Questions and Answers of Business Accounting

Show the journal entries needed to correct the following errors:(a) Purchases £1,410 on credit from A. Ray had been entered in B. Roy’s account.(b) A cheque of £94 paid for printing had been
After preparing its draft final accounts for the year ended 31 March 2009 and its draft statement of financial position as at 31 March 2009 a business discovered that the inventory lists used to
A trial balance was extracted from the books of D. Wilson, and it was found that the debit side exceeded the credit side by £100. This amount was entered in the suspense account. The following
Your bookkeeper extracted a trial balance on 31 December 2008 which failed to agree by £400, a shortage on the credit side of the trial balance. A suspense account was opened for the difference. In
You have extracted a trial balance and drawn up accounts for the year ended 31 December 2010. There was a shortage of £78 on the credit side of the trial balance, a suspense account being opened for
Study the following and answer the questions below. The trial balance of Mary Harris (Gowns) as at 31 December 2011 showed a difference which was posted to a suspense account. Draft final accounts
Gail Dawson is the owner of a retail business. She has employed an inexperienced bookkeeper to maintain her accounting records.(a) On 31 March 2012, the end of the business’s accounting year, the
The trial balance as at 30 April 2010 of Timber Products Limited was balanced by the inclusion of the following debit balance: Difference on trial balance suspense account £2,513. Subsequent
The trial balance of Happy Bookkeeper Ltd, as produced by its bookkeeper, includes the following items:You have been given the following information: (i) The sales ledger debit balances total
V. Fraga is a trader who sells all of his goods at 30% above cost. His books give the following information at 31 December 2013You are required to: (a) Ascertain cost of goods sold. (b) Show the
R. Jack gives you the following information as at 31 March 2014:Jack’s mark-up is 40% on ‘cost of goods sold’. His average inventory during the year was £17,000. Draw up an income statement
Fail’s business has a rate of inventory turnover of 10 times per year. Average inventory is £14,000. Mark-up is 40%. Expenses are 60% of gross profit. You are to calculate:(a) Cost of goods
The following figures relate to the retail business of A. Bell for the month of July 2012. Goods which are on sale fall into two categories, X and Y.You are to calculate for each category of
The following trading account is extracted from the income statement for the year ending 31 December 2011 and is given to you by the owner of the business, M. Pole:Pole says that normally he adds 20%
R. Sheldon presents you with the trading account set out above.(Authors’ note) He always calculates his selling price by adding 331 /3% of cost on to the cost price. (a) If he has adhered strictly
The following information is available for the years 2010, 2011 and 2012:The inventory valuations used above at the end of 2010 and at the end of 2011 were inaccurate. The inventory at 31 December
A. Dodds started in business on 1 January 2011 with £40,000 in a bank account. Unfortunately, he did not keep proper books of account. He must submit a calculation of profit for the year ending 31
Alice Twig is a magician. She has conjured up the following results from her non-existent accounting records. Fees are equal to four times her direct costs. At any given time her inventory equals one
B. Barnes is a dealer who has not kept proper books of account. At 31 October 2012 his state of affairs was as follows:During the year to 31 October 2013 his drawings amounted to £32,200. Winnings
A. Bell has kept records of his business transactions in a single entry form, but he did not realise that he had to record cash drawings. His bank account for the year 2011 is as follows:Records of
On 1 May 2011 Jenny Barnes, who is a retailer, had the following balances in her books: Premises £70,000; Equipment £8,200; Vehicles £5,100; Inventory £9,500; Trade accounts receivable £150.
Bill Smithson runs a second-hand furniture business from a shop which he rents. He does not keep complete accounting records, but is able to provide you with the following information about his
Although Janet Lambert has run a small business for many years, she has never kept adequate accounting records. However, a need to obtain a bank loan for the expansion of the business has
Jean Smith, who retails wooden ornaments, has been so busy since she commenced business on 1 April 2011 that she has neglected to keep adequate accounting records. Jean’s opening capital consisted
The following are summaries of the cash book and bank accounts of J. Duncan who does not keep his books using the double entry system.You are required to: (a) Calculate the value of J. Duncan’s
Using the information in Review Question 35.11, prepare J. Duncan’s statement of financial position as at 31 December 2011.Question 35.11The following are summaries of the cash book and bank
The following are summaries of the cash book and bank accounts of P. Maclaran who does not keep her books using the double entry system.You are required to: (a) Calculate the value of P. Maclaran’s
Using the information in Review Question 35.13, prepare P. Maclaran’s Statement of Financial Position as at 31 December 2011.Question 35.13The following are summaries of the cash book and bank
A summary of the Moorwick Bowling Club’s cash book is shown below. From it, and the additional information, you are to construct an income and expenditure account for the year ending 31 December
A The following trial balance of the Shire Golf Club was extracted from the books as on 31 December 2012:(i) Bar purchases and sales were on a cash basis. Bar inventory at 31 December 2012 was valued
Read the following and answer the questions below. On 1 January 2011 the Happy Haddock Angling Club had the following assets:During the year to 31 December 2011 the Club received and paid the
The treasurer of the Plumpton Leisure Centre has produced the following receipts and payments account for the year ended 31 December 2013:(i) Refreshment inventory was valued: 31 December 2012 £680;
The following is a summary of the receipts and payments of the Miniville Rotary Club during the year ended 31 July 2012.Required: (a) Calculate the value of the accumulated fund of the Miniville
The Milham Theatre Club has been in existence for a number of years. Members pay an annual subscription of £15 which entitles them to join trips to professional productions at a reduced rate. On 1
The accounting records of the Happy Tickers Sports and Social Club are in a mess. You manage to find the following information to help you prepare the accounts for the year to 31 December 2011. (i)
A business both buys loose tools and also makes some itself. The following data is available concerning the years ended 31 December 2010, 2011 and 2012.You are to draw up the Loose Tools Account for
A From the following information, prepare a manufacturing account and income statement for the year ending 31 December 2012 and a statement of financial position as at 31 December 2012 for J. Jones
From the following information, draw up a manufacturing account and the trading account section of the income statement for the six months ending 30 September 2013. You should show clearly: (a) Cost
E. Wilson is a manufacturer. His trial balance at 31 December 2013 is as follows:Prepare the manufacturing account and income statement for the year ending 31 December 2013 and a statement of
The financial year end of Mendip Limited is 30 June. At 30 June 2013, the following balances are available:(i) The inventory at 30 June 2013 was: raw materials £22,000; finished goods £35,600. (ii)
A Jean Marsh owns a small business making and selling children’s toys. The following trial balance was extracted from her books on 31 December 2013.You are given the following additional
The following list of balances as at 31 July 2012 has been extracted from the books of Jane Seymour who commenced business on 1 August 2011 as a designer and manufacturer of kitchen
From the following you are to draw up a departmental trading account for Slick’s Department Store for the year ending 30 June 2012. Inventory: Carpet Department White Goods Department Music
J. Horner is the proprietor of a shop selling paintings and ornaments. For the purposes of his financial statements he wishes the business to be divided into two departments:The following balances
From the following list of balances you are required to prepare a departmental income statement for the year ending 31 March 2011, in respect of the business carried on under the name of Jack’s
The statements of financial position of A. Vantuira, a sole trader, for two successive years are shown below. You are required to draw up a statement of cash flows for the year ending 31 December
Draw up a statement of cash flows for Gerry Peace for the year ending 31 December 2013 using the IAS 7 layout. You are told that fixtures bought in 2003 cost £400, whilst a van was bought for
Malcolm Phillips is a sole trader who prepares his financial statements annually to 30 April. His summarised statements of financial position for the last two years are shown below.Malcolm is
From the following details you are to draft a statement of cash flows for D. Duncan for the year ending 31 December 2011, using the IAS 7 layout. Gross profit Add Discounts received Profit on sale of
You are required to draw up a statement of cash flows for K. Rock for the year ending 30 June 2013 from the following information using the IAS 7 layout. Gross profit Add Reduction in allowance for
A Frank entered into a joint venture with Graham for the purchase and sale of robot mowers. They agreed that profits and losses should be shared equally. The following transactions took place: (a)
A Rock, Hill and Pine enter into a joint venture for dealing in paintings. The following transactions took place:Required: Show the joint venture accounts in the books of the three parties. Show in
Gray, Wilkes and Booth are partners. They share profits and losses in the ratios of 3 /8, 3 /8 and 1 /4 respectively. For the year ending 31 December 2012 their capital accounts remained fixed at the
Draw up a profit and loss appropriation account for the year ending 31 December 2013 and statement of financial position extract at that date, from the following: (i) Net profits £111,100. (ii)
Penrose and Wilcox are in partnership, sharing profits and losses in the ratio 3:2. The following information was taken from their books for the year ending 31 December 2012, before the completion of
A and B are in partnership sharing profits and losses 3:2. Under the terms of the partnership agreement, the partners are entitled to interest on capital at 5 per cent per annum and B is entitled to
Bee, Cee and Dee have been holding preliminary discussions with a view to forming a partnership to buy and sell antiques. The position has now been reached where the prospective partners have agreed
Frame and French are in partnership sharing profits and losses in the ratio 3:2. The following is their trial balance as at 30 September 2012.Required: Prepare an income statement and profit and loss
Scot and Joplin are in partnership. They share profits in the ratio: Scot 70 per cent; Joplin 30 per cent. The following trial balance was extracted as at 31 December 2013.Required: Draw up a set of
Sage and Onion are trading in partnership, sharing profits and losses equally. Interest at 5% per annum is allowed or charged on both the capital account and the current account balances at the
Bush, Home and Wilson share profits and losses in the ratios 4:1:3 respectively. Their trial balance as at 30 April 2013 was as follows:Draw up a set of financial statements for the year ending 30
Reid and Benson are in partnership as lecturers and tutors. Interest is to be allowed on capital and on the opening balances on the current accounts at a rate of 5% per annum and Reid is to be given
Wilson, Player and Sharp are in partnership. They shared profits in the ratio 2:4:3. It is decided to admit Titmus. It is agreed that goodwill is worth £72,000 and that it is to be brought into the
Owing to staff illnesses, the draft final accounts for the year ended 31 March 2012 of Messrs Stone, Pebble and Brick, trading in partnership as the Bigtime Building Supply Company, have been
The above partners have always shared profits and losses in the ratio: Pitt 4: Lamb 2: Soul 1. From 1 January the assets were to be revalued as the profit sharing ratios are to be altered soon. The
Fitch and Wall have been in partnership for many years sharing profits and losses in the ratio 5:3 respectively. The following was their statement of financial position as at 31 December 2012:On 1
Alan, Bob and Charles are in partnership sharing profits and losses in the ratio 3:2:1 respectively. The statement of financial position for the partnership as at 30 June 2012 is as follows:Charles
The statement of financial position of A. Barnes and C. Darwin at 31 March 2011 is as follows:The partners share profits and losses: Barnes three-fifths and Darwin two-fifths. At the date of the
At 31 December 2013, the statement of financial position of A, B and C, who are equal partners, was as followsA retired at that date. In order to determine the amount due to him the following
X, Y and Z have been in partnership for several years, sharing profits and losses in the ratio 3 : 2 : 1. Their last statement of financial position which was prepared on 31 October 2012 is as
The following trial balance has been extracted from the books of Gain and Main as at 31 March 2011; Gain and Main are in partnership sharing profits and losses in the ratio 3 to 2:In appropriating
A, B and C are partners sharing profits and losses in the ratio 2 : 2 : 1. The statement of financial position of the partnership as at 30 September 2013 was as follows:The partners agreed to dispose
Amis, Lodge and Pym were in partnership sharing profits and losses in the ratio 5 : 3 : 2. The following trial balance has been extracted from their books of account as at 31 March 2011:Additional
Proudie, Slope and Thorne were in partnership sharing profits and losses in the ratio 3 : 1 : 1. The draft statement of financial position of the partnership as at 31 May 2012 is shown
Lock, Stock and Barrel have been in partnership as builders and contractors for many years. Owing to adverse trading conditions it has been decided to dissolve the partnership. Profits are shared
Grant and Herd are in partnership sharing profits and losses in the ratio 3 to 2. The following information relates to the year to 31 December 2011:1 The partnership agreement allows for Herd to be
Flyer Ltd started in business on 1 April 2011. Its issued share capital was 200,000 ordinary shares of £1 each and 100,000 5 per cent preference shares of £1 each. The following information is
Trainsign Ltd has an authorised capital of £500,000, consisting of 350,000 ordinary shares of £1 each and 150,000 7 per cent preference shares of £1 each. Of these, 260,000 ordinary shares and
A statement of financial position is to be drawn up from the following information as at 30 September 2011: Issued share capital: ordinary shares 1 each Authorised share capital: ordinary shares of 1
The following balances remained in the ledger of OK Ltd after preparation of the income statement for the year ending 31 March 2012The directors propose: (i) a transfer to general reserve of
Developing Ltd has an authorised capital of 50,000, 10% preference shares of £1 each and 200,000 ordinary shares of 50p each. After preparation of the income statement for 2013, the following
Select Ltd is registered with an authorised capital of 300,000 ordinary shares of £1. The following trial balance was extracted from the books of the company on 31 March 2012, after the preparation
(a) From the above information, prepare the statement of financial position of Budgie Limited indicating clearly the shareholders’ funds and working capital. (b) Comment on the capital position
The trial balance extracted from the books of Tailor Times Ltd at 31 December 2012 was as follows:You are given the following additional information: (i) The authorised and issued share capital is
The following is the trial balance of Tully Ltd as on 31 December 2013:Given the following information, you are to draw up an income statement for the year ending 31 December 2013, and a statement of
You are to draw up an income statement for the year ending 31 December 2011, and a statement of financial position as at that date from the following trial balance and details of Partido Ltd:Notes at
A Here is the trial balance of Falta Ltd as at 30 April 2012:Given the following information as at 30 April 2012, draw up an income statement and statement of financial position for the year to that
Burden PLC has an authorised capital of 500,000 ordinary shares of £0.50 each. (a) At the end of its financial year, 31 May 2012, the following balances appeared in the company’s books:The
The chairman of a public limited company has written his annual report to the shareholders, extracts of which are quoted below. Extract 1 ‘In May 2012, in order to provide a basis for more
The directors of the company by which you are employed as an accountant have received the forecast income statement for 2012 which disclosed a net profit for the year of £36,000. This is considered
(a) The business of V. A. Fraga is taken over by T. Malloy in its entirety. The assets are deemed to be worth the statement of financial position values as shown. The price paid by Malloy is
I. Dodgem’s statement of financial position as at 31 December 2011 was as follows:An opportunity had arisen for Dodgem to acquire the business of A. Swing who is retiring.Dodgem agreed to take over
Spectrum Ltd is a private company with an authorised capital of £700,000 divided into shares of £1 each. 500,000 shares have been issued and are fully paid. The company has been formed to acquire
Calculate the inventory turnover ratio if average inventory is £40,000 and cost of sales is £280,000.
Calculate return on capital employed for a sole proprietor whose net profit was £60,000 and whose capital employed was £200,000.
Calculate gross profit as a percentage of sales if gross profit was £70,000 and sales were £400,000.
Calculate net profit as a percentage of sales if net profit was £45,000 and sales were £400,000.
(a) Calculate the current ratio if current assets are £50,000 and current liabilities are £30,000. (b) If inventory is £28,000, what is the acid test ratio?
(a) If accounts receivable are £50,000 and sales are £250,000, what is the accounts receivable/sales ratio? (b) How many days does the average debtor take to pay?
(a) If accounts payable are £40,000 and purchases are £240,000, what is the accounts payable/purchases ratio? (b) How many days does the business take on average to pay its creditors?

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