A trader prepared a draft income statement which showed a profit for the year of $36000.
A check of the books revealed the following information.
1 Drawings made by the owner of $900 had been debited to the wages account.
2 The provision for doubtful debts was increased by $20 at the year-end. The income statement was charged with the total provision of $260.
3 The total of the discount allowed column in the cash book, $140, for one month had not been debited to the discount allowed account.
What was the correct profit for the year?

Q: What topic does this question test?

This question tests Preparation of financial statements in O-Level Accounting (syllabus code 7707). It is worth 1 mark.

Q: Which exam paper is this question from?

This question appeared in the Cambridge O-Level Accounting Oct/Nov 2023 examination, Paper 1 Variant 3 (7707_w23_qp_13.pdf).

Question

A trader prepared a draft income statement which showed a profit for the year of $36000.
A check of the books revealed the following information.
1 Drawings made by the owner of $900 had been debited to the wages account.
2 The provision for doubtful debts was increased by $20 at the year-end. The income statement was charged with the total provision of $260.
3 The total of the discount allowed column in the cash book, $140, for one month had not been debited to the discount allowed account.
What was the correct profit for the year?

Oracle Prep · Accepted Answer

The correct answer is C: $37000.

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