## ELEMENTARY BALANCE SHEET

ELEMENTARY BALANCE SHEET
Is a statement which shows that list of assets, liabilities and capital of business at as specific period.
The purpose of preparing the balance sheet is to show the financial position of business at the end of trading period.
CAPITAL: Is the amount of money invested in the business for further production or is the money used to start business.
NET PROFIT: is the excess of gross profit over total expenses.
NET LOSS: Is the excess of total expenses over gross profit.
DRAWINGS: Is the money or goods taken out of the business for private expenses.
For example, if a proprietor taken money out for private use.
LIABILITIES: these are the debts of the business.
LONG TERM LIABILITIES: these are debts which payment take more than one year. For example, A loan from bank
CURRENT LIABILITIES: These are debts paid for near which are paid for short period, example creditor.
ASSETS: Are the property of the business, is anything has got value in business and assist the business to go smoothly.
FIXED ASSETS: The properties of the business which stay for a long period of time for example, Building, motor van premises,
It is purchased for business and not for sales and per month increase profit.
ACCOUNTING EQUATION
Is an equation comprises two sides as in mathematics such as. Y+3=4
Accounting equation deals with accounting balance through balance sheet items such as Assets, Liabilities Capital.
Accounting Equation formulated in taking consideration in balance sheet items but liabilities side comprises long term liabilities and short term liabilities.
Therefore accounting equation should be;-
CAPITAL + LIABILITIES (LONG TERM LIABILITIES) = ASSETS
CAPITAL = ASSETS – LIABILITIES
LIABILITIES = ASSETS – CAPITAL.

BALANCE SHEET AS AT 31.12.2000
 LIABILITIES AMOUNT ASSETS AMOUNT Capital Xxx FIXED ASSETS Add: net profit Xxx Buildings Xxx Xxx Motor van Xxx Less: drawings Xxx Furniture Xxx Xxx LONG TERM LIABILITIES CURRENT ASSETS Loan from bank Xxx Stock Xxx Debtor Xxx Cash in hand Xxx CURRENT LIABILITIES Cash in bank Xxx Creditor Xxx Bank over draft Xxx Xxx Xxx
EXAMPLE.1
From the following information prepare balance sheet
Building 7,000
Debtor 9,500
Creditor 21,000
Machinery 33,000
Cash in hand 18,000
Bank loan 20,000
Capital 56,000
Drawings 2,000
Net profit 10,000
Stock at 31.12.2001 37,500
Solution.QN1
BALANCE SHEET AS AT 31st Dec 2001
 LIABILITIES AMOUNT ASSETS AMOUNT Capital 56,000 FIXED ASSETS Add: net profit 10,000 66,000 Building 7,000 Machinery 33,000 40,000 Less drawings 2,000 64,000 LONG TERM LIABILITIES CURRENT ASSETS Bank loan 20,000 Stock 37,500 Debtor 9,500 CURRENT LIABILITIES Cash in hand 15,000 65,000 Creditor 21,000 105,000 105,000

EXAMPLE.2
From the information prepare Trading, profit and loss account and balance sheet as at 30th December 2006.
 DETAILS DR CR SalesPurchasesCarriage outsidesCarriage inwardsStock at 1.1 2006Return outwardReturn inwardSalaries of WageMotorRentSundryMotor VehicleFixture and FilingDebtorsCreditorCash at bankCash in BandDrawingscapital 115563262343776440244766457612002400600457738761202050 18600355304312844 Stock at 31 December 2006 is 4,998
Solution.QN2
DR TRADING, PROFIT AND LOSS ACCOUNT FOR THE YEAR END OF 2006 CR
 Details Amount Details Amount Opening Stock 3,776 Sale 18,600 Add Purchases 11,556 Less Return inward 440 Add carriage inward 234 15,566 18,160 Less: Return outwards 355 15,211 Less: Closing stock 4,998 cost of goods sold 10,213 Gross profit c/d 7,947 18,160 18,160 Carriage outwards 326 Gross profit b/d 7,947 Salaries of wage 2,447 Motor expenses 664 Rent 576 Sundry expense 1,200 Net profit 2,734 7,947 7,947
BALANCE SHEET AS AT 31st Dec 2006
 LIABILITIES Amount ASSETS Amount Capital 12,844 FIXED ASSETS Add: net profit 2,734 Motor vehicle 2,400 15,578 Fixture and fittings 600 Less drawings 2,050 13,528 CURRENT ASSETS LONG TERM LIABILITIES Stock 4,998 – Debtor 4,577 CURRENT LIABILITIES Cash 120 Creditor 3,043 Cash at bank 3,876 16,571 16,571
EXERCISE. 1
JUSTINA NYAMAI TRIAL BALANCE AS AT 31 DEC 2000
 S/N Name of A/c DR CR 1.2.34567891011121314151617181920 Stock 1 Jan 2000.Office equipmentPurchasesSalesFurnitureReturn in &outDiscount allowedInsuranceCarriage in wardCarriage out wardSalariesRentOffice expensesDebtorsCommission receivedCreditorsBank over draftCash in handDrawing capital 32,500 25,000 487,200 19,200 18,400 7,500 3,800 100,200 2,900 134,100 29,600 17,300 74,600 90052,500 722,100 12,40025,00032,20013,500 200,000
Required;
Prepare Trading, Profit and loss A/C and the Balance sheet as at 31 Dec 2000.

DR TRADING,PROFIT AND LOSS A/C FOR THE YEAR 2000 CR
 Details/Particular Amount Details/Particular Amount Opening Stock 32,500 Sales 722,100 Add: Purchases 487,200 Less: Return in ward 18,400 Add: carriage in wards 100,200 619,900 703,700 Less: Returned out ward 12,900 cost of goods available for sale 607,000 Less: Closing stock 44,300 cost of goods sold 562,700 Gross profit c/d 141,000 703,700 730,700 Carriage out ward 2,900 Gross profit b/d 141,000 Insurance 3,800 commission received 25,000 Salaries 134,100 Net loss 29,200 Rent 29,600 Discounts 7,500 Office expenses 17,300 195,200 195,200
BALANCE SHEET AS AT 31 DEC. 2000
 LIABILITIES ASSETS Capital 200,000 FIXED ASSETS Less: net loss 29,200 Furniture 19,200 170,800 Office equipment 25,000 Less drawings 52,500 118,300 CURRENT ASSETS LONG TERM LIABILITIES Stock 44,300 Debtor 74,600 Cash 900 CURRENT LIABILITIES Creditors 32,200 Bank over draft 13,500 164,000 164000
EXERCISE 2
Mbona draw up the following trial balance as at 30th Sept 1998,
Draft a trading, profit and loss account for the year ended 30th Sept 1998 and balance sheet as at that date.

Solution.QN2 TRIAL BALANCE AS AT 30th Sept 1998
 DETAILS DR CR Loan from Ndento 5,000 Capital 25,955 Drawings 8,420 Cash at bank 3,115 Cash in hand 295 Debtors 12,300 Creditors 9,370 Stock at 30/12/1997 23,910 Motor van 4,100 Office equipment 6,250 SalesPurchases 92,100 130,900 Returns in wards 550 Return out wards 307 Carriage out ward 309 Motor van 1,630 Carriage in ward 215 Rent 2,970 Telephone charges 405 Wages & Salaries 12,810 Insurance 492 Office expenses 1,377 Sundry expenses 284 171,532 171,532 Stock at Sept 1998 was Tshs. 27,475

DR TRADING, PROFIT AND LOSS ACCOUNT FOR THE CR

YEAR ENDED 2006 Details/Particular
 Amount Details/Particular Amount Opening Stock 23,910 Sales 130,900 Add: Purchases 92,100 Less:Return in ward 550 Add: carriage in wards 215 116,225 130,350 Less: Returned out ward 307 cost of goods available for sale 115,918 Less: Closing stock 27,475 cost of goods sold 88,443 Gross profit c/d 41,907 130,350 130,350 Carriage out ward 309 Gross profit b/d 41,907 Motor expenses 1,630 Rent 2,970 Telephone charges 405 Wages & salaries 12,810 Insurance 492 office expenses 1,377 sundry expenses 284 Net profit 21,630 41,907 41,907
BALANCE SHEET AS AT 30TH SEPT 1998
 LIABILITIES Amount ASSETS Amount Capital 25,950 FIXED ASSETS Add: net profit 21,630 Furniture 4,100 47,585 Office equipment 6,250 Less drawings 8,420 39,165 CURRENT ASSETS LONG TERM LIABILITIES Stock 27,475 Loan from O.ndeto 5,000 Debtor 12,300 CURRENT LIABILITIES Cash in hand 245 Creditor 9,370 Cash at bank 3,115 53,535 53,535
EXERCISE.5
Salma and Omary CO.ltd started business with capital cash Tshs. 60,000 on 1st June.
June 2: Bought furniture and fitting Tshs. 10,000
3: Sold goods for cash 25,000
4: Sold goods for cash 33,000
6: Bought goods for cash 30,000
7: Transport charges 500
12: Cash sales 25,000
15: Paid rent 550
16: Cash sales 15,000
17: Sold goods to Mwajuma 8,000
19: Bought goods from Mohamed 11,000
25: Paid wages 600
30: Stock at close 1,200.
Required;-
– Balance cash account
– Purchases, sales accounts
– Prepare Trial balance.

Solution.QN5
DR CASH BOOK ACCOUNT 1 CR
 Date Particular Folio Amount Date Particular Folio Amount 1st June Capital 2 60,000 2nd June Furniture and fitting 3 10,000 4th June Sales 5 33,000 3rd June Purchases 4 25,000 12th June Sales 5 25,000 5th June Advertising 6 1,800 16th June Sales 5 15,000 6th June Purchases 4 30,000 17th June Sales 5 8,000 7th June Transport 7 500 15th June Rent 8 550 19th June Purchases 4 11,000 25th June Wages 9 600 31st June Balance c/d 61,550 141,000 141,000 1st July Balance b/d 61,550

DR CAPITAL ACCOUNT 2 CR
 Date Particular Folio Amount Date Particular Folio Amount 31st June Balance c/d 60,000 1st June Cash 60,000 1st July Balance b/d 60,000
DR FURNITURE AND FITTING ACCOUNT 3 CR
 Date Particular Folio Amount Date Particular Folio Amount 2nd June Cash 10,000 31st June Balance c/d 10,000 1st July Balance b/d 10,000

DR PURCHASES ACCOUNT 4 CR
 Date Particular Folio Amount Date Particular Folio Amount 3rd June Cash 25,000 31st June Balance C/d 66,000 6th June Cash 30,000 19th June Cash 11,000 66,000 66,000 1st July Balance b/d 66,000

DR SALES ACCOUNT 5 CR
 Date Particular Folio Amount Date Particular Folio Amount 31st June Balance c/d 81,000 4th June Cash 33,000 12th June Cash 25,000 16th June Cash 15,000 17th June Cash 8,000 81,000 81,000 1st July Balance b/d 81,000

 Date Particular Folio Amount Date Particular Folio Amount 5th June Cash 1,800 31st June Balance c/d 1,800 1st July Balance b/d 1,800

DR TRANSPORT ACCOUNT 7 CR
 Date Particular Folio Amount Date Particular Folio Amount 7th June Cash 500 31st June Balance c/d 500 1st July Balance b/d 500
DR RENT ACCOUNT 8 CR
 Date Particular Folio Amount Date Particular Folio Amount 15th June Cash 550 31st June Balance c/d 550 1st July Balance b/d 550
DR WAGES ACCOUNT 9 CR
 Date Particular Folio Amount Date Particular Folio Amount 25th June Cash 600 31st June Balance c/d 600 1st July Balance b/d 600
TRIAL BALANCE AS AT 31TH JUNE
 S/N Name of Account DR CR Cash 61,550 Capital 60,000 Furniture and fitting 10,000 Purchases 66,000 Sales 81,000 Advertising 1,800 Transport 500 Rent 550 Wages 600 141,000 141,000

EXERCISES
EXERCISE 1.1
Record the following transaction in the Cash account for January 1990.
Jan 1. Commenced business with capital of 6000/=
2. Purchased goods for cash 3,000/=
4. Paid office cleaners 200/=
5. Solid all the goods for cash 400/=
7. Purchased goods for cash 2,000/=
8. Paid rent 400/=
10. Sold goods for cash 3,000/=
13. Paid wages 100/=
EXERCISE 1.2
Musa commenced business on 1st June 1995 with 10,000 as capital
June 2. Bought goods for 5,000
4. paid office cleaner 500
5. Bought parking material 100
6. Sold goods 1,000
7. Purchased goods and paid cash 1,800
9. Paid wages 300
10. Cash sales 2000
12. Cash purchases 1,500.00
15. Cash sales to date 2,500.00
20. Paid rent 500.00

EXERCISE 2.1
Mashio commenced business on 1st June 2012 with 1,000,000 as capital.
2012
July 1 Bought goods for cash 300,000
1 Transport charges for cash 3,0000
2 bought goods from Kimario 70,000
4 sold goods for cash 500,000
6 paid wages for cash 20,000
8 sold goods to Masanja 60,000
11 paid for electricity for cash 5,000
18 paid Kimario 70,000
24 paid for general expenses 2,000
28 received cash from Masanja 45,000

Enter the above transactions in the respectively ledger account, complete the double entry and bring down the balance at the end of the month July.
EXERCISE 3.1
PREPARE TRADING Account for the year ended 2008.
Purchases 12,000
Sales 30,000
Stock at 1.1.2008 5,000
Stock at 31.12.2008 2,000

EXERCISE 3.2
Prepare trading Account for the year ended 2008
Purchase 70,000
Sales 120,000
Stock at 1.1.2008 30,000
Stock at 31.12.2008 25,000

EXERCISE 3.3
Prepare trading Account for the given the following.
Purchases 170,000
Sales 180,000
Stock at 1.7.2006 60,000
Stock at 30.6.2007 40,000

SOLUTIONS TO EXERCISES
SOLUTION 1.1

DR CASH A/C ( L1 ) CR
 Date Particular Folio Amount Date Particular Folio Amount 1/1/1990 Capital L2 6,000 2/1/1990 Purchases L3 3,000 5/1/1990 Sales L5 400 4/1/1990 Office clement L4 200 10/1/1990 Sales L5 3,000 7/1/1990 Purchases L3 2000 8/1/1990 rent L6 400 13/1/1990 wages L7 100
Solution 1.2

DR CASH A/C (L 1) CR
 Date Particular Folio Amount Date Particular Folio Amount 1/6/1995 Capital 2 10,000 2/6/1995 Purchases 3 5,000 6/6/1995 Sales 6 1000 4/6/1995 Office cleaner 4 500 10/6/1995 Sales 6 2000 5/6/1995 P.material 5 100 15/6/1995 Sales 6 2500 7/6/1995 Purchases 3 1800 9/6/1995 wages 7 300 12/6/1995 purchases 3 1500 20/6/1995 Rent 8 500 30/6/1995 Balance c/d 5800

Solution 2.1

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• ### Duane, December 12, 2023 @ 11:53 amReply

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