Questions and Answers of ISE Business Accounting

A Study the following accounts of two companies and then answer the questions which follow. Both companies are stores selling textile goods.\section*{Required:}(a) Calculate the following ratios for
The directors of L Ltd appointed a new sales manager towards the end of 19X2. This manager devised a plan to increase sales and profit by means of a reduction in selling price and extended credit
The following information relates to the Brodick group of companies for the year to 30 April 19X7:\section*{Additional information:}(a) The issued share capital of the group was as follows:Brodick
You are presented with the following summarised information for Norbreck plc and its subsidiary, Bispham Ltd:\section*{Additional information:}(a) Norbreck plc acquired 80 per cent of the shares in
A The following figures for the year to 30 April 19 X6 have been extracted from the books and records of three companies which form a group:Profits are deemed to accrue evenly throughout the
A The following are the trial balances of ATH Ltd, GLE Ltd, and FRN Ltd as on 31 December 19 X8.ATH Ltd acquired the shares in FRN Ltd on 31 December 19X6, when the credit balance on the profit and
From the following balance sheets you are to draft a consolidated balance sheet for the group of $P, S 1$ and $S 2$. P Balance Sheet as at 31 December 19X7 Investment in S1: 9,000 shares bought
A From the following balance sheets prepare a consolidated balance sheet for the group of $\mathrm{P}$, S1 and S2. P Balance Sheet as at 31 December 19X9 Investment in S1: 16,000 shares bought
On 1 April 19X1 Machinery Limited bought 80 per cent of the ordinary share capital of Components Limited and on 1 April 19X3 Machinery Limited was itself taken over by Sales Limited who purchased 75
A Bryon Ltd has held $1,500,000$ shares in Carlyle Ltd for many years. At the date of acquisition, the reserves of Carlyle Ltd amounted to $£ 800,000$. On 31 March 19X6 Carlyle Ltd bought
From the following balance sheets and further information you are to draw up a consolidated balance sheet as at 31 December $19 \times 8$. P Balance Sheet as at 31 December 19X8 Fixed assets
A From the following balance sheets and supplementary information you are to draw up a consolidated balance sheet as at 31 December 19X5. P Consolidated Balance Sheet as at 31 December 19X5
$\quad$ B Balance Sheet as at 31 December $19 \times 7$ Investment in S: 60,000 shares bought on 31.12.19X6 121,000 Fixed assets 90,000 Less Depreciation for year 24,000 66,000 Current assets
25.4P Balance Sheet as at 31 December 19X5 Investment in S: 30,000 shares bought 31.12.19X4 53,400 Fixed assets 60,000 Less Depreciation for year 6,000 54,000 Current assets 10,600 118,000 Share
B Arkwright started in business on 1 January 19X5 with £10,000 in a bank account.Unfortunately he did not keep proper books of account.He is forced to submit a calculation of profit for the year
A J Kirkwood is a dealer who has not kept proper books of account. At 31 August 19X6 his state of affairs was as follows:During the year to 31 August 19X7 his drawings amounted to £7,560. Winnings
Following is a summary of Kelly’s bank account for the year ended 31 December 19X7:All of the business takings have been paid into the bank with the exception of £9,630. Out of this, Kelly has
J Evans has kept records of his business transactions in a single entry form, but he did not realise that he had to record cash drawings. His bank account for the year 19X8 is as follows:Records of
On1 May 19X8 Jenny Barnes, who is a retailer, had the following balances in her books:Premises £70,000; Equipment £8,200; Vehicles £5,100; Stock £9,500; Trade debtors £150.Jenny does not keep
From the following draw up a bank reconciliation statement from details as on 31 December 19X6: Cash at bank as per bank column of the cash book Unpresented cheques Cheques received and paid into the
Draw up a bank reconciliation statement, after writing the cash book up to date, ascertaining the balance on the bank statement, from the following as on 31 March 19X9: Cash at bank as per bank
The following are extracts from the cash book and the bank statement of J Roche.You are required to:(a) Write the cash book up to date, and state the new balance as on 31 December 19X9, and(b) Draw
The bank columns in the cash book for June 19X7 and the bank statement for that month for C Grant are as follows:You are required to:(a) Write the cash book up to date to take the above into account,
The bank statement for G Greene for the month of March 19X6 is:You are to:(a) Write the cash book up to date, and (b) Draw up a bank reconciliation statement as on 31 March 19X6. 19X6 Mar 1 Dr Cr
Following is the cash book (bank columns) of E Flynn for December 19X7:You are required to:(a) Write the cash book up to date to take the necessary items into account, and (6) Draw up a bank
You are required to prepare a sales ledger control account from the following for the month of May: 19X6 May 1 Sales ledger balances 4,936 Totals for May: Sales journal 49,916 Returns inwards
You are required to prepare a purchases ledger control account from the following for the month of June. The balance of the account is to be taken as the amount of creditors as on 30 June. 19X6 June
Prepare a sales ledger control account from the following: 19X5 May 1 Debit balances Totals for May: Sales journal Cash and cheques received from debtors Discounts allowed Debit balances in the sales
Prepare a sales ledger control account from the following information for July 19X9, carrying down the balance at 31 July: 19X9 July 1 July 31 Sales ledger balances Sales journal 9,700 99,280 Bad
The trial balance of Queen and Square Ltd revealed a difference in the books. In order that the error(s) could be located it was decided to prepare purchases and sales ledger control accounts.From
The following extracts have been taken from the subsidiary books of the business owned by D Jenkinson for the month of April 19X0.It should be noted that the balances in the accounts of D
R Stubbs is a trader who sells all of his goods at 25% above cost. His books give the following information at 31 December 19X9:Show your answer in the form of a trading account. Stock 1 January 19X9
C White gives you the following information as at 30 June 19X7:(a) Calculate the closing stock as at 30 June 19X7.(6) State the total amount of profit and loss expenditure White must not exceed if he
The following figures relate to the retail business of J Clarke for the month of May 19X9.Goods which are on sale fall into two categories, A and B.Calculate for each category:Cost of goods sold
The following trading account for the year ended 31 December 19X8 is given to you by H Rayner:Rayner says that normally he adds 25% to the cost of goods to fix the sales price. However, this year saw
In a new business during the year ended 31 December 19X8 the following debts are found to be bad, and are written off on the dates shown:On 31 December 19X8 the schedule of remaining debtors,
A business had always made a provision for doubtful debts at the rate of 5% of debtors. On 1 January 19X7 the provision for this, brought forward from the previous year, was £260.During the year to
A business started trading on 1 January 19X6. During the two years ended 31 December 19X6 and 19X7 the following debts were written off to the Bad Debts Account on the dates stated:On 31 December
A business, which started trading on 1 January 19X5, adjusted its bad debt provisions at the end of each year on a percentage basis, but each year the percentage rate is adjusted in accordance with
A(a) Businesses often create a provision for bad debts.(i) Of which concept (or convention) is this an example? Explain your answer.(ii) What is the purpose of creating a provision for bad
The balance sheet as at 31 May 19X7 of Forest Traders Limited included a provision for doubtful debts of £2,300. The company’s accounts for the year ended 31 May 19X8 are now being prepared. The
A firm makes a provision for doubtful debts of 5% of debtors, also a provision of 24%for discount on debtors.On 1 January 19X7 the balances brought forward on the relevant accounts were provision for
E Chivers commenced business on 1 January 19X7 and makes his accounts to 31 December every year. For the year ended 31 December 19X7, bad debts written off amounted to £1,200. It was also found
D Sankey, a manufacturer, purchases a lathe for the sum of £4,000. It has an estimated life of five years and a scrap value of £500.Sankey is not certain whether he should use the straight line or
A machine costs £12,500. It will be kept for four years, and then sold for an estimated figure of £5,120. Show the calculations of the figures for depreciation (to nearest £) for each of the four
A motor vehicle costs £6,400. It will be kept for five years, and then sold for scrap £200.Calculate the depreciation for each year using (a) the reducing balance method, using a depreciation rate
A machine costs £5,120. It will be kept for five years, and then sold at an estimated figure of £1,215. Show the calculations of the figures for depreciation for each year using (a) the straight
A bulldozer costs £12,150. It will be kept for five years. At the end of that time agreement has already been made that it will be sold for £1,600. Show your calculations of the amount of
A motor tractor is bought for £6,000. It will be used for three years, and then sold back to the supplier for £3,072. Show the depreciation calculations for each year using (a) the reducing
A company, which makes up its accounts annually to 31 December, provides for depreciation of its machinery at the rate of 10 per cent per annum on the diminishing balance system.On 31 December
A company starts in business on 1 January 19X1. You are to write up the motor vans account and the provision for depreciation account for the year ended 31 December 19X1 from the information given
A company starts in business on 1 January 19X3, the financial year end being 31 December.You are to show:(a) The machinery account.(b) The provision for depreciation account.(c) The balance sheet
A company maintains its fixed assets at cost. Depreciation provision accounts, one for each type of asset, are in use. Machinery is to be depreciated at the rate of 12% per cent per annum, and
A company depreciates its plant at the rate of 20 per cent per annum, straight line method, for each month of ownership. From the following details draw up the plant account and the provision for
A company maintains its fixed assets at cost. Depreciation provision accounts for each asset are kept.The following additions were made during the financial year ended 31 December 19X9:Machinery
What is the meaning of depreciation?Give three reasons why depreciation may occur.Name two methods of depreciation.In what way do you think the concept of consistency applies to depreciation?‘Since
(a) Identify the four factors which cause fixed assets to depreciate.(6) Which one of these factors is the most important for each of the following assets?(i) a gold mine,(ii) a motor lorry,(ii1) a
A Mavron ple owned the following motor vehicles as at 1 April 19X6:Mavyron ple’s policy is to provide at the end of each financial year depreciation using the straight line method applied on a
A firm buys a fixed asset for £10,000. The firm estimates that the asset will be used for 5 years. After exactly 24 years, however, the asset is suddenly sold for £5,000. The firm always provides a
Contractors Ltd was formed on 1 January 19X6 and the following purchases and sales of machinery were made during the first 3 years of operations.Each machine was estimated to last 10 years and to
The financial year of H Saunders ended on 31 December 19X6. Show the ledger accounts for the following items including the balance transferred to the necessary part of the final accounts, also the
J Owen’s year ended on 30 June 19X8. Write up the ledger accounts, showing the transfers to the final accounts and the balances carried down to the next year for the following: (a) Stationery: Paid
On 1 January 19X8 the following balances, among others, stood in the books of M Baldock, a sole trader:(a) Rates, £104 (Dr);(b) Packing materials, £629 (Dr).During the year ended 31 December 19X8
On 1 January 19X6 the following balances, among others, stood in the books of T Thomas:(a) Lighting and heating, (Dr) £277.(b) Insurance, (Dr) £307.During the year ended 31 December 19X6 the
The two accounts below were taken from the books of a retailer at the end of his financial year, 31 December 19X7.Required:Answers to the following questions. Insurance Account Dr 19X7 19X7 Jan 1
The following trial balance was extracted from the books of A Scholes at the close of business on 28 February 19X7.Notes:(a) Stock 28 February 19X7 £3,510.(b) Wages and salaries accrued at 28
T Morgan, a sole trader, extracted the following trial balance from his books at the close of business on 31 March 19X9:Notes:a) Stock 31 March 19X9 £4,290.b) Wages and salaries accrued at 31 March
The following is a summary of the petty cash transactions of Jockfield Ltd for May 19X8.You are required to:(a) Rule up a suitable petty cash book with analysis columns for expenditure on cleaning,
(a) Why do some businesses keep a petty cash book as well as a cash book?(b) Kathryn Rochford keeps her petty cash book on the imprest system, the imprest being £25.For the month of April 19X9 her
Rule up a petty cash book with analysis columns for office expensés, motor expenses, cleaning expenses, and casual labour. The cash float is £350 and the amount spent is reimbursed on 30 June. 19X7
On 1 May 19X7, D Wilson Ltd, 1 Hawk Green Road, Stockport, sold the following goods on credit to G Christie & Son, The Golf Shop, Hole-in-One Lane, Marple, Cheshire:Order No A/496 3 sets ‘Boy
On 1 March 19X6, C Black, Curzon Road, Stockport, sold the following goods on credit to J Booth, 89 Andrew Lane, Stockport SK1 1AA, Order No 1697:(a) Prepare the sales invoice to be sent to J
The following sales have been made by S Thompson Ltd during the month of June 19X9.All the figures are shown net after deducting trade discount, but before adding VAT at the rate of 10 per cent.You
The following sales and purchases were made by R Colman Ltd during the month of May 19X6.Enter up the Sales and Purchases Books, Sales and Purchases Ledgers and the General Ledger for the month of
The credit sales and purchases for the month of December 19X7 in respect of C Dennis &Son Ltd were:Write up all of the relevant books and ledger accounts for the month. Net, after trade discount
Louise Baldwin commenced business as a wholesaler on 1 March 19X9.All transactions are subject to Value Added Tax at 10%.(a) Rule up a sales day book and head the main columns as follows.Enter the
Mudgee Ltd issued the following invoices to customers in respect of credit sales made during the last week of May 19X7. The amounts stated are all net of Value Added Tax. All sales made by Mudgee Ltd
C Taylor, a wholesale dealer in electrical goods, has three departments: (a) Hi Fi, (b) TV, and (c) Sundries. The following is a summary of Taylor’s sales invoices during the period 1 to 7 February
Enter up a purchases analysis book with columns for the various expenses for M Barber for the month from the following information on credit items. 19X6 July 1 Bought goods from L Ogden 220 55 3
H Smith is employed at a rate of £5 per hour. During the week to 18 May 19X9 he worked his basic week of 40 hours. According to the requisite tables the income tax due on his wages was£27, and
B Charles has a basic working week of 40 hours, paid at the rate of £4 per hour. For hours worked in excess of this he is paid 1% times basic rate. In the week to 12 March 19X6 he worked 45 hours.
B Croft has a job as a car salesman. He is paid a basic salary of £200 per month, with a commission extra of 2% on the value of his car sales. During the month of April 19X6 he sells£30,000 worth
T Penketh is an accountant with a salary of £2,000 per month plus bonus, which for May 19X6 was £400. He pays superannuation contributions of 5% of gross pay, and these are allowed as reliefs
A K Blake is employed at the rate of £6 per hour. During the week to 25 May 19X6 he works 35 hours. According to the tax and national insurance tables he should pay income tax £28 and national
A R Kennedy is a security van driver. He has a wage of £200 per week, plus danger money of £2 per hour extra spent in transporting gold bullion. During the week ended 15 June 19X6 he spends 20
A Mrs T Hulley is paid monthly. For part of April 19X6 she earns £860 and then goes on maternity leave, her maternity pay for April being £90. She has pay free of tax £320, whilst on the next
A P Urmston is paid monthly. For June 19X6 he earns £1,500 and also receives statutory sick pay of £150. He pays £90 superannuation which is allowed as a relief against income tax and he has
The data which follows was extracted from the books of account of H Kirk, an engineer, on 31 March 19X6, his financial year end.You are required to allocate each or part of the items above to either
At the beginning of the financial year on 1 April 19X5, a company had a balance on plant account of £372,000 and on provision for depreciation of plant account of £205,400.The company’s policy is
The following balance sheets were drawn up as at 31 December $19 \times 7$. The person drafting the balance sheet of P Ltd was not too sure of an item and has shown it as a suspense amount. P
A The following balance sheets of P Ltd and S Ltd were drawn up as at 31 December 19X4. Draw up the consolidated balance sheet as at that date. P Balance Sheet as at 31 December 19X4 Investment in
Draw up a consolidated balance sheet as at 31 December $19 \times 9$ from the following information. Investment in subsidiary: 30,000 shares bought 31.12.19X8 Fixed assets Current assets Share
A The balance sheets of P Ltd and S$ Ltd are as follows: Investment in subsidiary: 120,000 shares bought 31.12.19X3 Fixed assets Current assets Share capital Profit and loss account: As at 31.12.19X3
The following are the summarised balance sheets of P Ltd and S Ltd at 31 December 19X6.There were no additions or disposals of fixed assets by the group during the year.(b) P Limited acquired its
X plc acquired 80 per cent of the ordinary share capital of Y plc on 1 January $19 \mathrm{X} 6$ for $£ 300,000$.The lists of balances of the two companies at 31 December 19X6 were as
A P plc acquired 80 per cent of the ordinary share capital of $S$ plc for $£ 150,000$ and 50 per cent of the issued 10 per cent cumulative preference shares for $£ 10,000$, both purchases
You are to enter up the sales journal from the following details. Post the items to the relevant accounts in the sales ledger and then show the transfer to the sales account in the general ledger.
Enter up the sales journal from the following, then post the items to the relevant accounts in the sales ledger. Then show the transfer to the sales account in the general ledger. 19X8 Mar 1 Credit
J Fisher, White House, Bolton, is selling the following items, the retail prices as shown:plastic tubing at £1 per metre, polythene sheeting at £2 per length, vinyl padding at £5 per box, foam
B Mann has the following purchases for the month of May 19X8:Required:(a) Enter up the purchases journal for the month.(b) Post the transactions to the suppliers’ accounts.(c) Transfer the total to

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