2009_1 T02 S

2009_1 T02 S - ACCT2101 Financial Reporting Tutorial 2...

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ACCT2101 – Financial Reporting Tutorial 2 - Solutions 1 TOPIC 2: DOUBLE-ENTRY ACCOUNTING SYSTEM Question 3.2 – Accounting Equation a) not possible right hand side of the accounting equation will exceed the left hand side b) possible c) not possible left hand side of the accounting equation will exceed the right hand side Question 3.5 – Nature of Accounts Assets normally have a debit balance, whilst liabilities and equity normally have a credit balance. Revenues have a credit balance, and expenses have a debit balance Examples Assets DR Liabilities CR Equity CR Revenue Cr Expenses DR Cash Accts Payable Share Capital Sales Electricity exp Acct Rec Loan Retained Profits Dividend Revenue Income tax exp Inventory Income Tax Payable Reserves Interest Revenue Rent expense Furn & Fittings Wages Payable Other Revenue Sundry expense Land & Buildings Revenue Received in Advance Depreciation exp Investments Mortgage Amortisation exp Intangibles Provisions Prepayments Problem 3.22 – Normal Balance Accounts Receivable Debit Share Capital Credit Accounts Payable Credit Investments Debit Inventory Debit Plant & Equipment Debit Provision for Employee Entitlements Credit Accrued Expenses Credit Taxes Payable Credit Prepayments Debit Retained Profits Credit Problem 3.8 – Accounting Equation – Ascertain unknown amounts Retained profits 30/6/09 = Retained profits 1/7/08 + Net profit –Dividends = 200 + 150 – 50 = 300 Liabilities 1/7/08 = Assets – (Share capital 1/7/08 + Retained profits 1/7/08) = 600 – (180 + 200) = 220 Assets 30/6/09 = Liabilities (30/6/09) + (SC 30/6/09+ RP 30/6/09) = 300 + (190 + 300) = 790
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ACCT2101 – Financial Reporting Tutorial 2 - Solutions 2 Problem 3.28 Dragons Pty Ltd Journal entries 1. Credit Sales Dr Accounts receivable 200,000 Cr Sales revenue 200,000 2. Cash Sales Dr Cash 6,000 Cr Sales revenue 6,000 3. Collection from customers Dr Cash 150,000 Cr Accounts receivable 150,000 4. Purchase of inventory Dr Inventory 70,000 Cr Accounts payable 70,000 5. Payments of accounts payable Dr Accounts payable 50,000 Cr Cash
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This note was uploaded on 06/06/2009 for the course 2131 FFF taught by Professor Mrhuh during the Three '09 term at Queensland.

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2009_1 T02 S - ACCT2101 Financial Reporting Tutorial 2...

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