Easy questions

Question 1. The accounting year end for a business is 30.11.15. The Electricity bill is received quarterly in arrears.
The bills and the respective payment dates are mentioned below.

Bill Quarter Amount £ Payment date

Feb 15 750 2nd Mar 15
May 15 897 13th June 15
Aug 15 699 6th Sep 15
Nov 15 758 2nd Dec 15
Pass the appropriate double entries and prepare the relevant ledger accounts for 2015 and 2016 to ensure that the
matching principle is met.

Question1A. Waffen SS sole trader ends his financial year on 30 th June. His new business telephone
agreement was started on 1 August 2016 and he pays his bill quarterly in arrears, from the business bank
account.

Quarter ending Amount £

31.10.16 4,672
31.01.17 3,942
30.04.17 4,918
31.07.17 5,155
Requirement: Pass the appropriate double entries and prepare the relevant ledger accounts for 2016 and 2017 to
ensure that the matching principle is met.

Question 2. A business starts its trade on 1 st Nov 2014 and the accounting year end is 31.10.15. The Electricity bill is
received in arrears. The bills periods and the respective payment dates are mentioned below.

Bill Quarter Amount £ Payment date

Feb 15 (4 months) 750 2nd Mar 15
May 15 (Quarter) 897 13th June 15
Aug 15 (Quarter) 699 6th Sep 15
Nov 15 (Quarter) 758 2nd Dec 15
Pass the appropriate double entries and prepare the relevant ledger accounts for 2015 and 2016 to ensure that the
matching principle is met.

Question2A. Assume that rent of £4,000 per year is payable at the end of every quarter. The rent was paid
on time in March, but this is not always the case. The year end is 30th November.

Bill Due Amount £ Payment date

31st March 20X5 1,000 31st March 20X5
30th June 20X5 1,000 2nd July 20X5
th
30 September 20X5 1,000 4th October 20X5
31st December 20X5 1,000 5th January 20X6
Pass the appropriate double entries and prepare the relevant ledger accounts for 20X5 and 20X6 to ensure that the
matching principle is met.
Question3. Horace G, trading as Goodrunning Motor Spares, ends his financial year on 28 February each
year. His telephone was installed on 1 April 2016 and he receives his telephone account quarterly at the end
of each quarter. On the basis of the following data, pass the appropriate double entries and prepare the relevant
ledger accounts for 2017 and 2018 to ensure that the matching principle is met. (Source: 2013-bpp-f3-study-text pg 212 pdf
file)

Quarter ending Amount £

30.06.16 23.50
30.09.16 27.20
31.12.16 33.40
31.03.17 36.00

Question 4. A business’ electricity charges amount to $12,000 per annum. In the year to 31st December
20X5, $9,000 had been paid. The electricity for the final quarter is paid in January 20X6. Pass the appropriate
double entries and prepare the relevant ledger accounts for 20X5 and 20X6 to ensure that the matching principle is
met. (Source: F3 Kaplan 2017 pg 204 pdf file)

Question 5. John Simnel’s business has an accounting year end of 31st December 20X1. He rents factory
space at a rental cost of $5,000 per quarter, payable in arrears. During the year to 31 st December 20X1, the
cash payments of rent have been as follows:

 31st March (for the quarter to 31st March 20X1) $5,000

 29th June (for the quarter to 30th June 20X1) $5,000
 2nd October (for the quarter to 30th September 20X1) $5,000

The final payment due on 31st December 20X1 for the quarter to that date was not paid until 4 th January
20X2. Pass the appropriate double entries and prepare the relevant ledger accounts for 20X1 and 20X2 to ensure that
the matching principle is met. (Source: F3 Kaplan 2017 pg 205 pdf file)

Question 6. Willie Woggle opens a shop on 1 May 20X6 to sell hiking and camping equipment. The rent of
the shop is $12,000 per annum, payable quarterly in arrears (with the first quarter being 31 July 20X6). All
payments are made on the last date of the relevant quarter except for the last quarter which is paid on the 3 rd
day of the new accounting year. Willie decides that his accounting period should end on 31 December each
year. Pass the appropriate double entries and prepare the relevant ledger accounts for 20X6 and 20X7 to ensure that
the matching principle is met. (Source: 2013-bpp-f3-study-text pg 216/217 pdf file)

Question7. A company rents a machine and pays rentals quarterly in arrears at the end of February, May,
August and November each year. The annual rental was £12,000 until end May 2010 when it was increased
to £18,000. The year end is 31st October. Pass the appropriate double entries and prepare the relevant ledger
accounts for 2010 and 2011 to ensure that the matching principle is met. (Source: EW F3 pg 176 pdf file)
 Medium level questions

Question8. A business has an accrued expense for factory rental on Jan 1 st, 2013 of £28,000. Payments of
factory rental were £32,000 on Feb 28th, £40,000 on May 31st, £44,000 on Aug 31st and £48,000 on Nov 30th.
The next rental payment on Feb 28th 2014 is expected to be £52,000. Pass the appropriate double entries and
prepare the relevant ledger accounts for 2013 and 2014 to ensure that the matching principle is met. (Source: EW F3 pg
176 pdf file)

Question8A. A business has an accrued expense for factory rental on Feb 1 st, 2013 of £21,000. Payments of
factory rental were £32,000 on Mar 31st, £40,000 on June 30 th, £44,000 on Sep 30th and £48,000 on Dec
31st .The next rental payment on Mar 31st 2014 is expected to be £52,000. Pass the appropriate double entries
and prepare the relevant ledger accounts for 2014 and 2015 to ensure that the matching principle is met.

Question9. Cleverley started in business as a paper plate and cup manufacturer on 1 January 2012, making
up accounts to 31 December 2012. Electricity bills received were as follows. All payments are on the
relevant quarter’s ending date. (Source: 2013-bpp-f3-study-text pg 212 pdf file)

Quarter ending 2012 2013 2014

31st January Nil 6,491.52 6,753.24
30th April 5,279.47 5,400.93 6,192.82
st
31 July 4,663.80 4,700.94 5,007.62
31st October 4,117.28 4,620.00 5,156.40
Required : Pass the appropriate double entries and prepare the relevant ledger accounts for 2012, 2013 and 2014 to
ensure that the matching principle is met. .

Question10. The following details are available. Prepare the double entries and the relevant ledger accounts.

1) On 31 December 20X4, three months’ rent amounting to a total of £3,000 was owing.
2) The rent chargeable per year was £12,000.
3) The following rent payments were made in the year 20X5:
4) 6 January £3,000; 4 April £3,000; 7 July £3,000; 18 October £3,000.
5) The final three months’ rent for 20X5 is still owing.

Question 11. The following details are available. Prepare the double entries and the relevant ledger
accounts.

1) On 31 December 20X4, unpaid interest expense amounted to £1,850.

2) During the year to 31 December 20X5, we paid £27,480 for interest expense.
3) On 31 December 20X5, we still owed £2,750 for interest expense.
 Difficult question

Question 12. Ratsnuffer is a business dealing in pest control. Its owner, Roy Dent, employs a team of eight
who were paid $12,000 per annum each in the year to 31 December 20X5. At the start of 20X6 he raised
salaries by 10% to $13,200 per annum each salaries by 10% to $13,200 per annum each.

On 1 July 20X6, he hired a trainee at a salary of $8,400 per annum. He pays his work force on the first
working day of every month, one month in arrears, so that his employees receive their salary for January on
the first working day in February, etc. (Source: 2013-bpp-f3-study-text pg 214 pdf file)

Required:

a) Calculate the cost of salaries which would be charged in the income statement of Ratsnuffer for the
year ended 31 December 20X6.
b) Calculate the amount actually paid in salaries during the year (ie the amount of cash received by the
work force).
c) State the amount of accrued charges for salaries which would appear in the statement of
financial position of Ratsnuffer as at 31 December 20X6.