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FIN005 Financial Accounting
Comprehensive Revision Exercises

Question 1
Tiffany Company carries on business as a retail trader. The trial balance of business as at 31 December 2011 was as follows: Dr Cr $ $
Capital 204,800
Merchandise inventory 25,680
Salaries and wages 46,160
Motor expenses 3,720
Electricity 3,074
Fixtures and fittings at cost 28,000 - Accumulated depreciation 1 Jan 2011 16,800
Cost of merchandise sold 262,860
Office supplies 10,000
Building at cost 100,000 - Accumulated depreciation 1 Jan 2011 6,000
Sales 465,200
Rent 12,000
Prepaid insurance 1,760
Interest income on investment 1,226
Equipment at cost 24,000 - Accumulated depreciation 12,240
Premises 100,000
Account Receivables 18,530
Account Payables 23,004
Prepaid rates 16,000
Bank 277,486
Loan (repayable in 2017) 200,000 929,270 929,270

You are given the following additional information:

(1) Insurance expired at 31 December 2011 were $760.
(2) The following amounts were accrued at 31 December,2011: Interest $5,000 Electricity $460

(3) Rates expenses unexpired at 31 December 2011 were $7,000

(4) Depreciation is to be provided as follows:

(a) building – 2% annually, straight – line method.
(b) fixtures and fittings – 20% annually, straight – line method.
(c ) Equipment – 30% annually on a reducing balance