2
3
Answer all questions
1
The following trial balance was extracted from the books of Shan’s business at the end
of the financial year on 30 June 2023.
$
Drawings
15 000
Capital
40 000
Office equipment
12 800
Motor vehicle
50 000
Accumulated depreciation :
Office equipment
1 280
Motor vehicle
6 000
Trade payables
Cash in hand
Trade receivables
5 000
250
3 200
Cash at bank (credit balance)
10 000
Sales revenue
92 450
Sales returns
8 250
Cost of sales
11 720
Inventory
47 970
Rent income
4 200
Discount received
860
Insurance
600
Wages and salaries
5 200
Office expenses
4 800
Additional information on 30 June 2023
1
Insurance, $400, was paid in advance.
2
Payment for wages and salaries, $300, was owing.
3
Included in rent was an amount of $800 received in advance.
4
Office equipment is to be depreciated at 10% per annum using the straight-line
method.
5
Motor vehicle is to be depreciated at 20% per annum using the reducing balance
method.
6
The business reviewed its debtors and decided that 3% of the trade
receivables may not be collectible.
REQUIRED
(a) Prepare the statement of financial performance for the year ended 30 June
2023.
[10]
(b) Prepare the statement of financial position as at 30 June 2023.
[10]
[Total:20]
4
2
5
Han is a sole trader. After preparing the accounts for the year ended 31 March 2023, he
discovered the following errors.
1
Cheque of $400 received from credit customer, John, has been entered into Jim’s
account.
2
Repayment of a bank loan of $2 000 was recorded as $2 100.
3
Credit sales of $800 was debited to the sales revenue account and credited to
trade receivables account.
4
Commission income earned of $300 was yet to be received at the year end, has
not been adjusted.
3
Noni runs a trading business. She has $30 000 in her capital account as at 1 July 2022.
She provided the following information for the year ended 30 June 2023.
( i ) Noni had taken stock costing $4 500 on 3 March 2023 for personal use.
( ii ) On 28 May 2023, Noni brought into the business her own laptop costing $3 200.
The business made a loss of $5 900 for the year ended 30 June 2023.
REQUIRED
(a) Prepare journal entries to record the transactions on the following dates. Narrations
are not required.
REQUIRED
(a)
Prepare journal entries to correct each error above. Narrations are not required.
[6]
( i ) 3 March 2023
[2]
( ii ) 28 May 2023
[2]
(b)
Copy and complete the table below for errors 3 and 4, stating whether profit, assets
and liabilities for the year is overstated or understated by the error, and the amount
(b) Prepare the journal entries at the year end 30 June 2023. Narrations are not
involved. If the error has no effect, simply state no effect for both effect and amount.
required.
Error 2 is done for you as an example.
(I)
Transfer of the loss of $5 900.
[2]
Error
Profit ($)
2
3
4
No effect
Error On
Assets ($)
understated 100
( ii ) Transfer of drawings.
Liabilities ($)
understated 100
[2]
(c) Prepare the capital account for the year ended 30 June 2023. Bring the balance
down on 1 July 2023.
[5]
[6]
[Total: 13]
[Total:12]
6
4
7
Glen’s business trades in computers. The following is a record of transactions that
took place with Kline during the month of June 2022:
(e)
Glen is planning to buy computers from another supplier besides his current
one. He has shortlisted the following two suppliers.
Kline
2022
June 1
16
19
19
26
28
July
Dr
$
Balance b/d
Inventory
Cash at bank
Discount received
Inventory
Capital
Cr
$
2 500
2 400
100
1 700
900
1 Balance b/d
Information
Bal
$
10 200 Cr
12 700 Cr
10 300 Cr
10 200 Cr
8 500 Cr
7 600 Cr
7 600 Cr
Ezy Enterprise
Hardy Trading
Country of operations
Local supplier
Overseas supplier
Number of years in
business
20 years
3 years
Cost per unit
$450
$400
Credit terms
30-day credit period
45-day credit period
Return policy
Computers
can
be
returned within 14 days
and exchanged for free
Computers
can
be
returned within 30 days
and exchanged for free
Warranty
2 years
1 year
REQUIRED
(a)
Explain what it means to buy on credit.
(b)
State whether Kline is a credit customer or credit supplier.
(c)
Describe the transactions that took place on the following days:
[1]
[1]
(i)
June 16
(ii)
June 19
REQUIRED
(iii) June 26
(iv) June 28
[4]
State one reason for the discount received on June 19.
[1]
Advise Glen which supplier he should buy from. Justify your decision with two
reasons.
(d)
[5]
[Total: 15]
(e)
Glen is expanding his business. He has taken a bank loan of $200 000 on 1 July
2022. This loan is to be repaid over 10 instalments. The first instalment together
with
the interest will be paid on 30 June 2023.
The accounting year end is 31 December.
REQUIRED
Prepare an extract of the statement of position as at 31 December 2022, showing
only the liabilities section.
[3]
End of paper