Working 04122025
217
Accounts receivable = $47,744
Allowance for receivables = $3,500
Net receivables = $47,744 − $3,500 = $44,244
✔ Correct answer: A — $44,244 as a current asset
218
Opening allowance (1 Nov 20X1): $9,000
Closing allowance required (31 Oct 20X2): $6,000
Decrease in allowance = $9,000 − $6,000 = $3,000 (this is a credit, reduces expense)
Irrecoverable debts written off during the year: $5,000 (expense)
Total charge to the Statement of Profit or Loss:
Irrecoverable debts expense: $5,000
Less: Reduction in allowance (credit): ($3,000)
Total expense = $2,000
✔ Answer: $2,000
219
Opening allowance (1 Nov 20X4): $5,670
Closing allowance required (31 Oct 20X5): $5,512
Change in allowance = $5,670 − $5,512 = $158 decrease
A decrease in allowance = credit to the Statement of Profit or Loss (income)
✔ Answer: $158
220
A provision is defined (IAS 37) as a liability of uncertain timing or amount.
✅ Answer: B
221
Price per microwave = $300
Sales each month = 150 units
On average, returns in following month = 5 units.
Return rate = 5 / 150 = 1/30.
At 31 Dec 20X5, the only expected future returns relate to December’s sales (returns for earlier
months have already happened).
Expected returns for December = 5 microwaves
Provision = 5 × $300 = $1,500
✅ Provision to include: $1,500
222
Opening provision (31 Oct 20X4) = $6,548
Required closing provision (31 Oct 20X5) = $4,940
Decrease in provision = 6,548 − 4,940 = $1,608
A decrease in a provision is credited to the statement of profit or loss (it reduces expense / is
income).
✅ Answer: C — A credit of $1,608
229
Opening capital = $23,000
Loss for the year = −$2,500
Additional capital introduced = +$3,000
Drawings = −$8,200
Closing capital
= 23,000 − 2,500 + 3,000 − 8,200
= $15,300
230
Opening capital = $35,000
Drawings = $14,600
Closing capital = $30,000
Formula:
Closing capital = Opening capital + Profit − Drawings
So:
Profit = Closing − Opening + Drawings
= 30,000 − 35,000 + 14,600
= $9,600
231
Closing capital = $42,500
Drawings = $15,700
Capital introduced = $2,750
Profit = $13,800
Formula:
Closing = Opening + Profit + Capital introduced − Drawings
Rearrange for Opening:
Opening = Closing − Profit − Capital introduced + Drawings
= 42,500 − 13,800 − 2,750 + 15,700
= $41,650
232
Opening capital = $12,735
Drawings (withdrawals) = $2,345
Closing capital = $2,690
Formula with a loss (L):
Closing = Opening − Loss − Drawings
So:
Loss = Opening − Drawings − Closing
= 12,735 − 2,345 − 2,690
= $7,700
253
Posted to Purchases (debit) = $274,865
Correct figure = $274,685
So purchases are overstated on the debit side by $180.
Credit entries (to payables) are assumed correct.
Therefore, total debits > total credits by $180.
✅ Answer: C – The total of the debit balances will exceed the total of the credit balances.
254
Suspense account has an opening debit balance of $900.
(i) Supplier’s invoice for $16,700 posted to Purchases as $17,600

Purchases (debit) overstated by $900.

Correcting entry:
o
Dr Suspense $900
o
Cr Purchases $900

This increases the debit balance on suspense by $900.
(ii) Cheque for $900 not recorded in the ledger

Whole double entry missing (Dr expense / Cr bank), so this error does not affect the
suspense account.
So final balance on Suspense:
Opening debit $900

from (i) $900
= $1,800 debit
✅ Answer: C – $1,800
Q272
Given:
Payables ledger control account (per general ledger)
= $78,553
Less: Discount not recorded in general ledger
Discount = $128
→ This means the control account is overstated, so we must subtract it:
78,553 − 128 = 78,425
Add: Debit balance of $100 included as a credit balance
If a debit balance was wrongly treated as a credit, the list of balances is understated by:
Debit wrongly shown as credit → difference = 200
(100 to remove wrong credit + 100 to put it correctly as debit)
So add $200:
78,425 + 200 = 78,625
Final Answer
✔ Correct payables ledger control account balance = $78,625
305
Opening allowance for receivables: $37,000 (credit)
Debts written off during year: $18,000 (expense – debit)
Required closing allowance: $20,000 (credit)
Change in allowance = 37,000 − 20,000 = $17,000 decrease
A decrease in allowance is a credit to profit or loss (reduces expense).
Net effect in profit or loss:

Irrecoverable debts expense: $18,000 debit

Reduction in allowance: $17,000 credit
Net charge = 18,000 − 17,000 = $1,000 debit
✅ Answer: B – $1,000 debit
306
Receivables ledger balance: $37,890
Debts to be written off: $1,570
Required closing allowance: $1,158
First, remove irrecoverable debts from receivables:
Adjusted receivables = 37,890 − 1,570 = $36,320
Then subtract the allowance for receivables:
Net receivables = 36,320 − 1,158 = $35,162
✅ Answer: B – $35,162
307
To write off an irrecoverable debt, we:

Debit Irrecoverable debts (expense)

Credit Trade receivables (ledger control)
✅ Answer: C – Debit Irrecoverable debts, and Credit Trade receivables’ ledger control
362
Business bought goods on credit for $10,000.
Half of the goods were sold → Cost of goods sold:
COGS = 10,000 ×
1
= 5,000
2
Markup = 120% of cost.
So selling price:
Sales = 5,000 × (1 + 1.20) = 5,000 × 2.20 = 11,000
Sales commission = 5% of sales:
Commission = 11,000 × 5% = 550
Net profit
Net profit = Sales − COGS − Commission
= 11,000 − 5,000 − 550 = 5,450
✅ Answer for Q362: $5,450
363 — Calculate Sales Revenue
Based on the calculation below, the correct answer is A $525,300.
Here is the step-by-step breakdown of how to arrive at this figure.
Approach
To find the total sales revenue, you need to combine two figures:
1. Cash Sales: (Given directly in the question)
2. Credit Sales: (Must be calculated by reconstructing the Receivables Ledger Control Account)
Formula:
$$Total Sales = Credit Sales + Cash Sales$$
Step 1: Calculate Credit Sales
We need to find the missing balancing figure (Credit Sales) in the Receivables account. We can do
this by adding up all the items that decreased the receivables balance and subtracting the items that
increased it (like the opening balance).
Reconstruction Calculation:
Item
Amount
($)
Logic
Closing Accounts Receivable
38,600
Start with the end balance
(+) Cash received & banked
381,600
Decreased the debt
(+) Cash expenses paid from
receipts
6,800
Note below: This counts as cash collected from
customers
(+) Irrecoverable debts
7,200
Written off, decreases the debt
(+) Contra with payables
9,400
Offset, decreases the debt
Total Credits (Decreases)
443,600
(-) Opening Accounts Receivable (29,100)
Remove initial balance
(-) Refunds to customers
Refunds increase the amount owed to the customer
(a debit)
(2,100)
Item
Amount
($)
Logic
= Credit Sales
412,400
The balancing figure
Important Note on Expenses: The expenses of $6,800 were paid out of cash received from
customers before it was banked. This means the actual total cash collected from customers was the
banked amount ($381,600) plus the cash used for expenses ($6,800). Both amounts reduced the
customers' debt.
Step 2: Calculate Total Sales Revenue
Now, simply add the calculated credit sales to the cash sales provided in the list.

Credit Sales: $412,400

Cash Sales: $112,900

Total Sales: $525,300
Correct Option: A
386
All sales are for cash.
Cash movement for November 20X7:

Cash banked: $26,543

Drawings from till: $1,750

Wages paid in cash: $3,750

Office furniture/equipment paid in cash: $1,750

Cash in till 1 Nov: $70

Cash in till 30 Nov: $50
Cash equation:
Opening till + Cash sales − (Banked + Drawings + Wages + Furniture) = Closing till
70 + Sales − (26,543 + 1,750 + 3,750 + 1,750) = 50
Sum of payments:
26,543 + 1,750 + 3,750 + 1,750 = 33,793
So:
70 + Sales − 33,793 = 50 ⇒ Sales = 33,793 + 50 − 70 = 33,773
Jurgen’s cash sales for November 20X7 = $33,773.
387
Sales = $825,000
Markup on cost = 25%
If cost = 100, sales = 125 →
Cost of goods sold (COGS):
COGS =
825,000
= 660,000
1.25
Inventory:

Opening inventory: $12,800

Closing inventory: $14,700
COGS formula:
COGS = Opening inventory + Purchases − Closing inventory
So:
660,000 = 12,800 + Purchases − 14,700
Purchases = 660,000 + 14,700 − 12,800 = 661,900
Cost of Emre’s purchases = $661,900.
388
Trade payables:

Opening balance (1 Apr 20X5): $21,876

Payments to suppliers: $123,456

Discounts received: $1,025

Contra with receivables: $2,500

Closing balance: $19,998
Payables control equation:
Opening + Credit purchases − Payments − Discounts − Contra = Closing
Rearrange for credit purchases:
Credit purchases = Payments + Discounts + Contra + Closing − Opening
= 123,456 + 1,025 + 2,500 + 19,998 − 21,876 = 125,103
Cost of Carole’s credit purchases for the year ended 31 March 20X6 = $125,103.
Given:

Capital: Ron 50,000; Kevin 50,000; Sid 20,000

Interest on capital: 10%

Salaries: Ron 8,000; Kevin 10,000; Sid 12,000

Net profit: 45,000

Residual profit/loss shared equally.
412 – Residual profit per partner
Interest on capital:

Ron: 10% × 50,000 = 5,000

Kevin: 10% × 50,000 = 5,000

Sid: 10% × 20,000 = 2,000
Total interest = 12,000
Salaries:

Ron: 8,000

Kevin: 10,000

Sid: 12,000
Total salaries = 30,000
Total appropriations before residual profit = 12,000 + 30,000 = 42,000
Residual profit = Net profit − appropriations
= 45,000 − 42,000 = 3,000
Residual profit is shared equally:
3,000 ÷ 3 = 1,000 profit each
✅ 412: Option A – $1,000 profit for each partner.
413 – Ron’s total profit share
Ron receives:

Interest on capital: 5,000

Salary: 8,000

Share of residual profit: 1,000
Total = 5,000 + 8,000 + 1,000 = 14,000
✅ 413: Option D – $14,000