CIE Accounting Paper-2: Specimen Questions with Answers 57 - 59 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: 57 (7 of 7 Based on Passage) Show Passage

Short Answer Question▾

Write in Short

Show Miss. Rosy’s balance sheet as on 31.03. 2014.

Explanation

Balance Sheet of Miss Rosy as on 31.03. 2014

shows table of Balance Sheet of Miss Rosy as on 31.03. 2014

LIABILITIES

AMOUNT

AMOUNT

ASSETS

AMOUNT

AMOUNT

Capital

200000

Cash

178000

Add Profit on sale

40000

Building

80000

240000

Stock

80000

Less: Drawings (Phone)

20000

Car

20000

220000

Less: Expenses (Rent)

2000

218000

Creditors: Stock

120000

Car

20000

140000

Outstanding rent

400

358000

358000

Passage

Fancy dresses show the following information as on 31.12. 2012.

Debtors- £164000, Bad debts during the year 2012 amounts to £4000, Bad debts for the year 2013 amounts to £2000. Provision for bad and doubtful debts in 2012 is £5000 and for the year 2013 is@5%. Discount allowed in 2012 is £2000 and for the year 2013 a provision for discount on debtors is created@2%.

Question number: 58 (1 of 5 Based on Passage) Show Passage

Essay Question▾

Describe in Detail

Show the treatment of the above entries in the profit and loss account of Fancy dresses for the year ending 31.12. 2012

Explanation

Profit and loss account in the books of Fancy dresses for the year ended 31.12. 2012

shows given table in Profit and loss account in the books of Fancy dresses for the year ended 31.12. 2012

PARTICUALRS

AMOUNT

AMOUNT

PARTICUALRS

AMOUNT

AMOUNT

To Bad debts

4000

Add: New bad debts

2000

6000

Add: New Provision on bad debts@5%

8100

14100

Less: Old provision on bad and doubtful debts

5000

9100

To discount allowed

2000

To provision for discount on debtors

3078

SOLUTION:

New provision@5%= Debtors – new bad debts

= 164000 – 2000

=162000 * 5%

=8100

Provision for discount on debtors

= 162000 – 8100

= 153900 * 2%

= 3078

Question number: 59 (2 of 5 Based on Passage) Show Passage

Essay Question▾

Describe in Detail

How will the bad debts and the provision for bad and doubtful debts be treated in the balance sheet of Fancy dresses as on 31.12. 2012

Explanation

Balance sheet of Fancy dresses as on 31.12. 2012

Shows table of Balance sheet of Fancy dresses as on 31.12. 2012

LIABILITIES

AMOUNT

AMOUNT

ASSETS

AMOUNT

AMOUNT

Sundry debtors

164000

Less: Bad debts

2000

162000

Less: Provision for bad & doubtful debts@5%

8100

153900

Less: Provision for discount on debtors@2%

3078

150822