.. Jacintha Trading and Profit and Loss Account for the year ended 3 December 200 $ $ $ Opening stock 60000 Sales 63000 Purchases 26500 Less sales returns 550 Less purchases returns 475 62450 26025 Add: Carriage inwards 900 26925 Cost of goods available for sale 86925 Less closing stock 46500 Cost of goods sold 40425 Gross profit c/d 22025 62450 62450 Carriage outwards 350 Gross profit b/d 22025 Insurance expense 3000 Commission received 5000 Rent expense 00 37025 Salaries 5225 Utilities 2400 Motor expenses 700 Interest expense 750 Total expenses 5525 Net profit to Capital 2500 37025 37025 mark each Jacintha Balance Sheet as at 3 December 200 Fixed asset $ $ Owner equity $ Motor vehicle 63225 Capital 8000 Add net profit 2500 Current asset 02500 Closing stock 46500 Less drawings 9000 Debtors 8000 93500 Bank 8750 Long term liability 73250 Loan from bank 32500 mark each Current liability Creditors 0475 236475 236475
2. Tom Trading, Profit & Loss Accounts for the year ended 30 April 20 [0.5] $ $ $ $ Stock as at May 200 [0.5] 7,500 Sales 80,000 [0.5] Add Purchases [0.5] 63,000 Less Returns Inwards 5,000 [0.5] Less Returns Outwards [0.5] 8,000 Net sales 75,000 55,000 Add Custom duty [0.5],500 Carriage inwards [0.5] 4,500 [0.5] (9000X/3)Salaries & wages[0.5] 3,000 Net purchases 64,000 Cost of goods available for sale 7,500 Less: Stock as at 30 Apr 20 [0.5] 0,000 Cost of goods sold 6,500 Gross profit c/d 3,500 75,000 75,000 Carriage outwards [0.5] 5,500 Gross profit b/d 3,500 [0.5] OF General expenses [0.5] 850 Rent received 3,000 [0.5] Interest [0.5] 300 Discount received 750 [0.5] Stationery [0.5] 900 Salaries and wages (9000X2/3) [0.5] [0.5] 6,000 Discount allowed [0.5] 200 Insurance [0.5] 4,500 Net loss,000 8,250 8,250 (Total: marks) Tom Balance Sheet as at 30 April 20 [0.5] Fixed Assets [0.5] $ $ Owner's Equity [0.5] $ $ Premises [0.5] 40,000 Capital as at May 200 56,000 [0.5] Motor vehicles [0.5] 70,000 Less: Net loss,000 [0.5] OF Furniture [0.5] 30,000 55,000 240,000 Less: Drawings,000 [0.5] Current Assets [0.5] 54,000 Stock [0.5] 0,000 Long-Term Liabilities [0.5] Debtors [0.5] 5,000 Mortgage on premises 90,000 [0.5] Cash in hand [0.5] 5,000 Current Liabilities [0.5] 30,000 Creditors 20,000 [0.5] Bank overdraft 6,000 [0.5] 26,000 270,000 270,000 0 (Total: 9 marks) 2
3. Bryan Co Trading, Profit and Loss Account for the year ended 3 December 200 $ $ $ $ Opening stock 8000 Sales 55000 Purchases(36200-200) 36000 Less: Sales 500 returns Add: Carriage inwards 700 54500 Duty on purchases 300 37000 Less: Purchases returns 400 36600 Cost of goods available for sale 44600 Less: Closing stock 7200 Cost of goods sold 37400 Gross Profit 700 54500 54500 Rent 6000 Gross Profit 700 Utilities 2200 Discount 800 received Wages 2800 Commission 200 received Discount allowed 000 Interest expense 450 Carriage outwards 750 Net Profit 5900 900 900 3
Bryan Co Balance Sheet as at 3 December 200 Fixed Assets $ $ $ Owner's Equity $ $ Office Equipment 3,000 Balance.7.09 2300 Motor Vehicle 2,500 24,500 Add:Net Profit 5900 OF 27200 Less:Drawings 000 Balance 30.6.0 26200 Current assets Stock 7200 Long Term Liabilities Debtors 5200 2400 Loan from bank 5000 4 Current Liabilities Creditors 4500 Bank overdraft 200 5700 36,900 36,900 4
$ $ Opening Stock [0.5] 8700 Sales [0.5] 87500 Purchases (5250-350) 50900 Less: Returns Inwards 200 Add: Carriage on Purchases 600 [0.5] 87300 Repackaging Wages 200 53600 Less Returns Outwards 450 5350 Cost of Goods Available for Sale 6850 Less Closing Stock 7250 Cost of Goods Sold 54600 Gross Profit c/d 32700 Dean Trading and Profit and Loss Account for the year ended 30 April 20 87300 87300 Salaries (3/4x8400) 6300 Gross Profit b/d 32700 Carriage on Sales [0.5] 270 Commission Received [0.5] 770 Rental Expense [0.5] 3800 General Expense (90-20) 700 Discount Allowed [0.5] 720 Interest Expense (5%x5000) 250 Advertising [0.5] 2200 5240 Net Profit 8230 33470 33470 [4] Dean Balance Sheet as at 30 April 20 $ $ Fixed Assets Owner's Equity Premises [0.5] 20000 Capital, May 200 [0.5] 5000 Motor Vehicles [0.5] 5000 Add Net Profit [0.5] 8230 35000 Additional Capital 5000 38230 Current Assets Less Drawings [.5] 240 Stock 7250 Capital, 30 Apr 20 [0.5] 36090 Debtors 6570 Cash [0.5] 860 Long-term Liabilities Bank Loan 4680 5000 Current Liabilities Creditors [0.5] 5840 Bank Overdraft 2750 (2500+250) 8590 49680 49680 [0] (c) Net Realisable Value of the stock is the market value of the stock after deducting any expenses that may be incurred in the selling process. (d) Stock are valued based on the lower amount between the Cost and the Net Realizable Value. This is in compliance with the Prudence Concept, which states that businesses should not over-state its profits or assets. (e)(i) NO, I disagree. Computer purchased for the office staff to use should be recorded as fixed assets since they are can benefit the business for more than acounting period and not meant for resale. (e)(ii) Profit will decrease. [Total: 30] 5
5. Item Gross Profit Net Profit Increase ($) Decrease ($) Increase ($) Decrease ($) (b) 200 200 (c) No effect 70 (d) No effect No effect (e) 00 00 (f) No effect 80 (g) No effect 50 6
6. a) Debtor b) Creditor cii) Goods of $700 were returned from Thila. 2 ciii) Received $2 000 cheque from Thila. 2 civ) Purchased $2 500 goods on credit from Raja 2 cv) Goods of $450 were returned to Raja. 2 cvi) Paid $ 600 cheque to Raja. 2 d) Net goods sold = 5000-700 = $4 300 Net goods purchased = 2 500-450 = $2 050 e) Debtor Thila 20 $ 20 $ Mar 5 Sales 5000 Mar 0 Returns 700 0.5 inwards 0.5 6 Bank 2000 0.5 3 Bal c/d 2300 5000 5000 0.5 Apr Bal b/d 2300 f) Creditor Raja 20 $ 20 $ Mar 6 Returns 450 Mar 3 Purchases 2500 0.5 outwards 0.5 0.5 0 Bank 600 3 Bal c/d 450 2500 2500 Apr Bal b/d 450 0.5 7
Q3 Updated Cashbook 20 20 Oct 3 Balance b/d 9,000 Oct 3 Insurance expense 200 3 Credit Transfer - Matthew 400 3 Bank charges 20 3 Interest revenue 00 3 Balance c/d 9,280 9,500 9,500 Nov Balance b/d 9,280 [6] Bank Reconciliation Statement as at 3 October 20 Balance as per updated cashbook 9,280 Less : Uncredited cheques / deposits Paul (,500) Keith (2,500) John (2,000) 3,280 Add : Unpresented cheques / deposits Meck Supplies 4,200 Tom,200 8,680 [8] 20 Mar 3 Bal b/d Interest Rec d Updated Cash Book (Bank Columns only) $ $ 20 Mar 3,320 50 Insurance Melvin (Dishonoured cheque) Bal c/d 50 20,00,370,370 Apr Bal b/d,00 Question 5(b): Adjusted cash Book Balance Add Unpresented Cheques: Joseph Less Uncredited Deposits: Liqing Bank Statement Balance Bank Reconciliation Statement as at 3 Mar 20 $ 00 280 380 350 030 (a) To reconcile the difference between the Cash Book and the Bank Statement. 8
Q2a Cash book [0.5] Date Particulars DA Cash Bank Date Particulars DR Cash Bank [0.5] 20 20 Apr Balance b/d 3,540 7,080 Apr 5 Cash,020 [0.5] [0.5] 3 Sales 2,990 5 Rent 6,000 [0.5] [0.5] 5 Bank,020 7 Drawings 3,200 [0.5] 0 Debtor: Mars Trading 00,500 23 Debtor: Mars Trading,500 [0.5] [0.5] 2 Commission revenue 800 25 Bank,00 [0.5] [0.5] 9 Interest revenue 240 27 Advertising expense 2,600 [0.5] 22 Debtor: Venus Trading 250 4,750 29 Wages expense 500 [0.5] [0.5] 25 Cash,00 30 Bank 2,000 [0.5] [0.5] 30 Cash 2,000 30 Balance c/d 300 6,800 3,00,920 3,00,920 May Balance b/d 300 6,800 [2] Q2b A cash discount is given to encourage prompt payment. Q2c There was insufficient funds in Mars Trading's bank account. 2 (a) Explain what is meant by the double-entry principle. The double-entry principle states that every transaction has a debit and credit entry [m] of an equal amount [m]. (b). Date Source document Book of prime entry Account debited Account credited Apr 4 Invoice Purchases Purchases JJ Publishing Journal Apr 0 Invoice Sales Journal CSS Library Sales 9
(c) Apr 2 Credit note Sales Returns/ Returns Inwards Journal Sales Returns/ Returns Inwards CSS Library ½m per correct answer [6] GENERAL JOURNAL 20 Dr $ Cr $ Apr Motor vehicles [½m] [½m] [½m] Loan from Manibank Capital Assets and liabilities contributed by owner to commence business [½m] 57 800 4 000 43 800 3 Office furniture [m] [m] Goody Woody Purchase of office furniture on credit [½m] 7 200 7 200 29 Drawings [m] [m] Purchases Goods taken by owner for personal use [½m] 50 50
[7] (d) Distinguish between cash and credit transactions. A cash transaction is one where immediate payment is made. A credit transaction is one where payment is delayed to a later date. [Total: 7] a) General Journal Debit Credit 200 $ $ (i) June 5 Dr Motor Vehicle 4,000 Cr Capital 4,000 (ii) June 9 Dr Bank Dr Discount Allowed,800 200 Cr Debtor Robin 2,000 (iii) June 23 Dr Utilities 200 Cr Bank 200 (iv) June 30 Dr Bank / Cash at Bank,000 Cr Cash / Cash on Hand,000 b)
Date Particulars Debit Credit 200 $ $ a) May 23 Dr Debtor Betty 800 Cr Office Equipment 800 Being surplus office equipment sold to Betty on credit b) Aug 5 Dr Drawings 300 Cr Cash 300 Being cash withdrawn for personal use c) Oct 7 Dr Bank,500 Cr Capital,500 Being proceeds from the sales of personal stocks banked in a) A cash transaction involves the exchange of goods and cash at the same time (at the point of transaction) but a credit transaction involves only the goods given or received at the point of transaction, with the cash paid or received on a later date. b) Transaction Effect on Asset Liability Owner s Equity
(i) Bought furniture worth $5,000 using cheque Office Furniture +$5,000 Bank - $5,000 (ii) Sold goods to Jenny at $,200 and received cash Cash +$,200 Sales +$,200 (iii) Bought goods at $2,000 from Roger on credit *Stock +$2,000 Creditor Roger +$2,000 (iv) Withdrew goods worth $600 for his wife *Stock -$600 Drawings -$600 (v) Accepted debt settlement from Cass - a computer worth $500 and the remaining $700 received in cash Office Equipment +$500 Cash +$700 Debtor Cass -$,200 [Total: marks] 2. Transactions Books of Original Entry Source Documents (a) Credit Sales $2 000 Sales Journal Sales Invoice Invoice issued (b) Purchases Returns $500 Purchases Returns Journal Credit note received (c) Purchase of furniture $3 000 on credit General Journal Invoice received
(d) $ 000 cheque received from debtor Cash Book Receipt issued (e) Payment of postage $3 (f) Cash Purchases $650 Petty Cash Book Cash Book Petty Cash Voucher Receipt received 3a) General Journal Error Particulars Debit ($) Credit($) (i) Repair 200 Motor Vehicle 200 (ii) Rent 500 Bank 500 (iii) Bank 860 Interest Received 860 (iv) Returns Outwards 80 Mavis 80 (v) Mitchel 200 Purchases 200 Michelle 200 Sales 200 3(b) (i) (ii) (iii) (iv) Error of Principle Error of Omission Error of Reversal of Entries Error of Original Entry
4 (a) Jenny Cash Book (Bank columns) 2006 $ 2006 $ Sep 30 Bal b/d (unadjusted) 270 Sep 30 Error in cheque 90 000 Cash 800 Insurance 08 Dividends 400 Bank charges 9 Bal c/d (adjusted) 353 2470 2470 Oct Bal b/d (adjusted) 353 4B (b) Jenny Bank Reconciliation Statement as at 30 Sep 2006 $ Bal as per Bank Statement 803 Add Uncredited deposits 00 590 690 493 Less Unpresented cheque 40 Bal as per Cash Book (adjusted) 353 4B (c) Current Assets: Cash at Bank $353
5(a) & (b) Book of Michael Trading and Profit & Loss Accounts Dr. for the half year ended 30 June 2005 [½] Cr. $ $ $ $ Opening Stock [½] 7000 Sales [½] 64500 Purchases [½] 4800 Less: Returns Inwards [½] 300 add: Duty on Purchases [½] 400 64200 42200 Cost of goods available for sale[½] 49200 less: Closing Stock [½] 9000 Cost of goods sold [½] 40200 Gross Profit c/d [½] 24000 64200 64200 Carriage Outwards [½] 400 Gross Profit b/d [½] 24000 Office Expenses [½] 2000 Interest Received [½] 500 Stationery [½] 700 Commission Received [½] 800 Wages [½] 4200 Net Profit [½] 9000 27300 27300 ST: [ 9m ] Balance Sheet as at 30 June 2005 [½] Fixed Assets [½] $ $ Owner's Equity [½] $ $ Premises [½] 50000 Capital, Jan '05 [½] 44200 Motor Vehicles [½] 4000 Add: Net Profit [½] 9000 Fixtures and Fittings [½] 8000 63200 72000 Less: Drawings [½] 000 Capital, 30 Jun '05 62200 Current Assets [½] Stock [½] 9000 Long Term Liability [½] Debtors [½] 500 Mortgage on Premises [½] 5000 Cash [½] 300 ST of BS : 9 BS Total : Sub-Heading Total :4 items @ ½ m each = 2 Total of (c) = [2m] 4400 Current Liabilities [½] Creditors [½] 6900 Bank overdraft [½] 2300 9200 86400 86400
6. Debtor, Aliston Date Particulars $ Date Particulars $ 2007 2007 Sep Bal b/d 4 340 Sep 5 Bank 000 2 Sales 950 2 Returns Inwards 225 23 Bank/Cash 2 340 Discount Allowed 60 30 Bal c/d 2 565 6 290 6 290 Oct Bal b/d 2 565 [7] [m each for all items; closing bal c/d and b/d are treated as one item] Creditor, Kang AH Date Particulars $ Date Particulars $ 2007 Sep 9 Bank/Cash 805 Sep Bal b/d 900 Discount Received 95 2 Purchases 200 30 Bal c/d 380 29 Purchases (Debit Note) 80 3 280 3 280 Oct Bal b/d 380 [5] [m each for transactions on Sep 9, 2, 29 and m each for opening bal and closing ba] 7. Solutions (a) Trading, Profit and Loss Account for the year ended 30 June 2007 $ $ $ $ Opening Stock 3 755 Sales 30 000 Purchases Less Returns Inwards 250 (5 655 200) 5 455 28 750 Less Returns Outwards 750 3 705 Insurance on imported Goods 500 7 960
Less Closing Stock 4 000 Cost of Goods Sold 3 960 Gross Profit 4 790 28 750 28 750 Discounts Allowed 03 Gross Profit 4 790 Carriage Outwards 460 Discounts Received 0 Insurance (2755 500) 2 255 Interest on Fixed Sundry Expenses 790 Deposit 35 Wages 6 000 Net Profit 5 607 5 25 5 25 (b) Balance Sheet as at 30 June 2007 $ $ $ $ Fixed Assets Owner s Equity Fixtures and Fittings 5 940 Capital 5 430 Add Net Profit 5 607 Current Assets 2 037 Stock 4 000 Less Drawings 3 00 Debtors 8 700 7 937 Fixed Deposit 5 000 Cash 2 057 Long-term Liabilities 9 757 Bank Loan 0 000 Current Liabilities Bank Overdraft 260 Creditors 7 500 7 760 35 697 35 697 (c) A trial balance is prepared to check the mathematical accuracy of the debits and credits in the ledger. It also facilitates the preparation of final accounts and balance sheet as it is a complete listing of all account balances.