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Poa Tutorial 5

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17 views4 pages

Poa Tutorial 5

Uploaded by

cherry377382
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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NANYANG POLYTECHNIC

SCHOOL OF BUSINESS MANAGEMENT


BM4112 / IT2853 PRINCIPLES OF FINANCIAL ACCOUNTING

TUTORIAL 5 – Recording Business Transactions

Question 1

WTX Pte Ltd discovered the following errors in its accounts for the month ended 31
December 20x9:

1) Cash receipt from a trade debtor (AR) of $10,000 was recorded twice.

Right Entry: Wrong Entry Recorded:


Dr Cash $10,000 Dr Cash $10,000
Cr Accounts Receivable $10,000 Cr Accounts Receivable $10,000
Dr Cash $10,000
Cr Accounts Receivable $10,000

2) Furniture purchased on account at $1,500 for the office was recorded as debit
Accounts Payable $1,500 and credit Furniture $1,500.

Right Entry: Wrong Entry Recorded:


Dr Furniture $1,500 Dr Accounts Payable $1,500
Cr Accounts Payable $1,500 Cr Furniture $1,500

3) Paid a total $15,000 to accounts payable and the accounts assistant had debited
Accounts Receivable $15,000 and credited Cash $15,000.

Right Entry: Wrong Entry Recorded:


Dr Accounts Payable $15,000 Dr Accounts Receivable $15,000
Cr Cash $15,000 Cr Cash $15,000

4) A purchase of equipment at $34,000 on credit was recorded as debit Equipment


$43,000 and credit Accounts Payable $43,000.

Right Entry: Wrong Entry Recorded:


Dr Equipment $34,000 Dr Equipment $43,000
Cr Accounts Payable $34,000 Cr Accounts Payable $43,000

Required:

Prepare journal entries to correct the errors above for the month of 31 December 20x9.
Narrations are not required.

No. Accounts DR($) CR($)


1) Account

Question 2

Charlie Company discovered the following errors in its accounts during the month of
June 20x9:

1) Charlie invested $10,000 in cash and a laptop $2,000 into the business. This was
recorded as debit Capital $12,000 and credit Cash $12,000.
Right Entry: Wrong Entry Recorded:
Dr Cash $10,000 Dr Capital $12,000
Dr Computer $2,000 Cr Cash $12,000
Cr Capital $12,000

2) A payment of $3,500 to a trade creditor was recorded as debit Cash $5,300 and
credit Accounts Payable $5,300.
Right Entry: Wrong Entry Recorded:
Dr Accounts Payable $3,500 Dr Cash $5,300
Cr Cash $3,500 Cr Accounts Payable $5,300

3) $20,000 collected in cash for services performed in June 20x9 was recorded as
debit Accounts Receivable $20,000 and credit Fees Earned $20,000.
Right Entry: Wrong Entry Recorded:
Dr Cash $20,000 Dr Accounts Receivable $20,000
Cr Fees Earned $20,000 Cr Fees Earned $20,000

4) A payment of salary expense amounting to $900 was recorded as $9,000 into the
correct accounts.
Right Entry: Wrong Entry Recorded:
Dr Salary Expense $900 Dr Salary Expense $9,000
Cr Cash $900 Cr Cash $9,000

Required:
Prepare journal entries to correct the errors above. Narrations are not required.
Question 3

The normal account balances of Angel Consultancy Services as at 30 June 20x9 was
as follows:

Accounts $
Accounts Receivable 26,400
Capital 50,000
Service Revenue 180,000
Salary Expense 96,000
Accounts Payable 15,600
Supplies 37,400
Drawings 10,000
Cash 27,800
Rent Expense 48,000

Additional Information:

(1) $1,000 paid to a creditor was recorded as Dr Accounts Receivable $1,000 and
Cr Cash $1,000. No further entry was made to the books.

(2) Payment of $6,000 for June 20x9 salary was recorded as Dr Rent Expense
$600 and Cr Cash $600. No further entry was made to the books.

Required:

(a) Prepare the correcting journal entries based on the additional information
provided. No narration is required.

(b) Prepare the Trial Balance as at 30 June 20x9, incorporating the correcting journal
entries recorded in (a) above.

(c) Calculate the net profit or net loss for the year ended 30 June 20x9, stating
clearly in your answer whether it is a net profit or net loss.
Net profit=Revenue-Expenses
=180000-102000-47400
=30600
(d) Calculate the total assets, total liabilities and total owner’s equity as at 30 June
20x9.
Total assets=25400+37400+22400=85200
Total liabilities=14600
Total liabilities=14600
Total owner’s equity=50000-10000+30600=70800

Question 4 – Class Exercise

To be shown during tutorial and done in class

(1)
Wrong correct
Dr fees earned 300 Cr fees earned 300
Cr account receivable 300 Dr Account Recievable 300
Cr service revenue 300
Dr capital 4000 Dr capital 4000
Cr cash 4000 Cr cash 4000
Dr drawings 4000
Dr utilities expense 5100 Dr utilities expense 5100
Cr Account Payable 5100
Cr rent expense 5000 Account payable 5000

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