Accounting Test Question With Answer On Adjustments To Final Accounts

Mr. Steven is a retailer whose accounting year ends on 30 June 2006. He has extracted a Trial Balance, before producing his final accounts and the following are some of the balance included in that Trial Balance:

The following information is also available:

(a)     The Insurance Account was charged with $39 which relates, in fact to advertising.

(b)     The Insurance Account includes a premium of $144 for the year ended 30 September 2006

(c)     The sale of motor vehicle for $1,000 on 30 April 2006 was recorded in the ledger. No other entries have been made. The cost of the motor vehicle sold was $5,310 and the depreciation to the disposal date was $3,740

(d)     Depreciation of $4,100 is to be provided on the motor vehicles for the year ended 30 June 2006

(e)     During the year, the local garage repaired one of Mr. Trader’s motor vehicles. No payment has been made for this work. Instead, Mr. Trader supplied the garage owner with goods with a retail value of $393

(f)       Creditor’s account balances at 30 June 2006 totalled $22,785 The differences from the Purchases Ledger Control Account was accounted for by purchases returns. These had been correctly dealt with in the suppliers Personal Accounts but have not been entered in the Purchases Ledger Control Account.

Required:

In the books of Mr.Steven, open the seven Ledger Accounts named and enter the balances given. Post the entries necessary to deal with the matters specified in (a) to (f) and balance the accounts. (25 marks)

ANSWER

Insurance Account

Motor Vehicle Account

Provision For Depreciation of Motor Vehicles Account

Disposal Of Motor Vehicles Account

Repairs To Motor Vehicles Account

Sales Account

Purchase Ledger Control Account