Question 6 -- / 10 An organisation has been informed that one of its customers has gone into liquidation while owing 4,000. The organisation does not expect to receive the 4,000. What double entry is required to account for this? DEBIT IRRECOVERABLE DEBT EXPENSE 4,000 CREDIT ALLOWANCE FOR RECEIVABLES 4,000 DEBIT IRRECOVERABLE DEBT EXPENSE 4,000 CREDIT CASH 4,000 2 DEBIT SALES 4,000 CREDIT 3 RECEIVABLES 4,000 DEBIT IRRECOVERABLE DEBT EXPENSE 4,000 CREDIT RECEIVABLES 4,000 4 Question 7 -- / 10 A business pays its gas bill, monthly, in arrears. At the year end of 31/12/19 the business has not received the invoice for December 2019. The accountant estimates that the December invoice will be 125. What entry is needed to record this? DEBIT HEAT & LIGHT 125 CREDIT ACCRUALS 125 NONE UNTIL THE 2 INVOICE IS PAID PREPAYMENTS DEBIT 125 CREDIT HEAT & 125 3 LIGHT LIGHT DEBIT HEAT & 125 CREDIT PAYABLES 4 125 Question 8 -- / 10 A business has a financial year end of 31/12/19. On 1st December 2019 the business paid its rent, in advance, for the next three months and the accountant entered the following into the ledger Rent Debit 1,200 Cash Credit 1,200 What adjusting entry is required at year end? NONE PREPAYMENTS DEBIT 800 CREDIT RENT 800 DEBIT RENT 800 CREDIT 800 PREPAYMENTS DEBIT RENT 400 CREDIT 400 PREPAYMENTS Question 9 -- / 10 A business is preparing its financial statements for the year ended 31st March 2020. The business pays its electricity bill quarterly in arrears. Details of the payments made throughout the year are shown below Date Paid quarter ended For 10/06/19 31/05/19 300 10/09/19 31/08/19 250 10/12/19 30/11/19 320 10/03/20 29/02/20 400 The business estimate that the electricity for the next quarter will be 360 and an extract from the Statement of Financial Position as at 31/03/19 is shown below. 29/02/20 400 The business estimate that the electricity for the next quarter will be 360 and an extract from the Statement of Financial Position as at 31/03/19 is shown below. Current Assets Prepayments 400 Current Liabilities Electricity Accrual 90 The Electricity expense included in the Statement of Profit or Loss for the year ended 31/03/20 would be: 1,270 1 N 1,290 1,300 3 1,400 4 4