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)
Profit & Loss Account
Fixed Assets (at cost)
Land & Buildings
Plant & Machinery
Accumulated Depreciation Provision
Plant & Machinery
1,000 Motor Vehicles
Salaries & wages
Gas & electricity
Repairs & maintenance
Accounting & legal fees
Cash at bank
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.
(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…