HA1020 Accounting Principles and Practices Tutorial Questions 2020

This document contains solutions to tutorial questions from an accounting principles and practices course (HA1020). The solutions cover key accounting concepts, including bad debts, the allowance for doubtful accounts, inventory systems (periodic and perpetual), bank reconciliation, and depreciation methods (straight-line, diminishing balance, and units-of-activity). The assignment also provides journal entries for various transactions, such as inventory purchases, unearned revenue, notes payable, and expense accruals. This resource is designed to help students understand and apply accounting principles to solve practical problems and prepare for assessments.

Accounting Tutorial

Contents
TASK...............................................................................................................................................3
Question 1:.......................................................................................................................................3
(1)...........................................................................................................................................3
(2)...........................................................................................................................................3
Question 2........................................................................................................................................4
Question 3........................................................................................................................................4
Question 4........................................................................................................................................5
Question 5........................................................................................................................................6

TASK
Question 1:
(1)
Allowance for doubtful accounts 8000
Account Receivable Account 8000
(Being bad debts written off)
Bad debt Expenses 11680
Allowance for doubtful accounts 11680
(Being Allowance created for accounts receivable)
Working Note:
Accounts Receivables 600000
Less: Bad debts written off 8000
Revised Debtors 592000
Allowance Required @ 4% 23680
Existing Allowance (20000-8000) 12000
Allowance to be made 11680
(2)
Accounts Receivables
Opening Balance 600000 Allowance for Doubtful Accounts 80000
Closing Balance 520000
Total 600000 Total 600000
Allowance for doubtful accounts
Accounts Receivables 8000 Opening Balance 20000
Closing Balance 23680 Bad debts 11680
Total 31680 Total 31680
Bad debts Expenses
Allowance for doubtful accounts 11680 Closing Balance 11680

Total 11680 Total 11680
Question 2
(a). Both the periodic inventory as well as perpetual inventory systems are 2 techniques for
tracking and maintaining inventory records. Herein, perpetual inventory system, inventory of
every transaction is continually updated as well as inventory in books displays the actual
inventory in hand. periodic system uses occasional physical count for measuring the level of
inventories and cost of goods sold (COGS). Perpetual system maintains track of
inventories levels on an ongoing basis, with changes made periodically whenever product is
purchased or sold.
(b). Periodic systems are usually better suitable to small firms, while firms with higher sales
volumes and various different retail outlets (such as grocery stores) require perpetual systems.
(c). If opening inventory balance is overstated then profit would be decrease while if closing
balance of inventories are overstated then profit would be increase.
Question 3
Bank Reconciliation Statement
Particulars Amount Amount
Balance as per pass book 58791
Add: Payment not deposited into bank 250
Less: Cheque issued for payment -1612
Add: Bank Service Fee 40
Less: Interest on Bank Balance -98 -1420
Balance as per cash book 57371
Adjusting Entry
Debit Credit
Bank Service Fee 40
Payment not deposited into bank (Rectification) 250

Cash Account 290
Cash Account 1710
Cheque issued for payment 1612
Interest on Bank Balance 98
Question 4
1. Straight-line
Depreciation = (200000-30000) / 10
17000
2. Diminishing balance at 20% p.a.
Purchase Price 200000
Depreciation 1st year @ 20% 40000
Closing WDV 160000
Depreciation 2st year @ 20% 32000
Closing WDV 128000
Depreciation 3rd year @ 20% = 25600
3. Units-of-activity
Depreciation = [(200000 - 30000) *
96000]/800000
20400

Question 5.
Journal Entries
Debit Credit
Merchandise Inventory 16800
Account Payable 16800
(Being inventory purchased)
Cash 18000
Unearned Service Revenue 18000
(Advance received against future services)
Cash 900000
Notes Payable 900000
(Cash borrowed through notes payables)
Unearned Service Revenue 8000
Service Revenue 8000
(Being advance received services provided)
Electricity Expense 24200
Electricity Payable 24200
(Being Electricity bill received)
Cash 21600
Unearned Rent Revenue 21600
(Being advance received for Rent services)
Wages 23000
Wages Payable 23000
(Being wages payment liability occurred)