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A company’s statement of profit or loss for the year ended 31 December 20X5 showed a net profit of $83,600. It was later found that $18,000 paid for the purchase of a motor van had been debited to the motor expenses account. It is the company’s policy to depreciate motor vans at 25% per year on the straight-line basis, with a full year’s charge in the year of acquisition.
What would the net profit be after adjusting for this error?Why are you setting test questions and expecting answers?
You must have answers in the same book in which you found the questions, so you should ask about whatever part of the answer you are not clear about.Have you watched the free lectures on depreciation? The lectures are a complete free course for Paper F3 and cover everything needed to be able to pass the exam well.
If you want me to answer any questions then you must ask in the Ask the Tutor Forum – this forum is for students to help each other.
At 31 December 20X5 the following require inclusion in a company’s financial statements:
1: On 1 January 20X5 the company made a loan of $12,000 to an employee, repayable on
1 January 20X6, charging interest at 2% per year. On the due date she repaid the loan and paid
the whole of the interest due on the loan to that date.
2: The company paid an annual insurance premium of $9,000 in 20X5, covering the year ending
31 August 20X6.
3: In January 20X6 the company received rent from a tenant of $4,000 covering the six months to
31 December 20X5.
What total figures should be included in the company’s statement of financial position
as at 31 December 20X5?
B Current assets $22,240 Current liabilities $nil
C Current assets $10,240 Current liabilities $nilI am really ok with statements 2 and 3 but statement 1 seems a bit tough. i believe the answer to be C but B was recorded as one.
Could you please explain what should happen with section 1 ?
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