REVISION QUESTIONS

Question 1

The following errors were found in the accounting system after a trial balance above
was prepared.
(i) In January 20X9 some new office equipment had been purchased for
£360; this had been debited to the purchases account.
(ii) A payment by cheque to a creditor, £216, had been entered in the books
as £261.
(iii) A credit notes for £37 sent to a customer had been overlooked.
(iv) The owner had withdrawn a cheque for £80 for private use in October
20X8; both the bank and drawings account had been credited with this
amount.
Prepare corrected trial balance

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Question 2
Sariah provided the following information about her three types of inventories at 30
September 2020.

Inventory Number Cost Selling price Selling expenses

item of units per unit per unit per unit
$ $ $
A 110 17 20 2
B 85 18 19 1
C 90 15 16 2

REQUIRED

Calculate the total value of Sariah’s inventory at 30September 2020.

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Question 3
Ian Selkirk is a sole trader who maintains a full set of accounting records. He divides his
ledger into three sections – general ledger, purchases ledger and sales ledger.
(a) Name two accounts which would appear in the general ledger.
i) ………………………………………………………………………………………….
ii) ………………………………………………………………………………………….
[2]
(b) State two benefits of preparing control accounts
i)
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(ii)
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[4]

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Ian Selkirk prepares control accounts for his purchases and sales ledgers at the end of each
month.
On 1 April 2003 the balances brought down on the control accounts were
$
Purchases Ledger Control account 1960 credit
Sales Ledger Control account 1750 debit
Sales Ledger Control account 100 credit
Totals of the journals for April 2003 were –
$
Purchases Journal 4190
Sales Journal 5150
Purchases Returns Journal 135
Sales Returns Journal 270
The Cash Book for April 2003 showed –
$
Cheques received from debtors 4990
Cheques paid to creditors 3830
Cheque paid to debtor in respect of
Overpayment 100
Discount allowed 110
Discount received 180
The journal entries for April 2003 showed –bad debts written off $74
Required: Prepare sales ledger control account and purchase ledger control account.
Question 4
Beketele started a business on 1 July 20–6. On that date she made the following payments.
$
Premises 215 000
Legal costs relating to purchase of premises 2 150
Motor vehicle 9 800
Delivery costs of motor vehicle 200
Fuel for motor vehicle 50
Insurance of motor vehicle 495

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 a) State whether each of these payments is capital expenditure or revenue expenditure.

Item Revenue or capital?

Premises
Legal costs relating to purchase of premises
Motor vehicle
Delivery costs of motor vehicle
Fuel for motor vehicle
Insurance of motor vehicle
[6]
Beketele decided to depreciate the motor vehicle by 20% per annum using reducing balance
method
Calculate the depreciation expenses for 30 June 20-7 and 30 June 20-8 and accumulated
depreciation on the motor vehicle on 1 July 20–8.

For the year ended Calculation of depreciation

30 June 20-7

30 June 20-8

accumulated
depreciation on 1
July 20-8

[6]
He also decided to depreciate premises for 2% per year straight line method.
calculate depreciation of premises for 3 years.

Prepare provision for depreciation account of motor vehicle for the year ended 30 June 20-7
and 30 June 20-8

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On 1 July 20–8 Beketele decided that the motor vehicle was no longer suitable and
sold it for $5 600 which was received in cash
calculate profit or loss on disposal of motor vehicle.

Question no 5
Tebogo owns an advertising agency. His financial year ends on 31 May. He provided the
following information for the year ended 31 May 20–1:
$
Fees received from clients 37 130
Office expenses 9 435
Rates 2 125
Wages of assistant 19 500
Rent received from tenant 2 300
Cash drawings 9 000
Bad debts recovered 400
Motor vehicle at cost 1 June 20–0 5000
Provision for depreciation of motor vehicle 1000
Loose tools at cost 1200
The following additional information is also available:
1 On 31 May 20–1 fee due from clients amounted to $1 030.
2 The rent received $300 was accrued on 31 May 20–1.
3 On 31 May 20–1 wage prepaid amounted to $210.
4 Motor vehicle to be depreciated at the rate of 20% per annum using reducing balance
method.
5 At the end of the year loose tools was valued at $900. There were no loose tools bought or
sold during the year.
6 Provision for doubtful debts to be charged 10% of the fees due from clients.

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Question 6
Karl Ward imports and sells furniture. The following balances were extracted from his books
on 30 September 2005.

$ $
Sales 137 900
Stock at 1 October 2004 6 900
Purchases 41 200
Carriage inwards 9 400
Carriage outwards 1 300
Wages and salaries 34 700
Insurance 1 800
Rent and rates paid 10 800
Motor vehicle expenses 4 200
General expenses 22 850
Discounts received 800
Bank overdraft 700
Motor vehicles at cost 32 000
Provision for depreciation of
motor vehicles at 1 October 2004 16 000
Trade creditors 3 140
Drawings 17 690
Capital at 1 October 2004 24 300
182 840 182 840

Additional information

1. Stock at 30 September 2005 was valued at $7500.

2. During the year Karl Ward took goods costing $4300 for his own use. No entries
have been made in the books.

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 3. Depreciation is to be charged on the motor vehicles using the diminishing
(reducing) balance method at 50% per annum.

4. Wages and salaries, $6800, were owing at 30 September 2005.

5. The amount for insurance represents insurance cover for the 18 months period
from 1 October 2004 to 31 March 2006.

Prepare income statement and statement of financial position at 30 September 2005

Question no 7
a) Explain the meaning of the following terms used in connection with inventory
valuation:
Cost……………………………………………………………………………………………
…………………………………………………………………………………………………
[2]
Net realizable value
…………………………………………………………………………………………………
…………………………………………………………………………………………………
[2]
b) Name one accounting principle applied when valuing his inventory.
…………………………………………………………………………………………. [1]
Calculate value of inventory from the following information

COD COST $ SALES VALUE $ SELLING EXPENSES

E
ABC 40000 120000 60000
DAD 50000 100000 50000
CAB 60000 140000 90000
BBD 45000 80000 -

Question no 8
Rod’s financial year ends on 31 December. On 1 January 2020 Rod will purchase a new
delivery vehicle for his business. The details are as follows:
Cost $12000
Estimated economic life 3 years
Estimated residual value $1500
Rod is undecided whether to charge depreciation on the new delivery vehicle by using the
straight-line method or diminishing (reducing) balance method. If he decided to use the
diminishing (reducing) balance method this would be at a rate of 50% per annum.
REQUIRED

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Calculate the depreciation which would be charged on the new delivery vehicle for each of
the years 2020, 2021 and 2022 using the straight-line method and diminishing (reducing)
balance method.
Insert your answers in the table provided.
Use the space provided on the next page to show your workings.

Year Straight-line method Diminishing (reducing)

balance method $
$

2020

2021

2022

Also, open Provision for Depreciation account by taking reducing balance figures.
Question no 9
Ben opened a retail store on 1 April 2017.

He introduced the following into the business.

Inventory 15 200

Shop fittings 14 300

Cash 17 900 (of which $17 400 was paid into a business bank account) On the same day,
Ben received a business start-up loan of $15 000 which was paid into the business bank
account. Interest at 5% per annum was payable at six-monthly intervals.

REQUIRED (a) Prepare the opening journal entry. A narrative is not required.

Question no 10

Abiola started a business on 1 September 2017. On that date she opened a business bank
account with a capital of $40 000 and a loan of $10 000. On the same day she purchased
inventory, $6600, and fixtures and fittings, $11 750, paying by bank transfer.
REQUIRED

(a) Prepare a journal entry, to include all the above information, to open the books of the
business on 1 September 2017.
A narrative is required.

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 Abiola General Journal
Date Details Debit Credit
2017 $ $
Sept 1 ............................................................ ..................... .....................

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(b) State why it is useful to show a narrative as part of a journal entry.

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[2]

The following transactions took place on 1 March 2018.

1 Abiola transferred her private motor vehicle to the business at a valuation of $12 000.

2 Abiola took goods, $450, from the business for personal use.

REQUIRED

(c) Prepare journal entries to record the transactions of 1 March

2018. Narratives are not required.

Abiola General Journal

Date Details Debit Credit
2018 $ $

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Mar 1 ………………………………………….. .................... ....................

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2
Mar 1 ………………………………………….. .................... ....................

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Question 11

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Question 12

The balances in the books of Nadia Sayed on 28 February 2014 included the following.

Balance of provision for doubtful debts account 300

Bad debts written off 496

Trade receivables 18650

Nadia Sayed decided to write off $150 owed by Sabar Stores and to create a provision for
doubtful debts of 3% of the remaining trade receivables.

REQUIRED

a) Calculate the amount of the provision for doubtful debts.

b) Prepare the entries in the journal to record the following.

1. Writing off the bad debt

2. Closing irrecoverable debts account
3. Adjusting the provision for doubtful debts

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Question no 13

Zodwa is a trader. She maintains a full set of accounting records. Her financial year ends on
31 July. She provided the following information on 31 July 2017.

1 No entry has been made for $720 cash received from Brian, a credit customer. The
balance of his account is irrecoverable and should be written off.

2 A cheque for $118 was received from AL Stores whose account was written off in 2015.

3 Rent prepaid amounted to $400. One quarter ofthe rent for theyear relates to Zodwa’s
flat above the business premises.

4 Commission receivable outstanding amounted to $150.

5 The fixtures originally cost $40 000 and are to be depreciated by 15% per annum using
the reducing (diminishing) balance method.

REQUIRED

(a) Record this information in the followingaccounts of Zodwa’s ledger at 31 July 2017.

Close the accounts by balancing or by making a transfer to an appropriate account.

Some entries have already been made in the accounts during the year.

Brian account
Date Details $ Date Details $
2016

Aug 1 Balance b/d 1000 ............ ................................ ..............

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. ................................ .............. ............ ................................ ..............
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Bad debts account
Date Details $ Date Details $
2017

July 31 Total to date 990 ............ ................................ ..............

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. .

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. .

Bad debts recovered account

Date Details $ Date Details $

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. ................................ .............. . ................................ ..............

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. .

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. .
Rent account
Date Details $ Date Details $
2017

July 31 Total paid 5200 ............ ................................ ..............

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Drawings account
Date Details $ Date Details $
2017

July 31 Total to date 9650 ............ ................................ ..............

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. ............
.
Commission receivable account
Date Details $ Date Details $
2017

............ ................................ .............. July 31 Total to date 890

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Provision for depreciation of fixtures account

Date Details $ Date Details $
2016

............ ................................ .............. Aug 1 Balance b/d 11 100

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Question no 14

Demis is a trader. His financial year ends on 31 December.

He prepared the following trial balance which contains errors.

Demis

Trial balance at 31 December 2021

Debit Credit

$ $

Sales 90 052

Purchases 52 420

Purchases 52 420

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 Rates and insurance 11 500

General expenses 1 092

Property 92 500

Fixtures at cost 34 000

Provision for depreciation of fixtures 21 760

Trade receivables 7 410

Trade payables 4 665

Inventory 9 600

Cash at bank 8 095

Capital at 1 January 2021 109 940

Drawings 11 320

Suspense 60 770

283 772 283 772

Additional information

1. There was $80 in the petty cash box at 31 December 2021.

2. The value of inventory on 31 December 2021 was included in the trial balance.
The inventory valuation had increased by 20% since 31 December 2020.

Demis later discovered the following errors.

1 Drawings of goods for own use, $317, had been omitted from the books of account.

2 Purchases returns, $93, had been credited to the sales account.

3 A payment for property insurance, $500, had been debited to the property account.

4 A credit purchase, $315, from Erin, had been recorded as $135.

5 A credit sale, $191, to Harvinder, had been debited to the sales account and credited
to Harvinder’s account.

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Prepare a corrected trial balance at 31 December 2021.

Demis

Corrected Trial Balance at 31 December 2021

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 Sales Debit Credit

Purchases $ $

Rates and insurance ............................. .............................

General expenses ............................. .............................

Property ............................. .............................

Fixtures at cost ............................. .............................

Provision for depreciation of fixtures ............................. .............................

Trade receivables ............................. .............................

Trade payables ............................. .............................

Inventory ............................. .............................

Cash at bank ............................. .............................

Capital at 1 January 2021 ............................. .............................

Drawings ............................. .............................

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…………………………………. …………………. ……………………

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…………………………………… ………………….. ……………………

……………………………………. ………………….. ……………………

______________ ______________

______________ ______________

Question no 15

Nazmeen started in business as a hairdresser on 1 January 2022. She purchases her

hairdressing supplies on credit and uses the imprest system for her petty cash.

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Nazmeen’s assets and liabilities at 1 January 2022 were as follows:

Motor vehicle 11 000

Balance at bank 2 300

Petty cash 200

Bank loan 2 500

REQUIRED

Prepare the general journal entry to record the opening assets and liabilities at 1 January
2022. A narrative is required.

Nazmeen

General journal
Date Details $ $

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