Tutorial Questions: Principles of Accounting 2

Tutorial 1

1. During the year to 31 December 20X6,the following debts are found to be bad and are written off on the dates shown:
9 March T Wright, RM86
30 May S O’Connor, RM111
25 June C Smith, RM75
10 October S Proctor, RM39

Show the bad debts account and the effect on the profit and loss account for the year ended 31 December 20X6.

2. The following are the total figures for debtors at the end of each financial year. The provision for doubtful debts is to be
maintained at 4% of debtors at the year-end.
Year ended 31 December Value of amounts receivable
20X1 RM12,000
20X2 RM15,000
20X3 RM14,000

Assuming no provision for doubtful debts had previously existed you are required to:

(a) Construct the provision for doubtful debts account for 20X1, 2 and 3.
(b) Show the relevant entries on the profit and loss account for the year ended 31 December 20X1, 2 and 3.
(c) Show the debtors on balance sheet extracts as at 31 December 20X1, 2 and 3.

3. On 1 July 20X6 there was a balance of RM600 in the Provision for Doubtful Debts Account and it was decided to maintain
the provision at 5% of the debtors at each year-end. The debtors at 30 June for the next three years were:
RM
20X7 15,000
20X8 10,000
20X9 10,000

Show the provision for doubtful debts account for the period 1.7.X6 to 30.6.X9

4. As at 1 April 20X8 we were owed RM650 from Paul Evans. On 26 July Evans was declared bankrupt. A payment of 35p in the
RM was received in full settlement. The remaining balance was written off as a bad debt.
Write up the account of Evans, as it would appear in the Sales Ledger

5. In a new business during the year ended 31 December 20X5 the following debts are found to be bad and are written off on
the date shown:
28 February N Johnston RM87
27 August M Johnson RM32
17 September D Scaife RM112

Show the bad debts account for the year ended 31 December 20X5

6. The debtors figures below have been extracted from the end of year final accounts of Hope Ltd, for a four –year period:

20X1 RM4,000
20X2 RM6,000
20X3 RM6,000
20X4 RM3,000

The directors have decided to create a provision for doubtful debts equal to 4% of outstanding debtors at the year-end.

Construct the provision for doubtful debts account for this period of time - assuming no prior provision existed in the books
of Hope Ltd.

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Tutorial Questions: Principles of Accounting 2

Tutorial 2:

1. Mark Lamb has purchased a new price of equipment to help speed up his production line. The equipment cost RM25,000
and is expected to last for five years. At the end of this period the equipment can be traded in for the value of RM4,000.
You are required to calculate the depreciation on the asset using both methods show the balance remaining on the van at
the end of each of the 5 years for each method. Assume that 30% is to be used for the reducing balance method.

2. Duncan Palmer, a sole trader purchases a delivery van for the sum of RM10,000. It has as estimated life of 8 years and a
scrap value of RM1,600. Palmer is not sure whether to use the straight line or the reducing balance method when providing
for deprecation on the van.
You are required to calculate the depreciation on the van using both methods show the balance remaining on the van at
the end of each of the 8 years for each method. Assume that 20% is to be used for the reducing balance method.

3. A forklift truck is bought for RM15,000. It will be used for 6 years and is expected to have no residual value.
Show the depreciation calculations for each year using both the straight line method and the reducing balance method
(assuming a rate of 40%)

4. A delivery vehicle costs RM25,000 and is expected to last 5 years. At the end of the five years it is expected to have a scrap
value of RM2,000. Calculate the deprecation for each year using:

(a) Straight-line method

(b) Reducing balance method (using a rate of 40%)

5. A machine is bought for RM60,000 and is expected, at the end of its life, to have residual value of RM5,000. The machine will
need replacing after 4 years. Calculate the deprecation for each year using:

(a) Straight-line method

(b) Reducing balance method (using a rate of 50%)

Tutorial 3

1. The financial year of S Gill ended on 31 December 20X4. Show the ledger accounts for the following items including the
balance transferred to the necessary part of the financial statements, also the balance carried down to 20X5.

(a) Rent: Owing at 1 January 20X4 RM56; Paid in 20X4 RM434.

(b) Commission: Received in 20X4 RM200, still owed at 31 December 20X4 RM40.
(c) Insurance: Prepaid at 1 January 20X4 RM32; Paid in 20X4 RM865.

2. A Swift’s financial year ended on 31 March 20X5. Show the ledger accounts for the following items including the balance
transferred to the necessary part of the financial statements, also the balance carried down to the next year.

(a) Rates: Owing at 1 April 20X4 RM54; Paid during financial year RM322; Owing at 31 March 20X5 RM76.
(b) Motor expenses; Owing at 1 April 20X4 RM32; Paid during financial year RM154; Prepaid at 31 March 20X5 RM12.
(c) Rent: Prepaid at 1 April 20X4 RM89, Paid during financial year RM1320; Owing at 31 March 20X5 RM87.
(d) Interest received; Received during financial year RM65; Still owed to firm at 31 March 20X5 RM8.

3. From the following trial balance of J Hall, you are asked to draw up an income statement for the year ended 31 March 20X2.

Dr Cr
RM RM
Sales 52000
Purchases 23000

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Tutorial Questions: Principles of Accounting 2

Inventory as at 1 April 20X1 8550

Premises 75000
Equipment 18000
Returns inwards 340
Bank 1280
Wages 5600
Insurance 390
Advertising 260
Capital 94660
Drawings 11800
Returns outwards 450
Accounts receivable 6500
Accounts payable 4960
Rent 1350
152070 152070

Additional information:
 Inventory as at 31 March 20X2 was valued at RM10660
 Depreciation is to be provided as follows: Premises 10%, Equipment 20% (both on cost).
 A provision for doubtful debts is tot be created at 5% of amounts receivable at the year-end.
 Accrued rent RM211.
 Insurance paid in advance RM120

4. The financial year of J Johnston ended on 31 December 20X7. From the following information construct ledger accounts for
each of the following:
(a) Rent: Paid during 2007 RM395, prepaid for 20X8 RM45.
(b) Heating costs: Owing as at 1 January 20X7 RM32, paid during 20X7 RM178, still owing at end of the year RM22.
(c) Received cheques during 20X7 totalling RM480. Still owed RM87 as at 31 December 20X7
(d) Insurance: Prepaid at 1 January 20X7 RM44; Paid in 20X7 RM501.

Tutorial 4:
1. You are require to prepare a sales ledger control account from the following for the month of April:
20X3 RM
April 1 Sales ledger balances 5,554
Totals for April:
Sales daybook 18,776
Returns inwards daybook 790
Cheques and cash received 19,443
Discounts allowed 1,105
April 30 Sales ledger balances 2,992

2. You are required to prepare a purchases ledger control account from the following for the month of July
20X8 RM
July 1 Purchases ledger balances 15,733
Totals for July:
Purchases daybook 34,677
Returns outwards daybook 2,045
Cheques and cash paid to suppliers 40,087
Discounts received 3,455
July 31 Purchases ledger balances 4,823

3. From the following data, prepare control accounts for both the purchases ledger and the sales ledger.
20X9 RM
March 1 Purchases ledger balances 4,388

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Tutorial Questions: Principles of Accounting 2

March 1 Sales ledger balances 5,677

Totals for March:
Sales daybook 46,998
Purchases daybook 35,444
Cheques and cash paid to suppliers 31,010
Discounts received 492
Discounts allowed 890
Sales ledger balances set-off against purchases ledger balances 500
Returns outwards daybook 575
Bad debts 350
Returns inwards daybook 4,333
Cash and cheques received from customers 4,1200
March 31 Purchases ledger balances ?
March 31 Sales ledger balances ?

4. You are required to prepare a sales ledger control account from the following information for the month of October.

20X3 RM
Oct 1 Balance of amounts receivable 3,421

Totals for October:

Sales daybook 43,435
Receipts from debtors 41,111
Returns inwards 462
Bad debts 123
Discounts allowed 312
Set-offs 611
Oct 31 Balance of amounts receivable at end month 4,237

5. You are required to prepare a purchases ledger control account from the following information for the month of May

20X1 RM
May 1 Balance of accounts payable 2,279

Totals for May

Purchases daybook 34,419
Payments to creditors 31,989
Returns outwards 413
Discounts received 878
Set-offs 611
May 31 Balance of accounts payable at end of month 2,807

Tutorial 5:

1. You have extracted a trial balance on 31 December 20X7 which failed to agree by RM350, a shortage on the
debit side of the trial balance. A suspense account was opened for the difference. In January 20X8, the
following errors, made the previous year, were found:
 The purchases daybook had been undercast by RM200.
 The insurance account had been undercast by RM50.
 Sale of equipment of RM400 had been credited in error to the Sales account.
 Sales daybook had been overcast by RM175
 Discounts received had been undercast by RM75

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Tutorial Questions: Principles of Accounting 2

You are required to:

(a) Show the journal entries necessary to correct the errors.
(b) Draw up the suspense account after the errors have been corrected
(c) If the net profit for the year had previously been RM6,800, show statement of corrected net profit for
the year ended 31 December 20X7 after all the above corrections have been made.

2. Your bookkeeper extracted a trial balance on 31 December 20X4 which failed to agree by RM530,a shortage on
the credit side of the trial balance. A suspense account was opened for the difference. In January 20X5, the
following errors, made the previous year, were found:
 Goods purchased on credit from R Hinds of RM750 was entered correctly in the purchases account but was
entered in the personal account as RM570.
 Insurance paid for RM115 cash had been completely omitted from the books
 Commission received of RM240 cash was entered on the debit side of both accounts.
 Purchases daybook had been undercast by RM400.
 Drawings of RM250 had been entered in the drawings account as RM520

You are required to:

(a) Show the journal entries necessary to correct the errors.

(b) Draw up the suspense account after the errors have been corrected
(c) If the net profit for the year had previously been RM1,250, show statement of corrected net profit for
the year ended 31 December 20X4 after all the above corrections have been made.

3. A trial balance was extracted from the books of T Pearce, and it was found that the debit side exceeded
the credit side by RM20. This amount was entered in the suspense account. The following errors were
discovered and corrected:

(a) The sales daybook was undercast by RM160

(b) Wages paid by cheque for RM55 was credited to both accounts.
(c) Cash drawings of RM70 was only entered in the cash account
Construct a suspense account for the above corrections.

4. A trial balance was extracted from the books of V Oliver, and it was found that the credit side exceeded the
debit side by RM112. This amount was entered in the suspense account. The following errors were discovered
and corrected:

(a) The insurance account was overcast by RM38

(b) Sale of goods on credit of RM78 to C Fagan was credited to the personal account.
(c) Sales account was undercast by RM230
Construct a suspense account for the above corrections.

Tutorial 6:

1. From the following information construct the subscriptions account for the Evington Valley Tennis Club for the year ended
30 June 20X2
Balances as at Balances as at
1.7.20X1 30.6.20X2
RM RM
Subscriptions in arrears 14 23
Subscriptions paid in advance 18 26

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Tutorial Questions: Principles of Accounting 2

During the year, cash receipts in respect of subscriptions amounted to RM322

2. From the following information construct the subscriptions account for the Bawden Bowling Club for the year ended 31
December 20X1

Balances as at Balances as at
1.1.20X1 31.12.20X1
RM RM
Subscriptions in arrears 7 18
Subscriptions paid in advance 12 43
During the year, cash receipts in respect of subscriptions amounted to RM158

3. From the following information construct a bar trading account for the year ended 30 June 20X4.

Payments and receipts during the year ended 30 June 20X4 RM

Bar takings 865
Payments to bar suppliers 563
Bar wages 320

Balances as at Balances as at
1.7.20X3 30.6.20X4
RM RM
Bar creditors 342 276
Bar stocks 180 98

4. The Clarendon Social Club charged its members an annual subscription of RM80. It currently has 25 members. The
following balances are available for the year ended 31 December 20X5:

Balances as at Balances as at
1.1.20X5 31.12.20X5
RM RM
Subscriptions in arrears 35 74
Subscriptions paid in advance 12 43

From the above information, calculate how much money was actually received in respect of subscriptions during the year of
20X5.

5. The Mersea Sailing Club offers life membership rates at a cost of RM400. The normal annul subscription rate is RM75. It is
the club’s policy to transfer 10% of the year-end balance on the life membership fund to the Income and expenditure
account each year. During the year ended 31 December 20X3, 6 members paid for life membership.

If the balance as at 1 January 20X3 was RM5,600, calculate the balance on the life membership fund as at 31 December
20X3.

6. From the following information construct the subscriptions account for the Woddlesford Chess Club for the year ended 30
June 20X5.
Balances as at Balances as at
1.7.2004 30.6.2005
RM RM
Subscriptions in arrears 7 12
Subscriptions paid in advance 3 4

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Tutorial Questions: Principles of Accounting 2

During the year, cash receipts in respect of subscriptions amounted to RM112

Produce a subscriptions account for the year to 30 June 20X5

7. From the following information construct a bar trading account for the year ended 31 December 20X8
Payments and receipts during the year ended 31 December 20X8: RM
Bar takings 1,276
Payments to bar suppliers 545
Bar wages 219

Balances as at 1.1.X8 Balances as at

31.12.X8
RM RM
Bar creditors 143 214
Bar stocks 34 89

Tutorial 7:

1. T Woods is a manufacturer. From the following data, prepare a manufacturing account for the year ended 31 December
20X2.
RM
Inventory as at 1 January 20X2:
Raw materials 14,000
Work in progress 3,150
Purchase of raw materials 89,000
Wages 78,000
Direct expenses 8,600
Machinery depreciation 2,370
Factory power 8,400
Factory rent 9,850

Additional information:

 Inventory as at 31 December 20X2: Raw materials RM12,500, Work in progress RM4,220

 Wages are apportioned direct to indirect in the ratio 2:1

2. G Norman is manufacturer. From the following data construct a manufacturing, trading and profit and loss account for the
year ended 31 December 20X6.

RM
Inventory as at 1 January 20X6:
Raw materials 21,955
Work in progress 7,670
Finished goods 24,330
Purchases of raw materials 115,100
Direct expenses 12,590
Direct wages 43,500
Factory power 7,300
Rent: Factory ¾, Office ¼ 11,200
Indirect wages 14,990
Depreciation:
Factory equipment 2,370

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Tutorial Questions: Principles of Accounting 2

Office equipment 6,550

Sales 297,000
Salaries of sales workers 9,430
Administrations costs 1,120
Additional information:
 Inventory as at 31 December 20X6:
Raw materials: RM18,775, Work in progress RM6890, Finished goods RM28,750
 Rent accrued RM800
 Direct expenses prepaid RM250

3. From the following data for H Smith, produce a manufacturing account for the year ended 31 December 20X6

RM
Work in progress as a 1 January 20X6 1,238
Raw materials as at 1 January 20X6 6,553
Purchases of raw materials 79,924
Manufacturing wages 45,252
Equipment at cost 80,000
Factory insurance 3,123
Power costs 4,765
Factory supervision 54,334

Additional information
 Closing Inventory as at 31 December 20X6:
o Work-in-progress RM1,238
o Raw materials RM7,879
 Equipment is to be depreciated at 20% on cost
 Manufacturing wages and power costs are considered to be direct costs.

4. From the following information, produce a manufacturing account for Bocking Ltd for the year ended 31 December 20X1.

RM
Work in progress as a 1 January 20X1 24,323
Raw materials as at 1 January 20X1 53,453
Purchases of raw materials 123,211
Direct wages 87,686
Insurance 9,808
Factory heating 12,382
Royalties 5,343
Supervisor's wages 25,452

Additional information:

 Closing Inventory at 31 December 2001:

o Work in progress RM34,324
o Raw materials RM54,352
 Insurance is to be split equally between the factory and the office

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Tutorial Questions: Principles of Accounting 2

Tutorial 8:
1. Hirst, Bright and Warhurst are partners. They share profits and losses in the ratio of 3:2:1. In the first year of trading, ending
31 December 20X4, the partnership earned a net profit of RM15,800. They have agreed interest should be allowed on fixed
capital balances at 10% per annum. Also, it has been agreed that Bright should receive a partnership salary of RM4,500 per
annum. Capital account balances are as follows: Hirst RM8,000, Bright RM6000 and Warhurst RM6,000.
You are required to draw up the appropriation account of the partnership for the year ended 31 December 20X4.

2. Stewart and Armstrong are in partnership sharing profits and losses equally. The following balances have been extracted
form the books as at 31 December 20X6.

Capital a/c: Current a/c: Salaries: Drawings:

Stewart, RM15,000 Stewart, RM3,200 Stewart, RM6,000 Stewart, RM8,000
Armstrong, RM20,000 Armstrong, RM800 (Dr) Armstrong, RM4,000 Armstrong, RM5,000

The firm’s net profit for the year to 31 December 20X6 was RM26,750.
Interest is to be allowed on capital at 10% per year.
Interest is to be charged on drawings based on 5% of total drawings for the year, irrespective of when the drawings were
taken.

REQUIRED
(a) An appropriation account for the year ended 31 December 20X6
(b) The current accounts for both partners

3. Peacock, MacLean and Brunt are partners. They share profits and losses equally. In the first year of trading, ending 31
December 20X7, the partnership earned a net profit of RM32,800. They have agreed interest should be allowed don fixed
capital balances at 10% per annum. Also, it has been agreed that MacLean should receive a partnership salary of RM7,200
per annum. Capital account balances are as follows; Peacock RM18,000, MacLean RM12,000 and Brunt RM9,000.
You are required to draw up the appropriation account of the partnership for the year ended 31 December 20X7.

4. Scaife, Rowlands and Johnson are partners. They share profits and losses in the ratio of 2:2:1 respectively. In the first year of
trading, ending 31 December 20X2, the partnership earned a net profit of RM56,700. They have agreed interest should be
allowed on fixed capital balances at 10% per annum. Also, it has been agreed that Rowlands should receive a partnership
salary of RM5,500 per annum. Capital account balances are as follows; Scaife RM23,000, Rowlands RM13,000 and Johnson
RM18,500. Interest on drawings was also charged as Scaife RM400 and Rowlands RM600.
You are required to draw up the appropriation account of the partnership for the year ended 31 December 20X2.

Tutorial 9:

Review question from Frank Wood, Business Accounting 1, 13 Edition, Prentice Hall, 2015.

45.1
45.2
45.3
45.4
45.5A