Tbalance-q

Questions to test your understanding of Bookkeeping and Accounting

1. The stock account of Brown and Keen Ltd had a debit balance of £99,000 on 1 July. The following events occurred in July.

  • • On 4 July goods costing £14,000 were
    purchased for cash.

     

  • • On 6 July goods costing £8,000 were purchased
    from Knight Ltd on credit. 

  • • On 8 July goods costing £6,000 were purchased
    from Knight Ltd on credit.

     

  • • On 12 July goods with a stock value of
    £3,000 were sold for £4,200. It was a cash transaction. 

  • • On 16 July goods with a stock value of
    £2,100 were returned to Knight Ltd for credit.

     

  • • On 17 July a fire destroyed the entire
    stock. 

  • Fortunately no one was hurt.

     

Write up the accounts to show these events.
There is no need to write out the journal. Goods destroyed in the fire should be
written off to the profit and loss account.

 

2. A business only supplies zero-rated
goods and each year its annual turnover is only about £3,000. May it choose to register
for VAT and recover the VAT part of its purchases?

 

3. The VAT section of this chapter shows
the entries in the books of Claphorn and Crayfish Ltd following a sale to Dashwood
and Dorkins Ltd Show the resulting entries in the books of the purchaser (Dashwood
and Dorkins Ltd).

 

4. Killington Ltd pays the monthly salaries
by BACS transfers to employees’ bank accounts. On 26 November it issues a single
cheque for £61,216.13 in respect of the payment of the November salaries. This sum
is calculated after making the following deductions from employees’ gross pay:

 

• £15,123.45 for income tax.

 

• £9,678.32 for employees’ national insurance 

contributions.

 

• £500.00 for the repayment of a staff
loan.

 

Employers’ national insurance contributions
(not reflected in the gross amount of £86,517.90) total £10,996.42. There are just
two cost centres: Production Department which takes a charge of £63,111.48 and Administration
Department which takes the remainder of the cost.

 

Show the bookkeeping entries for the cheque
and the consequent postings.

 

5. What are the three types of error that
will not be disclosed by a trial balance?

 

ACCOUNTING
INSTANT TIP

 

The trial balance proves that the books balance
but some types of mistake may still have been made.