Account Alevels

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Question 1

Imperial Luxurious is a business providing marketing design services. On 1 March 2011 the following balances were extracted from the books:
£
Capital 150 000
Premises 120 000
Fixtures and fittings 24 000
Provisions for depreciation on:
premises 5 000
fixtures and fittings 6 000
Debtors 17 500
Creditors 8 500
Bank 8 000

For the month of March the following summarised transactions occurred: • Credit sales of £28 000 were invoiced to customers.
• Debtors paid cheques for £24 300 after being allowed £250 discount for prompt settlement. • Additional fixtures and fittings were purchased for £4 000 on credit. • Operating expenses of £4 750 were paid by cheque.

• Design materials of £1 350 were purchased on credit.
• After receiving £150 discount for prompt settlement, creditors were paid £6 200 by cheque. • Bank charges of £600 were charged to the bank account. • Wages of £12 000 were paid by cheque.

Required:
(a) Prepare the trial balance at 31 March 2011.
(10)

Additional information at 31 March 2011:
• Operating expenses of £1 600 were accrued.
• Depreciation is charged using the straight line method at the rate of: i) Premises 2% per annum
ii) Fixtures and fittings 15% per annum.

(b) Prepare the profit and loss account for the month of March 2011. (8)
(c)Prepare the statement of financial position as at 31 March 2011. (4)
(d) Name three (3) adjustments that do not affect the trial balance agreement. (3)
Question 2
The following information is available from the accounts of Gheetha for the year ended 30 November 2010. On 1 December 2009 the following account balances were in the books:
£
Electricity 250 CR
Marketing expenses 720 CR
Provision for doubtful debts 2000 CR

(i) The electricity account records show the following:
Cheque payments £
7 December 2009 250
14 March 2010 425
7 June 2010 385
26 September 2010 190
Refund by cheque
8 July 2010 65
On 30 November 2010 it was estimated that £170 was owing for electricity.

(ii) Marketing expenses records show the following:
Cheque payments £
20 December 2009 General marketing expenses 1800
18 April 2010 Marketing brochures 600
10 July 2010 General marketing expenses 1350
1 October 2010 Advertising campaign (for 3 months) 1200 On 30 November 2010 it was estimated that the following were prepaid: • Half of the marketing brochures purchased on 18 April 2010 remained. • The proportion of the advertising campaign unused.

(iii) A provision for doubtful debts was to be maintained from the following schedule of debtors: Age of Debt (months) Debtors 30 November 2010 (£) Provision (%) 0–3 months 15000 5

3–6 months 6000 10
Over 6 months 2000 20

Required:
(a) Suggest three advantages of applying accounting concepts when preparing the final accounts of a business. (4)
(b) Prepare the following ledger accounts for the year ended 30 November 2010. Each account should include the transfer to the profit and loss account for the year, and the balance to be carried down. (i) Electricity account

(ii) Marketing expenses account
(iii) Provision for doubtful debts account
(11)
Question 3
Poppy and Guppy each have a business buying and selling goods on credit. The summarized trading and profit & loss accounts and balance sheets for both businesses are as follows:

|Trading and profit & loss accounts for the year ended 30 September 2011 | | |Poppy |Guppy | | |£ 000 |£ 000 | |Sales...
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