Final Xref 5kjljljl

7/30/2019 Final Xref 5kjljljl

1/49

Chapter 17

Correction of errors


2/49

Slide 2 notes reference - page 187

2 main uses:

Suspense accounts

Never appear in the final accounts

To account for a Dr or Cr

when the accountant is

unsure where it should go

To make a preliminary

trial balance balance


3/49


Lecture example 1

The double entry would be: Dr Suspense account 400

Cr Cash at bank 400

Bank 400Suspense

Suspense 400Bank


4/49


Lecture example 1 (cont)

The double entry is: Dr Rent expense 400

Cr Suspense account 400

Bank 400Suspense

Suspense 400Rent

Rent 400


5/49


Lecture example 2

(W1) Should Dr SLCA 8,132 Cr Sales 8,132

Have Dr SLCA 8,132 Cr Sales 1,832Now Dr Suspense 6,300 Cr Sales 6,300

Dr Suspense 6,300

Cr Sales 6,300(ii) Dr Electricity expense (615-516) 99

Cr Suspense 99

(W2) Should Dr Telephone 70 Cr Accruals 70Have Dr - Cr Accruals 70Now Dr Telephone 70 Cr Suspense 70

Dr Telephone 70

Cr Suspense 70(iv) Dr Purchases (77,356 76,182) 1,174

Cr 1,174Suspense

(i) (W1)

(iii) (W2)


6/49



Suspense account(i) Sales 6,300

(ii) Electricity 99

(iii) Telephone 70

bal b/d 4,957

(iv) Purchases 1,174

6,3006,300


7/49


Dr Cr

Motor van at cost 5,500

Inventories 6,230Receivables ledger control 19,167Cash at bank 218Petty cash 50Payables ledger control 13,166Prepayments 490Accruals 70Motor van - provision for depreciation 2,000Sales 100,170Purchases 77,356Rent expense 1,200Wages and salaries expense 12,500Electricity expense 615

Telephone expense 300Accountancy expense 500Van expenses 280Depreciation expense 1,000Capital 10,000

125,406 125,406



8/49


Ledger codes

Vital to record all transactions without error but also be

able to retrieve them Need to organise all these transactions by means of

individual flags

Format can be in a hierarchy e.g. Assets

Non current assets

Current assets Inventories

Receivables

Liabilities

Capital Expenses

Revenues

Audit trail of all items and transactions

Time


9/49


Ledger codes

Accounting codes used should be: Unique

Useful

Compact

Meaningful

Self-checking & of standard size

Expandable


10/49


Example of how a Ledger stores datafor retrieval

X

Cos

tcentre

Ledger code

All data must be unique to

be easily stored andlocated within the ledger

and represent one item inone place at one time

Literally, a cube of

data. How do you findone item out of all

transactions in the yearso far?

At one slice of time,

you can find anindividual transaction

e.g. Newcastle Wageson 16/4/05

e.g. 16/4/05

e.g.

Newcastle

e.g. Wages


11/49

Chapter 18

Sales tax, PAYE and NI


12/49


Sales tax

An indirect tax

Charge sales tax on sales

OUTPUT TAX

Suffer sales tax on purchases

INPUT TAX


13/49


Lecture example 1

(a) Grow raw materials &

Net Tax Gross

sell for $117.50 (W1)

100 17.50 117.50

(b) (1) Buy raw materials for $117.50(2) Sell to wholesaler for $293.75 (W2)

100 17.50 117.50250 43.75 293.75

17.50

26.25

(W1) 17.5

117.5x $117.50 = $17.50

17.5

117.5x $293.75 = $43.75

(W2)


14/49


15/49



(e) Customer bought goods for $470

Net Tax Gross

400 70.00 470

Tax paid directly to HMRC is:

(a)(b)

(c)

(d)

(e)

17.5026.25

8.75

17.50

0

70.00

Tax suffered by customer


16/49


17/49


Lecture example 2

The double entry to record the sales is:

Trade Receivables 1,762.50

Sales 1,500.00

Dr Cr

Sales Tax 262.50

Sales

Tr Rec 1,500

Trade Receivables Sales Tax

b/d 175Sales 1,762.50

(incl ST)

Tr Rec 262.50

262.50262.50

c/d 87.50

b/d 87.50


18/49


Lecture example 3

Sales Tax calculated after accounting forall discounts

Settlement discount (10% x 11,000) (1,100)

Trade discount (4,000)

11,000

Sales net of all discounts 9,900

Sales Tax = 9,900 x 17.5% = 1,732.50

Sales 15,000

$


19/49


Lecture example 3 part (a)

The double entry to record the sale will be:

Sales 11,000

Receivables 12,732.50

Dr Cr

Sales Tax 1,732.50


20/49


Lecture example 3 part (b)

Sales tax control account

Receivable 1,732.50

Receivables

Sales 12,732.50

Sales

Receivable 11,000

Cash 12,732.50


21/49


Lecture example 3 part (c)

Sales

Receivables 11,000

Receivables

Sales 12,732.50

Sales Tax control account

Receivables 1,732.50

Cash 11,632.50

Discounts allowed

Receivables 1,100

Discount allowed 1,100

12,732.50 12,732.50


22/49


23/49


National Insurance and PAYE

Employers

NI

paid to

employee

paid to

pension fund

paid to

HMRC

TOTAL EXPENSE

Net wage Pension PAYE

GROSS WAGE

Employees

NI


24/49


Lecture example 4

(a) The total cost to the employer is $33,000

33,000

30,000

The double entry would be:

Wages & salaries expense

Wages control (gross pay)

Dr Cr

NIC (employers contribution) 3,000

(Gross pay 30,000 + Employers NI 3,000)

(b) The 3 items deducted from gross pay are

(i) Employees National Insurance contribution

(ii) PAYE

(iii) Trade Union deductions


25/49


26/49



(d) The total amount paid to the Inland Revenue is $8,900

3,900

8,900

The double entry would be:

NIC control

Bank

Dr Cr

PAYE control 5,000

600

600

(e) The double entry to reflect payments to the TU would be:

Trade union account

Bank

Dr Cr


27/49


Lecture example 4 part (f)

NIC control

bal b/d 4,000Wages & salaries expense(employers NI)

3,000

Wages & salaries control(employees NI)

2,000

3,900Bank

5,100bal c/d

9,0009,000

Trade Unions

bal b/d 500

Wages & salaries control 100

600Bank

600600


28/49



Bank

Wages & salaries control 21,900NIC control 3,900

Trade Union 60031,400bal c/d

31,40031,400

PAYE control

bal b/d 5,000

Wages & salaries control 6,000

5,000Bank

PAYE control 5,000

bal c/d 6,000

11,00011,000


29/49



Wages & salaries control

NIC control(employees NI) 2,000

Trade Union 100

21,900Bank

30,00030,000

Wages & salaries expense

IS 33,000

PAYE control 6,000

33,000Wages control &NIC control

33,00033,000

Wages & salaries 30,000expense

Ch t 19


30/49

Chapter 19

Incomplete records


31/49


Lecture example 1

The records that are likely to be kept would include:

Bank statements

Till rolls

Supplier invoices and statements Sales invoices and statements


32/49


33/49


34/49


Lecture example 3

The cost of sales is $285,600

100%

60%

40%

Rule (margin): Set sales to 100%

Sales

COS

Gross Profit

476,000

285,600x 60%


35/49


Lecture example 4

Credit sales for the year are 290,560

130%

100%

30%

Rule (mark-up): Set COS to 100%

Sales

COS

Gross Profit

257,000

334,100x 130%

Total salesCash sales

Credit sales

334,100(43,540)

290,560


36/49


Lecture example 5

Purchases for the year are $174,500

130%

100%

30%

Rule (mark-up): Set COS to 100%

Sales

COS

Gross Profit

221,000

170,000x 100/130

170,000

43,000

174,500

Opening inventory

Purchases

Cost of sales

Less: closing inventory (47,500)


37/49


38/49


Lecture example 7(a) Purchases for the year are $173,029

Cash 430

Bank 167,224

bal c/d 43,825

bal b/d 38,450

Purchases 173,029

211,479 211,479

Purchase Ledger Control Account

(b) The double entry for the purchases figure is:

Purchases 173,029

PLCA 173,029


39/49


40/49

9


41/49


Lecture example 9

(a) Purchases for the year were $158,345

Bank 157,300

bal c/d 15,456

bal b/d 14,411

Purchases 158,345

172,756172,756

PLCA

The double entry for the purchases figure is:

Purchases 158,345PLCA 158,345

Dr Cr


42/49

L t l 9 ( t)


43/49

Slide 43notes reference - page 217


(d) Sales for the year were $203,008

The double entry for the sales figure is:

Trade Receivables 203,008

Sales 203,008

Dr Cr

Sales

COS

Gross Profit

130%

100%

30%

156,160

203,008x 130%

L t l 9 ( t)


44/49



(e) Cash received from trade receivables during the year was

$200,877

bal b/d 19,246

Sales 203,008Receipts from receivables 200,877

bal c/d 21,377

222,254222,254

SLCA

L t l 9 ( t)


45/49



(f) The amount of cash stolen by the cashier was $36,824

bal b/d 100 Expenses 2,080($40 x 52)

200,977200,977

Cash

Receipts from 200,877

receivables Drawings 2,860($55 x 52)

Bankings 159,213

Stolen 36,824

bal c/d 0

Chapter 20


46/49

Chapter 20

Profit adjustments

P f d fit i fit


47/49


Proforma

Original profit

Adjustment

(a) over depreciation

(b) accrual

(c) unrecorded sale

Dr Cr

- +

X

X

(X)

X

(X) X X

XAdjusted profit

decrease profit increase profit


48/49

End of day 5 what to do now


49/49

End of day 5 - what to do now

1.Coursenotes review

Course Companion

2. Questionpractice

3. Study textreview

Reinforce todays learning

Develop question skills

Documents

Final Xref 5kjljljl