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 [Link] 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 Revenue
expenditure 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 Revenue
expenditure
expendiure

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 [Link] 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.

Capital Revenue

expenditure expenditure

Purchase of new computer

Purchase of laser printer

Replacement of hard disk in computer

(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

Capital receipt Revenue

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 Revenue
expenditure 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

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 2000

Inventory of stationery 500

Rates prepaid 2 200

The following transactions took place during the year ended 31 December 2014.

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 P

October 1 Inventory of stationery 640

December 28 Bought stationery and paid by cheque 3150

2022

January 5 received cash discount for damaged stationery 300

April 1 took stationery for personal use 200

September 30 inventory of stationery 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 [Link]
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 [Link]
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 [Link] Financial year ends on
31 August.

(a) Explain the following terms.

(i) Prepaid expenses (2)

(ii) Accrued income (2)

Dimpho provided the following information

At 1 September 2023

Rent receivable owing 2 500

Inventory of packaging materials 600

During the year ended 31 August 2024

Rent received by cheque 33000

Packaging materials paid by cheque 4500

At 31 August 2024

Rent receivable owing 5000

Inventory of packaging materials 570

(b) Prepare the following accounts in Dimpho’s ledger for the year ended 31 August
[Link] 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 [Link] financial year ends on 31 December.

Amla Khan maintains one combined account for the rates and [Link] 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.

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 P

Rent prepaid 300

For the year ended 28 February 2021

Rent charge for the year 3 900

Cheque payments for rent 30 June 2020 1 950

30 November 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.

Inventory of stationery 1440

Commision payable owed by Letso 4500

During the year ended 31 August 2020,he made the following payments by cheque

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
[Link] 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.

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 28 February 2021

Trade receivables 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
[Link] 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 [Link] 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.

P
Trade receivables 127 200
Bad debts to be written off 2 050

Write up the provision for doubtful debt account in Beta’s ledger for the year 31
March [Link] 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
[Link] 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.

P
Motor vehicles 80 000
Provision for depreciation of motor vehicle 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 [Link] 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 (2)

(ii) Prudence concept (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 [Link] 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 Cr

Bank 475

Drawings 2750

Lighting and heating 400

Wages and salaries 3500

Discount received 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) 51800

Fixtures and fittings(at cost) 450

90 180 90 180

Additional information
The following additional information is to be considered.
1. Inventory on 31 December 2004 was valued at P3500
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 [Link] clearly
the cost of sales. (16)
(b) Prepare [Link]’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) CR(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 39040

Trade receivables 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 19 000

Purchases 14 600

Owner’s equity 13 910

Trade receivables 3 200

Trade payables 3 900

Opening inventory ( 1 January 2020) 1 050

Rent, rates and insurance 610

Wages and salaries 900

Bank 1 400

Cash 1 620

Drawings 750

Motor van at cost 8 000

Machinery at cost 9 000

Provision for depreciation:

Motor van (1 January 2020) 1 600

Machinery (1 January 2020) 1 800

 Discount received 1 100

Sales returns 180

Additional information
[Link] 31 December 2020:
Inventory was valued at P1250
[Link] accrued amounted P150
[Link] prepaid amounted to P120
4.A bad debt of P80 should be written off
[Link] 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 [Link] 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

[Link] was valued at P4400
[Link] of the discount received column in the cash book, P2 200,had not been transferred to
the discount received account
[Link] accrued amounted to P110
[Link] 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 [Link] 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
[Link] and salaries accrued amounted to P2720
[Link] 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 82 340
purchased)
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) CR (P)
Revenue 130 000
Purchases 72 000
Purchase returns 1 900
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 9 100
Provision for doubtful debts 1 600
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 14 000
Equipment 2 000
Capital 102 000
Drawings 18 600

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

Dr(P) Cr(P)
Motor vehicle(at cost) 30 000
Provision for depreciation(Motor vehicle) 6 000
Bank overdraft 8 500
Equity 50 000
Petty cash 1 500
Trade payables 2 100
Inventory of lubricants(1 January 2005) 1 100
Commission received 3 200
Trade receivables 14 200
Drawings 12 000
Interest on overdraft 1 500
Lubricants purchased 2 000
Rent of garage 36 000
Repairs revenue 160
800
Salaries and wages 32 900
Spare parts used 22 800
Stationery and postage 6 800
Telephone 6 240
Tools and equipments 35 000
Provision for depreciation(tools and equipment 6
000
Tools and equipment repairs 9 360
Travelling expenses 15 400
Insurance 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 [Link] 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 [Link] 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.

Income from bus fares 230 000

Rent and insurance 16 620
Salaries and wages 30 400
Office expenses 1 350
Telephone expenses 2 000
Luggage fees received 1 200
Fuel 7 800
Repairs 10 600
Advertising 3 000
Premises at cost 80 000
Fleet of buses at cost 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 [Link] 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 Service business

business

Cost of sales

Gross profit

Discount received

Modise provides secreterial services for small [Link] 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 [Link] sold all office equipment for [Link]
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 [Link] 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 [Link]
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:

P
Accrued expenses 1 620
Capital accounts(1 July 2006)
Macho 44 000
Neo 30 000
Cash at bank 10 600
Trade payables 21 000
Current account (1 July 2006)
Macho 23 000 Cr
Neo 11 300 Cr
Trade receivables 25 200
Profit for the year 80 470
Prepaid expenses 900
Provision for doubtful debts 630
Inventory 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) Cr(P)
Capital accounts 1 January 2008
Thabo 19 000
Masego 15 900
Current accounts 1 January 2008
Thabo 500
Masego 310
Drawings
Thabo 8 220
Masego 9 550
Purchases 50 140
Revenue 89 900
General expenses 13 190
Wages 8 000
Bad debts 700
Buildings at cost 24 130
Furniture at cost 3 300
Trade receivables 2 900
Trade payables 5 700
Bank overdraft 1 970
Cash
Inventory 1 Jan 2008 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 [Link] the account and bring down the balance on 1 october 2022.
(8)