The two accounts below were taken from the books of a retailer at the end of his financial year, 31 December 19X7.

Insurance Account Dr Cr 19X7 £ 19X7 £

Jan 1 Balance 80 Dec 31 Profit and loss 530 Jan-Dec Bank 540 Dec 31 Balance c/d 90 620 620 Dec 31 Balance b/d 90 Rent Receivable Account Dr Cr 19X7 £ 19X7 £

Dec 31 Profit and loss 885 Jan 1 . Balance 60 Dec 31 Balance c/d 75 Jan-Dec Bank 900 960 960 Dec 31 Balance b/d 75 Required:

Answers to the following questions.

1 What type of account is the insurance account?

2 What type of account is the rent receivable account?

3 In which subdivision of the ledger will these accounts be found?

4 Under which heading will the closing balance of the insurance account be found on the balance sheet?

5 Under which heading will the closing balance of the rent receivable account be found on the balance sheet?

6 In which subsidiary book (book of prime entry) will the entries transferring amounts to the profit and loss account be found?

7 Which document will be the source of information for the entry in the insurance account

‘bank £540’?

8 Which document will be the source of information for the entry in the rent receivable account ‘bank £900’?

9 What amount for insurance will appear in the trial balance dated 31 December 19X7 prepared prior to the preparation of final accounts?

10 What amount for rent receivable will appear in the trial balance dated 31 December 19X7 prepared prior to the preparation of final accounts?

11 If the adjustment in the insurance account for £90 on 31 December had been overlooked, would the net profit have been under- or overstated and by how much?

12 If the adjustment in the rent receivable account for £75 on 31 December had been overlooked, would the net profit have been under- or overstated and by how much?

(Southern Examining Group: GCSE)