April 2021

Dr Philip E Dunn tests your knowledge of Year End and other Adjustments.

This Test Bank issue will be of relevance to those trainees on the Assistant Accountant Level 3 Apprenticeship.

The Administration Expenses Account of Davenport Ltd showed opening accruals of £510 and opening pre-payments of £800. During the year the bank summary showed payments of £17,500. At the end of the year accrued expenditure amounted to £650 and expenses pre-paid were £750.

Q1: What was the amount to be charged to the Profit or Loss Account for the year?

You are responsible for the Accounting Function at a golf club. At the start of the year the Subscriptions Account showed opening subscriptions in arrears of £1,500 and subscriptions in advance of £2,000. During the year the bank summary showed receipts of £50,000. At the end of the year subscriptions in arrears amounted to £3,000 and those in advance £4,500.

Q2: What would be the amount of subscriptions shown on the Income and Expenditure Account for the year?

You are responsible for the Sales Ledger and Credit Control Function in a SME. At the end of the year the Total Receivables was £150,000 and it was decided to provide an allowance for Doubtful Debts of 2% of the total.

Q3: To which side of the Allowance for Doubtful Debts Account would an amount be posted?

Q4: What figure would be charged to the Profit or Loss Account for the year?

The following year end the Total Receivables amounted to £200,000 and it was decided that the Allowance for Doubtful Debts would remain at 2%.

Q5: What amount would be credited to the Allowance for Doubtful Debts Account following this revision.

Q6: What amount will have been offset against Total Receivables on the Statement of Financial Position?

The following year end Total Receivables amounted to £175,000 and the allowance was to remain at 2%

Q7: What amount would be credited to the Profit or Loss Account for the year?

Q8: To which side of the Allowance for Doubtful Debts Account would the relevant amount be posted?

Q9: What would be the amount stated for Receivables on the Statement of Financial Position at the year end?

Q10: Which International Reporting Standard deals with Inventories?

You are dealing with the Inventory Valuation for a client and the Inventory has been valued at £90,500. It was discovered that four items of stock had recently been slightly damaged and the detail is shown below.

	Cost (£)	Selling Price (£)	Net Realisable Value (£)
C1	420	560	350
C2	550	720	560
C3	600	780	500
C4	700	900	650

Q11: What adjustment needs to be made to the Closing Inventory?

You are working on a client’s year end accounts. An amount of £3,500 has been posted to the Administration Account and this amount was for school fees for the client’s daughter.

Q12: How would you correct the previous posting for this transaction?

A VAT registered trader takes goods for his own use that normally have a selling price of £900 including Vat.

Q13: What would be the entries required to deal with such a transaction?

You work as an Accounting Assistant for a SME. One of your duties is to prepare the Bank Reconciliation Statement. It is the month end and your Cash Book shows a Debit Balance. The balance on the bank statement shows a Credit Balance of £1,500. However, you note that there were three cheques entered in the Cash Book not yet presented to the bank for a total of £450.

There were bank charges of £120 shown on the statement not yet in the Cash Book.

Q14: What would be the adjusted Cash Book balance at the month end?

Q15: From the following figures what would be the closing balance on the Sales Ledger Control Account? Opening Receivables £75,000, Sales on Credit during the year £200,000, Sales Returns £10,100, Discounts Allowed £7,500, Bank receipts from Receivables £190,000, Bad debts written off £1,200.

Q16: From the following figures what would be the closing balance on the Purchase Ledger Control Account? Opening Payables £40,000, Purchases on Credit during the year £130,000, Purchase Returns £12,100, Discounts Received £8,100, Bank Payments to Payables £95,000.

At the start of the year the Plant and Equipment at Cost Account showed a Debit balance of £180,000 and the Provision for Depreciation on Plant and Equipment Account showed a Credit balance of £72,000. During the year Plant to the value of £80,000 (net of VAT) was purchased.

The business depreciates its assets in the year of purchase but not in the year of sale at a rate of 20% Straight Line basis.

Q17: What would be the charge for Depreciation for the year?

Q18: What would be the carrying value of the Plant and Equipment on the Statement of Financial Position at the year end?

• Dr Philip E Dunn is a freelance author and technical editor for Kaplan and Osborne Books.