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1)sir, A sole trader took some goods costing $800 from inventory for his own use. The normal selling price of the goods is $1,600.
Which of the following journal entries would correctly record this? the answer is
Dr drawing account $800
Cr purchases account $800
my question is why did they use the selling price of$1600? are they saying these goods where not yet displayed in the shop for sale? how did they know these goods where still in storage and not in the shop?2)William’s trial balance at 30 September 20X5 includes the following balances:
Trade receivables $75,943
Receivables allowance $4,751
How should these balances be reported in William’s statement of financial position as at 30 September
20X5?
The answer is an asset of $71,192..is this the answer because the question asked for the balance? I believe the allowance $ 4,751 is a liability to the company.3)A trial balance is made up of a list of debit balances and credit balances.
Which of the following statements is correct?
A Every debit balance represents an expense.
B Assets are represented by debit balances.
C Liabilities are represented by debit balances.
D Income is included in the list of debit balances.
the answer is B. what of D?1. But according to the answer you have written, they did not use $1600.
When the company bought them they credited cash and debited purchases.
However the company did not keep them – so they should be charged to the owner and not be recorded as purchases.
So debit drawings and credit purchases.2. On the SOFP, we show as a current asset the receivables less the allowance for receivables. Please watch my free lectures on irrecoverable and doubtful debts where I stress this several times.
3. Income is a credit balance!!! I really do not think that you are watching the free lectures – I explain all this in the lectures and you cannot expect me to type out my lectures here.
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