Accounting Answers

STATEMENT OF COMPREHENSIVE INCOME

• Always apply the income tax expense as 25% of operating profit.

Gross Sales = ₱ 3,822,300

Sales Returns= ₱ 219,700

Gross Purchases = ₱ 1,000,000

Purchase Discounts = ₱ 180,000

Beginning Inventories = ₱ 920,500

Ending Inventories = ₱ 450,800

Distribution Expenses = ₱ 760,200

Administrative Expenses = ₱ 440,900

Other Comprehensive Income = ₱ 210,000

Look for:

A. NET PROFIT MARGIN

B. GROSS PROFIT MARGIN

C. OPERATING PROFIT MARGIN

STATEMENT OF FINANCIAL POSITION

Accounts Payable ₱ 600,000

Unearned Revenue 1,210,000

Salaries Payable- current 120,000

Owner’s Withdrawals 280,000

Owner’s Capital 1,500,000

Comprehensive Income 3,000,000

Total Current Assets 80% of total liabilities

Cash 250,000

Inventories 480,000

Prepaid Expenses 600,000

Property, Plant and Equipment 5,166,000

Accounts Receivable 214,000

Look for:

A. CURRENT RATION

B. QUICK RATIO

C. CURRENT ASSETS TO WORKING CAPITAL

D. DEFENSIVE INTERVAL RATIO

E. DEBT TO EQUITY RATIO

F. EQUITY TO DEBT RATIO

G. DEBT RATIO

H. EQUITY RATIO

3. The concept of the “smart city” has recently been introduced as a strategic device to 

encompass modern urban production factors in a common framework and, in particular, 

to highlight the importance of Information and Communication Technologies (ICTs) in 

the last 20 years for enhancing the competitive profile of a city. The demand for smart 

cities has increased in recent years. 

a. In order to meet the demand of a smart city project in a country like India, with the help 

of any smart city project, describe some of the key elements for such smart cities. 

(5 Marks)

b. Mention the importance of smart cities and challenges in managing smart cities.

3.a. Two goods have a cross-price elasticity of demand of +1.2 (a) would you describe the 

goods as substitutes or complements? (b) If the price of one of the goods rises by 5 per 

cent, what will happen to the demand for the other good, holding other factors constant?

(5 Marks)

3.b. Calculate Marginal Utility and Average Utility from the information given in the below 

table: (5 Marks)

Quantity Consumed Total Utility

1 20

2 35

3 47

4 55

5 60

1. The net profit before taxes as per the profit and loss account, of Gaman Ltd is Rs 269244. With the given set of information, classify the given items as (operating / investing / financing), share the correct classification with logical reasoning

And calculate the cash flow from operating activities

Loss on sale of asset

95780

dividend income

26000

interest income

35000

finance cost paid on debentures

12000

gain on sale of investment

45000

Depreciation on fixed assets

85000

Amortisation Expenses

110000

Melur Sdn. Bhd. is owned by Melur. She is a sole proprietorship that sells groceries to

her local community in Kampung Baru. Melur always closes her accounts on 30

September every year.

At 30 September 2019, the debit balance in the cash book of Melur Sdn. Bhd. was

RM805.15. A bank statement on 30 September 2019 showed Melur Sdn. Bhd. to be in

credit by RM1,112.30. After several investigations were made, the following items were

established:

1. The cash book had been under cast by RM90.00 on the debit side.

2. Cheque paid in not yet credited by the bank amounted to RM208.20.

3. Cheque drawn not yet presented to the bank amounted to RM425.35.

Prepare a Bank Reconciliation Statement as at 30 September 2019.

Hadid owns a shop selling groceries to the local community. Most of the sales and

purchases are made on credit. Below are the credit purchases and credit sales transactions

for the month ended 31 July 2019:

1/7/2019 Purchased stationery items on credit from MM Stationery for

RM1,500.

2/7/2019 Purchased canned drinks from ABC Beverages Sdn Bhd for

RM1,000 on credit.

6/7/2019 Sold goods to Sani on credit for RM100.

7/7/2019 Sold snacks on credit worth RM300 to Zaini who runs a small

business catering to the needs of his neighbours.

8/7/2019 Sold groceries on credit worth RM400 to Fatin.

Post the ledger to the relevant accounts and balance it off.

James Dean trades in clothing for the middle market. James Dean Clothing use the Periodic Inventory Method to keep records of trade goods. The following is an extract of balances from the general ledger for the year ended 28 February 2021

extract of balances as at28 february 2021

R

Revenue from sale of trade goods

735 100

Rent income received from tenant

66 000

Inventory: Trade goods - balance at 1 March 2020

: Consumables on hand at 1 March 2020

150 500

7 600

Purchases

353 000

Settlement discounts received

18 400

Settlement discounts granted

15 800

Railage inwards

36 200

Railage outwards

39 100

Goods returned to suppliers

21 400

Goods returned by customers

34 600

Additional information:

1. Physical stock-take at 28 February 2021 determined the following: - Trade goods R166 800 - Consumables on hand R 7 940

2. Goods to the value R7 600 were donated to the local community organization

3. An invoice for R4 500 was received on 28 February 2021 for goods transported from the supplier to James Dean Clothing. The invoice needs to be recorded.

4. James Dean rents office space to a tenant. Rental income of R18 700 was credited to the sales in error. A correction needs to be recorded.

Required:

3.1 Show journal entries to record adjustments for all the additional information. (6)

3.2 Prepare the trading section of the Statement of Profit or Loss and other comprehensive income for James Dean Clothing for the year ended 28 February 2021. Sales, Cost of sales and gross profit must be shown. Also show the gross profit percentage (%) on cost. (16)

3.3 Briefly describe three important features of the Perpetual Inventory Method. (3)

1.   Annie Rasmussen is the owner and operator of Go44, a motivational consulting business. At the end of its accounting period, December 31, 2018, Go44 has assets of $720,000 and liabilities of $180,000. Using the accounting equation and considering each case independently, determine the following amounts:

(c) Annie Rasmussen, capital, as of December 31, 2019, assuming that assets decreased by $168,000 and liabilities increased by $15,000 during 2019.

(d) Annie Rasmussen, capital, as of December 31, 2019, assuming that assets increased by $175,000 and liabilities decreased by $18,000 during 2019.

(e) Net income (or net loss) during 2019, assuming that as of December 31, 2019, assets were $880,000, liabilities were $220,000, and there were no additional investments or withdrawals.

Discuss different practical applications (minimum two) of simplex method being is used in a real-life scenario. Also give appropriate references for your examples.