Final Accounts Adjustments 2001-2012
Higher Level
CM
2005
2009
The figure for Finished
Goods includes items
which cost €7,000 to
produce, but now have
a sales value of €4,500
Stocks are always stated at LOWER OF COST
OR NET REALISABLE VALUE. So, these
goods are now worth €2,500 less. Subtract
€2,500 from Closing Stock of FG to get the
true figure
2010
CM
2001
2005
2009
2011
Included in the figure
for Sale of Scrap
Materials is €1,800
received form the sale
of an old machine on
30/6/2004. This
machine had cost
€22,000 on 1/4/2000.
The cheque had been
entered in the bank
Account. This was the
only entry made in the
books
Sale of Scrap Materials a/c.
Disposal
1800
TB
5,500
Plant & Machinery a/c
Bal b/d
260,000
Disp
22,000
Accumulated Dep on Machinery a/c
Disposal
18,700
Bal b/d
104,000
DEP P&L 49,800
Disposal of Machinery a/c
P&M
22,000 Acc Dep
S of Scrap
18,700
1,800
P&L Loss 1,500
Depreciation: from date of purchase to date of
sale
prepared by Frank Smith
last updated 25/02/2013
P&M
Sold item : 1/4/2000 to 30/6/2004 = 4 ¼ years
DEP = 22,000 x 4 ¼ x 20% = 18,700
DEP current year =22,000 x ½ x 20% = 2200
DEP – P&M
[260,000-22,000] x 20% = 47,600
+ SOLD Item
2,200
49,800
CM
C
2009 2007
2005 2012
2001
ST
2011
2006
The Suspense figure
arises as a result of
discount allowed
€1,000 entered only in
the Debtors account
Discount Allowed : Dr Disc All a/c, CR
Debtors a/c
It was discovered that
Finished Goods, which
cost €8,000 to produce,
were invoiced to a
customer on a “sale or
return” basis. These
goods had been entered
Goods on “Sale or Return” remain part of
Stocks until actually sold. Therefore reduce
Sales by €9,600 [€8,000 + 20%], increase
closing stocks of FG by 8,000, and reduce
Debtors by 9,600.
Therefore DR Discount Allowed by reducing
Discount(Net) in TB by 1000, and reducing
Admin Expenses by 1,000
2008
2010
Suspense
CM
2009
2005
2001
prepared by Frank Smith
last updated 25/02/2013
2011
in the books as a credit
sale at cost plus 20%
Sale or
Return
CM
During 2004, James Ltd
built an extension to the
2009
factory. The work was
carried out by the
2005
company’s own
employees. The cost of
2001
their labour €40,000
was included in factory
wages. The cost of
materials used €18,000
is included in
Capital
Expenditure purchases. No entry
was made in the books
in respect of this
extension.
This is CAPITAL EXPENDITURE, therefore
all costs to be capitalised, not entered in
expenses.
CM 2005
Pref Div is based on the Pref Shares Issued.
The Preference
Dividend Due to be
paid
Deduct €40,000 from Factory wages, and
€18,000 from Purchases. Add €58,000 to cost
of Factory Buildings in Balance Sheet.
e.g. 200,000 8% Pref Shares @ €1 each
Dividend for year is € 200,000 x 8% = €16,000
This is entered in Appropriation section of
P&L, deducted from Profit after Taxation.
Check TB for Interim Pref Div paid.
Total Pref Div-Interim Div Paid=Pref Div Due
to CL in BS
CM
2005
The total Ordinary
Dividend for the year
should be 9c per share
Check TB for Interim Ord Div already paid.
Calculate total div i.e. 300,000 issued ord
shares x 9c = €27,000 – deduct from Profit
after Tax in P&L Approp.
Amount not paid = Total Div-Interim paid – to
CL in BS
CM
Provision should be
prepared by Frank Smith
See Ordinary Level above for basic calculation.
last updated 25/02/2013
2005, 2011
C 2012
CM
2005,2011
CM
2001, 2011
ST 2006/8
made for Debenture
Interest.
Debenture Interest
9% Debentures
(including €30,000
issued on 1/4/2004)
70,000 x 9% x 1 full year
Corporation Tax of
€10,000 to be provided
for
See Ordinary Level
No record has been
made in the books for
raw materials costing
€11,000 which were in
transit on 31/12/2000
Increase Purchases, Closing Stock and
Creditors by €11,000.
At the end of 2000 the
company re-valued the
land and buildings at
€660,000
Revaluation
+ 30,000 x 9% x ¾ year)
Goods in
Transit
CM
2001
Dr. Asset with Revaluation
2009
Cr Revaluation a/c
2011
DR. Acc Dep to date on asset
Cr. Revaluation a/c
ST 2006
Before making these entries, calculate the full
depreciation for the year for the asset.
2008
2010
DR Land & Bldgs €22,000 - labour, €28,000 –
materials , €60,000 Revaluation
CR Rev Reserve 60,000
Cr Factory wages €22,000
prepared by Frank Smith
last updated 25/02/2013
Cr Purchases €28,000
Dr P&L [550,000-60,000] x 2%= €10,800
CR Acc dep on L&B
Dr Acc Dep
Cr Rev Res
C 2007,
2012
ST 2010
CM 2009
C 2007,
2012
ST
2006/8/10/11
ST 2008
2010
ST 2008
2010
44,000+ 10,800
Stocks at 31/12/2006 at
cost was €85,200 – this
figure includes
damaged stock which
cost €6,600 but which
now has a net realisable
value of €2,600
So, the damaged stock is now worth €4,000
less..
i.e 85,200 - 4,000 = 81,200 - actual closing
stock figure
Patents, which
incorporate 3 months
investment income, are
to be written off over a
5 year period
commencing in 2005
Calculate the Investment Income and add back
to Patents ; write off ⅕ of Patents through the
S&D Expenses; the balance on Patents will
appear in the Intangible Fixed Assets in the BS
Goods with a retail
selling price of €10000
were returned to a
supplier. The selling
price was cost plus
25%. The supplier
issued a credit note
showing a restocking
charge of 10% of cost
price. No entry has been
made in respect of the
restocking charge
SP=Cost + 25%
SP=100% + 25%
SP=125%
Cost =( SP/125 ) x 100 = 8000
Subtract Restocking Charge from Creditors
and Purchases i.e. 10%x 8000=800
Provision to be made
for mortgage interest
due. 20% of mortgage
interest for the year
calculate the mortgage interest due - 20% is
Drawings and should be subtracted from the
NP in the BS
prepared by Frank Smith
last updated 25/02/2013
refers to the private
section of the building
ST
2008/2010
CM 2009
A cheque for €600 had
been received on
31/12/2007 in respect of
a debt of €1000
previously written off
as bad. The debtor had
agreed to pay the
remainder within 1
month. No entry was
made in the books to
record the transaction
DR Bank 600
Cr Bad Debt Recovered 600
A bad debt of €500
should be written off.
Subtract from Debtors
Enter in S& D Expenses
On 31/3/2007 a deliver
van which cost €30,000
on 30/9/2004 was
traded in against a new
van which cost €36,000.
An allowance of
€10,000 was made on
the old van. The cheque
for the net amount of
this transaction was
entered in the bank
account but was
incorrectly treated a the
purchase of trading
stock. These were the
only entries made in
respect of this
transaction.
Deal with the trade-in as a normal Disposal;
calculate the depreciation to date on the van
being traded in i.e. €30,000x rate x 2.5 yrs and
transfer to Disposal.
the Allowance was entered in Vans a/c ad
Disposal a/c, but the cheque payment was
debited in Purchases.
Therefore
Credit Purchases 10,000
Debit Disposal 10,000
and calculate the P/L on disposal in the normal
way
Goods withdrawn by
the owner for private
use during the year with
a retail value of €2000
which is cost plus 25%
were omitted from the
books.
calculate the cost of the goods
SUBTRACT from Purchases
ADD to Drawings
During 2006 a store
Deal with this through a Disposal A/c for the
Inc Debtors in BS
Inc Gains in P&L with bad Debt Recoverable
2011
ST 2006
2008
2010
C
2007
2012
ST 2008
C 2007
prepared by Frank Smith
SP=Cost + 25%
last updated 25/02/2013
2012
C 2007
2012
ST 2006
C 2012
room which cost
€40,000 and stock
which cost €12,000
were destroyed by fire.
A new store was built
by the firms own
workers. The cost of
their labour €19,000
had been treated as a
business expense and
the materials costing
€51,000 were taken
from the firm’s stocks.
The insurance company
has agreed to contribute
€52,000 in
compensation for the
damage. No adjustment
has been made in the
books in respect of the
old or new store.
Store Room
____________Disposal a/c _______________
Buildings
40,000 Acc Dep
x
P/L
Ins Co
52,000
P/L
Also subtract 12,000 from Purchases and enter
in P/L as loss of insured stock in S&D Exp
_________Buildings a/c ________________
Bal b/d
x
Disposal
40,000
Wages
19,000
Purchases 51,000
Subtract the above figures from Wages and
Purchases
Amount due from Ins Co is shown as CA in BS
Bank Statement / Bank
Reconciliation
Statement
A new warehouse was
purchased during the
year for €200,000 plus
VAT 12.5%. the
amount paid to the
vendor was entered in
the Buildings account.
No entry was made in
the VAT account.
The advertising
payment is for an 18
month advertising
campaign which began
on 1/10/2011
prepared by Frank Smith
Increase VAT by €200,000 x 12.5%= €25,000
VAT due from Revenue is a CA
Find Advertising paid in TB. Only 3 months of
the expense is relevant to the current financial
year i.e 1/6th in S&D Exp in P&L.
Advertising prepaid is a CA in BS
last updated 25/02/2013