A-AS Level (CIE) Accounting Paper-2: Specimen Questions with Answers 38 - 40 of 53
Passage
The following balances have been extracted from the books of Jennings Company Limited as at 31st December, 2018.
Dr. | Cr. | |
Machinery | 1,60, 000 | |
Land and Building | 6,74, 000 | |
Depreciation on Machinery | 16,000 | |
Purchases (adjusted) | 4,00, 000 | |
Closing Stock | 1,50, 000 | |
Wages | 1,20, 000 | |
Sales | 10,00, 000 | |
Salaries | 80,000 | |
Bank overdraft | 2,00, 000 | |
10% Debentures (issued on 1.1. 04) | 1,00, 000 | |
Equity share capital-2000 shares of $ 100 each-fully paid | 2,00, 000 | |
Preference share capital-1000,6% shares of $ 100 each- fully paid. | 1,00, 000 | |
16,00, 000 | 16,00, 000 |
The board of directors of the Jennings Company Limited has decided to make the following appropriations:
(i) To declare equity dividend on paid-up capital
(ii) To pay dividend on the preference share capital in full
(iii) To transfer $ 2,00, 000 to general reserve
Question 38 (1 of 3 Based on Passage)
Write in Short Short Answer▾
Prepare the Profit and loss account for the year ended 31st December, 2018.
EditExplanation
Profit and Loss Account for the Year Ended 31st December, 2018
$ | $ | ||
To Purchases | 4,00, 000 | By sales | 10,00, 000 |
To Wages | 1,20, 000 | ||
To Gross Profit c/d | 4,80, 000 | ||
10,00, 000 | 10,00, 000 | ||
To Depreciation | 16,000 | By Gross Profit b/d | 4,80, 000 |
To Salaries | 80,000 | ||
To Debenture interest outstanding | 10,000 | ||
To Depreciation | 3,74, 000 | ||
4,80, 000 | 4,80, 000 |
Question 39 (2 of 3 Based on Passage)
Write in Short Short Answer▾
Prepare Profit and loss appropriation account for Jennings Company limited.
EditExplanation
Profit and Loss Appropriation Account for the Year Ended 31st Dec, 2018
$ | $ | ||
To General Reserve | 2,00, 000 | By balance b/d | 3,74, 000 |
To proposed dividend | |||
On Preference share capital 6,000 | 26000 | ||
On equity share capital 20,000 | 1,48, 000 | ||
To balance of profit c/d | 3,74, 000 | 3,74, 000 |
Question 40 (3 of 3 Based on Passage)
Explanation
Assets which are acquired for permanent use in the business and are not meant for resale are called fixed. Such assets are purchased once and last for many years such as goodwill, land, buildings, leaseholds, railway sidings, plant and machinery, furniture, development of property, patents, live-stock, vehicles etc.
- In case of fixed assets, original cost of each asset, additions made during the year, cost of the asset sold during the year and the total depreciation provided on each asset up to the end of the year are to be stated separately.
- If all such details cannot be conveniently included in the balance of sheet itself, a separate schedule containing all such details will be annexed to the balance of sheet and it will form a part of the balance sheet.