11 ACCOUNTING
CORE STUDIES 2 HOMEWORK SHEET 1
Page 112, Ex 4.4 Why are accrued revenues and prepaid expenses assets?
Ex 4.5 Why are accrued expenses and unearned revenues liabilities?
Ex 4.6 A business balances its accounts on 30 June. Give balance day adjustments to effect
these changes:
1. Rent expense has been prepaid for $200.
2. Insurance has been prepaid for $3500.
3. Commission revenue of $400 is owing.
4. Wages of $80 owing.
Ex 4.7 A business balances its accounts on 31 December. Give balance day adjustments to effect these
changes:
1. $1 500 advertising owing.
2. Sales salaries of $800 owing.
3. $100 interest owing on government bonds.
4. $620 rent revenue is owing to the business.
Ex 4.28 From the following information:
a. Show journal entries for the balance day adjustments and clearing the GST accounts
b. Prepare an Income Statement for the year ended 30 June
c. Prepare a Balance Sheet as at 30 June
Trial Balance of J Knight as at 30 June 2013
Debit
Sales
Sales Returns
Commission Revenue
Cost of Goods Sold
Advertising
Travel Expenses
Interest Revenue
Selling Expenses
Office Wages
Stationery
Insurance
Electricity
Telephone Expenses
Cash at Bank
Accounts Receivable
Inventories
Land
Buildings
Vehicles
Accounts Payable
GST Collected
GST Credits Received
Mortgage
Capital
Drawings
Additional information:
 Advertising of $200 was prepaid
 Office wages of $800 are owing
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Credit
50 000
1 000
2 000
18 750
1 000
750
250
1 100
875
200
400
400
200
8 000
9 000
11 000
20 000
30 000
22 000
7 000
4 000
2 000
10 000
54 425
1 000
$127 675
$127 675
Ex 4.29 From the following information for D Knowles, prepare the general journal entries,
income statement and balance sheet.
Trial Balance of D Knowles
as at 30 June 2013
Interest Expense
Office Wages
Sales
V Campbell
D Hall
Rent Revenue
Office Furniture
Inventories
Advertising
Cash at Bank
Sales Returns
Equipment
Selling Expenses
Vehicles
Buildings
Land
Cost of Goods Sold
Mortgage
Goodwill
Insurance
Shares in TX Co
Office Expenses
S Mayne
M Wallace
GST Collected
GST Credits Received
Capital
Drawings
Additional information:
Advertising owing totals $500
Insurance prepaid is $250
Rent received in advance is $275
Interest owing is $500
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Debit
150
13 000
Credit
150 000
1 350
875
1 275
10 000
10 500
3 000
10 000
1 500
20 000
13 000
25 000
15 000
15 000
75 750
10 000
50 000
1 000
10 000
2 770
880
1 000
13 000
8 000
118 750
9 000
$294 900
$294 900
The following list of balances has been extracted from the books of A Smith on 30th
June 2013. You are required to prepare:
1. Balance day adjustments in the General Journal
2. Income Statement
3. Balance Sheet
Debit
Sales returns
Drawings
GST clearing
Plant and Equipment
Sales
Buildings
Advertising
Commission revenue
Land
Loan
Insurance
Electricity
Motor vehicles
Bad debts expense
Office Furniture
Equipment
Mortgage
Cartage outwards expense
Capital
Bank
Inventories
Accounts payable
Cost of goods sold
Rent revenue
Rent expense
Wages
Accounts receivable
3,500
2,500
3,300
45,000
300,000
150,000
300
900
100,000
142,650
1,000
800
75,000
4,100
45,000
35,000
100,000
1,200
181,100
123,550
63,000
18,000
55,000
5,000
6,000
20,000
20,000
$750,950
Additional Information:
Employees are owed wages of $500.
Insurance of $500 was paid in advance
Interest revenue is owed to the business of $200
Rent revenue of $1000 had been paid to the business but not yet earned.
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Credit
$750,950
Ex 4.33 From the following information for M Newtown, prepare the general journal entries,
income statement and balance sheet.
Trial Balance of M Newtown
as at 30 June 2013
Sales
Sales Returns and Allowances
Commission Revenue
Interest Revenue
Rent Revenue
Cost of Goods Sold
Advertising
Delivery Vehicle Expenses
Sales Salaries
Insurance
Office Salaries
Cash at Bank
J Gregorio (Accounts Receivable)
Inventories
Vehicles
Building
Land
B Bodington (Accounts Payable)
GST Collected
GST Credits Received
Capital
Drawings
15 000
600
3 000
15
6 000
6 900
3 000
3 000
2 400
7 200
600
1 380
5 400
56 250
30 000
45 000
45 000
1 035
1 800
1 545
182 250
825
Additional Information:




Insurance of $6 600 was paid in advance
Sales salaries owing are $1 500
Rent owing to the business is $1 500
Commission of $300 was received in advance
Calculate the gross profit, net profit and rate of return on owner’s equity ratios. Write a
report of 300 – 400 words analysing the given ratios. Make recommendations for
improvement, where possible.
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Ex 4.34
From the following information, prepare:




Journal entries for the balance day adjustments and GST clearing
An income statement for the year ended 30 June 2013
A balance sheet as at 30 June 2013
Calculations for the three earning capacity ratios
Trial Balance of A Cooper
as at 30 June 2013
Dividend received
Cash at bank
Mortgage
Inventories
Loss by burglary
Shares in AGC Ltd
Sales returns
Bad debts expense
Office furniture
B Edwards (Accounts Payable)
Loan from bank
Drawings
Capital
Cash on hand
D Davis (Accounts Receivable)
Insurance
Sales
Commission revenue
Office expenses
Delivery vehicle expenses
Telephone expense
Goodwill
Cost of goods sold
Rent revenue
Land
Advertising
B Murray (Accounts Payable)
W Hall (Accounts Receivable)
GST collected
GST credits received
Delivery vehicles
Buildings
Additional Information:





Insurance of $1 000 was prepaid
Rent of $250 was received in advance
Advertising owing is $2 000
Commission revenue owing is $575
Interest owing on loan from bank is $2 000
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1 000
10 000
50 000
9 000
1 000
20 000
3 000
500
15 000
1 750
15 000
10 000
84 750
1 000
8 750
6 000
98 000
3 000
4 000
3 500
5 000
10 000
25 000
5 000
50 000
10 000
2 000
3 750
9 000
4 000
20 000
50 000