CIE Accounting Paper-2: Specimen Questions 14 - 16 of 103

Passage

ABC & Co. started business on 1st January 2014 with a capital of £240000.

During the month, the following transactions took place:

2nd Bought goods from XYZ on credit £60000

5th Sold goods to MNO £75000

5th Cash Purchases £75000

8th Cash Sales £45000

9th Goods returned to XYZ £ 6000

15th Bought Furniture £45000

16th Cash paid to XYZ £36000

16th Loan taken from Mr. K £90000

17th Goods Returned by MNO £9000

20th ABC takes stock for personal use £9000

21st Cash received from MNO £36000

25th Salary paid £15000

28th Purchase of Stationery £ 3000

29th Amount paid to Mr. K on loan Account £ 54000

30th Interest received £12000

Question number: 14 (4 of 5 Based on Passage) Show Passage

Essay Question▾

Describe in Detail

Prepare the stock ledger A/C

Explanation

Table Title: Stock ledger A/C in the books of ABC & Co.

shows Table Title: Stock ledger A/C in the books of ABC & Co.

DATE

PARTICUALRS

JF

AMOUNT

£

DATE

PARTICUALRS

JF

AMOUNT

£

02.01. 2014

To XYZ A/C

60000

05.01. 2014

By MNO A/C

75000

05.01. 2014

To cash A/C

75000

08.01. 2014

By Cash A/C

45000

17.01. 2014

To MNO A/C

9000

09.01. 2014

By XYZ A/C

6000

20.01. 2014

By drawings A/C

9000

31.01. 2014

By balance C/D

9000

144000

144000

01.02. 2014

To balance B/D

9000

Question number: 15 (5 of 5 Based on Passage) Show Passage

Essay Question▾

Describe in Detail

Prepare the trial balance of ABC & Co for the month ended 31.01. 2014

Explanation

Trial balance of ABC & Co as on 31.01. 2014

shows Trial balance of ABC & Co as on 31.01. 2014

PARTICULARS

LF

DEBIT AMOUNT

£

CREDIT AMOUNT

£

Cash A/C

195000

Capital A/C

240000

Stock A/C

9000

XYZ A/C

18000

MNO A/C

30000

Furniture A/C

45000

Loan from Mr. K A/C

36000

interest A/C

12000

Salaries A/C

15000

Drawings A/C

9000

Stationery A/c

3000

Total

306000

306000

Passage

Mr. Jack purchases machinery at a cost of £100000. The life of the machinery is said to be 3 years At the end of 3 years the machinery is sold as scrap at £20000.

Question number: 16 (1 of 5 Based on Passage) Show Passage

Short Answer Question▾

Write in Short

Why should Mr. Jack depreciate his machinery before selling it as scrap?

Explanation

Any asset over a period of time becomes old and incurs wear and tear expenditure. Hence Mr. Jack should depreciate his machinery to know the book value of it in order to ascertain whether he sold the asset at profit or loss.

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