1
L Mann started business with £5,000 in the bank on 1 April. The business transactions during
the month were as follows:
(i
) Took £300 out of the bank for petty cash
(ii
) Bought a second-hand van and paid by cheque £3,500
(iii
) Bought goods on credit from A Supplier for £2,500
(iv) Sold goods for cash for £300
(v) Sold goods on credit for £1,000 to B Safe
(vi
) Returned faulty goods to A Supplier £500
(vii
) Paid sundry expenses of £50 in cash
(viii
) Paid the rent of £500 by cheque
(ix) Withdrew cash drawings of £500
Stock at cost at 30 April was £1,250.
Required:
(a) Prepare the ledger accounts recording the transactions.
(b) Prepare the trial balance at 30 April.
(c) Prepare a trading, profit and loss account for April.
(d) Prepare a balance sheet as at 30 April.
(e) Calculate the percentages of:
(i
) Gross profit to sales.
(ii
) Net profit to opening capital.
(f
) Comment on:
(i
) The relationship between drawings and net profit and why it is important that Mann keeps
an eye on it.
(ii
) Working capital.