1.

A list of accounts of a business at the start of a week is as follows:

$
Trade debtors 33,000
Inventory 28,000
Furniture and fittings 63,000
Freehold premises 145,000
Trade creditors 23,000
Bank overdraft 43,000
Owner’s equity 203,000

During the week the following transactions take place:

 Sold inventory for $11,000 cash. The inventory has cost $8,000.
 Sold inventory for $23,000 on credit. This inventory had cost $ 17,000.
 Received cash from trade debtors totalling $18,000.
 The owners of the business introduced $100,000 of their own money which was placed in a
business bank account
 Bought a motor vehicle, for $40,000. Paid $10,000 cash. Balance a loan from ABC Finance.
 Paid wages $1500 cash
 Bought inventory on credit for $14,000.
 Paid weekly Rent $350
 Paid trade creditors for $13,000.
 Paid Gas account $150

Prepare:
- a workbook and post these opening balances and transactions
- Statement of profit or loss
- Statement of financial position
- Statement of cash flows
2. Account Balances as at 31/12/XY

Cash 118201
Stock balance as at 1/1/20XY 5521
Accounts receivable 4517
Stock Purchases 8255
Pett Cash 123
Vehicle 10000
Electricity 120
Rent 2700
Wages 1450
Gas 106
Painting 391
Phone 200
Accounts payable 5789
Sales 12938
Capital, T Freer 132857

Additional Information
Stock at 31/12/20XY 2350

REQUIRED:
Prepare a Income Statement for the period
ending 31/12/20XY
3. Slippery Steve Ltd., a service company, has the following account balances prior to the

recording of the balance day adjustments:

Account Balances as at 31st December 20xx (prior to adjustments)

Account $

Bank Overdraft $4 800

Accounts receivable $38 200
Stock of Supplies $2 600
Prepaid rent $1 800
Property, Plant & Equipment (PP&E) $54 000
Accounts payable $5 000
Bank Loan $10 000
Contributed capital (16 600 shares) $16 600
Retained earnings (31/12/20xw) $5 760
Accumulated depreciation of P&E $24 000
Sales revenue $96 000
General expenses (not detailed) $65 560

Adjustments / additional information not yet recorded to December 31st, 20xx:

1. Property has a useful life of 6 years, with a scrap value of $6000. Calculate Depreciation (straight
line method) for 20xx.
2. Rent used up during the last month was $900;
3. Wages incurred and owing to employees as at 31st December,$ 2 200;
4. The count of supplies on 31st December indicated that there were
$1 200 on hand and in good condition;
5. The bank statement showed bank fees of $100 which have not yet been
recorded;
6. Included in the General Expenses amount of $65,560 is Council Rates of
$1800, which cover the period 1/4/20xx to 31/3/20xy.
7. Bad debts of 1% need to be recorded based on debtors balance.

Required:

1. Record the Account balances prior to adjustments in the workbook

2. Calculate and record the Adjustments in the workbook, total and balance the
workbook,.
3. Prepare a properly constructed balance Sheet in the standard vertical Format.
4. What factors could give rise to the accounting “accrual profit” exceeding the “cash flow from
operating activities”?

5. Candid Ltd produces one product the X19. Standard (budgeted) costs are as follows:

Direct Materials 5Kg @ $10.40 per Kg 52.00

Direct Labour 1hr @ $29.00 per hr 29.00
Factory overhead 1hr @ $17.50 per unit 17.50
98.50

Actual results for the month of June were:

Units Produced 235,000

Direct Materials used 1,176,000 at $10.45 per kg
Wages paid 237,000 hours at $28.95 per hr
Actual Overhead incurred $4,200,000

Required:
Calculate the Direct Materials Price and Efficiency Variances, The Labour Rate and Efficiency
variances and the Factory Overhead Variance.
Other than a the reason " The standard (budgeted) figure was incorrectly calculated", list
one reason you could suggest for each variance calculated.