Accounting 9706 · AS & A Level · Preparation of financial statements

Preparation of financial statements — practice question

Sachin trades in electrical appliances costing $150 per unit. His brother, Tajid, lives overseas, and it had been arranged that Tajid would sell some of the appliances. In the year ended 31 December 2016, Sachin sent 1000 appliances to Tajid.
(a)[9]

Prepare the consignment account in Sachin’s ledger for the year ended 31 December 2016.

(b)[3]

Prepare the account for Tajid in Sachin’s books for the year ended 31 December 2016.

(c)[2]

Prepare the goods sent on consignment account in Sachin’s books for the year ended 31 December 2016.

(d)[5]

Prepare Sachin’s account in Tajid’s books for the year ended 31 December 2016.

(e)[2]

Identify two reasons that could explain why the selling price of the appliances fell.

(f)[4]

Discuss whether Sachin should send another consignment to Tajid or put the money into the new project. Support your view with three reasons for your decision.

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