2020 JYSS 3E POA EOY P2 Q7

7 Figo’s financial year ends on 30 September.

No record had been made in the accounts during the year ended 30 September 2020 for the following 

1. Figo had taken goods, costing $1 800, on 3 March for personal use.

2. 13 April, Figo brought into the business his own motor vehicle, valued at $9 000.

3. Figo decided to split the telephone expenses of $880, one-quarter private use and three-quarters business use.

REQUIRED

a. Explain the term drawings.

[2]

b. State what effect drawings has on the profit of a business.

[1]

c. Write the journal entries to record transactions 1, 2 and 3 above.

[6]

d. Prepare the drawings account for the year ended 30 September 2020.

[3]

e. What accounting theory is being applied for transaction 3 above.

[1]

[TOTAL 13]

SOLUTION
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a)

Assets or resources taken from business by owner for personal use.

b)

No effect

e)

Accounting entity theory

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