GS SSeS Notes: 1 For questions with the eter x ater the question number, sme key gues are provided whe’ Somes assess For other questions, detail answers ae shown, The answers are located in Append: Answers 1 2SeSSment on .337, 2 AS required by the Hong Kong Examinations and Assessment Authority, no answers are provided to HKCEE and HKDSE questions. 3 As required bythe Hong Kong institute of Accredited Accounting Technicians (HKIAAT), no marking scheme rovided to HKIAAT questions. ShortQuestions, 3.18 Ma's business had the following credit purchases for the month of March 2013: Mar 1 From D Sin: 4 MP4 players at $1,000 each, 6 digital cameras at $2,000 each Less 2 25% trade discount "12 From J Kwong: 8 LED TVs at $10,000 each, 2 washing machines at $2,500 each. Less a 20% trade discount, "20 From 8 Pak: 10 LCD monitors at $1,300 each, No trade discount was given. “23. From A Young: 2 washing machines at $2,000 each, § microwave ovens at $800 each, 10 refrigerators at $1,500 each, Less 2 20% trade discount. Required: In B Ma's books: {8 Write up the purchases journal for the month (75 mats 'b Post the journal entries tothe trade creditors’ accounts in the purchases ledger. (2 mats ‘© Transfer the monthly total of credit purchases to the purchases account in the general ledger. (0.5 mat 4.2X A Yung's firm had the folowing credit purchases for the month of July 2015: Jul 2 From J Woo: 20 squash rackets at $250 each, 10 footballs at $300 each. Less a 30% trade discount. "11 From R Chin: 60 badminton rackets at $150 each, 6 pairs of roller skates at $800 each, 4 footbal at $250 each. Less a 25% trade discount, * 15. From B Wong: 60 trophies at $100 each, 4 basketballs at $600 each. Less a 33 496 trade discount. * 22 From Y To: 50 badminton rackets at $120 each. No trade discount was given, Required: In A Yung’s books: ‘a. Write up the purchases day book for the month, 75 mats (mat bb Post the journal entries tothe trade crecitors’ accounts inthe trade payables edger ¢ Transfer the monthly total of credit purchases to the purchases account in the general ledger. (0.5 maltBooks of Original Entry and Ledgers () SL K Sing’ frm sells the folowing items atthe lst pices shown: white tape at $100 per ol bive cotton at $60 per sheet, black sik at $200 per metre. The fm made the folowing credit sales in March 2015: Mar 4 — To C Wong: 30 rolls of white tape, 50 sheets of blue cotton. Less a 25% trade discount. * 14 ToW-Chan Ud: 60 tls of white tape Lesa 33 1% rade csount "18 To Tai Hing Ltd: 100 metres of black silk. No trade discount was given. “26 ToT Au: 10 rolls oF white tape, 10 sheets of blue cotton, 30 metres of black sik. Less 2 25% trade discount, Required: Record the above transactions inthe sales journal and post the journal entries to the trade debtors’ accounts in the sales ledger. (9 marks) bi Transfer the monthly total of credit sales to the sales account in the general ledger. (1 mark) Fong's business sells the folowing items at the list prices shown: plastic tubing at $10 per metre, polythene sheeting at $20 per length, foam rubber at $30 per sheet. The business made the following credit sales in June 2015: Jun 1 To Tai Ping Co: 220 metres of plastic tubing, 60 sheets of foam rubber, Less a 25% trade discount. "5 ToK Lo: 50 lengths of polythene sheeting, 200 sheets of foam rubber. Les a 20% trade discount. "11 ToK Lu: 290 metres of plastic tubing. No trade discount was give. " 24 To Sun Wing Co: 320 metres of plastic tubing, 240 lengths of polythene sheeting, Less 2 10% trade discount. Required: a Record the above transactions in the sales day book and post the journal entries to the trade debtors’ accounts in the trade receivables ledger. (9 marks) bb Transfer the monthly total of credit sales to the sales account in the general ledger. (1 mark) H Ma's business sub-divides its purchases ledger into three alphabetical sections: A-G, H-M and N-Z, with the trade creditors’ accounts being entered according to their surnames, Draw up a purchases day book with appropriate analysis columns and enter the following transactions for June 2014. Determine the total for the month. (marks) Date Supplier s jun 1 CYu 96,000 " 6 KPo 36,000 "10 THo 57,500 "14 DChu 10,600 "20 KSo 9,100 "26 PL 45,000i Mester sung! resenting @ * ao ce s business divides its sles ledger into three parts, each one representing "2. They are: (1) Europe, (2) Asia and (3) North America. Draw up a sales journal, with appropriate analysis columns, in respect of th particular geographical .e following sales made in uy 2016 cue 5 } Jul 11. Carnegie, New York, USA 11,900 | "3 PAoki, Tokyo, Japan 28,800 ] “5 BBeel, Munich, Germany 24,900 "10 Alar, london, UK 4,400 “15. T Pearson, Washington, USA 38,700 "17 Taro, Kyoto, Japan 2,400 * 19°C Thompson, Toronto, Canada 21,900 * 28 1Goh, singapore 18,800 "31 Tan, Kuala Lumpur, Malaysia 37,200 1-7 Write up the purchases journal andthe returns outwards journal to record the following transactions Then post the journal enires tothe relevant trade creditors’ accounts in the accounts payable ledger and show the transfers to the general ledger at the end of the month. (11 matks) 2014 Mar 1 — Purchased goods on credit from H Lee for $11,900. "Purchased goods on credit from: T Seng $9,800, A Shek $11,400, A Weng $2,500. * 7 Returned goods 10: H Lee $1,600, T Seng $1,400. * 10 Purchased goods on credit from A Shek for $5,900. * 25. Retumed goods of $1,100 to A Shek * 31 Purchased goods on credit from A Wong for $5,600. 1.8K Write up the sales journal and the returns inwards journal to record the following transactions. Then post the journal entries to the relevant trade debtors’ accounts in the accounts receivable ledger land show the transfers to the general ledger at the end of the month, (11 mats) 15 dul 1 Sold goods on cre 1: Sin for $18.80, K Fon fr $7,700, C Chung for $8,800 * 6 Sold goods on credit to: S Tin for $11,800, K Fong for $6,600. * 10 Goods were returned to the firm from: A Sin of $1,200, C Chung of $1,700. * 20. Sold goods on credit to K Young for $9,700 * 24 Goods of $500 were retumed to the firm from § Tin, ApplicationsRroblems, 4.9. J Leung operates a toy retail business. The following purchases were made in January 2015: Jan 2. Purchased soft toys on credit from D Sung for $36,000, before deducting a 5% trade discount. * & Purchased hard toys on credit from J Ma for $28,000, before deducting a 5% trade discount.Books of Original Entry and Ledgers (0) LR = Jan 18 As the business was running out of inventory, soft toys were purchased from a retail store, Star Toys Lt, for $6,000 in cash "22 Purchased hard toys on credit from J Ma for $2,000. "26 Purchased a desktop computer for office use at a cost of $5,000. Required: ‘a Record the above transactions in the purchases journal of Leung's business. @ marks) bb Suggest one reason why a trade discount was given on 8 January 2015 but not on 22 January 2015 even though both purchases were made from the same supplier. (2 marks) 4,10 8 Lau owns a garment factory, The following sales were made in March 2016: Mar 3 Sold ladies’ clothing on credit to Fist Beauty Co for $44,000, before deducting a 10% trade discount. “9 Sold men's clothing on credit to Smart Dress Ltd for $58,000, before deducting a 10% trade discount. "16 Received a purchase order for men's clothing worth $30,000 from Bo Bo Lid, a company in mainland China, * 22 Sold ladies’ clothing on credit to Jenny's Store for $16,000, before deducting 2 5% trade discount. * 28 Delivered the ordered men’s clothing to Bo Bo Lt. Required: ‘a. Record the above transactions in the sales journal of B Lau’s business. (4 marks) b Suggest one reason why different trade discounts were given to First Beauty Co and Jenny's Store, respectively, even though the goods sold were of the same type. (2 marks) 1.11% LW had the folowing credit purchases for May 2015: May 1 Bought PC chips from D Lam for $50,000. * 4 Bought digital cameras from W Poon for $38,000. 8 Bought external hard disks from E Tang for $15,000. = 11 Bought microwave ovens from Global Ltd for $24,500. 16 Bought high-definition TVs from Hi-Tech Ltd for $17,000. "20 Bought video cameras from C Lo for $43,500. 23 Bought washing machines from Y Chung for $31,000. * 27 Bought LCD monitors from Hi-Tech Ltd for $26,500. Required ‘a Enter the above transactions in L Wu's purchases journal with three analysis columns. computer equipment, cameras and household appliances (10 marks) briefly explain how L Wu could make use of the additional information provided by the analysis columns. (2 marks)Original entry Ee: 212%. T Kwan, a home accessories merchant, divides her ‘miscellaneous. During November 2015, T Kwan ™a\ business ito three departments: name 8, hin ang usiness it we the following Sales 10 Nov 9600 pet 4 ToM Kam: eee sao ex (00 eact 10 jugs (china) 0 eh 50 teapots (china) “47 $500 per 1 ToD Teo: 150 glasses # - SH : $140 ead ToP Yeung: 6 teapots (china) ass par 25 buckets ich 18 glass vases hen Required! record the above transactions in (8 may Prepare a sales analysis book for T Kwan and provided by the Briefly explain how T Kwan could make use of analysis columns. the additional information mary uns journals to record the following transac Jes and purchases ledgers. The monthly ota 4,13 Write up the sales, purchases, sales returns and purchases ret the general ledger. Then post the journal entries to the relevant accounts in the sl the journals are to be transferred to the corresponding accounts You are aso required to balance off all the accounts atthe end of the month (29 maty 2015 Mar 1 Sold goods on credit to: € Chen $5,600, K Kwoon $14,500. "3 Purchased goods on credit from: B Luen $14,400, Y Sin $7,600. * 7. Sold goods on credit to: K Wing $8,900, A Yiu $7,800. * 9 Purchased goods on credit from: Y Man $2,400, W Kin $12,300. "11 Goods were returned by the business to: B Luen $1,200, Y Sin $2,200. 14 Goods were returned from: C Chen $500, K Kivoon $1,100, K Wing $1,400. "17 Purchased goods on credit from Y Man for $6,500. 20. Goods of $1,400 were returned by the business to Y Sin. * 24 Sold goods on credit to: K Wah Ltd $5,700, K Wing $6,500. "28 Goods of $2,400 were returned to the business from A Yiu.Books of Original and Ledgers (0, LR 1,14% Write up the sales, purchases, retums inwards and retumns outwards journals to record the following transactions. Then post the journal entries tothe relevant accounts inthe trade receivables and trade payables ledgers, and show the transfers tothe general ledger. You are also required to balance off al te accounts atthe end of the month (29 marks) 2016 ‘Apr 1 Sold goods on credit to C Ng Ltd for $10,500. Purchased goods on credit from H San for $80,000. Sold goods on credit to: Y Fan for $30,600, T Lee Ltd for $20,800, “15 Purchased goods on credit from: K Wong Ltd for $12,500, A Mok for $30,500, T Au for $20,100, K Sze for $55,000. “16 Returns inwards: C Ng Ltd $1,200, T Lee Ltd $4,400. “18 Sold goods on creit to: T Lee Ld for $90,500, W Chang for $28,900. "21 Purchased goods on crelt from: A Mok for $60,900, T Ping for $10,600. "24 Retums outwards: k Wong Ltd $1,500, T Au $1,900, K Sze $6,000 * 30 Retums inwards: W Chang $6,600, 4,15. Mary Chau owns a trading company that deals in computer accessories. The folowing transactions were made in June 2015 and recorded in the books of original entry as follows: Jun 2 Purchased goods on credit from High Tech Ltd for $46,000. * 8 Sent a debit note to High Tech Ltd for defective goods costing $2,000. KO 10. Sold goods on credit to ABC Co for $25,000. C. 12 Sold goods on credit to New Century Co for $33,000. "14 Purchased goods on credit from High Tech Ltd for $38,000.-/ * 16 Sold goods to J Chan for $8,000 in cash "19 Purchased computers on credit from High Tech Ld for $9,700 for business use. ” 22 Sent a debit note to High Tech Ltd for defective goods costing $1,500. 0) "24 Sold goods on credit to ABC Co for $20,000. 26 Received a debit note of $3,000 from New Century Co for defective goods. | 28 , Purchased goods on credit from Styne Co for $44,000 * 29° Mary Chau took goods costing $4,000 for her personal use * 30. Received a purchase order from Sunny Co for $37,000. Required: {Distinguish between a debit note and a credit note. (4 marks) bb Record the above transactions in the purchases journal, sales journal and returns journals. (6.5 marks) Post the entries from the above journals to the sales ledger and the purchases ledger, and balance off the accounts at the end of June 2015. (6.5 marks) d_ Briefly explain the purpose of keeping separate books and ledgers instead of recording all transactions in one book. (2 marks)me ene =. 6 ee Short,Questions, soning warsactions were ade iM 3S or by 2.1 Jenny Ko started a trading business in January 2015. The fol ‘cheque in the first month of trading Jen "10 brea ot) aig; "48 "20 "23 "26 * Required: Record the above transactions in a two-column cash book and show the cash and bank balances 10 a business bank account, it int Jenny contributed $30,000 cash and immediately put Paid $10,000 by cheque for rent. Bought office furiture for $15,000 by cheaue. Obtained a bank loan of $50,000. Bought goods for $40,000 on creit. Sold goods totalling $25,000 by cheque. Sold goods for $22,000 in cash. Bought stationery for $500 by cash. Settled all trade creditors’ accounts by cheque. Deposited $20,000 cash into the bank. Paid rent of $8,000 by cheque for Jenny's home. One of the cheques received on 15 January 2015, amounting to $4,000, was dishonoured, at the end of January 2015. 7 mats 2.2. Write up a three-colurnn cash book to record the following transactions. Then balance it off at the * end of the month and show the discount accounts in the general ledger. (12 matt 2014 May 1 Balances brought down: cash $10,000, bank $50,000. "2. Paid the following trade creditors by cheque, in each case a 5% cash discount was to be deducted: W Dai $3,000, C Kwok $2,600. * 5 Received a cheque of $1,450 from H Poon, a trade debtor. "9 Made cash sales of $7,700, "11 Paid $1,600 in cash for insurance "13. The following trade debtors paid their accounts by che was tobe deducted § Su $4.90, Fran Sey eee ach case a cash acount of 08 “15. Paid $2,900 in cash for repairs “ 18 Cash sale proceeds of Pi $6,500 were deposited directly into the bank. * 21 Paid $15,000 by cheque for salaries, . Received @ loan 28 Received @ loan of $5,000 from L Yeung by cheque * 31 Paid $700 in cash for stationery,Books of Original Entry and Ledgers (i) [mh Write up a three-column cash book to record the following transactions. Then balance it off at the end of the month and show the discount accounts in the general ledger. (16 marks) 2015 Mar 1 Balances brought down: cash $3,600, bank $14,700, 1 2 The owner contributed further capital of $40,000 by cheque. "3 Bought fixtures for $7,800 by cheque. "4 Made cash sales of $2,200. 6 Paid the following trade creditors by cheque, in each case deducting a 10% cash discount: ‘A Fung $6,500, K Ho $2,400, T Tai $4,000. “8 Cash sales of $5,000 were immediately deposited into the bank. "12 Paid $1,300 in cash for utilities, "15. Withdrew $4,000 from the bank. 19. The following trade debtors settled their accounts by cheque, in each case a cash 5% discount was to be deducted: L Young $3,200, C Chen $2,000, H Tung $2,800. "23. Paid $8,000 in cash for salaries "26 Paid $3,500 by cheque for insurance. 28 —_Banked all the cash in hand except for $200 left in the cash box. "31 Paid $3,000 by cheque for motor expenses. Write up the general journal on 1 May 2015 to open a set of books for € Chan's business. Then show the required entries inthe ledgers. No narration is required, (10 marks) {As at 1 May 2015, the business had the following assets and liabilities Inventory $34,600. Fixtures $28,000 and machinery $36,500. Trade creditors: T Wong $7,220, W Chan $2,400. Trade debtors: W Sun $450, T Sze $2,750. Bank $13,840 and cash $980. wun Prepare the required journal entries on 1 January 2014 to open a set of books for K Ho's busines. ‘After that, post the journal entries to the ledgers, No narration is required, (11 marks) ‘As at 1 January 2014, the business had the following assets and liabilities: Buildings $200,000, fixtures $90,000 and inventory $12,750. Trade receivables: K Sing $4,920, L Mok $13,600. Trade payables: W Ng $5,450, T Wing $2,920. Loan owed to T Lee $24,000. Bank balance $91,340 and cash in hand $420. wnenee- 2.6 Show the journal entries required to record the folowns 2016 g transactions: may for $36,000. May 1 Bought a motor vehicle on crait from Chen Se aw the Ser, Uy * 8 Office furniture bought on credit earlier for $4,900 was rel ices, ‘as it was unsuitable. Full allowance Was given. a * 14 The proprietor took goods costing $4,550 from 28 The business bought a fax machine for $2,100 som " Unsuitable and was sold to J Lee on credit at COs pusiness without paying for them, time ago. It was subsequently found top a ® ended 31 March 2016 7 ' Jenny Chan's busi the year ended 31 March 2016 Prepare an income staterne fon a cash basis, b_ Prepare an income statement f con an accrual basis. State any three differences betweer for Jenny Chan's business for 1 the income statements in parts (2) and (b). a “The following information isan extract fom the books of Financial Services & Co forthe year ended 3. 2015 Advertsing and promotions 1 April 2014 ‘Accrual from last year $22,200 28 July 2014 Paid by cheque $75,000 15 October 2014 Paid by cheque $126,000 Printing and stationery 4 April 2014 Stationery in hand $204,000 14 September 2014 Purchased stationery by cheque $51,000 12 February 2015 Paid printing expense by cheque $25,200 Rent 1 April 2014 ‘Three months’ rent received in advance from the tenant $3730 1 duly 2014 Six months’ rent received by cheque $75,600 1 October 2014 Six months’ rent received by cheque at the revised rate of $177,600 per annum $8800 Rates 1 April 2014 ‘Three months’ rates paid in advance $46,800 1 July 2014 Paid six months’ rates by cheque $100,800 1 October 2014 Paid six months’ rates by cheque $100,800Per 0 cr oan 35 at 31 March 2015: () Payments for advertising dur out in August 2015 ny uta the year included $34,800 for poster advertising that would be carried (i) Stationery in hand was val saree ‘allued at $186,000. There was also an unpaid invoice for $36,900 for printing Required: Prepare the following accour account and year-end balsas 2 the Year ended 31 March 2015, including transfers tothe profit an loss a lances to be carried forward. Advertising and promotions Printing and stationery Cora Rent revenue emer) iv Rates (3 marks) — @ marks) cee ie balances of the above accounts in the statement of financial position as at 31 March (25 marks) Past,Exam,Questions, 3,18 On 31 March 2006, the following balances were extracted from the books of Mr Chiu, a sole trader: 5 Insurance 8,100 or Electricity 6,480 Or Commission income 200,000 cr Rental income 120,000 Cr The following information is available: (i) Insurance: a payment of premium for $2,780 for 12 months to 30 June 2006 was included in the insurance account (i) Electricity: an amount of $1,560 due on 31 March 2006 remained unpaid. {iii) Commission income: commission income of $12,000 received for the month of April 2006 was included in the commission income account. (iv). Rental income: monthly rental income of $10,000 had not been received for the months of February and March 2006. Required: Write up the above accounts, make the necessary adjustments for accruals or prepayments, and (@ marks) ferred to the profit and loss account for the year ended 31 March 2006. show the amounts transf (HKIAAT, Book-keeping and Accounts Exam December 2006, Q5b) 1253,19 Viola Company generates income 126 2m ‘Adjustments Relating tothe ‘of Financial Statements en premises to tenants ho af Fe Pay ng, fice by letting is 0 eee ce. $70,000 |n respect of rent for January 2009; ang ap syed in advance $28,000 0 During 2008, the company had receive ya tena 31 December 2008, an amount of $12,000 ¥25 to $730,000, which included a es amounting wn the tenants chegu A rental deposit +2010 of $32,000: Le ae 00 rentals from a tenant of $10,099 aa 1 ec 2009, remained unpaid 4 Apt, July and 1 October. Deas a In 2009, the company received fro s refundable rental deposit of $100,000 and er 1was refunded toa tenant in November 200.404) on 20 month, which were due on 16 Noverber and 16 at During 2000, ates were pa by cheques quater O°! 2 follows: 5 +3 months to 28 February 2009 3 months to 31 May 2009 Ne 3 months to 31 August 2008 ie 3 months to 30 November 2008 ae ates sreurting o $2,160 or the re mons to 28 ebraty 2010 ALICE yet been paid bythe cong as at 31 December 2009. Required: In the books of Viola Company, show the entries in ‘the following accounts for the year ended 31 Decembe: 2008: 2 the rental income account; and mt (aman bb the rates account. (KCEE Principles of Accounts 2010, Secon gi Mr wong operates @ property leasing business. During the year of 2009, Mr Wong received in advance $a in respect of rental income for January 2010 and discovered thet ental income in arrear amounted to $24(tt con 31 December 2008. In the year of 2010, Mr Wong received cheques from tenants amounting to $306,000, which included $14,500 rental income received in advance for 2011. The amount of rental income in arrear as at 31 December 2010 was $17,500. Mr Wong's financial year ends on 31 December each year. | Required: Prepare the following accounts for Mr Wong forthe year ended 31 December 2010: | fa Rental income in area, ansil] 'b_ Rental income in advance: and ama Rental income. (ana (HKIAAT, AAT Foundation Exam July 2011, Pane?#‘Accruals and see required to pay two months’ management f , nt fees in advance when they ing from the thir 5 they ae required to pay the monthyfes in advange, nn” ny ™NEIR Star fom the thie month In 2008, the management fees received from $32,000. At 31 December 2009, management fees of $4,000 were owed by tenants, 0, the company recei in 2010, the company received from the tenants cheques totalling $558,000, which included the payments by three new tenants who moved in on 1 December. At 31 December 2010, management fees from a tenant, which were due on 1 November and 1 December, remained unpaid the new tenants who moved in on 1 December amounted to, During 2010, Rica Company paid cleaning 19 expenses by cheque to a company which provides cleaning and peest control services in the building. Det: i ae eeee : ails are as follows: Date of payment Period covered Asount SJauny 2010 —2monthsto31 nua 2010-30000 4 March 2010 4 months to 31 May 2010 40,000 Bune 2010 ‘4 months to 30 September 2010 44,000 9 October 2010 2 months to 30 November 2010 22,000 Cleaning expenses amounting to $23,000 for the two months to 31 January 2011 were paid on 2 January 2011 Required: In the books of Rica Company, show the entries in the following accounts for the year ended 31 December 2010: i the management fee income account; and 6 marks) ji the cleaning expenses account. marks) 'b State and explain the accounting principle or concept that should be adopted for handling the management fee income and cleaning expenses above, (4 marks) (HKCEE Principles of Accounts 2011, Section A Q3) wer