Financial accounting solution 

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F/Account-Theory

1a)

i)trade discount An amount or rate by which the catalog, list, or retail price of an item is reduced when sold to a reseller.

ii)cash discount is a deduction allowed

by the seller of goods or by the provider of services in order to motivate the customer to pay within a specified time.

iii)bad debtis a monetary amountowed to a creditor that is unlikely to be paid and, or which the creditor is not willing to take action to collectbecause of various reasons, often due to the debtor not having the money to pay

iv)provision for doubtful debts is the estimated amount of bad debt that will arise from accounts receivable that have been issued but not yet collected.

v)bad debt recovery is business debt from a loan, credit line or accounts receivablethat is recovered either in whole or in part after it has been written off or classified as a bad debt.

1b)

i)Error of commission

ii)Error of principle

iii)Error of compensation

iv)Error of original entry

v)Error of transition

4a

Easy formation

Tax advantage

Unlimited liability

Diffusion of risk
3a)

suspense account is an account in the general ledger in which amounts are temporarily recorded.

3b)

i)Provision Profit and loss account will not disclose true profit/loss, unless provision is created.WHILE Revenu Profit and loss account discloses true profit/loss, even if no reserve is created.

ii)expense is the term for a cost incurred in the process of producing or offering a primary business operation. While Revenue is the term used to describe income earned through the provision of a business’ primary goods orservices.

3c)

i)capital reserve- this is a type of account on a municipality’s or company’s balance sheetthat is reserved for long-term capital investmentprojects or other large and anticipated expenses that will be incurred in the future.

ii)revenue reserve- The portion of a business’ profits retained by the companyfor investmentin future growth, and are not redistributed to the shareholders through regular or special dividends.

5a) (NOTE: UNDERLINE EACH PART AND TABULATE)

JOURNAL

TBULATE

————— dr ——- cr

————— NGN —— cr

(i)

suspense — 19,000 —-

purchase —————- 19,000

__________________________________

ii)

returns inwards —— 8,000 ——

suspense —————————– 8,000

__________________________________

iii)

suspense ——- 19,600 ———

cashbook ——- ——— 19,000

__________________________________

iv)

suspense(49,000×2) — 98,000 —–

cashbook————- —– 98,000

__________________________________

v)

repairs of plant —— 11,000 ——-

plant and machinery — ——- 11,000

__________________________________

vi)

customer ———– 158,950 ——–

sales ————– ——– 158,950

__________________________________

vii)

suppliers(25,500×2) —- 51,000 —–

suspense ————— —– 51,000

=================

5b)

TABULATE

suspense account

NGN

purchase 19,000

cash book 19,600

cash book 98,000

= 136,600

NGN

returns in 8,000

supplier 51,000

c/f 77,600

= 136,600

(6 and 9)

Question 6 and 9 answer

6)

Tabulate

Sales lodger control account

Mar 2016

Sale journal =GH$112,415

cheque dishonoured =GH$300

cash refuned =GH$150

set off =GH$500

interested charge =GH$50

bal c|d =GH$125

total =GH$113,540

apr 2016

bal b|d =GH$6,540

-Left-Table-

Mar 2016

Bal b|d ={113540-112540} GH$1000

cash received =GH$101600

returnted inwards =GH$1700

discount allowwed =GH$2500

bad debt written off =GH$200

bal c|d =GH$6540

apr 2016

bal cld =GH$125

total =GH$113,540

F/Account-Theory

SECTION-B ANSWERs ONLY 3

================================

8)

Tabulate

Jallo department store

Department trading profit amd loss account

for the year ended 31st dec 2015

opening stock= 14000/18000

add purchase= 300000/200000

cost of goods available= 440000/380000

lost closing stock= (10000)/(20000)

cost of sales=430000/360000

gross profitable=470000/900000=57500/936000

-Expenses-

repairs of building=22000/33000

rent=72000/18000

insurance=48000/12000

Discount

allowed=24000/6000

advertisment=6000/15000

electricity=64000/16000

wages and salaries=24000/60000

net profit=72000/504000 =60200/664000

-Left-Table-

sales=900000/90000=93600/96300

gross profit bld=470000/576000

discount received132000/88000

total=60200/664000

9a)

Tabulate

Agege local government

Statement of capital expenditure for the year ended 31st

Extention of classroom =N400,000

construction of bridges =N635,000

purchase of drugs =N135,000

provision of street light =N74,500

renovation of office building =N106,500

Total= N1,351,000

31st Dec bal C|d =N1,351,000

Total =N1,351,000

9b)

Tabulate

statement of recurrent expeniture for the year ended

Entertainment =N45,900

training and development =65,330

maintenance of motor vehicle =55,800

administrative expenses =100,870

salaries of traditional chief =105,000

disposal of refuse =203,440

postages and salaries =123,450

personel cost =877,540

total =N1,577,330

31st dec bal c|d =N1,577,330

total =N1,577,330

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