Exercise 4 – Hustler & Lord Inc.

11 Questions | Total Attempts: 121

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Exercise 4 – Hustler & Lord Inc.

Prepare an adjusted trial balance for the Company as per 31. 12. 2013 according to the transactions in the quiz.


Questions and Answers
  • 1. 
    None posted share capital increase of 250.000. 50.000 of the 250.000 is premium while the rest is share capital. The capital increase was paid by the shareholders to the company’s overdraft account.
    • A. 

      The bank overdraft account (liability) is debited 250.000, the share capital account (liability) is credited 50.000 while the share premium account (liability) is credited 200.000

    • B. 

      The bank overdraft account (liability) is credited 250.000, the share capital account (liability) is debited 200.000 while the share premium account (liability) is debited 50.000

    • C. 

      The bank overdraft account (liability) is credited 250.000, the share capital account (liability) is debited 50.000 while the share premium account (liability) is debited 200.000

    • D. 

      The bank overdraft account (liability) is debited 250.000, the share capital account (liability) is credited 200.000 while the share premium account (liability) is credited 50.000

  • 2. 
    None posted loan from LoanBank Inc. The loan has a principal of 700.000 and admission costs of 35.000 giving proceeds of 665.000. The proceeds were paid to the company’s overdraft account.
    • A. 

      The longterm loan account (liability) is credited 665.000 while the bank overdraft account (liability) is debited 665.000

    • B. 

      The longterm loan account (liability) is debited 700.000, the bank overdraft account (liability) is credited 665.000 while the admission cost account (profit/loss) is credited 35.000

    • C. 

      The longterm loan account (liability) is credited 700.000 while the bank overdraft account (liability) is debited 700.000

    • D. 

      The longterm loan account (liability) is debited 665.000 while the bank overdraft account (liability) is credited 665.000

    • E. 

      The longterm loan account (liability) is credited 700.000, the bank overdraft account (liability) is debited 665.000 while the admission cost account (profit/loss) is debited 35.000

  • 3. 
    None posted purchase of a new company building for the amount of 900.000 and none posted depreciations concerning the building. The purchase was paid by transfer from the overdraft account. The purchase was at the end of Q1. The depreciation period is set to 40 years and the scrap value is set to 200.000. Straight line depreciations are used.
    • A. 

      The accumulated depreciations on building account (asset) is credited 13.125 while the depreciations on building account (profit/loss) is debited 13.125

    • B. 

      The accumulated depreciations on building account (asset) is credited 17.500 while the depreciations on building account (profit/loss) is debited 17.500

    • C. 

      The land and building account (asset) is credited 900.000, the bank overdraft account is debited 900.000

    • D. 

      The land and building account (asset) is debited 900.000, the bank overdraft account is credited 900.000

    • E. 

      The accumulated depreciations on building account (asset) is credited 22.500 while the depreciations on building account (profit/loss) is debited 22.500

  • 4. 
    None posted and unpaid audit fee of 50.000 for 2013.
    • A. 

      The trade creditors account (liability) is credited 50.000 while the audit fee account(profit/loss) is debited 50.000

    • B. 

      The other creditors account (liability) is debited 50.000 while the audit fee account(profit/loss) is credited 50.000

    • C. 

      The trade creditors account (liability) is debited 50.000 while the audit fee account(profit/loss) is credited 50.000

    • D. 

      The other creditors account (liability) is credited 50.000 while the audit fee account(profit/loss) is debited 50.000

  • 5. 
    Posted property tax regarding Q1 2014 of 30.000. The posting was made to the account “Premises expenses”.
    • A. 

      The transaction should no be included in the books for the fiscal year 2013

    • B. 

      The premises expenses account (profit/loss) is credited 30.000 while the prepaid expenses account (asset) is debited 30.000

    • C. 

      The premises expenses account (profit/loss) is debited 30.000 while the prepaid expenses account (asset) is credited 30.000

    • D. 

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

  • 6. 
    None posted reception of payment of 25.000 from trade debtors (customer). The payment was made to the overdraft account before 31.12.2013.
    • A. 

      The bank overdraft account (liability) is debited 25.000 while the sales account (profit/loss) is credited 25.000.

    • B. 

      The bank overdraft account (liability) is debited 25.000 while the trade debtors account (asset) is credited 25.000.

    • C. 

      The bank overdraft account (liability) is credited 25.000 while the sales account (profit/loss) is debited 25.000.

    • D. 

      The bank overdraft account (liability) is debited 25.000 while the accrued income account (asset) is credited 25.000.

  • 7. 
    None posted reversal of provision for bad debt. There has previously been made a provision for bad debt on the debtor of 25.000.
    • A. 

      The provision for bad debt account (asset) is debited 25.000 while the bad debt account (profit/loss) is credited 25.000

    • B. 

      The trade debtors account (asset) is credited 25.000 while the bad debt account (profit/loss) is debited 25.000

    • C. 

      The trade debtors account (asset) is credited 25.000 while the sales account (profit/loss) is debited 25.000

  • 8. 
    None posted disposal and depreciations concerning company car. The car was damaged during a car crash. No insurance cover can be expected from the insurance company. Depreciation until the car crash is 13.000. The original cost of the car can be found in the balance sheet account in the trial balance.
    • A. 

      The car account (asset) is debited 200.000 while the gain/loss on fixed asset account (profit/loss) is credited 200.000

    • B. 

      The accumulated depreciations on car account (asset) is credited 13.000 while the depreciations on car account (profit/loss) is debited 13.000

    • C. 

      The accumulated depreciations on car account (asset) is debited 13.000 while the depreciations on car account (profit/loss) is credited 13.000

    • D. 

      The accumulated depreciations on car account (asset) is debited 33.000 while the gain/loss on fixed asset account (profit/loss) is credited 33.000

    • E. 

      The accumulated depreciations on car account (asset) is credited 33.000 while the gain/loss on fixed asset account (profit/loss) is debited 33.000

    • F. 

      The car account (asset) is credited 200.000 while the gain/loss on fixed asset account (profit/loss) is debited 200.000

  • 9. 
    None posted reception of VAT from the tax authorities of 6.000. The amount consists of output VAT of 20.000 and input vat of 26.000. The payment was made to the overdraft account before 31.12.2013.
    • A. 

      The bank overdraft account (liability) is credited 6.000, the output VAT account (liability) is credited 26.000 while the input VAT account (liability) is debited 20.000

    • B. 

      The bank overdraft account (liability) is credited 6.000 while the input VAT account (liability) is debited 6.000

    • C. 

      The bank overdraft account (liability) is debited 6.000, the output VAT account (liability) is debited 20.000 while the input VAT account (liability) is credited 26.000

  • 10. 
    1. None posted wages regarding December 2013 specified below:
    Wages 70.000 Withheld pension contribution 10.000 Taxable income 60.000 Withheld income tax 20.000 Net wages 40.000 Payment was made from the overdraft account.    
    • A. 

      The wages account (profit/loss) is credited 60.000 while the pension contribution account (profit/loss) is credited 10.000

    • B. 

      The wages account (profit/loss) is debited 60.000 while the pension contribution account (profit/loss) is debited 10.000

    • C. 

      The bank overdraft account (liability) is credited 40.000, the payable income taxes account (liability) is credited 20.000, while the payable pension contribution account (liability) is credited 10.000.

    • D. 

      The wages account (profit/loss) is debited 70.000 while the pension contribution account (profit/loss) is debited 10.000

    • E. 

      The bank overdraft account (liability) is debited 40.000, the payable income taxes account (liability) is debited 20.000, while the payable pension contribution account (liability) is debited 10.000.

  • 11. 
    None posted settlement of the input and output VAT account to the VAT payable account.
    • A. 

      The VAT payable account (liability) is credited 39.000 and debited 13.000

    • B. 

      The output VAT account (liability) is debited 39.000 while the input VAT account (liability) is credited 13.000

    • C. 

      The VAT payable account (liability) is debited 39.000 and credited 13.000

    • D. 

      The output VAT account (liability) is credited 39.000 while the input VAT account (liability) is debited 13.000

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