Principles Of Accounting

Submitted By mariapar
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Pages: 3

INCIPLES OF ACCOUNTING
REVISION QUESTIONS 1
The annual accounting period of Hexton Ltd ends on 30th April. As at 30th April 2013 Hexton Ltd’s trial balance is as follows:

£
£
Capital (200,000 50p Ordinary shares)

100,000
Profit & Loss Account

83,500
Fixed Assets (at cost)

Land & Buildings
250,000

Plant & Machinery
50,000

Furniture
5,000

Motor Vehicles
28,000

Accumulated Depreciation Provision

Plant & Machinery

19,200 Furniture

1,000 Motor Vehicles

7,000
Sales

834,500
Returns in
34,200

Purchases
528,000

Returns out

28,400
Carriage in
1,300

Carriage out
14,200

Salaries & wages
36,500

Gas & electricity
6,500

Local taxes
4,000

Marketing expenses
39,000

IT expenses
9,300

Repairs & maintenance
4,200

Administrative expenses
5,000

Bank charges
250

Interest received

200
Interest paid
15,000

Accounting & legal fees
3,000

Debtors
189,640

Creditors

73,260
Stock-in-trade
53,000

Cash at bank
43,400

Bank overdraft

22,430
10-year Loan

150,000

1,319,490
1,319,490

After the trial balance has been extracted, the following have occurred for which you should make appropriate adjustments as required:
1. A stock take on 30th April 2013 revealed stack valued at £42,300.
2. Plant & machinery were all purchased at the same time. They are estimated to have a useful life of 5 years. At the end of that time all Plant & machinery will be sold for £2,000. Hexton Ltd operates a reducing balance method of depreciation for Plant & machinery.
3. Assuming that the estimated residual values are zero, Furniture and Motor Vehicles are depreciated by the straight-line method. Depreciation per annum is charged at Furniture 10% and Motor Vehicles 25%.
4. £9,000 of Marketing expenses will not be spent until June 2013.
5. In early May 2013 a bill for £350 has been received from the local stationers for goods received and used in March 2013.
You are required to draft:
(a) The Trading & Profit & Loss Account of Hexton Ltd for the year ended 30th April 2013; and
(b) The Balance Sheet of Hexton Ltd as at 30 April 2013.
You must show all workings on a separate sheet of paper in support of the figures you report in the final accounts.
QUESTION 2
(a) Define depreciation.
(b) Why do we charge depreciation?
(c) You are employed by Vitapride Ltd as Fixed Assets Accountant. The company’s accounting year runs from 1st April – 31st March. During the last 3 years the following events have occurred:
April 2010: Vitapride Ltd bought computer controlled machinery for £69,000. It…