Mid Term Revision Ans

BUS 10250 Financial Accounting Mid term Revision
Question 1

Financial year is from 1/6/20x8 to 31/5/20x9

Rent

Rent charged was $2,400 from 1/1/20x8 to 31/12/20x8 which was $200 per month.
Rent charged was $3,000 from 1/1/20x9 to 31/12/20x9 which was $250 per month.

Rent expense charge to income statement for year ended 31/5/20x9 should be:

1/6/20x8 to 31/12/20x8 total $1,400
1/1/20x9 to 31/5/20x9 total $1,250

Hence, total rent expense charge to the income statement for the year ended 31/5/20x9 was $2,650.

Rent has been paid to 30/6/20x9, i.e prepaid rent of one month = $250 carried down to next accounting year.

Rates

Rates charged was $2,040 from 1/4/20x8 to 31/3/20x9 which was $170 per month.
Rates charged was $2,280 from 1/4/20x9 to 31/3/20x0 which was $190 per month.

Rates expense charged to income statement for year ended 31/5/20x9 should be:

1/6/20x8 to 31/3/20x9 total $1,700
1/4/20x9 to 31/5/20x9 total $380

Hence, total rates charged to income statement for the year ended 31/5/20x9 was $2,080.
Rates had been paid to 31/3/20x9 and so there is two months rates accrued total $380.

Question 2

Andrea Howell
Income statement for the year ended 31 May 20X9

$
$
Sales

405,000
Less: Cost of sales

Inventory at 1 June 20X8 27,400

Add: Purchases (259,600-1,040)
258,560

285,960

Less: Inventory at 31 May 20X9 25,900

260,060
Gross profit

144,940
Add: Discount received

4,420 Provision for bad debts (0.5% x 46,200 – 280)

49

149,409
Less: Expenses

Depreciation on:

Property 900

Equipment 8,625

Discount allowed 3,370

Wages and salaries (52,360 + 140)
52,500

Bad debts 1,720

Loan interest 1,560

Carriage outwards 5,310

Other operating expenses (38,800 – 500 + 200)
38,500

112,485
Net profit for the year

36,924

Andrea Howell
Statement of financial position as at 31 May 20X9

$
$
$

Non current assets

Cost
Accumulated depreciation
Net book value
Property
90,000 13,400