Abiola rents premises at an annual rent of $6000, payable on the first of each month.
She provided the following information.
$
2018
September 1 Rent payable accrued 500
The following amounts of rent were paid by bank transfer.
2018
September 2 3000
2019
February 3 3000
August 6 1500
REQUIRED
Prepare the rent payable account in the ledger of Abiola for the year ended 31 August 2019.
Balance the account and bring down the balance on 1 September 2019.
Abiola
Rent payable account
Date Details $ Date Details $
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[5]
Explain how the accounting principle of accruals (matching) was applied in the preparation of
the rent payable account.
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Abiola receives commission from another trader when Abiola’s customers purchase goods from
his shop.
Abiola provided the following information.
$
2018
September 1 Commission receivable outstanding 350
The following amounts of commission were received by bank transfer.
2018
September 30 350
2019
January 31 425
April 30 395
July 31 470
On 31 August 2019 commission receivable outstanding amounted to $310.
REQUIRED
Prepare the commission receivable account in the ledger of Abiola for the year ended
31 August 2019.
Balance the account and bring down the balance on 1 September 2019.
Abiola
Commission receivable account
Date Details $ Date Details $
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[5]
6 Amrit runs a secretarial agency. His financial year ends on 31 July. He prepared the following trial
balance on 31 July 2019.
$ $
Fees from clients 58 800
Premises (at cost) 90 000
Office equipment (at cost) 16 000
Provision for depreciation of office equipment 3 200
Capital 85 000
Drawings 11 500
5% Loan (repayable 1 February 2020) 15 000
Trade receivables 4 650
Provision for doubtful debts 100
Bad debts 80
Insurance 2 100
Wages 38 000
Operating expenses 6 500
Rent receivable 3 000
Bank 3 730
168 830 168 830
The following information is available.
1 The insurance covers a period of 14 months to 30 September 2019.
2 At 31 July 2019 wages, $1500, were accrued and one year’s loan interest was outstanding.
3 A debt of $150 should be written off as irrecoverable.
4 The provision for doubtful debts should be maintained at 3% of the remaining trade
receivables.
5 The office equipment is to be depreciated at 20% per annum using the reducing (diminishing)
balance method.
REQUIRED
(a) Prepare the income statement for the year ended 31 July 2019.
Amrit
Income Statement for the year ended 31 July 2019
$ $
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[14]
