Week 3 Assignments
R1811D6732779
Accounting 1
UU-ACG-1000-17357
Submitted to Alexandros Mavros
EXERCISE 1
a. Accruals are expenses incurred by a company on a statement which is yet to
be paid before a year end. For example, a company may pay for electricity
or water bills when they have already consumed most of the service.
b. Prepayments are expenses suffered by a company which are paid in
advance before the goods or service are procured. For example, employees
working for a company can request for an advance pay before the month end
or before they put in work.
c. Dr Electricity acc Cr Dr Water acc Cr
$ $
Cash 6500 Cash 1700
Cash 500 Bal C/D 7000 Cash 300 Bal C/D 2000
7000 7000 2000 2000
Dr Audit Fees Cr Dr Salaries acc Cr
$ $ $ $
Cash 5000 Bal C/D 5000 Cash 180, 000 Bal C/D 181, 500
5000 5000 Cash 1, 500 181, 500
181, 500
Dr Cash acc Cr
$ $
Electricity 7000 Profit and Loss Extract
Bal C/D 195, 000 Water 2000 Masha and The Bear Inc
Audit 5000
Salaries 181, 000 Less: Expenses $ $
195, 000 195, 000 Water 2000
Electricity 7000
Audit 5000
Salaries 181, 000 (195,000)
Balance Sheet Extract
Masha and the Bear inc
CREDITORS LIABILITIES $
Creditors 195, 000
EXERCISE 2
a. Straight line method
Cost - Residual Value
Useful Life
$310, 000 - $ 120, 000
1 year
= $190, 000
b. The Reducing balance method
All assets = $ 310, 000 + $ 79, 200
= $ 389, 200
Cost 389, 200
Depreciation of the year (25%) 79, 200
Balance at the end of the year 292, 200
EXERCISE 3
a. Making an Allowance for bad debt is also called the provision for doubtful debts
this shows the possibility of clients not paying what they owe, while Writing off a
bad debt is excluding a bad-debt as an asset from the account book. Allowance
for bad debt is treated and shown by balance of accounts after writing- off and
each debt is considered on its own. Write- Off is treated and shown in the debit-
bad debt expense and are recovered in the profit and loss account.
b.
Date Particulars Dr Cr
2017 Accounts Receivable $ $
Written Off 740,000 740, 000
c. Dr Accounts Receivable Cr Dr doubtful debts Cr
2017 $ 2017 $
Receivables 24, 000 Receivables 24, 000
d. Dr adjusting Entry Cr
2017 $ 31/ 12/ 2017 $
Allowance 70, 000 Bal C/D 80, 000
Added 10, 000
80, 000 80, 000
EXERCISE 4
A. Purchase of a motor car
-Capital expenditure
A company can use a motor car for a long period
B. Claim for a meal
-revenue
It is a small expense and can be used for a short period
C. Purchase of shares in a supplier
-revenue
The money that will be used to purchase the shares will increase the revenue of a
company
D. Purchase of a new computer
-Capital expenditure
A company will use it for a long period to increase productivity
E. Payment for hotel accommodation
-Revenue
It is considered a revenue because the accommodation will be used for a short period
F. Installation cost for server
-Capital expenditure
A cost will be included to the cost of the server
G. Purchase of raw materials
-Capital expenditure
It helps the company to increase the production
H. Repair of motor vehicles
-Revenue
It is a small cost, which a business have to pay on a short period
I. Purchase of new stationery
-Capital expenditure
These are assets used by a company for a long period
J. Payment of an insurance premium
-revenue expenditure
These are prepaid expenses which are paid by a company before they receive the services
and they
increases the revenues
K. Wages
-revenue expenditure
These are payments, which employers pay employees for the work done.
L. Purchase of a new plot of land.
-Capital expenditure
It is an asset, which the company will use for a long period