Other Payables and other Receivables

161

Review Questions

1. Rupa made the following bank payments in the month of March

2008.
$
March 6 Motor expenses – repairs 120
12 Motor expenses – tyres 150
The bill for repairs had been received in February and $120 had been
accrued in the motor expenses account at the end of the month.
Rupa received a bill for motor fuel for $80 on 219 March but the bill
was not paid until 7 April.
Required
(a) Prepare the motor expenses account in Rupa’s ledger for the
month of March 2009. Show the amount transferred to the
income statement for the month and the balance brought down
on 1 April.
Mopsa has to pay $400 rent on her shop each month.
She was not able to pay all the rent due in March 2009 and $150 was
outstanding on 1 April.
From 1 April, her landlord increased the rent to $450 each month.
On 27 April Mopsa made a payment of rent to her landlord of $500
in total.
Required
(b) Prepare the rent account in Mopsa’s ledger for the month of April
2009. Show the amount to be transferred to the income statement
for the month and balance brought down on 1 May.
Andrea does not include any accrual in her electricity account for
electricity used, and invoiced, but not paid for at the end of the
month.
162 IGCSE Accounting

Required
(c) Place a tick (✓) in one of the boxes below to show whether the
amount for electricity in her income statement for the month will
be
understated
overstated
[IGCSE 2009]
2. Susie is a trader. On 1 July 20-7 her inventory of stationery was
valued at $110. During the year ended 30 June 20-8 the following
transactions took place.
20-7 September 1 Purchased stationery, $328, by cheque
20-8 January 4 Purchased stationery, $95, in cash
February 1 Received a cash refund, $15, for an overcharge
by the stationery supplier
Susie’s inventory of stationery on 30 June 20-8 was valued at $187.
Write up the stationery account in Susie’s ledger for the year ended
30 June 20-8.
3. Amina Hassan’s financial year ends on 30 April. She sublets part of
her premises to Mariam Kamel.
Amina provided the following information.

2001 $
May 1 Mariam owed 1 month’s rent 60
July 1 Mariam paid rent for 15 months to 30 June 2002 by cheque 900

Prepare the rent received account as it would appear in Amina

Hassan’s ledger for the year ended 30 April 2002. Show clearly
the amount transferred to the income statement and the balance
on 1 May 2002.
[IGCSE 2002]
*4. The following extract shows transactions recorded in Ramon’s cash
book for the month of April 2007.
Other Payables and other Receivables
163

Ramon
Cash Book

Date Details Cash Bank Date Details Cash Bank

$ $ $ $
Apl 1 Balance b/d 1100 2450 Apl 1 Rent 900
3 Sales 500 6 Electricity 120
12 Ahmed 1200 21 Drawings 800
29 Ahmed 650 29 Wages 700
____ ____ 30 Balance c/d 100 3280
1600 4300 1600 4300
May 1 Balance b/d 100 3280
Additional information:
1. The balance on Ahmed’s account in the ledger on 1 April was $2850 Dr.
2. Rent of $900 is payable quarterly in advance.
3. An electricity bill for $60 was accrued at 30 April.

Required
Write up the following accounts in Ramon’s ledger for the month of
April 2007.
Show the amounts transferred to Ramon’s income statement for the
month and any balances at 1 May.
(a) Sales account (b) Ahmed account (c) Rent account
(d) Electricity account (e) Drawings account (f) Wages account
[IGCSE 2007]
5. The following account appears in Ruth Tembe’s nominal (general)
ledger.
Business rates account

Date Details folio $ Date Details folio $

2008 2008
Sept 30 Bank 1490 Aug 1 Balance b/d 90
2009
July 31 Income
statement 1200
____ Balance c/d 200
1490 1490
2009
Aug 1 Balance b/d 200
164 IGCSE Accounting

Required
(a) Explain each of the entries in the business rates account as it
appears in the nominal (general) ledger of Ruth Tempe. State
where the double entry for each transaction would be made.
The first one has been completed as an example.
2008 Aug 1 Balance $90
Explanation This is the amount owing for business rates for the
previous financial year.
Double entry Debit business rates account for the year ended 31
July 2008
2008 Sept 30 Bank $12490
2009 July 31 Income statement $1200
(b) (i) Explain the significance of the $200 shown at the end of the
business rates account.
(ii) State where this amount will appear in Ruth Tembe’s balance
sheet at 31 July 2009.
[IGCSE 2009]
6. Elmer Gantry is a self-employed builder whose financial year ends
on 30 September. His trial balance drawn up on 30 September 2003
included the following balances.
Dr Cr
$ $
Revenue (sales) 100 000
Purchases 66 000
Purchases returns 4 000
Inventory 1 October 2002 12 000
Insurance 4 250
Wages 6 000
General expenses 1 000
Motor expenses 2 600
Rent 5 000
You are given the following additional information.
1. On 30 September 2003 insurance prepaid was $250 and motor
expenses due but unpaid were $400.
Other Payables and other Receivables
165

2. Inventory on 30 September 2003 was $9000.

(a) Prepare Elmer Gantry’s income statement for the year ended 30
September 2003.
(b) (i) State what is meant by the accounting principle of accruals.
(ii) Explain how the accruals principle is applied to insurance in
Elmer’s income statement.
[Based on IGCSE 2003]
*7. Miriam is a business consultant. She provided the following
information at the end of her first year on 30 September 20-4.
$
Office expenses 7 250
Wages 27 500
Insurance 1 800
Property tax 800
Motor vehicle expenses 1 840
Fees received from clients 40 900
Commission received 5 600

The following information is also available.

1. The office expenses include stationery. On 30 September 20-4 the
inventory of stationery was valued at $250.
2. It is estimated that half of the motor vehicle expenses relate to
Miriam’s personal use.
3. On 30 September 20-4
Property tax due amounted to $160
Office expenses due amounted to $45
Commission receivable amounted to $250.
4. The insurance covers a period of 15 months to 31 December
20-4.
5. Bank charges, $115, have not been entered in the accounting
records.
Prepare Miriam’s income statement for the year ended
30 September 20-4.