Calculating the missing data:

1. Depreciation at 31 January 20X1:

During the year, Cygnus sold for £300 equipment that had cost £800 and had written
down value at 1 February 20X0 of £200. He purchased further equipment on 1 August
20X0 for £1,800. From that, we can calculate:

Expense for selling equipment = 800 - 200 = £600

Total shop equipment at 31 January 20X1 = 14,800 – 800 + 1,800 = £15,800

Moreover, Depreciation is charged at 10% per year on the straight-line basis, with no
depreciation in the year of sale and proportionate depreciation in the year of purchase.
So the depreciation for:

The shop equipment in 20X0 = £14,000 × 10% = £1,400

The new shop equipment for 6 months = (1,800 × 10% × 6) /12 = £90

 The depreciation = 1,400 + 90 = £1,490

 The aggregate depreciation at 31 January 20X1 = 6,900 – 600 + 1,490 = £7,790

2. Rent in advance at 31 January 20X1

Rent is payable quarterly in advance on 1 January, 1 April, 1 July and 1 October each
year . On 1 July 20X0, the annual rent was increased from £6,000 to £9,000. It means
that:

Rent expense in 31 January 20X1 = Rent expense in 20X0 + Rent expense in January
20X1 = [(£6,000/4 x 2) + (£9,000/4 x 2)] + £9,000/4 = [£3,000 + £4,500] + £2,250 =
£9,750

In 20X1, Cynus paid £8,250 for rent

 Rent in advance at 31 January 20X1 = £9,750 – £8,250 = £1,500

 3. Beginning capital at 31 January
20X0
£ £
Assets
Shop equipment 7,900
Stock 146,400
Trade debtor 14,400
Rent in advance 1,000
Cash in hand 800
170,500
Liabilities
Loan - Draco 24,000
Trade creditor 12,100
Accrued expense 2,300
Bank overdraft 2,600
41,000

 Beginning capital at 31 January 20X0 = Assets – Liabilites

= 170,500 – 41,000 = £129,500

Purchases at 31 January 20X1

Purchases at 31 January 20X1 = Payment for purchases + Closing balance – Opening

balance = 81,400 + 14,200 – 12,100= £83,500

Sales revenue at 31 January 20X1

Cost of Goods Sold = Opening stock + Purchases - Closing stock

= 146,400 + 83,500 – 128,700 = £101,200

Sales prices are fixed by doubling cost

 Sales revenue = Cost of goods sold x 2 = £101,200 x 2 = £202,400

Cash received from sales revenue

SALES TOTAL ACCOUNT

£ £
Opening balance 14,400 cash for sales 201,100
Sales 202,400 closing balance 15,700
216,800 216,800

Drawing

Drawing would normally represent no particular problem at all in preparing a set of final
accounts from incomplete records

CASH SUMMARY
£ £
Opening balance 800 cash banked 131,600
Cash for sales 201,100 drawings 69,400
Closing balance 900
201,900 201,900

Calculations for the Trading and Profit and Loss account

1. Rent: rent is payable quarterly in advance on 1 January, 1April, 1 July and 1

October. On 1 July 20X0, the annual rent was increased from £6,000 to
£9,000. Therefore:

Rent= (6,000 × 5) /12 + (£9,000 × 7) /12 = £7,750

2. Sundry Expenses
Total sundry expenses = 18,600 - 2,100 + 3,300 = £19,800

3. Interest on loan: the loan from Draco carried interest at 10% per year
payable annually on 31 December. On 31 December 20X0 Cygnus repaid
£12,000 of loan. The balance is repayable on 31 December 20X4. Therefore:
 The old interest on loan = [(£2,400 × 10%) ×11] /12 = £2,200
The new interest on loan = [(£ 12, 000 × 10%) × 11] /12 = £100
 the total interest on loan = 2,200 + 100 = £2,300

From the missing data and the calculations above, here is the Trading and Profit and
Loss account of Cygnus at the end of 31 January 20X1

Cygnus
Trading and Profit and Loss account at 31 January 20X1
£ £

Sales revenue 202,400

Less: Cost of goods sold 101,200

Gross profit 101,200

Less: Expenses
Rent 7,750
Sundry expense 19,800
Depreciation 1,490
Profit on sale of
equipment (£300 - £200) (100)
Interest on loan 2,300

31,240

Net profit 69,960

Calculations for the balance sheet of Cygnus at the end of 31 January 20X1

Current assets = Stock + Trade debtor + Rent in advance + Cash at bank + Cash in
hand = 128,700 + 15,700 + 1,500 + 4,850 + 900 = £151,650

Fixed assets = Equipment - Aggregate depreciation

= 15,800 - 7,790 = £8,010

Current liabilities = Trade creditor - Accrued expense

= 14,200 - 3,400 = £17,600

Net current assets = Current assets – Current Liabilities

= 151,650 - 17,600 = £134,050

Net assets = total assets – total liabilities

= 151,650 + 8,010 – (17,600 + 12,000) = £130,060

Capital = Beginning capital + profit – drawing

= 129,500 + 69,960 - 69,400 = 199,460 - 69,400 = £130,060

Cygnus
Balance Sheet at January 31 20X1
£ £
Current assets
Stock 128,700
Trade debtor 15,700
Rent in advance 1,500
Cash at bank 4,850
Cash in hand 900
151,650
Fixed assets
Equipment 15,800
Aggregate depreciation 7,790
8,010
Current liabilities
Trade creditor 14,200
Accrued expense 3,400
17,600
Net current assets 134,050

Long term liabilities

Loan - Draco 12,000
Net assets 130,060
Capital
Beginning Capital at January 31
20X0 129,500
Profit 69,960
199,460
Less: Drawing: 69,400
130,060