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John Moffat.
John Moffat.-
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cwazysam
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Hello!
Can you please tell me when do we open a reconstruction account as a balancing figure? I know how to deal with the questions but this this is the only point i get stuck at.
I came across two questions, CHRYSOS MAR JUN 17 AND FLUFFTORT SEPT DEC 15. In the former there was reconstruction acc while in the later it wasn’t.Regards.
John Moffat
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I am a bit puzzled, because neither question needs the preparation of a reconstruction account (and the examiners answer does not produce a reconstruction account).
In both cases it is a question of filling it to the statements what is known given the instructions in the question, and then just filling it the missing figure (reserves in one question and cash in the other question) as a balancing figure.
cwazysam
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I have the kaplan kit and in that for the question chrysos within the equity section under reserves there was reconstruction (as bal fig). So taking the balancing amount directly to reserve is okay?
And i know this is very last minute, but im greatly confused when we have to do adjustment in cash and when in reserves just like you said had been done in the questions?
John Moffat
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Yes, it is OK just to take the balancing figure (and this is what the examiner did in his answer).
There is no ‘rule’ as to which is the balancing figure. We fill in everything that we are given in the question and the ‘missing figure’ is the one that we fill in to make the SOFP balance. In the case of Chrysos it is only the reserves that are missing, whereas in the case of Flufftort it is only the cash that is missing.
cwazysam
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