BGCSE ACCOUNTING
Questions from past examinations papers Bgcse
and igcse
Module 3:classify capital and revenue receipts and expenditure, Adjustment in
ledger accounts,Financial statements of a sole trader, partnership
With practice in Accounting A* IS AUTOMATIC
Module 3
3.1 CLASSIFY CAPITAL AND REVENUE RECEIPTS AND EXPENDITURE
2022 BGCSE PAPER 1
CLASS EXERCISE 1
Bonang is a trader, supplying building materials.She records capital and revenue items
separately in her book keeping records. She distinguishes between capital receipts and
capital expenditure when preparing financial statements.
(a) (i) State the meaning capital receipt and revenue receipts.
Give two examples each
[12]
Capital receipt
Revenue receipt
Capital expenditure
Revenue expenditure
(ii) Indicate whether each item is capital expenditure and revenue expenditure by placing a
tick in the correct column.
Capital
expenditure
Revenue
expenditure
Legal fees for the purchase of premises
Freight charges on importation of new delivery van
Cost of fuel for delivery van
Repairs to delivery van
Installing generator
Premises insurance
[6]
CLASS EXERCISE 2
2021 IGCSE
Jas owns a printing business and has recently incurred various expenditures relating to her
premises.
REQUIRED (a) Complete the table by inserting a tick to show how each item of expenditure
should be classified. The first one has been completed as an example.
Capital
expendiure
Revenue
expenditure
Building new extension warehouse
Rates of new extension
Carriage costs for roof tiles for new extension
Legal costs for new extension
Repairs to office tool
CLASS EXERCISE 3
2012 IGCSE
On 1 April Bamber bought a new computer for his business costing P4800.He also bought a
new laser printer costing P750.
On 1 January 2012 Bamber replaced the hard disk in the computer as the existing one had
failed. The cost was P450.
(a) In the table below, place a tick under the most appropriate heading to show whether the
item is capital or revenue expenditure.
Purchase of new computer
Purchase of laser printer
Replacement of hard disk in computer
Capital
Revenue
expenditure
expenditure
(b) (I) explain the effect on Bambers income statement of recording capital expenditure as
revenue expenditure.(2)
(ii) Explain the effect on Bambers Statement of financial position of recording capital
expenditure as revenue expenditure.(2)
CLASS EXERCISE 4
State which of the following are capital expenditure and revenue expenditure.
(a) Extension of warehouse
(b) Wages paid to contractor to build a client’s warehouse
(c) Legal fees for the selling of premises to the buyer
(d) Repainting of existing warehouse
(e) Purchase of new tyres for motor van
(f) Purchase of a file cabinet for resale
CLASS EXERCISE 5
BGCSE PAPER 1 2017
Complete the table by indicating using a tick on whether is a revenue receipt or capital receipt
Revenue receipt
Capital receipt
Proceeds from disposal of motor vehicle
Cash discount received
Additional fund introduced by the owner
Cash received from the credit customer
CLASS EXERCISE 6
IGCSE 2022 PAPER 2
Complete the table by inserting a tick to show how each item of expenditure should be
classified.
Capital
expenditure
Legal fees for obtaining premises to build extension
Building costs for extension
Insurance for office
Painting the office extension
Office calendar for 2023
Purchase of office equipment
Revenue
expenditure
Installation of office equipment
Stationery for office
3.2 MAKE ADJUSTMENTS IN THE LEDGER ACCOUNTS
Income and expenses accounts
Class exercise 1
Bgcse 2015 paper 1
(a) Explain what is meant by Accrued expense [2]
On I January 2014 Mazinga Ltd had the following balances.
Rent receivables owing
Inventory of stationery
Rates prepaid
P
2000
500
2 200
The following transactions took place during the year ended 31 December 2014.
P
Rent received by cheque
26 000
Stationery paid by cheque
3 800
Rates paid by cheque
3000
On 31 December 2014
Rent receivable owing
4000
Inventory of stationery
450
Rates prepaid
3000
(b) Prepare the following ledger accounts for the year ended 31 December 2014. Bring down the
balance on 1 January 2015.
(i) Rent received account [4]
(ii) Stationery account
[4]
(iii) Rates account
[4]
(c) State the effect on the statement of financial position on 31 December 2014, if no adjustments was
made for rates prepaid at the end of the year. (2)
(d) Explain why it is important for Moziya Ltd to observe the accrual principle when preparing the
income statement for the year. (2)
Class exercise 2
Bgcse paper 2 2022
Pono is a food wholesaler who buys and sells on credit terms. She maintains a full set of Accounting
record.
Pono financila year ends on 30 September
She provided the following information about stationery for the year ended 30 September 2022.
2021
October 1
December 28
2022
January 5
April 1
September 30
Inventory of stationery
Bought stationery and paid by cheque
P
640
3150
received cash discount for damaged stationery
took stationery for personal use
inventory of stationery
300
200
1220
(a) Write up stationery account as it would appear in Pono’s ledger for they year ended 30
September 2022. Balance the account on 30 September 2022 and bring down the balance on 1
October 2022. (7)
(b) Explain how Pono applied each of the following accounting concepts in the preparation of
stationery account.
(i) Prudence concept
(2)
(ii) Business entity concept
(2)
Class exercise 3
Bgcse paper 2 2023
Gakelona financial year ends on 31 August. He rents out part of his premises.Gakelona provided the
following information for the year ended 31 August 2023.
2022
P
September 1 Rent receivable outstanding
3000
November 5 Rent received in cash
16000
2023
May 1
Rent received by cheque
17000
August 31
Rent receivable outstanding
6000
(a) Prepare the rent receivable account for the year ended 31 August 2023.Balance the
account and bring down the balance on 1 September 2023. (6)
(b) State how the accrual/matching concept has been applied in preparation of rent rent
receivable account.(2)
Class exercise 4
Bgcse paper 1 2024
Dimpho is a trader. He maintains a full set of accounting records.His Financial year ends on 31
August.
(a) Explain the following terms.
(i) Prepaid expenses
(2)
(ii) Accrued income
(2)
Dimpho provided the following information
P
At 1 September 2023
Rent receivable owing
Inventory of packaging materials
2 500
600
During the year ended 31 August 2024
Rent received by cheque
Packaging materials paid by cheque
33000
4500
At 31 August 2024
Rent receivable owing
Inventory of packaging materials
5000
570
(b) Prepare the following accounts in Dimpho’s ledger for the year ended 31 August
2024.Balance the accounts and bring down the balances on 1 September 2024.
(i) Packaging materials account
(ii) Rent received account
(8)
Class exercise 5
Igcse 2014
Amla Khan is a trader.Her financial year ends on 31 December.
Amla Khan maintains one combined account for the rates and insurance.She provided the following
information.
On 1 January 2014 three months’s rates P480 was outstanding and four months insurance, totalling
P700 was prepaid.
During the year ended 31 December 2014, the following payments were made by cheque.
P
Rates 16 months to 31 January 2016
2560
Insurance 12 months to 30 April 2015
2400
(a) Prepare the rates and insurance account in the ledger of Amla Khan for the year ended 31
December 2014. Balance the account and bring down the balance on 1 January 2015. (8)
Class exercise 6
Igcse paper 2 2021
Tej provided the following information.
At 1 March 2020
Rent prepaid
P
300
For the year ended 28 February 2021
Rent charge for the year
Cheque payments for rent 30 June 2020
30 November
P
3 900
1 950
2 100
(a) Prepare the rent payable account for the year ended 28 February 2021. Balance the
account and bring down the balance on 1 March 2021. (6)
Class exercise 7
Bgcse paper 2 2020
The following balances were taken from Letso’s ledger on 1 September 2019.
P
Inventory of stationery
1440
Commision payable owed by Letso
4500
During the year ended 31 August 2020,he made the following payments by cheque
P
Total payments for stationery
368
Total payements for commission
15000
Additional information:
1. Stationery taken for own use amounted to P260
2. Inventory of stationery on 31 August 2020 valued at P120
3. The charge for commission in the income statement for the year ended 31 August 2020
was P12 300.
(a) Prepare the following accounts in Letso’s ledger for the year ended 31 August
2020.Balance the accounts on 31 August 2020 and bring down the balances on 1 September
2020.
(i) Stationery account
(ii) Commision payable account
BAD DEBTS , BAD DEBTS RECOVERED AND PROVISION FOR DOUBTFUL DEBTS
Class exercise 1
Bgcse 2019 paper 1
Karabo is a sole trader who sells goods on credit. She maintains a provision for doubtful
debts.
The financial year of Karabo ends on 30 September
(a) Explain the meaning of the following terms.
(i) Bad debts
(2)
(ii) Provision for doubtful debts (2)
Karabo decided to write off P250 owed by Tshiamo as a bad debt.
(2)
On 1 August 2019, Tshiamo, a credit customer paid P250 Cash. The amount was previously
written off as bad debt.
(a) Prepare the following accounts. Show the transfer to the relevant financial statement at 30
September
(i) Bad debt account
(b) Make the necessary entries in the following accounts to show how bad debt recovered
from Tshiamo would be recorded in Karabo’s ledger. Show how the amount would be
transferred to the relevant account or financial statements on 30 September.
(i) Bad debt recovered account
(2)
(ii) Tshiamo ‘s account
(2)
(c) (i) Suggest two reasons why Karabo should maintain a provision for Doubtful debts.
(2)
(iii) Suggest two reasons apart from using percentage of trade receivables in which Karabo
can decide on the amount of provision for doubtful debts. (2)
Karabo provided the following information.
The balance on the provision for doubtful debt account on 1 October 2016 was P500.
Trade receivables on 30 September.
P
2017
15000
2018
7000
2019
5000
(d) Prepare provision for doubtful debt account. Show the transfers to the relevant financial
statements at 30 September. (8)
Class exercise 2
Bgcse paper 2 2017
On 5 September 2017, Tito Monare decided to write off John Bantsi’s debt, P350 as a bad
debt.
(a) Show the entries in Tito Monare’s General journal, to record writing off John Bantsi’s
Bad debt on 5 September 2017. A narrative is required. (3)
Class exercise 3
BGCSE 2024 paper 1
Batho and Moabi are in partnership. Their financial year ends on 31 July. The partners
maintain provision for doubtful debts of 3% of the trade receivables at the end of each
financial year.
(a) State four ways in which Batho and Moabi could decide on the amount of their provision
for doubtful debts. (4)
On 1 August 2023 the balances on Botho and Moabi Provision for doubtful debts account
wad P500.00
On 31 July 2024 Batho and Moabi’s trade receivables amounted to P20 495. This amount
included P495 due from credit customer who has gone bankrupt. The partners decided to wite
off the amount as a bad debt.
(b) Prepare the following accounts. Show the transfers to the relevant financial statement at
31 July 2024.12.
(i) bad debt account
(ii) Provision for doubtful debts account
(6)
(c) Name two accounting concepts which Batho and Moabi are applying by maintaining a
provision for doubtful debts. Give reasons in each. (6)
Class exercise 4
Bgcse paper 1 2015
B Oteng maintains a provision for doubtful debt at 3% of her trade receivables. On 1 October
2014 her provision for doubtful debts was P1350.
On 30 September 2015 B Oteng’s trade receivables amounted to P48 000
(a) (i) State the meaning of the term Bad debt.
(1)
(iii) Prepare B Oteng’s Provision for doubtful debbts account for the year ended 30
September 2015. Balance the account and bring down the balance on 1 October 2015.
(3)
Class exercise 5
Igcse paper 2
Tej is a trader who sells goods on credit. His financial year end on 28 February. Tej provided
the following information.
At 1 March 2020
Trade receivables
28 February 2021
P6 250
P7000
Provision for doubtful debts was 4% of trade receivables at 1 March 2020 and 6% of trade
receivables at 28 February 2021.
(a) Prepare the Provision for doubtful debts account for the year ended 28 February
2021.Balance the account and bring down the balance on 1 March 2021.
Class exercise 6
Bgcse paper 1 2022
Obakeng is a trader. His financial year ends on 30 September. He maintains a provision for
doubtful debts at 3% of the trade receivables at the end of each year.
He Provided the following information.
On 1 October 2021 the provision for doubtful debts amounted to P1312.
During the year ended 30 September 2022 bad debts recovered amounted to P1050.
On 30 September 2022 trade receivables amounted to P63 500, including P1500 owed by
Tendi which should be written off.
(a) Explain the following terms:
Bad debt recovered
Provision for doubtful debt (4)
(b) (i) Suggest two reasons why Tendi’s debt was to be written off.
(2)
(ii)Prepare the journal entries to write off the amount owed by Tendi and to transfer the bad
debt recovered to Obakeng’s income statement. Narratives are required.(6)
(iii) Prepare the provision for doubtful debts account for the year ended 30 September 2022.
balance the account and bring down the balance on 1 October 2022 (4)
Class exercise 7
Igcse
(i)
Zeta is a trader, she maintains a provision for doubtful debts at 3%
of trade receivables. On 2011 May 1, there was a balance of P3416 on the provision for
doubtful debts account.
The following information was available on 30 April 2012.
P
Trade receivables
127 200
Bad debts written off
200
Write up the provision for doubtful debt account in Zeta’s ledger for the year ended 30 April
2012.Balance the account on 30 April 2012 and bring down the balance on 1 May 2012. (3)
(ii)
Beta is a trader, she maintains a provision for doubtful debts at 2%
of trade receivable. On 1 April 2011, there was a balance of P2528 on the provision for
doubtful debts account.
The following information was available on 31 March 2012.
Trade receivables
Bad debts to be written off
P
127 200
2 050
Write up the provision for doubtful debt account in Beta’s ledger for the year 31 March
2012.Balance the account on 31 March 2012 and bring down the balance on 1 April 2012.
DEPRECIATION OF NON-CURRENT ASSETS
Class exercise 1
BGCSE 2017 paper 1
S. Moape started a laundry business on 1 October 2015. On that date he purchased a laundry
machine on credit from Khumo engineering for P20 000. On 1 April 2016, he purchased
another laundry machinery for P25 000, paying by cheque. S Moape depreciates the laundry
machines at 30% per annum on cost and from the date of purchase.No depreciation is charged
in the year of disposal. On 31 March 2017, S. Moape sold the machine he bought on 1 October
2015, receiving a cheque of P13 500.
(a) State three reasons why S. Moape Non-current assets depreciates (3)
(b) Prepare the ledger accounts for each of the following years ended 30 September 2016 and
30 September 2017. Balance the accounts at the end of each year and bring down the balances.
(i) Laundry machinery account
(ii)Provision for depreciation laundry machinery account
(12)
(c) S. Moape depreciates his equipment using reducing balance method but depreciates his
buildings/machinery using straight line method.
(i) State when is appropriate to use straight line method and reducing balance method.(2)
(ii) Explain why S .Moape uses reducing balance method of depreciation for equipment and
straight line method for machinery. (2)
Class exercise 2
Bgcse paper 1 2021
Dirang is a trader. His financial year ends on 30 September. On 1 October 2020 the balances in
Disang’s ledger included the following.
Motor vehicles
Provision for depreciation of motor vehicle
P
80 000
30 000
Additional information
1. Motor vehicles are depreciated at the rate of 25 % per annum on cost, calculated from the
date of purchase. No depreciation is charged in the year of disposal of motor vehicle.
2. On 1 January 2021and additional motor vehicle, P60 000 was purchased by cheque.
3. On 1 July 2021 an old motor vehicle was sold for P18 000 cash.This had been purchased on
1 October 2018 for P40 000.
(a) Prepare the following accounts in Disang’s ledger for the year ended 30 September 2021.
Balance the account where necessary and bring down the balance on 1 October 2021.
(i) Motor vehicle account
(ii) Provision for depreciation of motor vehicle account
(iii) Disposal account
(15)
(b) Explain how Disang is applying the following accounts concepts by depreciating motor
vehicle for each year.
(i) Maching/accrual concept
(ii) Prudence concept
(2)
(2)
Class exercise 3
Igcse paper 2014
(a) Describe the following methods of depreciation
(i) Straight line method
(ii) Reducing balance method
(iii) Revaluation method
(3)
(b) State the circumstances when the above methods of depreciation may be used.
(i) Straight line method
(ii) Reducing balance method
(iii) Revaluation method
(c) State which of the above methods of depreciation would be the most appropriate to use for
each of the following.
(i) Computer equipment
(ii) Buildings
(iii) Motor vehicle
(3)
(d) Suggest one non-current assets which may be depreciated using the revaluation method.
(1)
Tony Yeo is in business. His financial year ends on 30 April. He depreciates his non-current
assets each year.
On 1 May 2013 the balances in Tony Yeo’s ledger included the following:
P
Equipment at cost
8600
Provision for depreciation of equipment
3260
The equipment is being depreciated at 20% per annum using the straight line method,
calculated
from the date of purchase. No depreciation is to be charged in the year of disposal.
On 31 October 2013 equipment which had cost P2000 on 1 May 2011 was sold for P750
cash.
On 1 November 2013 equipment costing P3400 was purchased on credit from New2You.
REQUIRED
(e) Write up the following accounts in the ledger of Tony Yeo for the year ended 30 April
2014.
Balance the accounts where necessary and bring the balances down on 1 May 2014.
(i) Equipment account
(3)
(ii) Provision for depreciation of equipment account
(5)
(iii) Disposal account
(4)
Class exercise 4
Igcse paper 2 2020
Sariah is preparing her financial statements for the year ended 30 September 2020. She
provides
the following information for fixtures and fittings.
2019
P
October 1 Fixtures and fittings at cost
28600
Provision for depreciation of fixtures and fittings
6185
2020
January 31 Sold fixtures and received a cheque
1150
The fixtures had been purchased on 1 February 2018 for P1500
March 31 Purchased new fixtures paying by cheque
3500
Sariah’s policy is to provide depreciation on fixtures and fittings at 10% per annum using the
reducing balance method. A full year’s depreciation is charged in the year of purchase but
none in
the year of disposal
(a) Prepare the following accounts for the year ended 30 September 2020. Close the
accounts by balancing or by making an appropriate ye ar end transfer.
(i)
Fixtures and fittings account
(ii)
Provision for depreciation of fixtures and fittings
(iii)
Disposal account
(11)
Class exercise 5
Bgcse paper 1 2023
Bame is a trader. Her financial year ends on 30 September.she provides depreciation on her
non-current assets each year.
(a) State three factors that causes Bame’s non-current assets to depreciate (3)
(b) State one reason why Bame depreciate her non-current assets
(1)
(c) State two differences between reducing balance method and straight line method
(4)
(d) State two types of non-current assets which are suitable for depreciation using the
revaluation method (2)
Bame provides depreciation on her motor vehicles at the rate of 25% per annum using the
reducing balance. She allows a full year’s of depreciation in the year of purchase of motor
vehicles but no depreciation in the year of disposal.
On 1 October 2021 Bame had a motor vehicle with a cost of P75 000 on which depreciation
of P30 000 had been provided.
On 1 January she bought a new motor vehicle, costing P92 000 from AB Motors on credit.
On 1 January she sold an old motor vehicle and received a cheque of P37 500.
(e) Write up the following ledger accounts for each of the years ended 30 September
2022 and 30 September 2023.
Balance the accounts where necessary and bring down the balances on 1 October 2022 and
October 2023 respectively.
(i) Motor vehicle account
(ii) Provision for depreciation of motor vehicle account
(iii) Disposal of motor vehicle account
(15)
CLASS EXERCISE 6
BGCSE 2009
Lame is a trader. His financial year ends on 31 December. On 1 January, 2007, he purchased
two motor vehicles for P40 000 each paying by cheque.
On 30 June 2009 he sold one of the motor vehicles for P22 000 cash
On October 2009 he purchased another motor vehicle P50 000 on credit from ABC motors.
Lame depreciates his motor vehicles using the straight line method at 20% per annum.
depreciation is charged for each month of ownership and no depreciation is charged in the
year of disposal.
(i) Write up the motor vehicles account for three years ending on 31 December 2007, 2008
and 2009.
(ii)write up the provision for depreciation of motor vehicles account for each of the three
years ended on 2007, 2008 and 2009.
(iii) Write up the disposal of motor vehicle account.
Class exercise 7
Igcse paper 3 2008
Tahir Ali supplies building materials. His financial year ends on 31 December. On 1 January
2006 he decided to provide a delivery service for his customers. On that date he purchased
three motor vehicles, costing P20 000 each, on credit from Ansari Road Motors.
Tahir Ali decided that depreciation should be calculated on motor vehicles owned at 31
December each year at the rate of 20 % per annum, using the reducing (diminishing) balance
method.
A full year’s depreciation should be provided in the year of purchase, but no depreciation
should be provided in the year of disposal.
On 30 June 2007 Tahir Ali decided that only two motor vehicles were required and he sold the
other motor vehicle on credit to Apollo Traders for P17 000.
(a) Explain how Tahir Ali is applying the matching principle when he depreciate
motor vehicle.(2)
(b) Write up the following ledger accounts in Tahir Ali’ledger for each of the years
ended 31 December 2006 and December 2007.
(i) Motor vehicle account
(ii) Provision for Depreciation of motor vehicle
(iii) Disposal of motor vehicle account
(18)
Class exercise 8
Igcse 2015 paper 2
On 1 October 2013 Natasha Salim started a business altering and mending clothes. On that date
she purchased a machine, P4000, paying by cheque.
On 1 January 2014 she purchased another machine, P6000, on credit from ABC Machines. She
decided to depreciate the machines using the reducing (diminishing) balance method at 20%
per annum.
A whole year’s depreciation was to be charged in the year of purchase, but no depreciation in
the year of sale. On 1 February 2015 Natasha Salim decided that the machine purchased on 1
October 2013 was no longer required. She sold it for P2100, cash.
(a) Prepare the following accounts in the ledger of Natasha Salim for each of the two
years ended 30 September 2014 and 30 September 2015. Balance the accounts and
bring down the balances on 1 October 2014 and 1 October 2015
(i) Machinery account (5)
(ii) Provision for Depreciation account (5)
(b) Calculate the profit/loss on the disposal of the machine on 1 February 2015. (2)
3.3 Prepare financial statements of trading and service organisations
Trading organisations
Class exercise 1
Bgcse (2004)
The following trial balance was extracted from the books of F Ngaka, a trader, as at 31 December 2004.
Dr
Bank
475
Drawings
2750
Lighting and heating
400
Wages and salaries
3500
Discount received
Cr
425
Sales returns
120
Bad debts
185
Rent and rates
900
General expenses
830
Capital
55 405
Carriage on purchases
120
Purchases
23 700
sales
32 400
Inventory (1 Jan 2004)
2300
Trade receivables
2650
Trade payables
1750
Purchase returns
200
Motor van(at cost)
Fixtures and fittings(at cost)
51800
450
90 180
Additional information
The following additional information is to be considered.
1. Inventory on 31 December 2004 was valued at P3500
90 180
2. An amount of P40 for lighting is outstanding on 31 December 2004.
3. Depreciation is being provided on the motor van at 20% on cost.
4. During the year, F. Ngaka took goods worth P150 from the business for personal use.
5. Rent and rates prepaid at 31 December amounted to P100.
(a) Prepare Ngaka’s income statement for the year ended 31 December 2004.Show clearly the cost of
sales. (16)
(b) Prepare F.Ngaka’s Statement of financial position as at 31 December 2004. (14
Class exercise 2
Igcse paper 2 2022
Fatima is a sole trader. She prepares her financial statements to the end of March each year. At 31 March
2022, Fatima’s ledger account balances included the following.
DR(P)
Revenue
79 400
Sales returns
3970
Purchases
36500
Rent and rates
9000
Wages
10100
General expenses
1287
Insurance
1800
Discount received
1095
Inventory 1 April 2021
3000
Bank
23049
Fixtures and fittings
80 000
Provision for depreciation: fixtures and fittings
Trade receivables
CR(P
39040
6400
Trade payables
4995
Provision for doubtful debt
156
Drawings
8580
Capital
59 000
183 686
183 686
Additional information:
The following information is also available.
1. Inventory at 31 March 2022 was P3120.
2. Fatima took goods for her own use from the business during the year ended 31 March 2022. These
goods cost P1300.
3. Depreciation on fixtures and equipment is to be charged at 20% per annum using the reducing
balance method.
4. Accrued wages at 31 March 2022 were P800.
5. Rent includes a payment of P1500 for the 3 months from 1 March 2022 to 31 May 2022.
6. A bad debt of P200 is to be written off.
7. The provision for doubtful debts is to be set at 3% of trade receivables.
(a) Prepare Fatima’s income statement for the year ended 31 March 2022. (11)
(b) Prepare Fatima’s Statement of financial position as at 31 March 2022. (11)
Class exercise 3
BGCSE (2008)
1. The following balances were extracted from the books of Tirelo Morwa, sole trader, at 31
December 2020.
Revenue
Purchases
Owner’s equity
Trade receivables
Trade payables
Opening inventory ( 1 January 2020)
Rent, rates and insurance
Wages and salaries
Bank
Cash
Drawings
Motor van at cost
Machinery at cost
Provision for depreciation:
Motor van (1 January 2020)
Machinery (1 January 2020)
Discount received
Sales returns
P
19 000
14 600
13 910
3 200
3 900
1 050
610
900
1 400
1 620
750
8 000
9 000
1 600
1 800
1 100
180
Additional information
1.At 31 December 2020:
Inventory was valued at P1250
2.Rent accrued amounted P150
3.Insurance prepaid amounted to P120
4.A bad debt of P80 should be written off
5.Depreciation is to be provided:
Motor van at 10% per annum using the straight line method.
Machinery at 20% per annum using the reducing balance.
(a) Prepare Tirelo Morwa’s Income statement for the year ending 31 December 2009. (14)
(b) Prepare Tirelo Morwa’S Statement of financial position as at 31 December 2009.(14)
Class exercise 4
Bgcse (2022)
Leatile is a sole trader.She provided the following trial balance at 30 September 2022.
Leatile
Trial balance at 30 September 2022
Dr(P)
Cr(P)
Machinery at cost
150 000
Delivery van at cost
140 000
Office equipment at cost
38 500
Provision for depreciation of Machinery
22 500
Provision for depreciation of delivery van
70 000
Provision for depreciation of office equipment
13 928
Provision for doubtful debt
400
Revenue(sales)
198 780
Purchases
110 000
Dsicount allowed
2600
Rent
26 400
Inventory at 1 October 2021
3 100
Electricity
2 320
Wages and salaries
36 340
Trade receivables
9 600
Carriage on purchases
500
Trade payables
14 540
Bank
6 600
Cash
1 020
Drawings
12 428
Long-term loan
80 000
capital
127 960
General expenses
1 900
534 708
534 708
Additional information at 30 September 2022
1.Inventory was valued at P4400
2.Total of the discount received column in the cash book, P2 200,had not been transferred to the
discount received account
3.Electricity accrued amounted to P110
4.Depreciation is to be provided as follows:
Machinery P22 500
Delivery van P17 500
Office equipment P4500
6. The provision for doubtful debts to be reduced to P288
7. Interest on loan,at 10% per annum is accrued
8. Office equipment costing P8500 was sold for P4000 which was received by cheque.
The depreciation on the office equipment sold amounted to P6200. No entry were made to record this
transaction
(a) Prepare Leatile’s income statement for the year ended 30 September 2022. (16)
(b) State two reasons why each of the following will be interested in Leatile’s financial statements
(I) Bank manager (2)
(II) Leatile, the owner (2)
Class exercise 5
BGCSE (2015)
The following were extracted from the books of D. Dikoloto at 30 September 2015.
Dr(P)
Cr(P)
Revenue
55 160
Inventory, 1 October 2014
2 760
Purchases
22 880
Carriage on purchases
3 760
Wages and salaries
13 800
Insurance
720
Rent and rates
10 820
Motor expenses
4 840
Discount received
320
Cash
1 000
Bank overdraft
1 280
Premises
47 640
Motor vehicles at cost
42 800
Provision for depreciation on motor vehicles
1 october 2014
10 700
Trade receivables
1 220
Trade payables
4 940
Drawings
7 040
Capital
86 880
159 280
159 280
Additional information on 30 September 2015
1 Inventory was valued at P3000
2 D.Dikoloto took goods costing P1720 for own use; No entries were made in the books
3 Depreciation on the motor vehicles provided at 25% per annum using the reducing balance
method
4.Wages and salaries accrued amounted to P2720
5.The amount of insurance represents cover for the 18 months period from 1 April 2014 to 30
September 2015
(a) Prepare the income statement of Dikoloto for the year ended 30 September 2015.(16)
(b) State the effects of profit or loss for the year of capital (2)
(c) State the meaning of net current assets(1)
(d) Calculate net current assets (3)
(e) Suggest two ways of improving net current assets (3)
Class exercise 6
Shoppers Traders is a retailer business. The following trial balance was extracted from the ledger
accounts of the business.
PARTICULARS
DR(P)
CR(P)
Revenue
140 850
Purchases(ordinary goods purchased)
82 340
Carriage
4 800
Drawings
13 500
Rent, rates and insurance
6 482
Postage and stationery
2 450
Advertising
1 280
Salaries and wages
27 400
Bad debts
880
Allowance for doubtful debts
150
Trade receivables
11 140
Trade payables
7 244
Petty cash
180
Bank
1910
Inventory (1 January 2018)
12 300
Equipment(at cost)
62 000
Accumulated depreciation
20 000
Capital
58 418
Total
226 662
226 662
Additional information on 31 December 2018
1. Rent is accrued by 300
2. Rates have been prepared by P840
3. P1800 of carriage is carriage on purchases
4. Equipment is depreciated at the rate of 10% on cost
5. The allowance for doubtful debt is to be increased to P180
6. Inventory at the end of the year was valued at P13 230.
(a) Prepare Shoppers income statement for the year ended 31 December 2018
(b) Prepare Shoppers statement of financial position as at 31 December 2018.
Class exercise 7
The list were extracted from Butale’s books at 31 December 2013
DR (P)
Revenue
Purchases
72 000
Purchase returns
Carriage on purchases
3 500
Import duties
1 200
Staff salaries
11 200
Rent and insurance
6 000
Other operating expenses
4 500
Cash at bank
15 500
Trade receivables
31 400
Trade payables
Provision for doubtful debts
Inventory (1 January 2013)
21 400
Motor vehicle at cost
56 000
Equipment at cost
20 000
Provision for depreciation on 1 January 2013
Motor vehicles
Equipment
Capital
Drawings
18 600
CR (P)
130 000
1 900
9 100
1 600
14 000
2 000
102 000
Additional information
- On 31 December 2013
- Inventory was valued at P22 000
- Other operating expenses amounted to P400
- Insurance, P600 was paid for the twelfth month, ending 30 April 2014
- Provision for doubtful debts to be increased to P2000
- Bank charges of P300 had not been recorded in the books
- Depreciation is to be provided as follows:
Motor vehicles- 25% per annum on cost
Equipment- 10% per annum on book value
(a) Prepare the income statement of Butale for the year ended on 31 December, 2013
(b) Prepare Butale’s statement of financial position as at 31 December ,2013
(c) State two ways in which the income statement will be useful for the following
- Butale, the owner
- Employees
- Government
- Bank
- Credit suppliers
SERVICE ORGANISATIONS
Class exercise 1
The trial balance of Jacobs’s garage
Motor vehicle(at cost)
Provision for depreciation(Motor vehicle)
Bank overdraft
Equity
Petty cash
Trade payables
Inventory of lubricants(1 January 2005)
Commission received
Trade receivables
Drawings
Interest on overdraft
Lubricants purchased
Rent of garage
Repairs revenue
Salaries and wages
Spare parts used
Stationery and postage
Telephone
Tools and equipments
Provision for depreciation(tools and equipment
Tools and equipment repairs
Travelling expenses
Insurance
Dr(P)
30 000
Cr(P)
6 000
8 500
50 000
1 500
2 100
1 100
3 200
14 200
12 000
1 500
2 000
36 000
160 800
32 900
22 800
6 800
6 240
35 000
6 000
9 360
15 400
9 800
Additional information:
(i)
at 31 December 2005
- Rent prepaid by P6000
- Salaries and wages owing amount to P1200
- Insurance prepaid amount to P400
- Inventory lubricants is valued at P1100
(ii)
250 of telephone relates to P.Jacobs personal calls
(iii)
The motor vehicle is to be depreciated by 10% on cost
(iv)
The tools and equipment are to be depreciated by 15% per annum on cost
(a) Prepare the income statement of P.Jacobs Garage for the year ended 31 Deember,
2005.
(b) Prepare the statement of financial position of P. Jacobs Garage at 31 December, 2005
Class exercise 2
BGCSE (2019)
TRT (Pty) Ltd operates a fleet of buses
(a) State two differences between a merchandised business and a service business
TRT (Pty) Ltd provided the following information at the end of the financial year on 30
September 2019.
P
Income from bus fares
Rent and insurance
Salaries and wages
Office expenses
Telephone expenses
Luggage fees received
Fuel
Repairs
Advertising
Premises at cost
Fleet of buses at cost
230 000
16 620
30 400
1 350
2 000
1 200
7 800
10 600
3 000
80 000
200 000
Additional information at 30 September 2019.
1. Rent accrued P2000
2. Insurance prepaid P3 800
3. Accrued office expenses P850
4. Premises are to be depreciated at 15 % per annum using straight line method
5. Buses are to be depreciated at 25% per annum using straight line method
(b) Prepare the income statement of TRT (Pty) Ltd for the year ended 30 September 2019.
Class exercise 3
BGCSE(2024)
Businesses may be divided into merchandised and service businesses.
(a) State three difference between a merchandised business and a service businesss
(b) Complete the table by placing a tick to show whether each item can appear in the financila
statements of a merchadised business or a service business.If an item can appear in both the financial
statements of a merchandised business and a service business, place a tick under both columns.
Item
Merchandised business
Service business
Cost of sales
Gross profit
Discount received
Modise provides secreterial services for small businesses.His financial year ends on 31 March.
He provided the following information for the year ended 31 March 2024.
P
Fees received from clients
22 500
Rent received from Tenants
4050
Insurance paid
3060
General expenses paid
9340
Additional information
1. Part of premises are rented to a tenant at an annual rent of P3700
2. During the year ended 31 March 2024.Modise sold all office equipment for P2800.The equipment
had cost P6000 and had depreciated by P4000 at that date of sale. No depreciation is charged in the
year of disposal.
3. On 1 October 2023, Modise purchased new office equipment for P8000. Modise depreciates his
equipment at 25% per annum using the straight line method.Depreciation is calculated from the date
of purchase.
(a) Prepare Modise’s Income statement for the year ended 31 March 2024. (8)
3.3.8 Partnership
class exercise 1
BGCSE (2000)
Ben and Amu are partners sharing profits and losses in the ratio 3:2. The following balances were
extracted from the books of the partnership on 31 December, 2000.
Dr (P)
Cr(P)
Capital accounts: Ben
10 000
Amu
8 000
Current accounts: Ben
2000
Amu
1 500
Drawings:
Ben
800
Amu
600
Inventory: 1 Jan, 2000
1 800
Purchases and sales
6 000
8 400
Rent
700
Insurance
600
Other payables
400
Trade receivables
2 000
Trade payables
3000
Motor van
10 000
Equipment
5 000
Cash at bank
1 000
Additional information
(i)
The inventory at 31 December 2000 valued at P4000
(ii)
Insurance was prepaid was P100 at 31 December 2000
(iii)
Rent owing at 31 December, 2000 was P250
(iv)
Depreciation for motor van is 10% on cost
(v)
Allow 10% interest on partners capital
(vi)
Amu is to receive a salary of P350 per month
(a) Prepare the income statement and appropriation accounts for the year ended 31
December 2000
(b) Prepare the partners current accounts(separate accounts)
(c) Prepare the Statement of financial position of the partners on 31 December 2000
Class exercise 2
BGCSE (2010)
Sipho and Maetso are in partnership. Their financial year ends on 31 December 2010.The following
balances were extracted from the books after calculating the profit before tax.
P
Profit for the year before tax (2010)
5340
Capital account:
Sipho
5000
Maetso
3000
Current account:
Sipho
500(Cr)
Maetso
300(Cr)
Drawings:
Sipho
600
Maetso
400
Additional information:
Partners are charged 5% interest on drawings
Interest on capital is allowed at 5% per annum
Any remaining profits and losses are shared equally.
(a) (i) Prepare Sipho and Maetso’s income statement appropriation account for the year ended 31
December 2010.
(ii)Prepare Sipho and Maetso’s current accounts as they would appear in the ledger of the partnership
for the year ended 31 December, 2010
Class exercise 3
BGCSE (2017)
The partnership agreement of Peter and John included the following terms.
-Interest on capital is to be allowed at 10% per annum
-Interest is to be charged on drawings at 5% per annum
-Profits and losses to be shared equally
-A fluctuating capital account is to be maintained for each partner
Peter and John Motukwa provided the following information.
At 1 May 2016
P
Capital – Peter
19 600
John
11 200
For the year ended 30 April 2017
P
Gross profit for the year
6 600
Operating expenses
5 200
Drawings –Peter
2 300
-John
1 900
(a) Prepare the profit and loss appropriation account for the year ended 30 April 2017.
(b) Prepare the partner’s capital accounts and bring down the balances on 1 May 2017.
Class exercise 4
BGCSE (2007)
Macho and Neo are in partnership. The balances on their books on 30 June 2007 included the
following:
Accrued expenses
Capital accounts(1 July 2006)
Macho
Neo
Cash at bank
Trade payables
Current account (1 July 2006)
Macho
Neo
Trade receivables
Profit for the year
Prepaid expenses
Provision for doubtful debts
Inventory
P
1 620
44 000
30 000
10 600
21 000
23 000 Cr
11 300 Cr
25 200
80 470
900
630
4 850
Additional information
1. Partners are entitled to interest on capital at a rate of 10% per annum.
2. Neo is entitled to an annual salary of P12 000
3. Profits and losses are shared in the ratio, Macho 3 : Neo:2
(a) Prepare the profit and loss appropriation account for the year ended 30 June 2007 (5)
(b) Prepare Neo’s current account for the year ended 30 June 2007 (4)
(c) Compute the working capital of the partnership at 30 June 2007 (7)
(d) Suggest two ways in which Neo and Macho can improve the working capital (2)
Class exercise 5
BGCSE (2008)
Thabo and Masego are in partnership. The following trial balance was extracted from the books on 31
December, 2008.
Dr (P)
Capital accounts 1 January 2008
Thabo
Masego
Current accounts 1 January 2008
Thabo
Masego
Drawings
Thabo
Masego
Purchases
Revenue
General expenses
Wages
Bad debts
Buildings at cost
Furniture at cost
Trade receivables
Trade payables
Bank overdraft
Cash
Inventory 1 Jan 2008
Cr(P)
19 000
15 900
500
310
8 220
9 550
50 140
89 900
13 190
8 000
700
24 130
3 300
2 900
5 700
1 970
9 400
132 000
132 000
Additional information
The inventory on 31 December, 2008 was valued at P12 800
On 31 December, 2008 other operating expenses, valued P350 were paid in advance
Furniture to be depreciated by 10% on cost
The partnership agreement includes the following provisions:
- Interest on capital is allowed at 10% per annum
- Masego is entitled to a salary of P5000
Thabo and Masego share profits and losses3/4 and ¼ respectively
(a) Prepare the income statement and appropriation account of Thabo and Masego for the year
ended 31 December 2008
(b) Draw up the current accounts of Thabo and Masego for the year ended 31 December 2008.
(c) Prepare the statement of financial position for Thabo and Masego on 31 December 2008.
Class exercise 6
BGCSE (2022)
Orabile and Pako have been in partnership for some years.
Their partnership agreement includes the following terms:
Interest on capital is allowed at 10% per aanum
Salary of P24 000 per annum is to be paid to Pako
Interest on drawings is charged at 5 % per annum on total drawings
Profits and losses are shared in proportion to capital contributed
Interest on partners loans is allowed at 8% per annum.
Oarabile and Pako provided the following information
On 1 October 2021
P
Capital accounts balances Oarabile
150 000
Pako
100 000
Current account balances Oarabile
11 200 debit
Pako
10 800 debit
During the year ended 30 September 2022
Drawings
Oarabile
18 000
Pako
17 000
Profit for the year ended 30 September 2022
64 400
(a) Suggest one reason that may have caused the partner’s current accounts to have debit
balances on 1 October 2021.
(b) State one reason why Orabile and Pako included the following clauses in their partnership
agreement.
1. Partners given interest on capital
2. Partners charged interest on drawings
3. Pako given a salary
4. Partners given interest on loans to partnership
(c) Prepare the profit and loss appropriation account for the partnership for the year ended 30
September 2022. (8)
(d) Prepare the current accounts for Orabile and Pako for the year ended 30 September
2022.Balance the account and bring down the balance on 1 october 2022. (8)