May/June 2023

For what reason does a business's accountant examine its financial statements?

Interpretation of accounting ratios

When his financial year ended, Zane created a suspense account. Why did he need to open this account?

The trial balance

Jack has set up a suspense account. He has discovered that rent paid of $\$250$ was entered correctly in the rent account, but was credited to the bank account as $\$520$. Which entries will rectify this error?

Correction of errors

Naila had the following details at 31 August. Debit balance in cash book at 31 August: $\$449$ Deposits not yet credited: $\$424$ Cheques not yet presented: $\$175$ Interest wrongly charged by the bank: $\$10$ What credit balance appeared on the bank statement at 31 August?

Bank reconciliation

Which statement concerning a sales ledger control account is incorrect?

Control accounts

The partly completed account below was shown in Candy’s ledger. Information for the purchases ledger control account is given below. The following entries still remain to be entered in the account. Credit suppliers charged $15 interest for late payments. Balances totalling $450 owed in the purchases ledger were offset against balances in the sales ledger. What will be the closing balance on the purchases ledger control account after these entries have been posted?

Control accounts

A trader’s spending over the year consists of the following amounts: - redecoration of premises: $5000 - insurance of motor vehicles: $2000 - purchase of machinery: $10000 What amount should the trader record in her income statement for the year?

Capital and revenue expenditure and receipts

Which statement regarding depreciation is correct?

Accounting for depreciation and disposal of non-current assets

Rashid supplied these balances as at 31 December: - machinery at cost: $52000 - provision for depreciation of machinery: $23000 Depreciation for the year was worked out at 20% of cost and this is already included in the provision balance. Once the balances had been extracted, it was discovered that machinery repairs costing $2000 had been posted in error to the machinery account. What is the adjusted balance on the provision for depreciation of machinery account?

Accounting for depreciation and disposal of non-current assets

The annual rental income payable by Kumar, a tenant, is $3600. At the beginning of the year, Kumar had rent paid in advance of $900. By the end of the year, he was in arrears for two months’ rent. How much rent was received from Kumar during the year?

Other payables and other receivables

When the financial year ended, Gina had the following clothing items in her inventory: - 100 t-shirts: cost price per unit $15, selling price per unit $30 - 200 dresses: cost price per unit $40, selling price per unit $30 What total value did Gina’s inventory have?

Valuation of inventory

Padma began operating a business on 1 April 2022 using $\$30000$ of her own funds. On 31 March 2023, her assets and liabilities were listed as follows. Machinery at net book value: $\$38000$ Other assets: $\$15000$ Long-term loan from bank: $\$16500$ What was Padma’s capital on 31 March 2023?

Sole traders

Which error results in the gross profit being overstated?

Correction of errors

Which group contains only intangible assets?

Accounting for depreciation and disposal of non-current assets

At the close of the financial year, Karim chose to raise his provision for doubtful debts. What effect will this have on his income statement and the statement of financial position?

Irrecoverable debts and provision for doubtful debts

What items are shown in a partnership appropriation account?

Partnerships

X and Y are partners, with capital contributions of $50000 and $30000 respectively. Under the partnership agreement, profits are shared in line with the capital invested, and each partner receives 10% interest on capital. The profit for the year amounted to $37000. What total amount was credited to Y’s current account at the end of the year?

Partnerships

What is one advantage of becoming a member of a limited company?

Limited companies

A limited company was given the following information: - issued share capital (50000 ordinary shares of $1 each): $50000 - profit for the year ended 31 December 2022: $13000 - amount transferred to general reserve during the year: $6000 - interim ordinary share dividend paid during the year: $3000 On 31 December 2022, the decision was taken to use the remaining profit to pay a final ordinary share dividend. What percentage final dividend would the ordinary shareholders receive?

Limited companies

P Limited keeps a provision for doubtful debts account. On 1 April 2022, the balance on this account was $6200. The provision ought to have been raised to $7400 on 31 March 2023, but this adjustment was not entered. What effect did this error have on the retained earnings in the statement of financial position on 31 March 2023?

Irrecoverable debts and provision for doubtful debts

What items are shown in the income and expenditure account of a tennis club?

Clubs and societies

Tim began a manufacturing business on 1 January. He supplied the following details for his first year of trading. Closing inventory of finished goods: $2060$ Work in progress at the end: $1840$ Factory overheads total: $15530$ Prime cost total: $70570$ What did Tim’s cost of production come to?

Manufacturing accounts

A trader made an entry on the credit side of the income statement and on the debit side of his capital account. What transaction is shown by this double entry?

Sole traders

Although Hassan earned a profit of $7000$, his capital fell by $200$ during the year. Which transactions brought about this?

Sole traders

A trader gave the details below. Credit sales: $36000$ Cash sales: $10\%$ of total sales Net profit margin: $30\%$ What is the net profit?

Calculation and understanding of accounting ratios

The table lists the gross margin and profit margin for four businesses. Which business manages its overhead costs most efficiently?

Interpretation of accounting ratios

Ramiz is employed as a sales manager in a car showroom. His pay depends on how many cars he sells. Which accounting ratio would be relevant for Ramiz?

Interested parties

Manvinder set up a business and deposited a cheque for $1000$ into a business bank account. He entered this in the business records by debiting the bank account and crediting the capital account. Which accounting principles did he apply?

Accounting principles

A trader enters assets and expenses in his ledger at the amount he paid for them. Which accounting principle is being applied?

Accounting principles

Ted, who is a manufacturer, bought a machine on credit from T Limited. In what way would Ted have recorded this?

Capital and revenue expenditure and receipts

The account shown below was recorded in Abdul’s books. Hanif’s account: Debit side: 18 Jan returns $\$100$, 31 Jan bank $\$392$, discount $\$8$, balance c/d $\$150$. Credit side: 1 Jan balance b/d $\$400$, 4 Jan purchases $\$250$. Which statement is correct?

The trial balance

Which items appear on a statement of account?

Business documents

A trader prepares an invoice for goods that are sold on credit. The listed price of the goods is $\$2500$. The trader gives a trade discount of $15\%$, and also provides a cash discount of $4\%$ if payment is made promptly. Which amount is entered in the sales journal?

Books of prime entry

A trader drew up a trial balance at 31 December. Which statement about this trial balance is correct?

The trial balance

When the trial balance had been finished, it was discovered that a $\$4000$ amount for motor vehicle repairs had been posted to the motor vehicle account. What kind of error is this?

Correction of errors

What is the main purpose of book-keeping?

Books of prime entry

Maya charges depreciation on her motor vehicle at $25\%$ per annum by the straight-line method. The motor vehicle had a cost of $15000. For the present financial year, depreciation was wrongly worked out at $15\%$ per annum. What effect will correcting this mistake have on the profit for the year?

Accounting for depreciation and disposal of non-current assets

Waseem was given a bank statement. He noticed that the bank had charged interest twice by mistake, and that a dividend from an investment had been credited. He then brought the cash book up to date and drew up a bank reconciliation statement. In which record did he enter these two items?

Bank reconciliation

Thembi is putting together her sales ledger control account. She needs to find out: 1 the total value of goods returned by credit customers 2 the amount due from credit customers that has been written off as irrecoverable. From which records can she obtain this information?

Control accounts

On 1 August, the sales ledger control account showed a debit balance of $1800. In August, a debt of $200 was written off as irrecoverable, and $10000 was collected from credit customers. By 31 August, the amount owed by credit customers was $3000. What was the total value of credit sales in August?

Control accounts

A wholesaler recorded these transactions: • goods worth $30000 were sold on credit • a cheque for $12000 was received from the sale of old fixtures at book value How should these amounts be classified?

Capital and revenue expenditure and receipts

A trader posted the cost of fixing office equipment to the office equipment account as a debit. What effect did this error have on the financial statements?

Capital and revenue expenditure and receipts

A business acquired two assets, X and Y, on 1 January 2022, at a cost of $2000 each. It charges depreciation on asset X at 10% per annum using the straight-line method, and on asset Y at 10% per annum using the reducing balance method. Which statements are correct?

Accounting for depreciation and disposal of non-current assets

Ravi’s financial year finishes on 30 April. On 1 May 2020, Ravi purchased a motor vehicle for $8000, and on 1 May 2022 he disposed of it for $4050. Depreciation is charged using the reducing balance method at 20% per annum. What would be entered in the income statement for the year ended 30 April 2023 in respect of the disposal of the motor vehicle?

Accounting for depreciation and disposal of non-current assets

On 2 January, Razia wrote off $450 that Annette, a credit customer, owed her as irrecoverable. On 2 October, Annette made a cheque payment of $100 towards settling part of that debt. Which entries would Razia record on 2 October?

Irrecoverable debts and provision for doubtful debts

Asha gave the following details about her inventory at the close of the financial year. Product P: 200 units, cost price per unit $2.50, selling price per unit $2.00. Product J: 300 units, cost price per unit $3.00, selling price per unit $3.50. What was the overall value of Asha’s inventory?

Valuation of inventory

Which items in a statement of financial position do descriptions 1, 2 and 3 match?

Sole traders

Which group includes only service businesses?

Manufacturing accounts

What information is shown by a business’s statement of financial position?

Sole traders

A trader settles her insurance premium on 1 January each year so that it covers the next 12 months. Her insurance payments were: • 1 January 2022: $1680 • 1 January 2023: $1920 What amount should the trader have recorded for insurance in her income statement for the year ended 31 March 2023?

The trial balance

Which item is included in the profit for the year in a partnership appropriation account?

Partnerships

Abi and Erni are in partnership. Erni receives a yearly partnership salary of $3000. Any remaining profits and losses are split equally. For the year ending 31 August 2022, profit came to $12600. At 1 September 2021, the partners’ current account balances were: Abi: credit balance of $2500 Erni: debit balance of $1400 What credit balance was shown on Erni’s current account on 1 September 2022?

Partnerships

What does the term equity mean?

Limited companies

In the financial year, AB Limited paid $1400 in debenture interest for that year. By the year end, a further $700 of debenture interest had been accrued. How was debenture interest presented in the financial statements for the year?

Other payables and other receivables

Which items are included when a sports club prepares an income and expenditure account?

Clubs and societies

Melody is a music club. Once each year, the club stages a music concert. A judge selects the musicians who receive prizes. For the most recent music concert, the club gave these figures. Ticket sales for the concert: $1500 Concert prizes purchased: $450 Programme sales for the concert: $150 Fee paid to the concert judge: $250 What was the profit made from the concert?

Clubs and societies

The following information was supplied by a business. Opening inventory of raw material: $50000 Closing inventory of raw material: $60000 Purchases of raw material: $80000 Carriage inwards on raw material: $2000 What was the cost of raw material consumed?

Manufacturing accounts

A cheque received from Kate, who is a credit customer, was dishonoured. In what way was this dishonoured cheque recorded?

Books of prime entry

On 1 January 2022, Ashwin began operating a business as a taxi driver. The taxi was bought for $5000 and he deposited $100 into a business bank account. He kept no accounting records. By 31 December 2022, the business bank account contained $1750, the taxi had a value of $4000 and he still owed the garage $50 for repairs. Over the year, he withdrew $1600 from the business bank account as drawings. What was the profit for the year?

Incomplete records

The trader did not maintain a full set of accounts. The details for the year are given below. Opening trade payables: $5000 Closing trade payables: $9800 Payments to credit suppliers: $35000 Cash discounts received: $3000 Find the purchases for the year.

Incomplete records

T Limited gave the following figures. Net profit before interest: $29200 Profit for the year: $28000 Equity at the year-end: $192000 $6\%$ debentures: $20000 Calculate T Limited’s return on capital employed.

Calculation and understanding of accounting ratios

Sabelo’s liquid (acid test) ratio was greater on 1 January 2022 than on 31 December 2022. What might have led to this?

Interpretation of accounting ratios

The ratios below are given for the businesses of Ewa and Max. Current ratio: Ewa $2.2:1$, Max $2.4:1$ Liquid (acid test) ratio: Ewa $1.4:1$, Max $1.0:1$ An accounting student made these statements. Which of the statements are correct?

Interpretation of accounting ratios

A café owner failed to record in her accounts the effect of higher competition after a different café opened close by. Which accounting principle was used?

Accounting principles

What information is recorded in a business’s sales ledger?

Control accounts

Which activity illustrates double entry book-keeping?

Accounting principles

Which statement about cash discounts received is correct?

Books of prime entry

Tahir drew up a trial balance. He placed both the balance on the discount allowed account, $900, and the bank overdraft, $750, in the incorrect column. Which side total of the trial balance was larger, and by how much did the debit total differ from the credit total?

The trial balance

Goods sold on credit to J Sharp were entered by mistake in the account of T Sharpe. What type of error has been made?

Correction of errors

Khalid posted items to a suspense account in order to rectify two errors discovered in his ledger accounts. After the errors were put right, the suspense account was cleared. error 1: $700 sales had been left out of the sales account. error 2: The purchases journal had been totalled $550 too high. Which entry was posted in the suspense account to make the trial balance balance?

Correction of errors

What is the primary purpose of book-keeping?

Books of prime entry

Maya charges depreciation on her motor vehicle at $25\%$ per annum by using the straight-line method. The motor vehicle had a cost of $15000. For the current financial year, depreciation was calculated wrongly at $15\%$ per annum. What impact will correcting this error have on the profit for the year?

Accounting for depreciation and disposal of non-current assets

Waseem was given a bank statement. He noticed that the bank had mistakenly charged interest twice and that a dividend had been credited on an investment. Waseem then brought the cash book up to date and prepared a bank reconciliation statement. In which book did he enter these two items?

Bank reconciliation

Thembi is drawing up her sales ledger control account. She needs details of: 1 the total value of goods returned by credit customers 2 the amount owed by credit customers that has been written off as irrecoverable. Where can she find this information?

Books of prime entry

At 1 August, the sales ledger control account showed a debit balance of $1800. In August, a debt of $200 was written off as irrecoverable, and $10\,000 was collected from credit customers. By 31 August, amounts owed by credit customers were $3000. What was the total credit sales in August?

Control accounts

A wholesaler carried out the following transactions: - goods were sold on credit for $30\,000$ - a cheque for $12\,000$ was received from the sale of old fixtures at book value How should these amounts be classified?

Capital and revenue expenditure and receipts

A trader entered the cost of repairing office equipment on the debit side of the office equipment account. What effect did this mistake have on the financial statements?

Capital and revenue expenditure and receipts

On 1 January 2022, a business purchased two assets, X and Y, for $2000 each. Asset X is depreciated at $10\%$ per annum by the straight-line method, while asset Y is depreciated at $10\%$ per annum by the reducing balance method. Which statements are correct?

Accounting for depreciation and disposal of non-current assets

Ravi’s financial year finishes on 30 April. On 1 May 2020, Ravi purchased a motor vehicle for $8000 and then sold it on 1 May 2022 for $4050. He applies the reducing balance method of depreciation at $20\% per annum. What amount would be shown in the income statement for the year ended 30 April 2023 in relation to the disposal of the motor vehicle?

Accounting for depreciation and disposal of non-current assets

On 2 January, Razia treated $450 owed to her by Annette, a credit customer, as irrecoverable and wrote it off. Then, on 2 October, Annette paid $100 by cheque as part of that debt. What entries would Razia make on 2 October?

Irrecoverable debts and provision for doubtful debts

Asha gave the following details for her inventory at the close of the financial year. Product P: number of units $200$, cost price per unit $2.50$, selling price per unit $2.00$. Product J: number of units $300$, cost price per unit $3.00$, selling price per unit $3.50$. Calculate the total value of Asha’s inventory.

Valuation of inventory

Which parts of a statement of financial position do descriptions 1, 2 and 3 refer to? 1 finance and other resources contributed by the owner 2 amounts due for goods supplied, unpaid expenses and loans advanced to the business 3 property owned by the business, sums owed by customers, unsold goods and cash in the bank

Sole traders

Which set consists entirely of service businesses?

Sole traders

What information is shown by a business's statement of financial position?

Sole traders

A trader settles her insurance premium on 1 January every year, covering the next 12 months. Her insurance payments were as follows: - 1 January 2022: $1680$ - 1 January 2023: $1920$ How much did the trader record for insurance in her income statement for the year ended 31 March 2023?

Capital and revenue expenditure and receipts

Which item is included in the profit for the year in a partnership appropriation account?

Partnerships

Abi and Erni operate a partnership. Erni is entitled to receive an annual partnership salary of $3000$. The remaining profits and losses are divided equally. The profit for the year ending 31 August 2022 was $12\,600$. On 1 September 2021, the partners’ current account balances were as follows: Abi $2500$ credit; Erni $1400$ debit. What was the credit balance on Erni’s current account on 1 September 2022?

Partnerships

What does the term equity mean?

Limited companies

In the financial year, AB Limited paid $1400 in debenture interest for that year. By the year-end, a further $700 of debenture interest had accrued. How was debenture interest presented in the financial statements for the year?

Other payables and other receivables

Which items are included in an income and expenditure account drawn up for a sports club? 1 the cost of furniture bought for the clubhouse during the year 2 depreciation of furniture and sports equipment 3 clubhouse rates paid in advance for the following financial year 4 subscriptions still unpaid by members at the end of the financial year

Clubs and societies

Melody is a music club. The club stages a music concert once per year. A judge chooses the musicians who receive prizes. The club gave the following information about the most recent music concert. What was the profit made from the concert?

Clubs and societies

A business has provided the details below. What was the expenditure on raw material consumed?

Manufacturing accounts

A cheque received from Kate, who is a credit customer, was dishonoured. In what way was this dishonoured cheque recorded?

Books of prime entry

Ashwin began a business as a taxi driver on 1 January 2022. His taxi cost $5000 and he paid $100 into a business bank account. No accounting records were kept. On 31 December 2022, the balance in the business bank account was $1750, the taxi had a value of $4000 and he owed $50 to the garage for repairs. Over the year, he withdrew $1600 from the business bank account as drawings. What was the profit for the year?

Incomplete records

A trader did not maintain a full set of accounts. He supplied the following information for the year. What were the purchases for the year?

Incomplete records

T Limited supplied the information shown below. What was the return on capital employed for T Limited?

Calculation and understanding of accounting ratios

Sabelo’s liquid (acid test) ratio was greater on 1 January 2022 than it was on 31 December 2022. What might have led to this?

Interpretation of accounting ratios

The ratios below apply to the businesses of Ewa and Max. An accounting student produced the statements below. Which of the statements are correct?

Interpretation of accounting ratios

The owner of a café did not record the effect of increased competition in her accounts when another café opened close by. Which accounting principle was used?

Accounting principles

What information is recorded in a business’s sales ledger?

Control accounts

Which transaction illustrates double entry book-keeping?

Accounting principles

Which statement is correct about cash discounts received?

Books of prime entry

Tahir compiled a trial balance. He put both the balance on the discount allowed account, $900, and the bank overdraft, $750, into the incorrect column. Which total on the trial balance was greater, and how much difference was there between the debit total and the credit total?

The trial balance

Sales made on credit to J Sharp were, by mistake, posted as a debit in the account of T Sharpe. Which type of error has been made?

Correction of errors

Khalid posted items to a suspense account to rectify two mistakes discovered in his ledger accounts. After those mistakes had been corrected, the suspense account was cleared. error 1 $700 sales had been left out of the sales account. error 2 The purchases journal had been overcast by $550. Which entry was posted in the suspense account to make the trial balance agree?

Correction of errors

Shvan keeps a petty cash book under the imprest system. The imprest amount is $200, and it is topped up each Wednesday. Any payment below $75 is taken from petty cash. Any cash receipt below $75 is put into petty cash. On 1 March 2023, Shvan had $61 in his petty cash box. He gave the following details for the first week of March 2023. March 1 Replenished petty cash imprest from the business bank account 2 Paid $55 to Giles, a trade payable 3 Paid taxi fare, $21 6 Paid $18 for notepads and pens 6 Received cash, $25, from Mitchell, a trade receivable 7 Paid $30 for office cleaning

Books of prime entry

Stalla is a sole trader who sells on credit. She keeps a provision for doubtful debts at 4% of trade receivables. Stalla’s trade receivables were: At 31 December 2021 $75000 At 31 December 2022 $77000

Accounting for depreciation and disposal of non-current assets

Eshe is a trader who has drawn up a trial balance at 31 March 2023. The totals were not equal, so the difference was entered into a suspense account. Eshe subsequently found the errors shown in the table below.

Correction of errors

Salman runs a footwear factory, and he supplies all three nearby shoe shops. He makes up his financial statements to 30 April each year. As at 30 April 2023, the balances on Salman’s ledger accounts were: Opening inventory on 1 May 2022: Raw materials $8190 Work in progress $15200 Finished goods $23860 Purchases of raw materials $78420 Purchases of finished goods $90144 Wages: Factory supervisor $27500 Factory operatives $52396 Rates and insurance $17528 Factory electricity $11442 General factory expenses $8244 Factory equipment - at cost $90000 Factory equipment - provision for depreciation $43920 Bank balance $31000 debit Further details: 1 Inventory at 30 April 2023: Raw material $8000 Work in progress $16100 Finished goods $24590 2 Salman applies a mark-up of 50% to his cost of sales. 3 Rates and insurance are to be divided three quarters to the factory and one quarter to the office. 4 On 30 April 2023, factory electricity of $1048 had not yet been paid. 5 Factory equipment is depreciated at 20% per annum using the reducing balance method.

Manufacturing accounts

Q Limited draws up its financial statements to 31 March each year. At 1 April 2022, the company’s retained earnings stood at $16250. In the year ended 31 March 2023, the company earned a profit of $43500 (after charging all expenses and interest). Dividends totalling $39000 for the year had been paid by 31 March 2023. After the income statement was completed, the following balances were taken from the company’s ledger accounts. Fittings and equipment at cost $150000 Provision for depreciation of fittings and equipment $40650 Motor vehicles at cost $72000 Provision for depreciation of motor vehicles $31125 Inventory $51790 Balance at bank $1076 debit Trade receivables $19700 Provision for doubtful debts $591 Trade payables $31450 5% Debentures (repayable 2029) $40000 Bank loan (repayable 2027) $10000 Ordinary share capital $120000

Limited companies

Omer works as a trader. These transactions occurred during April 2023. April 3 Deposited $1000 of his own personal funds into the bank April 7 Paid $360 to supplier Alexander by telephone transfer April 10 Cash sales of $695 were paid straight into the bank account April 12 Bought goods on credit from Alexander for $340 April 15 Paid $68 cash for petrol April 16 Paid rent of $400 by standing order April 23 Received a cheque for $384 from credit customer Esme in full settlement of an invoice worth $400 April 27 Paid Alexander $323 by cheque after deducting $17 cash discount April 28 Bought goods on credit from Alexander for $235

Books of prime entry

Ramla has already worked out her draft profit for the year ended 28 February 2023. However, the following adjustments still need to be posted to Ramla’s ledger accounts. 1 An amount of $99 owed to Ramla by Mai is to be written off as irrecoverable. 2 Fixtures and fittings, $875, were purchased on credit from Padma. 3 A loan repayment, $500, had been incorrectly recorded as loan interest. 4 Rent paid, $350, had been recorded as $530. 5 Drawings, $120, had been debited to the wages account.

Irrecoverable debts and provision for doubtful debts

Several years ago, the Favourite Book Club was established. Since the club began, the annual subscription has stayed at $52. Payment of subscriptions is made only by cheque or credit transfer. The treasurer supplied the information below. At 1 January 2022 / At 31 December 2022 Subscriptions in advance: $260 / $156 Subscriptions in arrears: $468 / $1040 Insurance paid in advance: $348 / $366 Cash at bank: $68 / $114 For the year to 31 December 2022: Receipts - Subscriptions received $5356 Payments - Rent paid $2080; Insurance paid $732; General expenses paid $2498 The club had 128 members in 2021 and 120 in 2022. The treasurer knows that 4 current members will not pay their subscriptions for 2022. She has chosen to write these subscriptions off.

Clubs and societies

Akila and Darius are partners. Their partnership agreement states the following: interest on capital at 3% per annum interest on drawings at 5% a salary of $9500 per annum to Akila remaining profits and losses to be divided 60% to Akila and 40% to Darius. The partners produced the following balance list. Capital accounts at 1 May 2022: Akila $90000; Darius $65000 Current accounts at 1 May 2022: Akila $2600 debit; Darius $4745 credit Drawings for the year ended 30 April 2023: Akila $19400; Darius $16320 Profit for the year ended 30 April 2023 amounted to $42304.

Partnerships

Amadi drew up the trial balance below, which is still untotalled and includes mistakes. Trial balance at 31 March 2023 Fittings and equipment at cost $30000 credit Provision for depreciation of fittings and equipment $7500 debit Trade receivables $6100 debit Bank overdraft $3106 debit Trade payables $3485 credit Capital $20000 credit Sales $73250 credit Purchases $41785 debit Discount received $1990 debit Returns inwards $3390 debit Carriage inwards $1223 debit General expenses $6430 debit Rent and rates $7380 debit Drawings $9500 debit Inventory at 1 April 2022 $3752 credit Inventory at 31 March 2023 $3965 debit

Correction of errors

Omer is a trader. The transactions below occurred in April 2023. April 3 He paid $1000 into the bank using his own personal funds April 7 He paid supplier Alexander $360 by bank transfer April 10 Cash sales of $695 were deposited straight into the bank account April 12 Goods worth $340 were bought on credit from Alexander April 15 He paid $68 in cash for petrol April 16 Rent of $400 was paid by standing order April 23 A cheque for $384 was received from credit customer Esme, settling an invoice for $400 in full April 27 He paid Alexander $323 by cheque after taking off $17 cash discount April 28 Goods worth $235 were bought on credit from Alexander

Books of prime entry

Ramla has already worked out her draft profit for the year ended 28 February 2023, but her ledger accounts still need adjustments for these items; 1 Ramla is to write off $99 owed by Mai as irrecoverable; 2 fixtures and fittings costing $875 were bought on credit from Padma; 3 a loan repayment of $500 was wrongly entered as loan interest; 4 rent of $350 paid had been entered as $530; 5 drawings of $120 had been posted to the wages account.

Irrecoverable debts and provision for doubtful debts

The Favourite Book Club was set up several years ago. The annual subscription of $52 has stayed the same since the club began. Members settle their subscriptions by cheque or by credit transfer. The treasurer supplied the information below. At 1 January 2022 / At 31 December 2022 Subscriptions in advance: $260 / $156 Subscriptions in arrears: $468 / $1040 Insurance paid in advance: $348 / $366 Cash at bank: $68 / $114 For the year ended 31 December 2022: Receipts - Subscriptions received $5356 Payments - Rent paid $2080, Insurance paid $732, General expenses paid $2498 In 2021 the club had 128 members and in 2022 it had 120. The treasurer knows that 4 current members will not pay their subscriptions for 2022, so she has chosen to write these subscriptions off.

Clubs and societies

Akila and Darius are in partnership. Their partnership agreement states the following: interest on capital of 3% per annum interest on drawings of 5% a salary to Akila of $9500 per annum residual profits and losses to be shared 60% to Akila and 40% to Darius. The partners supplied the following balances. Capital accounts at 1 May 2022: Akila $90000, Darius $65000 Current accounts at 1 May 2022: Akila $2600 debit, Darius $4745 credit Drawings for the year ended 30 April 2023: Akila $19400, Darius $16320 The profit for the year ended 30 April 2023 was $42304.

Partnerships

Amadi drew up the trial balance below, which has not yet been totalled and still contains errors. Trial balance at 31 March 2023 Fittings and equipment at cost $30000 credit Provision for depreciation of fittings and equipment $7500 debit Trade receivables $6100 Bank overdraft $3106 Trade payables $3485 Capital $20000 Sales $73250 Purchases $41785 Discount received $1990 Returns inwards $3390 Carriage inwards $1223 General expenses $6430 Rent and rates $7380 Drawings $9500 Inventory at 1 April 2022 $3752 credit Inventory at 31 March 2023 $3965

Correction of errors