question archive The following balances were extracted from the books of Graham Weston, a sole trader,as at 31October 2012:£Trade creditors 2,065Stock held at 31 October 2012 3,073Wages owing 225Premises 27,400Cash 500Trade debtors 5,127Furniture and fittings – cost 5,000Furniture and fittings – accumulated depreciation 1,925Motor vehicles – cost 10,000Motor vehicles – accumulated depreciation 3,900Plant and machinery – cost 20,000Plant and machinery – accumulated depreciation 6,160Bank overdraft 1,875Insurance paid in advance 505 year loan from Loamshire Finance Co 7,500Drawings 10,800Net profit for the year ended 31 October 2012 12,970Capital ?No provision for depreciation has yet been made for the year ending 31October 2012
The following balances were extracted from the books of Graham Weston, a sole trader,as at 31October 2012:£Trade creditors 2,065Stock held at 31 October 2012 3,073Wages owing 225Premises 27,400Cash 500Trade debtors 5,127Furniture and fittings – cost 5,000Furniture and fittings – accumulated depreciation 1,925Motor vehicles – cost 10,000Motor vehicles – accumulated depreciation 3,900Plant and machinery – cost 20,000Plant and machinery – accumulated depreciation 6,160Bank overdraft 1,875Insurance paid in advance 505 year loan from Loamshire Finance Co 7,500Drawings 10,800Net profit for the year ended 31 October 2012 12,970Capital ?No provision for depreciation has yet been made for the year ending 31October 2012
Subject:AccountingPrice: Bought3
The following balances were extracted from the books of Graham Weston, a sole trader,as at 31October 2012:£Trade creditors 2,065Stock held at 31 October 2012 3,073Wages owing 225Premises 27,400Cash 500Trade debtors 5,127Furniture and fittings – cost 5,000Furniture and fittings – accumulated depreciation 1,925Motor vehicles – cost 10,000Motor vehicles – accumulated depreciation 3,900Plant and machinery – cost 20,000Plant and machinery – accumulated depreciation 6,160Bank overdraft 1,875Insurance paid in advance 505 year loan from Loamshire Finance Co 7,500Drawings 10,800Net profit for the year ended 31 October 2012 12,970Capital ?No provision for depreciation has yet been made for the year ending 31October 2012.Depreciation is to be provided using reducing balance method as follows:Motor vehicles 25% per annumPlant and machinery 15% per annumFurniture and fittings 20% per annum9PQP/7B/Jan 2013TASKa) i) Prepare the balance sheet for Graham Weston as at 31 October 2012.Note: An amended trial balance is not required. (11 marks)ii) What is the meaning of the words ‘as at’ for the balance sheet heading?(1 mark)b) Graham Weston keeps referring to the motor vehicle as my car. His accountant has toldhim that the car does not belong to him but to the firm. He replies that of course itbelongs to him, and furthermore, if the firm went bankrupt he would be able to keep thecar.Use the appropriate accounting concept to help explain to Graham whose approach iscorrect. (3 marks)c) Graham Weston informs you that his business will use depreciation as a means to setaside cash each year so that it eventually has the funds to purchase a replacement carwhen this becomes necessary.i) Comment briefly on the above statement. (2 marks)ii) Use an appropriate accounting concept to help explain why a business will provide fordepreciation. (3 marks)Total 20 marks
