Exam On Accounting

Instructions:
1. Duration- 1.30 H
2. Use black pen
3. Annotate wherever you prefer

“All the best”

1 Omer is a trader.

The following transactions took place in April 2023.

April 3 Paid $1000 into the bank from his own personal money

7 Paid $360 to a supplier, Alexander, by telephone transfer

10 Cash sales, $695, were paid directly into the bank account

12 Purchased goods, $340, on credit from Alexander

15 Paid $68 cash for petrol

16 Paid rent, $400, by standing order

23 Received a cheque, $384, from a credit customer, Esme, in full settlement of an

invoice for $400

27 Paid $323 by cheque to Alexander, having deducted $17 cash discount

28 Purchased goods, $235, on credit from Alexander

REQUIRED

(a) Complete Omer’s cash book on the page opposite.

Balance the cash book and bring down the balances on 1 May 2023.
 Omer
Cash Book

Date Details Discount Cash Bank Date Details Discount Cash Bank
allowed received
2023 $ $ $ 2023 $ $ $

Apr 1 Balance b/d 120 Apr 1 Balance b/d …............ …............ 477

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(b) Prepare the account for Alexander for April 2023. Balance the account and bring down the
balance at 1 May 2023.

Omer
Alexander account
Date Details $ Date Details $
2023
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Omer buys all his supplies from Alexander who does not allow Omer any trade discount. Omer is
now considering also purchasing supplies from Tahir who would offer him 3% trade discount but
no cash discount.

REQUIRED

(c) Advise Omer whether he should choose:

Option 1 – purchase supplies from Alexander only, or
Option 2 – purchase supplies from both Alexander and Tahir
Justify your answer by providing three advantages and one disadvantage of the option you
have chosen.

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[Total: 20]
2 Ramla has calculated her draft profit figure for the year ended 28 February 2023.
Adjustments in Ramla’s ledger accounts have still to be made for the following items.

1 An amount of $99 owed to Ramla by Mai is to be written off as irrecoverable.

2 Fixtures and fittings, $875, were purchased on credit from Padma.

3 A loan repayment, $500, had been incorrectly recorded as loan interest.

4 Rent paid, $350, had been recorded as $530.

5 Drawings, $120, had been debited to the wages account.

REQUIRED

(a) Prepare the journal entries required for items 1–5. Narratives are not required.

Ramla
Journal
Item Details Debit Credit
number $ $

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(b) Complete the following table by entering the amount of each adjustment required to calculate
Ramla’s adjusted profit. If an item has no effect on profit, enter zero (0) in the ‘no effect on
profit’ box.

Item Increase in Decrease in No effect on Profit

profit profit profit
$ $ $
Draft profit 11 650

Adjusted profit
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(c) Explain

(i) how the journal for item 1 complies with the prudence principle.

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(ii) how the journal for item 5 complies with the business entity principle.

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[Total: 20]
3 Amadi prepared the following trial balance which is not yet totalled and contains errors.

Amadi
Trial balance at 31 March 2023
Debit Credit

$ $

Fittings and equipment at cost 30 000

Provision for depreciation of fittings and equipment 7 500

Trade receivables 6 100

Bank overdraft 3 106

Trade payables 3 485

Capital 20 000

Sales 73 250

Purchases 41 785

Discount received 1 990

Returns inwards 3 390

Carriage inwards 1 223

General expenses 6 430

Rent and rates 7 380

Drawings 9 500

Inventory at 1 April 2022 3 752

Inventory at 31 March 2023 3 965

REQUIRED

(a) Prepare a corrected trial balance at 31 March 2023. Show the remaining difference between
the debit and credit totals as ‘suspense.’
 Amadi
Corrected Trial Balance at 31 March 2023

Debit Credit
$ $

Fittings and equipment at cost ...................... ......................

Provision for depreciation of fittings and equipment ..................... .....................

Trade receivables ..................... .....................

Bank overdraft ..................... .....................

Trade payables ..................... .....................

Capital ..................... .....................

Sales ..................... .....................

Purchases ..................... .....................

Discount received ..................... .....................

Returns inwards ..................... .....................

Carriage inwards ..................... .....................

General expenses ..................... .....................

Rent and rates ...................... ......................

Drawings ..................... .....................

Inventory ..................... .....................

Suspense ..................... .....................

___________ ___________

___________ ___________

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