Debk Practice Paper 1 Solutions

SECTION 1: SOLUTIONS
1 Post
2 File
3 File
4 File
5 File
Page 1
Solution 6
Debit Credit
Machine - Cost 22,000
Machine - Acc’d Depreciation 21,000
Profit / Loss on Asset Disposal 200
Bank & Cash
Drawings 1,200
Solution 7
Debit Credit
Accounts Receivable 1200
Bank Cash 2800
VAT 600
Sales 1075
Discounts Allowed 75
Solution 8
Debit Credit
P&M Cost Account
P&M Accum’d Depreciation a/c 56250
Repairs
P&M Depreciation Expense 56250
Profit/Loss on Disposal
Solution 9
Debit Credit
Prepayments 1300
Accounts Payable 1600
Accruals
Rent & Rates
Computer Maintenance & Support 300
Solution 10
Debit Credit
Bank & Cash
Wages Taxes Control Account 2056
Earnings Payable Account 5894
Commission Expense 650
Salary Expense 7300
Page 2
Solution 11
Debit Credit
Plant & Machinery 18150
Bank & Cash
Other Payables 18150
VAT
Machinery Repairs
Solution 12
Debit Credit
Provision for Receivables 450
Drawings 5000
Purchases 5000
Bad Debt Expense 660
Solution 13
Debit Credit
Motor Vehicles Acc’d Depreciation 8000
Petty Cash
Suspense 3200
Rent Received 3200
Depreciation Expense 8000
Solution 14
Debit Credit
Non-current Assets 20000
Bank & Cash 12000
VAT
Loan 14000
Suspense 6000
Page 3
Solution 15
Debit Credit
Bank & Cash
VAT 2100
Accounts Payable
Sales 10000
Page 4
Solution 16
ANSWER 48400
Answer Workings (NB: These are provided for your convenience only. Workings are not required in
the online DEBK test)
76,000 -100,000 + (800,000-76,000) X 10%)
Solution 17
ANSWER 11100
(10,800 x 9/12) + (12,000 x 3/12)
Solution 18
ANSWER 5200
(-2300+1400+1000+5100=5200)
Solution 19
ANSWER 126000
Opening Capital 288,000

Capital Introduced 100,000
------------
388,000
Drawings (46,000)
------------
Subtotal 342,000
Closing Capital 468,000
Hence Profit = 126,000
Page 5
Solution 20
ANSWER 71150
{ (3/12 x660,000) + (6/12 x 782,000) + (3/12 x 622,000 } x 10%
Solution 21
ANSWER 129200
Trade Receivable Ledger Control Account
Opening balance 180,000 Cash from credit customers 228,000

Credit sales 190,000 Sales returns 8,000
Cash refunds to credit customers 3,300 Discount allowed 4,200
Bad debts written off 1,500
Contras against payable 2,400
Closing balance 129·200
373,300 373,300
Solution 22
ANSWER 90568
Trade Payables Ledger Control Account

€/£ €/£
Cash paid 90,568 Balance 14,879
Discounts received 5,329 Purchases 97,500
Purchases Returns 938 Trade payable debit balances 143
Balance 15,687
112,522 112,522
Page 6
Solution 23
ANSWER 4900
8400/12*7 = 4900
Solution 24
ANSWER 48500
(51700 – 2000 – 400 – 800 = 48500)
Solution 25
ANSWER -540
-825-475+600+160
Page 7
Solution 26
Statement of Profit & Loss of Hatch Meats for the year ended 31 December 20X8
€/£ ’000
Revenue 16,500
Cost of Sales -14,962
Gross Profit 1,538
Discounts allowed -32
Wages & Salaries -1,010
Rent & rates -160
Bad & doubtful debts -4
Insurance -135
Motor & travel expenses -90
P&M depreciation charge for the year -325
M.V. depreciation charge for the year -205
Loss on disposal -35
(Loss)/Profit for the year -458
Statement of financial position of Hatch Meats as at 31 December 20X8

Assets €/£ ’000 €/£ ’000
Non-current assets
Plant & machinery 775
Motor vehicles 390
1,165
Current assets
Inventories 145
Trade receivables 780
- Allowance for doubtful debts 8
Prepayments 135
Cash and cash equivalents 265
1,317
Total assets 2,482
Equity and liabilities

Capital 1,270
Drawings -100
Profit / (Loss) -458
712
Current liabilities
Trade & other payables 1,710
Accruals 60
Bank Overdraft -
1,770
Total equity and liabilities 2,482
Page 8
Trial Balance for "Hatch Meats" for year ended 31 December 20X8
Total Adj 1 Adj 2 Adj 3 Adj 4 (a) Adj 4 (b) Adj 5 Total
€/£ €/£
Closing Inventory 145 145
Plant & Machinery 900 400 1,300
Plant & Machinery-Accum Depreciation -300 -325 100 -525
Motor Vehicles 820 820
Motor Vehicles-Accum Depreciation -225 -205 -430
Trade receivables 780 780
Allowance for doubtful debts -14 6 -8
Prepayments 180 -45 135
Bank /(Overdraft) 200 65 265
Trade & other payables -1,110 -600 -1,710
Accruals - -60 -60
Capital account -1,270 -1,270
Drawings 100 100
Revenue -16,500 -16,500
Cost of sales 15,047 -145 60 14,962
Discounts allowed 32 32
Wages & Salaries 1,010 1,010
Rent & rates 160 160
Bad & doubtful debts 10 -6 4
Insurance 90 45 135
Motor & travel expenses 90 90
P&M depreciation charge for the year 325 325
M.V. depreciation charge for the year 205 205
Loss on disposal 35 35
Page 9
Workings
Year end adjustments to be considered Debit Credit

€/£ ’000 €/£ ’000
Adjustment 1: Inventories
Closing Inventories Asset SOFP 145
Cost of Sales SOPOL 145
being posting of closing inventory
Adjustment 2: Prepayments
Workings:
unwinding to P&L 180/12*3 45
Insurance SOPOL 45
Prepayments Asset SOFP 45
being unwinding of prepayment to P&L
Adjustment 3: Bad & doubtful debts

Workings:
Closing trade rec @ 1% 780 X 1% 8
Current allowance 14
Decrease 6
Allowance for doubtful debts Liability SOFP 6

Bad & doubtful debts SOPOL 6
being decrease of doubtful debt allowance
Workings: - Depreciation - 4(a)

Plant & Machinery (900-200+600)/4 325
M.V. 820/ 4 205
Plant & Machinery-Accum Depreciation Asset SOFP 325

Motor Vehicles-Accum Depreciation Asset SOFP 205
P&M depreciation charge for the year SOPOL 325
M.V. depreciation charge for the year SOPOL 205
being depr charge for the year
Adjustment 4: Depreciation
Page 10
Workings: - Disposal & Purchase- 4(b)
NBV 200-((200/4)*2) 100
Proceeds 65
Loss on disposal 35
Plant & Machinery Asset SOFP 200

Plant & Machinery-Accum Depreciation Asset SOFP 100
Bank Asset SOFP 65
Loss on disposal SOPOL 35
being elimination of plant. and accounting for sales proceeds and loss on disposal
Plant & Machinery Asset SOFP 600

Trade & other payables Liability SOFP 600
being accounting for new plant
Adjustment 5: Accruals
Accruals Liability SOFP 60
Cost of sales SOPOL 60
being accrual of goods received not invoiced
Page 11

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SECTION 1: SOLUTIONS

76,000 -100,000 + (800,000-76,000) X 10%)

(10,800 x 9/12) + (12,000 x 3/12)

Opening Capital 288,000

Closing Capital 468,000

Hence Profit = 126,000

{ (3/12 x660,000) + (6/12 x 782,000) + (3/12 x 622,000 } x 10%

Opening balance 180,000 Cash from credit customers 228,000

Trade Payables Ledger Control Account

(51700 – 2000 – 400 – 800 = 48500)

Statement of financial position of Hatch Meats as at 31 December 20X8

Equity and liabilities

Total equity and liabilities 2,482

Year end adjustments to be considered Debit Credit

Adjustment 3: Bad & doubtful debts

Allowance for doubtful debts Liability SOFP 6

Workings: - Depreciation - 4(a)

Plant & Machinery-Accum Depreciation Asset SOFP 325

Plant & Machinery Asset SOFP 200

Plant & Machinery Asset SOFP 600

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