Osborne Books Tutor Zone. Bookkeeping 2. Chapter activities

Transcription

1 Osborne Books Tutor Zone Bookkeeping 2 Chapter activities Osborne Books Limited, 2013

2 2 b o o k k e e p i n g 2 t u t o r z o n e 1 Banks, building societies and payment systems 1.1 Building societies are owned by: Shareholders The Government Their members Select the correct option. 1.2 Which of the following financial services are offered both by banks and also by building societies? Select the correct options. Current accounts Commercial mortgages Savings accounts (d) House mortgages (e) Safe custody for valuables (f) Debit cards (g) Credit cards (h) Business loans (i) Travel money (j) Insurance

3 c h a p t e r a c t i v i t i e s An overdraft has the following features: Limit set, interest charged on that limit, arranged for a set time period Limit set, interest charged on amount borrowed, arranged for a set time period Limit set, interest charged on that limit, fee payable (d) Limit set, interest charged on amount borrowed, security always required Select the correct option. 1.4 A bank draft is: A customer cheque guaranteed by the bank, as good as cash A cheque written out by a bank, as good as cash, suitable for large purchases A cheque written out by a bank, as good as cash, best for small purchases Select the correct option. 1.5 The normal clearance cycle for a BACS payment is: Two hours Two days Three days Select the correct option.

4 4 b o o k k e e p i n g 2 t u t o r z o n e 2 Making payments 2.1 Paying supplier accounts requires a number of procedures and checks before authorisation to pay can be given. Indicate whether each of the following statements is true or false. Authorisation to pay a supplier s account can only be given if... True False The documentation has been checked and agreed The invoices involved were issued more than 30 days previously Settlement discount has always been taken when offered Credit notes have been issued when credit is due The remittance advice has been received by the customer 2.2 The main difference between a standing order and a direct debit is that: A standing order is set up by the person making the payments A standing order is set up by the person receiving the payments A standing order payment takes longer to process through the BACS Select the correct option.

5 c h a p t e r a c t i v i t i e s A CHAPS payment is: A fast payment which can be set up by a customer with an online bank account A high value same day payment set up by a bank for its customer A high value same day payment which is set up by a bank and can be cancelled if required Select the correct option. 2.4 Indicate whether the following statements relating to The Faster Payments Service are true or false. True False It allows a customer to arrange a same day payment from one account to another account It is restricted to online accounts The payment can be cancelled at any time The payment normally takes only two hours to reach its destination account The customer must have enough money in the account in order to make the payment

6 6 b o o k k e e p i n g 2 t u t o r z o n e 3 Receiving and recording payments 3.1 A business receiving cash for sales that it has made operates a cash till. At the end of each working day the cash in the till is counted and a certain amount is kept in the till as a float and the rest paid into the bank on a paying-in slip. On Wednesday the cashier noted the following details: Cash float in the till at the beginning of the day Cash receipts from sales during the day: Cash taken from the cash till for paying in at the bank Answer the following questions: What was the total of the cash received during the day? What was the total of the cash in the till at the end of the day before the cash for paying in at the bank was taken out? What was the total of the cash float held overnight on Wednesday?

7 c h a p t e r a c t i v i t i e s You work for Marco Limited and deal with cheques received from customers. Part of your job is to check the cheques and either pass them forward for listing for paying in at the bank or query them. During the course of Tuesday 21 October 20XX you receive a cheque. Western Bank PLC Barset Branch 29, Castle Square, Barset MR8 6VN Pay Marco Limited Four hundred and ninety five pounds only REFER TO DRAWER Account payee only date 6 October 20XX only BENJAMIN DETT B. Dett The words REFER TO DRAWER mean (select the one correct option): You will need to refer the cheque to the bank You will need to refer the cheque to Benjamin Dett You will need to file the cheque because it has already been paid in 3.3 A business regularly receives payment for goods ordered on its website. Payment may be made using (tick the two correct options): A debit card using Chip and PIN A credit card using details including the card number, security code and expiry date A debit card using details including the card number, security code and expiry date

8 8 b o o k k e e p i n g 2 t u t o r z o n e 3.4 Chargeback in relation to online card sales means: If the card transaction is invalid, the seller can get the money back from the card company The seller has to pay a set percentage of the purchase price to the card company The purchaser has the right to claim the money back from the seller if the goods are faulty Which one of these options is correct? 3.5 Biscotti Supplies receives the following remittance advice. REMITTANCE ADVICE TO Biscotti Supplies Unit 21 Elgar Estate, Broadfield, BR7 4ER FROM: Marshall Catering 45 The Circus Broadfield BR2 5KH XX Date Our ref Your ref Amount ( ) XX 3450 Invoice XX 3450 Credit note 341 (45.00) XX 3479 Invoice TOTAL 1, THIS HAS BEEN PAID BY FASTER PAYMENT DIRECTLY INTO YOUR BANK ACCOUNT AT CENTRAL BANK NO SORT CODE FOR VALUE 2 JULY 20XX Will this advice be accompanied by a cheque? Yes/No? Into which Bank will the money be paid? Into whose account will the money be paid?

9 c h a p t e r a c t i v i t i e s 9 4 Paying into the bank 4.1 You work for Elektra Ltd. The cheque shown below has to be paid into the bank. You can see that there are a number of problems with missing details on the cheque. Southern Bank PLC Stourminster Branch 10 High Street, Stourminster ST1 8HJ Pay Elektra Limited Three hundred pounds only Account payee only date only CAPELLO DESIGNS Director What action would you need to take? Select the correct option in the following two very different situations which reflect some or all of these problems. There is no date on the cheque, but the cheque has in this case been signed by the issuer. Write the current date on the cheque and pay it in Send the cheque back to Capello Designs and ask for the date to be completed and the cheque returned to Elektra Limited Send the cheque back to Capello Designs bank There is no date on the cheque, and the cheque has not been signed by the issuer. Write the current date on the cheque and write in the name of the issuer and pay the cheque in Send the cheque back to Capello Designs and ask for the missing details to be completed and the cheque returned to you Send the cheque back to Capello Designs bank

10 1 0 b o o k k e e p i n g 2 t u t o r z o n e 4.2 You work for Enigma Enterprises, which has a bank account at Mercia Bank, Malvern Wells. You are required to prepare the paying-in slip and counterfoil as at today's date. The cheques are to be listed and totalled on the back of the paying-in slip. The items to be banked are: Cash two 20 notes three 10 notes three 5 notes six 1 coins five 50p coins two 10p coins seven 2p coins Cheques J E Gardner C Mackerras A Boult N Imrod MERCIA BANK MALVERN WELLS ENIGMA ENTERPRISES

11 c h a p t e r a c t i v i t i e s You work for Butterworth Ltd, which has a bank account at Albion Bank, Broadfield. You have just received the December bank statement, which is shown below. Study the statement and answer the questions that follow. Albion Bank plc 87, The Ringway, Broadfield, BR1 2GH Account title Butterworth Limited Account number Statement 45 Date Details Payments Receipts Balance 20XX 3 Feb Balance brought down 4, CR 10 Feb Faster Payment Evershed Ltd 3, , CR 10 Feb , , CR 11 Feb , CR 13 Feb Giro Credit , , CR 17 Feb Giro Credit , CR 17 Feb Dishonoured cheque 1, , CR 21 Feb , , CR 24 Feb , CR 28 Feb Bank Charges CR The letters CR after each balance mean that: The balance will reflect a credit balance in Butterworth Ltd s cash book The balance will reflect a debit balance in Butterworth Ltd s cash book The entry for a dishonoured cheque on 17 February represents: A cheque that has been dishonoured and then paid in again A cheque that has been paid in and then dishonoured

12 1 2 b o o k k e e p i n g 2 t u t o r z o n e If a cheque for 5,000 was paid in on 1 March, Butterworth Ltd would be able to: Withdraw the funds on the same working day and the cheque could not be returned unpaid Withdraw the funds 4 working days later and the cheque could not be returned unpaid Withdraw the funds 4 working days later and the cheque could be returned unpaid (d) Withdraw the funds 6 working days later and the cheque could not be returned unpaid at this stage Select the two correct options. (d) Butterworth Ltd s bank account received a Faster Payment for 3, on 10 February. How long would it normally have taken for this payment to reach the account from Evershed Ltd s bank? Select the correct option. 3 working days 1 working day 2 hours

13 c h a p t e r a c t i v i t i e s Bank reconciliation statements 5.1 Upon receipt of a bank statement, which two of the following must be written into the firm s cash book? 1 bank charges 2 unpresented cheques 3 direct debit payments 4 outstanding lodgements 1 and 3 2 and 4 1 and 4 (d) 2 and A firm s bank statement shows a balance of 850 credit. Unpresented cheques total 2,250; outstanding lodgements total 750. What is the balance at bank shown by the cash book? 2,350 debit 2,350 credit 650 debit (d) 650 credit

14 1 4 b o o k k e e p i n g 2 t u t o r z o n e 5.3 The bank columns of Chris Hart's cash book for May 20X4 are as follows: 20X4 Receipts 20X4 Payments 1 May Balance b/d May Curtis Ltd May Hawkins Ltd May T Daniels May B Morgan May Smith & Co May Arnold & Sons May P Singh He received his bank statement which showed the following transactions for May 20X4: BANK STATEMENT Payments Receipts Balance 20X4 1 May Balance brought forward CR 6 May Cheque no CR 7 May Cheque no CR 8 May Credit , CR 15 May BACS credit: AJ Traders , CR 22 May Cheque no , CR 24 May Direct debit: Arley Finance CR 25 May Cheque no CR You are to: Check the items on the bank statement against the items in the cash book and update the cash book accordingly; total the cash book and show the balance carried down at 31 May 20X4. Prepare a bank reconciliation statement at 31 May 20X4 which agrees the bank statement balance with the cash book balance.

15 c h a p t e r a c t i v i t i e s On 30 November Segovia Ltd received the following bank statement as at 24 November 20X2. BANK STATEMENT Date Details Paid out Paid in Balance 20X2 01 Nov Balance brought forward 1,991 C 02 Nov Cheque ,736 C 04 Nov BACS credit: R Phillips 1,364 3,100 C 05 Nov Cheque ,700 1,400 C 07 Nov Cheque C 12 Nov Paid into bank 1,517 1,995 C 13 Nov Cheque ,643 C 18 Nov BACS credit: Walters & Co 2,392 4,035 C 19 Nov Direct debit: Wyvern Council 245 3,790 C 20 Nov Cheque ,994 C 24 Nov Bank charges 50 2,944 C 24 Nov Cheque ,062 1,882 C D = Debit C = Credit

16 1 6 b o o k k e e p i n g 2 t u t o r z o n e The cash book as at 24 November 20X2 is shown below. CASH BOOK Date Details Bank Date Cheque Details Bank 20X2 20X2 number 01 Nov Balance b/f 1, Nov Mercia Supplies Nov R Phillips 1, Nov Perran Ltd 1, Nov Begley & Co 1, Nov Wilson Ltd Nov Egan Ltd 2, Nov Durning Stores 1, Nov Dholiwar Ltd 1, Nov Bromfields Nov Scott Ltd Nov Wyvern Council Nov HTP Ltd 968 Check the items on the bank statement against the items in the cash book. Enter any items in the cash book as needed. Total the cash book and clearly show the balance carried down at 24 November (closing balance) and brought down at 25 November (opening balance). Select your entries for the Details column from the following list: Balance b/f, Balance c/d, Bank charges, Begley & Co, Bromfields, Closing balance, Dholiwar Ltd, Durning Stores, Egan Ltd, HTP Ltd, Mercia Supplies, Opening balance, Perran Ltd, R Phillips, Scott Ltd, Walters & Co, Wilson Ltd, Wyvern Council.

17 c h a p t e r a c t i v i t i e s 1 7 (d) Complete the bank reconciliation statement as at 24 November. Select your entries for the Details column from the following list: Bank charges, Begley & Co, Bromfields, Dholiwar Ltd, Durning Stores, Egan Ltd, HTP Ltd, Mercia Supplies, Perran Ltd, R Phillips, Scott Ltd, Walters & Co, Wilson Ltd, Wyvern Council. Bank reconciliation statement as at 24 November 20X2 Balance as per bank statement Add Name: Name: Total to add Less Name: Name: Total to subtract Balance as per cash book

18 1 8 b o o k k e e p i n g 2 t u t o r z o n e 6 Using control accounts 6.1 You have the following information for the month: customer balances at start of month 36,247 credit sales 20,391 sales returns 1,038 money received from customers 18,416 discounts allowed 184 irrecoverable debt written off 220 What is the figure for customer balances at the end of the month? 32,830 33,270 36,780 (d) 37, You have the following information for the month: supplier balances at start of month 19,542 credit purchases 12,764 purchases returns 391 money paid to suppliers 11,048 discounts received 164 What is the figure for supplier balances at the end of the month? 20,703 18,381 21,485 (d) 21,031

19 c h a p t e r a c t i v i t i e s You have the following information for the month: balance of VAT account at start of month 1,876 credit VAT from sales day book 1,295 VAT from purchases day book 876 VAT from sales returns day book 112 VAT from purchases returns day book 44 VAT from cash sales 561 What is the balance of VAT account at the end of the month? 964 credit 2,924 credit 4,764 credit (d) 2,788 credit

20 2 0 b o o k k e e p i n g 2 t u t o r z o n e 6.4 You work as an Accounts Assistant for Ikpasa Limited. Today you are working on the purchases ledger control account and purchases ledger. A summary of transactions with credit suppliers during the month of August is shown below. Show whether each entry will be a debit or a credit in the purchases ledger control account in the general ledger. Details Amount Debit Credit Balance of credit suppliers at 1 August 29,338 Purchases from credit suppliers 18,174 Payments to credit suppliers 19,351 Discounts received 176 Goods returned to credit suppliers 847 What will be the balance brought down on 1 September on the above account? Dr 27,490 Cr 27,490 Dr 31,538 (d) Cr 31,538 (e) Dr 27,138 (f) Cr 27,138 The following credit balances were in the purchases ledger on 1 September. Siddique Ltd 4,954 Patterson & Co 5,821 A Cracknell 3,954 De Waal Ltd 6,286 Luxon Stores 3,470 Denison plc 2,998

21 c h a p t e r a c t i v i t i e s 2 1 Reconcile the balances shown above with the purchases ledger control account balance calculated in part. Balance on purchases ledger control account at 31 August Total of the purchases ledger balances at 31 August Difference (d) What may have caused the difference you calculated in part? (d) Settlement (cash) discount was entered twice in the purchases ledger A purchases invoice was entered twice in the purchases ledger A purchases invoice was not entered in the purchases ledger A credit balance in purchases ledger has been recorded in error as a debit balance (e) Which one of the following statements is true? Reconciliation of the purchases ledger control account assures managers that the amount showing as outstanding from trade receivables is correct Reconciliation of the purchases ledger control account assures managers that the amount showing as outstanding to trade payables is correct Reconciliation of the purchases ledger control account will show if a sales return has been omitted from the purchases ledger (d) Reconciliation of the purchases ledger control account will show if a sales return has been omitted from the sales ledger

22 2 2 b o o k k e e p i n g 2 t u t o r z o n e 6.5 You work as an Accounts Assistant for Keating Ltd. Today you are working on the VAT control account. The following figures have been taken from Keating Ltd s books of prime entry: Totals for quarter Sales day book Purchases day book Net 54,960 Net 26,280 VAT 10,992 VAT 5,256 Gross 65,952 Gross 31,536 Sales returns day book Purchases returns day book Net 1,720 Net 840 VAT 344 VAT 168 Gross 2,064 Gross 1,008 Cash book: cash sales Net 5,680 VAT 1,136 Gross 6,816 What will be the entries in the VAT control account to record the VAT transactions in the quarter? Select your entries for the Details columns from the following list: Cash sales, Purchases, Purchases day book, Purchases returns, Purchases returns day book, Sales, Sales day book, Sales returns, Sales returns day book, Value Added Tax. VAT control Details Amount Details Amount The VAT Return has been completed and shows an amount owing to HM Revenue & Customs of 6,696. Is the VAT Return correct? Yes No

23 c h a p t e r a c t i v i t i e s The journal 7.1 Which one of the following transactions will be recorded in the journal? Bank payment to a supplier Sale of goods on credit Petty cash payment for stationery (d) Writing off an irrecoverable debt 7.2 Heather Shaw started in business on 1 June 20X8 with the following assets and liabilities: Office equipment 10,500 Inventory 3,300 Cash 200 Bank 1,400 Trade payable 1,700 Bank loan 2,500 Use the form below to prepare Helen Shaw s opening journal entry, showing clearly her capital at 1 June 20X8. Date Details Reference Dr Cr 20X8

24 2 4 b o o k k e e p i n g 2 t u t o r z o n e 7.3 You are employed by Teasdale Supplies as an Accounts Assistant. Today the Accounts Supervisor tells you that a credit customer, Hinson Haulage, has ceased trading, owing Teasdale Supplies 440 plus VAT. Record the journal entries needed in the general ledger to write off the net amount and the VAT. Select your account names from the following list: Irrecoverable debts, Hinson Haulage, Purchases, Purchases ledger control, Teasdale Supplies, Sales, Sales ledger control, Value Added Tax. Account name Amount Debit Credit Teasdale Supplies has started a new business, Teasdale Developments, and a new set of accounts is to be opened. A partially completed journal to record the opening entries is shown below. Record the journal entries needed in the accounts in the general ledger of Teasdale Developments to deal with the opening entries. Account name Amount Debit Credit Inventory 3,412 Office equipment 15,200 Cash at bank 1,874 Sales ledger control 11,391 Purchases ledger control 6,987 Rent 5,310 Heating and lighting 846 Wages 4,105 Bank loan 10,600 Capital 24,551 Journal to record the opening entries of the new business

25 c h a p t e r a c t i v i t i e s 2 5 The following information is used in multiple-choice questions 7.4, 7.5 and 7.6. The payroll system of Cilenti Limited has recorded the following totals for the month of May: gross wages 120,360 income tax 33,120 employer s National Insurance contributions 13,390 employees National Insurance contributions 10,840 employer s pension contributions 4,100 employees pension contributions 4,100 trade union fees The total payment to HM Revenue & Customs for the month is: 57,350 33,120 46,510 (d) 65, The total wages expense to the employer is: 136, , ,850 (d) 186,760

26 2 6 b o o k k e e p i n g 2 t u t o r z o n e 7.6 The total net pay to employees is: 68,900 71, ,360 (d) 87,240

27 c h a p t e r a c t i v i t i e s You are employed by Lockton Limited as an Accounts Assistant. Lockton Limited pays its employees through the bank every month and maintains a wages control account. A summary of last month s payroll transactions is shown below. Item Gross wages 45,833 Income tax 6,987 Employer's National Insurance contributions 2,045 Employees National Insurance contributions 1,822 Employer s pension contributions 953 Employees pension contributions 953 Record the journal entries needed in the general ledger to: (d) Record the wages expense. Record HM Revenue & Customs liability. Record the net wages paid to the employees. Record the pension fund liability. Select your account names from the following list: Bank, Employees National Insurance, Employer s National Insurance, HM Revenue & Customs, Income tax, Net wages, Pension fund, Wages control, Wages expense. Account name Amount Debit Credit Account name Amount Debit Credit

28 2 8 b o o k k e e p i n g 2 t u t o r z o n e Account name Amount Debit Credit (d) Account name Amount Debit Credit

29 c h a p t e r a c t i v i t i e s The trial balance and correction of errors 8.1 Advertising expenses of 340 paid from the bank have been recorded in the double-entry accounts as 430. Which one of the following entries will correct the error? Debit Credit Bank 430 Advertising expenses 430 Advertising expenses 430 Bank 430 Bank 430 Advertising expenses 430 Advertising expenses 340 Bank 340 (d) Advertising expenses 430 Bank 430 Bank 340 Advertising expenses 340

30 3 0 b o o k k e e p i n g 2 t u t o r z o n e 8.2 The trial balance of Sampson Storage does not balance. The debit column totals 148,374 and the credit column totals 149,521. What entry will be made in the suspense account to balance the trial balance? Account name Amount Debit Credit Suspense It is important to understand the type of errors that are disclosed by a trial balance and those that are not. Show which of the errors below are, or are not, disclosed by the trial balance. Error in the general ledger Error disclosed by Error NOT disclosed the trial balance by the trial balance The cost of stationery has been debited to office equipment account and debited to bank account A cash sale has been recorded in the cash book only A bank payment for heating and lighting has been debited to bank account and credited to heating and lighting account Rent paid of 540 has been recorded as 450 in the cash book and rent paid account A bank payment for office equipment has not been entered in the accounts The balance of sales ledger control account has been calculated incorrectly

31 c h a p t e r a c t i v i t i e s The initial trial balance of Taiwo Trading at 31 October 20X2 did not balance. The difference of 9 was placed into a suspense account. The error has been traced to the sales day book as shown below. Sales day book Date Details Invoice Total VAT Net 20X2 number 31 Oct Stretton Stores Oct Cottle and Co , Oct Dunlevy plc , Totals 2, ,440 Identify the error and record the journal entries needed in the general ledger to: (1) Remove the incorrect entry. (2) Record the correct entry. (3) Remove the suspense account balance. Select your account names from the following list: Cottle and Co, Dunlevy plc, Purchases, Purchases day book, Purchases ledger control, Purchases returns, Purchases returns day book, Sales, Sales day book, Sales ledger control, Sales returns, Sales returns day book, Stretton Stores, Suspense, Value Added Tax. (1) Account name Amount Debit Credit (2) Account name Amount Debit Credit (3) Account name Amount Debit Credit

32 3 2 b o o k k e e p i n g 2 t u t o r z o n e An entry to record a bank receipt of 350 for rent received has been reversed. Record the journal entries needed in the general ledger to: (1) Remove the incorrect entry. (2) Record the correct entry. Select your account names from the following list: Bank, Cash, Purchases, Purchases ledger control, Rent received, Sales, Sales ledger control, Suspense, Value Added Tax. (1) Account name Amount Debit Credit (2) Account name Amount Debit Credit

33 c h a p t e r a c t i v i t i e s The trial balance of Lorenz and Co included a suspense account. All the bookkeeping errors have now been traced and the journal entries shown below have been recorded. Journal entries Account name Debit Credit Wages 195 Suspense 195 Suspense 425 Sales 425 Vehicle expenses 80 Vehicles 80 As the Accounts Assistant at Lorenz and Co, you are to post the journal entries to the general ledger accounts. Dates are not required. Select your entries for the Details column from the following list: Balance b/f, Sales, Suspense, Vehicle expenses, Vehicles, Wages. Sales Details Amount Details Amount Suspense Details Amount Details Amount Balance b/f 230

34 3 4 b o o k k e e p i n g 2 t u t o r z o n e Vehicle expenses Details Amount Details Amount Vehicles Details Amount Details Amount Wages Details Amount Details Amount

35 c h a p t e r a c t i v i t i e s On 31 December 20X2 Linen Supplies Ltd extracted an initial trial balance which did not balance, and a suspense account was opened. On 1 January 20X3 journal entries were prepared to correct the errors that had been found, and to clear the suspense account. The list of balances in the initial trial balance, and the journal entries to correct the errors, are shown below and on the next page. As the Accounts Assistant at Linen Supplies Ltd, you are to redraft the trial balance by placing the figures in the debit or credit column. You should take into account the journal entries (on the next page) which will clear the suspense account. Account name Balances Balances at extracted on 1 January 20X3 31 December 20X2 Debit Credit Inventory 5,640 Sales ledger control 12,933 Purchases ledger control 7,462 Petty cash control 122 Capital 22,611 VAT owing to HM Revenue & Customs 1,594 Bank (overdraft) 3,827 Cash 496 Sales 74,012 Sales returns 1,475 Purchases 36,823 Purchases returns 308 Wages 19,414 Advertising 3,727 Insurance 1,496 Heating and lighting 2,023 Rent and rates 5,671 Miscellaneous expenses 854 Office equipment 18,800 Suspense account (debit balance) 340 Totals

36 3 6 b o o k k e e p i n g 2 t u t o r z o n e Journal entries Account name Debit Credit Suspense 350 Sales 350 Account name Debit Credit Suspense 450 Rent and rates 450 Rent and rates 540 Suspense 540 Account name Debit Credit Office equipment 600 Suspense 600