The following Trial Balance was taken from the ledger of F. Jackline, a sole trader, on 31st December 2002







Kshs



Kshs



Capital



40,000

Purchases

26,154



Sales



36,246

Salaries

4,814



Stock

4,307



Insurance

820



Rent



965

Buildings

25,000



Furniture

14,500



Debtors

6,140



Other expenses

1,060



Creditors



4,638

Commission

_____

__946



82,795

82,795



Adjustments:



Salaries due at the end of year 2012 was Kshs 350
Insurance was paid for one year up to 31st March 2013.
Rent received for January 2013, Kshs 165
Commission accrued but not yet received, Kshs 120
Furniture to be depreciated by 10%.
5% of debtors are doubtful.
Stock on 31st December 2012 was valued at Kshs 5,008.


Required:

i) Income statement for the year ended 31st December 2002

ii) Statement of financial position as at 31st December 2002

With data so spread out, it is essentially impossible to evaluate.

To prepare the income statement and statement of financial position, you need to make adjustments based on the given information and calculate various figures.

i) Income statement for the year ended 31st December 2002:

1. Start with the Trial Balance:
- Sales: Kshs 36,246
- Purchases: Kshs 26,154
- Salaries: Kshs 4,814
- Other expenses: Kshs 1,060
- Commission: Kshs 946

2. Add the adjustments:
- Salaries due at the end of the year: Kshs 350
- Commission accrued: Kshs 120

3. Calculate the Gross Profit:
Gross Profit = Sales - Purchases
Gross Profit = 36,246 - 26,154

4. Calculate the Net Profit:
Net Profit = Gross Profit - Salaries - Other expenses - Commission - Salaries due
Net Profit = Gross Profit - 4,814 - 1,060 - 946 - 350

ii) Statement of financial position as at 31st December 2002:

1. Start with the Trial Balance:
- Capital: Kshs 40,000
- Stock: Kshs 4,307
- Buildings: Kshs 25,000
- Furniture: Kshs 14,500
- Debtors: Kshs 6,140
- Creditors: Kshs 4,638

2. Add the adjustments:
- Insurance prepaid for 3 months (January to March 2013)
- Rent received for January 2013
- Furniture depreciation by 10%
- 5% of debtors are doubtful
- Stock on 31st December 2012: Kshs 5,008

3. Calculate the Total Assets:
Total Assets = Stock + Buildings + Furniture + Debtors + Adjustments

4. Calculate the Total Liabilities:
Total Liabilities = Creditors

5. Calculate the Capital:
Capital = Total Assets - Total Liabilities

Once you have the above figures, you can prepare the income statement and statement of financial position using the format required by your accounting principles or guidelines.