Exercise 1
Joshep Kark had the following trial balance
Accounts Opening
Debit $ Credit $
Cash 159,200
Trade Receivables 7,500
Land 137,600
Trade Payables 20,700
Capital 259,000
Sales 72,600
General and Administrative expense 38,000
Motor expense 10,000
Total 352,300 352,300
During April occured the following transactions:
April 3 Purchase goods on credit £75,000. Incurs £350 in delivery inwards costs, paid
by cash
6 Bought a new equipment £26,000 from the beginning of the month, paid by
cheque. Calculates depreciation using straight-line method, useful life is 5
years, and residual value is £500
8 Sold goods on credit $68,000. Incurs costs by cash £700 for delivering goods
to customers
10 Returned goods to supplier £7000
12 Customer return goods to us £4000
17 Customer paid us by bank £2,400
20 Withdraws £300 cash in hand from the business for personal used.
22 Borrows £25,000 from bank, repayable in 5 years’ time
25 Paid £4500 by cheque for insurance service (9 months, from April to
December).
27 Purchases goods from [Link] £12,000, less 5% trade discount, pays by cash
30 Inventory as at 30 April 2024 £1,000
April wage for the staff, will be paid on 5 May £2000
Required:
1. Callculate the equipment depreciation for this month. Show your calculation
2. Record all the transactions + Adjustment entry
3. Prepare Adjusted Trial Balance as at the end of the month?
4. Prepare the Statement of Profit or Loss (Income Statement)?
5. Prepare the Statement of Financial Position (Balance Sheet)?
Exercise 2
Darcy runs a small service business. The table is a trial balance of the business at
31 Dec 20X4 before adjusting the following transactions
Item £ (Debit) £ (Credit)
Sales 71,600
Purchases 29,050
Salaries 4,650
Motor expenses 1,860
Rent 2,500
Insurances 3,900
Motor vehicles 20,000
Fixtures 30,000
Inventories at 1 Jan 20X4 5,000
Cash 1,000
Drawings 24,000
Long-term loan 30,000
Capital 38,500
Trade receivable 7,640
Trade payable 19,500
Totals 159,600 159,600
There is no inventories at the year end
1. Darcy pays £1,800 cash for office rent.
2. Purchased a computer on credit from TechWorld for £900.
3. Darcy receives £1,200 in cash from a credit customer.
4. Paid £350 cash for delivery expenses for AK Distributor Ltd.
5. Bought another computer amounting to £1000 on credit
6. Paid £150 cash in bank interest charges
7. Received an invoice for £480 from Spark Utilities for electricity, to be paid next
month.
8. Owner withdrew £400 in cash for personal use.
9. Sold services worth £2,300 on credit to a customer.
10. Paid TechWorld £900 for the previously purchased computer equipment.
Required:
a) Write down journal entries for each transaction (2 points)
b) Prepare extended trial balance, with Opening balance, Adjustment and
Closing balance (1 point)
c) Based on the closing amount prepared above, prepare
Prepare Statement of Profit or Loss (1 point)
Prepare Statement of Financial Position (1 point)
Exercise 3
Andrew Joel company had the following trial balance
TRIAL BALANCE
As at 01/04/N
Opening
Accounts
Debit $ Credit $
Cash 8,600
Trade Receivables 87,000
Purchase 3,100
Building 31,500
Van 20,000
Drawing -
Trade Payables 20,700
Loan 1,500
Sales 80,000
Capital 55,000
General and Administrative expense 4,000
Delivery cost 3,000
Depreciation-Building
Accumulated Depreciation-Building
Total 157,200 157,200
During April occurred the following transactions
Apr 3: Purchase goods on time $2,500.
Apr 6: Bought a van $16,000 paid by cheque $14,000.
Apr 8: Sold goods on time $20,000.
Apr 15: A loan of $7,650 in cash is received from bank.
Apr 20: Customer paid us by bank $240
Apr 23: Building was bought from the beginning of the month. The
company calculate depreciation using straight-line method, useful
life is 5 years, and residual value is $1,500.
Apr 25: Withdraws $100 cash in hand from the business for personal used.
Apr 30: Inventory count shows that $1,000 are still on hand.
Required:
a) Calculate the Building Depreciation for this month.
b) Record all the transactions.
c) Prepare a Trial Balance as at the end of the month?
d) Prepare the Statement of Profit or Loss (Income Statement)?
e) Prepare the Statement of Financial Position (Balance Sheet)?