Final Account of Sole Proprietorship

 

We discussed the trading and profit (or loss) account of the sole proprietorship. Also, we discussed some of the end-of-year adjustments usually made to have a clean final account in line with matching concept of accounting. Here, we move further to introduce some of the complex issues in the final account of a sole proprietorship. These complex issues have to do with the necessary end-of-year adjustments required.

 

We now move to introduce them in the following examples.

Example1 The following Trial balance was extracted from the accounting records of Prisca Enterprises as at 31^st December, 20xx.

Trial balance of Prisca Enterprises

Additional information

1.   Stock as at 31^st December, 20xx stood at ₦845

2.   Interest on loan is yet to be accounted for

3.   Two staff’s salaries were omitted for the month of December, 20xx and the amount stood at ₦25

4.   It is the policy of Prisca Enterprises to provide for depreciation at the following rates:

a.    Furniture and Fittings      5%

b.    Motor vehicles               12.5%

c.    Equipment                      5%

5.   Rent prepaid amounts to ₦150

 

Required:

Prepare for Prisca Enterprises:

a.    Income statement for the year ended 31^st December, 20xx

b.    Statement of Financial Position as at 31^st December, 20xx

Solution

 

Income statement for Prisca Enterprises

xxx