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Instruction: Complete ALL questions from this section

Accounting

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Instruction: Complete ALL questions from this section.

Question 1 

You have been recently employed as the Accounting Clerk for Seven Seas Trading Enterprises. During your probation period, your supervisor, the Accountant, assigned you to assist him with writing up the ledgers and preparing the bank reconciliation statement.

For the month of February 2020, Seven Seas Trading Enterprise made the following receipts and payments:

 

Date February	Details	Cheque number	Amount  $ (bank)	Amount  $ (cash)
3	Paid Appleton Ltd after deducting discount of $4.75	123456	675.25
5	Paid wages in cash			58.60
6	J. Abbott paid on his account after deducting $2.54 discount		208.50
10	Cash sales			145.25
12	Paid rent	123457	125.00
16	Cash sales		278.30
17	Paid D Smith & Co. after deducting discount of $3.70	123458	421.80
20	Sales			204.35
23	D. Richards Ltd made a payment after deducting $2.70 discount		162.30
24	Bought stationary for cash			75.50
25	Paid G. Christie	123459	797.55
26	Sales		353.95
27	Received amount from P. Paul Ltd		262.30

 

 

Additional information:

 

1. The cash book at the start of the month shows $250.75 cash and $1 340.50 in the bank. 

 

2. The balances on the following accounts were extracted at the start of the month:

 

 

 

 

 

$

Appleton Ltd.			900
Wages			120
J Abbott			730
Rent			125
Sales			4250
D. Smith & Co			425.50
D Richards Ltd			380.50
G. Christie			1201.25
P. Paul Ltd			262.30

                                     

3. There are 28 days in the month of February 2020.

 

The bank statement below for February was received on March 3, 2020:

 

		Western National Bank plc
		Park Plaza Branch, Tent City
Seven Seas Trading Enterprises
Account Number: 678-123-18		Statement number: 2
February 1 – February 28, 2020
Date	Particulars	Payments	Receipts	Balance
2020		$	$	$
1 Feb	Balance brought forward			1340.50Cr
7 Feb	Credit		208.50	1549.00 Cr
10 Feb	Cheque 123456	675.25		873.75Cr
17 Feb	Credit		278.30	1152.05Cr
17 Feb	Cheque 123457	125.00		1027.05Cr
24 Feb	Credit		162.30	1189.35Cr
24 Feb	BACS J Jarvis Ltd		100.00	1289.35Cr
26 Feb	Cheque 123458	421.80		867.55Cr
26 Feb	Direct debit A-Z Finance Corporation	150.00		717.55Cr
27 Feb	Credit		353.95	1071.50Cr
28 Feb	Bank charges	10.00		1061.50Cr

 

You are required to:

 

1. Write up the three-column cash book for the month of February 2020. Folio columns are

required as appropriate.                                                                                       (6 ¼ marks)

 

2. Prepare the ledger accounts to record the transactions. Balance the accounts.    

                                                                                                                           (10 ¼ marks)

 

3. Prepare the bank reconciliation statement for the month of February 2020 starting with

the bank balance.                                                                                             (4 ½ marks) (Total 20 marks)

Question 2

 

1. Heather Hall has not accounted for adjustments for the past 3 years. She needs help updating her books. The following information is made available:                       

Date   Bad debts       Provision  

Year 1 ending 31 December 2018    $26 000           5% 

Year 2 ending 31 December 2019    $22 000           5% 

Year 3 ending 31 December 2020    $23 000           5% 

 

Prepare for Heather Hall: 

 

The extracts of her income statement and statement of financial position (balance sheet) to reflect adjustments for bad debts and provision for doubtful debts for the 3 years as

indicated above.                                                                                                      (9 marks) 

 

2. Heather Hall also purchased some vehicles, as follows, that have not been depreciated.  Year purchased        Motor vehicle at cost     Depreciation  

Jan 2018          $90 000           25% straight-line method 

Jan 2019          $60 000           25% straight-line method 

Jan 2020          $75 000           25% straight-line method

 

Prepare for Heather Hall: 

 

1. 1. The provision for depreciation account for the three years ending on 31 December

2020.                                                                                                                    (5 marks)

 

1. 2. A statement of financial position (balance sheet) extract showing the net book value

for all three vehicles as at 31 December 2020.                                                        (1 mark)

 

3. Complete the following table to assist Heather Hall with adjustments to her final accounts. The first line has been completed for you. 

 

Account          Paid for the year         Owing             Prepaid              Transfer to

income

statement 

Salaries           $20 000           $3 000                     $23 000 

Rent    $7 000                                $500                 $ 

Electricity       $12 000           $5 000                     $ 

Telephone       $2 700             $300            $ 

Insurance        $1 000                                $300                 $ 

Interest paid    $500    $100            $ 

        (5 marks)

 

(Total 20 marks)

 

Question 3

 

The following is a list of transactions for the month of June 2019 for Jackie Blake, who operates a liquor store in May Pen:

 

            June

01        Jackie Blake invested $80,000, cash into her business

05        Bought on credit from Jazz Company, merchandise with a total cost of $20,000

06        Sold merchandise valued at $25,000 to Jon, who paid $13,200 by cheque, with the balance to be paid later.

10        Jackie took $3,000 worth of merchandise for personal consumption.

15        Purchased furniture on credit from Ashley Furniture Ltd, $15,000.

1. 1. 15. Cash purchases, $25,000
      16. Returned merchandise to Jazz Company valued at $2000.
      17. Received a loan $30,000 from Scotty by cheque

1. 1. 20. Returned $2,000 worth of furniture to Ashley Furniture Company
      21. Paid rent to Joseph, $3,000 by cheque

25        Paid off the amount owing to Jazz Company by cheque.

1. 1. 27. Cash sales $35,000
      28. After receiving a $1,000 discount from Ashley Furniture Company, settled the amount owing by cheque

 

1. Record the transactions above in appropriate accounts in the general ledger provided and balance each account off.                                                                                       (15 marks)
2. Extract a trial balance as at June 30, 2019.               (5 marks)

(Total 20 marks)