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S@IFURS UNIVERSITY COLLEGE

Class Test- Inventory, Accruals and Prepayments 1. The electricity account for the year ended 30 April 2006 was as follows: $ 250 Time: 12 mins

Electricity accrued at 1 May 2005 Payments made during the year in relation to: Quarter ending 30 June 2005 Quarter ending 30 September 2005 Quarter ending 31 December 2005 Quarter ending 31 March 2006 Which of the following is the appropriate entry for electricity? Accrued at 30 April 2006 for year ended 30 April 2006 $Nil $150 $300 $450

400 350 425 450

Charge to income statement $1,375 $1,525 $1,675 $1,825

A B C D

2. The year end of Lansdown is 31 December. The company pays for its electricity by a standing order of $100 per month. On 1 January 2006 the statement from the electricity supplier showed that the company had overpaid by $25. Lansdown received electricity bills for the four quarters starting on 1 January 2006 and ending on 31 December 2006 for $350, $375, $275 and $300 respectively. Which of the following is the correct entry for electricity in Lansdowns income statement and statement of financial position for the year ending 31 December 2006? Income statement $1,300 $1,300 $1,200 $1,200 Statement of financial position $75 accrual $75 prepayment $125 accrual $125 prepayment

A B C D

3. At 1 January 2006 Michael had a prepayment of $200 in respect of rent. He paid $1,200 on 1 March 2006 in respect of the year end 28 February 2007. What is the charge to the income statement in respect of rent for the year ended 31 December 2006? A $1,400 B $1,200 C $1,100 D $1,300

S@IFURS UNIVERSITY COLLEGE


4. A company receives rent from a large number of properties. The total received in the year ended 30 September 2011 was $ 205000. The following were the amounts of rent in advance and in arrears at 30 September 2010 and 2011. 30 September 2010 30 September 2011 Rent received in advance 51500 65500 Rent in arrears 34500 24500 What amount of rental income should appear in the companys income statement for the year ended 30 September 2011? A $181000 B $156500 C $205000 D201000

5. Radiance Kitchenware has the following items in their financial statements for the year ended 31st December 2007: Inventory @ 01/01/07 Purchases Inventory @ 31/12/07 $45,678 $98,000 $42,800

Closing inventory includes the following damaged items: A table was purchased for $500. Due to fire damage the maximum it can be sold for is $200 after a wax product costing $50 has been applied. Four chairs costing $100 each were also damaged in the fire. They can be sold for $20. Required Calculate the cost of sales for 2007.