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accounting principles

Questions and Answers of Accounting Principles

=+14. A manager is entitled to receive commission at the rate of 5 % of net profits after charging such commission. How much is this commission if the net profit was £4,200 before charging the
=+2. Provide Depreciation as follows:Machinery and Plant 10 %Showroom Equipment 5 %General Office Equipment 5 %
=+1. Stocks at 31st December, 1962, were:£Raw Materials 8,316 Work in Progress 9,410 Finished Goods 18,613
=+General Office 560 Showroom Equipment 17,000 General Office Equipment 12,000 Machinery and Plant 183,400 Stocks at 1st January, 1962 Raw Materials 11,400 Work in Progress 8,090 Finished Goods
=+13. From the following list of balances and additional information prepare Manufacturing, Trading and Profit & Loss Accounts for the year ended 31st December, 1962, and a Balance Sheet as at that
=+Show the account for Motor Expenses in Currants ledger for 1962 after the accounts for the year had been closed.
=+To cover private use of the car he treats half of the expenses as private and transfers this proportion to his personal Drawings Account.On 1st January, 1962, he owed £16 for Repairs and had paid
=+12. *Curran pays all his car expenses by cheques drawn on his business bank account. In the books of the business all these payments are debited to an account for Motor Expenses.
=+10. Give the Rent, Rates and Insurance Account incorporating the following information:FINAL ACCOUNTS 59£481,094 £481,094*Re-printed by courtesy of the Royal Society of Arts (R.S.A.)
=+per annum. The rate of gross profit he expects to make on Sales is 25 %(i.e. before deducting expenses or wages). Assuming that T. will make a Net Profit of £1,000 and that, at the end of the year
=+Raw Materials: Stock at Beginning£2,100 Purchases 12,000 Stock at End 3,100 Finished Goods: Stock at Beginning 1,750 Stock at End 980 Work in Progress: At Beginning 1,870 At End 2,090 Sales 34,646
=+You are to make provision for the prepayments and accrual at 30th September, 1962 and to show the transfer to the Profit & Loss Account at that date.11. From the following information relating to a
=+5 8 ACCOUNTING PRINCIPLES AND PRACTICE April 1 Rent Accrued£April 1 60 Insurance prepaid 200 Payments £May 16 Rent, 3 months to 30th April 300 Aug. 1 Insurance, Year to 31st July, 1963 216 24
=+8. *Given below is the abridged Balance Sheet of G. Cantone:Balance Sheet 1st March, 1962£ £Creditors 1,890 Cash 20 G. Cantone Debtors 625 Capital Account 2,355 Stock 2,100 Machinery
=+Stock on Hand 1st January, 1962 at cost price 6,000 Purchases from 1st January to 14th March, 1962 14,000 Sales from 1st January to 14th March, 1962 18,000 State the value of the stock destroyed by
=+7. *A trader dealing in a standard line of goods which he regularly sold at 25% above cost price, discovered on the morning of 17th March, 1962—a Monday—that during the week-end all his stock
=+9. *T. is proposing to set up in business as a retailer and is negotiating for a shop, the rent of which is £450 per annum and the Rates £375 per annum.He expects that he will need to employ an
=+(c) Cantone purchases goods for resale (stock) costing £75. This was a credit Purchase.(d)Old machinery is sold for £100 in cash; the book value was £250.(e) It is decided to correct the
=+(a) Cantone receives a loan of £500, which he used to pay £200 to a creditor and £300 for the purchase of new Machinery.(b) A debtor pays £120 on account.
=+ApL 1 To Balance Apl. 1 By Cash on sale(Old Van) b/f 350 of old van 500 Cost of New Van 1400 1961 Mar. 31 Balance 1250 FINAL ACCOUNTS 57£4,245 £4,245 The following transactions took place on 2nd
=+The following matters are to be taken into account:(a) The Stock in Trade at 31st March, 1961 was valued at £5,040.(b) Salaries accrued at 31st March, 1961 amounted to £840 and Rent accrued,
=+On September 30th, 1962, the directors decided to maintain the provisions existing against the debts of S. Jones and A. Brown and to create provisions as follows:£. s. d.A. K. James 21. 9. 4.B.L.
=+During the year ended 30th September, 1962, no further business was done with any of these debtors, but a first and final dividend of £85 was received from the liquidator of Smith Ltd. and T.
=+6. tAt September 30th, 1961, the directors of XY Ltd. created a provision in their accounts against the following debts which they consider to be of doubtful nature:£. s. d.Smith Ltd. 250. 7.
=+You are required to prepare a Trading and Profit & Loss Account for the year to 31st March, 1961 and a Balance Sheet as at that date.
=+5. *The following Trial Balance was extracted from the books of Jackson trader, at 31st March, 1961.56 ACCOUNTING PRINCIPLES AND PRACTICE£1750 £1750 Provide for the depreciation on the new van at
=+•Re-printed by courtesy of the Royal Society of Arts (R.S.A.).From the following details, piepare the Plant and Machinery Account for the years ended 31st December, 1959 to 31st December, 1962
=+Balance At Bank 3,920 Drawings 4,600 Motor Expenses (including Petrol) 510 Motor Vans 1,250 Rent and Rates 750 Salaries 8,120 Provision for Bad Debts, 1st April, 1960 210 Bad Debts 730 General
=+4. *A manufacturer, who prepares his accounts to 31st December each year, debits all his purchases of machinery to a single Plant and Machinery Account, and writes oif depreciation by fixed annual
=+(b) During the year Bad Debts, as they occurred, had been debited to Provision foi Bad Debts Account. Additional provision should be made to bring the balance of this account up to £100.(c)
=+You are required to draw up Macarthy's Trading and Profit & Loss Account for the year ended 30th June, 1962, and his Balance Sheet as at 30th June, 1962, taking into account the following:(a) On
=+Customs Duty on Imported Purchases 317 Carriage Outwards 432 Returns Inward 218 Returns Outward 74 Rent, Rates and Insurance 2,170 Fixtures and Fittings 900 Discount Allowed 315 Discount Received
=+3. •The books of Francis Macarthy, a wholesale dealer in toys, showed the following balances at the close of business on 30th June, 1962:•Re-printed by courtesy of the Royal Society of Arts
=+2. •On 1st January, 1962 the Provision for Bad Debts Account in the books of G. Gardham showed a credit balance of £230. During the following twelve months, debts amounting to £185 were written
=+1. •The following Trial Balance of a sole trader, although it adds up to the same total on both sides, is incorrect:Trial Balance at 30th June, 1962 Dr, Cr.£ £Capital, 1st July, 1961 8,950
=+4. On 1st January, 1960, J. Milford purchases a machine costing £600 from Wheelers Ltd. He estimates that the machine will last nine years and its scrap value will then be £60. Prepare two
=+Goods, invoice price £80, were returned by G. Jones.Provide for Depreciation on the Motor Van, £20.Make the requisite entries in the accounts of B. Hoad and take out a Trial Balance.
=+30 Received £350 from D. Fale but was informed that it would not be possible to collect any more of the debt.31 Paid Salaries, £100.
=+3. On 1st July, 1962, B. Hoad paid £2,000 into his business as capital.The following transactions took place:July 3 Purchased Motor Van for £800.6 Purchased goods on credit from Vale & Co.,
=+31 Bought from Smith a supply of chemical waste for £50.You are asked to prepare from the above information Smith's account as it would appear in Turner's ledger, balancing it and bringing down
=+17 Bought from Smith 5 tons coranium at £22/10/- per ton.*Re-printed by courtesy of the Royal Society of Arts (R.S.A.).22 Sold to Smith 4 old Pressing machines as scrap, for £220 the lot.28 Paid
=+2. *Turner is in business as a manufacturer and the following are his transactions with Smith for the month of January, 1962:Jan. 1 Balance due to Smith £430.10 Bought from Smith 20 tons xyncalia
=+Enter these transactions in the accounts of B. Pratt and take out a Trial Balance.
=+1. Β. Pratt commenced business on 1st January, 1962, with a capital of£3,000 cash. The following transactions took place:Jan. 3 Paid £200 Rent for premises.6 Purchased good for cash, £160.7
Sam sells a team kit for £15. He knows his direct costs are £11 and his indirect costs are £2.43. Jaz offers to make the product for £12. Should he accept Jaz’s offer? What will happen to the
Sam plans to make 15,000 team kits, 6,000 tennis racquets, and 2,000 badminton racquets. Anna has told Sam that it takes the labour hours presented in Table 11.5 to manufacture and string the tennis
Wanda runs a home laundry service, Kwicky Washy Ltd, where customers’ laundry is collected, washed, ironed, and delivered back to them for a set charge per bag.The service is offered to customers
=+1. *On 31st December, 1961, a limited company owned machinery which appeared in its balance sheet drawn up as on that date as "at cost£97,300 less aggregate depreciation £51,770."During 1962 the
=+Show how the machinery should appear in the company's Balance Sheet as on 31st December, 1962, supposing that:
=+(a) the company wishes to disclose to its members information regarding additions to and disposals of machinery, and(b) no more than the minimum statutory information is to be given.
=+2. *The authorised share capital of the Excelsior Machine Co. Ltd. is £250,000 divided into 60,000 5 per cent preference shares of £1 each and 190,000 ordinary shares of £1 each: 40,000
=+Quoted investments, at cost 9,784 Sundry Debtors and prepayments 28,551 Creditors and accrued expenses 11,203 Stock on hand, at cost 46,259 Cash at bank 10,327 Cash in hand 1,052 Trade investments,
=+The balances shown for Freehold Land and Buildings, Machinery and Plant, and Furniture, Fixtures and Fittings are the net amounts after providing depreciation on the diminishing value up to 31st
=+No disposal of any of these assets has been made during the year.The directors are of the opinion that the market value of the Stock on hand and of the Trade Investments is in excess of cost. The
=+(a) appropriate £8,000 by way of future tax reserve;(b) increase the debenture redemption reserve to £5,000;(c) set aside £5,000 against a possible increase in the prices of raw materials;(d)
=+3. ÍBrisk Limited has an authorised share capital of £150,000 in shares of£1 each of which 100,000 shares have been issued on which 15/- per share has been called up.After making some of the
=+Creditors and accrued expenses — 10,100 Stock-in-trade, at or under cost 39,276 —Share Premium Account — 4,000 General Reserve — 10,000 Interest on 6 % Notes (net) 368 —White Bank
=+Marketable Investments, at cost 9,260 —Depreciation, 31st December, 1961:On Freehold Buildings — 9,140 On Plant and Machinery — 37,580 Interest on Trade Investments (net) — 1,225 Interest
=+The profit for the year 1962 is after charging £3,000 salary of the factory manager, who is also a director, and writing off £1,800 to reduce the stock-in-trade to market value. Owing to a rise
=+Provision is to be made for: depreciation on buildings at 5 % on cost and on plant and machinery at 8% on cost, directors' fees £1,000, auditors'remuneration, fixed by the directors, £630,
=+The liability for income tax 1962/3, Case 1, Schedule D, has been finally agreed at £18,526; on the profit of the year 1962, it is estimated to be£20,500. Profits tax for the year 1961 has been
=+The Directors decide to appropriate £5,000 to General Reserve and to recommend a dividend of 20%, less income tax, on the paid up share capital, the calls in arrear having since been received.You
=+4. On 30th September, 1960, the Arconia Co. Ltd. issued £30,000 4%debentures, interest bemg payable on 31st March and 30th September.Give the Debenture Interest Account including the entry for
=+5. Give the Journal entries for the "grossing up" of the following payments:(a) Interest paid net on £50,000 6% Debentures for the year 1961.(b) Net income from investments during 1961-£690. (Tax
=+6. For some years, the Adjo Trading Company Ltd. has made provision in its books for taxation based on all profits earned to the Balance Sheet date. On the 1st October, 1959, the following balances
=+The 1959-60 assessment was paid on the due date. The 1960-61 assessment was finally agreed at £8,100. Give the Income Tax Account for the year to 30th September, 1960 and the relevant entries in
=+7. HMegas Ltd. has an issued share capital of £50,000 ordinary shares and 10,000 7i per cent preference shares of £1 each. In addition, it has issued 10 per cent unsecured loan stock of £15,000
=+The preference share dividends are payable in equal instalments on 1st April and 1st October and a final dividend on the ordinary shares of 8 per cent was paid on 15th April, 1962, in respect of
=+By 31st December the income tax 1962/3 was agreed at £38,129. The profits tax for the accounting period to 31st December, 1962, was estimated at £2,917 and the income tax 1963/4 was estimated at
=+8. The Balance Sheets of R. Wüliams for 31st December, 1960 and 1961 are summarised below:Capital 1960£3,416 Current Liabilities 2,132 1961£3,834 Fixed Assets (cost)Less Depreciation 3,261
=+Prepare a Funds Statement and also a Statement of Working Capital Changes.
=+9. From the following accounts, prepare a Statement of Working Capital and a Source and Application of Funds Statement:Share Capital Share Premium General Reserve Profit & Loss Account Future
=+Fixed Assets at cost less depreciation Stock Debtors Cash at Bank The Profit & Loss Account for 1962 was:Taxation Transfer to Reserve Proposed Dividend Balance carried forward£5,710 6,000 4,800
=+At 31st December, 1962, the Reserve was used to issue Bonus Shares on the basis of one for every five held.The depreciation of Fixed Assets was £3,022 in 1962.1. *A, Β and C were three companies
=+Goodwill Fixed Assets Investment:1,000 Β Ltd. Ordinary Shares at cost Bank Other Current Assets A£Β£c£200,000 50,000 30,000 10,000 50,000 8,000 27,000 7,000 30,000 11,000 6,000£280,000
=+As regards B, A should make an offer to buy the whole of its shares from the existing members. As regards C, the company should be wound up and A should buy all its assets from the Liquidator.
=+These proposals were duly approved and put into effect. A offered to the ordinary shareholders of Β ten of its own shares taken as valued at 22/6d each and £4 in cash for each ten shares of B,
=+2. *The following is the Balance Sheet Manufacturing Co. Ltd.:at 31st March, 1962, of the Irish Nominal Capital Issued Capital—100,800 6% Pref. Shares of 10/- each 117,600 Ordy. Shares of 5/-
=+The company has, until recently, made trading losses. Debenture Interest is a year in arrears. Buildings and Plant are old, and fresh capital is required to set the business on a sound footing.A
=+(a) The Ordinary Shares to be consolidated into 23,520 Shares of 10/-each.(b) The rate of interest on the Preference Shares is to be reduced to 5 %and the 100,800 Preference Shares will then be
=+(d) A further 52,880 Ordinary Shares will be issued for cash to the directors and their friends.(e) Buildings and Plant are to be reduced to £35,000 and £25,000 respectively.
=+(f) The Share Capital is to be reduced by cancelling as unrepresented by assets 3/4d per share of the Preference Shares and 3/- per share of the Ordinary Shares. The Profit & Loss Account Balance
=+3. The Balance Sheets of A. Ltd. and its subsidiaries B. Ltd. and C. Ltd.at 31st December, 1961, are summarised as follows:A, Ltd. B. Ltd. C. Ltd.£ £ £Capital—£1 shares fully paid 100,000
=+4. HA, Β and C are three companies with issued share capitals of £200,000,£150,000 and £60,000 respectively. A holds 75% of the shares of Βand 80% of the shares in C at a cost of £120,000 and
=+Liabilities £ £Debentures 50,000 15,000 Loan from A 10,000 25,000 Sundry Creditors 30,000 20,000 For all companies, the Profit & Loss Account Balance is the only figure omitted in the above
=+5. Alpha Ltd. owns 75% of the shares of Beta Ltd. The Profit & Loss Accounts of the two companies for the year ended 31st October, 1961, were as follows:Alpha Ltd. Beta Ltd.Net Profit from Trading
=+Proposed Transfers to Reserve Recommended Final Dividend Balance carried forward£ £16,500 6,960 4,216 20,716 6,960 7,110 3,010 13,606 3,950 14,312 2,162 27,918 6,112 8,000£19,918 £6,112 10,000
=+The balance on Profit & Loss Account of Beta Ltd. when Alpha Ltd.acquired its shares was £960.Prepare a Group Profit & Loss Account.
=+6. Some years ago, Parent Ltd. acquired 60% of the shares of Child Ltd.On 31st December, 1962, the Balance Sheets of the two companies were as follows:Parent Child Parent Child£ £ £ £Share
=+£364,000 £123,000 £364,000 £123,000 For 1962, the Profit & Loss Accounts were:Parent Child Parent Child£ £ £ £Income Tax 12,000 9,000 Balances 1st January 33,000 10,000 Proposed Dividends
=+When the shares were acquired, the Revenue Reserve of Child Ltd. was£5,000 and the balance on Profit & Loss Account, £6,000. No dividends have been credited to the Investment Account in the books
=+Prepare a Group Balance Sheet at 31st December, 1962, and a Group Profit and Loss Account for the year.
=+1.* A business friend of yours who does not know much about accountancy has a holding of 1,000 ordinary shares in a pubhc company and asks you to explain certain points in connection with the
=+Revenue Reserves 650 Provisions 60 Current Liabilities 290£2,250 Fixed Assets Less Depreciation Current Assets 1,000s of £s 1,090 420 670 1,580£2,250 The questions your friend wants answered are
=+1. On the assumption that the ordinary shares of a well-managed company of this size, engaged in the industry in question, should have a market quotation such that the ratio of the balance of the
=+Assuming that the company's profit for the last year did in fact amount to the figure you calculate, what is the ratio of net profit to total capital employed in earning that profit as disclosed by
=+2.2.* The balance sheet of a limited company as on 31st December, 1958, was as follows:Issued Capital Reserves Debentures Current Liabilities£100,000 20,000 50,000 5,500£175,500 Fixed Assets
=+(a) What was the amount of the company's working capital at that date?
=+(b) During the year ended 31st December, 1959, the company earned a net profit of £19,700 after charging £4,800 for depreciation of the fixed assets, new fixed assets were brought at a cost of
=+(c) The following appropriations are proposed out of the profit for 1959:the transfer of £5,000 to General Reserve and the declaration of dividends amounting to £7,500. What effect will each of

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