Demonstrate an understanding of accounting principles
The purpose of an assignment is to ensure that the Learner is able to:
- Demonstrate an understanding of accounting principles.
- Systematically record the financial aspects of business transactions.
- Prepare financial statements to know the result of business operations for a particular period of time.
- To meet the financial information needs of the decision-makers and help them in rational decision-making.
- Report the results and position of business to “Users” of financial statements.
- Presenting ‘true and fair’ view of financial transactions.
- Show accurate calculations for all transactions.
The following balances appeared in the general Ledger of HC Agency on 28 February 2004 after the accounts had been balanced:
Prepare the Pre- Adjustment Trial Balance HC Agency on 28 February 2004.
QUESTION TWO (25 MARKS)
On August 2008, Lucas started a garden service business. The following is an extract of certain
Accounts from his trial balance on 31 August 2008:
- Prepaid Insurance R 1 500 Equipment R 8 000
- Loan (credit) R 10 000
- Fees earned R 2 000
- Fees received in advance R 1 500
The following information relates to the above accounts:
- The insurance premium was paid for the year ended 31 July 2009.
- Depreciation on equipment for August 2008 amounts to R 300.
- The loan was negotiated on 01 August 2008 at an interest rate of 15% per annum.
- A client paid R 1 500 on 01 August 2008, being the fee for the next for months. His garden was serviced during August.
- A client, who received valued at R 250 during August, has not yet paid for them. Lucas would like to prepare statement on a monthly basis.
Prepare the adjustment journal entries (general journal) as at 31 August 2008. Narrations are required Show all Calculations.
A comparison of the Receipts Journal and Cash Payments Journal of Halogen Limited with its bank statement at 30 June 2001 reveals the following:
Bank account in the General Ledger (Debit) 01/06/20.11 R2 190
Bank statement (overdraft) 30/06/20.11 R540
Cash Receipts Journal R30 690
Cash Payment journal R32 400
- A debtor, A. Smith paid an amount of R750 directly into the bank account of Halogen Limited. 2. The bank erroneously debited Halogen Limited’s account with a cheque for R2 250 drawn by Palagan Limited.
- According to the Bank statement a cheque for R285 received from D. Direct in settlement of his account of R300 was dishonoured and returned on 27 June 20.11.
- Sundry bank debits and as per bank statement:
Service fees R69
Cheque book fees R6
- A stop order for the annual fire insurance premium of R405, payable to Direct Insurance, appeared on the bank statement but not in the relevant cash journal.
- A deposit of R1 170 on 30 June 20.11 in the cash receipts journal was in fact deposited on 1 July 2001.
- Outstanding cheques not yet presented to the bank for payment amounted to R2475
- Prepare adjusted cash journals at 30 June 20.11. (9)
- Show the Bank account for June 2001 in the general ledger, properly balance (8)
- Prepare a Bank Reconciliation Statement as at June 20.11. (8) FOUR (25
The following information was obtained from the financial records of Fine Traders on 28 February 20.8:
- The debtors column in the cash receipts journal was overcast by R1 000.
- The creditors column in the purchases journal was overcast by R2 000.
- A sales invoice for the amount of R600 was entered twice in the sales journal and posted twice to the personal account of B Broad.
- Credit note No 31, for R500, was credited to the account of T Thin, but no other entry was made in the book.
- An invoice for the amount of R50 was correctly entered in the purchases journal, but posted as
R150 the account of N Narrow
- An invoice for the amount of R400 was correctly entered in the sales journal, but posted as R40 to the account of D Dandy.
- A cheque for R900 received from debtor G Great was returned by the bank marked ‘’R/D’’.
The necessary entry was made in the cash payments journal, but no posting was made to the account of G Great
- The balance of P Pauper’s account for R1 420 has still to be written off as irrecoverable.
- It was determined that the allowance for credit losses account should amount to R538 at 28 February 20.8.
Prepare a properly balanced debtors control account for the month ending 20 February 20.8.