IGCSE Accounting Paper-2: Specimen Questions with Answers 177 - 177 of 189

Passage

The following balances were extracted from Alexa՚s books on 31 December 2019.

Alexa՚s Books on 31 December 2019
Dollar $
Opening Stock3500
Sales75000
Purchases50000
Debtors7000
Creditors10000
Administration Expenses8000
Cash at bank4000
Drawings6000
Machinery50000
Provision for depreciation on Machinery15000
Capital?

Question 177 (2 of 3 Based on Passage)

Write in Short

Short Answer▾

Prepare Alexa՚s Trial Balance as at 31 December 2019 showing her Capital A/c balance. (Marks 12)

31 December 2019 Showing Her Capital a/C Balance
Ledger AccountDebit $Credit $

Explanation

31 December 2019 Showing Her Capital a/C Balance
Ledger AccountDebit $Credit $
Opening Stock3500
Sales75000
Purchases50000
Debtors7000
Creditors9500
Administration Expenses8000
Cash at bank4000
Drawings6000
Machinery50000
Provision for depreciation on Machinery10000
Capital34000
Total128500128500

All expenses and assets have a debit balance whereas all the incomes and liabilities have a credit balance.

  • Machinery, Opening Stock, Debtors, Cash at bank are assets.
  • Purchases, Administration Expenses are expenses.
  • Provision for Depreciation is a Contra Asset A/c as it reduces assets. So, it has a credit balance.
  • Capital and Creditors are liabilities.
  • Sales is an Income.
  • Drawings are Contra Capital A/c as it reduces capital. So, it has a debit balance.

The balance of capital is calculated as follows-

(I) The closing stock was valued at $ 2500

(II) The depreciation for the current year is charged@20 % on reduced balance.

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