KTTC 2

On 1 June 20X3 Spam Plc purchased some plant at a price of £43,000. It cost £1,500 to
transport the plant to Spam Plc's premises and set it up, plus £900 for a licence to
operate it. The plant had a useful life of eight years and a residual value of £3,500. On
1 June 20X5 the directors of Spam Plc decided to change the depreciation method to
reducing balance, at 40%. What is the carrying amount of Spam Plc's machine in its
statement of financial position at 31 May 20X6?
A.£20,025
B.£20,280
C.£20,550
D.£20,955
The asset register showed a total carrying amount of £67,460. A non-current asset
costing £15,000 had been sold for £4,000, making a loss on disposal of £1,250. The
balance on the asset register after accounting for the disposal is:
A.£42,710
B.£51,210
C.£53,710
D.£62,210
Your firm bought a machine for £5,000 on 1 January 20X1, when it had a useful life of
four years and a residual value of £1,000. Straight-line depreciation is to be applied on
a monthly basis. On 31 December 20X3, the machine was sold for £1,600. The amount
to be entered in the 20X3 statement of profit or loss for profit or loss on disposal is:
A.profit of £600
B.loss of £600
C.profit of £350
D.loss of £400
A company has 30,000 40p equity shares outstanding at a premium of 8p per share.
Current market value of the company’s shares is 90p each. What is the balance on the
company's equity share capital account?
A.£9,600
B.£27,000
C.£14,400
D.£12,000
A company has occupied rented premises for some years, paying an annual rent of £120,000.
From 1 April 20X6 the rent was increased to £144,000 per year. Rent is paid quarterly in
advance on 1 January, 1 April, 1 July and 1 October each year. What is the journal entry to
transfer the balance on the rent expense account to the profit and loss ledger when preparing the
financial statements for the year ended 30 November 20X6?
A.Debit Profit and loss ledger account £136,000, Credit Rent expense £136,000
B.Debit Rent expense £136,000, Credit Profit and loss ledger account £136,000
C.Debit Rent expense £138,000, Credit Profit and loss ledger account £138,000
D.Debit Profit and loss ledger account £138,000, Credit Rent expense £138,000
Harry has been unable to calculate his business' profit or loss for the year ended 31
December 20X8 as fire destroyed most of his accounting records. He has, however,
been able to provide the following information: (1). Net assets at 31 December 20X7
were £23,000 and £32,500 at 31 December 20X8; (2). He introduced capital during the
year of £4,000 cash; (3). He took cash drawings of £2,500 and goods with a selling
price of £800. The cost of the goods was £750. What was Harry's profit or loss for the
year ended 31 December 20X8?
A.£8,750 profit
B.£(1,750) loss
C.£9,800 profit
D.£(2,750) loss
A business has net assets of £286,400 on 31 January 20X6 and had net assets of
£266,800 on 31 January 20X5. During the year the owner of the business: 1. took
goods for his own use which cost £10,000 and had a market value of £14,0003; 2.
introduced capital of £50,000; and 3. withdrew £30,000 as salary. The profit for the
year was:
A.£9,600
B.£30,400
C.£70,400
D.£109,600
A business compiling its financial statements for the year to 31 July each year pays
rent quarterly in advance on 1 January, 1 April, 1 July and 1 October each year. The
annual rent was increased from £60,000 per year to £72.000 per year as from 1
October 20X3. What figure should be included as the rent expense in the statement of
profit or loss for the year ended 31 July 20X4?
A.£69,000
B.£62,000
C.£70,000
D.£63,000
A business has an accrual for electricity at 1 January 20X7 of £215 and has paid
electricity bills of £3,420 during the year to 31 December 20X7. At 31 December 20X7
there is an accrual for electricity of £310. What is the electricity charge to be included
in the statement of profit or loss for the year ended 31 December 20X7?
A.£2.895
B.£3,325
C.£3,515
D.£3,945
A business has paid £ 10,400 of insurance premiums during the year ended 31 March 20X7. At 1
April 20X6 there was an insurance prepayment of £800 and at 31 March 20X7 there was a
prepayment of £920. What is the insurance charge in the statement of profit or loss for the year
ended 31 March 20X7?
A.£8,680
B.£10,280
C.£10,400
D.£10,520
Wright & Co’s year end is 31 August 20X4. Telephone line rental of £120 was paid on
31 July for the two months from that date. This amount was included in the
accounting records by debiting the telephone expense account and crediting the cash
at bank account. Which of the following entries of £60 should Wright & Co make at the
year end in relation to this expense?
A.Debit the telephone charges acc, Credit the prepayments account
B.Debit the prepayments account, Credit the telephone charges account
C.Debit the accruals account, Credit the telephone charges account
D.Debit the telephone charges acc, Credit the accruals account
The carrying amount of machinery has reduced by £10,000 following the disposal of
one item of machinery. Which of the following statements relating to the disposal are
correct?
A.Disposal proceeds were £15,000 and the profit on disposal was £5,000
B.Disposal proceeds were £15,000 and the carrying amount of the machinery disposed of
was £5,000
C.Disposal proceeds were £15,000 and the loss on disposal was £5,000
D.Disposal proceeds were £5,000 and the carrying amount of the machinery disposed of
was £5,000
Beehive Plc bought a car on 1 January 20X7 for £10,000 and decided to depreciate it
at 30% per annum on a reducing balance basis. It was disposed of on 1 January 20X9
for £6,000. The net effect on the statement of profit or loss for the year ended 31
December 20X9 is a credit of:
A.£1,100
B.£3,000
C.£4,000
D.£5,100
Automat Plc purchases a machine for which the supplier's list price is £18,000.
Automat Plc pays £13,000 in cash and trades in an old machine which has a carrying
amount of £8,000. It is the company's policy to depreciate such machines monthly at
the rate of 10% per annum on cost. The carrying amount of the new machine after one
year is:
A.£16,200
B.£18,000
C.£18,900
D.£21,000
A company had the following capital structure at 31 December 20X2: 300,000 equity
shares of £1 each: £300,000; Share premium: £150,000; Retained earnings: £717,000.
During 20X3, the company made made a 2 for 3 bonus issue. What is the retained
earnings balance after this bonus issue?
A.£567,000
B.£667,000
C.£517,000
D.£717,000
A company had the following capital structure in 20X2: 100,000 equity shares of 50p
each: £50,000; Share premium: £80,000. On 1 December 20X2, the company paid
dividend of 10p per share. What amount is the total dividend paid?
A.£5,000
B.£10,000
C.£15,000
D.£20,000
A company had the following capital structure at 31 December 20X2: 500,000 equity shares of
50p each: £250,000; Share premium: £40,000; Retained earnings: £80,000. During 20X3, the
company made a profit of £112,000. Retained earnings were £74,000 at 31 December 20X3.
What was the total dividend paid in 20X3?
A.£106,000
B.£42,000
C.£120,000
D.£118,000
Randolph started a trading business on 1 May 20X4 with capital of £40,000. In his first
year of trading he made a net profit of £117,000, selling goods at a mark-up on cost of
60%. He injected additional capital of £30,000 in the year and withdrew a monthly
amount of £3,200 for his living expenses. He also took drawings from stock of goods
with a resale value of £7,200. He had no stock at the year end. What were Randolph's
net assets at 30 April 20X5?
A.£141,400
B.£144,100
C.£144,280
D.£179,300
The year end of Murphy plc is 30 November 20X1. The company pays for its gas by a
standing order of £600 per month. It had an opening accrual of £400 and a closing
accrual of £500. What is the correct charge for gas to be included in Murphy Plc's
statement of profit or loss for the year ended 30 November 20X1 ?
A.£7,700
B.£7,100
C.£7,200
D.£7,300
Whipper has an machine which cost £40,000 and has a carrying amount of £32,000 on
1 April 20X7. It is being depreciated at 20% per annum on the reducing balance basis.
On 31 March 20X8, Whipper performed an impairment review and determined that the
fair value less disposal costs of the machine was £22,400 and the value in use was
£21,000. What is the impairment loss in respect of the machine at 31 March 20X8?
A.£17,600
B.£1,600
C.£4,600
D.£3,200
Plummet Plc is preparing its statement of profit or loss for the year ended 31
December 20X4. On the initial trial balance at that date administrative expenses have
a debit balance of £684,000 before accounting for depreciation and profits/losses on
disposal in respect of the company's computer equipment. At 31 December 20X3,
Plummet Plc had computer equipment that cost £1,004,408, all of which had been
purchased on 1 January 20X2, and it had accumulated depreciation of £697,600. A
computer system costing £6,800 was sold on 1 January 20X4 for £1,800. Computer
equipment is depreciate monthly on a straight-line basis over four years. The amount
to be disclosed as administrative expenses in Plummet Plc's statement of profit or
loss for the year ended 31 December 20X4 is:
A.£933,402
B.£935,002
C.£936,702
D.£963,702
Stripes Plc purchased new machinery on 1 August 20X4 for £38,000. The scrap value
of the machinery at the end of its six-year useful life has been assessed as £2,000.
Stripes Plc's policy is to calculate depreciation monthly on the straight-line basis. The
depreciation charge in Stripes Plc's statement of profit or loss for year ended 31
March 20X5 should be:
A.£4,000
B.£3,500
C.£6,000
D.£4,500
Paula and Quinn are in partnership, sharing profits in the ratio 2:1. On 1 July 20X4
they admitted Paula's son Ryan as a partner. Paula guaranteed that Ryan's profit
share would not be less than £25,000 for the six months to 31 December 20X4. The
profit sharing arrangements after Ryan's admission were Paula 50%, Quinn 30%,
Ryan 20%. The profit for the year ended 31 December 20X4 is £240,000, accruing
evenly over the year. What should Paula's final profit share be for the year ended 31
December 20X4?
A.£140,000
B.£139,000
C.£114,000
D.£139,375
Alice and Betty are in partnership, sharing profits and losses in the ratio 2:1. Their year end is 30
June. On 1 January 20X4 Cath joined the partnership and the new profit sharing ratio became
Alice 50%, Betty 30% and Cath 20%. The profit for the year ended 30 June 20X4 was £520,000,
after charging an expense of £40,000 which related to the first six months of the year. The
remainder of the profit accrued evenly over the year. What is Betty's total profit share for the year
ended 30 June 20X4?
A.£173,333
B.£156,000
C.£164,666
D.£164,000
Sayhan, Errol and Alev are in partnership, preparing financial statements as at 31
August each year and sharing profits 4:3:1. Sayhan retired on 30 April 20X2, and Errol
and Alev continued, sharing profits 3:1 respectively. Goodwill as at 30 April 20X2 (not
to be retained in the accounts) was valued at £50,000. The net entry to Errol's capital
account to include and then eliminate goodwill is:
A.Debit £6,250
B.Debit £18,750
C.Credit £6,250
D.Credit £18,750
Helen, John and Chris are in partnership, preparing financial statements as at 31
January each year and sharing profits 5:3:2. Helen retired on 30 September 20X6, and
John and Chris continued, sharing profits 5:3 respectively. Goodwill as at 30
September 20X6 (not to be retained in the accounts) was valued at £50,000. The net
entry to John's capital account to include and then eliminate goodwill is:
A.Debit £3,750
B.Debit £16,250
C.Credit £3,750
D.Credit £16,250
Sayhan, Errol and Alev are in partnership, preparing financial statements as at 31
August each year and sharing profits 4:3:1. Sayhan retired on 30 April 20X2, and Errol
and Alev continued, sharing profits 3:1 respectively. The business's profit for
appropriation, evenly over the 12 months to 31 August 20X2, was £121,248. For the
year to 31 August 20X2 Errol's profit share is:
A.£30,312
B.£45,468
C.£60,624
D.£90,936
Xavier and Yanis are in partnership, sharing profits in the ratio 2:1 and preparing their financial
statement to 30 June each year. On January 20X4 Zena joined the partnership, and it was
agreed that the profit-sharing arrangement should become Xavier 50% Yanis 30% and Zena
20%. The profit for the year ended 30 June 20X4 was £54,000 after charging an expenses of
£30,000 which it was agreed related to the period before 1 January 20X4. The profit otherwise
accrued evenly over the year. What is Xavier's total profit share for the vear ended 30 June
20X4?
A.£305,000
B.£312,500
C.£315,000
D.£295,000
At 31 December 20X8 Blue Anchor Plc has an insurance prepayment of £250. During
20X9 they pay £800 in respect of various insurance contracts. The closing accrual for
insurance is £90. What is the charge for insurance that should be included in the
statement of profit or loss for the year ended 31 December 20X9?
A.£460
B.£800
C.£960
D.£1,140
Asha Ltd, a manufacturing company, receives an invoice on 29 February 20X2 for
work done on one of its machines. £25,500 of the cost is actually for a machine
upgrade, which will improve efficiency. The accounts department do not notice and
charge the whole amount of the invoice to maintenance costs. Machinery is
depreciated at 25% per annum on a straight-line basis, with a proportional charge in
the years of acquisition and disposal. By what amount will Asha Ltd's profit for the
year to 30 June 20X2 be understated?
A.£19,125
B.£25,500
C.£23,375
D.£21,250
The carrying amount of a company's non-current assets was £200,000 at 1 August
20X0. During the year ended 31 July 20X1, the company sold non-current assets for
£25,000 on which it made a loss of £5,000. The depreciation charge for the year was
£20,000. The carrying amount of non-current assets at 31 July 20X1 is:
A.£150,000
B.£175,000
C.£180,000
D.£195,000
Wood Ltd’s initial trial balance as at 31 December 20X2 shows the following: Income
tax payable at 1 January 20X2: £45,000; Income tax paid during 20X2: £41,000.
Estimated income tax liability for the year ended at 31 December 20X2 is £35,600.
Which amount should appear in Wood’s statement of profit or loss for the year ended
at 31 December 20X2 as income tax?
A.£44,100
B.£50,400
C.£31,600
D.£39,600
Wood Ltd’s initial trial balance as at 31 December 20X2 shows the following: Income
tax payable at 1 January 20X2: £45,000; Income tax paid during 20X2: £41,000; Income
tax charge in the statement of profit or loss: £31,600. What is the income tax payable
balance that will appear in Wood’s statement of financial position as at 31 December
20X2?
A.£44,100
B.£50,400
C.£35,600
D.£39,600
Angus Plc has an income tax liability balance of £4,000 (debit) at 31 March 20X3. Estimated
income tax liability for the year ended at 31 March 20X4 is £35,000. Which figure should appear
in Angus’s statement of profit or loss for the year ended at 31 March 20X4 as income tax?
A.£39,000
B.£35,000
C.£31,000
D.£37,000
A company sells goods with a one-year warranty and had a provision for warranty
claims of £90,000 at 31 December 20X2. During 20X3, £40,000 in claims were paid to
customers. On 31 December 20X3, the company estimated that 10% of warranties
would be invoked at a cost of £78,000. What amount for warranty provision should be
included in the statement of profit or loss for the year ended at 31 December 20X3?
A.£28,000 charge
B.£52,000 charge
C.£52,000 credit
D.£28,000 credit
Alexander's net assets have increased by £127,000 over the year. He took drawings of
£47,000 and paid in the proceeds from a personal property sale amounting to £25,000.
His net profit for the year was:
A.£105,000
B.£149,000
C.£199,000
Krim plc paid local property tax of £6,495 on 31 May 20X7, in respect of the three
months ending 31 August 20X7. In the administrative expenses ledger account for the
year ended 30 June 20X7 Krim plc must:
A.debit £2,165
B.credit £2,165
C.debit £4,330
D.credit £4,330
Which of the following journals records interest earned on partners' capital account balances?
A.Debit Partners' current accounts, Credit Profit and loss appropriation account
B.Debit Profit and loss appropriation account, Credit Partners' current accounts
C.Debit Profit and loss appropriation account, Credit Cash at bank
D.Debit Profit and loss appropriation account, Credit Partners' capital accounts
A partner's private petrol bills have been treated as part of the partnership's motor
vehicle expenses. Which of the following journals corrects the error?
A.Debit Drawings account, Credit Motor vehicle expenses account
B.Debit Motor vehicle expenses account, Credit Drawings account
C.Debit Motor vehicle expenses account, Credit Capital account
D.Debit Capital account, Credit Motor vehicle expenses account
At 1 July 20X4 a company had prepaid insurance of £8,200. On 1 January 20X5 the company
paid £38,000 for insurance for the year to 31 December 20X5. What is the journal entry to
transfer the balance on the insurance expense account to the profit and loss ledger account for
the year ended 30 June 20X5?
A.Debit Profit and loss ledger account £27,200, Credit Insurance expense £27,200
B.Debit Insurance expense £27,200, Credit Profit and loss ledger account £27,200
C.Debit Profit and loss ledger account £36,700, Credit Insurance expense £36,700
D.Debit Insurance expense £36,700, Credit Profit and loss ledger account £37,600
What is the journal entry for an accrual of rent expenses of £500?
A.Debit Prepayments £500, Credit Rent expense £500
B.Debit Accruals £500, Credit Rent expense £500
C.Debit Rent expense £500, Credit Accruals £500
D.Debit Rent expense £500, Credit Prepayments £500
Butters plc is finalizing certain figures that will appear in its financial statement as at
30 June 20X5. On 1 March 20X4 the company paid an annual subscription to a trade
association of £21.000 for the 12 months ended 28 February 20X5. A 12.5% increase in
this subscription is expected, but has not been finalized at 30 June 20X5. What will
Butters included in its statement of financial position at 30 June 20X5 in respect of the
subscription?
A.an accrual of £15,750
B.an accrual of £7,875
C.a prepayment of £15,750
D.prepayment of £7,875
The annual insurance premium for Boost Ltd for the period 1 July 20X6 to 30 June 20X7 is
£13,200, which is 10% more than the previous year. Insurance premium are paid on 1 July. What
is the statement of profit or loss charge for insurance for the year ended 31 December 20X6?
A.£12,000
B.£12,600
C.£13,200
D.£14,520
Redruth Plc began trading on 1 April 20X3. The carrying amount of plant and equipment in
Redruth Plc's financial statements as at 31 March 20X5 was £399,960. The cost of these assets
was £614,500. On 31 March 20X6 an asset costing £11,500 was acquired. Depreciation is
charged on plant and equipment monthly at an annual rate of 25% straight-line. There are no
residual values. The carrying amount of Redruth Plc's plant and equipment in its statement of
financial position at 31 March 20X6 is:
A.£254,960
B.£257,835
C.£299,970
D.£308,595
The net assets of Walter's business decreased by £11,025 over the year to 31 October 20X7.
During that year he had paid in additional capital of £14,000, drawn £875 in cash each month
and, on one occasion, taken goods costing £2,625 for his own use. The loss made by the
business for the year ended 31 October 20X7 was:
A.£10,150
B.£11,900
C.£21,525
D.£25,025
Exe Plc, which has a year end of 31 December, purchased a machine on 1 January 20X1 for
£35,000. It was depreciated at 40% per annum on the reducing balance basis. On 1 January
20X4 Exe Plc part-exchanged this machine for a more advanced model. It paid £30,000 and
realised a profit on disposal of £2,440. The price of the new machine was:
A.£10,000
B.£34,680
C.£35,120
D.£40,000
A company issued 50,000 50p equity shares at a premium of 20p per share. All cash from this
issuance was fully collected. Which entries should correctly record this share issuance?
A.Dr Share capital £50,000, Dr Share premium £10,000, Cr Cash at bank £60,000
B.Dr Share capital £25,000, Dr Share premium £10,000, Cr Cash at bank £35,000
C.Dr Cash at bank £60,000, Cr Share capital £50,000, Cr Share premium £10,000
D.Dr Cash at bank £35,000, Cr Share capital £25,000, Cr Share premium £10,000
A company issued 100,000 50p equity shares at a price of £1 per share, all received in cash.
Which entries should correctly record this share issuance?
A.Dr Share capital £50,000, Dr Share premium £50,000, Cr Cash at bank £100,000
B.Dr Share capital £50,000, Dr Share premium £50,000, Cr Cash at bank £150,000
C.Dr Cash at bank £100,000, Cr Share capital £50,000, Cr Share premium £50,000
D.Dr Cash at bank £150,000, Cr Share capital £100,000, Cr Share premium £50,000
A company issued 50,000 30p equity shares at a premium of 20p per share. The company’
accountant posted full amount to debit cash at bank and credit share capital. Which
entries would correct above error?
A.Dr Share capital £10,000, Cr Share premium £10,000
B.Dr Share capital £15,000, Cr Share premium £15,000
C.Dr Share premium £10,000, Cr Share capital £10,000
D.Dr Share premium £15,000, Cr Share capital £15,000
Bez plc draws up financial statements to 31 December in each year. It pays internet server
charges for each year ending 30 April in two equal instalments, on 1 May and 1 November
in advance. It also pays telephone rental charges quarterly in arrears at the end of
February, April, July and November. The total internet server charge for the year to 30
April 20X6 was £9,000. Telephone rental charges for the year commencing 1 July 20X5
were £7,440. What was the accrual for telephone rental charges included in Bez pls’s
statement of financial position at 31 December 20X5?
A.£1,860
B.£1,240
C.£620
D.£1,620
Crocker Plc, a retailer, depreciates all vehicles monthly over five years. On 31 October
20X9 Crocker Plc bought a car at a cost of £17,625 plus VAT, trading in an old car that had
cost £16,800 including VAT on 1 July 20X7. A payment of £13,500 was also made. VAT is
at a rate of 20%. In respect of this disposal in its statement of profit or loss for the year
ended 31 December 20X9 Crocker Plc will show a loss of
A.£2,430
B.£4,835
C.£5,955
D.£1,310
On 1 April 20X5 Herepath Plc bought a Foxy car for £23,500. The company's depreciation
policy for cars is 30% per annum using the reducing balance method. On 1 April 20X7 the
Foxy was part exchanged for a Vizgo car, which had a purchase price of £28,200.
Herepath Plc made a payment to the seller for £ 19,350, in final settlement. What was
Herepath Plc's profit or loss on the disposal of the Foxy?
A.£5,150 loss
B.£7,835 profit
C.£2,665 loss
D.£6,250 loss
Diamond Ltd issues 250.000 equity shares with a nominal value of £2 each at a price of
£3.55 each for cash. Which or the following sets of entries would be made to record this
transaction?
A.Credit Bank £887,500, Debit Share capital £500,000, Debit Share premium £387,500
B.Debit Bank £887,500, Credit Share capital £250,000, Credit Share premium £637,500
C.Debit Bank £887,500, Credit Share capital £500,000, Credit Share premium £387,500
D.Credit Bank £887,500, Debit Share capital £250,000, Debit Share premium £637,500
At 1 January 20X2, a company had retained earnings of £220,000. At 31 December 20X2, this
company’s retained earnings were £250,000. During the year, the company paid a dividend of
£30,000 and made a bonus issue of 100,000 25p ordinary shares from retained earnings. What
is the profit for the year ended 31 December 20X2?
A.£85,000
B.£25,000
C.£35,000
D.£50,000
Constains plc. has an insurance prepayment of £320 at 31 March 20X2. During the year ended
31 March 20X2 Constains Plc paid two insurance bills, one for £1,300 and one for £520. What
was the insurance prepayment at 31 March 20X1 if the charge for insurance for the year was
£1,760?
A.£200
B.£260
C.£320
D.£380
On 1 January 20X4 Joffa Plc purchased a new machine at a cost of £96,720. Delivery costs were
£3,660 and internal administration costs of £9,450 were incurred. At that time Joffa Plc planned
to replace the machine in five years, when it would have no value, and to depreciate the machine
on a straight-line basis. Joffa Plc decides on 1 January 20X6 that the machine only has one
remaining year of useful life. There is no change to the residual value at the end of its life. How
much depreciation will be charged in respect of this machine in Joffa Plc's statement of profit or
loss for the year ended 31 December 20X6?
A.£58,032
B.£60,228
C.£65,898
D.£33,460
Sunil started business on 1 December 20X3 with cash of £5,000. He has not yet prepared a full
set of financial statements. As at the end of his first reporting period, 30 November 20X4, he has
cash at bank of £1,726. He made sales of £33,498 during the period and paid expenses in cash
of £19,385. He has no outstanding creditors at the end of the period, and has no fixed assets or
stock, but one customer owes him £2,387. Assuming Sunil made no other capital injections but
took drawings of £15,000 in the period, identify his profit for the 12 month reporting period to 30
November 20X4 and his net assets at the end of the period on an accrual basis.
A.Net profit of £11,726, net assets of £1,726
B.Net profit of £14,113, net assets of £4,113
C.Net profit of £11,726, net assets of £4,113
D.Net profit of £14,113, net assets of £1,726
Corrie Ltd is preparing its statement of changes in equity for the year ended 31 December 20X6.
Its opening retained earnings balance at 1 January 20X6 was £151,600. The following balances
and transactions arose during the year: (1) Corrie Ltd issued 10,000 £1 equity shares at a
premium of £0.80 per share on 1 January 20X6; (2) Corrie Ltd made a bonus issue on 1 March
20X6 of 5,000 £1 equity shares utilising retained earnings; (3) It paid a dividend totalling £16,000
on 31 October 20X6; (4) It made a loss for the year of £17,800. What is the closing balance of
Corrie’s retained earnings at 31 December 20X6?
A.£148,400
B.£112,800
C.£130,800
D.£134,000
Gilbert Plc acquired a new truck on 1 July 20X4 for £99,900 including VAT at 20%. The company
depreciates all vehicles straight- line at 20% per annum on a monthly basis. What is the carrying
amount of Gilbert Plc's truck at 31 December 20X4?
A.£89,910
B.£83,250
C.£66,600
D.£74,925
Muncher Plc includes profits and losses on disposal of non-current assets in administrative
expenses in its statement of profit or loss. Depreciation is charged on fixtures and fittings at 20%
using the reducing balance method. On 1 July 20X6 some fixtures that cost £4,000 on 1 July
20X3 were sold for £ 150. In the administrative expenses account Muncher Plc must:
A.debit £1,450
B.credit £1,450
C.debit £1,898
D.credit £1,898
Dash has a property which cost £420,000 on 1 April 20X4. It is being depreciated on the straight-
line basis over 20 years to its residual value of £40,000. On 31 March 20X9, Dash carried out an
impairment review and has assessed that the property had a fair value less disposal costs of
£280,000 and a value in use of £300,000. What is the impairment loss in respect of the property
at 31 March 20X9?
A.£15,000
B.£25,000
C.£45,000
D.£80,000
Dale Ltd is preparing its statement of changes in equity for the year ended 31 December 20X8.
The opening share capital balance in the statement of changes in equity was £100,000,
comprising 100,000 £1 equity shares which were issued at a premium of £0.50 per share. The
following balances and transactions arose in the year: (1) Dale Ltd issued 20,000 £1 equity
shares at price of £1.70 per share on 1 July 20X8; (2) Dale Ltd made a bonus issue on 1 October
20X8 of 10,000 £1 equity shares utilising retained earnings; (3) It paid a dividend totalling of 20p
per share to all shareholders on 31 December 20X8. What was the closing balance of share
capital in the statement of changes in equity at 31 December 20X8?
A.£144,000
B.£104,000
C.£118,000
D.£130,000