1 Accruals and prepayments – expenses Exercise 1 On 1 January Year 4, the following were 3 of the account balances in E Parker’s ledger: ledger: £ Rent 230 Dr Insurance 65 Dr Advertising 110 Cr During the year ended 31 December Year 4, he paid the following amounts by cheque:
31 Jan 28 Feb 31 May 31 Aug 31 Aug 30 Sep
£ 110 460 690 690 180 250
Advertising Rent Rent Rent Insurance Rent
Additional information: information: (1) The monthly rent was increased to £250 from 1 October Year 4. (2) An advertising bill amounting to £85 had not been paid by 31 December Year 4. (3) The insurance premium paid on 31 August Year 4 covered the year ended 31 August Year 5.
Required Prepare accounts in the ledger of E Parker for the year ended 31 December Year 4, for: (i) rent (ii) insurance (iii) advertising. advertising. Give particular attention to dates, and show, in each account, the transfer to the Profit & Loss Account for the year ended 31 December Year 4.
Exercise 2 The following details are from the books of Melville & Co for the year ended 30 September Year 9:
Sales Purchases Stock at 1 Oct Yr 8 Stock at 30 Sep Yr 9 Wages and salaries Heating and lighting Rent and rates Motor-vehicle Motor-vehic le expenses
wages and salaries owing amount to £620 rent payable accrued due, £250 rates prepaid amount to £180 heating and lighting accrued due, £60 office stationery is in stock amounting to £380.
Required Prepare for Melville & Co a Trading and Profit & Loss Account for the year ended 30 September Year 9.
Exercise 3 The following are details relating to N Tulloch’s Rent Payable Account: Account: Year 5 30 Jun 8 Sep 27 Nov
Balance on the account of £300, representing representing 2 months’ rent paid in advance advance Paid £450 by cheque, being rent for the 3 months ended 30 November Year 5 Paid £720 by cheque, being rent for the 4 months ended 31 March Year 6
Year 6 9 Apr
Paid £360 by cheque, being rent for the 2 months ended 31 May Year 6
Required Prepare for N Tulloch the Rent Payable Account for the year ended 30 JuneYear 6. Balance the account at the year end and show the transfer to the t he Profit & Loss Account.
Exercise 4 Tan Lian, a sole trader, had the following account balances on 1 January Year 5: £ Insurance Office expenses Rent payable
70 160 240
Dr Dr Cr
During Year 5, the following payments were made by cheque: Year 5 26 Jan 9 Feb 25 Feb 12 Apr 8 Jun 25 Aug 6 Nov 11 Dec
Office expenses: purchase of stationery, £63 Rent for 4 months ended 31 March Year 5, £960 Insurance for 6 months ended 31 August Year 5, £210 Office expenses, £92 Rent for 4 months ended 31 July Year 5, £1,040 Insurance for 6 months ended 28 February Year 6, £240 Rent for 4 months ended 30 November Year 5, £1,040 Office expenses, £280 2
At 31 December December Year 5, there was a stock stock of stationery valued valued at a cost of £90.There £90.There was no further increase in the monthly charge for rent in December Year 5.
Required Open the 3 accounts listed above and enter the transactions that occurred in Year 5. Balance the accounts and make the appropriate transfers to the Profit & Loss Account for the year ended 31 December Year 5.
2 Accruals and prepayments – income Exercise 1 M Paine, a sole trader, is about to prepare his final accounts. As book-keeper, you need to adjust the figures shown in certain accounts. M Paine’s financial year ends on 31 December Year 5. At that date, certain accounts carry the following balances: £ Rates 1,960 (Dr) Telephone 215 (Dr) Insurance 760 (Dr) Rent receivable 3,840 (Cr) Wages 45,630 (Dr) You ascertain the following information relating to the accounts above. (1) Rates – Rates – included in the Rates Account is a payment of £900 for the half-year to 31 March Year 6. (2) Telephone – Telephone – the amount accrued due, not yet paid to 31 December Year 5, is £47. (3) Insurance – Insurance – a premium of £720 paid for the year to 31 January Year 6 is included in the Insurance Account. (4) Rent receivabl r eceivable e – the tenant owes £160 for rent outstanding at 31 December Year 5. (5) Wages – Wages – the amount accrued due at 31 December Year 5 was £840.
(a) Open these accounts, enter the balances given, deal with the accrual or prepayment as necessary, and show the transfers to the Profit & Loss Account. (b) Show how any remaining balances on the above accounts would appear in the balance sheet of M Paine at 31 December Year 5.
Exercise 2 L Reinholdt is a theatrical agent whose accounting year ends on 31 December. He provides 3
the following details for the year ended 31 December Year 10: (1) On 1 January, 3 months rent had been paid in advance – advance – £1,200. On 1 April, he paid 6 months rent in advance – £2,400. On 1 October, he paid rent for the 6 months ending 31 March Year 11 – 11 – £2,700. (2) On 1 January, commission due to Reinholdt, and not yet received, amounted to £3,200. January – –December: December: commission received – received – £64,300. At 31 December, December, commission due due and not yet received received in respect respect of Year 10 amounted amounted to £4,700. (3) On 1 January, the estimated amount outstanding on the Telephone Account was £320. On 31 March, he paid the telephone bill in respect of the previous 6 months, £510. On 30 September, he paid the telephone bill in respect of the previous 6 months, £520. On 31 December, the estimated amount outstanding on the Telephone Account was £300.
(a) Prepare the following accounts for Reinholdt for the year ended 31 December Year 10: (i) Rent Account (ii) Commission Receivable Account (iii) Telephone Account.
(b) Prepare a balance sheet extract for Reinholdt at 31 December Year 10, showing how the 3 balances would appear.
Exercise 3 At 1 January Year 8, 8, L Johnston, a trader, trader, owed £320 fo forr rent, but her rates were were prepaid by £110. During Year 8, she made the following payments by cheque: Rent 2 Apr 28 Sep
£ 600 630
Rates 7 Apr 5 Oct
At 31 December December Year 8 there was was accrued rent of of £350 and rates were prepaid prepaid by £120. £120.
Required Prepare L Johnston’s combined Rent & Rates Account for Year 8, showing the transfer to t o the Profit & Loss Account and the account fully balanced.
Exercise 4 The following information relates to some of the expense and income accounts of 4
Jan Goldsmith for the year ended 31 December Year 5:
£ Insurance Paid by cheque Prepaid Prepaid
23 Feb Yr 5 31 Dec Yr 4 31 Dec Yr 5
630 85 95
Stationery Paid by cheque 19 Mar Yr 5 Stock 31 Dec Yr 4 Stock 31 Dec Yr 5 Owing to stationery stationer y suppliers 31 Dec Yr 5
765 130 160 45
Telephone Paid by cheque Paid by cheque Owing Owing
11 Jun Yr 5 4 Dec Yr 5 31 Dec Yr 4 31 Dec Yr 5
295 285 64 56
Rent payable Paid by cheque Paid by cheque
16 Feb Yr 5 12 Aug Yr 5
31 Dec Yr 4 31 Dec Yr 5
Rent receivable Received by cheque Received by cheque Owing Owing
31 30 31 31
450 375 75 150
Mar Yr 5 Sep Yr 5 Dec Yr 4 Dec Yr 5
(a) Prepare the 5 ledger accounts, incorporating the information given above, for the year ended 31 December Year 5. In each account, show the transfer to the Profit & Loss Account and bring bring down the balance(s) at 1 January January Year 6 6.. balance (b) Show how the balances on the accounts would be displayed in Jan Goldsmith’s balance sheet at 31 December Year 5.
Exercise 5 In the books of Frank Napier, a sole trader, the following account balances were brought forward on 1 July Year 4:
During the year ended 30 June Year 5, the following amounts were paid by cheque: Year 4 25 Jul 1 Aug 5 Sep 24 Oct
Office cleaning (3 months to 31 Jul Yr 4) Insurance premium (6 months to 31 Jan Yr 5) Advertising Office cleaning (3 months to 31 Oct Yr 4)
£ 390 270 260 390
Year 5 26 Jan 1 Feb 8 Mar 21 Apr
Office cleaning (3 months to 31 Jan Yr 5) Insurance premium (6 months to 31 Jul Yr 5) Advertising Office cleaning (3 months to 30 Apr Yr 5)
420 300 210 420
The following amounts were received by cheque during the year ended 30 June Year 5: Year 4 17 Aug 3 Oct 15 Dec
Rent (1 May May – – 31 Aug Yr 4) Rent (1 Sep Sep – – 31 Oct Yr 4) Rent (1 Nov Nov – – 31 Dec Yr 4)
£ 700 350 380
Year 5 12 Jan
Advertising (part refund)
3 Mar 19 May
Rent (1 Jan Jan – – 31 Mar Yr 5) Rent (1 Apr – – 31 Jul Yr 5)
Frank Napier was aware that, at the end of his financial f inancial yea year, r, 30 June Year 5, there t here was an outstanding advertising bill for £190 and 2 months’ payment outstanding on the office offi ce cleaning account, at £140 per month.
(a) Open the following accounts: (i) Advertising (ii) Insurance (iii) Office Cleaning Cleaning (iv) Rent Receivable.
(b) Post the various items to the accounts. (c) Show the transfer entries to the Profit & Loss Account for the year ended 30 JuneYear 5. (d) Balance the accounts at 30 June Year 5. Note You are not required to show the Profit & Loss Account.
Exercise 6 The following information is from the books of Enterprise Servic Services es in respect of the year ended 30 June Year 9: 6
Rent Receivable Year 8 1 Jul 1 Oct Year 9 1 Apr
£ 3 months’ rent prepaid 630 630 8 months’ rent received by cheque
6 months’ rent received by cheque at revised revised rate of £2,960 per annum
Rates Year 8 1 Jul 1 Oct Year 9 1 Apr
3 months’ rates prepaid Paid 6 months’ rates by cheque
Paid 6 months’ rates by cheque
Advertising Year 8 1 Jul 28 Aug
Accrued due Paid by cheque
Year 9 15 May
Paid by cheque
Printing and Stationery Year 8 1 Jul 14 Sep Year 9 12 Feb At 30 June Year 9: 9:
Stock of stationery Purchased stationery by cheque
Paid printing account by cheque
(1) Payments for advertising during the year included £580 for poster advertising that was due to be carried out in August Year 9. (2) The stock of stationery was valued at £3,100. There was also an unpaid invoice for £615 for printing.
(a) Prepare the following accounts for the year ended 30 June Year 9, including transfers to the Profit & Loss Account and year-end balances. (i) Rent Receivable (ii) Rates (iii) Advertising (iv) Printing and Stationery
(b) Show, in the form of a balance sheet extract, how the balances on these accounts would appear at 30 June Year 9. 7
Question 1 From the followi f ollowing ng information prepare T Swinton’s Swinton’s office stationery account for the tow year ended 31 December Year 3 and 31 December Year 4 respectively. Year 3 Jan 1 Jan 1 – 1 – Dec 31 Dec 31
Year 4 Jan 1 – 1 – Dec 31 Dec 31
Balance of stationery stationer y in stock £ 615 Office stationery stationer y purchased by cheque during the year £ 2,020. Stock of office stationer stationery y valued at £ 490.
Office stationery purchased by cheque during the year £1, 960 Stock of office stationery valued at £ 580.
Question 2 From the following details prepare K Laport’s La port’s rent account for the t he year ended 31 December Year 5. Balance the account at the year-end, showing the transfer to profit and loss account. Year 5 Jan 1 Mar 25 Oct 2
balance on the account £240, representing one quarter’s rent paid in advance. advance. Paid by cheque £ 480, rent for the half-year ended 30 September year 5. Paid by cheque £ 540, rent for the half-year ended 31 March year 6.
Question 3 From the following particulars prepare office cleaning account for the year ended 30 September Year 6. 30 September Year 5
-Invoice for £160 received from cleaning company for 2 months ended 30 September year 5and not yet entered in the books.
October Year 5September Year 6
-Accounts -Account s paid by cheque for office cleaning £ 990.
30 September Year 6
-Invoice for £ 170 received from cleaning company for 2months ended 30 September Year 6and not yet entered in the books.
Question 4 P Jones, a sole trader, had the following account balances on 1 January Year 7: 8
Rent payable Cr £ 70
Insurance Dr £ 40
Telephone Cr £ 45
Rates Dr £ 210
During the year, the following f ollowing payments payments were made by cheque:
1 Rent payable (quarterly, in advance)
Insurance Insuranc e premium for year to 31 January Year 8
Rent payable (increased (increas ed amount)
rates for half year to 30 Sep year 7
Telephone bill bill
rates for the half year to 31 March Year 8
P Jones calculates that at the end of the t he financial year, 31 December Year 7, he owes £ 60 for telephone cells.
Required Open the four accounts listed above, and post the necessary items to them. Balance the accounts and make the appropriate transfers to the profit and loss account for the year ended 31 December Year 7.
Question 5 On 1 January Year 6, the following were 3 of the account balances in K jordan’s ledger: £ Insurance
320 Dr 9
During the year ended 31 December Year 6, K Jordan’s received and paid the following amounts by cheque. Receipts £
Additional Information: (1)
-The insurance premium paid on 26 March Year 6 covered the period until 31 march year 7. The premium was treated as evenly spread over the year.
-The monthly rent was increased to 360 from 1 July Year 6. The payment on 4 November covered the period until 31 January Year 7.
-£ 210 of commission which was due had not been received by 31 December Year 6.
Required (a) Prepare Accounts in the Ledger of K Jordan for the year ended 31 December Year 6, for: (i)
(iv) (b) Show how the balances on the above accounts would would be displayed in K Jordan’s balance sheet at 31 December Year 6.
3 Depreciation of fixed assets Exercise 1 10
Jack Millard commenced business on 1 January Year 3 and on that date purchased a motor vehicle for £10,400. On 31 December Year 3, he wished to determine the depreciation expense for the year just completed. He is unsure whether to use the:
(a) straight line method – method – the vehicle would have a 3-year life with an estimated resale value of £4,100; method – using a rate of 40% on cost. (b) reducing balance method –
Required To help Jack Millard decide between the 2 methods, draw up and complete the following table:
Depreciation charge in Profit & Loss Account for the year ended 31 Dec Year 3 £
Net book value at 31 Dec Year 3 £
Method (a) (b)
Exercise 2 Charles Day started a business on 1 January Year 4. On that date, he purchased by cheque a motor van costing £9,600 from Greenaway Motors Ltd. He decided to depreciate this asset, using the rate of 40% per annum on the reducing balance method. He also Purchased, on the same day, on credit, fixtures and fittings costing £15,000 from P J Shop Fitters Ltd. He decided to depreciate these fixtures and fittings using the straight line method. He estimated that they would have a useful life of 15 years, and would have a scrap value of £2,100. He kept the asset accounts at cost, and used a provision for depreciati depreciation on account for each asset.
Required Prepare for Charles Day the following accounts for each of Years 4, 5, 6, and 7: (i) Motor Van (ii) Provision for Depreciation of Motor Van (showing calculations to the nearest £) (iii) Fixtures and Fittings (iv) Provision for Depreciation of Fixtures and Fittings.
Exercise 3 Required With reference to T/15.2, prepare an extract to show how both assets would appear in Charles Day’s balance sheet at 31 December Year 7. 7. 11
Exercise 4 On 8 February Year 5, Southern Stores bought a computer for use in the office, paying £8,600 by cheque. It was decided to provide for depreciation by use of the straight line method. It was estimated that, at the end of 5 years, the residual (scrap) value would be £600. On 12 September Year 5, Southern Stores purchased a motor vehicle for use in the business, paying £10,000 by cheque. The vehicle was to be depreciated at the rate of 40% per annum, using the reducing balance method. The business retained the asset accounts at cost and dealt with depreciation using a separate Provision for Depreciation Account for each asset.The financial year ends on 31 December. Any asset purchased purchased in the first 6 mo months nths of a year has a whole year’s year’s depreciation depreciation provided, while any asset purchased in the second half of the year has only half a year’s depreciation written off.
(a) Prepare the following accounts for the years ended 31 December Years 5, 6, and 7: (i) Computer Equipment (ii) Provision for Depreciation Depreciation of Computer Equipment (iii) Motor Vehicle (iv) Provision for Depreciation of Motor Vehicle.
(b) Show a balance sheet extract at 31 December Year 7 for both the Computer Equipment and Motor Vehicle Accounts.
Exercise 5 D Amos purchased fixtures and fittings for £6,000 by cheque on 1 January Year 3. On 1 July of the samehis year, heassets purchased by cheque a motor vehicle for £18,000. He decided to depreciate fixed as follows: f ollows: (1) Fixtures and fittings – fittings – using the straight line method. He estimated that they would have a working life of 8 years, with a residual (scrap) value of £1,000. (2) Motor vehicle – vehicle – using the reducing balance method. method. He set the rate at 40% on reducing balance each full year. He kept the asset accounts at cost and kept accumulated depre depreciation ciation of each type of asset in a separate Provision for Depreciation Depreciation Account. Assets acquired during the year were depreciated from the date of purchase.
Required In the books of D Amos, prepare the following following accounts for the 3 financial years ended 31 December Year 3,Year 4, and Year 5, balancing the accounts at the end of each year: 12
(i) Fixtures and Fittings (ii) Provision for Depreciation of Fixtures and Fittings (iii) Motor Vehicle (iv) Provision for Depreciation of Motor Vehicle.
Exercise 6 On 1 January Year 4, Frank Saunders purchased furniture and equipment by cheque for £11,000. He decided to provide for depreciation on this asset using the straight line method over 8 years. He estimated that the scrap value at the end of that time would be £600. On 14 February Year 4, he purchased a motor van by cheque for £8,400, for use in the business. He decided to provide for depreciation on this asset at the rate of 40% per annum, using the reducing balance method. He allowed a full year’s depreciation in the year of of purchase and calculated the depreciation to the nearest £. On 31 December Year 6, he sold the motor van for £3,200 and was paid by cheque. His practice is to record and leave the asset accounts at cost and to accumulate accumulate the depreciation in a Provision for Depreciation Account for each asset. His financial year ends on 31 December.
Required In the books of Frank Saunders, open the following accounts and enter the transactions for the years ended 31 December Years 4, 5, and 6: (i) Furniture and Equipment (ii) Provision for Depreciation Depreciation of Furniture and Equipment (iii) Motor Van (iv) Provision for Depreciation of Motor Van (v) Disposal of Motor Van.
Question: 1 A motor vehicle vehicle is bought for £ 12,800. 12,800. It is planned to be be used for 5 years years and then sold for £ 400. Calculate the depreciation for each year using (a) The straight ling method; and (b) The reducing balance method; applying a depreciation rate of 50%
Question: 2 A machine costing costing £ 20,000 was was purchased by R Silvester by cheque cheque on 1 July July Year 3. He decided to depreciate it at the rate of 40 % per annum using the reducing balance method. a) Show the 13
Provision for depreciation of machine account for the three years ending 30 June Years 4, 5 and 6.
b) Show how the asset would appear in the balance sheet of R Silvester on 30 30 June Year 6.
Question: 3 On 1 January year 6, Tanya Green bought a motor vehicle for £ 6,500 by cheque. She decided to depreciate the motor vehicle by 25 % per annum using the straight line method of depreciation. She sold the motor vehicle on 31 December Year 8 for £ 1,750 received in ash. Show the (a) Motor vehicle account (b) Provision for depreciation of motor vehicle account, and (c) Disposal account for financial years ending 31 December year 6, 7 and 8.
4 Bad debts and provision for doubtful debts Exercise 1 F Openshaw submitted the following following information at 31 March for Years 4, 5, and 6:
Total debtors before writing off bad debts £
Bad debts to be written off £
31 Mar Yr 4
F Dale T Wylie
31 Mar Yr 5
31 Mar Yr 6
A Dolt E Fox
Openshaw provides for doubtful debts at the rate of 21/2% of the remaining debtors at the end of each financial year. At 31 March Year 3, the provision for doubtful debts was £380.
(a) In the books of F Openshaw, prepare the following accounts for the years ended 31 March Years 4, 5, and 6, including the transfers to the Profit & Loss Account at the end of each financial year: (i) Bad Debts (ii) Provision for Doubtful Debts.
(b) Show extracts from the balance sheets of F Openshaw at 31 March Years 4, 5, and 6, placing debtors under current assets.
Exercise 2 (a) It is the practice of Coniston & Son to write off bad debts as they occur and to provide for doubtful debts. For the 3 years from the commence commencement ment of business to 31 December Year 3, the following information is available: At year ended 31 December: December:
Year 1 £
Year 2 £
Year 3 £
Balance of debtors before writing off bad debts Bad debts to be written off
Provision for doubtful debts, as a percentage of debtors
Required (i) Prepare the following accounts for Years 1, 2, and 3, showing the transfers to the Profit & Loss Account at the end of each year: ● Bad Debts ● Provision for Doubtful Debts. (ii) Show the balance sheet extract in respect of debtors at 31 December each year.
(b) On 7 June Year 4, Coniston & Son received a payment of £129 from S Atkins for an outstanding debt of £320. Coniston wrote off the balance as a bad debt. Required Show the account of S Atkins in Coniston’s ledger. ledger.
Exercise 3 At 31 December December Year 8, AB & Co has debtors debtors totalli totalling ng £42,560. Debts Debts amounting to £760 £760 have yet to be written off as bad. A specific provision is to be created covering in full the following debts: D £620 E £570 F £710 15
A general doubtful doubtful debts provision provision of 4% of remaining remaining debts is al also so to be created. No provision exists as yet.
(a) Show in a statement: (i) how the 2 provisions provisions are calculated (ii) the amount of net debtors. (b) Show as an extract how the item ‘debtors’would appear in the balance sheet of AB & Co Co at 31 December Year 8.
Exercise 4 Donald Lisher, a sole trader, maintains a provision for doubtful debts that he adjusts at the end of each financial year. At 1 January Year 8, the balance on the account was £860. The following additional information is available: available:
Year ended 31 Dec Yr 8 31 Dec Yr 9 31 Dec Yr 10
Bad debts written off during year £ 1,235 1,640 1,320
Debtor year-end balances £ 25,300 29,600 28,800
Provision for doubtful debts % 4 6 5
On 12 October Year 10, Donald Lisher received a cheque for £240 in respect of a debt which had been written off in Year 9.
(a) From the above information, prepare for the years ended 31 December Years 8, 9, and 10: (i) the Bad Debts Account, including the closing entries; (ii) the Provision for Doubtful Debts Account, showing the balance carried forward each year.
(b) Show, in a brief statement, the entries which would be made in the books of Donald Lisher to record the recovery of £240 for the debt written off in Year 9. Note Bad debts written off should not be taken to the Provision for Doubtful Debts Account.
Exercise 5 The accounting year of R Cleaver, a trader, ends on 31 December.At 31 December Year 3, his trade debtors amounted to £37,500 and he had a provision for doubtful debts amounting to 2% of debtors. 16
During Year 4, Cleaver wrote off debts as follows: (1) The whole of the debt of £460, due from f rom L Paul, was written off as irrecoverable on 15 August Year 4. (2) Another debtor,K Sang, who owed £220, paid a contribution of 25%; the balance was immediately written off as irrecoverable on 26 November Year 4. At 31 December December Year 4, debtors amounted amounted to £41,000 £41,000 and the provision provision for doub doubtful tful debts was adjusted to 2.5% of this figure. In Year 5, bad debts written off amounted to £560. In addition, on 20 October, K Sang paid the balance of his debt, which had been written off in Year 4. It was the practice of Cleaver to keep a Bad Debts Recovered Account for recording debts recovered in a year following the one in which they were written off. At 31 December December Year 5, debtors amounted amounted to £39,000 £39,000 and the Provision Provision for Doubtful Doubtful Debts was adjusted to 2% of this figure.
Required Prepare the following accounts to include the above information relating to the years ended 31 DecemberYear 4 and 31 December Year 5: (i) L Paul (ii) K Sang (iii) Bad Debts (iv) Provision for Doubtful Debts (v) Bad Debts Recovered.
Question: 1 On 30 June Year 4, the end of his financial year, T Smithers found that his debtors mounted to £ 26,760. Included in this figure were debts amounting to £ 460 which Smithers regarded as irrecoverable and which he now decided to write off. He also decided to create a rovision for doubtful debts at 4% of total debtors. Prepare: (a) The bad debts account; and (b) The provision for doubtful debts account in both cases balanced at the end of the financial year.
Question: 2 A Att 31 March 2002 William john’s trade debtors amounted to £ 60,000. Included in this amount were irrecoverable debts of £ 5,000, which William decided to write off following this write off, William adjusted his Provision for doubtful Debts to t o 2% of debtors.
At 31 March 2003, William’s debtors had increased in total to £ 80,000 and included in this amount were irrecoverable debts of £ 10,000, which William W illiam decided to write off as bad debts. The Provision for Doubtful debts was than adjusted to 4% of debtors. At 31 March 2004, William’s debtors had increased further in total to t o £ 90,000 and this t his was after writing off bad debts of £ 250. The Provision for doubtful debts was reduced to 3% of debtors.
Required: Prepare the following accounts for each of the years ended 31 March 2002, 2003 and 2004: (i) Bad Debts (ii) Provision for Doubtful Debts The balance on the provision for doubtful Debts account at 1 April 2001 was £ 800.
Question: 3 B Tanner owns a wholesaling business. He adjusts the provision for doubtful debts at the end of each financial f inancial year. Irrecoverable Irrecoverable debts are written off debtors’ accounts as they become known. The following information is available: B debts Net total For the Written off debtors Year ended during year at year end £ £ 31 March year 5 1,120 19,700 31 March year 6 2,370 26,500 31 march year 7 1,680 24,300
Percentage rate of provision for doubtful debts 6% 5% 4%
Required: From the above information, prepare: (a) The bad debts account including the closing entries for the years ended 31 march year 5, 6 and 7. (b) The provision for doubtful debts account for the same years showing the provisi provision on carried forward each year. The balance on the account at 1 April Year 4 was £ 910. (c) An extract from each year’s balance balance sheet, showing showing the entry for debtors. debtors.
Question: 4 Ruper Tancred, whose financial year end is 31 March, summarized the following information in respect of the last three trading years: Year 13
year 15 18
Customer balances at 31 March
Bad debts: written off during the year To be written off at 31 march
Doubtful debts: Specific provision required at 31 March1, 260 General Provision at 31 march to be adjusted to: 2%
At 1 April year 12, the provision provision for doubtful debts brought brought forward w was as £ 1, 970.
Required: (a) Prepare ledger accounts accounts for each of the three years for: (i) had debts: and (ii) provision for doubtful debts. (b) Show how debtors would appear in the balance sheet at 31 March year 15.
5 Bank reconciliation statements Exercise 1 The following information is available in respect of A W olfson, a trader:
Year 5 1 Sep Balance b/f 5 Sep Sales 10 Sep T Swithin 15 Sep Sales 23 Sep K Smart 25 Sep T Hunt 28 Sep Sales
CASH BOOK (bank only) £ Year 5 2,806 4 Sep Purchases (915) 1,020 9 Sep Wages (916) 857 16 Sep N Victor (917) 1,370 24 Sep Rent (918) 524 26 Sep Wages (919) 413 27 Sep N Hills (920) 1,245 29 Sep S Twitchin (921) 30 Sep Purchases (922) 540 30 Sep Balance ?
(a) Calculate the missing balance in the Cash Book and enter it in your answer book as the balance brought down at 30 September Year 5. (b) Bring the Cash Book up to date by entering in it the t he items you consider appropria appropriate te from the bank statement. Balance the Cash Book and bring down the new balance at 1 October Year 5. (c) Prepare the bank reconciliation statement at 30 September Year 5.
Exercise 2 The following is a copy of of F Holme’s Cash Book for April Year 5: 5: CASH BOOK
(a) Starting with the balance of £3,576, bring F Holme’s Cash Book up to date by posting to it the items you consider appropriate from the bank statement. Balance the Cash Book and bring down the new balance on 1 May Year 5. (b) Prepare a bank reconciliation statement at 30 April Year 5, commencing with the bank statement balance of £7,804.
Exercise 3 The following information relates to the business of M Rhodes: Bank statement at 30 June Year 5 Debits Credits £ £
1 Jun 5 Jun 5 Jun 8 Jun
Balance 10659 10658 Counter credits
11 Jun 13 Jun 15 Jun 15 Jun 19 Jun 24 Jun
Standing order – – Ajax Insurance 242 10660 459 Counter credits 10661 150 Standing order – – L White Direct debit – Town Council 517 10663 324 10665 138 Charges 74
26 Jun 29 Jun 30 Jun
230 176 813
Cheque book counterfoils £ A Parry 176
Balance £ 4,619 4,389 4,213 5,026
Cr Cr Cr Cr
4,784 4,325 5,446 5,296 5,758
Cr Cr Cr Cr Cr
5,241 4,917 4,779 4,705
Cr Cr Cr Cr
7 Jun 11 Jun 22 Jun 23 Jun 23 Jun 25 Jun 29 Jun
10660 10661 10662 10663 10664 10665 10666
8 Jun S Moon G Race 15 Jun Rayne & Co C Mills T Orchard
L Goddard A Parry D Fletcher Lines Ltd Star & Co A Parry C Thorpe
Note Cheques are paid into the bank on the day they are received. Required
(a) Write up the bank account in the books of M Rhodes starting with a debit balance of £4,619 on 1 June Year 5. Entries should be in date order. (b) Prepare a bank reconciliation statement at 30 June Year 5, commencing with the bank statement balance of £4,705.
Exercise 4 You are required to prepare a bank statement from the details below. Thomas Snodden banks at Wilmster Bank, 46 High Street, Ledbury, Eastshire LE2 5SR 5SR – – account number 96015. On 1 September Year 2, he had a balance at the bank of £126.00 (Dr).The following were his transactions with the bank during Setpember Year 2: 4 Sep Received cheque from R Grafton for £57.00 6 Sep Drew cheque no 100567 payable to T Lucas £95.50 This was debited to Snodden’s account on 11for September 9 Sep The bank made a standing order order payment to Moody Moody Publish Publishers ers for £162.00 12 Sep Drew cheque no 100568 payable to N Swift for £73.00 This was debited to Snodden’s account on 16 September 14 Sep Received by credit transfer from f rom K Hanson £214.00 17 Sep Drew cheque no 100569 payable to T Cavendish for £106.50 This was debited to Snodden’s account on 21 September 20 Sep Received cheque from N Speedy for £165.00 22 Sep The bank made direct debit payment to Eastwise Electricity for £89.00 25 Sep The bank made credit transfer payment to Spacewell Ltd for £105.00 27 Sep Received cheque from L Morsewell for £235.00 30 Sep The bank charged interest of £17.00
Note Any cheques received received by Thomas Thomas Snodden are paid into the bank bank on the day of receipt. receipt. In 22
each instance above, the bank credited Snodden’s account on the same day.
Question: 1 Suppose that Sandra Renton’s cash book for the t he month of March Year 3 appears as follows:
Cash Book (Bank Columns) Year 3
T Lyle (236715)
R Brown (236716)
T Brentomre (236717) 95
F wragg (236718)
The balance at this state, shown as a separate note, is a debit balance of £ 350. Sandra receives the following bank statement.
Year 3 Mar 1
Standing order Block & Trent
T Lyle (236715)
Credit transfer: A Zimm
R Brown (236716)
Direct debit: B Traders Association Associati on
Question: 2 The following information relates to the banking transactions of N Swann for the month of August year 5: Cash book (bank columns only) Year 5
General expenses expenses (1012)
drawings (1014) (1014)
purchases (1015) (1015)
T Wagstaffe (1018)
Provisional Dr balance £ 2,716
Bank statement Dr
£ 2,420 Cr 2,353 3,188 3,052
Year 5 Aug 1 Aug 3 Aug 4 Aug 7
Balance 1012 Credit standing order order (rates)
Aug 11 Aug 15 Aug 20 Aug 22 Aug 23 Aug 27 Aug 29 Aug30
1013 1014 1015 direct debit (insurance) (insurance) Credit 1017 Credit transfer – – T Palmer Bank interest
67 835 136 330 140 406 153 716 345 268 8
2,722 2,582 2,176 2,023 2,739 2,394 2662 2,670
Required: a) Starting with the cash book balance balance of £ 2,716 on 31 August year 5, brin bring g the cash book up to date by entering the appropriate items at the end of August and bring down the revised balance at 1 September year 5. 24
b) Prepare the bank reconciliation reconciliati on statement for N Swann at 31 August Year 5, starting with the bank statement balance. balance.
6 Capital and revenue expenditure Exercise 1 State whether each of the following is capital expenditure or revenue expenditure.You only have to write one word, either ‘capital’ or ‘revenue’ in each case. (1) Purchase of a motor van for use within the business. (2) Purchase of goods intended for resale in the normal course of business. (3) Purchase of petrol for the motor van. (4) Purchase of materials to be used in building an extension e xtension to the firm’s business premises. (5) Payment of insurance insurance on the business premises.
Exercise 2 Matthew Dawalla owns a restaurant and the following were some of his transactions during the year ended 31 October Year 7: (1) Purchase of flour for immediate use in the kitchen. (2) Purchase, in September Year 7, of a motor van for delivery of prepared foods to customers. (3) Payment for advertising. (4) Payment for carriage inwards in respect of foodstuffs for the kitchen. k itchen. (5) Payment of £6,400 for work done on the restaurant premises. £5,100 was for an extension to the restaurant seating area, while the remainder was for painting and decorating decoratin g tthe he restaurant. (6) Payment for heating and lighting. (7) Purchase, in July Year 7, of new ovens for the kitchen. (8) Payment for expenses of running the motor van.
Required State whether each of the t he 8 transactions is revenue expenditure, capital expenditure, or both. If an item is both capital and revenue expenditure, you should state the respective amounts.
Exercise 3 JK Distributors Ltd purchases motor vehicles from manufacturers and sells them to other companies and to the general public. Jameson Partners is a firm of accountants. Required Classify the following transactions into either capital expenditure or revenue expenditure. Transactions by JK Distributors Ltd: (1) Purchase of motor vehicles for resale. (2) Purchase of a transporter lorry for moving vehicles. (3) Payments for the building of a showroom extension. (4) Salaries and commission paid to showroom sales staff. (5) Purchase of a computer for stock control purposes. Transactions by Jameson Partners: (1) Purchase of motor vehicles for use in the business. (2) Purchase of an office safe. (3) Rent paid for use of office premises. (4) Payment of course fees for staff training. (5) Payment of staff salaries and travelling expenses.
Exercise 4 P Arkan is a builder. He designs and builds superior houses to meet individual customer specification. The following invoices were received from suppliers in October Year 4:
£ Invoice 1
From Mellow Brick Company: 40,000 high quality bricks Delivery charge From Premier Equipment Company: One earth moving machine 4 replacement tyres for existing machine From Excel Office Supplies: One photocopier photocopier for use within the firm 10 reams of copier paper
From Arbor Construction Construction Company: Building an extension to the cement storage area Repairs to fencing as instructed: Fencing panels and other materials Labour charges
12,400 1,475 1,060 14,935
Required Analyse the amount amount of each invoice invoice and apportion apportion it to capital expenditure expenditure and revenue expenditure. Present your answer in a table as follows:
Capital expenditure £
Revenue expenditure £
Total expenditure £
Invoice 1 Invoice 2 Invoice 3 Invoice 4
Exercise 5 Show the effect of the way each of the following transactions was recorded in the accounts of a retailer of electrical equipment. e quipment. If there was no effect, state ‘no effect’. effect’.
Transaction (1) Purchase of motor vehicle for deliveries deliveries to customers – customers – entered in Purchases Account
Effect on Net profit
(2) Invoice for electricity wrongly entered in Water Supply Account (3) Payment for repairs to premises entered in Premises Account (4) Bill for petrol for delivery vehicle entered in Motor Vehicle Account (5) Invoice for legal services in respect of the purchase of premises entered in Office Expenses Account (6) The cost of installing installing new shop fittings was charged to Wages Account
Exercise 6 This question has reference to the information given in exercise 2 (Matthew Dawalla). Matthew Dawalla makes no provision for depreciation in respect of fixed f ixed assets purchased in the last 6 months of any financial year. Using the format shown below, indicate by means of a tick which of the Trading Account, Profit & Loss Account, or balance balance sheet prepared prepared at 31 October Year Year 7 would be affected by each of the transactions. In the case of item (5), also state the amount.
Profit & Loss Account
(2) (3) (4) (5) (6) (7) (8)
Exercise 7 Andrew Smithers Smithers has recently prepared prepared the following following Trading and and Profit & Loss Account: Account: Andrew Smithers Trading and Profit & Loss Account for the year ended 30 September Year 3 £ £ Sales of goods sold: less Cost Opening stock Purchases
less Closing stock Gross profit less Expenses: Rent Wages General expenses Net loss
73,200 3,860 49,750 53,610 4,200
4,400 18,900 860
On reviewing his books of account you find that: (1) The item ‘Purchases’ includes: includes: 28
a desktop computer bought for use in the office for £2,200; a new delivery van bought for use in the business for £7,600; the purchase of materials for extending the shop premises £2,350.
(2) The sales figure includes the sale of the old delivery van for £1,600. This figure had been shown in the books at £3,400. (3) The closing stock includes £300 of materials in hand for work on extending the shop premises. (4) Rent accrued £400. (5) The figure for wages includes £2,100 for building work on extending the shop premises. Andrew Smithers Smithers tells you that he wishes wishes to allow £1 £1,500 ,500 first-year depreciation depreciation on the new delivery van.
Required Prepare a revised Trading and Profit & Loss Account for Andrew Smithers for the year ended 30 September Year 3.
Exercise 8 John Bradford ended his first year of trading on 31 DecemberYear 4. He has no knowledge of book-keeping and accounts but has prepared what he calls his profit statement for the year: John Bradford Profit statement at 31 December Year 4 £ £ Cash takings from customers 22,664 Purchases Goods for resale 14,173 Motor vehicle, bought 1 Jan Yr 4 2,200 16,373 Advertising 838 Vehicle running costs 1,092 Wages paid 2,640 Insurances 310 Heat and light Cash taken for own use Profit
Other information at 31 December Year 4: (1) Customers invoiced for £1,082 had not yet paid their accounts. (2) Wages accrued due £286. (3) Purchases that had cost £1,730 were still unsold (stock). (4) John Bradford expects the motor vehicle to last 3 years and to have a trade-in value then of £700.
(a) State what important distinction John Bradford has failed to make in his treatment of the motor-vehicle purchase. 29
(b) Prepare a revised Trading and Profit & Loss Account for John Bradford for the year ended 31 December Year 4.
Question: 1 Compupro is a small computer and data processing bureau. In a certain trading period it enters into the following transactions: (a) (b) (c) (d) (e)
The purchases of supplies of computer print-out paper, all of which is expected to be used within the current trading period The renewal of insurance on the computer hardware Expenditure on increasing increasing the security to the building in which the bureau’s facilities f acilities are situated The wages of the computer operators The adding of extra storage capacity to computer used within the bureau
Required: State in respect of the above whether you would treat the item as capital expenditure or revenue expenditure, giving the reason for your choice. Set out your answer in two columns as follows:
Capital or Revenue
Expenditure (A) (B) (C) (D)
Question: 2 (a) Required Briefly explain (I) capital expenditure expenditure and (ii) revenue expenditure. (b) During the year, the following transactions took place for a business which operates as a general store: (1)
Purchase by cheque of a motor vehicle costing £ 4,620, to be used to make deliveries deliveries to customers.
Payment by cheque of £ 3,550 for work done on the shop premises owned by the firm. £ 2,800 was for an improvement to the shop front, whilst £ 750 was for paining and decorating the inside of the shop premises. (3) Payment by cheque £ 160 for stationery. stationer y. (4) Expenses for three months for the motor vehicle, paid by cheque £ 230
Purchase of goods on credit at a cost of £ 3,460. These goods were intended for resale in the normal course of business. (6) Wages of £ 250 and materials costing £ 240, used by the firm’s own employees, in building a store at the rear of o f the business shop.
Required: Indicate for each of the six transactions whether it is capital expenditure, expenditure, revenue expenditure or both, stating the mount.
7 Final accounts and adjustments further considered Exercise 1 J Salmon, a sole trader, prepared the following trial balance from her books at 30 June Year 6: Dr Cr £ £ Motor vehicles at cost 80,000 Fixtures and fittings at cost 82,000 Purchases and purchases returns 263,500 7,300 7,300 Sales and sales returns 3,400 370,000 370,000 Stock (1 Jul Yr 5) 15,700 Discounts 2,300 1,600 Provision for doubtful debts 600 Bad debts 650 Debtors and creditors Capital Drawings Provision for depreciation: depreciation: Motor vehicles Fixtures and fittings Rent Motor-vehicle Motor-vehicl e running expenses Rates and insurances Salaries Cash at bank Cash in hand Lighting and heating
(1) Depreciation is to be provided as follows: Motor vehicles Fixtures and fittings
25% on cost 10% on cost
(2) Stock was valued at cost £17,400. (3) The provision for doubtful debts is to be set at 2% of the debtors. (4) Motor-vehicle running expenses at £510 and lighting and heating at £420 were accrued. (5) The rates and insurances were prepaid by £120.
Required Prepare for J Salmon:
(a) a Trading and Profit & Loss Account for the year ended 30 June Year 6 (b) a balance sheet at 30 June Year 6.
Exercise 2 Hilda Braquette prepared the following trial balance at 31 October Dr £ Stock at 1 Nov Yr 4 6,820 Fixtures and fittings at cost 14,000 Provision for depreciation of fixtures and fittings fittin gs at 1 Nov Yr 4 Bank 3,200 Cash in hand 148 Debtors and creditors 10,300 Motor vehicles at cost 24,000 Provision of motor vehicles atfor 1 depreciation Nov Yr 4 Purchases and sales Discounts allowed and received Drawings Motor-vehicle Motor-vehicl e running expenses Wages Bad debts Provision for doubtful debts Returns inwards and outwards Rent Light and heat Insurance Office expenses Capital
Additional information information at 31 October October Year 5:
£ (1) Stock at cost (2) Insurance prepaid (3) Accrued due: Light and heat Office expenses
£ 8,460 240
(4) Depreciation is provided as follows: Fixtures and fittings – 10% per annum on cost Motor vehicles – 20% per annum on cost (5) Provision for doubtful debts is to be adjusted to 4% of debtors
Required For Hilda Braquette, prepare:
(a) the Trading and Profit & Loss Account for the year ended 31 October Year 5 (b) a balance sheet at 31 October Year 5.
Exercise 3 The following trial balance was extracted from the ledger ledger of P Lippis, a sole trader, on 31 March Year 12: Dr Cr £ £ Business premises at cost 85,000 Purchases and sales 39,800 64,650 Capital 93,420 Stock at 1 Apr Yr 11 8,310 Purchases returns 285 Fixtures and fittings at cost 12,700 Provision for depreciation of fixtures f ixtures and fittings 2,540 Trade debtors: R Evitts Prince K J Carr Archway Supplies Supplies Trade creditors: K Porter Archway Supplies Supplies Cash in hand Cash at bank Wages Advertising Heat and light Insurances Other expenses Drawings
The following additional information information is to t o be taken into account: (1) Stock valued at cost on 31 March Year 12, £7,935. (2) Accruals at 31 March Year 12: wages £230; heat and light £98. (3) Prepayment at 31 March Year 12, Insurances £46. (4) Lippis received a bank statement, showing that there t here was a balance in his favour on 31 March Year 12, amounting to £1,140.A creditor had not yet presented a cheque drawn by Lippis for £79, and the bank applied bank charges amounting to £32. (5) Depreciation was to be provided on fixtures and fittings at 10% per annum on cost. (6) Archway Supplies was Lippis’ main supplier.U supplier.Unusually,Archw nusually,Archway ay purchased goods from Lippis, and it was agreed that the debtor balance should be a contra against the creditor balance.
Required Prepare for P Lippis:
(a) a Trading and Profit & Loss Account for the year ended 31 March Year 12 (b) a balance sheet at 31 March Year 12.
Exercise 4 At 31 December December Year 3, the end of of her first year of trading, trading, Hilda Braquette Braquette produced the following list of stock items and asked for your help:
Original cost £ 2.00 5.00
Selling price £ 3.00 7.50
Stock value £
20 broken – broken – to be thrown away 40 damaged – damaged – saleable at half price old stock
20 damaged – damaged – saleable at half price
Required Calculate the stock valuation of each item and total to show the value of Hilda Braquette’s closing stock at 31 December Year 3.
Exercise 5 The following balances were included in the trial balance of James Hanson at 31 March Year 4: Debit Credit £ £ Purchases and sales 18,620 29,410 34
Returns Stock at 1 Apr Yr 3
At 31 March Year 4, 4, James Hanson counted counted and valued valued his stock in hand hand at cost, £1,382. This included the following 3 items of stock:
Item 1 Item 2 Item 3
Net realizable value
£ 120 72 80
£ 140 60 45
Required (a) Prepare a statement, starting with the stock value of £1,382, showing any necessary adjustments in respect of the 3 items of stock above, to show a new stock valuation at 31 March Year 4. (b) Prepare a Trading Account for James Hanson for the year ended 31 March Year 4.
Exercise 6 The financial year of F Lang, a trader, ends on 31 March. F Lang sells goods at a mark-up of 331/3% on cost price. On 31 March Year 4, the value of his stock at cost was £12,360. On 17 March Year 5, he provisionally valued his stock at £14,220. Between 18 March Year 5 and the end of that financial year, the following took place: (1) Lang bought goods to a purchase invoice value of £740. (2) He returned goods to suppliers that had been invoiced to him at £273. (3) He sold goods to a selling value of £1,320. (4) Lang took goods that had cost £195 for his own private use.
Required (a) Prepare a statement adjusting adjusting the value of stock at 31 March Year 5 for entry into the Stock Account at cost price. the effect the adjustment of theYear value5.of stock on the amount of the gross (b) Calculate profit £94,800 for theofyear ended 31 March
(c) Prepare the Stock Account for the years ended 31 March Years 5 and 6 respectively, assuming that the value of stock at 31 March Year 6 was £15,300.
Question: 1 Moon, a sole trader, extracted the following trial balance from his books at the cost of business on 31 May year 8. Dr Cr £ £ Balance at Bank
Cash in hand Stock 1 June year 7 Office furniture and equipment cost Discounts allowed and received Motor vehicle (cost) Debtors and creditors Drawings 6,000 Provision for Depreciation (at 1 June year 7) Office furniture and equipment equipment Motor vehicle Purchases and sales Provision for doubtful debt Wages and salaries Rents Rate and insurance Lighting and heating Sales returns and purchases returns Motor vehicle expenses Postage and stationery Sundry expenses
120 3,850 8,000 620 7,500 9,600
124,760 18,200 6,000 1200 580 210 1,960 270 490
Capital at 1June year 7
2,400 3,000 165,970 200
In addition the following information should be taken into account. (1) (2) (3) (4)
Closing stock at 31 may year 8 valued at £ 4,200. Accrued due but unpaid – unpaid –wages wages and salaries £ 1,320. Rates and insurances – insurances – prepaid by £ 160. The depreciation provision for the fixed assets is to be increased as followings: Office furniture and equipment equipment £ 800 Motor vehicle £ 1500 Provision for doubtful debt is to be increased by £ 40.
Required: Prepare, in respect of J Moon, the (a) Trading and profit and loss accounts for the year ended 31 May May year 8. (b) Balance sheet at 31 May year 8.
Question: 2 John Cleaver has just completed his second year of trading. His trial balance, extracted from ledger at 31 December year 2, is as follows: 36
Capital Loan from brother Purchases and sales
John Cleaver Trial balance at 31 December year 2 Dr Cr £ £ 26,120 8,000 49,370 82,578
Returns inwards and outwards Stock 1 January year 2 Drawings Debtors and creditors Bank overdraft Bank interest Wages Rent Insurance Heat and light Advertising Delivery costs Bad debts
188 3,930 12,300 22,100
245 5,593 1,860 270 440 265 1,803 436
Fixed assets (at cost) 32000 Accumulated depreciation depreciation on fixed assets to 31 December year 1
The following adjustments are to be taken into account: (1) Stock at 31 December year 2 £ 2,876. (2) Cleaver borrowed the £ 8,000 from his brother broth er on 1 January year 2. He has agreed to pay 15% interest per annum but no payment has yet been made. (3) Provide for annual depreciation depreciation of fixed assets at 10% on cost.
Required: Prepare Pre pare cleaver’s trading and profit and loss account for the year ended 31 December year 2 and a balance sheet at that date.
Question: 3 M Tiong, a sole trader engaged in wholesaling, extracted the following trial balance from his books at the close of business on 30 April year 5:
M Tiong 37
Trial Balance at 30 April year 5 Dr £ Office furniture and equipment Discounts 1,170 Cash at bank 3,240 Cash in hand 160 Stock 1 May year 4 Purchases and sales Rent, rates and insurance Delivery vehicle, at cost Provision for depreciation on delivery vehicle Debtors and creditors Wages and salaries Provision for doubtful debts Capital 1 May year 4 Drawings Vehicle running expenses Sundry expenses
2,970 13,890 2,340 7,400 8,400 9,350
Cr £ 6,000 390
2,000 3,650 600 20,000
4,500 1,840 410 61,670
Addition, Tiong has noted the following following points: points: (1) Stock at 30 April year 5 has been valued at £ 3,160.
Wages accrued amount to £ 280.
The depreciation provision on the delivery vehicle is to be increased by £ 1,200. A provision provision of £ 500 is to be created created in respect respect of depreciation depreciation on office furniture and equipment.
The provision for doubtful debts is to be set at 5% of debtors.
During the year, Tiong took goods, at a cost price of £ 90, for his own use. He has not yet recorded this in the books of account.
Insurance paid in advance is £ 120.
Required: Prepare, in respect of M Tiong: (a) The trading and profit and loss account for the year ended 30 April year 5 (b) A balance sheet at 30 April year 5.