CONTENTS. Kevin O Riordan 2000 ISBN Folens Publishers, Hibernian Industrial Estate, Greenhills Road. Tallaght, Dublin 24.

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1 CONTENTS Chapter 2: Double-Entry Book-keeping and the Trial Balance... 1 Chapter 3: Profit Measurement and Balance Sheet Preparation... 5 Chapter 4: Value Added Tax and Statutory Deductions... 8 Chapter 5: Accruals, Prepayments, Bad Debts, Provisions and Bad Debts Recovered Chapter 6: Depreciation and Revaluation Chapter 8: Final Accounts of a Sole Trader with Adjustments Chapter 9: Bank Reconciliation Statements Chapter 10: Control Accounts Chapter 11: Correction of Errors Suspense Account Chapter 12: The Conceptual Framework of Accounting Chapter 14: Limited Companies Chapter 15: Final Accounts of a Limited Company with Adjustments Chapter 16: Manufacturing Accounts Chapter 17: Departmental Accounts Chapter 18: Published Accounts (Higher Level Only) Chapter 19: Analysis and Interpretation of Financial Statements Chapter 20: Cash Flow Statements Chapter 21: Club Accounts and Accounts of Service Firms Chapter 22: Incomplete Records I Chapter 23: Incomplete Records II Chapter 24: Farm Accounts Chapter 25: Tabular Statements Chapter 26: Introduction to Management Accounting Chapter 27: Cost Classification Chapter 28: Product Costing Chapter 29: Cost Volume Profit Analysis (Marginal Costing) Chapter 30: Budgeting and Budgetary Control Kevin O Riordan 2000 ISBN Folens Publishers, Hibernian Industrial Estate, Greenhills Road. Tallaght, Dublin 24. The Publisher reserves the right to change, without notice, at any time the specification of this product, whether by change of materials, colours, bindings, format, text revision or any other characteristic.

2 Double-Entry Book-keeping and the Trial Balance: Solutions 2QUESTION 2.1 Bank Account July 1 Capital 35,000 July 12 Creditor 10,500 July 25 Sales 4,000 July 15 Wages 2,000 July 21 Advertising 1,000 July 28 Machinery 15,000 July 31 Balance c/d 10,500 39,000 39,000 Aug 1 Balance b/d 10,500 Capital Account (Peter Howard) July 31 Balance c/d 35,000 July 1 Bank 35,000 35,000 35,000 Aug 1 Balance b/d 35,000 Purchases Account July 5 Creditor 12,000 July 20 Creditor 8,000 July 31 Balance c/d 20,000 20,000 20,000 Aug 1 Balance b/d 20,000 Creditor Account July 12 Bank 10,500 July 5 Purchases 12,000 July 12 Discount Received 1,500 July 20 Purchases 8,000 July 22 Purchases Returns 1,000 July 31 Balance c/d 7,000 20,000 20,000 Aug 1 Balance b/d 7,000 Discount Received Account July 31 Balance c/d 1,500 July 12 Creditor 1,500 1,500 1,500 Aug 1 Balance b/d 1,500 Purchases Returns Account July 31 Balance c/d 1,000 July 22 Creditor 1,000 1,000 1,000 Aug 1 Balance b/d 1,000 Sales Account July 17 Debtor 16,000 July 25 Bank 4,000 July 31 Balance c/d 21,500 July 31 Debtor 1,500 21,500 21,500 Aug 1 Balance b/d 21,500 Debtor Account July 7 Sales 16,000 July 8 Sales Returns 3,000 July 31 Sales 1,500 July 31 Balance c/d 14,500 17,500 17,500 Aug 1 Balance b/d 14,500 1

3 Leaving Certificate Accounting Sales Returns Account July 8 Debtor 3,000 July 31 Balance c/d 3,000 3,000 3,000 Aug 1 Balance b/d 3,000 Wages Account July 15 Bank 2,000 July 31 Balance c/d 2,000 2,000 2,000 Aug 1 Balance b/d 2,000 Advertising Account July 21 Bank 1,000 July 31 Balance c/d 1,000 1,000 1,000 Aug 1 Balance b/d 1,000 Machinery Account July 28 Bank 15,000 July 31 Balance c/d 15,000 15,000 15,000 Aug 1 Balance b/d 15,000 Trial Balance as at 31 July Name of Account Debit Credit Bank... 10,500 Capital... 35,000 Purchases... 20,000 Creditors... 7,000 Discount Received... 1,500 Purchases Returns... 1,000 Sales... 21,500 Debtor... 14,500 Sales Returns... 3,000 Wages... 2,000 Advertising... 1,000 Machinery... 15,000 66,000 66,000 QUESTION 2.2 Bank Account Mar 1 Capital 12,000 Mar 3 Rent 150 Mar 30 Cash 4,800 Mar 8 Wages 100 Mar 11 Creditor 2,900 Mar 16 Wages 100 Mar 20 Rates 50 Mar 22 Motor Vehicle 5,000 Mar 23 Wages 100 Mar 25 Rent 150 Mar 31 Wages 120 Mar 31 Balance c/d 8,130 16,800 16,800 Apr 1 Balance b/d 8,130 2

4 Solutions Rent Account Mar 3 Bank 150 Mar 25 Bank 150 Mar 31 Balance c/d Apr 1 Balance b/d 300 Creditor Account Mar 11 Bank 2,900 Mar 7 Purchases 3,000 Mar 11 Discount Received 100 Mar 24 Purchases 2,000 Mar 26 Purchases Returns 300 Mar 31 Balance c/d 1,700 5,000 5,000 Apr 1 Balance b/d 1,700 Purchases Account Mar 7 Creditor 3,000 Mar 29 Drawings 600 Mar 24 Creditor 2,000 Mar 31 Balance c/d 4,400 5,000 5,000 Apr 1 Balance b/d 4,400 Discount Received Account Mar 31 Balance c/d 100 Mar 11 Creditor Apr 1 Balance b/d 100 Purchases Returns Account Mar 31 Balance c/d 300 Mar 26 Creditor Apr 1 Balance b/d 300 Wages Account Mar 8 Bank 100 Mar 16 Bank 100 Mar 23 Bank 100 Mar 31 Bank 120 Mar 31 Balance c/d Apr 1 Balance b/d 420 Sales Account Mar 10 Cash 2,000 Mar 19 Debtor 4,000 Mar 27 Debtor 2,700 Mar 31 Balance c/d 13,200 Mar 28 Cash 4,500 13,200 13,200 Apr 1 Balance b/d 13,200 Cash Account Mar 10 Sales 2,000 Mar 15 Advertising 750 Mar 28 Sales 4,500 Mar 30 Bank 4,800 Mar 31 Balance c/d 950 6,500 6,500 Apr 1 Balance b/d 950 Advertising Account Mar 15 Cash 750 Mar 31 Balance c/d Apr 1 Balance b/d 750 3

5 Leaving Certificate Accounting Debtor Account Mar 19 Sales 4,000 Mar 21 Sales Returns 500 Mar 27 Sales 2,700 Mar 31 Balance c/d 6,200 6,700 6,700 Apr 1 Balance b/d 6,200 Sales Returns Account Mar 21 Debtor 500 Mar 31 Balance c/d Apr 1 Balance b/d 500 Rates Account Mar 20 Bank 50 Mar 31 Balance c/d Apr 1 Balance b/d 50 Motor Vehicle Account Mar 21 Bank 5,000 Mar 31 Balance c/d 5,000 5,000 5,000 Apr 1 Balance b/d 5,000 Drawings Account Mar 29 Purchases 600 Mar 31 Balance c/d Apr 1 Balance b/d 600 Capital Account Mar 31 Balance c/d 12,000 Mar 1 Bank 12,000 12,000 12,000 Apr 1 Balance b/d 12,000 Trial Balance as at 31 March Name of Account Debit Credit Bank... 8,130 Rent Creditor... 1,700 Purchases... 4,400 Discount Received Purchases Returns Wages Sales... 13,200 Cash Advertising Debtor... 6,200 Sales Returns Rates Motor Vehicles... 5,000 Drawings Capital... 12,000 27,300 27,300 4

6 Profit Measurement and Balance Sheet Preparation: Solutions 3QUESTION 3.1 (a) Revenue (b) Capital (c) Revenue (d) Capital (e) Capital (f) Revenue (g) Revenue (h) Capital (i) Revenue (j) Capital (k) Capital QUESTION 3.2 (a) Trading Account (b) Profit and Loss Account (c) Balance Sheet (d) Balance Sheet (e) Trading account (f) Profit and Loss Account (g) Profit and Loss Account (h) Profit and Loss Account (i) Balance Sheet (j) Balance Sheet (k) Balance Sheet QUESTION 3.3 Trading and Profit and Loss Account for the year ended 31/12/-0 Sales 89,000 Less Cost of Sales Opening Stock 4,000 Add Purchases 42,000 Less Purchases Returns (700) 41,300 45,300 Less closing stock (5,000) (40,300) Gross profit 48,700 Add income Discount received ,100 Less expenses Wages 10,000 Discount allowed 600 Insurance 1,500 Carriage outwards 890 Postage and stationery 110 Light and heat 1,700 (14,800) Net profit 34,300 5

7 Leaving Certificate Accounting QUESTION 3.4 Balance Sheet as at 31/12/-0 Fixed Assets Premises 80,000 Furniture and fittings 12,000 92,000 Current Assets Stock 5,000 Debtors 8,000 13,000 Less Current Liabilities Creditors 4,000 Bank Overdraft 2,000 (6,000) 7,000 99,000 Financed by Capital 71,700 Add Net Profit 34, ,000 Less Drawings (7,000) 99,000 Trading and Profit and Loss Account for the year ended 30/6/-9 Sales 151,000 Less sales returns (1,000) 150,000 Less Cost of Sales Opening Stock 20,000 Add Purchases 107,000 Add carriage inwards 3,000 Add custom duties 4, ,500 Less closing stock (30,000) (104,500) Gross profit 45,500 Add income Rent received 7,500 53,000 Less expenses Wages 19,000 Light and heat 2,000 Advertising 3,000 Insurance 7,000 General expenses 6,000 (37,000) Net profit 16,000 6

8 Solutions Balance Sheet as at 30/6/-9 Fixed Assets Land and buildings 100,000 Furniture and equipment 20,000 Motor vehicles 12, ,000 Current Assets Stock 30,000 Debtors 20,000 Cash 1,000 51,000 Less Current Liabilities Creditors 25,000 Bank Overdraft 16,000 (41,000) 10, ,000 Financed by Capital 136,000 Add Net Profit 16, ,000 Less Drawings (10,000) 142,000 7

9 Value Added Tax and Statutory Deductions: Solutions 4QUESTION 4.1 Purchases Account May 1 Creditor 15,000 May 19 Creditor 5,000 May 31 Balance c/d 20,000 20,000 20,000 June 1 Balance c/d 20,000 VAT Account May 1 Creditor (Purchases) 1,500 May 3 Debtor (Sales) 2,500 May 15 Bank (Eircom) 4 May 4 Creditor (Purchases returns) 100 May 19 Creditors (Purchases) 500 May 11 Debtor (Sales) 700 May 20 Debtors (Sales returns) 50 May 28 Debtor (Sales) 400 May 27 Bank (Stationery) 10 May 31 Balance c/d 1,636 3,700 3,700 June 1 Balance b/d 1,636 Creditor Account May 4 Purchases returns 1,100 May 1 Purchases 16,500 May 22 Bank 15,400 May 19 Purchases 5,500 May 31 Balance b/d 5,500 22,000 22,000 June 1 Balance b/d 5,500 Sales Account May 3 Debtor 25,000 May 11 Debtor 7,000 May 7 Balance c/d 36,000 May 28 Debtor 4,000 36,000 36,000 June 1 Balance b/d 36,000 Debtor Account May 3 Sales 27,500 May 10 Bank 27,500 May 11 Sales 7,700 May 20 Sales returns 550 May 28 Sales 4,400 May 31 Balance c/d 11,550 39,600 39,600 June 1 Balance b/d 11,550 Purchases Returns Account May 31 Balance b/d 1,000 May 4 Creditor 1,000 1,000 1,000 June 1 Balance b/d 1,000 Bank Account May 10 Debtor 27,500 May 15 Telephone expenses 44 May 17 Entertainment expenses 330 May 22 Creditor 15,400 May 25 Motor vehicles 6,600 May 27 Stationery 110 May 28 Balance c/d 5,016 27,500 27,500 June 1 Balance b/d 5,016 8

10 Solutions Telephone Expenses Account May 15 Bank 40 May 31 Balance c/d June 1 Balance b/d 40 Entertainment Expenses Account May 17 Bank 330 May 31 Balance c/d June 1 Balance b/d 330 Sales Returns Account May 20 Debtor 500 May 31 Balance c/d June 1 Balance b/d 500 Motor Vehicles Account May 25 Bank 6,600 May 31 Balance c/d 6,600 6,600 6,600 June 1 Balance b/d 6,600 Stationery Account May 27 Bank 100 May 31 Balance c/d June 1 Balance b/d 100 The Trading Account for the month will show the following entries: Sales 36,000 Less sales returns (500) Purchases Less purchases returns QUESTION ,000 (1,000) 35,500 19,000 The Profit and Loss Account at the end of the month will show the following expenses: Telephone 40 Entertainment 330 Stationery 100 The Balance Sheet at the end of the month will show the following: Fixed assets Motor vehicle Current assets Debtor Bank Current liabilities Creditors VAT 6,600 11,550 5,016 5,500 1,636 Wages Account Nov 30 Bank PAYE PRSI (EE) VHI Savings club 16,020 10,320 2, ,000 PRSI (ER) 4,950 Nov 30 Balance c/d 37,950 37,950 37,950 Dec 1 Balance b/d 37,950 9

11 Leaving Certificate Accounting Bank Account Nov 30 Wages 16,020 PAYE/PRSI Account Nov 30 Wages 10,320 Wages (EE) 2,310 Nov 30 Balance c/d 17,580 Wages (ER) 4,950 17,580 17,580 Dec 1 Balance b/d 17,580 VHI Account Nov 30 Balance c/d 350 Nov 30 Wages Dec 1 Balance b/d 350 Savings Club Account Nov 30 Balance c/d 4,000 Nov 30 Wages 4,000 4,000 4,000 Dec 1 Balance b/d 4,000 The Profit and Loss Account for the year will show the following expense: Wages 37,950 The Balance Sheet at the end of the month will show the following: Current liabilities PAYE/PRSI 17,580 VHI 350 Savings club 4,000 QUESTION 4.3 Trading and Profit and Loss Account for the year ended 31/12/-0 Sales 45,000 Less Returns In (1,000) 44,000 Less Cost of Sales Opening Stock 2,000 Add Purchases 21,000 Less Returns Out (500) 20,500 Add Carriage In ,000 Less Closing Stock (4,000) (19,000) Gross Profit 25,000 Add Income Discount Received 500 Rent Received 2,000 Less Expenses Wages Rates Insurance Discount allowed Light and Heat Postage and Stationery 14, , ,500 (17,600) Net Profit 9,900 10

12 Solutions Balance Sheet As At 31/12/-0 Fixed Assets Premises 60,000 Motor Vehicles 20,000 80,000 Current Assets Closing Stock 4,000 Debtors 14,000 Cash 1,000 19,000 Less Current Liabilities Creditors 8,000 Bank Overdraft 2,000 PRSI/PAYE 2,500 VAT 1,800 (14,300) 4,700 84,700 Financed by Capital 78,800 Add Net Profit 9,900 88,700 Less Drawings (4,000) 84,700 11

13 Accruals, Prepayments, Bad Debts, Provisions and Bad Debts Recovered: Solutions 5QUESTION 5.1 Car Tax Account 1/1/-6 Balance b/d 72 1/4/-6 Bank /12/-6 Profit and Loss Account 324 1/10/-6 Bank /12/-6 Balance c/d (three months prepaid) /1/-7 Balance b/d 84 1/4/-7 Bank /12/-7 Profit and Loss Account 399 1/10/-7 Bank /12/-7 Balance c/d (three months prepaid) /1/-8 Balance b/d 105 QUESTION 5.2 (a) Bad Debts Account 1/10/-7 Debtors /12/-7 Debtors /12/-7 Profit and Loss Account (b) Provision for Bad Debts Account 1/1/-8 Balance b/d /12/-7 Balance c/d (5% of 14,000) /12/-7 Profit and Loss Account /1/-8 Balance b/d 700 QUESTION 5.3 Car Insurance Account 1/1/-8 Balance b/d /12/-8 Profit and Loss Account 920 1/4/-8 Bank /12/-8 Balance c/d (three months prepaid) 240 1,160 1,160 1/1/-9 Balance b/d /12/-9 Profit and Loss Account 1,140 1/4/-9 Bank 1,200 31/12/-9 Balance c/d (three months prepaid) 300 1,440 1,440 1/1/-0 Balance b/d 300 QUESTION 5.4 Rent Receivable Account 31/12/-5 Profit and Loss Account 1,350 1/1/-5 Balance b/d /12/-5 Balance c/d (six months prepaid) 750 1/7/-5 Bank 1,500 2,100 2,100 31/12/-6 Profit and Loss Account 1,650 1/1/-6 Balance b/d /12/-6 Balance c/d (six months prepaid) 900 1/7/-6 Bank 1,800 2,550 2,550 1/1/-7 Balance b/d

14 Solutions QUESTION 5.5 Motor Vehicles Tax Account 1/1/-7 Balance b/d 240 1/4/-7 Bank /12/-7 Profit and Loss Account 1,020 1/10/-7 Bank /12/-7 Balance c/d (three months prepaid) 260 1,280 1,280 1/1/-8 Balance b/d 260 1/4/-8 Bank /12/-8 Profit and Loss Account 1,160 1/10/-8 Bank /12/-8 Balance c/d (three months prepaid) 300 1,460 1,460 1/1/-9 Balance b/d 300 QUESTION 5.6 (a) Bad Debts Account 1/5/-8 Debtors 550 1/5/-8 Provision for Bad Debts /12/-8 Debtors /12/-8 Provision for Bad Debts (b) Provision for Bad Debts Account 1/5/-8 Bad Debts 550 1/1/-8 Balance b/d /12/-8 Bad Debts /12/-8 Balance c/d (5% of 18,000) /12/-8 Profit and Loss Account 850 1,650 1,650 1/1/-9 Balance b/d 900 QUESTION 5.7 (a) Bad Debts Account 1/6/-6 Debtors /12/-8 Debtors /12/-8 Profit and Loss Account (b) Provision for Bad Debts Account 1/1/-6 Balance b/d /12/-6 Balance c/d (5% of 19,600) /12/-6 Profit and Loss Account /1/-7 Balance b/d 980 QUESTION 5.8 Rent Account 1/1/-7 Balance b/d 150 1/4/-7 Bank /12/-7 Profit and Loss Account 690 1/10/-7 Bank /12/-7 Balance c/d (three months prepaid) /1/-8 Balance b/d 180 1/4/-8 Bank /12/-8 Profit and Loss Account 810 1/10/-8 Bank /12/-8 Balance c/d (three months prepaid) 210 1,020 1,020 1/1/-9 Balance b/d

15 Leaving Certificate Accounting QUESTION 5.9 (a) Bad Debts Account 1/6/-8 Debtors 640 1/6/-8 Provision for Bad Debts /12/-8 Debtors /12/-8 Provision for Bad Debts 500 1,140 1,140 (b) Provision for Bad Debts Account 1/6/-8 Bad Debts 640 1/1/-8 Balance b/d 1,680 31/12/-8 Bad Debts /12/-8 Balance c/d (5% of 24,000) 1,200 31/12/-8 Profit and Loss Account 660 2,340 2,340 1/1/-9 Balance b/d 1,200 QUESTION 5.10 (a) Bad Debts Account Debtors /12/-8 Profit and Loss Account QUESTION 5.11 (b) Provision for Bad Debts Account 1/1/-8 Balance b/d /12/-8 Balance c/d 1,400 31/12/-8 Profit and Loss Account 600 1,400 1,400 1/1/-9 Balance b/d 1,400 (c) Provision for Discount Allowed Account 31/12/-8 Profit and Loss Account 31/12/-8 Balance c/d 392 (2% of 20, ) /1/-9 Balance b/d 392 (d) Profit and Loss Account for the year ended 31/12/-8 (Extract) Expenses Bad Debts 900 Provision for Bad Debts Increase 600 Provision for Discount Allowed Increase 392 (e) Balance Sheet as at 31/12/-8 (Extract) Current Assets Debtors 26,000 Less Provision for Bad Debts (1,400) Less Provision for Discount Allowed (392) 24,208 Rent and Rates Account 3/1/-7 Bank 1,800 1/1/-7 Balance c/d (three months rates due) 420 7/1/-7 Bank /6/-7 Bank 1,800 4/9/-7 Bank 960 6/9/-7 Bank 1,800 30/12/-7 Bank /12/-7 Profit and Loss Account 9,060 31/12/-7 Balance c/d (three months rent due) 1,800 31/12/-7 Balance c/d (three rates prepaid) 480 9,960 9,960 1/1/-8 Balance b/d 480 1/1/-8 Balance b/d 1,800 14

16 Depreciation and Revaluation: Solutions 6QUESTION 6.1 (a) Buses Account 1/1/-3 Balance b/d 80,000 1/7/-3 Bank 25,000 31/12/-3 Balance c/d 105, , ,000 1/1/-4 Balance b/d 105,000 1/1/-4 Disposal 20,000 31/12/-4 Balance c/d 85, , ,000 (b) (c) Provision for Depreciation Account 31/12/-3 Balance c/d 35,000 1/1/-3 31/12/-3 Balance b/d Profit and loss 25,000 10,000 35,000 35,000 1/1/-4 31/12/-4 Disposal Balance c/d 12,500 31,000 1/1/-4 31/12/-4 Balance b/d Profit and Loss 35,000 8,500 43,500 43,500 Bus Disposal Account 1/1/-4 Bus 20,000 1/1/-4 1/1/-4 31/12/-4 Depreciation Bank Loss 12,500 7, ,000 20,000 QUESTION 6.2 (a) (b) (c) Buses Account 1/1/-5 Balance b/d 95,000 1/7/-5 Bank 35,000 31/12/-5 Balance c/d 130, , ,000 1/1/-6 Balance b/d 130,000 1/7/-6 31/12/-6 Disposal Balance c/d 28, , , ,000 Provision for Depreciation Account 31/12/-5 Balance c/d 64,000 1/1/-5 31/12/-5 Balance b/d Profit and Loss 40,000 24,000 64,000 64,000 1/7/-6 31/12/-6 Disposal Balance c/d 24,100 60,900 1/1/-6 31/12/-6 Balance b/d Profit and Loss 64,000 21,000 85,000 85,000 1/7/-6 31/12/-6 Bus Profit Bus Disposal Account 28,000 1/7/-6 Depreciation 24, /7/-6 Bank 4,600 28,700 28,700 15

17 Leaving Certificate Accounting QUESTION 6.3 (a) (b) (c) 1/1/-7 1/4/-7 Balance b/d Bank 1/1/-8 Balance b/d 210,000 1/9/-8 31/12/-8 Lorries Account 150,000 60,000 31/12/-7 Balance c/d 210, , ,000 Disposal Balance c/d 40, , , ,000 Provision for Depreciation Account 31/12/-7 Balance c/d 66,000 1/1/-7 31/12/-7 Balance b/d Profit and Loss 45,000 21,000 66,000 66,000 1/9/-8 31/12/-8 Disposal Balance c/d 28,500 56,500 1/1/-8 31/12/-8 Lorry Disposal Account 1/9/-8 Lorries 40,000 1/9/-8 1/9/-8 31/12/-8 Balance b/d Profit and Loss 66,000 19,000 85,000 85,000 Depreciation Bank Loss 28,500 9,000 2,500 40,000 40,000 QUESTION 6.4 (a) (b) 1/1/-8 1/4/-8 Balance b/d Bank Buses Account 175,000 70,000 1/4/-8 31/12/-8 Disposal Balance c/d 45, , , ,000 1/1/-9 Balance b/d 200,000 31/12/-9 Balance c/d 200, , ,000 1/4/-8 31/12/-8 Disposal Balance c/d Provision for Depreciation Account 27,000 43,500 1/1/-8 31/12/-8 Balance b/d Profit and Loss 54,000 17,500 71,500 71,500 1/1/-9 Balance b/d 43,500 31/12/-9 Balance c/d 63,500 31/12/-9 Profit and Loss 20,000 63,500 63,500 (c) Bus Disposal Account 1/4/-8 31/12/-8 Bus Profit 45,000 1,000 1/4/-8 1/4/-8 Depreciation Bank 27,000 19,000 46,000 46,000 QUESTION 6.5 (a) Truck Account 1/1/-6 1/10/-6 Balance b/d Bank 160,000 54,000 1/12/-6 31/12/-6 Disposal Balance c/d 25, , , ,000 1/1/-7 1/7/-7 Balance b/d Bank 189,000 36,000 1/9/-7 31/12/-7 Disposal Balance c/d 30, , , ,000 16

18 Solutions (b) Provision for Depreciation Account 1/12/-6 31/12/-6 Disposal Balance c/d 14,000 51,000 1/1/-6 31/12/-6 Balance b/d Profit and loss 46,000 19,000 65,000 65,000 1/9/-7 31/12/-7 Disposal Balance c/d 20,000 58,000 1/1/-7 31/12/-7 Balance b/d Profit and loss 51,000 27,000 78,000 78,000 (c) Truck Disposal Account 1/12/-6 31/12/-6 Truck Profit 25,000 5,000 1/12/-6 1/12/-6 Depreciation Bank 14,000 16,000 30,000 30,000 1/9/-7 31/12/-7 Truck Profit 30,000 2,000 1/9/-7 1/9/-7 Depreciation Bank 20,000 12,000 32,000 32,000 QUESTION 6.6 Bus Account 1/1/-8 Buses at cost amounted to 145,000 1/7/-8 Bus which cost 40,000 was sold 31/12/-8 Buses at cost amounted to 105,000 1/9/-9 Bus purchased for 25,000 1/12/-9 Bus purchased on credit for 27,000 31/12/-9 Buses at cost amounted to 157,000 Provision for Depreciation Account 1/1/-8 Accumulated balance on depreciation was 30,000 1/7/-8 Bus sold on 1/7/-8 had accumulated depreciation of 10,000 31/12/-8 Annual depreciation charge was 11,000 31/12/-8 Accumulated balance on depreciation was 31,000 31/12/-9 Annual depreciation charge was 23,000 31/12/-9 Accumulated balance on depreciation was 54,000 Disposal Account 1/7/-8 Bus sold cost 40,000 1/7/-8 Accumulated depreciation on bus sold was 10,000 1/7/-8 Bus was sold for 28,000 31/12/-8 Loss on disposal of bus was 2,000 QUESTION 6.7 (HIGHER LEVEL) (Reference to Calculations in Brackets). (a) 1/1/-8 1/4/-8 1/1/-9 1/10/-9 Balance b/d (1) Trade-in Bank Balance b/d Bank Vehicles Account 80,000 1/4/-8 Disposal 26,000 15,000 20,000 31/12/-8 Balance c/d 89, , ,000 89,000 44,000 1/10/-9 31/12/-9 Disposal Balance c/d 32, , , ,000 1/1/00 Balance b/d 101,000 17

19 Leaving Certificate Accounting (b) (c) 1/4/-8 31/12/-8 1/10/-9 31/12/-9 1/4/-8 31/12/-8 Disposal (3) Balance c/d Disposal (5) Balance c/d Vehicle Profit and loss 1/10/-9 Vehicle 32,000 1/10/-9 1/10/-9 31/12/-9 Provision for Depreciation Account 13,000 1/1/-8 Balance b/d (2) 42,400 44,550 31/12/-8 Profit and loss (4) 15,150 57,550 57,550 22,100 1/1/-9 Balance b/d 44,550 36,450 31/12/-9 Profit and loss (6) 14,000 58,550 58,550 1/1/00 Balance b/d 36,450 Vehicles Disposal Account 26,000 1/4/-8 Depreciation (3) 13,000 2,000 1/4/-8 Trade-in 15,000 28,000 28,000 Depreciation (5) 22,100 Bank 500 Profit and loss 9,400 32,000 32,000 CALCULATIONS ( ) 1. Opening balance on Vehicles Account as 1/1/-8 No. 1 22,000 No. 2 26,000 No. 3 30,000 Tachograph 2,000 80, Opening balance on Provision for Depreciation Account as at 1/1/-8 1 No. 1 (1/7/-3 1/1/-8) = 4 years, 6 months (4 -- ) x 20% of 22,000 = ,800 1 No. 2 (1/10/-5 1/1/-8) = 2 years, 3 months (2 -- ) x 20% of 26,000 = ,700 3 No. 3 (1/4/-6 1/1/-8) = 1 year, 9 months (1 -- ) x 20% of 30,000 = ,500 Tachograph (1/1/-7 1/1/-8) = 1 year x 20% of 2,000 = Total =... 42, Depreciation to date of Sale Vehicle No /10/-5 1/4/-8 = 2 years, 6 months (2 -- ) x 20% of 26,000 = , Annual Depreciation Charge for the year ended 31/12/-8 1 No. 1 1 year x 20% of 22,000 (N.B. only -- year remaining) = ,200 1 No. 2 3 months ( -- ) of 20% of 26, ,300 No. 3 1 year x 20% of 32,000 =... 6,400 3 No. 4 9 months ( -- ) x 20% of 35,000 = ,250 Total =... 15, Depreciation to date of Sale Vehicle No. 3 1 Vehicle (1/4/-6 1/10/-9) = 3 years, 6 months (3 -- ) x 20% of 30,000 = ,000 3 Tachograph (1/1/-7 1/10/-9) = 2 years, 9 months (2 -- ) x 20% of 2,000 = ,100 Total =... 22,100 18

20 Solutions 6. Annual Depreciation Charge for the year ended 31/12/-9 No. 1 Fully depreciated =... Nil 3 No. 3 9 months ( -- ) x 20% of 32,000 = ,800 No. 4 1 year x 20% of 35,000 =... 7,000 1 No. 5 3 months ( -- ) x 20% of 44,000 = ,200 Total =... 14,000 QUESTION 6.8 (HIGHER LEVEL) (Reference to Calculations in Brackets) (a) (b) (c) Vehicles Account 1/1/-8 1/10/-8 Balance b/d (1) Bank Trade-in 80,000 31,000 9,000 1/10/-8 31/12/-8 Disposal Balance c/d 20, , , ,000 1/1/-9 1/8/-9 Balance b/d Bank 100,000 48,000 1/7/-9 31/12/-9 Disposal Balance c/d 36, , , ,000 1/1/-0 Balance b/d 112,000 1/10/-8 31/12/-8 1/7/-9 31/12/-9 1/10/-8 31/12/-8 1/7/-9 31/12/-9 CALCULATIONS ( ) Disposal (3) Balance c/d Disposal (5) Balance b/d Vehicles Profit and Loss Vehicles Profit and Loss 1. Opening balance on Vehicles Account as at 1/1/-8 No. 1 20,000 No. 2 24,000 No. 3 32,000 Tachograph 4,000 80,000 Provision for Depreciation Account 20,000 1/1/-8 Balance b/d (2) 47,750 36,500 31/12/-8 Profit and loss (4) 8,750 56,500 56,500 18,750 1/1/-9 Balance b/d 36,500 30,500 31/12/-9 Profit and loss (6) 12,750 49,250 49,250 1/1/-0 Balance b/d 30,500 Vehicles Disposal Account 20,000 9,000 1/10/-8 1/10/-8 Depreciation (3) Trade-in 2. Opening balance on Provision for Depreciation Account as at 1/1/-9 No. 1 (1/7/-9 1/1/-8) = 8 years, 6 months, i.e. fully depreciated =... 20, No. 2 (1/10/-2 1/1/-8) = 5 years, 3 months (5 -- ) x % of 24,000 = , No. 3 (1/4/-5 1/1/-8) = 2 years, 9 months 2( -- ) x % of 32,000 = ,000 1 Tachograph (1/1/-6 1/1/-8) = 2 years x % of 4,000 = ,000 Total =... 47,750 20,000 9,000 29,000 29,000 36,000 1,250 1/7/-9 1/7/-9 1/7/-9 Depreciation (5) Bank Bank (Insurance) 18,750 2,500 16,000 37,250 37,250 19

21 Leaving Certificate Accounting 3. Depreciation to date of Sale Vehicle No. 1 1/7/-9 1/10/-8 = Fully Depreciated =... 20, Annual Depreciation Charge for the year ended 31/12/-8 No. 1 Fully Depreciated =... Nil 1 No. 2 1 year x % of 24, ,000 1 No. 3 1 year x % of 36,000 = , No. 4 3 months ( -- ) x % of 40,000 = ,250 Total =... 8, Depreciation to date of Sale Vehicle No Vehicle (1/4/-5 1/7/-9) = 4 years, 3 months (4 -- ) x % of 32,000 = , Tachograph (1/1/-6 1/7/-9) = 3 years, 6 months (3 -- ) x % of 4,000 = ,750 Total =... 18, Annual Depreciation Charge for the year ended 31/12/-9 1 No. 2 1 year x % of 24,000 = , No. 3 6 months ( -- ) x % of 36,000 = ,250 1 No. 4 1 year x % of 40,000 = , No. 5 5 months ( ) x % of 48,000 = ,500 Total =... 12,750 QUESTION 6.9 (HIGHER LEVEL) (Reference to Calculations in Brackets) (a) 1/1/-0 1/9/-0 1/1/-1 1/4/-1 Balance b/d (1) Bank Trade-in Balance b/d Bank Trade-in Vehicles Account 128,000 1/9/-0 Disposal 48,000 36,000 18,000 31/12/-0 Balance c/d 134, , , ,000 1/4/-1 Disposal 44,000 35,000 23,000 31/12/-1 Balance c/d 148, , ,000 1/1/-2 Balance b/d 148,000 (b) 1/9/-0 31/12/200 1/4/-1 31/12/-1 Disposal (3) Balance c/d Disposal (5) Balance b/d Provision for Depreciation Account 28,800 47,600 1/1/-0 31/12/-0 Balance b/d (2) Profit and Loss (4) 50,400 26,000 76,400 76,400 13,200 59,100 1/1/-1 31/12/-1 Balance b/d Profit and Loss (5) 47,600 24,700 72,300 72,300 1/1/-2 Balance b/d 59,100 20

22 Solutions (c) Vehicles Disposal Account 1/9/200 Vehicles 48,000 1/9/-0 1/9/-0 31/8/-0 Depreciation (3) Trade-in Profit and Loss 28,800 18,000 1,200 48,000 48,000 1/4/-1 Vehicles 44,000 1/4/-1 1/4/-1 1/4/-1 31/12/-1 Depreciation (5) Trade-in Bank (insurance) Profit and Loss 13,200 23,000 4,000 3,800 44,000 44,000 CALCULATIONS ( ) 1. Opening balance on Vehicles Account as at 1/1/-0 No. 1 36,000 No. 2 42,000 No. 3 44,000 Tachograph 6, , Opening balance on Provision for Depreciation Account as at 1/1/-0 7 No. 1 (1/6/-6 1/1/-0) = 3 years, 7 months ( ) x 20% of 36,000 = ,800 5 No. 2 (1/8/-7 1/1/-0) = 2 years, 5 months ( ) x 20% of 42,000 = ,300 1 No. 3 (1/10/-9 1/1/-0) = 3 months ( -- ) x 20% of 44,000 = ,200 3 Tachograph (1/4/-8 1/1/-0) = 1 year, 9 months (1 -- ) x 20% of 6,000 = ,100 Total =... 50, Depreciation to date of Sale Vehicle No. 2 1 Vehicle (1/8/-7 1/9/-0) = 3 years, 1 months ( ) x 20% of 42,000 = ,900 5 Tachograph (1/4/-8 1/9/-0) = 2 years, 5 months ( ) x 20% of 6,000 = ,900 Total =... 28, Annual Depreciation Charge for the year ended 31/12/-0 No. 1 1 year x 20% of 36, =7,200 2 No. 2 8 months ( -- ) x 20% of 48, =6,400 No. 3 1 year x 20% of 44,000 =... 8,800 1 No. 4 4 months ( -- ) x 20% of 54,000 = ,600 Total =... 26, Depreciation to date of Sale Vehicle No /10/-9 1/4/-1 = 1 year, 6 months (1 -- ) x 20% of 44,000 = , Annual Depreciation Charge for the year ended 31/12/-1 5 No. 1 1 year (only 5 months chargeable) (----- ) x 20% of 36,000 = ,000 1 No. 3 3 months ( -- ) x 20% of 44,000 = ,200 No. 4 1 year x 20% of 54,000 =... 10,800 3 No. 5 9 months ( -- ) x 20% of 58,000 = , ,700 21

23 Leaving Certificate Accounting QUESTION 6.10 (HIGHER LEVEL) (Reference to Calculations in Brackets) (a) 1/1/-8 1/9/-8 1/1/-9 1/4/-9 Balance b/d (1) Bank Trade-in Balance b/d Bank Trade-in Vehicles Account 127,000 1/9/-8 Disposal 46,000 38,000 16,000 31/12/-8 Balance c/d 135, , , ,000 1/4/-9 Disposal 42,000 53, ,000 11,000 31/12/-9 Balance c/d 199, ,000 1/1/-0 Balance b/d 157,000 (b) 1/9/-8 31/12/-8 1/4/-9 31/12/-9 Disposal (3) Balance c/d Disposal (5) Balance c/d Provision for Depreciation Account 24,923 1/1/-8 Balance b/d (2) 44,120 37,752 31/12/-8 Profit and Loss (4) 18,555 62,675 62,675 16,464 1/1/-9 Balance b/d 37,752 46,306 31/12/-9 Profit and Loss (6) 25,018 62,770 62,770 1/1/-0 Balance b/d 46,306 (c) Vehicles Disposal Account 1/9/-8 Vehicles 46,000 1/9/-8 1/9/-8 31/12/-8 Depreciation (3) Trade-in Profit and Loss 24,923 16,000 5,077 46,000 46,000 1/4/-9 Vehicles 42,000 1/4/-9 1/4/-9 1/4/-9 31/12/-9 Depreciation (5) Trade-in Bank (Insurance) Profit and Loss 16,464 11,000 8,000 6,536 42,000 42,000 CALCULATIONS ( ) 1. Opening balance on Vehicles Account as at 1/1/-8 No. 1 40,000 No. 2 39,000 No. 3 42,000 Tachograph 6, , Opening balance on Provision for Depreciation Account as at 1/1/-0 No. 1 (1/1/-5 1/1/-8) = 3 years Year 1 40,000 x 20% =...8,000 Year 2 (40,000 8,000) = 32,000 x 20% =...6,400 Year 3 (32,000 6,400) = 25,600 x 20% =... 5, ,520 No. 2 (1/1/-6 1/1/-8) = 2 years Year 1 39,000 x 20% =...7,800 Year 2 (39,000 7,800) = 31,200 x 20% =... 6, ,040 No. 3 (1/1/-7 1/1/-8) = 1 year Year 1 42,000 x 20% =... 8, ,400 Tachograph (1/1/-6 1/1/-8) = 2 years, Year 1 6,000 x 20% =...1,200 Year 2 (6,000 1,200) = 4,800 x 20% ,160 Total =... 44,120 22

24 Solutions 3. Depreciation to date of Sale Vehicle No. 1 2 Vehicle (1/1/-5 1/9/-8) = 3 years, 8 months (3 -- ) 3 Years 1, 2 and 3 (as above calculation 2) =...19,520 2 Year 4 (25,600 5,120) = 20,480 x 20% x ( -- ) =... 2, , Tachograph (1/1/-6 1/9/-8) = 2 years, 8 months (2 -- ) 3 Years 1 and 2 (as above calculation 2) =...2,160 2 Year 3 (4, ) = 3,840 x 20% x ( -- ) = ,672 3 Total =...24, Annual Depreciation Charge for the year ended 31/12/-8 2 No year (as above calculation 3)...3,243 3 No. 2 1 year x 20% of (31,200 6,240) = 24,960 =...4,992 No. 3 1 year x 20% of (42,000 8,400) = 33,600 =...6,720 1 No year x 20% of 54,000 =...3,600 3 Total =... 18, Depreciation to date of Sale Vehicle No. 3 1 (1/1/-7 1/4/-9) = 2 years, 3 months (2 -- ) 4 Year 1 Calculation 2 =...8,400 Year 2 Calculation 4 =...6,720 1 Year 3 -- year x 20% of (33,600 6,720 = 26,880)...1,344 4 Total =... 16, Annual Depreciation Charge for the year ended 31/12/-9 No. 2 1 year x 20% of (24,960 4,992) = 19,968 = ,994 1 No year (as above calculation 5) ,344 4 No. 4 1 year x 20% of (54,000 3,600) = 50,400 = ,080 3 No year x 20% of 64,000 = ,600 4 Total = ,018 QUESTION 6.11 (HIGHER LEVEL) (Reference to Calculations in Brackets) (a) 1/1/-4 1/8/-4 1/1/-5 1/4/-5 Balance b/d (1) Bank Trade-in Balance b/d Bank Trade-in Trucks Account 170,500 1/8/-4 Disposal 55,500 48,000 17,000 31/12/-4 Balance c/d 180, , , ,000 1/5/-4 Disposal 60,000 42,000 26,000 31/12/-4 Balance c/d 188, , ,000 1/1/-6 Balance b/d 188,000 23

25 Leaving Certificate Accounting (b) (c) 1/8/-4 31/12/-4 1/5/-5 31/12/-5 Disposal (3) Balance c/d Disposal (5) Balance c/d Provision for Depreciation Account 34,300 1/1/-4 Balance b/d (2) 79,940 67,169 31/12/-4 Profit and Loss (4) 21, , ,469 31,328 1/1/-5 Balance b/d 67,169 63,379 31/12/-5 Profit and Loss (6) 27,538 94,707 94,707 1/1/-6 Balance b/d 63,379 Trucks Disposal Account 1/8/-4 Trucks 55,500 1/8/-4 1/8/-4 31/12/-4 Depreciation (3) Trade-in Profit and Loss 34,300 17,000 4,200 55,500 55,500 1/5/-5 31/12/-5 Trucks Profit and Loss 60,000 7,328 1/5/-5 1/5/-5 1/5/-5 Depreciation (5) Trade-in Bank (Insurance) 31,328 26,000 10,000 67,328 67,328 CALCULATIONS ( ) 1. Opening balance on Trucks Account as at 1/1/-4 No. 1 50,000 No. 2 55,000 No. 3 60,000 Tachograph 5, , Opening balance on Provision for Depreciation Account as at 1/1/-4 No. 1 (1/1/-0 1/1/-4) = 4 years Year 1 50,000 x 20% =...10,000 Year 2 (50,000 10,000) = 40,000 x 20% =...8,000 Year 3 (40,000 8,000) = 32,000 x 20% =...6,400 Year 4 (32,000 6,400) = 25,600 x 20% =... 5, ,520 No. 2 (1/1/-1 1/1/-4) = 3 years Year 1 55,000 x 20% =...11,000 Year 2 (55,000 11,000) = 44,000 x 20% =...8,800 Year 3 (44,000 8,800) = 35,200 x 20% =... 7, ,840 No. 3 (1/1/-2 1/1/-4) = 2 years Year 1 60,000 x 20% =...12,000 Year 2 (60,000 12,000) = 48,000 x 20% =... 9, ,600 Tachograph (1/1/-6 1/1/-8) = 2 years, Year 1 5,500 x 20% =...1,100 Year 2 (5,500 1,100) = 4,400 x 20% ,980 Total = , Depreciation to date of Sale: Truck No. 1 7 Vehicle (1/1/-0 1/8/-4) = 3 years, 7 months ( ) 12 Years 1, 2 and 3 (as above calculation 2) =...29,520 7 Year 4 (25,600 5,120) = 20,480 x 20% x ( ) =... 2, , Tachograph (1/1/-2 1/8/-4) = 2 years, 7 months ( ) 12 Years 1 and 2 (as above calculation 2) =...1,980 7 Year 3 (4, ) = 3,520 x 20% x ( ) = , Total = ,300 24

26 Solutions 4. Annual Depreciation Charge for the year ended 31/12/-4 7 No year (as above calculation 3) = , No. 2 1 year x 20% of (35,200 7,040) = 28,160 = ,632 No. 3 1 year x 20% of (48,000 9,600) = 38,400 = ,680 5 No year x 20% of 65,000 = , Total = , Depreciation to date of Sale Truck No. 3 1 (1/1/-2 1/5/-5) = 3 years, 4 months (3 -- ) 3 Year 1 and 2 Calculation 2 = ,600 Year 3 Calculation 4 = ,680 1 Year 4 -- year x 20% of (38,400 7,680) = 30,720 = ,048 3 Total = , Annual Depreciation Charge for the year ended 31/12/-5 No. 2 1 year x 20% of (28,160 5,632) = 22,528 = ,506 1 No year (as above calculation 5) ,048 3 No. 4 1 year x 20% of (65,000 5,417) = 59,583 = ,917 2 No year x 20% of 68,000 = ,067 3 Total = ,538 QUESTION 6.12 (HIGHER LEVEL) (a) 1/1/-7 1/1/-7 Balance b/d Revaluation reserve Land and Buildings Account 800, ,000 1/1/-7 31/12/-7 Disposal Balance c/d 200,000 1,214,000 1,414,000 1,414,000 1/1/-8 Balance b/d 1,214,000 (b) 1/1/-7 1/1/-7 31/12/-7 Disposal (2) Revaluation Reserve Balance c/d Provision for Depreciation Account 15,000 22,500 22,000 1/1/-7 31/12/-7 Balance b/d (1) Profit and Loss (3) 37,500 22,000 59,500 59,500 1/1/-7 Balance b/d 22,000 (c) 1/1/-7 31/12/-7 Land and Buildings Profit and Loss Buildings Disposal Account 200, ,000 1/1/-7 1/1/-7 Depreciation (2) Bank 15, , , ,000 (d) Revaluation Reserve Account 1/1/-7 31/12/-7 Balance c/d 636,500 1/1/-7 Land and Buildings Depreciation 614,000 22, , ,500 1/1/-8 Balance b/d 636,500 25

27 Leaving Certificate Accounting CALCULATIONS ( ) 1. Opening Balance on Provision for Depreciation Account as at 1/1/-7 500,000 1/1/-4 1/1/-7 = 3 years x =...37, Depreciation to date of Sale of buildings on 1/1/-7 200,000 1/1/-4 1/1/-7 = 3 years x =...15, Annual Depreciation charge for the year ended 31/12/-7 814,000 1 year x =...22, QUESTION 6.13 (HIGHER LEVEL) (a) 1/1/-7 1/1/-7 Balance b/d Revaluation reserve Land and Buildings Account 1,300,000 1,225,000 1/1/-7 31/12/-7 Disposal Balance c/d 200,000 2,325,000 2,525,000 2,525,000 1/1/-8 Balance b/d 2,325,000 (b) 1/1/-7 1/1/-7 31/12/-7 Disposal (2) Revaluation Reserve Balance c/d Provision for Depreciation Account 20,000 60,000 35,000 1/1/-7 31/12/-7 Balance b/d (1) Profit and Loss (3) 80,000 35, , ,000 1/1/-8 Balance b/d 35,000 (c) 1/1/-7 31/12/-7 Land and Buildings Profit and Loss Buildings Disposal Account 200,000 50,000 1/1/-7 1/1/-7 Depreciation (2) Bank 20, , , ,000 (d) Revaluation Reserve Account 1/1/-7 31/12/-7 Balance c/d 1,285,000 1/1/-7 Land and Buildings Depreciation 1,225,00 60,000 1,285,000 1,285,000 1/1/-8 Balance b/d 1,285,000 CALCULATIONS ( ) 1. Opening Balance on Provision for Depreciation Account as at 1/1/-7 800,000 1/1/-2 1/1/-7 = 5 years x =...80, Depreciation to date of sale of buildings on 1/1/-7 200,000 1/1/-2 1/1/-7 = 5 years x =...20, Annual Depreciation charge for the year ended 31/12/-7 2, 325, ,000 1 year x =...35,

28 Solutions QUESTION 6.14 (HIGHER LEVEL) Land and Buildings Account 1/1/-4 Balance b/d 250,000 1/1/-4 Revaluation reserve 230,000 31/12/-4 Balance c/d 480, , ,000 1/1/-5 Balance b/d 480,000 1/1/-5 Bank 200,000 31/12/-5 Balance c/d 680, , ,000 1/1/-6 Balance b/d 680,000 1/1/-6 Revaluation reserve (4) 140,000 31/12/-6 Balance c/d 820, , ,000 1/1/-7 Balance b/d 820,000 1/1/-7 Disposal (7) 450,000 31/12/-7 Balance c/d 370, , ,000 Depreciation Land and Buildings Account 1/1/-4 Revaluation Reserve 36,000 1/1/-4 Balance b/d (1) 36,000 31/12/-4 Balance c/d 7,200 31/121/-4 Profit and Loss (2) 7,200 43,200 43,200 1/1/-5 Balance b/d 7,200 31/12/-5 Balance c/d 18,400 31/12/-5 Profit and Loss (3) 11,200 18,400 18,400 1/1/-6 Revaluation reserve 18,400 1/1/-6 Balance b/d 18,400 31/12/-6 Balance c/d 14,000 31/12/-6 Profit and Loss (5) 14,000 32,400 32,400 1/1/-7 Disposal (6) 9,000 1/1/-7 Balance b/d 14,000 31/12/-7 Balance c/d 10,000 31/12/-7 Profit and Loss (8) 5,000 19,000 19,000 Revaluation Reserve Account 1/1/-4 Land and Buildings 230,000 31/12/-4 Balance c/d 266,00 1/1/-4 Depreciation 36, , ,000 31/12/-5 Balance b/d 266,000 1/1/-5 Balance b/d 266, , ,000 1/1/-6 Balance b/d 266,000 1/1/-6 Land and Buildings 140,000 31/12/-6 Balance c/d 424,400 1/1/-6 Depreciation 18, , ,000 31/12/-7 Profit and Loss (9) 300,400 1/1/-7 Balance b/d 424,000 31/12/-7 Balance c/d 124, , ,400 Disposal Account 1/1/-7 Land and Buildings 450,000 1/1/-7 Depreciation 9,000 31/12/-7 Profit and Loss 79,000 1/1/-7 Bank 520, , ,000 27

29 Leaving Certificate Accounting CALCULATIONS ( ) 1. Accumulated Depreciation to date on 1/1/-4 9 years at 2% of 200,000 =... 36, Annual Depreciation charge for year ended 31/12/-4 1 year at 2% of 360,000 =... 7, Annual Depreciation charge for year ended 31/12/-4 1 year at 2% of 560,000 =... 11, Revaluation on 1/1/-6 25% on 560,000 = , Annual Depreciation charge for year ended 31/12/-6 1 year at 2% of 700,000 =... 9, Accumulated depreciation on buildings sold on 1/1/-7 1 year at 2% of 450,000 =... 9, Revalued value of buildings sold on 1/1/-7 Purchased 1/1/-5 = 200,000 Revalued 1/1/-4 = 160,000 Revalued 1/1/-6 = 90, , Annual Depreciation charge for year ended 31/12/-7 1 year at 2% of 250,000 =... 5, Revalued amount of buildings disposed of on 1/1/-7 transferred to Profit and Loss Account. Revaluation 1/1/-4 = 160,000 Accumulated depreciation on 1/1/-4 = 36,000 Revaluation 1/1/-6 (25% of 360,000) = 90,000 Accumulated depreciation on 1/1/-6 (2 years at 2% of 360,000) = 14, ,400 28

30 Final Accounts of a Sole Trader with Adjustments: Solutions 8QUESTION 8.1 Schedule of Adjustments ( ) Trading Account P+L Account Balance Sheet 1. Closing Stock 15,000 15,000 15, Light and Heat 6, , Rent and Rates 12, ,000 24,000 12, Insurance 9,000 3,000 6,000 3, Advertising 10, ,000 13,000 3, Carriage Out 5, ,500 6,500 1, Depreciation Land and Buildings 12, ,600 3,600 15, Depreciation Motor Vehicles 40, ,000 16,000 56, Depreciation Furniture and Equipment 6, ,000 1,000 7,000 (a) Trading and Profit and Loss Account for the year ended 31/12/-9 Sales ,000 Less Cost of Sales Opening Stock 12,000 Add Purchases 210,000 Returns Out (400) 209,600 Add Carriage In 6, ,600 Less Closing Stock 1. (15,000) (212,600) Gross Profit 187,400 Add Income 187,400 Less Expenses Light and Heat 2. 6,410 Rent and Rates 3. 24,000 Insurance 4. 6,000 Advertising 5. 13,000 Carriage Out 6. 6,500 Depreciation Land and Buildings 7. 3,600 Depreciation Motor Vehicles 8. 16,000 Depreciation Furniture and Equipment 9. 1,000 Wages 24,000 (100,510) Net Profit 86,890 29

31 Leaving Certificate Accounting QUESTION 8.2 (b) Balance Sheet as at 31/12/-9 Cost Depreciation Value Fixed Assets Land and Buildings ,000 15, ,400 Motor Vehicles 8. 80,000 56,000 24,000 Furniture and Equipment 9. 10,000 7,000 3, ,000 78, ,400 Current Assets Closing Stock 1. 15,000 Insurance Prepaid 4. 3,000 Debtors 40,000 58,000 Less Current Liabilities Light and Heat Due Rent and Rates Due 3. 12,000 Advertising Due 5. 3,000 Carriage Out Due 6. 1,500 Creditors 18,000 Bank 5,600 (40,510) 17, ,890 Financed By Capital 120,000 Add Net Profit 86, ,890 Less Drawings (18,000) 188,890 Long-Term Liabilities 15-Year Loan 20, ,890 Schedule of Adjustments ( ) Trading a/c P+L a/c Bal. Sheet 1. Closing Stock 100, , , Rates 6,800 3,400 3,400 3, Postage and Stationery 4, , Bad Debts Debtors 70, , Provision for Bad Debts 3,475 3,475 3, Depreciation on Buildings 4,000 4,000 4, Depreciation on Delivery Vans 24, ,000 12,000 36, Fixtures and Fittings 24, ,000 12,000 36,000 30

32 Solutions (a) Trading and Profit and Loss Account for the year ended 31/12/-0 Sales Returns In 520,000 (4,000) 516,000 Less Cost of Sales Opening Stock 90,000 Add Purchases Returns Out 300,000 (5,000) 295,000 Less Closing Stock ,000 (100,000) (285,000) Gross Profit 231,000 Add Income Rent Received Discount Received 18,000 3,800 Less Expenses Rates Postage and Stationery Bad Debts Provision for Bad Debts Depreciation on Buildings Depreciation on Delivery Vans Depreciation on Fixtures, Fittings Discount Allowed Loan Interest General Expenses Insurance ,400 4, ,475 4,000 12,000 12,000 2,500 1,920 8,000 11, ,800 (62,995) Net Profit 189,805 (b) Balance Sheet as at 31/12/-0 Fixed Assets Buildings Delivery Vans Fixtures and Fittings Current Assets Closing Stock Rates Prepaid Stock of Stationery Debtors Less Provision for Bad Debts Less Current Liabilities Creditors Bank VAT Financed By Capital Add Net Profit Less Drawings Long-Term Liabilities 15 Year Loan Cost Depreciation Value 200, ,000 80,000 4,000 36,000 36, ,000 84,000 44, ,000 76, ,000 69,500 (3,475) 28,200 27,000 16, ,000 3, , ,925 (71,200) 250, , ,805 (33,080) 98, , ,725 16, ,725 31

33 Leaving Certificate Accounting QUESTION 8.3 Schedule of Adjustments ( ) Trading Acc P+L Acc Bal. Sheet 1. Closing Stock 12,000 12,000 12, Advertising 14,000 3,500 10,500 3, Carriage In 2, , Drawings 17, , Depreciation on Motor Vehicles 20, ,000 12,000 32, Depreciation on Furniture and Equipment 18, ,800 2,800 20, Loan Interest 1, ,000 2,000 1, Provision for Bad Debts 1, ,200 (a) Trading, Profit and Loss Account for the year ended 31/12/-8 Sales 190,000 Returns In (600) 189,400 Less Cost of Sales Opening Stock 21,000 Add Purchases 74,000 Returns Out (500) 73,500 Add Carriage In 3. 1,440 95,940 Less Closing Stock 1. (12,000) (83,940) Gross Profit 105,460 Add Income Discount Received 4,200 Rent Received 9,000 Patent Royalties 7,000 20, ,660 Less Expenses Advertising 2. 10,500 Depreciation on Motor Vehicles 5. 12,000 Depreciation on Fixtures + Fittings 6. 2,800 Loan Interest 7. 2,000 Provision for Bad Debts Discount Allowed 3,000 Rent 6,500 Wages and Salaries 20,000 Light and Heat 7,000 General Expenses 6,000 (70,000) Net Profit 55,660 32

34 Solutions QUESTION 8.4 (b) Balance Sheet as at 31/12/-8 Cost Depreciation Value Fixed Assets Motor Vehicles 5. 60,000 32,000 28,000 Furniture and Equipment 6. 46,000 20,800 25, ,000 52,800 53,200 Patents 40,000 Current Assets 93,200 Closing Stock 1. 12,000 Advertising Prepaid 2. 3,500 Debtors 20,000 Less Provision for Bad Debts 8. (1,200) Bank 18,800 7,000 41,300 Less Current Liabilities Loan Interest Due 7. 1,000 VAT 9,000 PRSI 2,800 Creditors 30,000 (42,800) (1,500) 91,700 Financed By Capital 34,000 Add Net Profit 55,660 89,660 Less Drawings 4. (17,960) 71,700 Long-Term Liabilities 10 Year Loan 20,000 91,700 Schedule of Adjustments ( ) Trading Acc P+L Acc Bal. Sheet 1. Closing Stock 6,000 6,000 6, Rent, Rates, Insurance 12,000 1, ,400 1, Postage and Stationery 6, , Advertising 3, , Commission 33, ,000 36,000 3, Bad Debts , Debtors 16, , Provision for Bad Debts Depreciation on Motor Vehicles 30, ,000 5,000 35, Carriage 12,000 8,400 3,600 8, Wages and Salaries 24,000 2,400 21, Drawings 29, ,400 31, Loan Interest 18,000 18,000 18,000 33

35 Leaving Certificate Accounting (a) Trading, Profit and Loss Account for the year ended 30/6/-9 Sales 225,000 Returns In (500) 224,500 Less Cost of Sales Opening Stock 7,000 Add Purchases 115,000 Returns Out (1,100) 113,900 Add Carriage In 10. 3, ,500 Less Closing Stock 1. (6,000) (118,500) Gross Profit 106,000 Add Income Commission 5. 36,000 Discount Received 1,200 Investment Interest Received 4,000 41, ,200 Less Expenses Rent, Rates, Insurance 2. 10,400 Postage and Stationery 3. 5,800 Advertising 4. 2,250 Bad Debts 6. 1,000 Provision for Bad Debts Depreciation on Motor Vehicles 9. 5,000 Carriage Out 10. 8,400 Wages and Salaries ,600 Loan Interest ,000 Discount Allowed 900 Light and Heat 7,400 Showroom Expenses 4,000 Telephone 900 (85,774) Net Profit 61,426 34

36 Solutions QUESTION 8.5 (b) Balance Sheet as at 30/6/-9 Cost Depreciation Value Fixed Assets Buildings 200, ,000 Motor Vehicles 9. 50,000 35,000 15, ,000 35, ,000 10% Investments 40, ,000 Current Assets Closing Stock 1. 6,000 Rent, Rates Insurance Prepaid 2. 1,600 Stock of Stationery Advertising Prepaid Commission Due 5. 3,000 Debtors 7. 15,400 Less Provision for Bad Debts 8. (924) 14,476 Petty Cash 100 Bank 3,200 29,526 Less Current Liabilities Loan Interest Due ,000 Creditors 14,000 VAT 1,900 PRSI 700 (34,600) (5,074) 249,926 Financed By Capital 100,000 Add Net Profit 61, ,426 Less Drawings , ,926 Long-Term Liabilities 15% Loan 120, ,926 Schedule of Adjustments ( ) Trading Acc P+L Acc Bal. Sheet 1. Closing Stock 65,000 65,000 65, Stationery 1, , Carriage 8,000 4,800 3,200 4, Wages and Salaries 74,000 14,800 59, Drawings 12, ,800 26, Depreciation on Buildings 5,000 5,000 5, Depreciation on Motor Vehicles 44, ,000 22,000 66, Depreciation on Office Equipment 5, ,300 1,300 6, Loan Interest 3, ,000 6,000 3, Advertising 3,600 1,200 2,400 1, Provision for Bad Debts 1, ,400 35

37 Leaving Certificate Accounting (a) Trading and Profit and Loss Account for the year ended 31/12/-6 Sales 520,000 Returns In (6,000) 514,000 Less Cost of Sales Opening Stock 48,000 Add Purchases 398,000 Returns Out (1,200) 396,800 Add Carriage In 3. 3, ,000 Less Closing Stock 1. (65,000) (383,000) Gross Profit 131,000 Add Income Commission 6,700 Discount Received 2,100 Reduction in Provision for Bad Debts , ,900 Less Expenses Stationery 2. 1,100 Carriage Out 3. 4,800 Wages and Salaries 4. 59,200 Depreciation on Buildings 6. 5,000 Depreciation on Motor Vehicles 7. 22,000 Depreciation on Office Equipment 8. 1,300 Loan Interest 9. 6,000 Advertising 10. 2,400 General Expenses 14,000 Showroom Expenses 4,000 (119,800) Net Profit 20,100 36

38 Solutions QUESTION 8.6 (b) Balance Sheet as at 31/12/-6 Cost Depreciation Value Fixed Assets Buildings ,000 5, ,000 Motor Vehicles ,000 66,000 44,000 Office Equipment 8. 18,000 6,300 11, ,000 77, ,700 Patents 30, ,700 Current Assets Closing Stock 1. 65,000 Stock of Stationery Advertising Prepaid 10. 1,200 Debtors 28,000 Less Provision for Bad Debts 11. (1,400) 26,600 VAT 1,600 94,700 Less Current Liabilities Loan Interest Due 9. 3,000 Creditors 30,000 PRSI 2,900 Bank 26,200 (62,100) 32, ,300 Financed By Capital 280,000 Add Net Profit 20, ,100 Less Drawings 5. (26,800) 273,300 Long-Term Liabilities Term Loan 90, ,300 Schedule of Adjustments Trading Acc P+L Acc Bal. Sheet 1. Closing Stock 83,000 83,000 83, Investment Interest 4,000 4,000 4, Provision for Bad Debts Repairs 20,000 15,000 5, Buildings 100, , , Loan Interest Depreciation on Buildings 20, ,450 3,450 23, Depreciation on Motor Vehicles 16, ,000 6,000 22, Depreciation on Furniture and Fittings 3, , Wages 58,000 18,000 40, Drawings 49, ,000 67, Light and Heat 4, , Insurance 5,600 1,400 4,200 1,400 37

39 Leaving Certificate Accounting (a) Trading, Profit and Loss Account for the year ended 31/5/-0 Sales 825,000 Less Cost of Sales Opening Stock 80,000 Add Purchases 615, ,000 Less Closing Stock 1. (83,000) (612,000) Gross Profit 213,000 Add Income Investment Interest 2. 4,000 Provision for Bad Debts , ,100 Less Expenses Repairs 4. 5,000 Loan Interest Depreciation on Buildings 7. 3,450 Depreciation on Motor Vehicles 8. 6,000 Depreciation on Furniture and Fittings Wages ,000 Light and Heat 12. 5,000 Insurance 13. 4,200 Distribution Expenses 5,000 Bad Debts 800 (70,550) Net Profit 146,550 38

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