Question: Smith and Tolhurst are in partnership, sharing

> The rate of progress in technology is so rapid that it is very difficult to predict exactly how new technology will affect accounting in the future. Can you suggest any developments in technology that could have a significant impact on accounting in the

> You may have no plans to become an accountant in the future. Why is it still important for you to study the basics of accounting, such as those covered in this book?

> Some students who want to train with an accountancy practice tend to focus exclusively on trying to get a job with one of the ‘Big Four’ (PwC, Deloitte, EY and KPMG) and ignore smaller accounting firms altogether. Required: (a) What do you think are the

> In this chapter you’ve learnt about some specific roles and areas of accountancy, such as ‘financial controller’ or ‘tax adviser’. Can you suggest any other particular areas of accounting in which you can specialise?

> For simplicity and convenience, this chapter discusses accountants as working ‘in practice’, ‘in industry’ or ‘in the public sector’. However, some organisations might not fall neatly into one of these three categories but will still require accounting s

> There is now growing disapproval from some sections of the public of the elaborate tax planning arrangements that tax advisers at some accounting firms have recommended to their clients. These arrangements may be entirely legal but are often highly compl

> There have been several high-profile scandals in accounting in recent times, which have contributed to the raised profile of ethics and integrity in accounting. The details of many of these scandals might be difficult to understand at this stage in your

> You are given summarised information about two firms in the same line of business, A and B, as follows. Required: (a) Produce a table of eight ratios calculated for both businesses. (b) Write a report briefly outlining the strengths and weaknesses of th

> Yaso is in business buying and selling goods on credit. He is concerned that although his business is making a good profit, his balance at the bank is not increasing. The following information is available: 1. At 1 September 2022, the bank balance was &A

> Alistair is concerned about the performance of his business. He has decided to assess the performance using ratio analysis. He is able to provide the following information extracted from his income statement for the year ended 30 April 2018 in order to c

> Write up the accounts to record the following transactions: May 1 Started business with £1,500 cash and £18,000 in the bank. 2 Received a loan of £4,000 from T. fox by cheque. 3 Bought a computer for cash £1,200. 5 Bought display stands on time from Drop

> Laura has recently inherited £50,000 and has been investigating the possibility of buying shares as an investment. She is, initially, looking to maximise her income. She has researched two companies and has provided the following information

> Study the following financial statements of two companies and then answer the questions which follow. Both companies are wholesalers of household products. The values shown are in £000s. Required: (a) Calculate the following ratios for both

> Darius Lowe gives you the following information as at 31 March 2024: Inventory 1 April 2023 ……… 12,000£ Purchases …………………………. 72,000 His mark-up is 40% on ‘cost of goods sold’. His average inventory during the year was £14,000. Draw up an income statemen

> Arthur deals in bicycles. His business position at 1 October was as follows: Capital £3,369 Inventory £306 (3 x Model A bicycles @ £54 and 3 x Model B @ £48) Balance at bank £3,063 Having established good relations with his supplier he is able to obtain

> Trading Account for the year ending 31 December 2019 R. Sheldon presents you with the trading account set out above. Author’s note He always calculates his selling price by adding 33 1/3% of cost on to the cost price. (a) If he has adh

> The following figures relate to the retail business of Daisy King for the month of July. Goods sold fall into two categories, X and Y. You are to calculate for each category of goods: (a) Cost of goods sold. (b) Gross profit. (c) Total expenses. (d) Net

> The following details are provided to you regarding Southwall Ltd: (i) The company reported an operating profit of £432,000 for the year ended 31 December 2024. (ii) The depreciation expense for 2024 was £79,000. (iii) Extracts

> As at 31 May 2024 and 31 May 2023, Dendry Ltd had the following balance sheets: The company’s income statement for the year ended 31 May 2024 was as follows: Note also the following additional information: (i) The operating profit sho

> The balance sheets of Banton Ltd as at 31 August 2024 and 31 August 2023 are shown below: You are also given the income statement of Banton Ltd for the year ended 31 August 2024: Further information is given below: (i) There were no amounts outstanding

> Wilton Felder Ltd is finalising its financial statements for the year ended 31 October 2024. You are presented with the following information: Additional information: (i) There were no amounts outstanding in relation to interest payable or receivable as

> J. Hill has the following assets and liabilities on 30 November 2019: Trade payables £2,800; Equipment £6,200; Motor vehicle £7,300; Inventory £8,100; Trade receivables £4,050; Cash at bank £9,100; Cash in hand £195. You are not given the capital amount

> At 30 November 2023, Wandigo Ltd had the following capital structure: Share capital (500,000 ordinary shares of 25p each) ……… 125,000£ Share premium account ………………………………………………… 376,000 In January 2024, the company made a 1-for-4 rights issue at a price o

> You establish the following details in connection with the property, plant & equipment of Snoding Ltd for the year ended 30 June 2024: Carrying amount as at 1 July 2023 ……………………………………………………… 366,000£ Purchases of property, plant and equipment during the

> You are presented with the trial balance of Finnax Ltd at 30 November 2025 below: You are also provided with the following additional information: (i) Inventory at 30 November 2025 was counted and valued at a cost of £399,000. (ii) Towards

> The following information concerns Zarman plc in relation to its year ended 30 April 2024: The following additional information is relevant: (i) The inventory was counted at 30 April 2024 and was valued at a cost of £55,820. (ii) Depreciati

> The following information regarding Mashra Ltd relates to its year ended 30 June 2024: Trial balance as at 30 June 2024: Additional information: (i) The inventory was counted at 30 June 2024 and was valued at a cost of £44,767. (ii) Depreci

> The following details concern Oshada plc in connection with its financial year ended 31 March 2024: Note the following additional information: (i) Inventory at the year end was counted and valued at a cost of £38,319. (ii) Depreciation is t

> The trial balance below represents a summary of the balances on the nominal ledger of Banega Ltd (a wholesaler of hats and headwear) as at 31 December 2024: The following issues also need to be dealt with in preparing the financial statements: (i) The f

> The following trial balance has been extracted from the nominal ledger of Epicteta Ltd on 31 July 2024: In addition to the above trial balance, you are given the following information: (i) Closing inventory at 31 July 2024 was valued at a cost of &Acirc

> Minellan Ltd has extracted the following trial balance from its nominal ledger as at 31 March 2024: Additional information: (i) Inventory at 31 March 2024 was counted and valued at a cost of £181,000. Included in this figure, at a cost of &

> The following balances have been taken from the nominal ledger of Pandar plc as at 31 December 2024: The following points also need to be considered before preparation of the financial statements: (i) After producing the above trial balance, the followi

> Write up the following transactions in the T-accounts of F. Fernandes: Feb 1 Started in business with £11,000 in the bank and £1,600 cash. 2 Bought goods on time: J. Biggs £830; D. Martin £610; P. Lot £590. 3 Bought goods for cash £370. 4 Paid rent in ca

> As at 31 December 2023, Pointor plc had £400,000 6% loan notes in issue, interest being paid in two annual instalments on 31 March and 30 September each year. On 31 August 2024, the company then redeemed £300,000 of these loan notes at par, paying the in

> On 31 January 2023, the equity section of the balance sheet of Depper plc was as follows: . During the year ended 31 January 2024, the company: . Made a 1 for 6 bonus issue of shares, making use of the share premium account . Reported a final profit for

> (a) The share capital of Fogarino Ltd consists of 250,000 fully-paid ordinary (or ‘equity’) shares of 10 pence each, all of which were issued at a premium of 30 pence per share. The current market value of the company’s shares is 95 pence each. What is t

> The equity section of the balance sheet of Halmera Ltd as at 31 March 2023 was as follows: During the year ended 31 March 2024, the following events took place: (i) A 1-for-3 rights issue of ordinary shares was made in May 2023 at a price of Â&pou

> The following trial balance has been extracted from the books of Gain and Main as at 31 March 2022; Gain and Main are in partnership sharing profits and losses in the ratio 3 to 2: In appropriating the net profit for the year, it has been agreed that Ma

> Proudie, Slope and Thorne were in partnership sharing profits and losses in the ratio 3 : 1 : 1. The draft balance sheet of the partnership as at 31 May 2019 is shown below: Additional information: 1. Proudie decided to retire on 31 May 2019. However, S

> A, B and C are partners sharing profits and losses in the ratio 2 : 2 : 1. The balance sheet of the partnership as at 30 September 2020 was as follows: The partners agreed to dispose of the business to CNO Limited with effect from 1 October 2020 under t

> The balance sheet of A. Barnes and C. Darwin at 31 March 2022 is as follows: The partners share profits and losses: Barnes three-fifths and Darwin two-fifths. At the date of the above balance sheet, it was agreed to admit E. Fox who was to bring cash of

> Fitch and Wall have been in partnership for many years sharing profits and losses in the ratio 5:3 respectively. The following was their balance sheet as at 31 December 2023: On 1 January 2024, they decided to admit Home as a partner on the condition th

> Blunt, Dodds and Fuller are in partnership. They shared profits in the ratio 1:3:2. It is decided to admit Baxter. It is agreed that goodwill is worth £60,000, but that this is not to be brought into the business records. Baxter will bring &

> Complete the columns to show the effects of the following transactions:

> Abel, Burt, Cole and Dodds are in partnership. They are to change their profit ratios as shown: They decide to bring in a goodwill amount of £72,000 on the change. The last balance sheet before any element of goodwill has been introduced wa

> George, Henry and Lee are partners. They share profits and losses in the ratios of 5:3:2 respectively. For the year ending 31 December 2024 their capital accounts remained fixed at the following amounts: George ………. 120,000£ Henry …………… 80,000 Lee ………………

> Bush, Home and Wilson share profits and losses in the ratios 4:1:3 respectively. Their trial balance as at 30 April 2020 was as follows: Draw up a set of financial statements for the year ending 30 April 2020. The following notes are relevant at 30 Apri

> Scot and Joplin are in partnership. They share profits in the ratio: Scot 70 per cent; Joplin 30 per cent. The following trial balance was extracted as at 31 December 2020: The following notes are applicable at 31 December 2020: (a) Inventory, 31 Decemb

> A and B are in partnership sharing profits and losses 3:2. Under the terms of the partnership agreement, the partners are entitled to interest on capital at 5 per cent per annum and B is entitled to a salary of £4,500. Interest is charged on drawings at

> Draw up a profit and loss appropriation account for Cole, Knox and Lamb for the year ending 31 December 2024, and a balance sheet extract at that date, from the following: (i) Net profits £184,800. (ii) Interest to be charged on capitals: Cole £3,600; Kn

> Rock, Hill and Pine enter into a joint venture for dealing in paintings. The following transactions took place: 2024 May 1 Rock rented a shop paying three months’ rent £2,100. 3 Hill bought a van for £2,200. 5 Hill bought paintings for £8,000. 17 Pine re

> Frank entered into a joint venture with Graham for the purchase and sale of robot mowers. They agreed that profits and losses should be shared equally. The following transactions took place: (a) Frank purchased mowers for £120,400 and paid carriage £320.

> The following trial balance of the Grampian Golf Club was extracted from the books as on 31 December 2019: Notes: (i) Bar purchases and sales were on a cash basis. Bar inventory at 31 December 2019 was valued at £12,820. (ii) Subscriptions

> Complete the following table:

> The treasurer of the Plumpton Leisure Centre has produced the following receipts and payments account for the year ended 31 December 2020: Notes: (i) Refreshment inventory was valued: 31 December 2019 £680; 31 December 2020 £92

> You are given the following details in connection with the non-current assets of Roy Snell’s business for the year ended 31 July 2023: 1 August 2022, non-current assets at cost minus accumulated depreciation ………. 777,000£ Acquisitions of non-current asse

> Martin Petty is in the process of preparing a statement of cash flows for his business for the year to 30 April 2023. You establish the following facts in connection with that financial year: Net profit for the year ………………………….. 429,000£ Depreciation exp

> The balance sheets of Wendy Langmore’s business as at the end of its two most recent financial years are given to you below: (i) In December 2022, a delivery van was purchased for £18,950, paid for immediately by bank tran

> The balance sheets of Ruth Byrde’s business as at the end of its two most recent financial years are presented below: There were no acquisitions of non-current assets during the year ended 31 October 2024, but a delivery van that had a

> B. Barnes is a dealer who has not kept proper books of account. At 31 October 2019 his state of affairs was as follows: Cash ……………………………………………… 210£ Bank balance (not overdrawn) ……….. 4,700 Fixtures ………………………………………. 2,800 Inventory …………………………………… 18,200

> Using the information in Review question 27.13, prepare P. Maclaran’s balance sheet as at 31 December 2018. Review Question 27.13: The following are summaries of the cash book and bank accounts of P. Maclaran who does not keep her book

> The following are summaries of the cash book and bank accounts of P. Maclaran who does not keep her books using the double entry system. The following referred to 2018 The following additional information is available. You are required to: (a) Calcula

> Jean Smith, who retails wooden ornaments, has been so busy since she commenced business on 1 April 2018 that she has neglected to keep adequate accounting records. Jean’s opening capital consisted of her life savings of £15,000 which she used to open a b

> Bill Smithson runs a second-hand furniture business from a shop which he rents. He does not keep complete accounting records, but is able to provide you with the following information about his financial position at 1 April 2018: Inventory of furniture &

> Draw up Amy Banfield’s balance sheet as at 30 June 2024 from the following items: Capital ……………………. 22,960£ Equipment ………………… 11,660 Trade payables ………….… 6,390 Inventory …………….….….. 7,920 Trade receivables …..….… 9,400 Cash at bank ……………..…… 370

> Electronic spreadsheets (such as Microsoft Excel) are extensively used by accountants today and have been for decades. With reference to some of the various topics covered in this book, can you suggest some specific purposes for which accountants might u

> On January 1, Year 1, Poultry Processing Company purchased a freezer and related installation equipment for $42,000. The equipment had a three-year estimated life with a $3,000 salvage value. Straight- line depreciation was used. At the beginning of Year

> City Taxi Service purchased a new auto to use as a taxi on January 1, Year 1, for $36,000. In addition, City paid sales tax and title fees of $1,200 for the vehicle. The taxi is expected to have a five-year life and a salvage value of $4,000. Required a.

> The following trial balance was drawn from the accounts of Little Grocery Supplier (LGS) as of December 31, Year 2: Transactions for Year 3 1. Acquired additional $20,000 cash from the issue of common stock. 2. Purchased $85,000 of inventory on account.

> Joey’s Bike Shop sells new and used bicycle parts. Although a majority of its sales are cash sales, it makes a significant amount of credit sales. During Year 1, its first year of operations, Joey’s Bike Shop experienc

> Fresh Foods established a petty cash fund of $100 on January 2. On January 31, the fund contained cash of $9.20 and vouchers for the following cash payments: The four distinct accounting events affecting the petty cash fund for the period were (1) establ

> Required a. Discuss the requirements of Section 404 of the Sarbanes–Oxley Act and how it relates to COSO. b. What type of companies do these rules apply to?

> The Shirt Shop had the following transactions for T-shirts for Year 1, its first year of operations: During the year, The Shirt Shop sold 810 T-shirts for $20 each. Required a. Compute the amount of ending inventory The Shirt Shop would report on the bal

> The following information pertains to Mason Company for Year 2: Ending inventory consisted of 30 units. Mason sold 370 units at $90 each. All purchases and sales were made with cash. Operating expenses amounted to $4,100. Required a. Compute the gross ma

> For each of the following events, indicate whether the freight terms are FOB destination or FOB shipping point. a. Sold merchandise and the buyer paid the transportation costs. b. Purchased merchandise and the seller paid the transportation costs. c. Sol

> Powell Company began the Year 3 accounting period with $40,000 cash, $86,000 inventory, $60,000 common stock, and $66,000 retained earnings. During Year 3, Powell experienced the following events: 1. Sold merchandise costing $58,000 for $99,500 on accoun

> Obtain Target Corporation’s annual report for its 2018 fiscal year (year ended February 2, 2019) at http://investors.target.com using the instructions in Appendix B, and use it to answer the following questions: a. What was Target’s debt-to-assets ratio

> The following information was taken from the accounts of Green Market, a small grocery store, at December 31, Year 1. The accounts are listed in alphabetical order, and all have normal balances. Dollar amounts are given in thousands. Required First, prep

> The beginning account balances for Terry’s Auto Shop as of January 1, Year 2, follow: The following events affected the company during the Year 2 accounting period: 1. Purchased merchandise on account that cost $15,000. 2. The goods in

> Clark Bell started a personal financial planning business when he accepted $36,000 cash as advance payment for managing the financial assets of a large estate. Bell agreed to manage the estate for a one-year period beginning June 1, Year 1. Required a. S

> The following information was drawn from the Year 5 balance sheets of two companies: During Year 5, Butler’s net income was $25,200, while Lynch’s net income was $43,200. Required a. Compute the return-on-equity ratio

> On January 1, Year 2, LCJ Rental Cars purchased a car that is to be used to produce rental income. The car cost $35,000. It has an expected useful life of five years and a $5,000 salvage value. The car produced rental income of $9,000 per year throughout

> Indicate whether each of the following statements is true or false: a. The unearned revenue account appears on the income statement. b. Supplies expense appears on the statement of cash flows. c. Prepaid rent appears on the balance sheet. d. The book val

> The following is a partial list of transactions Bok Company experienced during its Year 3 accounting period: 1. Paid cash to purchase supplies. 2. Paid cash to purchase insurance coverage for the coming year. 3. Collected cash for services to be performe

> Composite Fabricators, Inc. is a U.S.-based company that develops its financial statements under GAAP. The total amount of the company’s assets shown on its balance sheet for the current year was approximately $370 million. The president of Composite Fab

> Match the financial statements with the appropriate statement to describe them.

> Ortho Company experienced the following events during its first- and second-year operations: Year 1 Transactions: 1. Acquired $68,000 cash from the issue of common stock. 2. Borrowed $36,000 cash from the National Credit Union. 3. Earned $59,000 of cash

> The following data are based on information in the 2018 annual report of Cracker Barrel Old Country Store. As of August 3, 2018, Cracker Barrel operated 655 restaurants and gift shops in 45 states. Dollar amounts are in thousands. Required a. Calculate t

> As of January 1, Year 2, Room Designs Inc. had a balance of $9,900 in Cash, $3,500 in Common Stock, and $6,400 in Retained Earnings. These were the only accounts with balances on January 1, Year 2. During the Year 2 accounting period, the company had (1)

> Identify whether each of the following items would appear on the income statement (IS), statement of changes in stockholders’ equity (SE), balance sheet (BS), or statement of cash flows (CF). Some items may appear on more than one statement; if so, ident

> The following transactions pertain to the operations of Ewing Company for Year 2: 1. Acquired $30,000 cash from the issue of common stock. 2. Provided $65,000 of services on account. 3. Paid $22,000 cash on accounts payable. 4. Performed services for $8,

> During Year 6, Kincaid, Inc. earned $85,000 of cash revenue. The company incurs all operating expenses on account. The Year 6 beginning balance in Kincaid’s accounts payable account was $2,000, while the ending balance was $25,000. The company made cash

> Harbert, Inc. had a beginning balance of $12,000 in its Accounts Receivable account. The ending balance of Accounts Receivable was $10,500. During the period, Harbert collects $72,000 of its accounts receivable. Harbert incurred $63,000 of cash expenses

> Determine the missing amounts in each of the following four independent scenarios: a. X Co. had a $4,700 beginning balance in accounts payable on January 1, Year 8. During Year 8, the company incurred $67,600 of operating expenses on account and paid $68

> In Year 1, Lee Inc. billed its customers $62,000 for services performed. The company collected $51,000 of the amount billed. Lee incurred $39,000 of other operating expenses on account, and paid $31,000 of the accounts payable. It acquired $40,000 cash f

> Ollie Company experienced the following events during its first-year operations: 1. Acquired $72,000 cash from the issue of common stock. 2. Borrowed $26,000 from the First City Bank. 3. Earned $59,000 of cash revenue. 4. Incurred $43,000 of cash expense

> At the end of Year 1, Emma, Inc. had $600 of cash, $400 of liabilities, $200 of common stock, and zero in retained earnings. During Year 2, the company generated $560 of cash revenue and incurred $900 of cash expenses. Required Based on this information,

> Ollie Company experienced the following events during its first-year operations: 1. Acquired $72,000 cash from the issue of common stock. 2. Borrowed $26,000 from the First City Bank. 3. Earned $59,000 of cash revenue. 4. Incurred $43,000 of cash expense

> The following information is drawn from the accounting records of Kristy Company: Divide the class into groups of four or five students. Organize the groups into four sections. Assign each section of groups the following tasks: Required Group Tasks Sec

> Determine the missing amounts in each of the following four independent scenarios: a. X Co. had a $4,500 beginning balance in accounts receivable on January 1, Year 4. During Year 4, the company earned $69,400 of revenue on account and collected $68,200