Cash 765120000 discount allowed 10400000 bad debt

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Cash7,651,200.00Discount allowed104,000.00Bad Debt40,000.00Balance c/d600,000.008,445,200.00Purchases ledger Control AccountSh.Bank6,100,000.00Discount received96,000.00Balance c/d440,000.006,644,000.00Sh.Balance b/d360,000.00Purchases6,284,000.006,644,000.00Notes1Depreciation of FixturesBalance b/f560,000.00Additions20,000.00580,000.00Less Closing value(510,000.00)Depreciation70,000.002Rent and ratesPrepayment b/f8,000.00Paid during the period95,000.00103,000.00Less Prepayments c/f(10,000.00)Charge to Profit and Loss93,000.003Lighting and HeatingAccruals b/f(16,000.00)Paid during the year42,000.0026,000.00Accruals c/f14,000.0040,000.004General expensesAccruals b/f(48,000.00)Paid during the year160,000.00112,000.00
112Answers – Past PapersSTRATHMORE UNIVERSITYREVISION KITAccruals c/f38,000.00150,000.005Amount banked from cashCredits on bank statement7,034,000.00Less cheques dishonoured by bank now banked(36,000.00)6,998,000.006Payments to creditorsAmount per bank statement6,100,000.00Unpresented cheques b/f(56,000.00)6,044,000.00Add unpresented cheques c/f64,000.006,108,000.007Bank:Balance as per bank statement198,600.00Less unpresented cheques64,000.00Balance as per cashbook262,600.008Accrued expensesGeneral expenses38,000.00Lighting and heating14,000.00Loan interest (3 months)6,000.0058,000.00QUESTION FIVEa)Aprovisionis an amount written off or retained by charging it in the profit and lossaccount i.e. writing off by way of providing for depreciation or reduction in value of assets.A provision is retained by way of providing for any known liability of which the amountcannot be ascertained accurately.Aliabilityis an amount owing which is accurately known. Therefore the differencebetween a provision and a liability will be based on the accuracy of the amount. Rent owingat the end of the financial year would normally be known with precision thus it would be aliability.Legal charges for a court case for which the lawyers have not yet submitted theirbill would be a provision.Areserveis an amount set aside from the profits (from the profit and loss appropriationaccount).A reserve may also arise fro events out of the profit and loss account (e.g. forcapital reserves we have share premium). Normally the reserves are set aside for specificpurpose as sometimes it may not be necessary to distribute all the profits of the companyto shareholders. E.g. revenue reserves may be used to pay out bonus shares, share premiummay be used to write off preliminary expenses and so on.b)Aprovisionis normally charged in the profit and loss account and reduced from therelevant asset e.g. a provision for doubtful debt is deducted from the debtors figure asshown in the balance sheet.A liability depending on whether it is current or non-current liability will be shown underthe relevant headings in the balance sheet e.g. the creditors will be shown under currentliabilities and Debenture will be shown under non-current liabilities.
Past Paper Questions and Answers113FINANCIAL ACCOUNTING1A reserve is normally shown under it's relevant headings in the balance sheet together withthe other shareholders funds. E.g. Share premium is shown under capital reserves and

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Term
Summer
Professor
Stevebico
Tags
Accounting, Management, Balance Sheet, STRATHMORE UNIVERSITY

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