May/June 2025

Which task will not be carried out by a book-keeper?

Books of prime entry

Jerry was given a cheque for $450 by Fatima. He recorded the cheque being received accurately in his cash book. However, the entry made to Fatima’s account was posted in the wrong direction. Which journal entry would correct this mistake?

Correction of errors

At 31 January, Somraj’s bank statement showed a credit balance of $740. He then checked the statement against his cash book and amended the cash book after discovering these items: bank charges not entered in the cash book $30 cheque paid but not yet presented to the bank $150 What was the revised cash book balance at 31 January?

Bank reconciliation

George is drawing up his purchases ledger control account. What information would he take from his general journal to complete this?

Control accounts

Javid’s sales ledger control account showed a debit balance of $12000. Interest of $40 on an overdue account and discount allowed of $150 had not been included. What is the corrected balance on the sales ledger control account?

Control accounts

What effect does incorrectly classifying expenses as capital expenditure have?

Capital and revenue expenditure and receipts

Atif charges depreciation on his motor vehicles at $20\%$ per annum by the reducing balance method. On 1 May 2024, Atif had motor vehicles that had originally cost $35000$. The accumulated depreciation for these motor vehicles was $12600$ on 1 May 2024. What balance will be shown in Atif’s provision for depreciation account on 30 April 2025?

Accounting for depreciation and disposal of non-current assets

T Limited lets out a section of its premises to a tenant. At the beginning of the year, the tenant owed $600 in arrears. Over the year, T Limited collected $8650 as rent from the tenant. T Limited’s income statement recorded rent receivable of $7900 for the year. What was the balance brought down on the rent receivable account at the start of the next year?

Other payables and other receivables

A provision for doubtful debts equal to $5\%$ of trade receivables is kept. On 1 January 2024, the provision for doubtful debts account showed a credit balance of $240. By 31 December 2024, trade receivables amounted to $5200. It was decided that $200 of this amount could not be recovered. Which entry was recorded in the provision for doubtful debts account on 31 December 2024?

Irrecoverable debts and provision for doubtful debts

How ought a business to value its inventory?

Valuation of inventory

Which items are presented in a statement of financial position?

Sole traders

What do we mean by assets?

Accounting principles

A business supplied the information below for two expenses. Electricity: 1 January 2024 $240 accrued; amount paid during year ended 31 December 2024 $1500; 31 December 2024 $360 accrued. Insurance: 1 January 2024 $180 prepaid; amount paid during year ended 31 December 2024 $1200; 31 December 2024 $220 prepaid. Which amounts are included in the income statement for the year ended 31 December 2024?

Other payables and other receivables

Which item counts as a current liability?

Other payables and other receivables

What benefit can a sole trader gain by becoming part of a partnership?

Partnerships

Which of the following statements are correct concerning the financial statements of a partnership?

Partnerships

R Limited supplied the information below. On 1 January 2024: ordinary share capital $350\,000$, retained earnings $46\,000$, general reserve $37\,000$. During the year ending 31 December 2024: profit for the year $32\,000$, dividends paid $20\,000$. What was total equity worth at year end?

Limited companies

A club showed the balance of its accumulated fund in its statement of financial position. What does a sole trader call the equivalent item in a statement of financial position?

Clubs and societies

Which item would appear in a manufacturing account?

Manufacturing accounts

During the year, a trader’s assets went up by $25\,000$ while his liabilities fell by $5\,000$. He made no drawings in that year. What was the profit or loss for the year?

Sole traders

A trader does not keep a complete set of accounting records. How might he work out the profit for the year?

Incomplete records

Janice began trading on 1 January. Every sale she made was for cash. Over the year, Janice paid wages of $12\,100$ and withdrew drawings of $7\,800$ from the money collected from customers. She also paid $56\,000$ of these receipts into the bank. By the end of the year, she still had $150$ of sales not yet banked, kept as cash. Which value for Janice’s sales was entered in the income statement?

Sole traders

Sammy purchased goods on credit and afterwards sent some of them back. How should he enter the returns in his books of account?

Books of prime entry

A trader supplied the details below. Revenue $120\,000$; inventory at the start of the year $9\,600$; inventory at the end of the year $10\,200$. A 25% mark-up is used. What were the year's purchases?

Valuation of inventory

A trader gave the information below for the year ending 31 December. Total cash and credit purchases of goods for resale $150\,000$; cash purchases of goods for resale $17\,000$; credit purchases of non-current assets $25\,000$. At that date, his trade payables stood at $8\,000$. Calculate the trade payables turnover.

Calculation and understanding of accounting ratios

The information below has been taken from an income statement. Cost of sales $15\,000$; gross profit $10\,000$; motor expenses $4\,000$; general expenses $1\,000$. What is the profit margin for the year?

Calculation and understanding of accounting ratios

A business has a trade receivables turnover of 42 days. Trade receivables are given 30 days to settle their accounts. The business finds it difficult to pay its credit suppliers. Which statements are right?

Interpretation of accounting ratios

A business does not show the skills or morale of its employees in its financial statements. Which accounting principle is being used?

Accounting principles

What does the objective of understandability assume that users of financial statements will have?

Accounting principles

The following was an account in Peter’s accounting records: Rami Bank $380$, discount received $20$, balance b/d $400$. Which statement is correct?

The trial balance

At the close of her financial year, Jasmine balanced the cash book and ledger accounts and carried out the necessary year-end transfers. Which statements are correct?

The trial balance

A trader purchased goods on credit from a supplier. In which book of prime entry should the trader enter this transaction?

Books of prime entry

Which account balance is entered in the debit column of a trial balance?

The trial balance

The debit and credit totals of a trial balance failed to match, so a suspense account was set up. It was then discovered that the total in the discount allowed column of the cash book of $\$100$ had been posted to the discount allowed account. Which journal entry would rectify this error?

Correction of errors

When Yui worked out his profit for the year, the following mistakes came to light. 1. The purchase of a new motor vehicle for $\$3200$ was entered in motor expenses. 2. The purchases account was overstated by $\$500$. What effect did correcting these mistakes have on the profit for the year (ignore depreciation)?

Correction of errors

Rikado gave up his work as a machine operator in order to launch his own manufacturing business. Why did he want to examine his financial statements at the end of the first year of trading?

Interested parties

Miguel’s cash book showed a debit bank balance of $4220. He later found the following mistakes. 1 A cheque for $200, used to buy office equipment, had been entered wrongly in the office expenses account. 2 Bank charges of $30 had been entered in the cash book as $70. What effect did these mistakes have on his statement of financial position?

Correction of errors

A trader was checking his bank statement against the revised balance shown in his cash book. Some cheques had not yet been presented, and some deposits had not yet been credited. The bank statement contained no mistakes. He began to prepare his bank reconciliation statement from the credit balance shown on the bank statement. How did he calculate his revised cash book balance?

Bank reconciliation

Mary works as a trader. Her cash book shows a debit balance in the bank column. She has now received her bank statement and must bring her cash book up to date by entering the following items. 1. A credit customer, Sam, has paid off his account by means of a credit transfer. 2. Mary rents out part of her premises to Dennis, and he has paid his monthly rent by standing order. The bank balance is not overdrawn. What effect do these entries have on the bank balance shown in Mary’s cash book?

Bank reconciliation

Which control account item is information supplied by the cash book for?

Control accounts

When Mark set up a car repair business, he bought premises and equipment. Two years later, he paid $5000 to build an extension, $600 for new equipment and $750 to repaint the original premises. What will be the increase in non-current assets from these transactions (ignore depreciation)?

Capital and revenue expenditure and receipts

On 1 January 2023, equipment was bought for $50\,000. It is anticipated that the equipment will last for five years and will have a residual value of $10\,000. Depreciation is charged using the straight-line method. What was the balance on the provision for depreciation of equipment account at 31 December 2024?

Accounting for depreciation and disposal of non-current assets

Anjum leases a section of her premises to Ajay at $6120 per annum. At the start of the year, Ajay had already paid rent for two months in advance. By the end of the year, Ajay had paid rent for three months in advance. What amount of rent did Anjum receive from Ajay during the year?

The trial balance

For what reason would a trader treat money owed by a credit customer as an irrecoverable debt?

Irrecoverable debts and provision for doubtful debts

Shilpa’s accounting year finishes on 30 April. On 31 March 2025, she wrote off a debt owed by Tahir because it was irrecoverable. Which entry did Shilpa record on 31 March 2025?

Irrecoverable debts and provision for doubtful debts

Tony has drawn up an inventory valuation statement at the close of the financial period. Inventory items and amounts: - cricket bats, cost $600, net realisable value $750 - cricket gloves, cost $400, net realisable value $320 - cricket helmets, cost $900, net realisable value $1200 - cricket pads, cost $300, net realisable value $240 What is the value of Tony’s inventory?

Valuation of inventory

By what method is owner's equity worked out?

Sole traders

Which statement is right?

Accounting principles

Draft financial statements drawn up at the end of the first year of trading indicate: - draft profit for the year of $24\,000 - trade receivables of $6300. An amount of $200 is to be written off as irrecoverable. A provision for doubtful debts is to be established at $1\%$ of the trade receivables remaining. What will the revised profit for the year be?

Irrecoverable debts and provision for doubtful debts

Ann and Bob operate as partners and divide profits in the ratio $3:2$ respectively. Ann is paid a salary of $20\,000 per annum. There is no interest on capital or interest on drawings. The profit for the year totals $75\,000$. Ann’s share of the residual profit was $24\,000. What salary was Bob entitled to?

Partnerships

What benefits do shareholders gain from operating as a limited company?

Limited companies

In the year ending 31 March 2025, the club received subscriptions totalling $2500$, and $120$ of this was for the next financial year. At 31 March 2025, subscriptions accrued were $280$. What entries should appear in the club’s statement of financial position at 31 March 2025?

Clubs and societies

The sports club’s bank account records that subscriptions amounting to $2695 were received in the financial year. This total includes $145 of subscriptions in arrears from the previous year. It also contains a subscriptions lodgement of $195 that is still outstanding. What amount for subscriptions should be shown in the receipts and payments account of the sports club?

Clubs and societies

On match days, a tennis club provides refreshments for sale. When the first accounting period ended, the receipts and payments account contained these items: - receipts from refreshments sales $2300 - payments made to refreshments suppliers $1400 - wages paid $300 Refreshments left unsold at the year end had cost $200. An invoice for refreshments bought amounting to $75 had not yet been settled. What profit from sale of refreshments should be shown in the income and expenditure account?

Clubs and societies

A manufacturing business worked out the following figures for the year ending 30 April 2025. Items and amounts: - prime cost: $\$360\,000$ - factory overheads: $\$114\,850$ - work in progress at 30 April 2025: $\$7\,940$ - purchase of finished products: $\$1\,100$ Work in progress on 30 April 2024 was $\$8\,990$. Calculate the production cost of goods completed for the year ending 30 April 2025.

Manufacturing accounts

Which items are taken into account when calculating prime cost in a manufacturing account?

Manufacturing accounts

At the beginning of the year, a manufacturer’s work in progress was worth $\$850$. By the end of the year, it had risen to $\$10\,200$. How did this rise affect the cost of production and the cost of sales?

Manufacturing accounts

Shula’s financial year finishes on 31 March. At the start of 1 April 2024, Yasmin’s account in Shula’s purchases ledger showed a credit balance of $100. What does this mean?

Other payables and other receivables

Gustav started a business on 1 January 2023 with capital of $\$50\,000$. For the year ended 31 December 2024, the information provided was as follows: - opening capital balance: $\$58\,000$ - extra capital introduced: $\$2\,000$ - drawings made during the year: $\$9\,880$ - closing capital balance: $\$60\,156$ What profit did Gustav earn in 2024?

Sole traders

The information below is given at the close of Savid’s first year of trading: - Amount due from credit customers: $\$9\,600$ - Amount due to credit suppliers: $\$12\,800$ Yearly total sales are $\$220\,000$, and cash sales account for $\$24\,000$ of this. What is the trade receivables turnover in days?

Calculation and understanding of accounting ratios

Which of the following is a limitation when comparing the accounting ratios of different businesses?

Limitations of accounting statements

Maluti runs a trading enterprise that has a bank overdraft and earns profit. Why would the government be most interested in Maluti’s financial statements?

Interested parties

Vikram wished to use the principle of consistency when recording the use of his delivery van. What did this mean?

Accounting principles

Benson intended to compare his profitability against that of his competitors. However, the preparation of his financial statements was held up for a long time because a fire broke out in the room where the records were stored. What does this delay affect?

Limitations of accounting statements

Which document can a business use as evidence that an invoice has been settled?

Business documents

Raminder keeps a petty cash book under the imprest system. Each month, the petty cash float of $250 is topped up on the first day of the month. During January, the petty cashier paid out $105 and also obtained a $15 refund from a stationery supplier. What amount was issued to the petty cashier on 1 February to restore the imprest?

Books of prime entry

Which statement about cash discounts is incorrect?

Books of prime entry

Ziningi drew up a trial balance. The debit column total came to $225750, while the credit column total was $225250. What might account for the discrepancy?

The trial balance

While preparing draft financial statements, Michael set up a suspense account. He later found that purchases of $68 had been posted to the purchases account as $86. What entry was posted in the suspense account when this error was corrected?

Correction of errors

Sameer worked out that his profit for the year came to $6300. He then discovered two mistakes. 1 A cheque for $3250, received from a credit customer, had been entered only in the cash book. 2 The total in the discount allowed column of the cash book, $300, had been credited to the discount received account. What was Sameer’s corrected profit for the year?

Correction of errors

Which activity is not carried out by a book-keeper?

Books of prime entry

Jerry was paid a cheque for $450 by Fatima. He recorded the cheque receipt correctly in his cash book. However, the posting into Fatima’s account was made the wrong way round. Which journal entry will correct this error?

Correction of errors

At 31 January, Somraj’s bank statement had a credit balance of $740. He then reconciled the bank statement with his cash book and amended the cash book after noting these items: bank charges not recorded in the cash book: $30 cheque paid but not presented to the bank: $150 What was the revised cash book balance at 31 January?

Bank reconciliation

George is drawing up his purchases ledger control account. Which details would he take from his general journal to do this?

Control accounts

The sales ledger control account for Javid showed a debit balance of $12000. Interest of $40 on an overdue account, together with discount allowed of $150, had both been left out. What was the correct balance on the sales ledger control account?

Control accounts

What is the effect of classifying expenses incorrectly as capital expenditure?

Capital and revenue expenditure and receipts

Atif writes off depreciation on his motor vehicles at 20% per annum by means of the reducing balance method. On 1 May 2024, the motor vehicles owned by Atif had originally cost $35000. Their accumulated depreciation stood at $12600 on 1 May 2024. What balance will be shown in Atif’s provision for depreciation account on 30 April 2025?

Accounting for depreciation and disposal of non-current assets

T Limited lets out part of its premises. At the beginning of the year, the tenant owed $600. Over the year, T Limited collected $8650 in rent from the tenant. T Limited’s income statement recorded rent receivable for the year at $7900. What was the balance brought down on the rent receivable account at the start of the following year?

Other payables and other receivables

A provision for doubtful debts of 5% of trade receivables is kept. On 1 January 2024, the provision for doubtful debts account showed a credit balance of $240. By 31 December 2024, trade receivables totalled $5200. Of this, $200 was judged to be irrecoverable. Which entry was recorded in the provision for doubtful debts account on 31 December 2024?

Irrecoverable debts and provision for doubtful debts

What method should a business use to value its inventory?

Valuation of inventory

What items are presented in a statement of financial position?

Sole traders

What does the term assets refer to?

Accounting principles

A business supplied the information below for two expenses. Electricity: 1 January 2024: $240 accrued Amount paid during year ended 31 December 2024: $1500 31 December 2024: $360 accrued Insurance: 1 January 2024: $180 prepaid Amount paid during year ended 31 December 2024: $1200 31 December 2024: $220 prepaid What amounts are included in the income statement for the year ended 31 December 2024?

Other payables and other receivables

Which of the items is classified as a current liability?

Other payables and other receivables

What benefit would a sole trader gain by setting up a partnership?

Partnerships

Which statements are correct about the financial statements of a partnership?

Partnerships

R Limited supplied the information below. On 1 January 2024: ordinary share capital $350\,000$ retained earnings $46\,000$ general reserve $37\,000$ For the year ended 31 December 2024: profit for the year $32\,000$ dividends paid $20\,000$ What was the amount of total equity at the end of the year?

Limited companies

A club showed the balance on its accumulated fund in its statement of financial position. What would be the corresponding figure in the statement of financial position of a sole trader?

Clubs and societies

Which item is shown in a manufacturing account?

Manufacturing accounts

Over the year, the trader’s assets went up by $25\,000$, whereas his liabilities went down by $5\,000$. No drawings were taken during the year. What profit or loss did he make for the year?

Sole traders

A trader does not keep a complete set of accounting records. How can he work out the profit for the year?

Incomplete records

Janice began trading on 1 January. Every sale she made was for cash. Over the year, Janice paid wages of $12\,100$ and withdrew drawings of $7\,800$ from the amount received from customers. She also banked $56\,000$ of these receipts. At the year end, she had $150$ of unbanked sales in cash. Which value for Janice’s sales was shown in the income statement?

Incomplete records

Sammy purchased goods on credit and then sent back some of them. How should he enter these returns in his books of account?

Books of prime entry

A trader supplied the information below. revenue $120\,000$ inventory held at the beginning of the year $9\,600$ inventory at the end of the year $10\,200$ A mark-up of $25\%$ is applied. What was the total of purchases for the year?

Sole traders

A trader gave the information below for the year that ended on 31 December. total cash and credit purchases of goods for resale $150\,000$ cash purchases of goods for resale $17\,000$ credit purchases of non-current assets $25\,000$ At that date, his trade payables stood at $8\,000$. What was the trade payables turnover ratio?

Calculation and understanding of accounting ratios

The details below are taken from an income statement. cost of sales was $15\,000$ gross profit was $10\,000$ motor expenses were $4\,000$ general expenses were $1\,000$ What is the profit margin for the year?

Calculation and understanding of accounting ratios

A business has a trade receivables turnover of 42 days. Trade receivables are given 30 days in which to settle their accounts. The business finds it hard to pay its credit suppliers. Which of the following statements are correct?

Interpretation of accounting ratios

A business does not include the skills or morale of its employees in its financial statements. Which accounting principle is being applied?

Accounting principles

What does the objective of understandability assume users of financial statements are expected to have?

Accounting principles

Peter’s accounting records showed the following account for Rami. Which statement is correct?

Control accounts

At the close of her financial year, Jasmine balanced her cash book and ledger accounts and carried out the necessary year-end transfers. Which statements are correct?

The trial balance

A trader acquired goods on credit from a supplier. In which book of prime entry should this transaction be entered?

Books of prime entry

Which account balance would be shown in the debit column of a trial balance?

The trial balance

The totals shown in a trial balance failed to agree, so a suspense account was opened. It was then discovered that the $100 total from the discount allowed column in the cash book had been credited to the discount allowed account. Which journal entry corrects this error?

Correction of errors

Once Yui had worked out his profit for the year, he found the following errors. 1. A purchase of a new motor vehicle costing $3200 had been debited to motor expenses. 2. The purchases account had been overcast by $500. What effect did correcting these errors have on the profit for the year? (Ignore depreciation)

Correction of errors

Anika began trading on 1 March 2024, yet she only started maintaining complete book-keeping records on 1 March 2025. Anika’s assets and liabilities on 1 March 2025 were: Premises $90 000 Motor vehicle $14 500 Inventory $3 625 Trade receivables: Kofi $3 000 Davia $2 140 Petty cash $86 Bank overdraft $1 080 Trade payables: Ado $1 925 Sam $210

Books of prime entry

Mo is a farmer. He draws up his financial statements to 31 December each year. He uses his delivery vehicle to take farm produce to his customers. Mo charges depreciation on vehicles at 20% per annum by the reducing balance method. In the year of purchase he charges a full year’s depreciation, and in the year of disposal he charges no depreciation. On 31 March 2024, he sold his delivery vehicle for $2 900 and was paid by cheque. He had bought this delivery vehicle in June 2021 for $10 000.

Accounting for depreciation and disposal of non-current assets

Nabil drew up a trial balance on 30 April 2025. The debit total was $95 428$, while the credit total was $95 156$. He put the resulting difference into a suspense account. Nabil then identified the errors shown in the table in part (a).

Correction of errors

H Limited draws up its financial statements to 30 April each year. In the year ended 30 April 2025, these events occurred: 1. The company reported profit for the year of $26 700 after debenture interest was charged. 2. $5 000 was transferred to the general reserve. 3. $5 340 in dividends was paid. No further dividends are due for the year. H Limited supplied these ledger account balances at 30 April 2025: Fixtures and equipment, book value $155 000 Motor vehicles, book value $16 875 Inventory $28 120 Trade payables $26 815 Trade receivables $33 000 Provision for doubtful debts $990 Bank overdraft $5 195 $5 000 5% Debentures (repayable 2029)

Limited companies

Grace runs a shoe factory. She also purchases handbags from a supplier and sells both the shoes and the handbags. Grace draws up her financial statements to 31 March each year. On 31 March 2025, the balances in her ledger accounts included these items: Inventory at 1 April 2024: Raw materials $5 345 Work in progress $13 820 Finished goods (shoes) $27 540 Purchases of raw materials $72 870 Carriage inwards of raw materials $1 220 Wages: Factory operatives $29 175 Factory supervisor $24 000 Office staff $26 170 Rent and insurance $12 000 Factory power $14 120 Factory equipment - at cost $180 000 Factory equipment - provision for depreciation $64 800 Further information: 1. Inventory at 31 March 2025: Raw materials $7 100 Work in progress $14 390 Finished goods (shoes) $27 985 2. Rent and insurance is to be split 65% to the factory and 35% to the office. 3. At 31 March 2025, Grace owed $1 315 for factory power and $2 000 for the factory supervisor’s wages. 4. Factory equipment is depreciated at 20% per annum using the reducing balance method.

Manufacturing accounts

Kadima is a trader. He only sells on credit. In March 2025, these transactions occurred. March 4 Paid Lee, $196, by bank transfer in full settlement of an invoice for $200 March 6 Received payment by cheque, $291, from Sophiah who had deducted 3% cash discount March 14 Paid motor expenses, $26, by cash March 19 Received payment by bank transfer, $375, from Merve, a customer March 22 Paid Mark, $240, by online transfer, having deducted 4% cash discount March 28 Withdrew $400 cash from the bank for business use March 29 Paid wages, $362, in cash March 30 Paid motor expenses, $91, by cheque

Books of prime entry

Farah and Salma are sisters operating as a partnership. Their partnership agreement states: interest on capital of 2% per annum interest on drawings of 4% per annum a salary to Farah of $11 200 per annum residual profits and losses to be shared as Farah 30%, Salma 70%. Farah and Salma gave the following information. Profit for the year ended 28 February 2025 $38 175 Capital accounts at 1 March 2024: Farah $52 000, Salma $75 000 Current accounts at 1 March 2024: Farah $3450 credit, Salma $1900 debit Drawings for the year ended 28 February 2025: Farah drawn from bank on 31 December 2024 $14 250; Salma drawn from bank on 31 December 2024 $14 250; Salma goods taken for own use 31 August 2024 $5750

Partnerships

Jasmine runs a consulting business. On 1 April 2024, the balances in Jasmine’s ledger accounts were as follows: Motor vehicles $16 000 Provision for depreciation of motor vehicles $7000 Trade receivables $12 220 Provision for doubtful debts $366 Rent (prepaid) $900 Rates (unpaid) $270 In the year ended 31 March 2025, Jasmine’s bank payments comprised: Motor vehicles $18 000 Rent and rates $14 960 Extra information: 1 Depreciation is to be calculated at 25% per annum by the reducing balance method. Vehicles bought during the year are to receive a full year’s depreciation. 2 Trade receivables at 31 March 2025 stood at $11 800. A further $300 remains to be written off as irrecoverable. 3 The provision for doubtful debts is to be kept at 3% of net trade receivables. 4 At 31 March 2025, prepaid rent amounted to $925 and rates owing were $185.

Accounting for depreciation and disposal of non-current assets

Bilal drew up a trial balance dated 31 December 2024. He then found these mistakes: 1 Goods withdrawn for Bilal’s personal use, with a cost of $185, had been entered as cash drawings. 2 Motor expenses of $63, paid by bank transfer, had been shown as $36. 3 Bilal’s introduced capital of $2000 had been posted to a bank loan account. 4 A purchase invoice for $84 from Maya had been debited to Moira’s account and credited to the purchases account. 5 Bilal’s private insurance of $130 had been entered as business insurance.

Correction of errors

Rexford operates as a trader, and every sale and purchase is made on credit. He does not keep a complete set of accounting records, but he has supplied the following details. Assets and liabilities as at 1 January 2024: Fixtures and fittings (cost) $28 000 Accumulated depreciation on fixtures and fittings $22 400 Inventory $6000 Trade receivables $21 750 Insurance prepaid $300 Cash at bank $3425 Trade payables $5680 Bank payments made during the year to 31 December 2024: Trade payables (after deducting cash discount of $380) $68 100 Rent and insurance $10 120 General expenses $4730 Wages $6400 Drawings $12 200 Additional information: 1 The only money received during the year to 31 December 2024 was $103 200 from trade receivables. 2 Rexford applies a mark-up of 50%. 3 Depreciation is charged at 20% using the straight-line method. 4 Inventory at 31 December 2024 was valued at $400 more than inventory at 1 January 2024. 5 The amount owed to trade payables at 31 December 2024 was 25% more than the amount owed at 1 January 2024.

Incomplete records

Anika began trading on 1 March 2024, although she did not begin keeping full book-keeping records until 1 March 2025. At 1 March 2025, Anika’s assets and liabilities stood at: Premises $90 000 Motor vehicle $14 500 Inventory $3 625 Trade receivables: Kofi $3 000 Davia $2 140 Petty cash $86 Bank overdraft $1 080 Trade payables: Ado $1 925 Sam $210

Books of prime entry

Mo is a farmer. He prepares his financial statements to 31 December each year. He uses his delivery vehicle to take farm produce to his customers. Mo charges depreciation on vehicles at 20% per annum by the reducing balance method. In the year of purchase he records a full year’s depreciation, and in the year of disposal he records none. On 31 March 2024, he sold his delivery vehicle for $2900 and received payment by cheque. He had bought this delivery vehicle in June 2021 for $10 000.

Accounting for depreciation and disposal of non-current assets

At 30 April 2025, Nabil drew up a trial balance. The debit total was $95 428, while the credit total came to $95 156. He entered the difference in a suspense account. He subsequently found the mistakes shown in the table in part (a).

Correction of errors

H Limited draws up its financial statements each year to 30 April. In the year ended 30 April 2025, the following events occurred: 1. After debenture interest had been charged, the company reported a profit for the year of $26 700. 2. $5000 was transferred to the general reserve. 3. A dividend of $5340 was paid. No further dividends are due for the year. H Limited supplied these ledger account balances at 30 April 2025: Fixtures and equipment at book value $155 000 Motor vehicles at book value $16 875 Inventory $28 120 Trade payables $26 815 Trade receivables $33 000 Provision for doubtful debts $990 Bank overdraft $5 195 5% Debentures (repayable 2029) $5 000

Limited companies

Grace owns a shoe factory. She also buys handbags from a supplier and sells both the shoes and the handbags. Grace draws up her financial statements to 31 March each year. At 31 March 2025, the balances in her ledger accounts included the following: Inventory at 1 April 2024: Raw materials $5 345 Work in progress $13 820 Finished goods (shoes) $27 540 Purchases of raw materials $72 870 Carriage inwards of raw materials $1 220 Wages: Factory operatives $29 175 Factory supervisor $24 000 Office staff $26 170 Rent and insurance $12 000 Factory power $14 120 Factory equipment at cost $180 000 Factory equipment - provision for depreciation $64 800 Additional information: 1. Inventory at 31 March 2025: Raw materials $7 100 Work in progress $14 390 Finished goods (shoes) $27 985 2. Rent and insurance is to be split 65% to the factory and 35% to the office. 3. At 31 March 2025, Grace owed $1315 for factory power and $2000 for the factory supervisor’s wages. 4. Factory equipment is depreciated at 20% per annum using the reducing balance method.

Manufacturing accounts