REVIEW QUESTIONS

ACC 111: TOPIC 4: Adjustments to Trial Balance

Accruals and prepayments
1. The financial year of S. Smith ended on 31 December 2013. Show the ledger accounts for the
following items including the balance transferred to the necessary part of the financial
statements, also the balances carried down to 2014:
(a) Motor expenses: Paid in 2013 TSh1,400,000; Owing at 31 December 2013 TSh200,000.
(b) Insurance: Paid in 2013 TSh1,700,000; Prepaid as at 31 December 2013 TSh130,000.
(c) Computer supplies: Paid during 2013 TSh900,000; Owing as at 31 December 2012
TSh300,000; Owing as at 31 December 2013 TSh400,000.
(d) Business rates: Paid during 2013 TSh5,600,000; Prepaid as at 31 December 2012
TSh580,000; Prepaid as at 31 December 2013 TSh560,000.
(e) Smith sublets part of the premises. He receives TSh3,800,000 during the year ended 31
December 2013. West, the tenant, owed Smith TSh380,000 on 31 December 2012 and
TSh420,000 on 31 December 2013.

2. The following trial balance was extracted from the books of Wabashiri Traders at the close of
business on 28 February 2014.
Dr Cr
TZS’000 TZS’000
Purchases and sales 92,800 157,165
Cash at bank 4,100
Cash in hand 324
Capital account 1 March 2013 11,400
Drawings 17,100
Office furniture 2,900
Rent 3,400
Wages and salaries 31,400
Discounts 820 160
Accounts receivable and accounts payable 12,316 5,245
Inventory 1 March 2013 4,120
Allowance for doubtful debts 1 March 2013 405
Delivery van 3,750
Van running costs 615
Bad debts written off 730
174,375 174,375
Notes:
(a) Inventory 28 February 2014 TSh2,400,000.
(b) Wages and salaries accrued at 28 February 2014 TSh340,000.
(c) Rent prepaid at 28 February 2014 TSh230,000.
(d) Van running costs owing at 28 February 2014 TSh72,000.
(e) Increase the allowance for doubtful debts by TSh91,000.
(f) Provide for depreciation as follows: Office furniture TSh380,000; Delivery van
TSh1,250,000.
Required:
Draw up adjusted trial balance.

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Depreciation

3. Black and Blue Ltd depreciates its forklift trucks using a reducing balance rate of 30 per cent. Its
accounting year end is 30 September. On 30 September 2017, it owned four forklift trucks:
(A) Purchased on 1 January 2014 for TSh2,400,000
(B) Purchased on 1 May 2015 for TSh2,500,000
(C) Purchased on 1 October 2015 for TSh3,200,000
(D) Purchased on 1 April 2017 for TSh3,600,000
Required:
Calculate the depreciation provision for the year ending 30 September 2017.

4. On 1 April 2013 a business purchased a machine costing TSh112,000,000. The machine can be
used for a total of 20,000 hours over an estimated life of 48 months. At the end of that time the
machine is expected to have a trade-in value of TSh12,000,000.
The financial year of the business ends on 31 December each year. It is expected that the
machine will be used for:
4,000 hours during the financial year ending 31 December 2013
5,000 hours during the financial year ending 31 December 2014
5,000 hours during the financial year ending 31 December 2015
5,000 hours during the financial year ending 31 December 2016
1,000 hours during the financial year ending 31 December 2017
Required:
(a) Calculate the annual depreciation charges on the machine on each of the following bases for
each of the financial years ending on 31 December 2013, 2014, 2015, 2016 and 2017:
(i) the straight line method applied on a month for month basis,
(ii) the diminishing balance method at 40% per annum applied on a full year basis, and
(iii) the units of output method.
(b) Suppose that during the financial year ended 31 December 2014 the machine was used for
only 1,500 hours before being sold for TSh80,000,000 on 30 June.
Assuming that the business has chosen to apply the straight line method on a month for
month basis, show the following accounts for 2014 only:
(i) the Machine account,
(ii) the Provision for Depreciation - Machine account, and
(iii)the Assets Disposals account.

5. Alice Burke prepares her financial statements on 31 December each year and maintains a Plant
and Equipment register at cost. She provides depreciation for the full year on non-current assets
which are in use at the end of the year, and none in the year of disposal.
At 31 December 2013 the plant account balance was TSh180,000,000 and the balance on the
accumulated provision for depreciation account was TSh70,000,000. Depreciation was provided
on the reducing balance method at 20 per cent.
Early in 2016, an item of plant which had cost TSh20,000,000 on 1 March 2014 was sold for
TSh14,000,000.
At the end of 2016, it was decided that for that and all succeeding years the straight line method
of calculating depreciation should be used. It was assumed that all the plant would be sold at the
end of 2019 for approximately TSh30,000,000.

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 Required:
Prepare the ledger accounts recording all of the above. You are not required to prepare the profit
and loss account.

Bad Debts

6. A business had always made an allowance for doubtful debts at the rate of 3 per cent of accounts
receivable. On 1 January 2015 the amount for this, brought forward from the previous year, was
TSh400,000.
During the year to 31 December 2015 the bad debts written-off amounted to TSh1,200,000.
On 31 December 2015 the accounts receivable balance was TSh28,000,000 and the usual
allowance for doubtful debts is to be made.
You are to show:
(a) The Bad Debts Account for the year ended 31 December 2015.
(b) The Allowance for Doubtful Debts Account for the year.

7. A business started trading on 1 January 2014. During the two years ended 31 December 2014
and 2015 the following debts were written off to the Bad Debts Account on the dates stated:
31 May 2014 [Link] TSh500,000
31 October 2014 H. Black TSh400,000
31 January 2015 [Link] TSh200,000
30 June 2015 F. Dale TSh900,000
31 October 2015 J. Park TSh100,000
On 31 December 2014 the total accounts receivable was TSh104,000,000. It was decided to
make an allowance for doubtful debts of TSh3,120,000.
On 31 December 2015 the total accounts receivable was TSh116,000,000. It was decided to
make an allowance for doubtful debts of TSh3,480,000.
You are required to show the Bad Debts Account and the Allowance for Doubtful Debts Account
for each of the two years.