1. Financial accounting (AS Level)
A section of Accounting, 9706
Listing 10 of 1775 questions
Noor, a sole trader, was preparing her business’s financial statements for the year ended 31 December 2018. The following information is available. At 1 January 2018 $ General expenses prepaid During the year ended 31 December 2018 $ General expenses paid 12 400 Insurance premiums paid 6 480 Rent received 5 460 At 31 December 2018 General expenses, $1210, were due but unpaid. Insurance premiums paid included $630 covering the six months ended 31 January 2019. Rent receivable of $1200 for the three months ended 28 February 2019 had not yet been received. Inventory had been valued at a cost of $11 400. However, it included several damaged items which had a selling price of $840. All goods are sold with a mark-up of 50%. The damaged items could be sold but would require repairs costing $360. REQUIRED Calculate the amount to be recorded in the income statement for the year ended 31 December 2018 for each of the following items. General expenses Insurance Rent receivable Closing inventory Additional information Noor’s policy is to maintain a provision for doubtful debts at 5% of trade receivables at the end of the financial year. REQUIRED State two accounting concepts which are applied when recording a provision for doubtful debts. Additional information At 31 December 2017 Noor’s trade receivables were $34 200 after deducting the provision for doubtful debts. At 31 December 2018 total trade receivables were $37 200. This total included the accounts of the following two credit customers. $ MN Limited S Wells Noor decided to write off these two accounts. She will maintain her provision for doubtful debts at 5% of trade receivables. REQUIRED Calculate the increase or decrease in the provision for doubtful debts at 31 December 2018.
9706_m19_qp_22
THEORY
2019
Paper 2, Variant 2
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Questions Discovered
1775