[Seiha]

Hi Jonh,
I’m also having problem with this question too

@vixengard said:
Hello,

I have come across a question on my BPP P&R CD which I am having difficulty answering, please can you help to explain this for me?

Question:

“The Accountant at Investotech discovered the following errors after calculating the comapny’s profit for 20X3:

1. A Non Current Asset costing $50,000 has been included in the Purchases Account

2. Stationery costing $10,000 has been included as closing inventory of raw materials, instead of stationery expenses.

What is the effect of these errors on gross profit & net profit?

In the book the answer is
A. Understatement of gross profit by $40,000 and understatement of net profit by $30,000

I already read your explanation to Vicki for this question however I still don’t understand; moreover, I’m abit confused because you said Vicki’s answer is right but it’s different from the book.

Please explain for more detail. Thanks

@vixengard said:
Hello!

Thanks for your response very helpful explanation, although I think the answers are based on not correcting the errors, so therefore this would be the correct answer?

1. Understatement of gross profit by $40,000 and understatement of Net Profit $50,000

These questions hurt my brain!!

Thanks 🙂

Vicki

@johnmoffat said:
That is correct 🙂

[Seiha]

Thank you very much I got it now.

[Seiha]

I got it now at first I’m a bit confuse with rent account I thought it’s only rent income.
I have one more doubt in this question the balance on the suspense account balance is Dr. 8,131(Debit: $387,642
Credit: $379,511)
So this question ask for reducing suspense a/c but when we corrected the error the suspense a/c also the debit balance. For me I’m confusing about it why debit side the same reduce each other.
Could you further explain about this?

[Seiha]

Hi Jonh,
I have problem with the below question

“The Accountant at Investotech discovered the following errors after calculating the comapny’s profit for 20X3:

1. A Non Current Asset costing $50,000 has been included in the Purchases Account

2. Stationery costing $10,000 has been included as closing inventory of raw materials, instead of stationery expenses.

What is the effect of these errors on gross profit & net profit?

The answer is
Understatement of gross profit by 40,000 and underestimate of net profit by $50,000

Could you explain why this is the right answer? Thanks

[Seiha]

Hi
Relating to the question above I also don’t understand
In the BPP the correct answer is
B. 4,000 received for rent of part of the office has been correctly recorded in the cash book and debited to rent account.

I already read your explanation above but still I don’t get it

Could you please explain by the way of correcting this errors using journal entry? Thanks

[Seiha]

Hi Jonh,
I’m having trouble with the bellow question

The debit side of a trial balance totals $800 more than the credit side.

Which one of the following errors would fully account for the difference?

A. $400 paid for plant maintenance has been correctly entered in the cash book and credited to the plant asset account.

B. Discount received $400 has been debited to discount allowed account

C. A receipt of $800 for commission receivable has been omitted from the records

D. The petty cash balance of $800 has been omitted from the trial balances

The answer is B but I don’t understand why it makes Dr. $800 more than Cr. I think only $400. Please help explaining this

[Seiha]

Thank Jonh

[Seiha]

Hi tutor,
The question is
Mauritz Co is preparing a bank reconciliation. The bank balance in the general ledger is $540 credit. There are two items that have not yet been dealt with.
(1) a cheque for $620 was sent to a supplier but is not yet showing on the bank statement
(2) a bank charge of $28 was charged by bank but was not recorded Mauritz Co.
What was the closing balance on Mauritz Co’s bank statement ?

The answer is $52 cash at bank
The calculation is
540+28= 568 credit
(568)+620= 52
I don’t understand why we need to deduct 568 with 620?

[Seiha]

Hi

We multiply by 16 years because the useful life of this property remains only 16 years when revaluation.
136,000 is the carrying value of the property after 4 years of purchase.
Another way to calculate is
Accumulated depreciation for 4 years is 170,000*4/20=34,000
Carrying amount is 170,000-34,000=136,000

Hope this help!

[Seiha]

Thank you very much for your clear explanation. Sorry for any inconveniences by posting my question here. I didn’t mean to post it here. I was accidentally clicked on the choose forum option and since my question is related to F3, I confused posting it here. I didn’t know it’s only for student to help each other only.

[Seiha]

Thanks for your fast reply and suggestion. I’ll read them again carefully.

[Seiha]

Hi Vipin,
I would like to ask you about the below solution u solved. I didn’t get the last step the calculation of the closing value=284,700-32,000+28,500=281,200.ans
Could u explain this?
Is there any formular for this?

vipin70 said:
remember inventory value is lower of cost and NRV.
case 1
cost=400*80=32,000& NRV(net realisable value)=95%*400*75(95% bcoz we deduct selling expense 5%)
=28,500
inventory value is lower of Cost and NRV
here, NRV is lower than cost. so inventory value becomes 28,500
case 2
cost=800*20=16,000
NRV=800*28-800*5-800=17600
here cost is lower, so inventory is 16,000
closing value=284,700-32,000+28,500=281,200.ans

[Seiha]

Thanks a lot I got it !

[Seiha]

The question of Okema24
On May 7, 2014
This is the question: The following info relates to Eva Co’s sales tax for the month of March 20X3.
Sales (including sales tax). $109, 250
Purchases (net of sales tax?). $64,000
Sales tax is charged at a flat rate of 15%. Eva Co’s sales tax account showed an opening credit balance of $4,540 at the beginning of the month and a closing debit balance of $2,720 at the end of the month.
What was the total sales tax pd to regulatory authorities during the month of March, 20X3?
A. $6,470.00
B. $11,910.00
C. $14,047.50
D. $13,162.17
Question: How will this look in a “T” account?
I did listen to the lecture on bookkeeping but I’m still unsure as to why they credited the ending balance of $2,720.

[Seiha]

Hi Sir,
About this problem after I read your explanation I understand that at the beginning of 20×4 the sale tax balance b/f is 2720 debit balance which is what the question told us ( the closing Debit balance 2720) but when we solve this problem in 20×3 the balance c/d is credit side which need to transfer to opposite side (Dr) . Is it correct?

[Author]

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