Double Entries

Question 1

Accruals

Answer 1

Dr Expense (SPL)
Cr Accruals (SFP)

Question 2

Prepayments

Answer 2

Dr Prepayments (SFP)
Cr Expense (SPL)

Question 3

Impairment

Answer 3

Dr Impairment Expense
Cr Accumulated Depreciation

Write down higher of:

• Fair value - cost to sell
• Value in use

Question 4

Depreciations

Answer 4

Dr Depreciation (SPL)
Cr Accumulated Depreciation

Question 5

Rights Issue

Answer 5

Dr Cash
Cr Share Capital
Cr Share Premium

Question 5

Bonus Issue

Answer 5

Dr Share Premium

Cr Share Capital

Question 6

Disposal (part-exchange)

Answer 6

Dr Disposals
Cr NCA Cost

Dr Accumulated Depreciation
Cr Disposals

Dr NCA PEA
Cr Disposals PEA (part-exchange allowance)

Dr NCA
Cr Cash/Payables

Balance disposals ledger to find profit or loss

Question 7

NCA Cost

Answer 7

Dr NCA cost

Cr Cash/payable with acquisition cost plus cost of bringing asset into working condition

Question 8

Closing Inventory

Answer 8

Dr Inventory (SFP)
Cr Closing inventory (COS)

Question 9

Accrued Income

Answer 9

Dr Accrued Income

Cr Income

Question 10

Deferred Income

Answer 10

Dr Income

Cr Deferred Income

Question 11

Sales returns, originally on credit

Answer 11

Dr Sales

Cr Trade Receivables

Question 12

Sales returns, originally a cash transaction

Answer 12

Dr Sales

Cr Cash

Question 13

Purchase returns, originally a credit transaction

Answer 13

Dr Payables

Cr Purchases

Question 14

Purchase returns, originally a cash transaction

Answer 14

Dr Cash

Cr Payables

Question 15

Receive cash from a customer, previously an allowance for the debt

Answer 15

Treat as normal:

Dr Cash
Cr Trade Receivables

Question 16

Write off, previously had an allowance for

Answer 16

Dr Irrecoverable Debts Expense

Cr Receivables

Question 17

Written off, subsequently recovered

Answer 17

Dr Cash

Cr Irrecoverable Debts Expense

Question 18

Increase in allowance for receivables

Answer 18

Dr Allowance for receivables

Cr Trade Receivables

Question 19

Decrease in allowance for receivables

Answer 19

Dr Trade Receivables

Cr Allowance for receivables

Question 20

VAT on sales

Answer 20

Dr Receivables - VAT inclusive
Cr Sales - VAT exclusive
Cr VAT

Question 21

VAT on purchases

Answer 21

Dr Purchases - exclusive
Dr VAT
Cr Cash/Payables - inclusive

Question 22

Contra

Answer 22

Dr Payables

Cr Receivables

Question 23

Dishonoured Cheques

Answer 23

Dr Receivables

Cr Cash

Question 24

When does the suspense account increase profit?

Answer 24

Dr Statement of financial position | Cr Statement of profit or loss

Question 25

When does the suspense account increase profit?

Answer 25

Dr Statement of financial position | Cr Statement of profit or loss

Question 26

When does the suspense account decrease profit?

Answer 26

Dr Statement of profit or loss | Cr Statement of financial position

Question 27

Admission of partner

Answer 27

Account for new capital introduced by partner: Dr Cash Cr Capital

Question 28

Issue of a loan note

Answer 28

Dr Cash | Cr Non-current liabilities

Question 29

'Finance cost' in the SPL

Answer 29

This is the interest incurred on the issue of loan notes Dr Finance Cost Cr Cash/Accrual

Question 30

Provision

Answer 30

Dr Relevant Expense Account | Cr Provisions

Question 31

When the expenditure for which the provision was created is incurred:

Answer 31

Dr Provision | Cr Cash at bank

Question 32

Tax liability

Answer 32

Dr Tax Expense | Cr Tax payable

Question 33

Paying actual tax bill

Answer 33

Dr Tax payable | Cr Cash

Question 34

Over-payment on tax liability

Answer 34

Dr Tax Expense | Cr Tax Payable