Exercise 8 - Much & Home Inc.

1. None posted and unpaid declared dividend to shareholders for the fiscal year 2013 of 15% of the share capital.

The dividend for the year account (liability) is credited 39.000 while the retained earnings account (liability) is debited 39.000

The other creditors account (liability) is credited 39.000 while the retained earnings account (liability) is debited 39.000

The interest expenses account (profit/loss) is credited 39.000 while the retained earnings account (liability) is debited 39.000

The interest expenses account (profit/loss) is debited 39.000 while the bank overdraft account (liability) is debited 39.000

2. None posted and unpaid audit fee for the fiscal year 2013 for the amount of 30.000.

The audit fee account (profit/loss) is debited 30.000 while the other creditors account (liability) is credited 30.000

The audit fee account (profit/loss) is debited 30.000 while the bank overdraft account (liability) is credited 30.000

The audit fee account (profit/loss) is credited 30.000 while the other creditors account (liability) is debited 30.000

The audit fee account (profit/loss) is credited 30.000 while the bank overdraft account (liability) is debited 30.000

3. None posted corporation tax of 55.000 (cost) and deferred tax of 12.000 (cost). Corporation tax is unpaid as per 31.12.2013.

The corporation tax account (profit/loss) is debited 67.000 while the other creditors account (liability) is credited 67.000

The corporation tax account (profit/loss) is credited 67.000 while the other creditors account (liability) is debited 67.000

The corporation tax account (profit/loss) is debited 67.000 while the bank overdraft account (liability) is credited 67.000

4. None posted settlement of the input and output VAT account to the VAT payable account.

5. The inventory account with a balance of 189.200 is specified below:

Date	Text	Amount
01.01.2013	Balance from 31.12.2012 – 10 pcs	10.500
28.02.2013	Purchase of 120 pcs	120.000
20.08.2013	Purchase of 17 pcs	22.950
25.10.2013	Purchase of 10 pcs	12.000
01.12.2013	Purchase of 25 pcs	23.750
31.12.2013	Balance	189.200

The inventory account only represents one product. As per 31.12.2013 the inventory was counted at 42 pcs. The company uses Fifo for assessment of its inventory. Asses the inventory as per 31.12.2013 and post cost of goods sold for 2013 in the trail balance.

The cost of goods sold account (profit/loss) is debited 144.000 while the goods for resale account (asset) is credited 144.000

The cost of goods sold account (profit/loss) is debited 189.200 while the goods for resale account (asset) is credited 189.200

The cost of goods sold account (profit/loss) is debited 45.200 while the goods for resale account (asset) is credited 45.200

6. The equipment account with a balance of 600.000 is specified below:

Begin balance 01.01.2013	0	Depreciation period	Expected scrap value	Purchase time
Additions in 2013:
Computer mainframe	400.000	10 years	10.000	Begin 2013
Printer	50.000	5 years	0	Medio 2013
Computer terminals	150.000	4 years	25.000	End 2013
End balance 31.12.2013	600.000

Calculate and post the depreciations on equipment for 2013. Straight line depreciations are used.

The accumulated depreciations on equipment account (asset) is credited 39.000 while the depreciations on equipment (profit/loss) is debited 39.000.

The accumulated depreciations on equipment account (asset) is credited 5.000 while the depreciations on equipment (profit/loss) is debited 5.000.

The accumulated depreciations on equipment account (asset) is credited 10.000 while the depreciations on equipment (profit/loss) is debited 10.000.

The accumulated depreciations on equipment account (asset) is credited 31.250 while the depreciations on equipment (profit/loss) is debited 31.250.

Submit

7. The trade debtors account with a balance of 850.000 shows the following age distribution as per 31.12.2013 including write off percentages:

Due	Not due	1-30 days due	31-60 days due	Over 60 days due
Amount	500.000	200.000	100.000	50.000
Write off %	0%	10%	50%	90%

Calculate and post the provision for bad debt as per 31.12.2013 using the write off percentages provided above.

The provision for bad debt account (asset) is credited 850.000 while the bad debt account (profit(loss) is debited 850.000

The trade debtors account (asset) is credited 115.000 while the bad debt account (profit(loss) is debited 115.000

The trade debtors account (asset) is credited 850.000 while the bad debt account (profit(loss) is debited 850.000

The provision for bad debt account (asset) is credited 115.000 while the bad debt account (profit(loss) is debited 115.000

8. Statement of account from Bank Inc. (the company's overdraft account) as per 31.12.2013 showing a balance of -402.150 is specified below:

Date	Text	Amount	Balance
	Transferred from previous statement of account . . . . . . .		-308.000
12.12.2013	Purchase of office supplies	-500	-308.500
15.12.2013	Rent of premises for Q1 2014	-45.000	-353.500
31.12.2013	*Payment of loan according to amortization schedule )**	-50.000	-403.500
31.12.2013	Interest income for Q4 2013	1.350	-402.150
31.12.2013	Balance as per 31.12.2013		-402.150

Reconcile the statement of account from Bank Inc. to the trail balance and post any none posted amounts in the trail balance. *) amortization schedule on loan:

Due date	Payment	Amortization	Interest	End balance
31.12.2012	50.000	12.500	37.500	500.000
31.12.2013	50.000	17.500	32.500	482.500
31.12.2014	50.000	22.500	27.500	460.000
31.12.2015	50.000	27.500	22.500	432.500

The office supplies account (profit/loss) is debited 500 while the bank overdraft (liability) account is credited 500

The premises expense account (profit/loss) is debited 45.000 while the bank overdraft (liability) account is credited 45.000

The prepayments account (asset) is debited 45.000 while the bank overdraft (liability) account is credited 45.000

The interest expenses account (profit/loss) is debited 50.000 while the bank overdraft account (liability) is credited 50.000

None of the transactions should be posted in the financial statement as per 31.12.2013

The interest revenue (profit/loss) is credited 1.350 while the bank overdraft account (liability) is debited 1.350

The interest revenue (profit/loss) is debited 1.350 while the bank overdraft account (liability) is credited 1.350

Submit