Question

use the information below to Answer questions that follow. Johns farm for the year ended 31st December 2019.

Closing valuation	240,000/=
Debts payable	115,000/=
Animal feed purchase	100,000/=
Sale of 2 heifers	180,000/=
Debts receivable	130,000/=
Wages	80,000/=
Opening valuation	220,000/=
Milk sales	62,000/=
Veterinary bills	57,000/=

1. prepare a profit and loss account of Johns farm.
2. what is the percentage profit or loss made by the farm?
3. of what use the profit and loss account to the farmer?

Answer 1

1.  
   THE PROFIT AND LOSS ACCOUNT OF JOHNS FARM FOR THE YEAR ENDED 31ST DECEMBERs 2019

   EXPENDITURE	INCOME
   opening valuation                          SHS CTS	SALES AND RECEIPTS                       .          .                          SHS CTS
   Opening valuation 220,000 00	Sale of heifer 180,000 00
   	Debts receivable 130,000 00
   	Sale of milk 62,000 00
   	Total sales and receipts 372,000 00
   Purchases and expenses SHS CTS	Closing valuation shs cts
   Debts payable 115,000 00	Closing valuation 240,000 00
   Animal feed 100,00 00
   Wages 80,000 00
   Veterinary bills 57,000 00
   Total purchases &expense 352,000 00
   Total of all expenditure 572,000 00	Total of income 612,000 00
   Profit 40,000 00

2. percentage profit= ^40,000/_612,000 x100= 6.536 %
3. it shows whether a farmer is making profit or loss in the farming business.