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Cape Accounting

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unit 1: May 2011, Question #1(a)

3/2/2018

4 Comments

 
Workings:
Important note; the year end for James Sargeant Compnay is the 31st March, 2009
Note 1
One month's prepayment for rent was made for April 2009. The value of the prepayment is $5,550/6mths = $925.
Note 2
Electricity has been accrued up to March 2009, but has only been paid up to 31st December, 2008. Therefore the entire amount of $1,785 must be recorded as an accrual.
Note 3
Calculation of the depreciation expense for the year ended 31st December, 2009 - 
18% ($138,900-$45,500) = $16,812.
Note 4
Inventory should be valued at the lower of cost and net realizable value. The cost of the inventory is $2,645 and its net realizable value is $4,000-$2,250 = $1,750. Therefore the value of the stock needs to be reduced by $895, that is $2,645-$1,750.
Note 5 
The updated provision for doubtful debt balance is 8% of $20,000 = $1,600. Therefore the current provision of $1,000 needs to be increased by $600.
Now that all the notes have been accounted for the journal entries for the necessary adjustments can be made.
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4 Comments
Britney
5/21/2018 05:47:33 pm

Very thankful for this.

Reply
Alisha
2/17/2019 04:03:01 pm

I would really love to get some help wuth CAPE Accounting Unit 1

Reply
Accounting Lyceum
4/6/2019 07:41:14 am

Hi Alisha,

I currently offer private lessons. You can email acc.lyceum@gmail.com if you are still in need of a little extra help.

Good luck!

Krystal.

Reply
Ameaka
7/2/2020 06:52:36 pm

I could really use your help

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    The author holds a Bsc (Hons) Degree in Applied Accounting from Oxford Brookes University, England and enjoys a successful career as an Accounting Supervisor and a private tutor.

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