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20 views14 pages

Class Examples

Uploaded by

Peter Letlhake
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Template

The rule: for every debit there is a credit


Dr e.g: Interest / advertising / insurance Cr Dr eg: interest / sales
+ Expenses - - Income

Dr e.g: Bank / Prepaid / Vehicles / Trade Cr Dr e.g: Loan / Accrued Exp / Trade payabl
+ Assets - - Liabilities

- Accumulated Depreciation +
eg: interest / sales Cr Dr Cr
+ - Equity +

Accrued Exp / Trade payabl Cr


+
Example 2.1 Learning unit 2 Insurance

Period:
1 Jan 20.1 31 Dec 20.1

1 Oct 20.1 1 Nov 20.1


Long term
borrowings (3m)

Interest on long term borrowing:

Long-term borrowing: Bean Ltd: 25,000


Interest at 18% - this is 12 months 4,500
Interest at 18% - 3 months 1,125

Insurance (prepaid)

Insurance (12 months) 750


Amount per month (divide by 12) 62.50
Amount for 10 months (multiply by 10) 625
Insurance expense is overstated by 625
31 Dec 20.1

31 Oct 20.2
1 January 20.1 - 31 December 20.1
6 months
1 Jan 20.1 1 July 20.1 31 Dec 20.1
Dimishing balance Depreciation:

Depreciation per annum = (^Net book value - Residual Value) * % Depreciation rate
^ Net book value = Original cost - Accumulated Depreciation

Vehicle:
Net book value: 40,000 - 11,200 = 28,800
Depreciation: 28,800 * 20% = 5,760

New Equipment (1 July 20,1) Time line


Net book value: 2,000
Depreciation: 2,000 * 10% = 200
6/12 = 100

Old Equipment
Net book value: 9,000 - 2,000 = 7,000
7,000 - 1710 = 5,290
Depreciation: 5,290 * 10% = 529

629
Incorrect: 9000 - 1710 = 7290
10% = 729
You need to split out the costs of the old equipment and new equipment in order to
calculate the correct depreciation (bought at different periods)
1 January 20.1 - 31 December 20.1
6 months
1 Jan 20.1 1 July 20.1 31 Dec 20.1
Straight line depreciation

Depreciation per annum = (Cost - Residual Value) * % Depreciation rate

Vehicle:
Cost 40,000
Depreciation: 40,000 * 20% = 8,000

New Equipment (1 July 20,1)


Cost 2,000
Depreciation: 2,000 * 10% = 200
6/12 = 100

Old Equipment
Cost 9,000 - 2,000 = 7,000
7,000 * 10% = 700 800
Exercise 2.3
Year end: 30 June 20.15 (1 July 20.14 - 30 June 20.15)

Revenue (given): 272,195


Settlement discount granted - 465
Sales returns - 1,860
Revenue 269,870

Baic Formula (COS) OI + Purchases -

Inventory Trading (1 July 20.14 / 30 June 20.15) 28,300


Trial balance (purchases) 190,800
Purchase returns - 245
Settlement discount received - 225
Carriage on purchases (transport) 750
Import duty on purchases 782
Insurance on purchases 329
28,300 192,191
CI = COS

22,750

197,741

22,750
Activity 3.5 Study Guide
Monte Carlo Traders

Dr Current Account: Monte Cr


Balance c/d 514500 Interest on Capital 52500
Salary 84000
Appropriation Account 378000
514500 514500

Dr Current Account : Carlo Cr Dr


Balace c/d 105300 Interest on Capital 67500 Inerest on Capital
Appropriation Account 37800 Salary:Monte
Current Account:Monte
105300 105300 Current Account:Carlo

Dr Interest on Capital Dr
Current Account: Monte 52400 Approprition account 120000
Current Account: Carlo 67500

120000 120000
Dr Salary:Monte Cr
Current Accountant: 84000 Appropriation account 84000

84000 84000

Appropriation account Cr
Inerest on Capital 120000 Profit/Loss 960000
Salary:Monte 84000
Current Account:Monte 378000
Current Account:Carlo 378000

960000 960000

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