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Accounting Equation Case Solution Worksheet

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December 2002 Examiner's Solution
C a s e S o l u t i o n 1
1. Prepare the accounting equation as at 30 September in a tabular format, detailing all of the transactions for the quarter
and incorporating the various adjustments identified by Shelby.
(20 marks)
Machinery
Raw
materials
Finished
goods
Debtors
Pre-
payments
Ordinary
share
capital
Creditors
Accruals
Retained
Profits
Profit &
Loss
Account
At 1.7.02
120 000
5 600
38 500
70 270
250 095
180 000
46 300
0
23 795
250 095
1
16 000
4 000
2
−14 500
3
−2 800
2 800
3
2 500
4
−45 200
5
3 000
3 000
6
−11 000
−11 000
6
28 000
28 000
7
−10 000
7
5 000
5 000
8
−15 000
9
40 000
10
−18 000
−18 000
10
27 000

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11
−5 800
5 800
11
3 500
(i)
Electricity
2 000
−2 000
(ii)
FG−Write off
−5 000
−5 000
(iii)
Depreciation
−3 000
−3 000
At 31.03.02
133 000
0
19 100
53 070
5 000
282 595
220 000
38 800
2 000
23 795
−4 000
280 595
Notes: Depreciation-Machinery: £120 000 @ 10% per annum = £12 000 or £3000/quarter
2. Prepare the Profit and Loss Account for the three months to 30 September 2002.
(6 marks)
Profit and Loss Accounts Quarter to 30 September 2002
Actual
£
£
Sales (28 000 + 27 000)
55 000
Cost of sales
Labour & Materials (11 000 + 18 000)
29 000
Write-off of finished goods
5 000
Depreciation machinery
3 000
37 000
Gross profit
18 000
Less: Expenses

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December 2002 Examiner's Solution Case Solution 1 1. Prepare the accounting equation as at 30 September in a tabular format, detailing all of the transactions for the quarter and incorporating the various adjustments identified by Shelby. (20 marks) At 1.7.02 1 Machinery Raw materials Finished goods Debtors 120 000 5 600 38 500 70 270 Prepayments 15 725 16 000 2 3 −2 800 3 6 2 500 Accruals Retained Profits 180 000 46 300 0 23 795 −12 000 4 000 −14 500 −14 500 Profit & Loss Account 250 095 45 200 3 000 3 000 −11 000 −11 000 28 000 28 000 7 −10 000 7 −10 000 5 000 5 000 8 −15 000 9 40 000 10 Creditors −2 500 −45 200 6 10 250 095 Ordinary share capital 2 800 4 5 Cash at bank −18 000 −15 000 40 000 −18 000 27 000 27 000 11 −5 800 11 5 800 3 500 (i) Electricity (ii) FG−Write off 2 000 −5 000 −3 000 133 000 −3 000 0 19 100 53 070 5 000 70 425 282 595 220 000 38 800 Notes: Depreciation-Machinery: £120 000 @ 10% per annum = £12 000 or £3000/quarter 2. Prepare the Profit and Loss Account for the three months to 30 September 2002. (6 marks) Profit and Loss Accounts Quarter to 30 September 2002 Actual £ Sales (28 000 + 27 000) £ 55 000 Cost of sales Labour & Materials (11 000 + 18 000) 29 000 Write-off of finished goods 5 000 Depreciation machinery 3 000 Gross profit Less: Expenses −2 000 −5 000 (iii) Depreciation At 31.03.02 −3 500 37 000 18 0 ...
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