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 2019Alexa’s books on 31 December 2019

$

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 number: 177 (2 of 3 Based on Passage) Show Passage

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Short Answer Question▾

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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. 31 December 2019 showing her Capital A/c balance.

Ledger Account

Debit

$

Credit

$

Explanation

31 December 2019 showing her Capital A/c balance. 31 December 2019 showing her Capital A/c balance.

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.

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