Financial Accounting Assignment

Question 1 -

Harry is a local trader who operates his petty cash on the imprest system. He balances the Petty Cash Book at the end of each month and makes the float up to $500 on the first day of the following month. The following four analysis columns are in use: Travel, Cleaning, Postage and Stationery, Ledger

On 31 March 2016, $122.04 remained in the petty cash. Transactions during April 2016 were as follows:

REQUIRED: Write up and balance the Petty Cash Book for the month of April 2016. Bring down the balance of cash-in-hand at 1 May 2016 and restore the imprest. The last voucher number used in March 2016 was number 513.

Question 2 -

On the 1 September 2016, a company, Billy had the following. Purchase Ledger Account balances:

G Jolly - $ 5,000 Cr

D Yen - $ 2,900 Cr

Billy made the following credit purchases during September 2016:           

The following returns outwards were made during Sep 2016:

On 30 Sep 2016, Billy paid cheques to his creditors in full settlement of the amount owing at 1 Sep 2016. G Jolly allowed a cash discount of 3% and D Yen allowed a cash discount of 2%.

REQUIRED: Prepare, in the books of Billy, the accounts of G Jolly and D Yen duly balanced at 30 Sep. (Show all the workings)

Question 3 -

REQUIRED: State three advantages of using control accounts.

Question 4 -

The bank column of the cash book of Duet Limited for the month ended 31 December 2016 showed a. credit balance of $431,280 which did not agree with the company's bank statement for the same period.

During your investigation of the difference, the following facts are revealed:

(1) A receipt from Witty Chan relating to a credit sale amounting to $597,000 was received on 30 December 2016 and immediately banked but no entry had been made in the books. The items appeared in the bank statement on 2 January 2017.

(2) Two cheques for $2,850 and $15,360 respectively were drawn in December 2016 and correctly entered in the cash book, but had not been presented for payment by the bank at the end of 31 December 2016.

(3) The receipts side of the cash book had been overcast by $4,500.

(4) A cheque for $2,475 received from a customer was returned by the bank marked "insufficient funds", but no corresponding entry had been made in the cash book.

(5) A credit transfer amounting to $18,000 had been posted to the bank statement on 20 December 2016 from a debtor.

(6) Bank charges amounting to $2,515 had not been entered in the cash book.

(7) Dividends amounting to $21,600 had been credited by the bank but not entered in the cash book.

(8) A standing order payment for $3,300, entered on the bank statement, had been entered on the debit side of the cash book.

(9) A cheque for $1,581, drawn by another customer of the bank, had been charged to Duet Limited's business bank account by mistake.

(10) A cheque for $3,600 received from a customer in settlement of his account had been entered in the cash book as $6,300.

(11) A standing order for rent repayments of $10,500 had been paid twice, in error, by the bank. No entry had been made in the books for either of the payments. --

(12) A monthly payment by standing order for telephone on 17 December of $380 had been omitted by the company. No entries regarding this payment had been recorded in the company cash book.

REQUIRED:

(i) Prepare the necessary adjustments in the cash book of Duet Limited, bringing down the adjusted balance on 31 December 2016.

(ii) Using the adjusted cash book balance in (a) above, prepare a bank reconciliation statement showing the adjusted bank statement balance (after adjustments of bank errors) and the original bank statement balance (before adjustment of bank errors) as at 31 December 2016.

Question 5 -

Progression Ltd has its financial year ended on 31 March. The following information was extracted from the business records:

Motor Insurance Account

1 April 2014         Bal b/d                  2 months' insurance prepaid       $2,400

A payment of $16,200 was made on 1 June 2014 in respect of the two year ended 31 May 2016.

Rents Receivable Account

(1) Tenant A paid $9,000 rent for every six month in advance on 1 June 2014, 1 December 2014, 1 Jun 2015 and 1 December 2015,

(2) On 1 June 2014, Tenant B paid a two year's rent of $10,800 in advance.

(3) Tenant C commenced a new lease on 1 Oct 2015 at a rental of $18,000 per annum. The first three monthly rents were received in advance but nothing further has been received.

Telephone Account -

Progression Ltd. signed, a five-year contract with a local telephone company on 1 April 2013 and fixed the annual telephone expenses of $3,600.

1 April 2014         Bal b/d                  6 month's telephone prepaid     $1,800

The following payments were made

27 Nov 2014        6 months' telephone expenses     $1,800

20 Mar 2016        6 months' telephone expenses     $1,800,

REQUIRED: In the books of Progression Ltd, prepare and balance the following accounts at 31 March 2015 and 31 March 2016. Transfers to the Income Statement Account must be clearly shown.

(a) Motor Insurance Account

(b) Rents Receivable Account

(c) Telephone Account

In respect of the year ended 31 March 2016:

(d) Prepare for Progression Ltd a Statement of Financial Position extract clearly showing both accruals and prepayments.