A-AS Level (CIE) Accounting Paper-2: Specimen Questions with Answers 51 - 53 of 53

Doorsteptutor material for IMO-Level-2 is prepared by world's top subject experts: get questions, notes, tests, video lectures and more- for all subjects of IMO-Level-2.

Passage

Following is the trial balance of Joan՚s ltd.

Following is the Trial Balance of Joan՚s Ltd
ParticularsDebitCredit
Stock as on 01 - 04 - 20162,00, 000
Purchases and sales22,00, 00035,00, 000
Bills receivables50,000
Returns1,00, 00050,000
Carriage inwards50,000
Debtors and creditors2,00, 0004,00, 000
Carriage outwards40,000
Discounts5,0005,000
Salaries and wages2,20, 000
Insurance60,000
Rent60,000
Wages and salaries80,000
Bad debts10,000
Furniture4,00, 000
Brijesh՚s capital5,00, 000
Brijesh՚s Drawing70,000
Loose tools1,00, 000
Printing and stationary30,000
Advertising50,000
Cash in hand45,000
Cash at bank2,00, 000
Petty cash5,000
Machinery3,00, 000
Commission10,00030,000
Total44,85, 00044,85, 000

Adjustments:

  • Stock on 31st March was valued at cost price $ 4,20, 000 and market price $ 4,00, 000.
  • Depreciate furniture@10 % p. a. and machinery@20 % p. a. on reducing balance method.
  • Rent of $ 5000 was paid in advance
  • Salaries and wages due but not paid $ 30,000
  • Make a provision for doubtful debts@5 % on debtors
  • Commission receivable $ 5,000

Question 51 (3 of 3 Based on Passage)

Edit

Write in Short

Short Answer▾

Prepare Balance sheet as on 31st March 2017

Explanation

Balance Sheet as on 31st March 2017

Balance Sheet as on 31st March 2017
LiabilitiesAmount ($)Amount ($)AssetsAmount ($)Amount ($)
Joan՚s Capital5,00, 000Fixed Assets:
Less: Drawings70,000Furniture4,00, 000
Add: Net profit of the year7,40, 000Less: Depreciation40,0003,60, 000
11,70, 000
Machinery3,00, 000
Less: Depreciation60,0002,40, 000
1,00, 000
Long term Liabilities:
Current liabilities:Current assets:
Stocks4,00, 000
Sundry debtors2,00, 000
Less: provision for doubtful debts10,0001,90, 000
Bills receivables50,000
Cash in hand45,000
Cash at bank2,00, 000
Petty cash5,000
Prepaid rent5,000
Commission receivables5,000
Sundry Creditors4,00, 000
Outstanding salaries and wages30,000
16,00, 00016,00, 000

Question 52

Edit

Write in Short

Short Answer▾

Using Sum of the year՚s digits method calculate depreciation for the following:

A machine costing $ 48,000 is scheduled to be depreciated over five years. The sum of years digit is 15 (Year 1 + Year 2 + Year 3 + Year 4 + Year 5) .

Explanation

The Depreciation in Each of the Five Year Is

Question 53

Edit

Write in Short

Short Answer▾

What is a trading account?

Explanation

Trading account is prepared in accountancy to calculate the gross profit or gross loss arising or incurred due to the trading activities of a business. In other words, it is prepared to show the result of manufacturing, buying, and selling of goods. If amount of sales exceeds the amount of purchases and the expenses directly connected with such purchases, the difference is termed as gross profit. On the contrary, if purchases and direct expenses exceed the sales the difference is called gross loss. A trading account records the amount of purchases of goods and the expenses which relate to either purchase of raw material or manufacturing of goods are recorded in the trading account. All such expenses are called “Direct Expenses”

“Trading account shows the result of buying and selling of goods. In preparing this account, the general establishment charges are ignored and only transactions in goods are included”

Developed by: