Exercise 7 - Costa & Kappa Inc.
Prepare an adjusted trial balance for the Company as per 31. 12. 2013 according to the transactions in the quiz.
- 1.None posted payment of dividend of 45.000 concerning the fiscal year 2013. The payment was made from the overdraft account 20.12.2013. No dividend tax was withheld.
- A.
The dividend account (liability) is debited 45.000 while the bank overdraft account (liability) is credited 45.000.
- B.
The retained earnings account (liability) is debited 45.000 while the bank overdraft account (liability) is credited 45.000.
- C.
The interest expenses account (profit/loss) is debited 45.000 while the bank overdraft account (liability) is credited 45.000.
- D.
The retained earnings account (liability) is credited 45.000 while the bank overdraft account (liability) is debited 45.000.
- 2.None posted and unpaid declared dividend to shareholders for the fiscal year 2013 of 60.000.
- A.
The dividend account (liability) is credited 60.000 while the bank overdraft account (liability) is debited 60.000.
- B.
The dividend account (liability) is debited 60.000 while the bank overdraft account (liability) is credited 60.000.
- C.
The dividend account (liability) is credited 60.000 while the retained earnings account (liability) is debited 60.000.
- D.
The dividend account (liability) is credited 60.000 while the interest expenses account (profit/loss) is debited 60.000.
- 3.None posted increase of capital 500.000. 400.000 of the 500.000 is premium while the rest is share capital. The capital increase was paid by the shareholders to the company’s overdraft account before 31.12.2013.
- A.
The share capital account (liability) is credited 100.000, the interest revenue account (profit/loss) is credited 400.000 while the bank overdraft account (liability) is debited 500.000.
- B.
The share capital account (liability) is credited 400.000, the premium account (liability) is credited 500.000 while the bank overdraft account (liability) is debited 500.000.
- C.
The share capital account (liability) is credited 100.000, the premium account (liability) is credited 400.000 while the bank overdraft account (liability) is debited 500.000.
- D.
The share capital account (liability) is credited 500.000 while the bank overdraft account (liability) is debited 500.000.
- 4.None posted corporation tax of 100.000 (cost) and deferred tax of 50.000 (cost). Corporation tax is unpaid as per 31.12.2013.
- A.
The corporation tax account (profit/loss) is debited 150.000 while the corporation tax payable account (liability) is credited 100.000.
- B.
The corporation tax account (profit/loss) is debited 150.000, the deferred tax account (liability) is credited 100.000.
- C.
The corporation tax account (profit/loss) is debited 150.000 while the other creditors account (liability) is credited 150.000.
- D.
The corporation tax account (profit/loss) is debited 150.000, the deferred tax account (liability) is credited 50.000 while the corporation tax payable account (liability) is credited 100.000.
- 5.None posted wages regarding Q4 2013 specified below: Wages = 160.000 Withheld pension contribution = 15.000 Taxable income = 145.000 Withheld income tax = 80.000 Net wages = 65.000 Payment was made from the overdraft account in December 2013.
- A.
The wages account (profit/loss) is debited 160.000 while the bank overdraft account (liability) is credited 160.000.
- B.
The wages account (profit/loss) is debited 160.000, the pension contribution account (profit/loss) is debited 15.000, the payable withheld income taxes account (liability) is credited 80.000, the payable withheld pension contribution account (liability) is credited 15.000 while the bank overdraft account (liability) is credited 65.000.
- C.
The wages account (profit/loss) is debited 145.000, the pension contribution account (profit/loss) is debited 15.000, the payable withheld income taxes account (liability) is credited 80.000, the payable withheld pension contribution account (liability) is credited 15.000 while the bank overdraft account (liability) is credited 65.000.
- D.
The wages account (profit/loss) is debited 145.000 while the bank overdraft account (liability) is credited 145.000.
- 6.None posted loan from SafeBank Inc. The loan has a principal of 300.000 and admission costs of 10.000 giving proceeds of 290.000. The proceeds were paid to the company’s overdraft account before 31.12.2013.
- A.
The bankoverdraft account (liability) is debited 290.000 while the longterm loan liabilities account (liability) is credited 290.000.
- B.
The bankoverdraft account (liability) is debited 300.000 while the longterm loan liabilities account (liability) is credited 300.000.
- C.
The bankoverdraft account (liability) is debited 290.000, the longterm loan liabilities account (liability) is credited 300.000 while the admission costs account (profit/loss) is debited 10.000.
- D.
The bankoverdraft account (liability) is debited 290.000 while the interest revenue account (profit/loss) is credited 290.000.
- 7.None posted payment of withheld income taxes to tax authorities of 35.000. Payment was made from the overdraft account before 31.12.2013.
- A.
The bankoverdraft account (liability) is credited 35.000 while wages account (profit/loss) is debited 35.000.
- B.
The bankoverdraft account (liability) is credited 35.000 while corporation tax account (profit/loss) is debited 35.000.
- C.
The bankoverdraft account (liability) is credited 35.000 while the payable withheld income taxes account (liability) is debited 35.000.
- D.
The bankoverdraft account (liability) is credited 35.000 while the corporation tax payable account (liability) is debited 35.000.
- 8.None posted payment of withheld pension contributions to pension fund of 11.000. Payment was made from the overdraft account before 31.12.2013.
- A.
The bank overdraft account (liability) is credited 11.000 while the payable withheld pension contribution account (liability) is debited 11.000.
- B.
The bank overdraft account (liability) is credited 11.000 while the pension contribution account (profit/loss) is debited 11.000.
- C.
The bank overdraft account (liability) is credited 11.000 while the retained earnings account (liability) is debited 11.000.
- D.
The bank overdraft account (liability) is debited 11.000 while the pension contribution account (profit/loss) is credited 11.000.
- 9.None posted payment of loan of 30.000 including 7.000 in interests. The remaining amount of 23.000 is repayment of loan principal. The payment was made from the overdraft account before 31.12.2013.
- A.
The bank overdraft account (liability) is credited 30.000, the interest expenses account (profit/loss) is debited 7.000 while the longterm loan liabilities account (liability) is debited 23.000.
- B.
The bank overdraft account (liability) is credited 30.000 while the interest expenses account (profit/loss) is debited 30.000.
- C.
The bank overdraft account (liability) is credited 30.000 while the longterm loan liabilities account (liability) is debited 30.000.
- D.
The bank overdraft account (liability) is credited 23.000 while the longterm loan liabilities account (liability) is debited 23.000.
- 10.None posted and unpaid audit fee for the fiscal year 2013 for the amount of 41.000.
- A.
The audit fee account (profit/loss) is debited 41.000 while the bank overdraft account (liability) is credited 41.000.
- B.
The audit fee account (profit/loss) is credited 41.000 while the bank overdraft account (liability) is debited 41.000.
- C.
The bank overdraft account (liability) is credited 41.000 while the other creditors account (liability) is debited 41.000.
- D.
The audit fee account (profit/loss) is debited 41.000 while the other creditors account (liability) is credited 41.000.
- 11.None posted reversal of provision for bad debt of 12.000.
- A.
The bank overdraft (liability) is credited 12.000 while the provision for bad debt account (asset) is debited 12.000.
- B.
The bad debt account (prodit/loss) is credited 12.000 while the provision for bad debt account (asset) is debited 12.000.
- C.
The sales account (prodit/loss) is credited 12.000 while the provision for bad debt account (asset) is debited 12.000.
- D.
The sales account (prodit/loss) is debited 12.000 while the provision for bad debt account (asset) is credited 12.000.
- 12.None posted new provision for bad debt of 20.000.
- A.
The sales account (profit/loss) is debited 20.000 while the provision for bad debt account (asset) is credited 20.000.
- B.
The sales account (profit/loss) is debited 20.000 while the cash account (asset) is credited 20.000.
- C.
The bad debt account (profit/loss) is credited 20.000 while the provision for bad debt account (asset) is debited 20.000.
- D.
The bad debt account (profit/loss) is debited 20.000 while the provision for bad debt account (asset) is credited 20.000.
- 13.None posted incurred loss on trade debtors of 40.000. There has previously been made a full provision for this loss.
- A.
The bad debt account (profit/loss) is debited 40.000 while the trade debtors account (asset) is credited 40.000.
- B.
The bad debt account (profit/loss) is debited 40.000 while the provision for bad debt account (asset) is credited 40.000.
- C.
The bad debt account (profit/loss) is credited 40.000 while the provision for bad debt account (asset) is debited 40.000.
- D.
The provision for bad debt account (asset) is debited 40.000 while the trade debtors account (asset) is credited 40.000.
- 14.None posted credit note to a trade debtor (customer) of 15.000. The credit note offsets an unpaid invoice.
- A.
The sales account (profit/loss) is debited 15.000 while the trade debtors account (asset) is credited 15.000.
- B.
The sales account (profit/loss) is credited 15.000 while the trade debtors account (asset) is debited 15.000.
- C.
The sales account (profit/loss) is credited 15.000 while the bad debt account (profit/loss) is debited 15.000.
- D.
The provision for bad debt account (asset) is credited 15.000 while the bad debt account (profit/loss) is debited 15.000.
- 15.None posted return of goods from customer (in connection with previously book credit note) of 5.500 (quantity is 10).
- A.
The goods for resales account (asset) is debited 5.500 while the cost of goods sold account (profit/loss) is credited 5.500.
- B.
The trade debtors account (asset) is credited 5.500 while the cost of goods sold account (profit/loss) is debited 5.500.
- C.
The goods for resales account (asset) is credited 5.500 while the trade creditors account (liability) is debited 5.500.
- D.
The goods for resales account (asset) is debited 5.500 while the trade creditors account (liability) is credited 5.500.
- 16.None posted invoice of 55.000 to a trade debtor customer. The invoice has not been paid as per 31.12.2013.
- A.
The sales account (profit/loss) is credited 55.000 while the trade debtors account (asset) is debited 55.000.
- B.
The sales account (profit/loss) is credited 55.000 while the cash account (asset) is debited 55.000.
- C.
The sales account (profit/loss) is credited 55.000 while the bank overdraft account (liability) is debited 55.000.
- D.
The transaction should no be included in the books as per 31.12.2013.
- 17.None posted payment of corporation tax of 86.000 from the overdraft account as per end of December 2013. The payment concerns due corporation tax from 2012.
- A.
The bank overdraft account (liability) is debited 86.000 while the corporations tax payable account (liability) is credited 86.000.
- B.
The bank overdraft account (liability) is credited 86.000 while the payable withheld income taxes account (liability) is debited 86.000.
- C.
The bank overdraft account (liability) is credited 86.000 while the corporations tax payable account (liability) is debited 86.000.
- D.
The bank overdraft account (liability) is credited 86.000 while the deferred taxes account (liability) is debited 86.000.
- 18.None posted depreciation on plant and machinery of 29.000.
- A.
The depreciations on equipment account (profit/loss) is debited 29.000 while the equipment account (asset) is credited 29.000.
- B.
The depreciations on plant and machinery account (profit/loss) is debited 29.000 while the accumulated depreciations on plant and machinery account (asset) is credited 29.000.
- C.
The depreciations on equipment account (profit/loss) is credited 29.000 while the equipment account (asset) is debited 29.000.
- D.
Option4
- 19.None posted inventory count and evaluation for 2013. The company uses FIFO (first in first out) in evaluating its inventory. At the beginning of the year the company had an inventory of 120 with the equivalent amount of 66.000 in value. During the year the company has purchased first 20 for an amount of 12.000 and then 15 for an amount of 10.500. All purchases have been posted to the account Goods for resale together with the begin value of 66.000. However section 15 above has not been included. The quantity in inventory was 55 as per 31.12.2013 including 10 (with a value of 5.500) mentioned in section 15. Asses the value of the inventory as per 31.12.2013 and post according to this.
- A.
The inventory account (asset) is credited 60.500 while cost of goods sold (profit/loss) is debited 60.500.
- B.
The inventory account (asset) is credited 33.500 while cost of goods sold (profit/loss) is debited 33.500.
- C.
The inventory account (asset) is credited 94.000 while cost of goods sold (profit/loss) is debited 94.000.
- D.
The inventory account (asset) is credited 66.000 while cost of goods sold (profit/loss) is debited 66.000.
- 20.None posted settlement of the input and output VAT account to the VAT payable account.
- A.
The output VAT account (liability) is credited 125.000, the input VAT account (liability) is debited 50.000 while the VAT payable account (liability) is debited 75.000.
- B.
The output VAT account (liability) is debited 125.000, the input VAT account (liability) is credited 50.000 while the VAT payable account (liability) is credited 75.000.
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