1.

You are presented with the following trial balance of Arbalrest, a limited liability company at
30 September 20X6.
Account Dr Cr
$ $
Inventory at 1st Oct 20X5 186,400
Purchases 1,448,200
Carriage inward 38,100
Carriage outwards 43,700
Sales 3,010,000
Trade receivables 318,000
Disposal 200,000
Wages and Salaries 694,200
Sundry expenses 80,000
Administrative expense 276,000
Loan interest 25,000
st
Allowance for Trade receivable at 1 Oct 20X5 18,800
Irrecoverable debt 14,300
Equipment at 1st Oct 20X5
- Cost 1,217,600
- Acc. Dep. 288,700
Land and building 1st Oct 20X5
- Cost 2,000,000
- Acc. Depn. Building 300,000
1$ Ordinary Share 1,000,000
Share premium 500,000
st
Retained Earnings at 1 Oct 20X5 524,000
10% loan notes 500,000
Suspense 400,000
Total 6,541,500 6,541,500

Additional information as at 31 September 20X6:

1. In dealing with suspense account, the company has checked and found the following errors:
- Cash received from the sale of a equipment at 1 st Oct 20X5 was correctly entered in the cash
book but was debited to the disposal account $200,000. The disposed equipment has original cost
of $300,000 and accumulated depreciation of $150,000. The cost and accumulated depreciation
of the sold equipment has not been removed from the above trial balance.
- An invoice of $3,000 for carriage outward was debited to carriage inward.
2. Closing inventory at 31 Sept 20X6 was valued at $200,000 based on its original cost.
However, $80,000 of this inventory has been in the warehouse for over 2 years and the directors
have agreed to sell it in November X6 for a cash price of $52,000.
3. Sundry expenses include $9,000 paid in respect of insurance for the year ending 30 June
20X7.
4. When preparing this trial balance, the accountant discovered that the total of all personal
accounts in receivable ledgers did not equal to the balance on control account. Upon
investigating the matter, the following errors was discovered:
- Undercasting of sales day book $10,000
- A contra entry of $20,400 has been wrongly debited to the payables memorandum ledgers
(should not be involved in trial balance) as $24,000.
5. Office equipment is depreciated at 20% per annum using the reducing balance method.
Building which has cost of $1,000,000 are depreciated at 5% per annum on their original cost.
At 31 Sep 20X6, the land and buildings is revalued at $2,000,000.
Required:
(a) Journalize all the adjusting entries
(b) Prepare the statement of profit or loss for the year ended 31 September 20X6.
(c) Prepare the statement of financial position as at 31 September 20X6

2. You are presented with the following trial balance of Arbalrest, a limited liability company at
30 September 20X6.
Account Dr Cr
$ $
Inventory at 1st Oct 20X5 186,400
Purchases 1,623,200
Carriage inwards 38,100
Carriage outwards 47,300
Sales 3,010,000
Trade receivables 318,000
Wages and Salaries 694,200
Marketing expense 80,000
Administrative expense 276,000
Loan interest 50,000
st
Allowance for Trade receivable at 1 Oct 20X5 18,800
Irrecoverable debt 14,300
Equipment at 1st Oct 20X5
- Cost 214,000
- Acc. Dep. 88,700
Land and building 1 Oct 20X5
- Cost 3,000,000
- Acc. Depn. Building 500,000
1$ Ordinary Share 1,000,000
Share premium 300,000
Retained Earnings at 1st Oct 20X5 312,000
10% loan notes 500,000
Suspense 812,000
Total 6,541,500 6,541,500

Additional information as at 30 September 20X6:

1. The balance of the suspense account is made up of two items:
(a) The proceeds of right issues on a 1 for 2 basis at $1.6 per share, credited to the suspense
account from the cash book.
(b) the proceeds of sale of some equipment on 1st Oct 20X5 with a carrying amount at the date of
sale of $14,200 and which had originally cost $30,000. The cost and accumulated depreciation of
the sold equipment has not been removed from the above trial balance.
2. At 28 Sept 20X6 the inventories were destroyed by a fire, the inventories on hand are only
$50,000. Arbalrest normally applies a profit margin of 50% for all sales. The destroyed
inventories are fully insured by an insurance company. The company has not recorded the loss of
inventories.
3. Marketing expenses include $8,000 which relates to November 20X6.
4. In preparing the bank reconciliation statement at 30 Sep 20X6, the following items are causing
the difference between Cash book balance and bank statement balance:
- Cheque of $1,000 incorrectly debited to the account by bank
- Outstanding lodgements are not credited $4,580
- Cheque paid in by the company and dishonored $500
5. Office equipment is depreciated at 20% per annum using the reducing balance method.
Building which has cost of $1,000,000 are depreciated at 5% per annum on their original cost.
At 30 Sep 20X6, the land and buildings is revalued at $3,200,000.
Required:
(a) Journalize all the adjusting entries
(b) Prepare the statement of profit or loss for the year ended 31 September 20X6
(c) Prepare the statement of financial position as at 31 September 20X6

3. Markus Company has prepared a trial balance at 30 April 20X3 which is presented below.
Dr Cr
$ $
Share capital 15,000
Share premium 4,000
Retained earnings – 1 May 20X2 10,000
Revaluation surplus – 1 May 20X2 1,000
Finance costs 300
Bank 7,400
Administrative expenses 65,800
Distribution expenses 31,200
Plant and machinery – cost 77,000
Plant and machinery – accumulated depreciation at 1 May X2 25,000
Trade receivables 20,000
Allowance for receivables-1 May 20X2 3,150
Revenue 230,000
Inventory – 1 May 20X2 18,750
Dividend 13,000
Trade payables 17,500
Purchases 90,000
6% loan – repayable 31 July 20X5 3,000
316,050 316,050

The following notes are relevant to the preparation of the financial statements for the year ended 30
April 20X3:
 (i) It has been determined that trade receivables of $600 are irrecoverable. In addition, it was decided
that the allowance for receivables should be reduced by $500. Bad debt expense is an administrative
expense.
(ii) Depreciation on plant and machinery is charged at 15% per annum on a reducing balance basis.
Depreciation is charged to cost of sales. It has been decided to revalued the plant and machinery
downward by $2,450 at 30 Apr 20X3.
(iii) The loan was taken out on 1 August 20X2 and interest has not yet been paid or accrued.
(iv) Closing inventory had been valued at $17,500. It was subsequently discovered that some items of
inventory which had cost $5,000 had a net realisable value of $3,750.
(v) At 30 April 20X3, a prepayment for insurance paid in advance of $400 had not yet been accounted
for. Insurance is classified as an administrative expense.
(vi) At 30 April 20X3, an accrual for freight and delivery expenses amounting to $350 had not yet been
accounted for. Freight and delivery expenses are classified as distribution expenses.
(vii) Markus has prepared bank reconciliation statement at 30 Apr 20X3 and discovered the following
items caused a difference between the bank statement balance and cash book balance:
- Bank is credited to the account in error $200
- Direct debit for $300 for electricity. Electricity is classified as an administrative expense.
- Cheque paid to a supplier on 29 December $800
Required:
1, Prepare a statement of profit or loss of Markus the year ended 30 April 20X3
2, Prepare a statement of financial position as at 30 April 20X3.