4. Accounting procedures
A section of Accounting, 7707
Listing 10 of 188 questions
BC a sole trader prepared the following trial balance from his accounts on 31 August 2022. Dr Cr $ $ Purchases 120 000 Revenue 231 500 Sales returns 3 600 Inventory 1 September 2021 11 100 Capital 111 900 Bank 4 100 Non-current assets at cost Premises 98 000 Machinery 52 000 Provision for depreciation of non-current assets Machinery 28 400 Commission receivable 2 200 Trade receivables 19 200 Trade payables 7 300 Discount allowed Discount received 1 400 Insurance 9 600 Repairs 12 400 Salaries 53 900 Rates 6 000 Carriage inwards 386 800 386 800 Additional information The closing inventory at 31 August 2022 was valued at $12 000. Commission received of $800 was owing at 31 August 2022. The balance shown for salaries covers the 11 months to 31 July 2022. Salaries for August 2022 are due and unpaid. There have been no salary increases over the previous 12 months and an equal amount is paid each month. At 31 August 2022 rates were prepaid by $300. The insurance included $700 covering a private insurance premium for BC. The repairs included $4000 that related to a new attachment for machinery. Machinery is to be depreciated at the rate of 20% per annum by the reducing balance method. A full year’s depreciation is charged regardless of the date of any purchases. There were no disposals during the year. Premises are not depreciated. REQUIRED Prepare the income statement of BC for the year ended 31 August 2022 BC Income Statement for the year ended 31 August 2022 …………………………………………………………… …………………………………………………………… …………………………………………………………… …………………………………………………………… …………………………………………………………… …………………………………………………………… …………………………………………………………… …………………………………………………………… …………………………………………………………… …………………………………………………………… …………………………………………………………… …………………………………………………………… …………………………………………………………… …………………………………………………………… …………………………………………………………… …………………………………………………………… …………………………………………………………… …………………………………………………………… …………………………………………………………… …………………………………………………………… …………………………………………………………… …………………………………………………………… $ …………… …………… …………… …………… …………… …………… …………… …………… …………… …………… …………… …………… …………… …………… …………… …………… …………… …………… …………… …………… …………… …………… $ …………… …………… …………… …………… …………… …………… …………… …………… …………… …………… …………… …………… …………… …………… …………… …………… …………… …………… …………… …………… …………… …………… Calculate the working capital at 31 August 2022. BC has been making future plans for the business and he needs to purchase $6000 of machinery immediately. There are two options to finance the purchase. Option 1 On credit with the full amount of $6000 payable in 60 days Option 2 Obtain a $6000 8% loan repayable in 5 years REQUIRED Advise BC on which option he should use. Justify your answer.
7707_w22_qp_22
THEORY
2022
Paper 2, Variant 2
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The following balances have been taken from the accounts of RB, a trader. 1 April 2021 31 March 2022 $ $ Insurance 2500 prepaid 850 prepaid Commission receivable 700 owing 630 owing The following transactions relate to the year ended 31 March 2022. All receipts and payments were through the bank account. $ Insurance paid 15 300 Insurance refund Commission receivable 7 200 REQUIRED Prepare the following ledger accounts for the year ended 31 March 2022. Balance the accounts and bring down the balances on 1 April 2022. RB Insurance account Date Details $ Date Details $ Commission receivable account Date Details $ Date Details $ Prepare the entries for insurance and commission receivable in RB’s statement of financial position at 31 March 2022. RB Extract from statement of financial position at 31 March 2022 Explain why the matching principle is important in the preparation of RB’s income statement. RB has arranged with his suppliers to receive a 25% trade discount off list price and a 2% cash discount. The cash discount is only for payments made within 10 days. On 5 March 2022 RB received an invoice from JP for the supply of goods with a list price of $3000. The invoice was paid on 13 March 2022. REQUIRED Calculate each of the following: the trade discount the cash discount the amount paid to the supplier JP Complete the table below indicating with a tick (✓) the effect of each type of discount on gross profit and profit for the year. Discount allowed increase decrease no effect gross profit profit for the year Discount received increase decrease no effect gross profit profit for the year
7707_w22_qp_23
THEORY
2022
Paper 2, Variant 3
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A trader prepared a draft income statement which showed a profit for the year of $36 000. A check of the books revealed the following information. Drawings made by the owner of $900 had been debited to the wages account. The provision for doubtful debts was increased by $20 at the year-end. The income statement was charged with the total provision of $260. 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?
7707_w23_qp_13
MCQ
2023
Paper 1, Variant 3
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Questions Discovered
188