Your work schedule for the current week requires you to prepare four different types of draft final accounts for approval by your manager. The information for these accounts is presented to you in a number of different forms. You commence by looking at some financial information for a client, a sole trader called Palmer. The client wishes to know his net profit for the trading year, but complete accounting records have not been maintained.
You have the following information for the accounting year to 31 July 2014 to assist with the production of the information for the trader:
Sole trader Palmer $
Opening cash in hand at bank 1 August 2013 , 68,000
Debtors at 1 August 2013 , 40,000
Cash Received from debtors in year to 31 July 2014 , 780,000
Debtors at 31 July 2014, 60,000
Bad debts written off during the year to 31 July 2014 , 0
Creditors for purchases at 1 August 2013, 54,000
Cash paid to suppliers in year to 31 July 2014 , 680,000
Creditors for purchases at 31 July 2014 72,000
Stock of goods for resale (Inventory) at 1 August 2013, 25,000
Stock of goods for resale (Inventory) at 31 July 2014 , 64,000
Cash paid for other expenses in year to 31 July 2014, 90,000
Cash drawings in year to 31 July 2014 50,000
Task 2 a) You are required to calculate:
net profit for Palmer for the year to 31st July 2014, which arrives at a net profit of $51,000, and the trader's cash in hand at bank, which should be $28,000 as at 31st July 2014·