Term 2 SFQ & MCQ's Tutorial 0-5 Flashcards
Larchfield Enterprises’s cash book shows a debit balance of £1,400. The bank statement at the same date shows an overdrawn balance of £420. What time difference could account for the discrepancy?
Cheques received but not yet cleared of £1,820
Firth Street Trader’s cash book at 10 January 2012 shows a debit balance of £4,250. When the bank statement as at 10 January 2011 was received, it was found that cheques drawn by the business totalling £548 had not been presented. Also, the bank statement recorded bank charges of £116 which had not been entered in the cash book. What was the bank statement balance as at 10 January 2012?
Cash Book Balance : £4,250
less: Bank charge: (£116)
Adjusted Cash Book Balance : £4,134
Bank Statement Balance: ?
Unpresented cheques: (£548)
£4,134
Therefore, Bank Statement Balance must have been £4,682.
The cash book shows a bank balance of £5,675 overdrawn at 31 August. It is subsequently discovered that a standing order for £125 has been entered twice, and that a dishonoured cheque for £450 has been debited in the cash book instead of credited. The correct balance should be:
Cash Book Balance: £5,675 o/d
less: Standing order reversed: (£125)
Dishonoured cheque 2x£450: £900
Bank Balance : £6,450 o/d
In preparing a company’s bank reconciliation at November 20X5, the following items are causing the difference between the cash book balance and the bank statement balance: Bank charges Error by bank (Cheque incorrectly debited to the account) Lodgements not credited Outstanding cheques Direct debit Cheque paid in by the company and dishonoured Which of these items will require an entry in the cash book?
Bank charges
Direct debit
Cheque paid in by the company and dishonoured
If sales are £12,000 and the gross profit percentage is 20%, what is the gross profit?
Sales £12,000 100%
COS £9,600 80%
GP £2,400 20%
Answer is £2,400.
If sales are £70,000 and teh gross profit mark-up is 40%, what is the cost of sales?
£ %
Sales 70,000 140
COS 50,000 100
GP 20,000 40
Answer is £50,000.
Erica’s inventory at 1 January 2012 was £18,000 at cost. Her budget for 2012 includes the following estimates: Sales: £112,000 Inventory at 31 Dec 2012: £24,000 If Erica achieves a constant gross profit mark-up of 25%, what is her budgeted purchases figure for 2012?
£ %
Sales 112,000 125
Opening inventory 18,000
+Purchases 95,600
-Closing inventory (24,000)
COS (89,600) 100
GP 22,400 25
Answer is £95,600.
Harry’s opening inventory is £28,520. Purchases and sales for 20X7 were £112,900 and £182,000 respectively. The gross margin is a constant 40% on sales. On 31 Dec 20X7 a fire destroyed all the inventory except for some inventory items costing £480. What was the cost of the inventory destroyed?
£ %
Sales 182,000 100
COS 109,200 60
GP 72,800 40
Sales 182,000
Opening inventory 28,520
+ Purchases 112,900
- Closing inventory (480)
(_140,940)_ 41,060
Comparing actual and expected: £140,940 - £109,200 = £31,740 cost of inventory destroyed
A business operates on a gross profit margin of 33 1/3 %. The gross profit on sales was £800 and expenses were £680. The net profit percentage is:
£ %
Sales 2,400 100
COS 1,600 66 2/3
GP 800 33 1/3
Expenses (680)
NP 120
£120/£2,400 = 5%
The following information is available to Daniella, a sole trader, for the year ended 31 Dec 2011: Opening Bal. Closing Bal. Receivables 4,300 5,500 Payables 2,800 5,100 Inventory 6,300 2,500 Daniella’s bank statements for the year show that payments to creditors of £46,300 and receipts from debtors of £72,500. What is Daniella’s gross profit percentage?
_ Receivables _ _ Payables _
b/f 4,300 bank 72,500 bank 46,300 b/f 2,800
sales 73,700 bal c/f 5,500 c/f 5,100 purchases 48,600
78,000 78,000 51,400 51,400
£ Sales 73,700 Opening inventory 6,300 \+ Purchases _ 48,600_
54,900 - Closing inventory _2,500_
_(52,400)_
Gross Profit 21,300
Gross profit % = £ 21,300/ £73,700 x 100 = 28.9%
A club takes credit for subscriptions when they become due. On 1 January 2012 arrears of subcriptions amounted to £76 and subscriptions paid in advance were £144. On 31 Dec 2012 the amounts were £96 and £160 respectively. Subscription receipts during the year were £1,580. In the income and expenditure account for the year ended 31 Dec 2012 the income from subscriptions would be shown as:
_ Subscriptions Account _
Bal b/f 76 Bal b/f 144
I & E 1,584 Subs rec’d 1,580
Bal c/f _ 160_ Bal c/f _ 96_
1,820 1,820
Answer is £1,584.
A club’s bar inventories a 1 January 2012 cost £7,500. During the year to 31 Dec 2012 cash receipts from customers of £56,580 were lodged in the bank. The barman’s wages of £100 per week for 52 weeks were paid from till receipts. Bar purchases during the year amounted to £42,400. Bar prices are fixed so as to achieve a uniform gross profit percentage of 40% on sales. The cost of the bar inventory zt 31 Dec 2012 would be shown as:
£ %
Cash receipts 56,680
Bar wages (£100x52) 5,200
61,880 100
Opening inventory 7,500
+ Purchases 42,400
- Closing inventory (12,772)
COS 37,128 60
GP 24,752 40
The following information is available in respect of Alf, a sole trader;
£
Net Profit for the Year 14,000
Capital at the End of the Year 62,000
Drawings 18,000
No further capital was introduced during the year. What was Alf’s opening capital?
£
Net profit 14,000
- Drawings 18,000
(4,000)
Opening capital 66,000 (bal fig)
Closing capital 62,000
Angie does not keep full acounting records, but the following information is available for her accounting year end 31 De 2011:
£
Cash Paid for Goods Supplied on Credit 55,700
Cash Purchases 7,800
Payables at 1 January 2012 1,940
Payables at 31 Dec 2012 1,440
What is Angie’s figure for purchases for the year 2012?
_ Payables _
Cash paid 55,700 bal b/f 1,940
Bal c/f _ 1,440_ Purchases 55,200
57,140 57,140
Total purchases = £55,200 + £7,800 (cash purchases) = £63,000
If sales are £16,000 and the gross profit percentage is 20%, what is the cost of sales?
£ %
Sales 16,000 100
COS 12,800 80
GP 32,000 20
In the absence of a formal partnership agreement, what is prescribed by the Partnership Act 1890?
Equal profit shares
In the absence of any agreement to the contrary, the Partnership Act 1890 presribes that salaries should be paid:
to none of the partners.
What double entry is necessary to reflect interest payable on partners’ drawings?
Partners’ current accounts Profit & Loss appropriation accounts
Phil & Jill are partners in a business. They share residual profits in the ratio 3:2 after interest on partners’ capital of 6% pa and interest on partners’ drawings of 10% pa.
Their capital balances throughout 20X6 were £8,000 and £6,000 respectively and the average balances on their drawings accounts were £12,000 and £15,000. Net trading profit for 20X6 was £32,000.
Calculate the balance of residual profits available for appropriation in profit sharing ratio.
Interest on Drawings:
Phil 12,000 x 10% = £1,200
Jill 15,000 x 10% = £1,500
Interest on Capital:
Phil 8,000 x 6% = £480
Jill 6,000 x 6% = £360
NP 32,000
+INT DR P 1,200
J _1,500_
_2,700_
34,700
-INT CA P 480
J _360_
_(840)_
33,860 (ANSWER)
Phil & Jill are partners in a business. They share residual profits in the ratio 3:2 after interest on partners’ capital of 6% pa and interest on partners’ drawings of 10% pa.
Their capital balances throughout 20X6 were £8,000 and £6,000 respectively and the average balances on their drawings accounts were £12,000 and £15,000. Net trading profit for 20X6 was £32,000.
Calculate the net amount of all the sums transferred from the appropriation account to the current account of Phil.
Balance of residual profits available for appropriation in profit sharing ratio: 33,860
Profit share 3/5 x 33,680 = £20,316
Current Account (Phil)
Drawings 12,000 Interest on Capital 480
Interest on Drawings 1,200 Profit share 20,316
bal c/f 7,596 _ _
20,796 20,796
Net: 19,596 DR
The rights and liabilities of partners among themselves:
may be freely agreed.
X and Y are in a partnership, sharing profits equally and preparing their accounts to 31 Dec each year. On 1 July 2012, Z joined the partnership, and from that date profits are shared X 40%, Y 40% and Z 20%.In the year ended 31 Dec 2012, profits were:
£
6 months to 31 June 2012 200,000
6 months to 31 Dec 2012 300,000
It was agreed that X and Y only should bear equally the expense for an irrecoverable debt of £40,000 written off in the 6 months to 31 Dec 2012 in arriving at the £300,000 profit.
What is X’s profit share for the year?
£ (000’s)
6 months to 30 June 2010 100 ( 50% x 200,000)
6 months to 31 December 2010 136 ( 40% x 340,000)
236
Less: irrecoverable debt 20 (50% x 40,000)
216
Answer is £216,000.
S and T are in partnership and prepare their accounts to 31 Dec each year. On 1 July 2012, U joined the partnership.
Profit sharing arrangements are:
6 months to
30 June 2012 31 Dec 2012
Salary S £15,000 £25,000
Share of profit S 60% 40%
T 40% 40%
U 20%
The partnership profit for the year ended 31 Dec 2012 was £350,000 accruing evenly over the year.
What are the partners’ total profit shares for the year ended 31 Dec 2012?
S T U
6 months to 30.6.2010
Salaries 15
Profit share 60:40 96 64
(£175000-15,000=£160,000)
6 months to 31.12.2010
Salaries 25
Profit share 40:40:20 60 _ 60_ _ 30_
(£175000-25000=£150,000)
196 124 30
Anna, Boris and Conrad share their partnership profits int he ratio 7:3:5. Boris gets a salary of £20,000 pa. The net profit for the year is £170,000.
How much does each partner get?
Anna Boris Conrad Total
Salary 20,000 20,000
Share of residual
Profit
(£170,000-20,000)
Shared 7:3:5 70,000 30,000 50,000 150,000
70,000 50,000 50,000 170,000
Xenon, Yvonne and Zelda have a profit sharing ratio of 3:2:1 with Zelda due a salary of £8,000. Yvonne has a minimum profit share of £16,000 guaranteed by Xenon.
The partnership made a profit of £26,000.
How much profit will be appropriated to each partner?
Xenon Yvonne Zelda Total
Salary 8,000 8,000
Share residual profit
(£26,000-8,000)
Shared 3:2:1 9,000 6,000 3,000 18,000
9,000 6,000 11,000 18,000
Reallocation from
Xenon to Zelda (10,000) 10,000 _ - _ _ _
(1,000) 16,000 11,000 26,000
