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Q1)A sole trader’s business made a profit of $32,500 during the year ended 31 March 20X8.
This figure we as after deducting $100 per week wages for himself .addition, empathies
home telephone bill through the business books amounting to$400 plus sales tax at17.5%.
His capital at 1Apr2il0Xw7 as $6,500. what was his capital at 31Marc2h0X8?
? $33,730
? $33,800
? $38,930
? $39,000
-here my question is why are we not deducting the 400 telephone bill and what about the sales tax ?Q2) Trade payables :31January 20X2 130,400
31 January 20X3 171,250
Payment to suppliers 888,400
Cost of good taken from inventory by owner for personal use 1,000
Refund received from suppliers 2,400
Discount received 11,200
what should be the figure of purchase in the financial statement for the year ended 31 jan 2023 ?my question here is if we make a payable account here , where to put the refund ?
will it decrease the payable ledger? and then what to do about the drawings ?Q1 The telephone should be drawings and so should be added back to the profit and added to the drawings. The sales tax should also be treated as drawings. This doesn’t affect the profit but it should be added to the drawings.
Q2 A refund is simply a repayment of cash already paid. So when the cash was paid we credited cash and debited payables, therefore when we receive a refund(repayment of cash) we debit cash and credit payables. The goods taken as drawings will mean that we need to reduce the purchases figure, because only the amount after removing the drawings were actually used by the company.
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