T6/FFA/F3 - Homework 5

1	The following is an extract from the trial balance of Jessy, a company. After making corrections, what is the revised balance on the suspense account?
	Premises Provision for depreciation Inventory Share capital Retained profits Receivables Carriage in Allowance for receivables Bank overdraft Payables Sales Purchases Sales returns Sundry expenses Discounts allowed Suspense		Dr $ 500,000 200,000 43,500 1,010 359,700 10,300 14,000	Cr $ 120,000 23,000 105,000 1,500 3,400 35,900 500,080 1,340 338,290
			1,128,510	1,128,510
	A	$15,710 Dr
	B	$14,730 Dr
	C	$12,050Dr
	D	$33,630 Dr

2

The following year end adjustments are required: ·        Closing inventory of $45,700 to be recorded. ·        Depreciation at 20% straight line to be charged on assets with a cost of $470,800. ·        An Irrecoverable debt of $230 to be written off. ·        Deferred income of $6,700 to be recorded. What is the impact on net assets of these adjustments?

A

$55,390 increase

B

$55,390 decrease

C

$41,990 decrease

D

$41,990 increase

3

The following is the extract of Jessy's trial balance as at 31 December 20X7:

Rent Insurance

Dr $ 22,000 30,000

Cr $

The following notes have been provided: (i)                The monthly rent charge is $2,000. (ii)               The annual insurance charge for the above year is $28,000. What is the charge for rent and insurance for the year and the closing accrual and prepayment?

Charge for the year $

Closing $

A

Rent Insurance

22,000 28,000

Rent prepayment Insurance prepayment

2,000 2,000

B

Rent Insurance

22,000 30,000

Rent accrual Insurance prepayment

2,000 2,000

C

Rent Insurance

24,000 28,000

Rent accrual Insurance prepayment

2,000 2,000

D

Rent Insurance

24,000 30,000

Rent accrual Insurance accrual

2,000 2,000

4

The following is the extract of Jasom’s trial balance as at 31 December 20x7:

Receivables Allowance for receivables Irrecoverable debts

Dr $ 29,600 1,600

Cr $ 3,100

The following notes are provided. (i)                Additional irrecoverable debts of $3,000 were discovered at the year end. (ii)               It has been decided to make an allowance for receivables of 10% on the adjusted receivables at the year end. The total bad debt expense (irrecoverable debts and allowances for receivables) for the year ended 31 December 20X7 and the closing net receivables balance as at 31 December 20X7 will be:

Bad debts expense $

Net receivables $

A

4,160

23,940

B

5,040

23,940

C

2,560

21,830

D

4,000

19,800

5

The following is the extract of Jasom's trial balance as at 31 December 20X7:

Plant and machinery Plant and machinery accumulated depreciation

Dr $ 50,000

Cr $ 15,000

The policy of the business is to charge depreciation at 10% per annum on a straight line basis. What is the income statement depreciation charge for the year ended 31 December 20X7 and the closing net book value as at 31 December 20X7

Depreciation charge $

Net book value $

A

3,500

31,500

B

5,000

30,000

C

5,000

45,000

D

3,500

30,000

6

The following is the extract of Jasom's trial balance as at 31 December 20X7:

Motor vehicles Motor vehicles accumulated depreciation

Dr $ 50,000

Cr $ 21,875

The policy of the business is to charge depreciation at 25% per annum on a reducing balance basis. What is the income statement depreciation charge for the year ended 31 December 20X7 and the closing net book value as at 31 December 20X7? Calculations to be rounded to the nearest $.

Depreciation charge $

Net book value $

A

12,500

15,625

B

7,031

42,969

C

12,500

37,500

D

7,031

21,094

7

Which of the following are books of prime entry?

A

Sales day book and trial balance

B

Petty cash book and accounts receivables ledger

C

Petty cash book and journal

8

The petty cash balance at 30 November 20X9 was $25. The following transactions occurred during the month:

1

Biscuits were purchased at a cost of $7.25.

2

Travel expenses of $12.75 were reimbursed to an employee.

3

The cleaner was paid $15.

What is the imprest amount?

A

$25

B

$60

C

$35

D

$50

9

Within a petty cash system: Balance at start of month                                                 X Expenses during month                                                    (Y) Amount transferred from bank                                     Z Balance at end of month                                                  Q Which of the following are true?

A

X = Q and Y = Z

B

X = Z and Y = Q

10

You are given the following figures for sales and receivables:

Receivables at year end Sales Total cash received from customers General allowance for receivables Specific allowance for receivables Irrecoverable debts written off

20x7 $ 74,963 697,104 686,912 750 1,264 1,697

20x6 $ 69,472 695

What was the value of sales returns during 20X7?

A

$1,740

B

$2,949

C

$3,004

D

$4,268

11

Ignacius operates the imprest system for petty cash. At 1 July there was a float of $150, but it was decided to increase this to $200 from 1 August onwards. During July, the petty cashier received $25 from staff for using the photocopier and a cheque for $90 was cashed for an employee. In July, cheques were drawn for $500 for petty cash. How much cash was paid out as cash expenses by the petty cashier in July?

A

$385

B

$435

C

$515

D

$615

12

Which ONE of the following might explain a debit balance on a payables ledger account?

A

The company took a cash discount to which it was not entitled and paid less than the amount due

B

The company mistakenly paid too much

C

The book-keeper failed to enter a contra with the receivables ledger

D

The book-keeper failed to post a cheque paid to the account

13

Jessy’s payables ledger control account has a balance at 1 October 20X8 of $34,500 credit. During October, credit purchases were $78,400, cash purchases were $2,400 and payments made to suppliers, excluding cash purchases, and after deducting cash discounts of $1,200, were $68,900. Purchase returns were $4,700. The closing balance was:

A

$38,100

B

$40,500

C

$47,500

D

$49,900

14

The entries in a receivables ledger control account are: Sales                                                                                          $250,000 Bank                                                                                          $225,000 Returns                                                                                      $2,500 Irrecoverable debts                                                                    $3,000 Returned unpaid cheque                                                            $3,500 Contra payables ledger account                                                 $4,000 What is the balance on the receivables ledger control account?

A

$12,000

B

$19,000

C

$25,000

D

$27,000

15

Which of the following is not the purpose of a receivables ledger control account?

A

To provide a check on the arithmetic accuracy of the personal ledger

B

To help to locate errors in the trial balance

C

To ensure that there are no errors in the personal ledger

16

A credit entry of $450 on X’s account in the books of Y could have arisen by:

A

X buying goods on credit from Y

B

Y paying X $450

C

Y returning goods to X

D

X returning goods to Y

17

Which of the following best describes the entries that are made using the sales day book totals at the end of each month?

A

Debit sales with total net sales, credit receivables ledger control with total gross sales and credit sales tax account with total sales tax

B

Debit sales with total gross sales, credit receivables ledger control with total net sales and credit sales tax account with total sales tax

C

Debit receivables ledger control with total net sales, debit sales tax account with total sales tax and credit sales with total gross sales

D

Debit receivables ledger control with total gross sales, credit sales with total net sales and credit sales tax account with total sales tax

18

A business’ petty cash operates on an imprest system with an imprest of $100. All claims for payment must be supported by a third party voucher such as a receipt. Which of the following is the most cost-effective control that should be implemented in addition to the imprest?

A

A designated petty cash cashier

B

The petty cash tin kept in a locked drawer in a supervisor’s office

C

The imprest should be kept in a safe rather than a locked box

D

Claims should be counter-signed by a manager

19

Which of the following best describes the purpose of a purchase invoice?

A

Issued by a supplier as a request for payment

B

Sent to supplier as a request for a supply

C

Issued by supplier listing details of recent transactions

D

Sent to the supplier as notification of payment

20

Which of the following are documents issued by the customer in a transaction rather than the supplier?

A

Quotation, goods delivery note and debit note

B

Goods delivery note, remittance advice and sales order

C

Purchase order and debit note

D

Sales order, purchase invoice and remittance advice

21

A payables ledger control account showed a credit balance of $768,420. The payables ledger totalled $781,200. Which one of the following possible errors could account in full for the difference?

A

A contra against a receivables ledger debit balance of $6,390 has been entered on the credit side of the payables ledger control account

B

The total of discounts allowed $28,400 was entered to the debit side of the payables ledger control account instead of the correct figure for discounts received of $15,620

C

$12,780 cash paid to a supplier was entered on the credit side of the supplier’s account on the payables ledger

D

The total of discounts received $6,390 has been entered on the credit side of the payables ledger control account

22

The payables ledger control account below contains a number of errors:

Payables ledger control account

Balance b/f Cash paid to supplier Purchase return Refunds received from supplier

$ 318,600 1,364,300 41,200 2,700

Purchases Contras against debit balances in receivables ledger Discounts received Balance c/f

$ 1,268,600 48,000 8,200 402,000

1,726,800

1,726,800

All items relate to credit purchases. What should be the closing balance when all the errors are corrected?

A

$128,200

B

$509,000

C

$224,200

D

$144,600

23

Harry received a statement from one of its suppliers, Mandy, showing a balance due of $3,980. the amount due according to the payables ledger account of Harry was only $230. Comparison of the statement and the ledger account revealed the following differences:

1

A cheque sent by Harry for $270 has not been allowed for in Mandy’s statement.

2

Mandy has not allowed for goods returned by Harry $180.

3

Harry made a contra entry, reducing the amount due to Mandy by $3,200, for a balance due from Mandy in Harry’s receivables ledger. No such entry has been made in Mandy’s records.

What difference remains between the two companies’ records after adjusting for these items?

A

$460

B

$640

C

$6,500

D

$100

24

A business’ sales (receivables) ledger control account did not agree with the total of the balances on the receivables ledger. An investigation revealed that the sales day book had been overcast by $10. What effect will this have on the discrepancy?

A

The control account should be credited with $10

B

The control account should be debited with $10

25

A supplier sends Harry a statement showing a balance outstanding of $14,350. Harry’s records show a balance outstanding of $14,500. The reason for this difference could be that:

A

the supplier sent an invoice for $150 which you have not yet received

B

the supplier has allowed you $150 cash discount which you had omitted to enter in your ledgers

C

you have paid the supplier $150 which he has not yet accounted for

D

you have returned goods worth $150 which the supplier has not yet accounted for

26

Which of the following would NOT lead to a difference between the total of the balances on the receivables ledger and the balance on the receivables ledger control account?

A

An error in totalling the sales day book

B

An error in totalling the receipts column of the cash book

C

An overstatement of an entry in a customer’s account

D

An entry posted to the wrong customer’s account

27

A receivables ledger control account showed a debit balance of $37,642. The individual customers’ accounts in the receivables ledger showed a total of $35,840. The difference could be due to:

A

undercasting the sales day book by $1,802

B

overcasting the sales returns day book by $1,802

C

entering a cash receipt of $1,802 on the debit side of a customer’s account

D

entering a cash discount allowed of $901 on the debit side of the control account

28

Jessy has received a statement of account from one of its suppliers, showing an outstanding balance due to them of $1,350. On comparison with the ledger account, the following is determined: ·        The ledger account shows a credit balance of $260. ·        The supplier has disallowed a cash discount of $80 due to late payment of an invoice. ·        The supplier has not yet allowed for goods returned at the end of the period of $270. ·        Cash in transit of $830 has not been received by the supplier. Following consideration of these items, the unreconciled difference between the two records is:

A

$70

B

$90

C

$430

D

$590

29

The purchase day book of Jessy has been undercast by $500, and the sales day book has been overcast by $700. Jessy maintains payables and receivables ledger control accounts as part of the double entry bookkeeping system. The effect of correcting these errors will be to:

A

make adjustments to the ledger balances of the individual customers and suppliers, with no effect on profit

B

make adjustments to the ledger balances of the individual customers and suppliers, with a decrease in profit of $1,200

C

make adjustments to the control accounts, with no effect on profit

D

make adjustments to the control accounts, with a decrease in profit of $1,200

30

For the month of November 20X0 Jessy’s purchases totalled $225,600 with sales tax of $33,840. The total of $259,440 has been credited to the payables ledger control account as $254,940. Which of the following adjustments is correct?

Control account

List of suppliers’ balances

A

$4,500 Cr

No adjustment

B

$4,500 Cr

Increase by $4,500

C

$29,340 Dr

No effect

D

$33,840 Dr

Increase by $4,500