A whole extended trial balance, start to finish
Take one small business from its ledger balances, through three adjustments, to its profit and a worksheet that agrees.
Task 1The ledger balances and the year-end notes3 questions
| Account | Debit | Credit |
|---|---|---|
| Bank | 2,680.00 | |
| Trade receivables | 10,500.00 | |
| Allowance for doubtful debts | 180.00 | |
| Opening inventory | 3,000.00 | |
| Purchases | 21,000.00 | |
| Wages | 9,000.00 | |
| Sales | 38,000.00 | |
| Capital | 8,000.00 |
- Closing inventory is valued at £3,600
- A debt of £500 is irrecoverable and is to be written off
- The allowance for doubtful debts is to be 3% of trade receivables after the write-off
- A debt written off
- debit Irrecoverable debts expense, credit Trade receivables
- The allowance goes up
- debit Allowance for doubtful debts adjustment, credit Allowance for doubtful debts
- Closing inventory
- debit Closing inventory (statement of financial position), credit Closing inventory (statement of profit or loss)
Write off the debt first. Then work out the allowance needed, and post only the change from the balance already in the ledger.
Task 2Extend the rows and find the profit4 questions
Task 3The final check3 questions