CIE Accounting Paper-2: Specimen Questions 55 - 55 of 103

Passage

Miss. Rosy started a small business as a sole proprietor in the year 2013 and had the following transaction during the year:

  • Commenced business with cash £200000
  • Purchases made for cash £80000 and credit £120000
  • Made Sales of £160000 in cash of goods costing £120000
  • Rent paid £2000 and outstanding rent for the year was £400
  • Bought car on credit £20000
  • Purchased a mobile phone for personal use £20000
  • Purchased a land for cash £80000

Question number: 55 (5 of 7 Based on Passage) Show Passage

Essay Question▾

Describe in Detail

How will Miss Rosy account for the above transactions in her books of accounts using the Accounting Equation?

Explanation

Assets=Liabilities+Capital

£358000=£140400+£217600

£358000=£358000

Accounting Equation in the books of Miss Rosy for the year 2013 2014

Table of amount and liability.

ASSET

AMOUNT

CAPITAL

AMOUNT

LIABILITY

AMOUNT

1

Cash

200000

=

Capital

200000

+

LIABILITY

0

200000

=

200000

2

Cash

120000

=

Capital

200000

+

Creditors

120000

Stock

200000

320000

=

200000

+

120000

3

Cash

280000

=

Capital

240000

+

Creditors

120000

Stock

80000

360000

=

240000

+

120000

4

Cash

278000

=

Capital

238000

+

Creditors

120000

Stock

80000

358000

=

238000

+

120000

5

Cash

278000

=

Capital

237600

+

Creditors

120000

Stock

80000

O/S rent

400

358000

=

237600

+

120400

6

Cash

278000

=

Capital

237600

+

Creditors

140000

Stock

80000

O/S rent

400

Car

20000

378000

=

237600

+

140400

7

Cash

258000

=

Capital

217600

+

Creditors

140000

Stock

80000

O/S rent

400

Car

20000

358000

=

217600

+

140400

8

Cash

178000

=

Capital

217600

+

Creditors

140000

Stock

80000

O/S rent

400

Car

20000

Land

80000

358000

=

217600

+

140400

WORKINGS:

shows table of cash, capital and stock details

shows this table is working of all details

2

Cash

200000

5

Capital

238000

Less: Purchases stock

80000

Less: O/S Exp

400

120000

237600

3

Cash

120000

6

Creditors

120000

Add Sales

160000

Add Car

20000

280000

140000

Capital

200000

7

Cash

278000

Add Profit

40000

Less: Mobile phone

20000

240000

258000

Stock

200000

Capital

237600

Less Sales

120000

Less: Phone Personal use

20000

80000

217600

4

Cash

280000

Less Rent paid

2000

8

Cash

258000

278000

Less: Land

80000

178000

Capital

240000

Less: Expense Rent

2000

238000

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