N. Moss commenced business on 1 May 20X0 with a capital of £5,000 of which £1,000 was in cash and £4,000 was in a bank current/cheque account. Her transactions during May were as follows:
1 May Borrowed £2,000 from Birmingham Bank Ltd. The funds were transferred to the business bank account
2 May Paid rent of £750 by standing order
5 May Paid wages of £120 in cash
8 May Purchased goods for £1,380 by debit card
10 May Sold goods for £650 cash
12 May Withdrew £200 in cash for personal use
15 May Bought goods on credit for £830 from S. Oak
18 May Sold goods on credit for £1,250 to K. Heath
20 May Bought shop fittings of £2,500 by debit card
23 May Paid water rates of £325 in cash
25 May Paid gas bill of £230 by standing order
27 May Returned goods costing £310 to S. Oak
28 May K. Heath returned goods with an invoice value of £480
29 May N. Moss introduced further capital by bank transfer: £3,000
30 May Bought stationery of £90 in cash
31 May Transferred £300 to S. Oak’s bank account
31 May Received a cheque for £500 from K. Heath.
You are required to show the above transactions in the ledger (use T accounts).
> The following figures relating to the year ended 31 March 20X9 have been extracted from the books of a manufacturer: The balances on the control accounts, as shown above, have been included in the trial balance and in this trial balance the total of th
> The bank statement for G. Graduate for the period ended 30 June 20X9 was received. On investigation it emerged that the balance per the statement was different to the balance per the cash book. The cash book showed a debit balance of £5,944. On examinati
> The statement of financial position and statement of performance of Faults Ltd show the following two items: However, the balance as shown on the bank statement does not agree with the balance as shown in the cash book. Your investigation of this matte
> A young and inexperienced bookkeeper is having great difficulty in producing a bank reconciliation statement at 31 December. He gives you his attempt to produce a summarized cash book, and also the bank statement received for the month of December. These
> The following is a summary from the cash book of Hozy Co. Ltd for October 20X9: On investigation you discover that: 1. Bank charges of £35 shown on the bank statement have not been entered in the cash book. 2. A direct debit payment for &A
> Who do you think the stakeholders (users) of financial statement might be?
> The following is the cash book of T. Trading for the month of September 20X9: The following is the bank statement received for T. Trading for the month of September 20X9: Required Prepare the bank reconciliation as at 30 September 20X9.
> David Greene, the bookkeeper for Botanic, a wholesale distributor of garden equipment, prepares accounts without the aid of a computerized accounting system. He carries out a bank reconciliation on a monthly basis. The details of the cash book for Decemb
> The following is an extract of the cash book for J. Robin: The bank statement of J. Robin in the account with the Bank of ABC is as follows: Required a. Complete the cash book and prepare the bank reconciliation as at 31 July 20X9.
> Catherine Big has a cash balance of £52,900 on 1 June 20X9. She opens a current account on that date, with Belfast Bank, depositing £50,000. Her transactions during the next three days included the following: 1 June â€
> F. Harrison is in business as a trader. A trial balance taken out as at 31 January 20X9 was as follows: The following information is to be taken into account: 1. Included in sales are goods on sale or return that cost £240 and which have b
> S. Trader carries on a merchandising business. The following balances have been extracted from his books on 30 September 20X9: The following further information is to be taken into account: 1. Inventories on hand on 30 September 20X9 were valued at &Ac
> The following trial balance has been extracted from the ledger of Andrea Howell, a sole trader, as at 31 May 20X9, the end of her most recent financial year. The following additional information as at 31 May 20X9 is available: 1. Inventories as at the
> The following trial balance has been prepared from the books and records of Sulphur Products as at 30 September 20X9. We are also told that the figures have to be amended to take into account further adjustments (see below). Additional information 1. A
> The balances extracted from the books of Cara Van at 31 December 20X9 are given below: Required a. Prepare the trial balance. b. What is the missing account? Additional information At 31 December 20X9: 1. Inventories are valued at £33,990
> B. Good drew up the following trial balance as at 31 March 20X9. Closing information included the following: 1. Inventories at the year-end were valued at £35,650. 2. An accrual for wages of £400 has still to be posted. 3. The
> What do you think is the objective of financial statements?
> The trial balance extracted from the books of Mary, a sole trader, as at 31 December 20X9 was as follows: Additional information 1. Inventory on hand on 31 December 20X9 is £94,280. 2. Rates paid in advance at 31 December 20X9 are Â&
> The trial balance for Jock at 31 December 20X8 is as follows: Additional information 1. Closing inventory value is £500. 2. The rates in the trial balance cover the 15 months to 31 March 20X9. 3. The motor car is depreciated using 20 per c
> After stocktaking for the year ended 31 May 20X9 had taken place, the closing inventory of Cobden Ltd was aggregated to a figure of £87,612. During the course of the audit that followed, the under-noted facts were discovered: 1. Some goods stored outside
> On 1 April 20X8 Modern Dwellings Ltd commenced business as builders and contractors. It spent £14,000 on the purchase of six acres of land with the intention of dividing the land into plots and building 72 houses thereon. During the year end
> S. Bullock, a farmer, makes up his financial statements to 31 March each year. The trial balance extracted from his books as at 31 March 20X9 was as follows: Included in the above-mentioned figure of £50 is £15 for rent and t
> Your company sells, for £275 each unit, a product that it purchases from several different manufacturers, all charging different prices. The manufacturers deliver at the beginning of each week throughout each month. The following details rel
> Brian Ltd starts selling footballs in 20X8. Although each ball looks the same, the unit cost of manufacture (which is done in batches) has fluctuated during the period. Details of the costs are as follows: Details of sales are as follows: The closing
> John Ltd starts selling mobile phones in 20X9. Details of purchases in the year are as follows: Details of sales in the year are as follows: Required a. Calculate the cost of sales for the year ended 31 December 20X9 and detail the value of the closi
> Anna started a picture framing business on 1 July 20X9. The following transactions occurred in the six months ended 31 December 20X9: Additional information 1. On 1 July 20X9 Anna started the business by putting £10,000 into the bank accou
> The balances on certain accounts of Foster Hardware Co. as at 1 April 20X8 were: Required Post and balance the appropriate accounts for the year ended 31 March 20X9, deriving the transfer entries to the statement of performance where applicable.
> Why are financial statements prepared by companies?
> The company’s year-end is 31 December 20X9. Prepare ledger accounts for the following accounts showing the adjustments that are necessary for the year-end accruals and prepayments and the balances that would appear in the financial statements. a. The ope
> a. Stationery: During the year to 31 December 20X9 £1,300 was paid in respect of stationery. The amount owing at 31 December 20X8 was £140 and the amount owing at 31 December 20X9 was £200. b. Rent: Kristal received rent of £3,000 during the year ended 3
> a. Commission: received in advance at the start of the current year £50; received in the current year £5,600; receivable at the current year end £250. b. Rates: paid in the current year £950; prepaid at the start of the current year £220; prepaid at the
> Munch Catering Ltd, whose financial year runs from 1 December to the following 30 November, maintains a ‘Building occupancy costs’ account in its general ledger. This account is used to record all payments in respect o
> Oriel Ltd, whose financial year runs from 1 June to the following 31 May, maintains a combined rent and rates account in its ledger. Rent is fixed on a calendar year basis and is payable quarterly in advance. Rent was £2,400 for the year end
> Bush, a sole trader, commenced trading on 1 January 20X9. a. Telephone expense details The quarterly rental payable in advance on 1 January, 1 April, 1 July and 1 October is £30. Telephone calls are payable in arrears: January to March 20X9
> The trial balance of Snodgrass, a sole trader, at 1 January 20X9 is as follows: The following information is given for the year: At 31 December 20X9 the following balances are given: Required Prepare a statement of performance for the year, and a s
> The financial statements for the year ended 30 November 20X8 of Springboard Ltd included an allowance for irrecoverable debts at that date of £900. During the year ended 30 November 20X9, the company received £500 from Peter Lyo
> YEAR 1 1. The balance on trade receivables at the year-end is £110,000. 2. Two of the balances in the sales ledger have to be written off. One is £4,500, the other is £5,500. 3. The company is to provide 5 per cent for an allowance for irrecoverable debt
> Because of the doubtful nature of some debts, P. Rudent instructed his accountants to make a specific allowance in the financial statements for the year ended 30 June 20X8 against the following debts: He also instructed that a general allowance of 5 pe
> Enter the following transactions in the books of ‘Seamus McKee’ for November (use T accounts). 1 Nov Started business with £10,000 in the bank 2 Nov Paid for advertising by debit card: £130 3 Nov Paid for stationery by debit card: £50 5 Nov Bought goods
> The statement of financial position as at 31 December 20X8 of Zoom Products Ltd included: The financial statements for the year ended 31 December 20X8 included an allowance for irrecoverable debts at 31 December 20X8 of 3 per cent of the balance outsta
> The following transactions are to be recorded. At the beginning of year 1 an allowance for irrecoverable debts account is to be opened. It should show an allowance of 2 per cent against trade receivables of £50,000. During the year irrecoverable debts of
> The statement of financial position of Beta Ltd as at 30 June 20X8 shows motor vehicles as follows: Vehicles are depreciated on the straight line basis over a five-year life. Depreciation is charged pro rata to time in the year of acquisition but no ch
> Makers and Co. is a partnership with a small factory on the outskirts of London. They decide to erect an extension to their factory. The following items appear in the trial balance of the firm, as at 31 December 20X9: In the course of your examination
> Pusher commenced business on 1 January 20X7 with two lorries – A and B. A cost £1,000 and B cost £1,600. On 3 March 20X8, A was written off in an accident and Pusher received £750 from the insurance company. This vehicle was replaced on 10 March 20X8 by
> An item of plant and machinery was sold within the year for £5,000. The asset cost the company £10,000 over two years ago. The balances on the cost account and accumulated depreciation account were £118,000 and £18,000. It is company policy to provide fo
> Plant was purchased in the year for £10,000. It has been decided to provide for depreciation on a reducing balance basis (25 per cent). A full year’s depreciation is charged in the year of purchase. Required a. Show the entries in the ledgers for the fi
> On 31 December 20X9, plant and machinery acquired at a cost of £200,000 in 20X6 was sold for £30,000. The accumulated depreciation to date was £130,000. Required Calculate the profit or loss on disposal (show all ledger account entries).
> You bought a lorry for £5,000. Its useful life is estimated at four years. The residual value is expected to be £1,000 after the four years. Required Calculate the depreciation charge for each of the four years using the straight line, reducing balance
> On 31 December 20X9, the trial balance of Joytoys showed the following chart of accounts and balances: Additional information 1. The inventory at 31 December 20X9 was valued at £19,500. 2. The bank loan is repayable in five yearsâ
> Extract the statement of profit or loss for the year ended 31 December 20X9 for M. McKee and the statement of financial position as at 31 December 20X9 from the following. Additional information Inventory at the year-end was £11,000.
> Balances on the main inventory accounts are as follows: The closing inventory count reveals inventory of £1,500. Required Determine the gross profit.
> A company has 100 units in inventory at the start of the year valued at £1,000. During the year it purchases a further 500 units for £5,000 and sells 400 units for £8,000. Required a. What is the quantity and value of the closing inventories? b. What is
> The balances extracted from the books of G. Ryan at 31 December 20X9 are given below: Additional information At 31 December 20X9 inventory was valued at £33,990. Required a. Post the following transactions. G. Ryan purchased £
> B. Good drew up the following trial balance as at 31 March 20X9. Additional information Inventory at the year-end was £35,650. B. Good made the following transactions. 1. Cash sales of £1,500 and credit sales of £
> The following is the trial balance of J. Peters as at 30 September 20X9: Additional information 1. The inventory at 30 September 20X9 was valued at £4,580. 2. The loan from A. Drew is repayable on 1 January 20Y5. Required Prepare a statem
> The following information is an extension to Question 11.4 in Chapter 11. a. Enter the following transactions using a three-column cash book. The following cash transactions happened in November: 9 Nov Cash paid to: Veronica by A. Adair £900, S. Ruddle £
> London Printing Co. has an opening balance on its cash account on 1 January of £20.00. On the first of each month £100 is withdrawn from the bank to cover that month’s potential petty cash requirements. The sec
> Belfast cleaning company operates its petty cash account using an imprest system. It is maintained at a figure of £100 on the first day of each month. At 31 December 20X8 £21.48 was held in the petty cash box. During January 20X
> The Oakhill Printing Co. Ltd operates its petty cash account on the imprest system. It is maintained at a figure of £80 on the first day of each month. At 30 April 20X9 the petty cash box held £19.37 in cash. During May 20X9, th
> Veronica Reichester owns a shop. The following transactions happened in November. 1 Nov Credit sales: C. Flanagan £456, S. Morgan £300, F. Hutchinson £645, A. Adair £987 2 Nov Credit purchases: N. Ward £123, F. Wood £465, S. Duffy £786, N. Hynd £56 5 Nov
> Enter the following transactions in ledger accounts of ABC (including a two-column cash book), balance off and extract the trial balance. 1 Jan ABC started business and put £1,000 in the business bank account 2Jan Bought £200 worth of inventory on credit
> The following information is an extension to Question 11.9 in Chapter 11. a. Enter the following transactions relating to the suppliers’ accounts in September using a three- column cash book: b. Make the necessary entries in the ledge
> The following information is an extension to Question 11.8 in Chapter 11: Required a. Make the necessary entries in the ledgers using your answers to Question 11.8 in Chapter 11. b. Close the suppliers’ accounts at 30 September.
> You are supplied with the following information in respect of B. Score’s transactions in September with its suppliers. The list of opening balances per the purchases ledger is as follows: The following are the transactions relating to
> You are provided with the following details about a company’s credit customers for the month of November. Balances in sales ledger Credit sales Sales returns Required You are required to update the sales ledger accounts (individua
> Close off the T accounts and prepare a trial balance from your answer to Question 9.7 in Chapter 9.
> Close off the T accounts and prepare a trial balance from your answer to Question 9.6 in Chapter 9.
> Close off the T accounts and prepare a trial balance from your answer to Question 9.5 in Chapter 9.
> a. Define a partnership. b. What are the legal limits on the number of partners? c. Outline the principal matters normally found in the articles or deed of partnership.
> Outline the differences between sole traders and partnerships.
> List the typical contents of an annual report for a public limited company.
> a. Briefly explain the nature of a qualitative characteristic of financial information. b. Prepare a diagram showing the qualitative characteristics of financial information and the relationship between each of them.
> What is the difference between solvency and liquidity?
> How does inflation affect ratio analysis?
> Explain the limitations of using accounting ratios in time-series analysis and inter-firm comparisons, giving examples where appropriate.
> a. Explain what is meant by capital gearing/leverage. b. Why might this influence a prospective investor’s decision concerning whether or not to buy equity shares in a company?
> Explain what each of the following is intended to measure: (a) dividend yield; (b) dividend cover; (c) earnings per share; (d) price–earnings ratio; and (e) return on equity.
> J. Ballantine has the following opening balances on her ledger accounts: The following transactions take place during the reporting period. 1. Bought desks for £500 by debit card 2. Paid wages of £2,000 by BACS 3. Lodged sales
> Examine the empirical evidence relating to the predictive ability of accounting ratios with regard to insolvency.
> Explain what each of the following is intended to measure: a. return on capital employed; b. profit margin; c. asset-turnover ratio; d. working capital and liquidity ratios; f. average period of credit taken by trade receivables; f. inventory turnover ra
> For many years, company financial statements consisted of a statement of financial position and a statement of profit or loss prepared using the accruals basis. Many also have to include a statement of cash flows. Required a. Explain why a statement of
> Explain the difference between the direct and indirect methods of ascertaining the ‘net cash inflow from operating activities’ shown in a statement of cash flows.
> Explain the purpose, uses and advantages of classified statements of cash flows prepared in accordance with IAS 7.
> List and describe the contents of the three headings/groups of items found in a statement of cash flows prepared in accordance with IAS 7.
> Explain the meaning of each of the following in the context of statements of cash flows: a. cash; b. cash equivalents.
> Explain how statements of cash flows differ from: (a) statements of profit or loss; and (b) statements of financial position.
> Describe the advantages and limitations of statements of cash flows.
> a. Explain the purpose(s) of a statement of cash flows. b. Describe the typical sources and applications of cash funds in an entity.
> The following is a list of balances in the general ledger of J. McKee at 30 June 20X9: Required a. Prepare a trial balance. b. The trial balance does not balance (on purpose). Which account is missing? How much is the balance on this account (the accou
> B. Jones is in business as a builders’ merchant. The following credit transactions took place during April 20X9: 1 Apr Bought goods on credit from Brick Ltd for £725 2 Apr Sold goods on credit to Oak Ltd for £410 4 Apr Bought goods costing £315 from Sto
> a. Explain with examples the nature of contingent assets and contingent liabilities. b. Describe the treatment of contingent assets and liabilities in published company financial statements.
> a. Explain with examples the nature of events after the reporting period. b. Describe the treatment of events after the reporting period in published company financial statements.
> a. Explain with examples the nature of prior period adjustments. b. Briefly describe the treatment of prior period adjustments in published company financial statements.
> a. Explain with examples the nature of exceptional items. b. Briefly describe the treatment of each of these items in published company financial statements.
> a. Explain the nature of acquisitions and discontinued operations. b. Briefly describe the treatment of each of these items in published company financial statements.
> Briefly explain the reason(s) for the separate disclosure of components of financial performance such as discontinued operations and exceptional items in published company financial statements.
> Explain the difference between a reserve and a provision.
> Explain the difference between revenue/distributable reserves and capital/non-distributable reserves, giving three examples of the latter.
> Set out below is the equity part of a company’s statement of financial position. Explain the purpose of each of the equity reserve accounts shown on this company’s statement of financial position.
> Explain with an example the difference between current liabilities, provisions and contingent liabilities.