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Extra Exercises 1CV10

The document provides instructions and details for several exercises related to accounting tutorials. Exercise 2.A.1 asks the student to record transactions, prepare accounts, trial balances, and financial statements. Exercise 2.A.2 provides transactions for a new firm and asks the student to prepare a balance sheet, calculate profit, and record transactions. Exercise 2.A.3 similarly provides transactions for another new firm and asks the student to record accounts, prepare a trial balance, and set up financial statements. Exercise 2.A.4 provides additional transaction details for a retailer and asks the student to enter the transactions, prepare a trial balance, and set up June financial statements.

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75 views

Extra Exercises 1CV10

The document provides instructions and details for several exercises related to accounting tutorials. Exercise 2.A.1 asks the student to record transactions, prepare accounts, trial balances, and financial statements. Exercise 2.A.2 provides transactions for a new firm and asks the student to prepare a balance sheet, calculate profit, and record transactions. Exercise 2.A.3 similarly provides transactions for another new firm and asks the student to record accounts, prepare a trial balance, and set up financial statements. Exercise 2.A.4 provides additional transaction details for a retailer and asks the student to enter the transactions, prepare a trial balance, and set up June financial statements.

Uploaded by

dtsioutsas
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Extra exercises tutorials 1CV10

Tutorial 2A

Exercise 2.A.1

Consider exercise 2.8 in Atrill and McLaney.


a. Record the transactions in a set of double entry accounts and balance the accounts.
b. Prepare the trial balance.
c. Setup the balance sheet again.
d. Prepare the profit and loss account.

Exercise 2.A.2

The records of a new firm show the following transactions.


May 1 Started firm with capital in cash of €250.
2 Bought goods on credit from D. Ellis €54.
4 Sold goods on credit to C. Bailey €43. Goods had cost €32.
6 Paid part of rent for May by cash €12.
9 Bailey paid us his account by bank €43.
12 We paid by bank D. Ellis €54.
15 Bought office furniture on credit €23.
18 Bought goods on credit from C. Mendez €48.
21 Sold goods on credit to B. Hughes €67. Goods had cost €41.
31 Paid remaining rent for May by bank €18.

Required:
a. Prepare the balance sheet as at 31 May 2013 by recording all transactions directly into the
balance sheet (have separate accounts for Cash and Bank).
b. Calculate the profit for May 2013.
c. Prepare the profit and loss account for May 2013.
d. Show how the transactions have been recorded in a set of double entry accounts.
Exercise 2.A.3
The following transactions have been recorded for a new firm, started January 2013

Jan 1 Started business with €3,500 cash.


2 Put €2,800 of the cash into a bank account.
3 Bought goods for cash €150.
4 Bought goods on credit from: L. Coke €360; M. Burton €490; T. Hill €110; C.
Small €340.
5 Bought stationery on credit from Swift Ltd €170.
6 Sold goods on credit to: S. Wakers €90; T. Binns €150; C. Howard €190; P. Peart
€160. Goods had cost 70% of selling price.
8 Paid rent for (January) by bank €55.
10 Bought fixtures on credit from Matalon Ltd €480.
11 Paid salaries in cash €120.
13 Returned goods to: M. Burton €40; T Hill €60.
16 Bought motor van by bank €700.
18 Received loan from J Henry by bank €600.
21 Goods returned to us by: S Wakers €20; C. Howard €40.
24 Sold goods on credit to: T Binns €100; P. Peart €340; J. Smart €115. Goods had
cost 60% of selling price.
26 We paid the following by bank: M. Burton €450; T. Hill €50.
29 Received bank from: J. Smart €115; T. Binns €250.
30 Received a further loan from J. Henry by cash €200.
31 Received €500 cash from P. Peart.

Required:
a. Record the transactions in a set of double entry accounts and balance the accounts (have
separate accounts for Cash and Bank).
b. Prepare the trial balance as at 31 January 2013.
c. Set up the balance sheet as at 31 January 2013 and the profit and loss account for January 2013.
Exercise 2.A.4

J. Gordon is a retailer and on 1 June 2013 his balance sheet was as follows:
Fixed assets Capital 14,000
Premises 10,000
Fixtures 2,000 12,000

Current assets Current liabilities


Stock 5,000 William 2,000
Debtor 600 Paul 3,000 5,000
Bank 1,400 7,000
19,000 19,000

His transactions during June 2013 were:


June 1 Purchased goods on credit from William for €1,000.
2 Cash sales €2,000. Cost of goods sold €1400.
3 Sold goods €600 on credit to Clare. Cost of goods sold €400.
4 Paid William €600.
5 Sam paid €560 in full settlement, which allowed him a discount of €40.
8 Cash sales €1,800. Cost of goods sold €1,100.
9 Purchased fixtures €700 cash.
10 Sold goods on credit to Sam for €800. Cost of goods sold €550.
11 Sold goods on credit to Ann for €300. Cost of goods sold €180.
12 Purchased goods on credit from Paul for €4,000.
17 Purchased goods from William on credit for €2,000.
19 Paid Paul €6,600 in full settlement.
21 Returned goods cost €200 to William.
23 Returns received from Ann. Selling price of the returns was €200 (Hint: 120).
26 Ann paid €90 in full settlement.
28 Cash sales €4,600. Cost of goods sold €3,850.
30 Paid William €1,800 on account.

Additional information: In June 2013 the depreciation on fixtures was €50.

Required:
a. Enter these transactions in J. Gordon's accounting records and take out a trial balance at 30 June
2013. In doing so, do not have separate accounts for Cash and Bank.
b. Set up the balance sheet as at 30 June 2013 and the profit and loss account for June 2013.
Tutorial 3A

Exercise 3.A.1:
Spratley Ltd is a builders' merchant. On November 1 the business had no sand in stock. The following
deals with purchases and sales during November.

November Tonnes Bought or sold Price per tonne


($)
2 50 Bought 20
4 30 Sold 35
21 40 Bought 26
27 20 Sold 38

Calculate the cost of goods sold and of the remaining inventories from the above information using
the following stock costing methods:
a. first in, first out
b. last in, first out
c. weighted average method

Exercise 3.A.2:
In January 2013 Sunny bought a building for € 2.000.000. He was told to expect a sales price or €
1.500.000 after 5 years (restwaarde). As the building will be used more often in the first few years
Sunny decided to use the depreciation method ‘fixed percentage of book value’ (reducing balance
method).

a. What will be the book value for Sunny after two years?
b. What would be this book value if Sunny would have used the method ‘fixed percentage of
investment’ (linear method)?
Tutorial 6A

Exercise 6.A.1 (taken from Seal et al. (McGraw-Hill, 2009)):


Barlow company manufactures three products: A, B, and C. The selling price, variable costs, and
contribution margin of each product follow:

Product A Product B Product C


Selling price £ 180 £ 270 £ 240
Less Variable expenses:
Direct materials 24 72 32
Other variable expenses 102 90 148
Total variable expenses 126 162 180
Contribution margin £ 54 £ 108 £ 60

The same raw material is used in all three products. Barlow Company has only 5,000 kilos of material
on hand and will not be able to obtain any more material for several weeks due to a strike in its
supplier’s plant. Mangement is trying to decide which product(s) to concentrate on next week in
filling it backlog of orders. The material costs £8 per kilo.
a. Compute the amount of contribution margin that will be obtained per kilo of material used in
each product.
b. Which orders would you recommend that the company works on next week - the orders for
product A, product B, or product C? Show computations.
c. A foreign supplier could furnish Barlow with additional stocks of the raw material at a
substantial premium over the usual price? If there is unfilled demand for all three products,
what is the highest price that Barlow Company should be willing to pay for an additional kilo
of materials?

Tutorial 7A

Exercise 7.A.1:
Consider Problem 8.58 in Wouters et al.
a. Compute yearly after-tax net cash flows for this investment (for each of the years 0,1,2,3,4)
b. Compute the net present value of this investment.
Suppose that, in addition to the basic information, the amount of working capital will be CHF15,000
higher during the project.
c. Compute yearly after-tax net cash flows for this investment (for each of the years 0,1,2,3,4)
d. Compute the net present value of this investment.

Exercise 7.A.2:
Consider Problem 8.60 in Wouters et al.
a. Compute yearly after-tax net cash flows for this investment (for each of the years 0,1,2,3,4,5)
b. Compute the net present value of this investment.
Suppose that, in addition to the basic information, the amount of working capital will be kr100,000
higher during the project.
c. Compute yearly after-tax net cash flows for this investment (for each of the years 0,1,2,3,4,5)
d. Compute the net present value of this investment.

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