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.
| Dollar $ | |
| Opening Stock | 3500 |
| Sales | 75000 |
| Purchases | 50000 |
| Debtors | 7000 |
| Creditors | 10000 |
| Administration Expenses | 8000 |
| Cash at bank | 4000 |
| Drawings | 6000 |
| Machinery | 50000 |
| Provision for depreciation on Machinery | 15000 |
| 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)
| Ledger Account | Debit $ | Credit $ |
Explanation
| Ledger Account | Debit $ | Credit $ |
| Opening Stock | 3500 | |
| Sales | 75000 | |
| Purchases | 50000 | |
| Debtors | 7000 | |
| Creditors | 9500 | |
| Administration Expenses | 8000 | |
| Cash at bank | 4000 | |
| Drawings | 6000 | |
| Machinery | 50000 | |
| Provision for depreciation on Machinery | 10000 | |
| Capital | 34000 | |
| Total | 128500 | 128500 |
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.