Question 1.
Fiona Sporty uses a
purchases journal, a cash payments journal, a sales journal, a cash receipts
journal and a general journal. Indicate in which journals the following
transactions are most likely to be recorded.
a) Purchased inventories on credit (2 marks)
b) Sales of inventory on credit (2 marks)
c) Received payment of a customer’s account (2 marks)
d) Payment of monthly rent by cheque (2 marks)
e) End of period
closing entries (2 marks)
Question
2.
Below
is information about Lisa Ltd’s cash position for the month of June 2019.
1. The general ledger Cash at Bank account had a balance of $21,200 on
31 May.
2. The cash receipts journal showed total cash receipts of $292,704 for
June.
3. The cash payments journal showed total cash payments of $265,074 for
June.
4. The June bank statement reported a bank balance of $41,184 on 30
June.
5. Outstanding cheques at the end of June were: no. 3456, $1,448; no.
3457, $84; no. 3460, $70 and no. 3462, $410.
6. Cash receipts of $10,090 for 30 June were not included in the June
bank statement.
7. Included on the bank statement were:
a dishonoured cheque written by a client James Ltd, $136
a credit for an electronic transfer from a customer of $644
interest earned, $44
account and
transaction fees, $120
Required:
a) Update the cash receipts and cash payments journals by adding the
necessary adjustments and calculate the total cash receipts and cash payments
for June. (4 marks)
b) Post from cash receipts and cash payments journals to the Cash at
Bank ledger account and balance the account. (1 mark)
c) Prepare a bank reconciliation statement at 30 June. (4 marks)
d) What is the
amount of cash that should be reported on the 30 June balance sheet? (1 mark)
Question
3.
On
1 June, Mason and Boyce had Accounts Receivable and Allowance for Doubtful
Debts accounts as below. Ignore GST.
During June, the
following transactions occurred:
1. Revenue earned on credit, $1,195,000.
2. Sales returns, $24,100.
3. Accounts receivable collected, $1,400,000.
4. Accounts written
off as uncollectable, $15,851.
Based on an ageing
of accounts receivable on 30 June, the firm determined that the Allowance for
Doubtful Debts account should have a credit balance of $13,500 on the balance
sheet as at 30 June. Ignore GST.
Required:
(a) Prepare general journal entries to record the four transactions and
to adjust the Allowance for Doubtful Debts account. (5 marks)
(b) Show how accounts receivable and the allowance for doubtful debts
would appear on the balance sheet at 30 June. (3 marks)
(c) On 29 June, Kim
Ltd, whose $2,400 account had been written off as uncollectable in June, paid
its account in full. Prepare journal entries to record the collection. (2
marks)
Question 4.
Tamworth Trading Ltd is a company
operating in the retail sector. The beginning inventory of Product EF5089 and
information about purchases and sales made during June are shown below.
Tamworth Trading Ltd
uses the perpetual inventory system, and all purchases and sales are on credit.
Selling price is $5 per unit. A stocktake on 30 June revealed 7,700 units in
inventory. Ignore GST.
Required:
a) Using the FIFO method, prepare an appropriate inventory record for
Product EF5089 for June. (8 marks)
b) Prepare an income
statement down to the gross profit for Tamworth Trading Ltd for June. (2 marks)
Question
5.
Nevertire
Ltd purchased a delivery van costing $52,000. It is expected to have a residual
value of $12,000 at the end of its useful life of 4 years or 200,000
kilometres. Ignore GST.
Required:
a) Assume the van was purchased on 1 July 2019 and that the accounting
period ends on 30 June. Calculate the depreciation expense for the year 2019–20
using each of the following depreciation methods (6 marks)
straight-line
diminishing balance (depreciation rate has been calculated as 31%)
units of production (assume the van was driven 78,000 kilometres
during the financial year)
b) Record the adjusting entries for the depreciation at 30 June 2021
using diminishing balance method. (2 marks)
c) Show how the van
would appear in the balance sheet prepared at the end of year 2 using
Straight-line method. (2 marks)
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