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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 purchase100,000/=
Sale of 2 heifers180,000/=
Debts receivable130,000/=
Wages80,000/=
Opening valuation220,000/=
Milk sales62,000/=
Veterinary bills57,000/=
  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?

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

    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.
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