Jol’13
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YEAR 12 - ACCOUNTING
UNIT THREE: Recording and Reporting for a Trading Business
SAC 2 – TEST 1 Version 1
Question 1: Nhi’s Accounting Solutions
Nhi owns a business selling solutions to accounting problems. Her journals have been prepared,
however, the following adjustments are yet to be recorded at 31 March 2013.




The payment of $200 to Creditor: Hussein was incorrectly recorded in the Creditor:
Hairy account.
Discount Revenue of $300 was incorrectly credited to the Discount Expense account.
A debtor Amy was declared bankrupt. Of the $3000 debt owed to Nhi, only 10 cents in
every dollar will be received.
A physical stock take revealed a stock loss of $250
a. Record the above entries into the General journal. Narrations are not required.
2+2+3+2 Marks
Total: 9 Marks
Question 2: Dean’s Drawings
Dean provides you with the following adjusted trial balance. He prepares his reports on a
monthly basis.
Dean’s Drawings
Adjusted Trial Balance at 30 April 2013
Advertising
300 Accrued Wages
1 500
Bank
2500 Capital
67 900
Cost of Sales
50 000 Creditors Control
12 000
Debtors Control
25 000 Discount Revenue
300
Discount Expense
2 000 Loan – Artistic Loans
5 000
Drawings
4 600 Sales
80 000
Electricity
300
Furniture and Fittings
10 000
Prepaid Stationery
1 500
Stationery Used
500
Vehicle
38 000
Wages
32 000
166 700
166 700
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a. Prepare the General Journal entries to close the revenue and expense accounts to the
Profit and Loss Summary Account. Narrations are not required.
10 marks
b. Complete the capital account.
4 marks
c. Justify why revenue and expense accounts should be closed.
3 marks
Total: 17 marks
Question 3: Oliver’s Sleepy Dreams
On 1 March 2013 Oliver set up a business by contributing the following assets and liabilities.
$
Computer System
(see below)
Delivery Truck (new)
40 000
Truck Loan (Auto Finance)
25 000
Cash
20 000 (Receipt 1)
Details of the computer system are as follows.
•
Oliver had used the computer system in a previous business. The original cost for the
system was $30 000, but Oliver and the accountant had determined an agreed market value of
$15 000 at 1 March 2013.
• The computer was transferred to the business on 1 March 2013.
a. Prepare the journal entries to record the capital contribution. A narration is not
required.
5 marks
Question 4: Simon’s Surfing Sports
Simon’s Surfing Sports entered into a contract for rent of premises on 1 December 2012. The
rent is paid 6 monthly in advance for $6600 (including GST) (Cheque 1098). The contract
states, that the payment for the next 6 months beginning 1 June 2013, will increase by 10%.
a. Record the payment made on the 1 December in the Cash Payments Journal.
1 mark
b. Calculate rent expense for the quarter ended 30 June 2013.
2 marks
c. Record the adjustment for rent expense in the General Journal for the quarter ended 30
June 2013. A narration is required. (Memo 62)
3 marks
d. Justify, with reference to a principle why the rent expense is different to the rent paid for
the reporting period.
3 marks
Total: 9 marks
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Question 5: Ashley’s Dress Shop
At balance day 30 June 2013, the business owed $220 in electricity. (memo 66)
a. Record the adjustment for electricity in the General Journal at 30 June 2013. A
narration is not required.
2 marks
On the 5 July 2013, electricity of $495 including GST, was paid using cheque 299.
b. Record the payment of electricity in the Cash Payments Journal.
2 marks
Total: 4 marks
Question 6: Mark’s Maltese School of Language
Mark has purchased some new office furniture for $16 500 including GST on 1 July 2011. He
had it installed at a cost of $2200 including GST. Mark is unsure which method of depreciation
he should use.
a. Calculate the depreciation of the office furniture using the 10% straight line method for
the year ended 30 June 2013.
2 marks
b. Record the depreciation expense in the ledger.
2 marks
c. Define depreciation
2 marks
d. Using 15% reducing balance method calculate depreciation expense for the year ended
30 June 2013.
2 marks
e. Discuss which method of depreciation Mark should use.
4 marks
Total:
12 marks
Question 7: Hussien’s Template Texts
Hussein Hassan sells mobile phones that are programmed with text messages. He imports the mobiles
direct from India before reprogramming them in Australia. Hussein insists on a deposit on all sales.
On the 1 March 2013, Dean put in an order for 10 mobile phones for $400 + GST each and provided a
deposit of $500 (Receipt 285). These have a cost price of $100 each.
On the 30 April 2013, Hussein delivered the 10 mobile phones to Amy and issued invoice ( HH999).
a. Record the deposit in the appropriate journal.
1 mark
b. Prepare the entries to record the sale of mobile phones on the 30 April 2013. A narration is not
required.
3 marks
Total: 4 marks
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YEAR 12 - ACCOUNTING
UNIT THREE: Recording and Reporting for a Trading Business
SAC 2 – TEST 1 Version 1
Student Name:
_______________________
Result:
/60
Question 1: Nhi’s Accounting Solutions
a.
General Journal
Date
Details
General Ledger
Debit
Credit
Subsidiary Ledger
Debit
Credit
/9
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Question 2: Dean’s Drawings
a.
General Journal
Date
Details
General Ledger
Debit
Credit
Subsidiary Ledger
Debit
Credit
/10
b.
Capital
Date
Cross Reference
$
Date
Cross Reference
$
4/
c.
Total:
/3
/17
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Question 3: Oliver’s Sleepy Dreams
a.
General Journal
Date
Details
General Ledger
Debit
Credit
Subsidiary Ledger
Debit
Credit
Cash Receipts Journal
Date
Details
Rec.
No.
Bank
Discount
Expense
Debtors
Control
Cost of
Sales
Sales
Sundry
GST
/5
Question 4: Simon’s Surfing Sports
a.
Cash Payments Journal
Date
Details
Chq.
No.
Bank
Discount Creditors Stock
Revenue Control Control
Wages
Drawings
Sundry
/1
b.
Rent Expense:
$
/2
GST
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c.
General Journal
Date
Details
General Ledger
Debit
Credit
Subsidiary Ledger
Debit
Credit
/3
d.
Total:
/3
/9
Question 5: Ashley’s Dress Shop
a.
General Journal
Date
Details
General Ledger
Debit
Credit
Subsidiary Ledger
Debit
Credit
/2
b.
Cash Payments Journal
Date
Details
Chq.
No.
Bank
Discount Creditors Electricity
Revenue Control
Wages
Sundry
GST
/2
Total: /4
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Question 6: Mark’s Maltese School of Language
a.
Depreciation using straight line method
$
/2
b.
Depreciation – Office Furniture
Date
Cross Reference
$
Date
Cross Reference
$
Date
Cross Reference
$
?
Date
Cross Reference
$
/2
c.
/2
d.
Depreciation using reducing balance method: $
/2
e.
/4
Total: /12
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Question 7: Hussein’s Template Texts
a.
Cash Receipts Journal
Date
Details
Rec.
No.
Bank
Discount
Expense
Debtors
Control
Cost of
Sales
Sales
Sundry
GST
/1
b.
Date
Details
Sales Journal
Date
Debtor
General Ledger
Debit
Credit
Invoice
Cost of
Sales
Subsidiary Ledger
Debit
Credit
Sales
GST
Debtors
Control
Total:
/3
/4
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SOLUTION
Question 1: Nhi’s Accounting Solutions
a. General Journal
Date
Details
Mar 31
General Ledger
Debit
Credit
Subsidiary Ledger
Debit
Credit
Creditor – Hussein
200
Creditor - Harry
Discount Expense
200
300
Discount Revenue
Bad Debt
300
2700
Debtors Control
-
2700
Amy
2700
/9
Question 2: Dean’s Drawings
a. General Journal
Date
Details
Apr 30
Sales
General Ledger
Debit
Credit
80 000
Discount Revenue
300
P&L Summary
P&L Summary
Subsidiary Ledger
Debit
Credit
80 300
85 100
Advertising
300
Cost of Sales
50 000
Discount Expense
2 000
Electricity
300
Stationery
500
Wages
32 000
/10
b.
Capital
Date
Apr 30
Cross Reference
P&L Summary
$
4800
Drawings
4600
Balance
58 500
Date
Apr 1
Cross Reference
Balance
67 900
$
25 000
67 900
May 1
Balance
58 500
4/
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c.
Revenue and expenses are closed so that they are empty and ready for the next reporting period.
This also allows profit to be calculated in the ledger and the capital figure to be updated.
/3
Total: /17
Question 3: Oliver’s Sleepy Dreams
a. General Journal
Date
Details
Mar 1
Computer
General Ledger
Debit
Credit
15 000
Delivery Truck
40 000
Truck Loan
25 000
Capital
30 000
Subsidiary Ledger
Debit
Credit
Cash Receipts Journal
Date
Details
Mar1 Capital
Rec.
No.
1
Bank
Discount
Expense
Debtors
Control
Cost of
Sales
Sales
20 000
Sundry
GST
20 000
/5
Question 4: Simon’s Surfing Sports
a.
Date
Cash Payments Journal
Details
Dec1 Prepaid Rent
Chq.
No.
1098
Bank
Discount Creditors Stock
Revenue Control Control
6600
Wages
Drawings
Sundry
6000
600
/1
b.
1000
1000
1100
Rent Expense:
$
GST
3100
/2
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3aSAC2t1v1 2013
c. General Journal
Date
Details
Jun 30
General Ledger
Debit
Credit
3100
Rent
Prepaid Rent
12
Subsidiary Ledger
Debit
Credit
3100
Rent expired for the
Reporting period (Memo 62)
/3
d.
The reporting period principle requires that the life of the business is broken into periods of time so that
reports can be prepared. This ensures that profit is calculated using revenues earned less expenses
incurred for the reporting period. The rent expense relates to the 3 months of rent incurred. Whereas,
the rent paid during the reporting period is paid for a 6 month period – paid for now and the future.
/3
Total:
/9
Question 5: Ashley’s Dress Shop
a. General Journal
Date
Details
Jun 30
Electricity
General Ledger
Debit
Credit
Subsidiary Ledger
Debit
Credit
220
Accrued Electricity
220
/2
b. Cash Payments Journal
Date
Details
Chq. Bank Discount
No.
Revenue
Jul5 Accrued Electricity
299
495
Creditors
Control
Electricity
Electricity
Wages
Sundry
220
GST
45
230
/2
Total: /4
Question 6: Mark’s Maltese School of Language
a.
(15 000+2 000)x 10%
=1700/4
Depreciation of Equipment using straight line method
$
425
/2
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b.
Depreciation – Office Furniture
Date
Jun 30
Cross Reference
Acc Depn Off Furn
$
Date
Cross Reference
$
425
Accumulated Depreciation – Office Furniture
Date
Cross Reference
$
Date
Jun 30
Cross Reference
Depn Off Furn
$
425
/2
c.
Depreciation is the allocation of the cost of a non-current asset over its useful life. It represents the use
of the asset to earn revenue during the reporting period.
/2
d.
17000x.15 = 2550
(17000 – 2550) x .15 = 2167.5/4
Depreciation using reducing balance method: $
542
/2
e.
The straight line depreciation method produces the same depreciation expense for each reporting period.
This would be used for assets that are used the same each reporting period. The reducing balance
method calculates depreciation on the carrying value of the business, with the expense decreasing each
reporting period. It is used for assets that are used more in the early years. The office furniture would be
used the same each reporting period and therefore the straight line method would best reflect its use.
/4
Total: /12
Question 7: Hussein’s Template Texts
a.
Cash Receipts Journal
Date
Details
Mar1 Prepaid Sales
Rec.
No.
285
Bank
Discount
Expense
Debtors
Control
500
Cost of
Sales
Sales
Sundry
GST
500
/1
b. General Journal
Date
Details
Apr 30
Prepaid Sales
Sales
General Ledger
Debit
Credit
500
500
Subsidiary Ledger
Debit
Credit
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3aSAC2t1v1 2013
Sales Journal
Date
Debtor
Apr 30
Dean
Invoice
HH999
Cost of
Sales
1000
Sales
3500
GST
400
14
Debtors
Control
3900
/3
Total: /4