EXERCISES Accounting

EXERCISES Exercise 1.1 INFORMATION FOR DECISIONS

LO 2

Ian Boardman has een a!!oin"ed as "he #oans o$cer %or "he #oca# comm&ni"' an(. One da') a !erson *a#(s in"o "he an( #oo(in+ %or a #oan "o &' a ne* car. Lis" six i"ems ao&" "ha" indi,id&a# "ha" Ian sho&#d -nd o&" e%ore decidin+ *he"her "o a!!ro,e "he #oan. C#assi%' "hese i"ems as economic/ or o"her 0s!eci%'. hich "'!e o% in%orma"ion is more im!or"an" %or "he !&r!oses o% +ood decision ma(in+3 Exercise 1.2 INFORMATION FOR DECISIONS

LO 4

Tran 5&/s %ami#' #i,es in Bei6in+) China. She has een acce!"ed in"o a &ni,ersi"' co&rse in S'dne') and has "o -nd accommoda"ion in "he ci"' *i"hin *a#(in+ dis"ance o% "he &ni,ersi"') or a" #eas" e c#ose "o !&#ic "rans!or". She searches "he In"erne" "o -nd s&i"a#e accommoda"ion and comes across "he %o##o*in+ a!ar"men"7

Re8&ired

Disc&ss ho* "his in%orma"ion ma' he#! Tran ma(e a decision. Lis" addi"iona# in%orma"ion Tran *o&#d need e%ore decidin+ *he"her "o ren" "his a!ar"men".

Exercise 1.9 INFORMATION FOR DECISIONS

LO 4

Renee Car"er has decided "o s"&d' medicine a" a &ni,ersi"' in Me#o&rne. She has arran+ed "o s"a' *i"h a %ami#' on "he nor"h side o% "he ci"'. In order "o +e" "o and %rom "he &ni,ersi"') she decides 2: she *i## need "o &' a car) cos"in+ a maxim&m o% ;1< ><<<. She searches "he In"erne" and comes across "he %o##o*in+ a" Car Ci"'7

Re8&ired

E,a#&a"e ho* &se%&# "his in%orma"ion is in arri,in+ a" a decision.

Lis" ex"ra in%orma"ion "ha" Renee sho&#d ascer"ain e%ore decidin+ *he"her "o &' "his car. Ass&me "ha" Renee does !&rchase "he car) and s&se8&en"#' -nds "ha" "he car has mechanica# !ro#ems *hich *i## re8&ire ;2<<< "o -x. Disc&ss *ha" she sho&#d do) +i,en "ha" she does no" ha,e eno&+h mone' "o !a' %or "he re!airs. ?'!o"hesise as "o ho* e"hica# "he comm&ni"' re+ards &sed car sa#es!eo!#e.

Exercise 1.: C?OOSIN@ A NIERSIT MAOR

LO 4

o& ha,e 6&s" enro##ed in a co&rse in &siness a" "he es"ern ni,ersi"'. There are se,era# s!ecia#"' areas) one o% *hich 'o& m&s" choose  acco&n"in+) &siness #a*) economics) -nance) mana+emen") mar(e"in+) in%orma"ion s's"ems. The choice 'o& ma(e is im!or"an" as i" *i## aec" 'o&r %&"&reG hence) 'o& m&s" +i,e care%&# "ho&+h" "o "his decision.

Re8&ired

Iden"i%' "*o !ossi#e s!ecia#"' areas in &siness "ha" in"eres" 'o&. Se" do*n 'o&r +oa#s and !ersona# !re%erences in se#ec"in+ a &siness ma6or. Iden"i%' "he %ac"ors *hich *i## he#! 'o& ma(e "his decision) and s!eci%' "he %ac"ors *hich are mos" im!or"an" "o 'o&. Es"a#ish a se" o% cri"eria *hich m&s" e me" e%ore ma(in+ a decision ao&" 'o&r a!!ro!ria"e s!ecia#"' area. De"ermine "he so&rces o% in%orma"ion 'o& *i## need "o ma(e s&ch a decision.

Exercise 1.H MAIN@ AN ECONOMIC DECISION

LO 2

o& ha,e decided "ha" no* is "he "ime "o &' a ne* #a!"o!. Lis" "he %ac"ors "ha" are im!or"an" in choosin+ a ne* #a!"o! and +a"her re#e,an" in%orma"ion %rom ,ario&s so&rces ao&" dieren" mode#s on "he mar(e". @i,en "ha" 'o& ha,e a maxim&m o% ;14<< "o s!end) iden"i%' *hich mode# 'o& *o&#d &' and disc&ss "he reasons %or 'o&r choice. Jresen" 'o&r ans*er so as "o i##&s"ra"e "he s"e!s re8&ired in "he decisionKma(in+ !rocess as disc&ssed in "his cha!"er. Exercise 1.4 FACTORS IN MAIN@ A BSINESS DECISION LO 2) 9

Cons&#" "he &siness sec"ion o% a #oca# ne*s!a!er) or The A&s"ra#ian Financia# Re,ie*) or a &siness 6o&rna#) s&ch as B&siness Re,ie* ee(#' 0BR ) and -nd an a!!ro!ria"e ar"ic#e de"ai#in+ an im!or"an" &siness decision "ha" has een made in "he #as" mon"h. Based on "he ar"ic#e) de"ermine "he %ac"ors "ha" *ere "a(en in"o acco&n" in arri,in+ a" "he decision. Disc&ss "he eec"s "ha" s&ch a decision *i## ha,e on ,ario&s in"eres"ed !ar"ies or s"a(eho#ders. Exercise 1. FACTORS IN MAIN@ A @OERNMENT DECISION

LO 2) 9

Cons&#" a #oca# ne*s!a!er) The A&s"ra#ian Financia# Re,ie*) or a &siness 6o&rna#) s&ch as BR) and -nd an a!!ro!ria"e ar"ic#e de"ai#in+ an im!or"an" %edera# +o,ernmen" decision in "he #as" mon"h. Based on "he ar"ic#e) de"ermine "he %ac"ors "ha" *ere "a(en in"o acco&n" in arri,in+ a" "he decision. Disc&ss "he eec"s "ha" s&ch a decision *i## ha,e on ,ario&s in"eres"ed !ar"ies or s"a(eho#ders. Exercise 1. ECONOMIC DECISIONS MADE B MANA@EMENT

LO 9

Acco&n"in+ !ro,ides m&ch in%orma"ion "o he#! mana+ers ma(e economic decisions in "heir ,ario&s *or(!#aces.

2H Re8&ired

Lis" exam!#es o% economic decisions "ha" "he %o##o*in+ !eo!#e *o&#d need "o ma(e *i"h "he &se o% acco&n"in+ in%orma"ion7

a mar(e"in+ mana+er a !rod&c"ion mana+er "he Chie% Exec&"i,e O$cer o% a na"iona# %oo"a## #ea+&e "he mana+er o% a secondKhand c#o"hin+ chari"'.

Exercise 1. C?OOSIN@ AN ACCONTIN@ CAREER LO 1<

A%"er readin+ "he cha!"er) disc&ss "he areas in *hich acco&n"an"s *or() and indica"e *hich area0s 'o& -nd mos" in"eres"in+ andor %ami#iar. I% 'o& in"end "o !&rs&e a career in an' one o% "hese areas o% acco&n"in+) disc&ss "he "'!es o% decisions and ad,ice "ha" 'o& e#ie,e 'o& *i## e in,o#,ed in ma(in+ and +i,in+.

Exercise 1.1<

SETTIN@ J A BSINESS LO 2) 4

L&i+i and @ina Cice##o ha,e decided "o #ease some ne*#' &i#" !remises %or "he !&r!ose o% o!enin+ a sea%ood o&"#e". The' in"end "o !ro,ide a *ide ran+e o% dieren" !rod&c"s) inc#&din+ a ,arie"' o% sea%ood %or sa#e and "a(eKa*a' -sh and chi!s.

Re8&ired

Disc&ss "he "'!es o% economic decisions "he' *i## e re8&ired "o ma(e) and "he in%orma"ion "he' *i## need "o ma(e "hose decisions. Dis"in+&ishin+ nonKeconomic and economic in%orma"ion) iden"i%' nonKeconomic decisions "ha" "he' *i## a#so e re8&ired "o ma(e. Disc&ss *h' L&i+i and @ina ma' re8&ire "he ser,ices o% an acco&n"an". Exercise 1.11

BECOMIN@ AN ACCONTANT

LO 

Read "he ar"ic#e %rom InTheB#ac( e#o* and ans*er "he 8&es"ions e#o*.

Re8&ired

Com!are "he en"r' re8&iremen"s "o ecome a %&## memer o% CJA A&s"ra#ia) Ins"i"&"e o% Char"ered Acco&n"an"s in A&s"ra#ia and "he Ins"i"&"e o% J&#ic Acco&n"an"s. Iden"i%' "he commona#i"ies and dierences. Disc&ss *h' "he !ro%essiona# acco&n"in+ odies *o&#d ha,e dieren" en"r' re8&iremen"s. Iden"i%' *ha" 8&a#i-ca"ions are re8&ired "o7 e a com!an' a&di"or e a !&#ic acco&n"an" e a -nancia# ad,iser !re!are "ax re"&rns.

EXERCISES Exercise 9.1 IDENTIFIN@ ACCONT CATE@ORIES

LO 2

The %o##o*in+ is a #is" o% #ed+er acco&n" "i"#es ex"rac"ed %rom "he +enera# #ed+er o% . enda##) mar(e"in+ cons&#"an"7 a+es and Sa#aries In"eres" Cash a" Ban( . enda##) Ca!i"a# Acco&n"s Ja'a#e Land 0nder Mor"+a+e F&rni"&re Acco&n"s Recei,a#e Mo"or ehic#es Ren" Mor"+a+e Ja'a#e Cons&#"anc' Fees In,es"men"s Com!&"ers In,en"or') Mar(e"in+ Ma"eria#s

Re8&ired

Iden"i%' each o% "he ao,e #ed+er acco&n"s as ei"her an asse") a #iai#i"') an income or an ex!ense acco&n". I% 'o& "hin( "ha" an' o% "he acco&n"s mi+h" -" in"o more "han one o% "hese ca"e+ories) ex!#ain *h'.

For each o% "he acco&n"s #is"ed ao,e) indica"e 01 *he"her increases are recorded as dei"s or credi"s and 02 *he"her "he norma# a#ance is a dei" or a credi".

Exercise 9.2 TRANSACTION ANALSIS LO 9

For each o% "he %o##o*in+ "ransac"ions) indica"e *he"her "he acco&n"s aec"ed are an asse") a #iai#i"') an e8&i"') an income or an ex!ense. A#so indica"e *he"her "he acco&n"s are ein+ increased or decreased and *he"her "he increase or decrease is a dei" or credi". I+nore @ST.

Exam!#e7 Jaid %or ad,er"isin+.

Increase an ex!ense 0dei") decrease an asse" 0credi"

O*ner +a,e "heir !ersona# com!&"er "o "he &siness. Em!#o'ed a secre"ar'. Cash !a'men" made %or ins&rance 4 mon"hs in ad,ance. J&rchased s&!!#ies on credi". Jaid a credi"or &sin+ an e#ec"ronic "rans%er. In,oiced a c&s"omer %or ser,ices !er%ormed. O*ner !aid %or "heir !ersona# +roceries &sin+ "he &siness credi" card. Jaid some cash and "oo( o&" a #oan "o !&rchase o$ce %&rni"&re. Recei,ed cash %rom a c&s"omer "ha" o*ed "he &siness mone'. Jaid %or an ad,er"isemen" aired on "e#e,ision.

Exercise 9.9 EFFECTS OF TRANSACTIONS ON FINANCIAL JOSITION

LO 9

The %o##o*in+ "ransac"ions *ere &nder"a(en ' Massen&r+ Jersonne# Ser,ices d&rin+ "he mon"h o% Fer&ar' 2<14. I+nore @ST.

In,oiced a c#ien" %or !ro,idin+ ad,ice on c&rren" em!#o'men" #e+is#a"ion) ;2:<<.

Jaid sa#aries "o s"a) ;94<<. 119 Jaid an ann&a# s&scri!"ion %or access "o an on#ine da"a ase o% em!#o'men" #e+is#a"ion &n"i# "he end o% an&ar' 2<1. Recei,ed ;4<<< %rom a c#ien" %or em!#o'in+ s"a %or "hem in an&ar'. M. Massen&r+ in,es"ed a %&r"her ;2<> <<< addi"iona# ca!i"a# in"o "he &siness "o ens&re i" has s&$cien" cash "o con"in&e o!era"ions. J&rchased ne* o$ce %&rni"&re and e8&i!men" on credi" %or ;12> H<<. In,oiced a c#ien" %or ;<<< %or !ro,idin+ ad,ice re+ardin+ an ind&s"ria# dis!&"e "he' had *i"h "heir em!#o'ees. Jaid ;2< e#ec"rici"' acco&n" "he da' "he acco&n" *as recei,ed. Jaid "he -rm/s #a*'ers %or an acco&n" recei,ed %rom "hem in Decemer %or recei,in+ #e+a# ad,ice) ;1<<. 1<. Jaid %or "he e8&i!men" !&rchased in 04. M. Massen&r+ *i"hdre* ;12<< %rom "he &siness an( acco&n" %or !ersona# &se.

Re8&ired

Indica"e *i"h "he a!!ro!ria"e #e""er *he"her each o% "he ao,e "ransac"ions res&#"ed in7 0a an increase in asse"s and a decrease in asse"s 0 an increase in asse"s and an increase in #iai#i"ies 0c an increase in asse"s and an increase in e8&i"' 0d a decrease in asse"s and a decrease in #iai#i"ies 0e a decrease in asse"s and a decrease in e8&i"' 0% an increase in #iai#i"ies and a decrease in e8&i"' 0+ an increase in e8&i"' and a decrease in #iai#i"ies. Exercise 9.: NORMAL BALANCE AND CLASSIFICATION IN FINANCIAL STATEMENTS LO 2

The acco&n"s e#o* a!!ear in "he char" o% acco&n"s o% Bri+h"s!ar( E#ec"rica# Ser,ices. Sho* *he"her "he norma# a#ance is a dei" or a credi". Indica"e *he"her

"he acco&n" *o&#d a!!ear in "he a#ance shee" or in "he income s"a"emen") and &nder *ha" c#assi-ca"ion) e.+. #iai#i"') asse") e8&i"') income or ex!ense.

Ser,ice ehic#es Re!airs Ex!ense Jre!aid Ins&rance Acco&n"s Ja'a#e nearned Ser,ice Fees Te#e!hone Ex!ense Acco&n"s Recei,a#e E#ec"rica# S&!!#ies B.A. Bri+h"s!ar() Dra*in+s @ST Ja'a#e @ST Recei,a#e Mor"+a+e Ja'a#e In"eres" Re,en& B. A. Bri+h"s!ar() Ca!i"a# E#ec"rica# Ser,ices Re,en&e

Exercise 9.H RECORDIN@ TRANSACTIONS IN @ENERALORNAL AND ANALSIS LO 9) :

The char" o% acco&n"s o% Je##ham Jos"er Jrin"ers con"ained "he %o##o*in+ acco&n"s7 Cash a" Ban(G Acco&n"s Recei,a#eG E8&i!men"G Acco&n"s Ja'a#eG . Je##ham) Dra*in+sG Jrin"in+ FeesG Sa#aries Ex!ense and Ad,er"isin+ Ex!ense. I+nore @ST.

The %o##o*in+ "ransac"ions occ&rred d&rin+ "he mon"h o% &ne7 &ne

1

. Je##ham *i"hdre* ;H< cash %or !ersona# &se.

H J&rchased ne* e8&i!men" %or ;H<<<. Jaid ;H<< de!osi" *i"h "he a#ance "o e !aid *i"hin 4< da's. 

Jaid %or ad,er"isin+ in "he #oca# ne*s!a!er) ;H1<.

1: Jaid ;92< "o credi"ors %or o$ce s&!!#ies "ha" had een !&rchased on credi" in "he !re,io&s mon"h. 1 22

Jaid sa#aries o% ;<. Recei,ed ;H<< %rom c&s"omers "o red&ce "heir acco&n" a#ances.

9< ;12> <<< in !rin"in+ %ees *ere d&e d&rin+ "he mon"h. O% "his) 2

Re8&ired

Jre!are "he +enera# 6o&rna# en"ries "o record "he ao,e "ransac"ions. For each "ransac"ion ao,e) !re!are an ana#'sis simi#ar "o "ha" sho*n in "he i##&s"ra"i,e exam!#e in "he cha!"er 0!. 1.

11: Exercise 9.4 ACCONT TITLES AND TJE

LO 2

Each o% "he %o##o*in+ i"ems descries as!ec"s o% "he &siness o% Lenn' Linnehan) #a*'er7

cash *hich Lenn' Linnehan has *i"hdra*n %rom "he &siness %or !ersona# &se !ho"oco!iers) doc&men" indin+ machine and com!&"ers amo&n"s o*in+ ' "he &siness "o s&!!#iers o% an on#ine #e+a# da"aase amo&n"s o*in+ ' c&s"omers %or cases com!#e"ed "a#es) *a## she#,in+ and oo( caine"s %or s"a o$ces @ST char+ed "o c#ien"s %or #e+a# ser,ices mone' orro*ed %rom a an( #ease ren"a# on !remises *hich sho&#d ha,e een !aid 1 mon"h a+o s&!!#ies he#d %or %&"&re doc&men" !re!ara"ion ins&rance !remi&m !aid in ad,ance "o co,er "he nex" 4 mon"hs.

Re8&ired

S&++es" an acco&n" "i"#e %or each i"em descried ao,e. C#assi%' "he i"em as an asse") #iai#i"') e8&i"') income or ex!ense.

Exercise 9. C?ART OF ACCONTS) JOSTIN@ TO T ACCONTS) AND TRIAL BALANCE LO 2) :) H The +enera# 6o&rna# o% Lenore @r&n*e#d) Jro!er"' Ad,iser) con"ained "he en"ries e#o* %or "he mon"h o% &#' 2<14. @ST is i+nored.

Re8&ired

Jos" "he "ransac"ions "o T acco&n"s. The char" o% acco&n"s %or "he &siness inc#&ded "he %o##o*in+ acco&n"s7 Cash a" Ban( Ser,ice Fees Recei,a#e O$ce E8&i!men" Acco&n"s Ja'a#e Lenore @r&n*e#d) Ca!i"a# Ser,ice Fees Re,en&e 1Q1<< 1Q2<< 1Q9<< 2Q1<< 9Q1<< :Q1<< Jre!are a "ria# a#ance o% "he +enera# #ed+er o% Lenore @r&n*e#d) Jro!er"' Ad,iser) as a" 91 &#' 2<14.

11H Exercise 9. RECORDIN@ TRANSACTIONS IN @ENERALORNAL AND ANALSIS LO :

The %o##o*in+ acco&n"s a!!ear in "he #ed+er o% "he ?enrie""a/s ?&+e ?air ?airdressers7 Cash a" Ban(G Acco&n"s Recei,a#eG ?airdressin+ E8&i!men"G Acco&n"s Ja'a#eG ?enrie""a Bo&an") Dra*in+sG ?airdressin+ Re,en&eG Sa#aries Ex!enseG and Ad,er"isin+ Ex!ense.

Re8&ired

Jre!are "he +enera# 6o&rna# en"ries "o record "he %o##o*in+ "ransac"ions "ha" occ&rred d&rin+ Decemer 0i+nore @ST. Ex!#ain *h' 'o& ha,e made each o% "he 6o&rna# en"ries "o acco&n" %or "he "ransac"ions.

Dec. 1 J&rchased hair dr'in+ e8&i!men" %or ;4H> <<<. Jaid ;H<<< de!osi" and a+reed "o !a' "he a#ance in 4< da's. 9 ?enrie""a *i"hdre* ;12<< %rom "he &siness "o &' herse#% a ne* dress %or a %riend/s *eddin+. 

Jaid sa#aries o% ;4<<.

1:

Jaid ;<< %or ad,er"isemen"s in "he #oca# ne*s!a!er.

1

Recei,ed ;H:< %rom c&s"omers "o red&ce "he a#ance in "heir acco&n"s.

29

Jaid ;9<< "o credi"ors %or s&!!#ies "ha" had een !&rchased on credi".

9< Earned ;H> 4<< in hairdressin+ re,en&e d&rin+ "he mon"h. O% "hese) 

The %o##o*in+ in%orma"ion re#a"es "o "he &siness o% Man Tin+/s Tra,e# A+enc' %or "he mon"h o% &ne 2<147 &ne

1

Man Tin+ La& in,es"ed ;12<> <<< cash in"o "he ne* &siness.

2 The &siness se" &! an o$ce ' !&rchasin+ some o$ce e8&i!men" %or ;94> <<< cash. 9 Man Tin+ hired an assis"an" "o dea# *i"h c&s"omers %or an ann&a# sa#ar' o% ;:2> <<<) !a'a#e in mon"h#' amo&n"s.

4 The assis"an" oo(s a ho#ida' "o E&ro!e %or a c#ien") in+ ?o) %or a "o"a# cos" o% ;14> <<< 0&n!aid a" "his s"a+e. The commission "o e (e!" ' "he &siness is 1

<<< "o Man Tin+/s Tra,e# A+enc'. O% "his amo&n") ;:2<< re!resen"s "he "o"a# cos" o% air %ares) *hich *i## e %or*arded "o "he air#ine concernedG and "he remainder 0exc#&din+ "he "ra,e# a+enc'/s commission is "o e %or*arded "o a !ar"ic&#ar ho"e# chain "o co,er "he c#ien"/s accommoda"ion. 22

The &siness !a's cash "o "he air#ine as !a'men" %or in+ ?o/s "ri!.

2H

The a!!ro!ria"e amo&n" o% cash is !aid "o "he ho"e# chain %or in+ ?o/s

9<

The assis"an" is !aid 1 mon"h/s *a+es in cash.

"ri!.

Re8&ired

Jre!are +enera# 6o&rna# en"ries "o record "he ao,e e,en"s) as a!!ro!ria"e) in "he acco&n"in+ records o% Man Tin+/s Tra,e# A+enc'. I+nore @ST. Ex!#ain *h' 'o& ha,e made each en"r' ' !ro,idin+ ana#'ses simi#ar "o "hose sho*n in "he i##&s"ra"i,e exam!#e in "he cha!"er 0!. 1.

Exercise 9.1< RECORDIN@ TRANSACTIONS IN @ENERAL ORNAL AND @ENERAL LED@ER LO 9) :

In Decemer 2<14) "he %o##o*in+ "ransac"ions occ&rred in Macchia"o/s Coee Roas"ers &siness "ha" s&!!#ies ca%s and a#so se##s direc" "o "he !&#ic7 Dec. 2

Michae# Macchia"o in,es"ed ;2> 4H<> <<< in"o "he &siness o%

Macchia"o/s Coee Roas"ers ' !&rchasin+ a %&##' e8&i!!ed coee roas"in+ &siness. The &siness ac8&ired consis"ed o% "he %o##o*in+ asse"s and #iai#i"ies7 Land ;1> 2<<> <<< B&i#din+ 1> <<<> <<< Coee roas"in+ e8&i!men" :2<> <<< O$ce e8&i!men"

4<> <<< Acco&n"s !a'a#e 9<> <<<

114 H 4

J&rchased some ne* roas"in+ e8&i!men" on credi" %or ;14<> <<<. Co##ec"ed cash %rom c&s"omers %or "he mon"h) ;22<> <<<.

12 Jaid "he acco&n"s !a'a#e o*in+ on 2 Decemer *hen Michae# !&rchased "he &siness. 1:

J&rchased an ins&rance !o#ic' %or "he 'ear %or ;4<<< cash.

1 J&rchased "e#e,ision ad,er"isin+ %or "he Chris"mas  Ne* ear !eriod %or ;<<< "o e !aid %or in 9< da's. 29 Co##ec"ed %ees in cash %rom c&s"omers %or "he Chris"mas  Ne* ear !eriod) amo&n"in+ "o ;:4> <<<. 9< Michae# *i"hdre* ;<<< cash in order "o !a' %or !ri,a"e Chris"mas !resen"s and !ar"ies.

Re8&ired

Jre!are +enera# 6o&rna# en"ries %or each o% "he ao,e "ransac"ions and e,en"s. Jos" "he en"ries "o #ed+er T acco&n"s and a#ance "he acco&n"s as a" 91 Decemer 2<14.

Exercise 9.11

ANALSIN@ LED@ER ACCONTS LO :

e##'/s C#eanin+ Ser,ices T acco&n"s %or 9< A!ri# 2<1 *ere as %o##o*s7

Re8&ired

Ana#'se "he ao,e acco&n"s and descrie in chrono#o+ica# order "he "ransac"ions "ha" ha,e een recorded. Exercise 9.12

IDENTIFIN@ AND EXJLAININ@ ERRORS

LO H

hen !rocessin+ "he acco&n"s %or E##ise/s E#ec"rica# Con"rac"ors) "he %o##o*in+ errors *ere made. 0a E#ec"rica# e8&i!men" !&rchased %or ;<< cash *as dei"ed "o E8&i!men" and credi"ed "o Acco&n"s Ja'a#e %or an incorrec" amo&n" o% ;<<. 0 Co##ec"ion o% an acco&n" recei,a#e %or ;:H<< *as recorded ' a dei" "o Cash a" Ban( and a dei" "o "he e8&i"' acco&n" o% "he o*ner. 0c A che8&e %or ;4<<< iss&ed "o !a' %or an acco&n" !a'a#e *as recorded as a dei" "o Acco&n"s Ja'a#e and a credi" "o Acco&n"s Recei,a#e %or ;4<<<. 0d A ;21<< !a'men" %or assor"ed e#ec"rica# "oo#s *as recorded as a dei" "o E8&i!men" and a credi" "o Cash a" Ban( %or ;21<. 0e Cash o% ;2<<< *i"hdra*n ' "he o*ner %rom "he &siness *as dei"ed "o Sa#aries Ex!ense and credi"ed "o Cash a" Ban(.

Re8&ired

Iden"i%' *hich o% "he ao,e errors *o&#d ca&se &ne8&a# "o"a#s in a "ria# a#ance !re!ared a" "he end o% "he !eriod. ri"e a rie% ex!#ana"ion %or each error "o indica"e ho* i" co&#d e -xed in "he acco&n"in+ records.

11 Exercise 9.19

JREJARATION OF CORRECTED TRIAL BALANCE

LO H

Ni+e#/s @ardenin+ Ser,ices "ria# a#ance !resen"ed e#o* does no" a#ance. In examinin+ "he +enera# 6o&rna# and "he +enera# #ed+er 'o& disco,er "he %o##o*in+ in%orma"ion. I+nore @ST.

The a#ance in "he Mor"+a+e Ja'a#e acco&n" is ;H:<<. A !&rchase o% #a*nmo*er %&e# %or cash o% ;1< *as erroneo&s#' recorded as a !&rchase on credi". The dei"s and credi"s "o Acco&n"s Recei,a#e "o"a##ed ;4<< and ;H:<< res!ec"i,e#'. A ;HH< !a'men" %or sa#aries *as no" !os"ed "o "he Cash a" Ban( acco&n".

The dei" "o record a *i"hdra*a# o% ;4<< in cash ' "he o*ner *as no" !os"ed.

NI@EL/S @ARDENIN@ SERICES Tria# Ba#ance as a" 9< &ne 2<14 Acco&n" Dei"

Credi" Cash a" an( ; 2> :<<

Acco&n"s recei,a#e H9<

S&!!#ies > 2<<

E8&i!men" :2<

Acco&n"s !a'a#e

; 2> 14< Sa#aries !a'a#e

2> < Mor"+a+e !a'a#e

:> H<< Ni+e# Mo*er) Ca!i"a#

4> :<< Ni+e# Mo*er) Dra*in+s 4> 22<

Ser,ice re,en&e

19> << Sa#aries ex!ense H> 1<<

Ren" ex!ense 9> 2<<

O"her ex!ense 2> H<

;2> 9<

2> <2<

Re8&ired

Jre!are a correc"ed "ria# a#ance. Exercise 9.1:

EFFECT OF ERRORS ON TRIAL BALANCE

LO H

A. For each o% "he %o##o*in+ errors7 0a indica"e *he"her "he error *o&#d ca&se "he "ria# a#ance "o ha,e &ne8&a# "o"a#s 0 de"ermine "he amo&n" ' *hich "he "ria# a#ance "o"a#s *o&#d dier 0c de"ermine *he"her "he error *o&#d ca&se "he dei" "o"a# or "he credi" "o"a# "o e #ar+er. I+nore @ST. 1. A ;2< credi" "o Ser,ice Re,en&e *as no" !os"ed. 2. Recei!" o% a !a'men" on acco&n" %rom a c&s"omer *as recorded as a dei" "o Cash a" Ban( %or ;12H and a credi" "o Acco&n"s Ja'a#e %or ;12H. 9. A !&rchase o% s&!!#ies %or ;H *as recorded as a dei" "o S&!!#ies %or ;H and a credi" "o Acco&n"s Ja'a#e %or ;H. :. A ;99 dei" "o Cash a" Ban( *as !os"ed as a credi". H. A ;2H< dei" "o "he Dra*in+s acco&n" *as dei"ed "o "he Ca!i"a# acco&n". 4. A ;H2< dei" "o Ren" Ex!ense *as !os"ed as a ;H2 dei". B. ?o* *o&#d each error e correc"ed3 @i,e "he correc"in+ 6o&rna# en"r' *here a!!ro!ria"e.

11

JROBLEMS

 Basic

 Modera"e

 Cha##en+in+ Jro#em 9.1 IDENTIFIN@ TJE OF ACCONT) DEBITCREDIT ANALSIS AND NORMAL BALANCE  LO 2

Ts e&n+ Jrin"ers/ #ed+er acco&n"s are #is"ed e#o*.

Acco&n"s Ja'a#e Acco&n"s Recei,a#e B&i#din+s Cash a" Ban( E#ec"rici"' Acco&n" Ja'a#e @ST Ja'a#e @ST Recei,a#e Ins&rance Ex!ense In"eres" Ex!ense In"eres" Recei,a#e In"eres" Re,en&e Land Loan Ja'a#e Mor"+a+e Ja'a#e Jre!aid Ins&rance Jrin"in+ E8&i!men" Ren" Re,en&e Ser,ice Fee Re,en&e S&ndr' Re,en&e S&!!#ies on ?and

S&!!#ies sed Ts e&n+) Ca!i"a# Ts e&n+) Dra*in+s nearned Re,en&e a+es Ex!ense a+es Ja'a#e

Re8&ired A. For each acco&n" #is"ed ao,e) com!#e"e a so#&"ion %orm as sho*n e#o* ' !#acin+ a "ic( in "he !ro!er co#&mns "o indica"e "he "'!e o% acco&n") "he side o% a T acco&n" on *hich increases are recorded) and "he side on *hich norma# a#ances are recorded.

S&++es"ed so#&"ion %orm7 B. Jre!are an a!!ro!ria"e char" o% acco&n"s %or "he &siness. se "he %o##o*in+ di+i"s %or acco&n" c#asses7 asse"s) 1G #iai#i"ies) 2G e8&i"') 9G income) :G ex!enses) H. i"hin each ca"e+or') assi+n a 9Kdi+i" code %or each acco&n". Jro#em 9.2 ORNAL ENTRIES) JOSTIN@ TO LED@ER) AND TRIAL BALANCE  LO 9) :) H

On 1 &#' 2<1H Nico#e Andreo& o!ened a ea&"' !ar#o&r. The %o##o*in+ "ransac"ions occ&rred d&rin+ "he -rs" mon"h o% o!era"ions 0i+nore @ST7 &ne 2 Andreo& in,es"ed ;12<> <<< in "he &siness ' de!osi"in+ cash in"o a &siness che8&e acco&n" *i"h "he Eas"!ac Ban(. 2

Jaid ;1<< %or "he -rs" mon"h/s ren".

9 J&rchased e8&i!men" ' an on#ine an( "rans%er %or ;92> <<< and si+nin+ a commercia# #oan a+reemen" %or ;9> <<<. :

J&rchased s&!!#ies %or ;:<<.

4

Jaid ad,er"isin+ ex!ense o% ;<.

14 Recorded ea&"' ser,ices re,en&e %or "he -rs" ha#% o% "he mon"h o% ;92H< in cash and ;42< on credi". 2<

Jaid ins&rance ex!ense %or &#' o% ;:< &sin+ an on#ine an( "rans%er.

29 Recei,ed a ;1:< !a'men" %rom c&s"omers *ho !aid on credi" in "he -rs" ha#% o% "he mon"h.

11 2

Andreo& *i"hdre* ;H4< cash %or !ersona# #i,in+ ex!enses.

91 Recorded re,en&e %or "he second ha#% o% "he mon"h o% ;94< in cash and ;H< on credi". 91

Jaid "e#e!hone acco&n" o% ;99< ' e#ec"ronic "rans%er.

se "he %o##o*in+ acco&n" "i"#es and n&mers7 Cash a" Ban() 1<
Re8&ired

Jre!are "he +enera# 6o&rna# en"ries "o record "he "ransac"ions. Jos" "he en"ries %rom "he +enera# 6o&rna# "o "he +enera# #ed+er acco&n"s 0r&nnin+ a#ance %orma" and en"er "he !os"in+ re%erences in "he +enera# 6o&rna#. Jre!are a "ria# a#ance as a" 91 &#' 2<1H.

Jro#em 9.9 JREJARIN@ @ENERAL LED@ER AND TRIAL BALANCE 

LO 9) H

Carr'in+ o&r Load !ro,ides hea,' %rei+h" ser,ices *i"h #ar+e "r&c(s. The %o##o*in+ "ransac"ions *ere %or Carr'in+ o&r Load. I+nore @ST. &ne 1 Crai+ Dienho in,es"ed ;42<> <<< in"o Carr'in+ o&r Load or+anised "o !ro,ide "r&c(in+ ser,ices "o remo"e !ar"s o% A&s"ra#ia. 2

J&rchased a "r&c( %or ;H:<> <<< on credi" %rom J. S"ric(#and.

: Trans%erred "he amo&n" o*in+ "o J. S"ric(#and &sin+ on#ine an(in+ %aci#i"ies "o ma(e a direc" an( "rans%er. H

Jaid ;14<< "o R. B&r"on %or "*o *ee(s ren" "o 1: &#'.



Char+ed hi"e Ca""#e S"a"ion ;12> <<< %or "r&c(in+ ser,ices.

1<

Dienho *i"hdre* ;:<<< cash "o mee" !ersona# ex!enses.

12

Jaid ;12<< %or ad,er"isin+ on #oca# radio.

12

Recei,ed ;42<< %rom O&"ac( Oi# %or "r&c(in+ ser,ices.

19 Char+ed S"ar Com!an' ;4<< and recei,ed ;<<< %rom ?ardie Com!an' %or "r&c(in+ ser,ices !ro,ided. 1: Recei,ed a che8&e %or ;12> <<< %rom hi"e Ca""#e S"a"ion and de!osi"ed i" in"o "he &siness an( acco&n". Jaid ;<< %or %&e# %or "he "r&c(.

Re8&ired

Record a## "ransac"ions direc"#' in"o #ed+er T acco&n"s and !re!are a "ria# a#ance. Re!ea" re8&iremen" A) ass&min+ "ha" a @ST o% 1

Jro#em 9.: JREJARIN@ T?E @ENERAL ORNAL  LO :

The Arid Sands @o#% C#& *as o!ened %or &siness on 1 &#' ' Todd Sim!son. The %o##o*in+ se#ec"ed e,en"s and "ransac"ions occ&rred d&rin+ "he -rs" mon"h o% o!era"ions7 &ne

1

The o*ner in,es"ed ;2> H<<> <<< cash in"o "he &siness.

9 Ac8&ired "he &siness o% ere'/s @o#% or#d %or ;1> <<> <<< cash. The !rice consis"ed o% #and ;1> <<<> <<<) &i#din+ ;4H<> <<<) and e8&i!men" ;1H<> <<<. 4 Ad,er"ised "he o!enin+ o% "he +o#% co&rse) !a'in+ ad,er"isin+ ex!enses o% ;94> <<< %or a ma6or "e#e,ision cam!ai+n. 1<

Jaid cash ;94> <<< %or a 1K'ear ins&rance !o#ic'.

1 J&rchased ne* +o#-n+ e8&i!men" %or ;4<> <<< %rom Ror' @o#-n+) !a'a#e in 9< da's. 1

Recei,ed +o#% memershi! %ees o% ;22> <<< in cash.

2H So#d 2<< co&!on oo(s %or ;:<< each. E,er' oo( con"ains 1< co&!ons each o% *hich en"i"#es "he ho#der "o one ro&nd o% +o#%. 2

Sim!son *i"hdre* ;1<> <<< cash %or !ersona# &se.

2

Jaid *a+es o% ;12> 4<<.

9<

Jaid Ror' @o#-n+ in %&##.

91

Recei,ed ;12> <<< cash %or +o#% %ees.

Re8&ired

Jre!are +enera# 6o&rna# en"ries %or "he mon"h o% &#') &sin+ a!!ro!ria"e acco&n" "i"#es. I+nore @ST.

12< Jro#em 9.H ORNAL ENTRIES) ENTERIN@ BE@INNIN@ ACCONT BALANCES) JOSTIN@ TO T ACCONTS) AND TRIAL BALANCE  LO :

The 91 Ma' 2<1 "ria# a#ance o% Am' ai") Jh'sio"hera!is") is sho*n e#o*. I+nore @ST. AM AIT) J?SIOT?ERAJIST Tria# Ba#ance as a" 91 Ma' 2<1 Acco&n" Dei"

Credi" Cash a" an( ; 1 <<<

Acco&n"s recei,a#e :> <<<

S&!!#ies 12> 9<<

Jre!aid ins&rance > 2<<

F&rni"&re and e8&i!men" 24<> 4<<

Acco&n"s !a'a#e

; > << E#ec"rici"' acco&n" !a'a#e

> H<< nearned re,en&e

2> << A. ai") Ca!i"a#

91:> 4< A. ai") Dra*in+s 141> 2<<

Ser,ices re,en&e

:42> <<<

Sa#aries ex!ense 1<> 9<<

E#ec"rici"' ex!ense > :4<

Ren" ex!ense 2:> <<<

;> <4<

;> <4<

The %o##o*in+ "ransac"ions *ere com!#e"ed d&rin+ &ne7 &ne

1

J&rchased s&!!#ies on credi" %or ;H<<.

9

Recei,ed ;2:> :<< %rom !a"ien"s as !a'men" on acco&n".

4

Jaid "he e#ec"rici"' ex!ense o% ;H<<) !re,io&s#' recorded.

1< Jer%ormed ser,ices %or ;2<<< "ha" *as recorded !re,io&s#' as &nearned re,en&e. 1: Recorded re,en&e o% ;1> 4<< in cash and ;19> 4H< on credi". Jaid sa#aries o% ;4H> <. 2<

J&rchased %&rni"&re %or ;1H> :<< and !aid ' e#ec"ronic "rans%er.

29

i"hdre* ;4<> <<< %rom "he &siness %or !ersona# &se.

2:

Jaid credi"ors ;<<<.

24

J&rchased ins&rance !o#ic' %or ;2:> <<< "o co,er &siness asse"s.

2

Recei,ed ;12> <<< %rom !a"ien"s as !a'men" on acco&n".

2 9<

Recorded re,en&e o% ;12:> 4<< in cash and ;2H> <<< on credi". Jaid ren" o% ;2:> <<<.

Re8&ired

Jre!are 6o&rna# en"ries "o record each "ransac"ion. 1. O!en T acco&n"s %or "he acco&n"s sho*n in "he "ria# a#ance. 2. En"er "he 91 Ma' a#ance in each acco&n". 9. Jos" "he 6o&rna# en"ries "o "he T acco&n"s. Jre!are a "ria# a#ance as a" 9< &ne 2<1.

Jro#em 9.4 ORNAL ENTRIES FOR TO CONSECTIE MONT?S  LO 1) :

Ro+er/s Re!air Ser,ices had "he %o##o*in+ "ransac"ions d&rin+ A!ri# and Ma' 2<147 A!ri# 1

Cash is recei,ed %rom a c&s"omer) D. L#o'd) ;2<<.



Re!air ser,ices are !ro,ided on credi" "o . T&rner %or ;12> <<<.



A i## %or e#ec"rici"' cons&med is recei,ed) ;2<.

11

S&!!#ies are re8&isi"ioned %rom s"ora+e %or &se in "he +enera# o$ce)

;2<.

121 1H

A ;H<> <<< #oan is "a(en o&" *i"h BCSA Ban(. In"eres" is !a'a#e a" 1
!.a. 1

A che8&e is iss&ed in !a'men" o% "he e#ec"rici"' acco&n" recei,ed on 

29

S&!!#ies are !&rchased on acco&n" %rom ?arr'/s ?ard*are) ;4<.

2H

S&!!#ies are re8&isi"ioned %or &se in "he o$ce) ;94<.

9<

Jre!aid ins&rance cos"s ha,e een &sed "o "he ex"en" o% ;9<<.

A!ri#.

Ma' 2 cash. 2

O*ner con"ri&"es ca!i"a# o% ;2<> <<<) ' an addi"iona# in6ec"ion o% Ren" %or "he mon"h is !aid ' che8&e) ;22<<.

H

Re!air e8&i!men" is !&rchased on acco&n" %rom Oran+e S&!!#iers) ;14>

<<<. 12 O$ce -x"&res are !&rchased %rom O$ceSho! %or ;4<<<. ;H<< is !aid immedia"e#' *i"h cash) "he remainder is d&e in &#'. 19

Re!air ser,ices !er%ormed %or c#ien"s %or cash) ;<<.

1:

Ja'men" on acco&n" is made ' che8&e "o Trade S&!!#iers) ;22> <<<.

1

A sa#ar' o% ;:2<< is !aid ' e#ec"ronic an( "rans%er.

91

Ins&rance ex!ired) ;9<<.

Re8&ired

Ass&min+ "ha" "he acco&n"in+ !eriod is a ca#endar 'ear) !re!are +enera# 6o&rna# en"ries %or Ro+er/s Re!air Ser,ices d&rin+ A!ri# and Ma' 2<1. I+nore @ST. A" "he end o% Ma') in"eres" is o*in+ on "he #oan "a(en o&" on 1H A!ri# *i"h BCSA Ban(. Sho&#d "his in"eres" e recorded ' Ro+er/s Re!air Ser,ices in i"s acco&n"in+ records3 h' or *h' no"3

Jro#em 9. JREJARATION OF RNNIN@ BALANCE LED@ER ACCONTS AND TRIAL BALANCE  LO 9) H

On 1 March 2<1:) ames Ta'#or decided "o o!en Ta'#or/s Tai#ormade "ha" ma(es s&i"s) "ro&sers and 6ac(e"s and re!airs and a#"ers c#o"hes. ?e con"ri&"ed %or "his !&r!ose se*in+ e8&i!men" ;:4> <<< and a commercia# ,an ;:> <<<) and de!osi"ed ;1<> <<< cash in a &siness an( acco&n". Transac"ions d&rin+ March *ere as %o##o*s 0i+nore @ST7 March

:

Too( a 9K'ear #ease on a sho! and !aid -rs" mon"h/s ren" ;12<<.

: J&rchased haerdasher' s&!!#ies %or ;:2<<) and !aid *i"h an e#ec"ronic "rans%er o% ;12<< and !aid %or "he res" *i"h credi". 4

Cash recei,ed %or minor c#o"hin+ re!airs) ;12<.

Re,en&e earned %or "ai#or ma(in+ a "*o !iece s&i" %or Andrea Fraser on credi") ;:<.  J&rchased a se*in+ machine) ;9<<) !a'in+ ;<< cash and "a(in+ o&" a #oan %or "he a#ance. 

Cash re,en&e earned) ;124<. 11

En+a+ed a se*er a" an a+reed *a+e o% ;11<< !er *ee(.

12

Jaid !e"ro# ;12<) !os"a+e ;2<) and e#ec"rici"' i## ;4<.

19

Cash o% ;2<< recei,ed %or o,erK"heKco&n"er re!airs.

Re,en&e o% ;1H<< earned %rom a c&s"omer on credi". 1:

Jaid %or haerdasher' s&!!#ies !&rchased on credi" on : March.

1H

i"hdre* ;4<< %or o*n &se.

14

Cash re,en&e recei,ed) ;9<.

1 1

?aerdasher' s&!!#ies !&rchased %or ;H<< on credi". Jaid *a+es "o em!#o'ee.

21

Re,en&e earned %or ma(in+ c#o"hes7 cash ;2:
29

Andrea Fraser !aid "he i## %or ser,ices rendered on 4 March.

2:

Je"ro# ex!enses !aid ;<.

2H

Jaid *ee(#' *a+es "o em!#o'ee.

2

Re,en&e earned %or c#o"hes ;2:2<) recei,in+ ;2<< in cash and "he

remainder on credi". 91 ?aerdasher' s&!!#ies &sed) ;42<.

Re8&ired

Jre!are "hreeKco#&mn r&nnin+ a#ance #ed+er acco&n"s. @i,e each acco&n" a s&i"a#e acco&n" n&mer. Jre!are a "ria# a#ance as a" 91 March 2<14.

122 Jro#em 9. JOLIC DECISION) ANALSIS AND C?ART OF ACCONTS  H

LO 2)

Le*is Ed*ards decides "o ranch o&" on his o*n and se" &! his o*n !ri,a"e !rac"ice as an acco&n"an". E,en"s occ&rrin+ in March 2<14 are as %o##o*s. I+nore @ST. March 1 De!osi"ed ;H<<> <<< in"o a &siness an( acco&n") se" &! &nder "he &siness name o% Le*is Ed*ards) Acco&n"an". 2

?ired an o$ce secre"ar' *ho commenced *or( immedia"e#'.

9

Jaid ;42<< %or "he -rs" mon"h/s ren" o% a s&i"a#e o$ce.

: J&rchased o$ce e8&i!men" and %&rni"&re %or a "o"a# o% ;:9> <<. An ini"ia# ;9<< is !aid in cash immedia"e#' and "he res" is "o e !aid in 9 mon"hs/ "ime) *i"h in"eres" !a'a#e a" 1

Jaid ;24<< in cash %or o$ce s&!!#ies.

12 Sen" in,oices "o a n&mer o% c#ien"s %or ser,ices rendered %or a "o"a# amo&n" o% ;1:> <<<. 1: Ed*ards *i"hdre* ;12<< cash %rom "he &siness %or !ersona# &se. Jaid "he o$ce secre"ar' ;19<< %or ser,ices rendered "o "he &siness. 1

Recei,ed ;<<< in cash %rom c#ien"s i##ed on 12 March.

2: Recei,ed ;14> <<< in cash %rom c#ien"s *ho !aid immedia"e#' %or ser,ices rendered. These c#ien"s *ere no" in,oiced !re,io&s#'. 91 Jaid ;<<< %or s&ndr' ex!enses and *a+es o% ;19<< "o "he o$ce secre"ar' %or "he !re,io&s %or"ni+h"/s *or(.

Re8&ired

A%"er ana#'sin+ "he e,en"s ao,e) s&++es" a char" o% acco&n"s) *i"h a!!ro!ria"e n&merin+) "ha" *o&#d e sa"is%ac"or' %or "he &siness. Ex!#ain *h' 'o& ha,e &sed !ar"ic&#ar n&merin+ in "he char" o% acco&n"s. Jre!are +enera# 6o&rna# en"ries as necessar' %or each o% "he e,en"s) &sin+ "he char" o% acco&n"s "ha" 'o& ha,e crea"ed. Ex!#ain *h' 'o& ha,e made "hese 6o&rna# en"ries ' an ana#'sis simi#ar "o "ha" sho*n in "he i##&s"ra"i,e exam!#e in "he cha!"er 0!. 1. Jro#em 9. ORNAL ENTRIES) T ACCONTS AND ANALSIS 

LO 9) :) H

On 1 A!ri# 2<1H) enn'/s E8&i!men" ?ire o!ened %or o!era"ions. enn' o*s#o*s(i con"ri&"ed "he ca!i"a# o% "he &siness o% ;2<> <<< cash. ?e has as(ed 'o& "o e recordK(ee!er %or "he &siness on a !ar"K"ime asis) and 'o& ini"ia##' es"a#ish "he need %or "he %o##o*in+ acco&n"s 0and n&mers. Addi"iona# acco&n"s ma' need "o e added in "he near %&"&re. @ST is i+nored. Cash a" Ban(

Acco&n"s Recei,a#e Land B&i#din+ Mo"or ehic#es ?ire E8&i!men" Acco&n"s Ja'a#e Mor"+a+e Ja'a#e enn' o*s#o*s(i) Ca!i"a# enn' o*s#o*s(i) Dra*in+s E8&i!men" ?ire Income

1<<

11< 12< 19< 1H< 1< 22< 2H< 9<< 91< 92<

D&rin+ A!ri# "he %o##o*in+ "ransac"ions *ere &nder"a(en ' "he &siness) inc#&din+ "he ini"ia# in,es"men" ' "he o*ner7 A!ri# 1

enn' o*s#o*s(i con"ri&"ed ;2<> <<< "o "he &siness.

2 The &siness ac8&ired #and %or ;9<<> <<< and a &i#din+ on "he #and %or ;14<> <<<. A cash !a'men" o% ;1<<> <<< *as made and a mor"+a+e #oan *i"h "he Ban( o% A&s"ra#ia *as arran+ed %or "he a#ance o*in+. : J&rchased +ardenin+) main"enance and re!air e8&i!men" "o hire o&" "o c&s"omers %or ;:H<> <<< %rom @enera# E8&i!men" Man&%ac"&rers. The &siness !aid ;2<<> <<< cash) and "he remainder *as d&e "o e !aid in 9< da's.  A +arden m&#cher *as "rans%erred %rom "he &siness "o "he o*ner) enn' o*s#o*s(i) %or cos" !rice o% ;2H<<.

129 1< A "rai#er *as %o&nd "o e de%ec"i,e) and "he &siness re"&rned i" "o @enera# E8&i!men" Man&%ac"&rers. The amo&n" d&e "o "he credi"or *as red&ced ' ;12> <<<. 19 The &siness ac8&ired some com!&"er e8&i!men" %or "he main o$ce a" a "o"a# cos" o% ;2<<) !aid in cash. 2

E8&i!men" hire income o% ;21> 4<< *as recei,ed in cash.

2

Jaid "he remainin+ cash o*in+ "o @enera# E8&i!men" Man&%ac"&rers.

9<

The &siness !aid *a+es o% ;22<< "o 'o& %or (ee!in+ "he acco&n"s.

E8&i!men" hire income o% ;1:> :<< *as recei,ed in cash and an addi"iona# ;4<<< remained o*in+ ' c#ien"s.

Re8&ired

Jre!are +enera# 6o&rna# en"ries %or "he &siness %or "he mon"h o% A!ri#. Jos" "hese en"ries "o a!!ro!ria"e T acco&n"s and de"ermine "heir a#ances. Jro,ide an ana#'sis o% each "ransac"ion "o ex!#ain each en"r' 'o& ha,e made in A ao,e 0see "he i##&s"ra"i,e exam!#e on !a+e 1.

Jro#em 9.1< JREJARATION OF TRIAL BALANCE) BALANCE S?EET AND REJORT TO T?E ONER  LO 1) 2) H

Je"er/s Jersona# Ser,ice in &siness %or se,era# 'ears. In &ne 2<14) as a res&#"Trainin+ o% a dis!&"e *i"hhad "heeen o*ner) "he acco&n"an" o% "he &siness disa!!eared and "oo( a## "he records *i"h her.

o& ha,e een hired "o recons"r&c" "he acco&n"in+ records) and *i"h "his in mind) 'o& cond&c" a s"oc("a(e o% a## o% "he asse"s o% "he &siness. B' chec(in+ *i"h an(s) co&n"in+ "he o$ce e8&i!men" and s&!!#ies) and in,es"i+a"in+ "he o*nershi! o% "he &i#din+s and e8&i!men") 'o& de,e#o! "he %o##o*in+ in%orma"ion as a" 9< &ne 2<147 Acco&n" "i"#e Land O$ce E8&i!men"

B&i#din+s Acco&n"s Recei,a#e In,es"men"s O$ce S&!!#ies Cash a" Ban( Ba#ance ; <> <<< 1:H> <<< 12> <<< H> H<< 9<> <<< <> <<< 92<> <<<

S"a"emen"s %rom credi"ors and &n!aid in,oices %o&nd in "he o$ce indica"e "ha" ;29<> <<< is o*in+ "o "rade credi"ors. There is a#so ;4<> <<< o*in+ &nder a 9 <<< cash "o "he &siness *hen i" *as es"a#ished and "ha" no %&r"her con"ri&"ions had een made. There is no record o% ho* m&ch "o"a# !ro-"0#osses had een earned in !as" 'ears.

Re8&ired

Jre!are a "ria# a#ance and a#ance shee" as a" 9< &ne 2<14 %or "he &siness. ri"e a re!or" "o "he o*ner s&++es"in+ a sim!#e acco&n"in+ s's"em "ha" co&#d e &sed in %&"&re and *h' 'o& recommend s&ch a s's"em.

Jro#em 9.11 ORNAL ENTRIES) JOSTIN@ TO RNNIN@ BALANCE LED@ER ACCONTS) AND TRIAL BALANCE FOR 2 CONSECTIE MONT?S  LO 9) :) H

In Decemer 2<14) Mi(e Mi##s o!ened a minia"&re +o#% co&rse "o ca"er %or "he s&mmer ho#ida' "o&ris"s and com!#e"ed "he "ransac"ions e#o* d&rin+ i"s -rs" mon"h o% o!era"ions. For "he sa(e o% sim!#ici"') @ST is i+nored.

Dec. 1

In,es"ed ;<> <<< ca!i"a# in "he &siness.

2 J&rchased +o#% c#&s and a##s and o"her e8&i!men" cos"in+ ;<> <<< %or ;:<> <<< cash and a #oan %or ;:<> <<<. :

Jaid ;1H<< %or ad,er"isin+.

4

J&rchased s&!!#ies on credi" %or ;42<<.

1H

Recorded cash re,en&e %or "he -rs" ha#% o% "he mon"h o% ;:<<.

2:

i"hdre* ;2< %rom "he &siness an( acco&n" %or !ersona# &se.

91

Recorded cash re,en&e %or "he second ha#% o% "he mon"h o% ;1<> 1<<.

91

Jaid *a+es o% ;2<<.

91

Jaid ren" %or Decemer) ;2:<<.

12: se "he %o##o*in+ acco&n" "i"#es and n&mers7

Cash a" Ban() 1Q1<<

S&!!#ies) 1Q11<

E8&i!men") 1Q12<

Acco&n"s Ja'a#e) 2Q1<<

Loan Ja'a#e) 2Q11<

M. Mi##s) Ca!i"a#) 9Q1<<

M. Mi##s) Dra*in+s) 9Q11<

Re,en&e) :Q1<<

Ren" Ex!ense) HQ1<<

Ad,er"isin+ Ex!ense) HQ11<

a+es Ex!ense) HQ12<

Re8&ired

Jre!are +enera# 6o&rna# en"ries "o record "he Decemer "ransac"ions. Jos" "he en"ries %rom "he +enera# 6o&rna# "o r&nnin+ a#ance +enera# #ed+er acco&n"s and en"er "he !os"in+ re%erences in "he 6o&rna#. Jre!are a "ria# a#ance as a" 91 Decemer 2<14.

The %o##o*in+ "ransac"ions "oo( !#ace in an&ar'7 an. : Jaid ;1<< o% "he amo&n" o*ed %or s&!!#ies. 

Jaid ;2< %or ad,er"isemen"s in #oca# ne*s!a!er.

19

Mi(e *i"hdre* ;1<<< %rom "he &siness %or !ersona# &se.

1:

Recorded cash re,en&e %or "he -rs" ha#% o% an&ar' o% ;<<.

1H

Jaid *a+es o% ;2:<< in cash.

21

J&rchased s&!!#ies on credi" %or ;91<<.

91

Recorded cash re,en&e %or "he second ha#% o% an&ar' o% ;:<<.

91

Jaid ren" %or an&ar') ;2:<<.

Re8&ired D. Jre!are 6o&rna# en"ries "o record "he an&ar' "ransac"ions. E. Jos" "he en"ries "o "he #ed+er. F. Jre!are a "ria# a#ance as a" 91 an&ar' 2<1. Jro#em 9.12 ORNAL ENTRIES) JOSTIN@ TO RNNIN@ BALANCE LED@ER ACCONTS) AND TRIAL BALANCE FOR 2 CONSECTIE MONT?S) INCLDIN@ @ST  LO 9) ): H

sin+ "he da"a in !ro#em 9.11) com!#e"e re8&iremen"s A "o F ass&min+ "he addi"ion o% @ST o% 1

<<<. Add "*o ne* acco&n"s7 @ST Recei,a#e 1Q1
In Se!"emer 2<14) Niem D&on+ o!ened a car hire &siness. The %o##o*in+ "ransac"ions occ&rred d&rin+ "he -rs" mon"h o% "he &siness 0i+nore @ST. Se!. 1 Niem o!ened a an( acco&n" "o e+in "he &siness and de!osi"ed ;H<<> <<< o% her o*n mone'. 9

Jaid ;12<< ren" %or "he !remises %or Se!"emer.

: J&rchased "en mo"or ,ehic#es cos"in+ ;:<> <<< each and e8&i!men" cos"in+ ;94> <<< *i"h ;9<<> <<< cash and a commercia# #oan %or "he a#ance. H

J&rchased s&!!#ies cos"in+ ;12> H<< on credi".

1H Recorded re,en&e %or "he -rs" ha#% o% "he mon"h o% ;1:> 4<< in cash and ;2> H<< on credi". 1

Jaid %or s&!!#ies !&rchased on H Se!"emer.

1

Jaid ins&rance ex!ense %or Se!"emer o% ;H<<<.

2: Recei,ed !a'men" %rom c&s"omers on acco&n" o% ;12> :<< and an(ed "he recei!"s. 2

J&rchased s&!!#ies cos"in+ ;42<< on credi".

2 Recorded re,en&e %or "he second ha#% o% "he mon"h o% ;12> H<< in cash and ;92> << on credi". 9<

Jaid %&e# ex!ense o% ;14> 2<< in cash.

12H se "he %o##o*in+ acco&n" "i"#es and n&mers7

Cash a" Ban() 1Q1<1

Acco&n"s Recei,a#e) 1Q1<2

S&!!#ies) 1Q11<

E8&i!men") 1Q12<

Mo"or ehic#es) 1Q19<

Acco&n"s Ja'a#e) 2Q1<1

Loan Ja'a#e) 2Q11<

N. D&on+) Ca!i"a#) 9Q1<1

Re,en&e) :Q1<1

Ren" Ex!ense) HQ11<

Ins&rance Ex!ense) HQ12<

F&e# Ex!ense) HQ19<

Re8&ired

o&rna#ise "he ao,e "ransac"ions. Jos" "he en"ries %rom "he +enera# 6o&rna# "o r&nnin+ a#ance +enera# #ed+er acco&n"s and en"er "he !os"in+ re%erences in "he +enera# 6o&rna#. Jre!are a "ria# a#ance as a" 9< Se!"emer 2<14. Re!ea" re8&iremen"s A "o C) addin+ a @ST o% 1

@ST Recei,a#e) 1Q1
@ST Ja'a#e) 2Q1H<

A#so ass&me "he %o##o*in+7

The cash !aid : Se!"emer *as %or ;9:9> 4<<. The recei!" on 2: Se!"emer *as %or ;19> 4:<.

Jro#em 9.1:

CORRECTION OF ERRORS  LO H

o&r -rs" assi+nmen" on 'o&r ne* 6o *as "o de"ermine *h' "he 91 Decemer 2<1H "ria# a#ance did no" a#ance. In 'o&r re,ie* o% "he records 'o& &nco,ered a n&mer o% errors descried e#o*.

The S&ndr' Ex!ense acco&n" *i"h a a#ance o% ;2:H *as omi""ed %rom "he "ria# a#ance. A !a'men" o% ;< on "he e#ec"rici"' acco&n" !a'a#e *as no" !os"ed "o "he E#ec"rici"' Acco&n" Ja'a#e acco&n") &" *as !os"ed correc"#' "o "he Cash a" Ban( acco&n". A ;2H dei" "o Cash a" Ban( *as !os"ed as ;2H. A ;94< credi" *as credi"ed "o "he Acco&n"s Recei,a#e acco&n" &" sho&#d ha,e een made "o "he Ser,ices Re,en&e acco&n" ins"ead. A cash recei!" o% ;:< %rom c&s"omers in se""#emen" o% "heir acco&n"s *as !os"ed "*ice "o "he Cash a" Ban( acco&n" and "he Acco&n"s Recei,a#e acco&n". The Acco&n"s Ja'a#e acco&n" a#ance o% ;94> << *as #is"ed in "he "ria# a#ance as ;9> 4<<. A ;2H4< credi" "o Ser,ices Re,en&e *as !os"ed as a ;2H4 credi". The dei" "o Cash a" Ban( *as %or "he correc" amo&n". A !&rchase o% o$ce s&!!#ies %or ;9H< on credi" *as no" recorded. A !&rchase o% a de#i,er' "r&c( %or ;12H> <<< &sin+ a #oan *as !os"ed as a dei" "o "he Loan Ja'a#e acco&n" and a dei" "o "he E8&i!men" acco&n". The Dra*in+s acco&n" a#ance o% ;14> <<< *as #is"ed as a credi" a#ance in "he "ria# a#ance.

A ;19<< !a'men" "o em!#o'ees %or "heir *ee(#' sa#aries *as credi"ed "o Cash a" Ban( on#' once &" *as !os"ed "*ice "o "he a+es Ex!ense acco&n".

Re8&ired A. Indica"e in "he so#&"ion %orma" sho*n e#o* ho* each error *o&#d aec" "he "ria# a#ance "o"a#s. I% "he error does no" ca&se "he "ria# a#ance "o e o&" o% a#ance and 'o& "ic( no/ in "he "hird co#&mn) *ri"e e8&a#/ in "he Dierence e"*een "ria# a#ance "o"a#s/ co#&mn. Each error is "o e considered inde!enden"#' o% "he o"hers. B. Jre!are "he 6o&rna# en"ries necessar' "o correc" errors n&mer :) H and  as #is"ed ao,e.

EXERCISES Exercise :.1 IDENTIFIN@ ADSTIN@ ORNAL ENTRIES

LO 9

Ma"ch "he endKo%K-nancia#K'ear ad6&s"men"s 0%or each inde!enden" si"&a"ion "o "he a!!ro!ria"e 6o&rna# en"r'.

Ad6&s"men"s

Jor"ion o% !re!aid ins&rance *hich has no* ex!ired 0een &sed &! Re,en&e earned &" no" 'e" recei,ed Ins&rance ex!ense *hich has no" een &sed &! 0"here is s"i## %&"&re co,er Jor"ion o% reco+nised re,en&e *hich is considered &nearned Ex!enses inc&rred &" no" 'e" !aid Re,en&e recei,ed in ad,ance *hich is no* earned

o&rna# en"r' 0a Jre!aid Ins&rance Dr) Ins&rance Ex!ense Cr 0 nearned Re,en&e Dr) Re,en&e Cr 0c Ins&rance Ex!ense Dr) Jre!aid Ins&rance Cr 0d Re,en&e Dr) nearned Re,en&e Cr

0e Ex!enses Dr) Ex!enses Ja'a#e Cr 0% Re,en&e Recei,a#e Dr) Re,en&e Cr Exercise :.2 CAS? ERSS ACCRAL BASIS OF ACCONTIN@

LO 1

A" "he end o% "he -rs" 'ear o% o!era"ions) Arch E"ec) o*ner o% Archi"ec" Desi+ns) en+a+ed 'o& "o !re!are 'ear#' -nancia# s"a"emen"s %or "he 'ear ended 9< &ne 2<14) on o"h "he cash asis and "he accr&a# asis. The %o##o*in+ da"a are a s&mmar' o% se#ec"ed "ransac"ions "ha" occ&rred d&rin+ "he 'ear. I+nore @ST.

Fees o% ;12H ><<< *ere co##ec"ed %or ser,ices !ro,ided d&rin+ "he 'ear. There *ere ;<<< in recei,a#es a" 9< &ne 2<14 %or ser,ices !er%ormed on credi". Cash !a'men"s o% ;1<4 ><<< *ere made %or sa#aries) ren") ins&rance and o"her ex!enses inc&rred d&rin+ "he 'ear. Sa#aries o*in+ &" no" 'e" !aid amo&n" "o ;:<<<. On 1H &ne 2<14) a c#ien" !aid ;9<<< in ad,ance %or ser,ices "o e rendered d&rin+ "he nex" -nancia# 'ear. Ex!enses o% ;4<<< *ere !re!aid 0no" inc#&ded in "he ;1<4 ><<< a" 9< &ne.

Re8&ired A. Ca#c&#a"e !ro-" &nder o"h "he cash asis and "he accr&a# asis. B. Ex!#ain ho* "he %o##o*in+ i"ems *o&#d e re!or"ed in "he &siness/s a#ance shee" &nder "he accr&a# asis7 1. "he ;<<< recei,a#es 2. "he &n!aid sa#aries o% ;:<<< 9. "he ;9<<< ad,ance recei,ed on 1H &ne :. "he cash !a'men" o% ;4<<< %or !re!aid ex!enses. Exercise :.9 CAS? ERSS ACCRAL ACCONTIN@ LO 1 1. D&rin+ March) Th&' B&i/s &siness !er%ormed ser,ices %or a s!eci-c c&s"omer %or *hich "he %ee *as ;<<<. Ja'men" *as recei,ed in "he %o##o*in+ A!ri#. 0a as "he re,en&e earned in March or A!ri#3 0 ha" acco&n" sho&#d e dei"ed in 0i March and 0ii A!ri#3

2. D&rin+ "he mon"h a &siness recei,ed ;14< ><<< in cash and !aid o&" ;12< ><<< in cash. Does "his indica"e "ha" "he &siness earned ;:< ><<< d&rin+ "he mon"h3 Ex!#ain. 14: 9. @ora6e( So#e Traders !&rchased a 9K'ear ins&rance con"rac" on 1 March. The &siness dei"ed "he en"ire cos" o% ;12 <<< "o Ins&rance Ex!ense. The -nancia# 'ear ends on 9< &ne. nder "he accr&a# s's"em) *ha" is "he correc" ex!ense %or "he c&rren" 'ear) and *ha" en"r' *o&#d e made "o correc" "he acco&n"s3 nder "he cash asis o% acco&n"in+) *ha" is "he correc" ex!ense and "he correc" ad6&s"in+ en"r' 0i% an'3 Exercise :.: ACCRAL BASIS INCOME STATEMENT

LO 1) 2

ic"oria ?o#mes re+is"ered as a -nancia# ad,iser se,era# 'ears a+o. An income s"a"emen" %or "he c&rren" !eriod) !re!ared &sin+ cash acco&n"in+) is !resen"ed e#o*. @ST is i+nored. ?OLMES/ FINANCIAL ADISOR SERICE Income S"a"emen" %or "he 'ear ended 9< &ne 2<1 Income7 Fees re,en&e ;9< ><<< Less7 Ex!enses 9<<< Jro-" ;H ><<<

Addi"iona# da"a 0a Fees %or ad,ice +i,en %or "he 'ear ended 9< &ne 2<14 %or ;<<< *ere co##ec"ed in "he c&rren" 'ear and are inc#&ded ao,e. 0 Fees earned in "he c&rren" 'ear o% ;12 ><<< are ex!ec"ed "o e co##ec"ed in "he %o##o*in+ 'ear. These ha,e no" een inc#&ded ao,e. 0c Accr&ed sa#aries a" 9< &ne 2<14 and 2<1 are ;:<<< and ;:9<<) res!ec"i,e#'. 0d De!recia"ion ex!ense o% ;1 ><<< is no" inc#&ded in "he ex!enses. 0e ic"oria ?o#mes *i"hdre* ;2:<< !er mon"h "o co,er !ersona# #i,in+ ex!enses.

Re8&ired

sin+ "he ao,e in%orma"ion) !re!are an income s"a"emen" on "he accr&a# asis. Sho* a## ca#c&#a"ions. BrieU' ex!#ain *h' "he re,ised s"a"emen" co&#d e considered a e""er meas&re o% !er%ormance. Is i" a correc" acco&n"in+ !roced&re "o exc#&de dra*in+s %rom ex!enses3 Ex!#ain *h'.

Exercise :.H ORNALISIN@ ADSTIN@ ENTRIES

LO 9

Ca#,in/s C#eanin+ has em!#o'ed 'o& "o in,es"i+a"e *he"her an' accr&a# en"ries are needed in "he &siness. On com!#e"ion o% 'o&r in,es"i+a"ion on 9< &ne) 'o& ha,e disco,ered "ha" "he %o##o*in+ i"ems need a""en"ion.

nearned c#eanin+ ser,ices re,en&e no* earned) ;92<<. De!recia"ion no" recorded) ;12 ><<<. Em!#o'ee sa#aries o*ed &" no" recorded) ;4:<<. Jre!aid ins&rance ex!ired) ;12<<. In"eres" re,en&e accr&ed &" no" recorded) ;14<<.

Re8&ired

Jre!are "he ad6&s"in+ en"ries %or i"ems 1 "o H a" 9< &ne) "he end o% "he acco&n"in+ !eriod. S&!!ose "he ad6&s"in+ en"ries in re8&iremen" A *ere no" made. Ca#c&#a"e "he "o"a# o,ers"a"emen" or &nders"a"emen" o% !ro-" as a res&#" o% "he omission o% "hese ad6&s"men"s.

Exercise :.4 ADSTIN@ ENTRIES AND INCOME STATEMENT

LO 9) :

The income s"a"emen" o% Je"er/s Jes" Con"ro# %or "he mon"h o% A&+&s" 2<14 sho*s a !ro-" o% ;4<< ased on7

Ser,ices re,en&e a+es ex!ense S&!!#ies ex!ense E#ec"rici"' ex!ense ;1H >2<< 4 >:<< 1 >1<< <<

14H In re,ie*in+ "he s"a"emen") 'o& disco,er "he %o##o*in+.

De!recia"ion on e8&i!men" o% ;:4< *as omi""ed. S&!!#ies ex!ense inc#&des ;92< o% s&!!#ies "ha" are s"i## on hand a" 91 A&+&s". Ins&rance ex!ired d&rin+ A&+&s" o% ;:<< *as omi""ed. Accr&ed *a+es a" 91 A&+&s" amo&n"in+ "o ;24< *ere no" inc#&ded. Ser,ices !ro,ided &" &nrecorded "o"a##ed ;14<<.

Re8&ired

Jre!are a correc"ed income s"a"emen" %or "he mon"h o% A&+&s" 2<14. Exercise :. ADSTIN@ ENTRIES AND LED@ER ACCONTS

LO 9) H

The %o##o*in+ in%orma"ion *as ex"rac"ed %rom "he acco&n"in+ records o% "he &siness o% end'/s La*nmo*in+ Ser,ices7 Acco&n" a#ances a" 1 &#' 2<1H7 Ren" accr&ed Ra"es !re!aid Ins&rance !re!aid

;94<< 2:<< 2:<<

Ja'men"s made d&rin+ "he 'ear ended 9< &ne 2<14 *ere as %o##o*s7

Ass&me "ha" *hene,er cash *as !aid) "he dei" en"r' *as made "o "he a!!ro!ria"e ex!ense acco&n") ra"her "han "he asse" or #iai#i"') %or "he 'ear. The on#' exce!"ion "o "his is "he -rs" !a'men" %or "he 'ear *hich is s!#i" e"*een "he accr&a# or de%erra# and "he ex!ense.

Re8&ired

ri"e &! and a#ance "he Ren" Ja'a#e) Jre!aid Ra"es) and Jre!aid Ins&rance acco&n"s in "he #ed+er o% end'/s La*nmo*in+ Ser,ices %or "he 'ear 1 &#' 2<1H "o 9< &ne 2<14. Sho* c#ear#' an' ad6&s"in+ en"ries "ha" ma' e re8&ired on 9< &ne 2<14. Ex!#ain *h' "hese ad6&s"in+ en"ries are necessar'.

Exercise :. ADSTIN@ ENTR FOR JREJAID INSRANCE LO 9

rea"i,e i"chens !&rchased a 1K'ear ins&rance !o#ic' on 1 March 2<1. The en"ire !remi&m o% ;<<< *as recorded ' dei"in+ Jre!aid Ins&rance. I+nore @ST.

Re8&ired

@i,e "he ad6&s"in+ en"r' a" 9< &ne %or "he 'ear endin+ 9< &ne 2<1. ha" amo&n" sho&#d e re!or"ed in "he 9< &ne 2<1 a#ance shee" %or Jre!aid Ins&rance3 144 I% no ad6&s"in+ en"r' *ere made on 9< &ne) ' ho* m&ch *o&#d !ro-" e o,ers"a"ed or &nders"a"ed3 o&#d asse"s e o,ers"a"ed or &nders"a"ed3 Ex!#ain.

ha" *o&#d 'o&r ad6&s"in+ en"r' in re8&iremen" A e i% "he !remi&m o% ;<<< *as recorded ' dei"in+ Ins&rance Ex!ense3

Exercise :. ADSTIN@ ENTR FOR NEARNED REENE LO 9

Eas' Ren"a#s L"d recei,ed : mon"hs/ ren" in ad,ance %rom "enan"s on 1 A!ri# 2<1H. The en"ire amo&n" o% ;4:<< *as credi"ed "o "he nearned Re,en&e acco&n" a" "his da"e. I+nore @ST.

Re8&ired

@i,e "he ad6&s"in+ en"r' a" 9< &ne 2<1H. ha" amo&n" 0i% an' sho&#d e re!or"ed in "he a#ance shee" a" 9< &ne 2<1H3 I% no ad6&s"in+ en"r' *ere made on 9< &ne) ' ho* m&ch *o&#d !ro-" e o,ers"a"ed or &nders"a"ed3 o&#d #iai#i"ies e o,ers"a"ed or &nders"a"ed3 Ex!#ain. ha" *o&#d 'o&r ad6&s"in+ en"r' e in re8&iremen" A i% "he amo&n" o% ;4:<< had een credi"ed "o Ren"a# Re,en&e on 1 A!ri# 2<1H3

Exercise :.1< EXTENSION OF ACCONT BALANCES TO JROJER ORS?EET COLMNS @ST LO :

Lis"ed e#o* are #ed+er acco&n"s "ha" a!!ear in "he ad6&s"ed "ria# a#ance co#&mns o% a *or(shee".

Cash a" Ban( a+es Ex!ense B&i#din+ Lan Mei Tran) Ca!i"a# Ser,ice Re,en&e De!recia"ion Ex!ense Acco&n"s Recei,a#e Acc&m&#a"ed De!recia"ion

E8&i!men" Jre!aid Ins&rance a+es Ja'a#e @ST Ja'a#e In"eres" Ja'a#e In"eres" Recei,a#e In"eres" Ex!ense In"eres" Re,en&e O$ce S&!!#ies Ex!ense O$ce S&!!#ies @ST Recei,a#e Lan Mei Tran) Dra*in+s

Com!#e"e "he "a&#a"ion sho*n e#o* ' en"erin+ a "ic( in "he !ro!er *or(shee" co#&mn in *hich "he amo&n" in each acco&n" *o&#d e ex"ended in com!#e"in+ "he *or(shee". Exercise :.11

ADSTIN@ ENTRIES FOR DEJRECIATION

LO :

Tre,/s @ardenin+ Ser,ices !&rchased a "rai#er on 1 &#' 2<14 %or ;24 >2<<. I" *as es"ima"ed "o ha,e a &se%&# #i%e o% H 'ears and a resid&a# ,a#&e a" "he end o% "ha" "ime o% ;2<<.

Re8&ired

ha" is "he de!recia"ion ex!ense %or "he 'ear ended 9< &ne 2<13 ha" is "he a#ance o% "he Acc&m&#a"ed De!recia"ion acco&n" a" "he end o% &ne 2<13 ha" is "he carr'in+ amo&n" o% "he "rai#er in "he a#ance shee" a" 9< &ne 2<1 and a" 9< &ne 2<13 Ex!#ain *h' an en"r' is made "o "he Acc&m&#a"ed De!recia"ion acco&n" ra"her "han "o "he Trai#er acco&n".

Exercise :.12

ADSTIN@ ENTRIES

LO 9

Se#ec"ed acco&n"s o% Amanda/s Ar" S&!!#ies are sho*n e#o* a" 9< &ne o% "he c&rren" 'ear e%ore an' ad6&s"in+ en"ries ha,e een made.

Jre!aid Ins&rance S&!!#ies Sho! She#,in+ nearned Ren"a# Fees Sa#aries Ex!ense Ren"a# Fees Re,en&e

Dei" ;: >H<< 2< 2: ><<<

92 >4<<

Credi"

; : ><<

19 >2<<

Addi"iona# in%orma"ion 0a Jre!aid ins&rance re!resen"s !remi&ms %or 1 'ear !aid on 1 A!ri#.

0 S&!!#ies o% ;:9< *ere on hand a" 9< &ne. 0c Sho! she#,in+) *hich had een !&rchased on 1 an&ar') is ex!ec"ed "o #as" 1< 'ears and ha,e a resid&a# ,a#&e o% ;2<<<. 14 0d Amanda co##ec"ed : mon"hs/ ren" in ad,ance on 1 &ne %rom a n&mer o% "enan"s. 0e Accr&ed sa#aries no" recorded as a" 9< &ne are ;2:<<.

Re8&ired

Record in "he +enera# 6o&rna# "he necessar' ad6&s"in+ en"ries on 9< &ne. Exercise :.19

ADSTIN@ ENTRIES  MISSIN@ DATA LO :) H

Se#ec"ed T acco&n"s %or Tre*he##a Traders are sho*n e#o*. Ad6&s"in+ en"ries %or "he !eriod ha,e een !os"ed.

Re8&ired

S&!!#ies o% ;9< *ere !&rchased d&rin+ "he 'ear. Ca#c&#a"e "he 1 &#' a#ance in "he S&!!#ies acco&n". No a#ance exis"ed in "he nearned Ren"a# Re,en&e acco&n" on 1 &#'. Ca#c&#a"e "he "o"a# amo&n" o% ren"a# %ees "ha" *ere recei,ed in cash d&rin+ "he !eriod. The a#ance in "he Jre!aid Ins&rance acco&n" on 1 &#' *as ;1<. Ca#c&#a"e "he "o"a# cash !a'men" made d&rin+ "he 'ear %or ins&rance !remi&ms. Exercise :.1:

ADSTIN@ ENTRIES

LO 9

In,es"men" @&r& !ro,ides in,es"men" ad,ice "o c&s"omers %or %ees. On 9< &ne 2<14) i" com!#e"ed i"s -rs" 'ear o% o!era"ions. Some o% "he #ed+er acco&n" a#ances o% "he &siness) e%ore an' 'earKend ad6&s"men"s) are +i,en e#o*7 Ad,er"isin+ Jre!aid In,es"men" Fees Re,en&e Ren" Ex!ense

Com!&"er Da"aase Ex!ense a+es Ex!ense E#ec"rici"' Ex!ense

; 1 >2<< 9H< ><<< 1 >2< 12 >2:< 119 ><< 4 >:<

No ad6&s"in+ en"ries ha,e een made "o "hese acco&n"s a" an' "ime d&rin+ "he 'ear. An ana#'sis o% "he &siness records re,ea#s "he %o##o*in+.

The a#ance in Ad,er"isin+ Jre!aid re!resen"s "he amo&n" !aid %or an ad,er"isemen" in an in,es"men" ma+aine %or 1 'ear. The a+reemen" *i"h "he !&#isher s"i!&#a"es "he same amo&n" o% s!ace each mon"h and co,ers "he !eriod 1 Se!"emer 2<1H "o 91 A&+&s" 2<14. The -rm/s #ease in res!ec" o% "he !remises s"i!&#a"es a ren" o% ;1::< !er mon"h !a'a#e on "he -rs" da' o% each mon"h) !#&s an ann&a# amo&n" e8&a# "o <.HP o% "he ann&a# %ees earned. The ex"ra ren"a# is !a'a#e *i"hin 1H da's o% "he end o% "he re!or"in+ !eriod. The com!&"er da"aase ex!ense re#a"es "o an ann&a# s&scri!"ion "o *e ased da"a on "he share mar(e" and o"her in,es"men"s. The s&scri!"ion *as "a(en o&" on 1 A&+&s" 2<1H. The *a+es are !aid e,er' Frida' %or a HKda' *or(in+ *ee( endin+ on "he !recedin+ ednesda'. In 2<14) 9< &ne %a##s on a Th&rsda' and "he *a+es %or "he *ee( ended 4 &#' 2<14 amo&n" "o ;<<<. No o,er"ime *as *or(ed and a## em!#o'ees *or(ed "he norma# o$ce ho&rs d&rin+ "he HKda' *ee(. The E#ec"rici"' Ex!ense #ed+er a#ance does no" inc#&de "he amo&n" %or &ne 2<14. The acco&n" *as recei,ed d&rin+ &#' and amo&n"ed "o ;12H<.

Re8&ired

o&rna#ise "he necessar' ad6&s"in+ en"ries.

14 Exercise :.1H LO 9)

ADSTIN@ ENTRIES AND EFFECT ON FINANCIAL STATEMENTS

In "he -rs" co#&mn o% "he sched&#e !resen"ed e#o* are "he condensed -nancia# s"a"emen"s %or Me#,in Mo"or,ehic#e Ren"a#s e%ore ad6&s"in+ en"ries *ere made. The %o##o*in+ i"ems *ere no" reUec"ed in "he s"a"emen"s.

Ren"a# re,en&e earned &" no" co##ec"ed or recorded) ;1H<<. De!recia"ion on ,ehic#es no" recorded) ;1: >H<<. a+es earned ' em!#o'ees &" no" !aid a" 'earKend) ;H4<<. The com!an' re8&ires "he -rs"Kda' ren"a# in ad,ance as a de!osi" %or ma(in+ a reser,a"ion. The de!osi" is ei"her ded&c"ed %rom "he "o"a# ren"a# char+es or is %or%ei"ed. D&rin+ "he #as" *ee( o% &ne) de!osi"s earned *ere no" recorded as re,en&e) ;<.

Re8&ired

Jre!are "he necessar' ad6&s"in+ en"ries in +enera# 6o&rna# %orm. De"ermine "he eec"s o% "he ad6&s"men"s on "he -nancia# s"a"emen"s ' com!#e"in+ "he sched&#e !resen"ed ao,e. 1. Did !ro-" increase or decrease3 B' ho* m&ch3 2. ha" *as "he eec" o% "he ad6&s"in+ en"ries on "o"a# asse"s3 "o"a# #iai#i"ies3 "o"a# e8&i"'3

14

JROBLEMS

 Basic

 Modera"e

 Cha##en+in+ Jro#em :.1 ADSTIN@ ENTRIES 

LO 9

?&i &) #a*'er) had "he %o##o*in+ "ransac"ions re#a"ed "o "he &siness d&rin+ &ne. I+nore @ST. &ne 1 J&rchased o$ce %&rni"&re %or ;94 ><<<. The %&rni"&re *i## e de!recia"ed o,er a &se%&# #i%e o% 1< 'ears a" *hich "ime i" is ex!ec"ed "o ha,e a resid&a# ,a#&e o% ;:<<. 1

J&rchased a 12Kmon"h -re ins&rance !o#ic' %or ;9<<<.

2 Borro*ed ;:2 ><<< %rom "he Eas"ern Ban( on a shor"K"erm #oan. The !rinci!a#) !#&s P ann&a# in"eres") *i## e re!aid in 9 mon"hs. 11 J&rchased s&!!#ies %or ;:H<. On 9< &ne) s&!!#ies *or"h ;29< remained on hand. 1H

Jaid ;12<< %or 1 mon"h/s ren" %or "he !eriod 1H &ne "o 1H &#'.

1 Recei,ed an e#ec"ronic an( "rans%er %rom a c#ien" %or ;:< as an ad,ance !a'men" %or ser,ices "o e !er%ormed. On#' 2

Recei,ed an in,oice %or ;:1< %or "e#e!hone and in"erne" char+es %or "he

Re8&ired

Jre!are "he 6o&rna# en"ries "o record each "ransac"ion and !re!are an' ad6&s"in+ en"ries as a" 9< &ne) "he end o% "he acco&n"in+ 'ear. Re!ea" re8&iremen" A ass&min+ "he addi"ion o% 1

Jro#em :.2 ADSTIN@ ENTRIES AND EFFECT ON FINANCIAL STATEMENTS  LO 9) : A. The -nancia# 'ear %or Dri! Dr' C#eanin+ Ser,ices ends on 9< &ne. sin+ "he %o##o*in+ in%orma"ion) ma(e "he necessar' ad6&s"in+ en"ries a" 'earKend. I+nore @ST.

1. On 1H Fer&ar') Danie##e Dri!/s &siness orro*ed ;14 ><<< %rom Nor"hern Ban( a" P in"eres". The !rinci!a# and in"eres" are !a'a#e on 1H A&+&s". 2. Ren" o% ;94<< %or "he 4Kmon"h !eriod endin+ 91 &#' is d&e "o e !aid in A&+&s". 9. The ann&a# de!recia"ion on e8&i!men" is es"ima"ed "o e ;2<<. The 1 &#' a#ance in "he Acc&m&#a"ed De!recia"ion acco&n" *as ;1H >4<<. :. Dri! Dr' C#eanin+ Ser,ices !&rchased a 1K'ear ins&rance !o#ic' on 1 March o% "he c&rren" 'ear %or ;44<. A 9K'ear !o#ic' *as !&rchased on 1 No,emer o% "he !re,io&s 'ear %or ;2<<. Bo"h !&rchases *ere recorded ' dei"in+ Jre!aid Ins&rance. H. The &siness has "*o !ar"K"ime em!#o'ees *ho each earn ;22< a da'. The' o"h *or(ed "he #as" 9 da's in &ne %or *hich "he' ha,e no" 'e" een !aid. 4. On 1 &ne) "he ?i+h&! ?o"e# !aid "he &siness ;21<< in ad,ance %or doin+ "heir dr' c#eanin+ %or "he nex" 9 mon"hs. This *as recorded ' a credi" "o nearned Dr' C#eanin+ Re,en&e. . a"er %or &ne o% ;H< is &n!aid and &nrecorded. . The s&!!#ies acco&n" had a ;2< dei" a#ance on 1 &#'. S&!!#ies o% ;1H4< *ere !&rchased d&rin+ "he 'ear and ;1< o% s&!!#ies are on hand as a" 9< &ne.

1< B. As 'o& (no*) a## ad6&s"in+ en"ries aec" one a#ance shee" acco&n" and one income s"a"emen" acco&n". Based on 'o&r ad6&s"in+ en"ries !re!ared ao,e7 1. com!#e"e "he sched&#e +i,en on !a+e 14 2. ca#c&#a"e "he increase or decrease in !ro-" 9. ca#c&#a"e "he increase or decrease in "o"a# asse"s) "o"a# #iai#i"ies and "o"a# e8&i"'. Jro#em :.9 ADSTIN@ ENTRIES FOR JREJAID INSRANCE) NEARNED REENE AND JREJAID RENT AND LED@ER ACCONTS  LO :

Mon"h#' Foodies/ Ma+aine/s #ed+er inc#&des "he %o##o*in+ acco&n"s7 S&scri!"ion Re,en&e) nearned S&scri!"ions Re,en&e) Jre!aid Ins&rance) Ins&rance Ex!ense) Jre!aid Ren" and Ren" Ex!ense.

The %o##o*in+ "ransac"ions re#a"in+ "o s&scri!"ions) ins&rance and ren" occ&rred on "he da"es indica"ed. I+nore @ST.

S&scri!"ions

1 &#' 2<14. The nearned S&scri!"ions Re,en&e acco&n" con"ained a credi" a#ance o% ; >H<<. O% "his a#ance) ;21 ><< is %or s&scri!"ions ex!irin+ a" "he end o% Oc"oer and ;HH >4<< is %or s&scri!"ions ex!irin+ a" "he end o% Fer&ar'.

1 No,emer 2<14. Mon"h#' Foodies/ Ma+aine recei,ed ;1: ><< %or s&scri!"ions #as"in+ 4 mon"hs.

1 March 2<1. Mon"h#' Foodies/ Ma+aine recei,ed ;9: >2<< %or s&scri!"ions #as"in+ 12 mon"hs.

1 Ma' 2<1. Mon"h#' Foodies/ Ma+aine recei,ed ;14 >H<< %or s&scri!"ions #as"in+ 4 mon"hs.

Ins&rance

1 &#' 2<14. The Jre!aid Ins&rance acco&n" con"ained a dei" a#ance o% ;11 >< %or a !o#ic' "ha" ends on 91 March.

1H Se!"emer 2<14. Mon"h#' Foodies/ Ma+aine !aid ;2 >12< %or a 12Kmon"h !o#ic' e+innin+ co,era+e on 1H Se!"emer.

Ren"

1 &#' 2<14. The Jre!aid Ren" acco&n" con"ained a dei" a#ance o% ;12 >H %or "he !eriod &#' "o No,emer inc#&si,e.

1 Decemer 2<14. Mon"h#' Foodies/ Ma+aine !aid ;2: ><9< %or  mon"hs/ ren".

Re8&ired

For each o% "he si"&a"ions #is"ed) en"er "he e+innin+ a#ance in "he !ro!er #ed+er acco&n" and !os" "he "ransac"ions direc"#' "o "he acco&n"s #is"ed. Then record "he necessar' ad6&s"in+ en"r' a" 9< &ne 2<1) "he end o% "he -nancia# 'ear. Jro#em :.: ADSTIN@ ENTRIES AND CORRECTIONS  LO 9) :

The dra%" acco&n"s %or "he 'ear ended 9< &ne 2<14 and a a#ance shee" as a" "ha" da"e %or S. S"einer are s&mi""ed "o 'o&. To*ards "he end o% "he -nancia# 'ear her acco&n"an" resi+ned and she had com!#e"ed "he records herse#%. She "hin(s "ha" errors ha,e occ&rred and as(s 'o&r he#!. An examina"ion o% "he acco&n"in+ records re,ea#s "he %o##o*in+.

In"eres" o% ;12< on "he in,es"men"s he#d ' "he &siness *as d&e) &" has no" een recei,ed. A !a'men" o% ;:14< %or ne* o$ce %&rni"&re has een incorrec"#' dei"ed "o "he S&ndr' Ex!enses acco&n". The %&rni"&re had een !&rchased #a"e in &ne 2<14. Ren" d&e %rom c&s"omers Ra++a"" and Je"ne' amo&n"in+ "o ;2H4< is no" inc#&ded in "he acco&n"s. Re!airs "o S"einer/s !ri,a"e mo"or ,ehic#e) ;1<<) ha,e een dei"ed "o "he ehic#e Ex!enses acco&n". Commission d&e "o sa#es re!resen"a"i,es %or "he mon"h o% &ne) ;::<) has een o,er#oo(ed. 11 An ins&rance !o#ic' co,erin+ con"en"s and &i#din+s *as "a(en o&" on 1 March 2<14) "he ann&a# !remi&m o% ;2:<< ein+ !aid in ad,ance on "his da"e and dei"ed "o "he Jre!aid Ins&rance acco&n". A !a'men" o% ;9H ><<< on 1 &#' 2<1H %or addi"ions "o &i#din+s has een dei"ed "o Re!airs and Main"enance. No de!recia"ion has een reco+nised %or "he 'ear endin+ 9< &ne. The dra%" a#ance shee" sho*s "he %o##o*in+7

B&i#din+s 0a" cos" Acc&m&#a"ed de!recia"ion O$ce %&rni"&re and e8&i!men" 0a" cos"V Acc&m&#a"ed de!recia"ion ;2H4 ><<
H1 >2<< 99 >4<< 2< ><<

2<: ><<

12 ><< V Does no" inc#&de addi"ions "o &i#din+s in no. 0) nor ad6&s"men"s %or o$ce %&rni"&re in 02 ao,e.

De!recia"ion is "o e ca#c&#a"ed as %o##o*s7

B&i#din+s7 2P on cos" O$ce %&rni"&re and e8&i!men"7 2

Re8&ired

I+norin+ @ST) sho* "he 6o&rna# en"ries re8&ired "o ma(e "he necessar' ad6&s"men"s #is"ed. Ca#c&#a"e "he eec" 0increase or decrease o% each o% "he ad6&s"men"s on "he !ro-" -+&re o% ;4: ><< as sho*n in "he dra%" acco&n"s. Jro#em :.H ADSTIN@ ENTRIES AND ANALSIS

LO :) H) 4

Ins"an" C#o"hin+ A#"era"ions is r&n ' Marc @ianno!o#o&s in "he #oca# sho!!in+ cen"re. The &siness !re!ared "he %o##o*in+ &nad6&s"ed and ad6&s"ed "ria# a#ances a" 9< &ne 2<147

12

Re8&ired

Jre!are "he ad6&s"in+ en"ries "ha" acco&n" %or "he dierences e"*een "he "*o "ria# a#ances and ex!#ain "he na"&re o% each en"r'. The on#' acco&n" aec"ed ' more "han one ad6&s"men" is A#"era"ions Re,en&e. I+nore @ST. Jro#em :.4 ADSTIN@ ENTRIES) JOSTIN@ TO T ACCONTS) AND EFFECT ON JROFIT @ST LO 9) :

The "ria# a#ance o% Che#sea E##io"") mar(e"in+ ser,ices !ro,ider) a" 9< &ne 2<1H *as as %o##o*s7 C?ELSEA ELLIOTT) MARETIN@ SERICES nad6&s"ed Tria# Ba#ance as a" 9< &ne 2<1H Acco&n" Dei"

Credi" Cash a" an( ; > <

Acco&n"s recei,a#e 21> <<<

@ST recei,a#e 2> 4<<

Jre!aid ren"

2> 1<<

Jre!aid ins&rance 2> 9<

O$ce s&!!#ies :> <2<

O$ce e8&i!men" 12> 2<<

Acc&m&#a"ed de!recia"ion  o$ce e8&i!men"

; 2> :< Acco&n"s !a'a#e

2> << nearned %ees

1> 1<< Loan !a'a#e  d&e 2<1H > 2<< @ST !a'a#e

> <4< C. E##io"") Ca!i"a#

14> 4<< C. E##io"") Dra*in+s H2> <<<

Fees re,en&e

19> :<< Sa#aries ex!ense H> 2<<

Te#e!hone ex!ense 4> 1<<

Ren" ex!ense 1<> 2<<

;1> 49<

;1> 49<

Re8&ired A. sin+ "he %o##o*in+ in%orma"ion) !re!are ad6&s"in+ en"ries. se "he acco&n"s sho*n in "he "ria# a#ance and "hese addi"iona# acco&n"s7 Sa#aries Ja'a#e) In"eres" Ja'a#e) Te#e!hone Acco&n" Ja'a#e) De!recia"ion Ex!ense) O$ce S&!!#ies Ex!ense) Ins&rance Ex!ense) In"eres" Ex!ense. 1. In"eres" ex!ense o% ;H2< has accr&ed on "he #oan !a'a#e. 2. A !h'sica# co&n" o% o$ce s&!!#ies on 9< &ne sho*s ;H4< o% &n&sed s&!!#ies on hand. 9. De!recia"ion o% "he o$ce e8&i!men" "his 'ear is es"ima"ed "o e ;1<2<. :. ?a#% "he amo&n" in "he nearned Fees acco&n" had een earned ' "he end o% "he 'ear. H. The amo&n" in "he Jre!aid Ren" acco&n" co,ers "his &ne and "he nex" 2 mon"hs. 4. O% !re!aid ins&rance) 

19 Jro#em :. JREJARIN@ A ORS?EET  @ST LO 4

e"S(i ?ire r&ns a &siness on "he M&rra' Ri,er hirin+ o&" 6e" s(is "o ho#ida' ma(ers) "o&r o!era"ors and %or cor!ora"e "rainin+ sessions. The &nad6&s"ed "ria# a#ance o% e"S(i ?ire is sho*n e#o*7 ETSI ?IRE nad6&s"ed Tria# Ba#ance as a" 9< &ne 2<14

Acco&n" Dei"

Credi" Cash a" an( ; 1> 4<

Acco&n"s recei,a#e 1H> 2<<

@ST recei,a#e :> :<<

Jre!aid ins&rance 12> H<<

e" s(is 24> 9<<

Acc&m&#a"ed de!recia"ion  6e" s(is

; 1 4<< O$ce e8&i!men" 4> 9<

Acc&m&#a"ed de!recia"ion  o$ce e8&i!men"

2> :< Acco&n"s !a'a#e

1> 4<< Loan !a'a#e

2> H<< nearned ren"a# re,en&e

2> < @ST !a'a#e

4> 4<< . e"son) Ca!i"a#

1<> 9< . e"son) Dra*in+s 2> 9<

Ren"a# re,en&e

11> 4< Sa#aries ex!ense H<> 14<

Ren" ex!ense > 4<

Re!airs and main"enance ex!ense > <

Marine s&!!#ies ex!ense 22> ::<

Te#e!hone ex!ense :> 42<

;::> <<

;::> <<

The %o##o*in+ addi"iona# in%orma"ion is a,ai#a#e a" "he end o% &ne.

0a Re!airs on one 6e" s(is done in &ne %or ;1< ha,e no" 'e" een !aid %or or recorded. A "ax in,oice has een iss&ed ' "he re!airer. 0 Ex!ired ins&rance amo&n"ed "o ;11 ><<<. 0c De!recia"ion on "he 6e" s(i Uee" %or 1 'ear is ;2 >H<<. De!recia"ion on "he o$ce e8&i!men" is ;192<. 0d Sa#aries earned &" no" !aid amo&n"ed "o ;9<. 0e The a#ance in "he nearned Ren"a# Re,en&e acco&n" inc#&des ;H4< recei,ed %or ser,ices rendered on 2 &ne. 0% The &ne "e#e!hone cos"s o% ;4<< ha,e no" een !aid %or or recorded a" 9< &ne 2<14. A "ax in,oice has een recei,ed. 0+ Accr&ed in"eres" on "he #oan !a'a#e is ;<<.

Re8&ired

Jre!are a 1
LO ) ) 

The ad6&s"ed "ria# a#ance co#&mns o% "he *or(shee" %or Chris/ C#eanin+ Ser,ices are as sho*n on "he nex" !a+e.

1:

Re8&ired

Com!#e"e "he *or(shee" and !re!are an income s"a"emen") a s"a"emen" o% chan+es in e8&i"' and a c#assi-ed a#ance shee". Jro#em :. ADSTIN@ ENTRIES AND IMJACT ON FINANCIAL STATEMENTS  LO 9) :

The -nancia# 'ear %or Ban(s"o*n Ren"a# Ser,ices ends on 9< &ne.

Re8&ired

A. sin+ "he %o##o*in+ in%orma"ion) ma(e "he necessar' ad6&s"in+ en"ries. 1. The ;4H "e#e!hone ex!ense is &n!aid and &nrecorded a" 9< &ne. 2. The a#ance in Acc&m&#a"ed De!recia"ion a" "he e+innin+ o% "he -nancia# 'ear *as ;H1 >9<<. Ann&a# de!recia"ion on e8&i!men" is es"ima"ed "o e ;9: >2<<. 9. Ren" o% o$ce !remises o% ;914H %or "he 9Kmon"h !eriod endin+ 91 &#' is d&e "o e !aid in &#'. :. Ban(s"o*n Ren"a# Ser,ices orro*ed ;< ><<< %rom BAN Ban( on 1H March. The !rinci!a#) !#&s P in"eres") is !a'a#e on 1H Se!"emer. Accr&ed in"eres" on 9< &ne has no" een recorded. H. Ban(s"o*n Ren"a# Ser,ices !&rchased a 12Kmon"h ins&rance !o#ic' %or ;2:< on 1 No,emer. A 2:Kmon"h !o#ic' *as !&rchased on 1 A!ri# %or ;44<<. Bo"h !&rchases *ere recorded ' dei"in+ Jre!aid Ins&rance. 4. The S&!!#ies acco&n" had a ;1H<< dei" a#ance on 1 &#' o% "he !recedin+ 'ear. S&!!#ies cos"in+ ;1<< *ere !&rchased d&rin+ "he 'ear) and ;191< o% s&!!#ies are on hand as a" 9< &ne. . On 1 &ne) Ban(s"o*n Ren"a# Ser,ices recei,ed 2 mon"hs/ ren" in ad,ance) "o"a##in+ ;:44<. This *as recorded ' a credi" "o nearned Ren"a# Re,en&e. . The o$ce assis"an" earns ;2< a da'. ?e *i## e !aid in &#' %or "he HKda' !eriod endin+ 2 &#'. 1H B. As 'o& (no*) a## ad6&s"in+ en"ries aec" one a#ance shee" acco&n" and one income s"a"emen" acco&n". Based on 'o&r ad6&s"in+ en"ries !re!ared in re8&iremen" A7 1. ca#c&#a"e "he increase or decrease in !ro-" 2. ca#c&#a"e "he increase or decrease in "o"a# asse"s) "o"a# #iai#i"ies and "o"a# e8&i"'. Jro#em :.1<  LO :) H) 

ADSTIN@ ENTRIES AND IMJACT ON FINANCIAL STATEMENTS

Tania An+&s es"a#ished An+&s/ Jhone A!! Jrod&c"ions in 2<1H and (e!" her acco&n"in+ records on a cash asis. D&rin+ 2<1) Tania decided "o s*i"ch her acco&n"in+ "o "he accr&a# asis and has as(ed 'o& "o he#! her con,er" "he 2<1H and 2<14 -nancia# s"a"emen"s "o an accr&a# asis. o&r ana#'sis o% "he acco&n"in+ records re,ea#ed "he %o##o*in+ da"a7

2<1H

2<14 Cons&#"in+ %ees re,en&e

Cash co##ec"ed %or a!!s de,e#o!ed d&rin+ "he 'ear ;1H >4<<

;14H >9<< Char+ed c&s"omers %or a!!s de,e#o!ed d&rin+ "he 'ear) &" cash *as no" recei,ed &n"i# "he %o##o*in+ 'ear :H >4<<

H ><<< Jre!aid re,en&e co##ec"ed in 2<1H %or a!!s de,e#o!ed in 2<14  >HH<

Ex!enses

Cash !aid %or ser,ices recei,ed 1 >2<<

4 ><< Accr&ed ex!enses a" end o% "he 'ear !aid %or in "he %o##o*in+ 'ear 9 ><<

:1 >4<<

Jre!aid ex!enses7

Cash !aid d&rin+ "he 'ear 22 ><<<

9: ><<< Amo&n" !re!aid a" "he end o% "he 'ear 1 >2<<

9 ><<

Re8&ired A. sin+ "he da"a) com!#e"e are,ia"ed income s"a"emen"s in "he %orm sho*n e#o* %or "he 'ears 2<1H and 2<14 %or o"h "he cash asis and accr&a# asis o% acco&n"in+. Sho* s&!!or"in+ ca#c&#a"ions in +ood %orm. B. Sho* "he dierences "ha" *o&#d res&#" in "he 91 Decemer 2<14 a#ance shee" acco&n"s %rom &sin+ "he accr&a# asis ins"ead o% "he cash asis. Jro#em :.11

ADSTIN@ ENTRIES AND STIFICATIONS 

LO :) H

Miranda/s Mo"or Mechanics ana#'sed "he acco&n"in+ records and o"her da"a %or "he &siness. The %o##o*in+ in%orma"ion is made a,ai#a#e %or "he 'ear ended 9< &ne 2<14.

Sa#aries and *a+es o*in+ "o em!#o'ees a" "he end o% "he -nancia# 'ear amo&n"ed "o ;2:<. Inc#&ded in "he Jre!aid Ren" acco&n" is an amo&n" o% ;14<< !aid in &ne %or "he mon"h o% &#' 2<14. The Jre!aid Ren" acco&n" has a dei" a#ance o% ;:<<. A## e8&i!men" had een ac8&ired *hen "he &siness *as es"a#ished on 1 &#' 2<19. The E8&i!men" acco&n" has a dei" a#ance o% ;1:2 ><<<. The e8&i!men" has a &se%&# #i%e o% 1< 'ears and an es"ima"ed resid&a# ,a#&e o% ;4<<<.

The Mo"or ehic#e acco&n" has a dei" a#ance o% ;< ><<<. The ,ehic#e *as !&rchased on 1 an&ar' 2<14 and has an es"ima"ed &se%&# #i%e o% H 'ears and an es"ima"ed resid&a# ,a#&e o% ;1< ><<<. The Jre!aid Ins&rance acco&n" has a dei" a#ance o% ;9:::. I" consis"s o% "he %o##o*in+ !o#icies !&rchased d&rin+ "he -nancia# 'ear endin+ 9< &ne 2<147

14 4. A !h'sica# co&n" o% o$ce s&!!#ies on hand a" 9< &ne +i,es a "o"a# o% ;<. The O$ce S&!!#ies acco&n" has a dei" a#ance o% ;22<. . Inc#&ded in "he Jre!aid Ad,er"isin+ acco&n" a#ance o% ;:<< is "he amo&n" is ;14H< !aid "o "he #oca# ne*s!a!er %or ad,er"isin+ s!ace in "heir &#' 2<14 !a!ers. The remainder o% "he a#ance is &sed &! ' 9< &ne 2<14. . A" "he end o% "he 'ear) "he &siness had o&"s"andin+ a #on+K"erm #oan o% ;:< ><<< %rom one o% Miranda/s %riends. In"eres" o% P !.a. is !a'a#e ha#%K'ear#' on "his #oan) e,er' 1 A!ri# and 1 Oc"oer. The #as" in"eres" !a'men" made ' "he &siness *as on 1 A!ri# 2<14. . The Mo"or Mechanic Ser,ices Re,en&e acco&n" had a credi" a#ance o% ;129 >4<<. Inc#&ded in "his amo&n" *as ;92< %or ser,ices "o e !ro,ided in &#' 2<14. 1<. Accr&ed co&nci# ra"es a" 9< &ne 2<14 *ere ;:2<<.

Re8&ired

Jre!are "he endKo%K!eriod ad6&s"in+ en"ries re8&ired on 9< &ne 2<14. Sho* c#ear#' 'o&r ca#c&#a"ions. Jro,ide reasons %or 'o&r ans*ers "o i"ems 2) : and  ao,e.

Jro#em :.12

ADSTIN@ ENTRIES AND FINANCIAL STATEMENTS

LO 9) :

The &nad6&s"ed "ria# a#ance o% "he +enera# #ed+er o% An"onio/s Sma## A!!#iance Re!air Ser,ice on 9< &ne 2<14 is !resen"ed e#o*7 ANTONIO/S SMALL AJJLIANCE REJAIR SERICE Tria# Ba#ance as a" 9< &ne 2<14 Acco&n"

Dei"

Credi" Cash a" an( ; 9> <

In,es"men" in mar(e"a#e sec&ri"ies 4> 24<

Acco&n"s recei,a#e 1> H<

@ST recei,a#e 1> 4<

Jre!aid ins&rance 1<> 2<<

E#ec"rica# re!air e8&i!men" 94<> <<<

Acc&m&#a"ed de!recia"ion  e#ec"rica# e8&i!men"

; 122> H<< Acco&n"s !a'a#e

1:> H<< Mor"+a+e !a'a#e 0d&e 91 Decemer 2<21

41> H<< @ST !a'a#e

2> 1<< A. Ca#arese) Ca!i"a#

12> < A. Ca#arese) Dra*in+s 91> H:<

Sma## a!!#iance re!airs re,en&e

:9:> 4<< Ad,er"isin+ ex!ense 2<> 1<<

O"her se##in+ ex!enses

9<> H<

E#ec"rici"' ex!ense 2<> 1<<

S&ndr' ex!enses 9> 2<<

Ren" ex!ense 1> 4<

a+es ex!ense 1HH> <<

In"eres" on mor"+a+e ex!ense 9> <4<

Ren" re,en&e

1> 2<<

;1> <22> 1<

;1> <22> 1<

Addi"iona# da"a %or ad6&s"men" !&r!oses 0a S&!!#ies on 9< &ne 2<14 *ere7 0i ad,er"isin+ s&!!#ies 0ori+ina##' dei"ed "o Ad,er"isin+ Ex!ense) ;4<< 0ii s"ore s&!!#ies 0ori+ina##' dei"ed "o S&ndr' Ex!enses) ;94<<. 1 0 On 1 an&ar' 2<14) "he &siness ren"ed ha#% o% i"s sho! s!ace "o osh&a/s Ca%e %or 12 mon"hs and recei,ed a che8&e %or ;1 >2<< !#&s @ST) re!resen"in+ "he en"ire 'ear/s ren"a# %ee. 0c J&rchases o% e#ec"rica# re!air e8&i!men" *ere as %o##o*s) ne" o% @ST7 J&rchase da"e

Cos"

1 an&ar' 2<12

;2< ><<<

1 A!ri# 2<14 ;< ><<<

se%&# #i%e  ears

1< ears

0d The Jre!aid Ins&rance acco&n" consis"s o% "he %o##o*in+) ne" o% @ST7 0e a+es earned ' em!#o'ees &" &n!aid as a" 9< &ne 2<14 "o"a##ed ;H<:<. 0% In"eres" on "he mor"+a+e !a'a#e is ;942 !er 'ear) !aid in ha#%K'ear#' ins"a#men"s on 1 Ma' and 1 No,emer.

Re8&ired

o&rna#ise ad6&s"men"s in "he +enera# 6o&rna# o% "he en"i"'. Jre!are an income ended 9< &ne 2<14. s"a"emen" and a s"a"emen" o% chan+es in e8&i"' %or "he 'ear Jre!are a a#ance shee" 0!ro!er#' c#assi-ed in narra"i,e %orm as a" 9< &ne 2<14. Jresen" "he In"eres" on Mor"+a+e Ex!ense acco&n" sho*in+ de"ai#ed en"ries %or "he 'ear ended 9< &ne 2<14 as i" *o&#d a!!ear a%"er a## ad6&s"men"s ha,e een made.

Jro#em :.19

CAS? AND ACCRAL ACCONTIN@ 

LO 1) :

Tran+ N+&'en o!era"es a roo-n+ &siness "ha" s!ecia#ises in re!#acin+ ro(en "i#es and c#eanin+ and re!airin+ roo%s and +&""ers. ?e e+an &siness in A!ri# 2<14 &" has no" 'e" es"a#ished a %orma# se" o% records. ?is son) Tram) has !re!ared cash recei!"s and !a'men"s s"a"emen"s %or each o% "he -rs" 9 mon"hs o% "he &siness) &" Tran+ N+&'en is *orried ao&" re#'in+ on "hem. ?e as(s 'o& "o !re!are a !ro!er/ se" o% -nancia# s"a"emen"s %or "he mon"h o% &ne.

B' re,ie*in+ "he an( s"a"emen"s) che8&e &""s) in,oice -#es and o"her da"a) 'o& deri,e a se" o% a#ance shee"s a" 1 &ne and 9< &ne. These are sho*n e#o*) %o##o*ed ' a s"a"emen" o% cash recei!"s and !a'men"s %or March. @ST is i+nored. N@EN ROOFIN@ SERICE Ba#ance Shee"s

1 &ne 2<14

9< &ne 2<14 ASSETS

Cash a" an( ; > 2<

; 1H> :< Acco&n"s recei,a#e > 22<

> 2< S&!!#ies on hand :> 1<<

:> 4:< E8&i!men" 42> <<<

:> :<< Acc&m&#a"ed de!recia"ion 0credi" 0> 4<<

01<> 9<<

;H> <<<

; 9> H<< LIABILITIES AND E5IT

Sa#aries !a'a#e ; :> 4:<

; > 9< E#ec"rici"' acco&n" !a'a#e 

1> :< T. N+&'en) Ca!i"a# <> 94<

:> 4H<

; H> <<<

; 9> H<<

1 N@EN ROOFIN@ SERICE Ba#ance Shee"s %or &ne 2<14 CAS? RECEIJTS

Recei,ed %rom credi" c&s"omers ;2> 4<

Con"ri&"ed ' T. N+&'en 2<> <<<

To"a# cash recei!"s

;:> 4< CAS? JAMENTS

Jaid %or s&!!#ies !&rchased

4> 1<

J&rchase o% e8&i!men" 12> :<<

Ja'men" o% sa#aries 4> <<

Jaid %or &ne ren" 2> <<<

S&ndr' ex!enses 2> 9<

Cash *i"hdra*n ' T. N+&'en 12> <<<

To"a# cash !a'men"s

:1> 44< Ne" increase in cash a#ance

; 4> 2<<

Re8&ired

From "he in%orma"ion !resen"ed) !re!are an income s"a"emen" on "he accr&a# asis %or "he mon"h o% &ne. ?in"7 o& ma' *ish "o !re!are 0recons"r&c" re#e,an" acco&n"s. I##&s"ra"e "he a!!aren" correc"ness o% 'o&r !ro-" amo&n" ' !re!arin+ a s"a"emen" o% chan+es in e8&i"' %or &ne 2<14.

Jro#em :.1: OJENIN@ T ACCONTS) ADSTIN@ ENTRIES AND JREJARIN@ FINANCIAL STATEMENTS  @STLO 9) :

@a,in/s @ardenin+ E8&i!men" ?ire/s &nad6&s"ed "ria# a#ance o% "he &siness a!!ears as sho*n e#o*. @AIN/S @ARDENIN@ E5IJMENT ?IRE nad6&s"ed Tria# Ba#ance as a" 9< &ne 2<14 Acco&n" Dei"

Credi" Cash a" an( ; H> 2<<

Acco&n"s recei,a#e 2> :<<

@ST recei,a#e

9> 9<<

Jre!aid ins&rance 1> 2<<

@ardenin+ e8&i!men" > <<

Acc&m&#a"ed de!recia"ion  !ar"' e8&i!men"

; :<> 4<< Acco&n"s !a'a#e

4> << @ST !a'a#e

H> <<< @. @reene) Ca!i"a#

1> 1< @. @reene) Dra*in+s 1> 91<

?ire %ees re,en&e

:> << Sa#aries ex!ense 24> H<<

Ren" ex!ense H> <<

Main"enance ex!ense 9> 1<<

E#ec"rici"' ex!ense 1> :<<

;1:H> 1<

;1:H> 1<

1

Addi"iona# in%orma"ion 0a Ex!ired ins&rance amo&n"s "o ;H<.

0 &ne e#ec"rici"' cos"s o% ;99< ha,e no" een !aid or recorded. No "ax in,oice has een recei,ed. 0c De!recia"ion on "he +ardenin+ e8&i!men" is ;14 >2H<. 0d ?ire %ees o% ;192< 0!#&s @ST o% ;192 *ere recei,ed in ad,ance and *ere no" considered "o e re,en&e a" a#ance da"e. 0e The Ren" Ex!ense acco&n" con"ains ;1::< !aid %or &#' 2<14 ren". 0% A hire %ee o% ;:1 recei,ed in cash 0inc#&din+ ;9 @ST *as recorded ' dei"in+ Acco&n"s Recei,a#e. 0+ Sa#aries earned amo&n"in+ "o ;H9< *i## e !aid in &#' and ha,e no" een recorded.

Re8&ired A. Se" &! T acco&n"s %or "he acco&n"s #is"ed in "he "ria# a#ance. 1. En"er "he acco&n" a#ances %rom "he "ria# a#ance in"o "he T acco&n"s. 2. Jos" "he ad6&s"in+ in%orma"ion direc"#' "o "he T acco&n"s. B. Jre!are an ad6&s"ed "ria# a#ance. C. Jre!are an income s"a"emen" and a s"a"emen" o% chan+es in e8&i"' %or "he 'ear ended 9< &ne 2<14. D. Jre!are a a#ance shee" as a" 9< &ne 2<14. Jro#em :.1H LO 9) :) 4

JREJARIN@ A ORS?EET AND FINANCIAL STATEMENTS 

The &nad6&s"ed "ria# a#ance o% ?e#ena/s ?ire Cars is sho*n e#o*7 ?ELENA/S ?IRE CARS nad6&s"ed Tria# Ba#ance as a" 9< &ne 2<14 Acco&n" Dei"

Credi" Cash a" an( ; > 1:<

Acco&n"s recei,a#e 12> 4<

@ST recei,a#e 1> H<<

O$ce s&!!#ies 4:<

?ire cars 9> 4<<

Acc&m&#a"ed de!recia"ion  hire cars

;9> :<< O$ce e8&i!men" 4> 2<<

Acc&m&#a"ed de!recia"ion o$ce e8&i!men"

9> H<<

Acco&n"s !a'a#e

1<> << nearned hire %ees

2> 24< @ST !a'a#e

9> 2:< ?. Sa,,a) Ca!i"a#

44> 4<< ?. Sa,,a) Dra*in+s 2<> 4<<

?ire %ees re,en&e

> << Ins&rance ex!ense > 1<

a+es ex!ense H<> 42<

Ad,er"isin+ ex!ense 9> <

Main"enance ex!ense > 4<<

F&e# and oi# ex!ense 1<> 4<

;22:> H<<

;22:> H<<

Addi"iona# in%orma"ion 0a Je"ro# !&rchased on credi" %or ;4< !#&s @ST o% 1

:<<. De!recia"ion on "he o$ce e8&i!men" is ;<. 0d The a#ance in "he Ad,er"isin+ Ex!ense acco&n" inc#&des ;4<< !re!a'men" 0ne" o% @ST %or an ad,er"isin+ cam!ai+n e+innin+ in &#'. 0e The a#ance in "he nearned ?ire Fees acco&n" inc#&des ;1<< recei,ed in Ma' %or hire ser,ices com!#e"ed in &ne.

0% The &ne ins&rance !remi&m o% ;<< !#&s @ST is o,erd&e and has no" een recorded. A "ax in,oice has no" een recei,ed. 0+ a+es earned &" no" !aid amo&n"ed "o ;11H<.

Re8&ired

Jre!are a 1