Accounting Test Question With Answer On Adjustments To Final Accounts

slang — Thu, 10 Sep 2009 08:37:30 +0000

QUESTION:

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:

	Dr ($)	Cr ($)
Purchase Ledger Control Account		22,975
Insurance	486
Motor Vehicles at cost	21,379
Accumulated provision for depreciation of motor vehicle at 1 st July 2005		8,310
Repairs to motor vehicles	1,087
Sales		262,390
Disposal of motor vehicle 30 April 2006		1,000

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

2005		$	2005		$
Jun 30	Balance b/d	486	Jun 30	Advertising	39
				Profit & Loss	411
				Balance c/d	36
		486			486

Motor Vehicle Account

2005		$	2005		$
Jun 30	Balance b/d	21,379	Jun 30	Disposal of motor vehicle	5,310
				Balance c/f	16,069
		21,379			21,379

Provision For Depreciation of Motor Vehicles Account

2005		$	2005		$
Jun 30	Disposal of motor vehicle	3,740	Jun 30	Balance b/d	8,310
	Balance c/d	8,670		Profit & Loss	4,100
		12,410			12,410

Disposal Of Motor Vehicles Account

2005		$	2005		$
Jun 30	Motor Vehicles	5,310	Apr 30	Bank	1,000
				Provision for depreciation	3,740
				Loss on Disposal	570
		5,310			5,310

Repairs To Motor Vehicles Account

2005		$	2005		$
Jun 30	Balance b/d	1,087	Jun 30	Profit & loss	1,480
	Sales	393
		1,480			1,480

Sales Account

2005		$	2005		$
Jun 30	Trading account	262,783	Jun 30	Balance b/d	262,390
				Repairs to motor vehicles	393
		262,783			262,783

Purchase Ledger Control Account

2005		$	2005		$
Jun 30	Purchases returns	190	Jun 30	Balance b/d	22,975
	Balance c/d	22,785
		22,975			22,975

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Accounting Test Question With Answer On Adjustments To Final Accounts