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FIN005 Financial Accounting
Comprehensive Revision Exercises

Question 1
Tiffany Company carries on business as a retail trader. The trial balance of business as at 31 December 2011 was as follows: Dr Cr $ $
Capital 204,800
Merchandise inventory 25,680
Salaries and wages 46,160
Motor expenses 3,720
Electricity 3,074
Fixtures and fittings at cost 28,000 - Accumulated depreciation 1 Jan 2011 16,800
Cost of merchandise sold 262,860
Office supplies 10,000
Building at cost
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e. A check drawn for $170 had been erroneously charged by the bank as $1,700.
f. Bank service charges for April amounted to $30.

Instructions
1. Prepare a bank reconciliation.
2. Journalize the necessary entries. The accounts have not been closed.

Question 4
At the end of each month, Sarah prepares a bank reconciliation statement for her business bank account. As 31 May 2012 her ledger balance was $2,759 (Credit) and her bank statement showed that she had funds of $131 at the bank. She has the following information:

i) The bank debited Sarah’s account with charges of $129 during May. Sarah has not recorded these charges. ii) Sarah arranged for $2,500 to be transferred from her personal bank account into the business bank account. The bank made the transfer on 30 May, but Sarah has not made any entry for it in her records. iii) On 22 May, Sarah withdrew $100 cash which she did not record. iv) Cheque number 543987, which Sarah issued to a supplier, appears on the bank statement as $650. Sarah incorrectly recorded the cheque as $560. v) A deposit of $457, representative receipts of May 28 had been made too late to appear on the bank statement. vi) Sarah was advised by the bank that she earned $52 interest for the period in May that her account was in credit. Sarah recorded this in May, but the bank did not credit her account until June. vii) Three of the cheques issued to a supplier, with a total of
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