2020 SASS 3E POA EOY P2 Q2
2 T’ Sam runs a food delivery business. The business rents out the space above the shop premises. T’ Sam provided the following information for the year ended 30 June 2020.
Account balances at 1 July 2019 | $ | |||||
Rent received in advance | 2 000 | |||||
Salaries payable | 7 500 | |||||
During the year ended 30 June 2020 | ||||||
Rent received by cheque | 40 000 | |||||
Salaries paid by cheque | 35 900 | |||||
Account balances at 30 June 2020 | ||||||
Rent received in advance | 3 500 | |||||
Salaries payable | 4 800 | |||||
REQUIRED
a. Calculate the amount (showing all workings) to be shown as rent income in the statement of financial performance of T’ Sam’s business for the year ended 30 June 2020.
[1]
b. Show the journal entries to record the salaries paid during the year ended 30 June 2020 and salaries payable at 30 June 2020.
[4]
c. Explain the accounting theory which is being applied when calculating the amounts for rent income and salaries expense for the year ended 30 June 2020.
[2]
The following ledger accounts are extracted from the books of T’ Sam for the month of July 2020.
Cash at bank account
Date | Particulars | Balance | ||
2020 | $ | $ | $ | |
July 1 | Balance b/d | 8 900 Dr | ||
7 | Trade receivable – Stefan | 1 170 | ||
12 | 3 895 | |||
20 | Trade payable – Brandon | 980 | ||
24 | Utilities expense | 390 |
Discount allowed account
Date | Particulars | Balance | ||
2020 | $ | $ | $ | |
July 7 | Trade receivable -Stefan | 130 | 130 Dr |
REQUIRED
d. Explain the following entries.
[4]
i. 7 July
ii. 20 July
iii. 24 July
e. Calculate the balance of cash at bank at 31 July 2020
[1]
[TOTAL 12]
2000+40000-3500
$38,500
accrual basis of accounting theory- expenses and income are recognised
when they are incurred/earned regardless of whether cash has been paid /
received during the period
OR matching Theory- expenses incurred must be matched against income
earned in the same period to determine the profit for that period.
i) The business received $1170 by cheque from trade receivable- Stefan,
after cash discount of $130.
ii) The business paid trade payable- Brandon $980, by cheque
iii) The business paid for utilities expense $390 by cheque
$12 595