Question 4 (38 marks)
The following trial balance was extracted from the books of McDowell
Limited as at 31 December 2024:
Debit
Credit
$
$
Inventory as at 1 January 2024
22,400
Share Capital as at 1 January 2024
35,390
Bad debts
160
Donations
2,300
Returns
1,100
1,720
Technical support
10,000
Costs of transportation-in
270
Trade receivables and payables
30,000
20,000
Allowance for doubtful accounts
750
Furniture at cost
14,000
Accumulated depreciation of furniture, at 1
January 2024
3,500
Motor expenses
3,500
General expenses
1,300
Purchases and sales
25,000
100,000
Salaries and wages
980
Dividend revenue
1,250
Office rent revenue
10,800
Cash at bank
28,000
Cash in hand
10,600
Bank loan
30,000
Stationery and postage
2,600
Motor vans at cost
80,000
Accumulated depreciation of motor vans, at
1 January 2024
28,800
232,210
232,210
Additional information:
i.
Inventory as at 31 December 2024 amounted to $31,850.
ii.
Accumulated depreciation of furniture and motor vans are 10% p.a. on
cost and 20% on remaining book value respectively.
iii.
Allowance for doubtful accounts was 4% on net trade receivables.
iv.
On 1 January 2024, the company has paid for insurance $9,000 by cheque
for one and a half year. No record had been made.
V.
Prepayments as at 31 December 2024: technical support $4,000,
stationery and postage $380.
vi.
Accruals as at 31 December 2024: costs of transportation-in $155, motor
expenses $1,000, office rent revenue $3,600.