2
1 Maria had the following assets and liabilities on 1 May 2014.
$
Inventory 1950
Amount payable – Midland Telecoms 400
Bank 550 Dr
5% Bank loan (repayable 30 April 2018) 2500
Fixtures and fittings 1500
REQUIRED
(a) Calculate the following.
(i) Owner’s capital
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
.......................................................................................................................................[1]
(ii) Capital employed
...........................................................................................................................................
.......................................................................................................................................[1]
© UCLES 2014 7110/22/O/N/14
3
The following related to the purchase of telephone services for the three months to 31 July 2014.
31 May Paid Midland Telecoms’ balance on 1 May 2014 by cheque.
26 June Received a telephone bill from Midland Telecoms $1200.
15 July Paid telephone bill received on 26 June by cheque less 2% cash discount.
31 July Prepared an income statement for the three months to 31 July 2014. It was
estimated that $130 was owing.
REQUIRED
(b) Prepare the following ledger accounts for the three months to 31 July 2014.
Midland Telecoms account
Date Details $ Date Details $
[5]
Telephone expenses account
Date Details $ Date Details $
[4]
(c) Name and explain the accounting concept applied in estimating the telephone expenses
owing on 31 July 2014.
Accounting concept
...................................................................................................................................................
Explanation ...............................................................................................................................
...................................................................................................................................................
...............................................................................................................................................[3]
© UCLES 2014 7110/22/O/N/14 [Turn over
4
The following were some of the transactions which took place in July.
5 July Purchased inventory on credit.
10 July Goods returned by a credit customer.
20 July Paid wages in cash.
25 July Disposed of fixtures and fittings on credit.
REQUIRED
(d) Complete the following table for the above transactions naming the source document prepared
by Maria and the book of prime entry used. The first item has been completed as an example.
Source document Book of prime entry
5 July Purchase invoice Purchases journal
10 July
20 July
25 July
[6]
[Total: 20]
© UCLES 2014 7110/22/O/N/14
