Question

Question one: 100 marks (25 each): The financial statement columns of the worksheet for The Kunafah Spoonat December 31, 2017 are as follows: Income Statement Financial Position Accounts Debit Credit Debit Credit Cash 20,000 Accounts Receivable 14.000 Supplies 8000 Prepaid Insurance 12 000 Equipment 438,000 Accumulated Depreciation Equipment 58,000 Accounts Payable 38,000 Note Payable (Long term) 120,000 Salaries and Wages Payable 26,000 Share Capital-Ordinary 100,000 Retained Eamings 124 000 Dividends 18,000 Service Revenue 246,000 Advertising Expense 42.000 Depreciation Expense 24000 Insurance Expense 6,000 Rent Expense 34,000 Salaries and Wages Expense 84,000 Supplies Expense 12 000 Totals 202000 246,000 510 000 466,000 Net Income 44,000 44.000 123.000 122.000 255.000 255,000 Instructions: Answer the following questions Show your calculations: Question & Calculations 1. Briefly discuss the difference between "Temporary Accounts" and "Permanent Accounts.

Answer 1

Solution 0 Difference between temporary accounts and Permanent accounts: Temporary Accounts Permanent Accounts - Temporary accounts are those accountsPermanent accounts found on the in which their balances are not balance sheet and are classified carried over from one accounting period asset, liability and aunes's equily accounts to another > Temporary account items have no opening balance because they | closed at the period end ang - Permanent account items will have opening balance, because they are carry forward from one accounting period to another. Temporary acount items are classified > Permanent acount stems are classified as revenue, expense and drawings account as asset, liability and owner's equly Temporary accounts are prepared to → Permanent accounts total balances identity profit / loss of the business Ge; assets and habilities & owner's equity) I shows the financial position of the business. - Examples Examples Expenses : Rent paid, salary paid, wages Assets: cash, Inventory, Prepaid expense etc depreciation expanse ete Liabilety . Accounts Payable, outstanding esperse Income : Sales revenue, service revenue owness Equity : commar stock, Retaused earnings vent received, etc : ete

Solution (2) amount Particulars |124,000 Retained camnings Corgirning balance) Cegere adgietmata) 44,000 Add! Net income - (18,000 Less: Dividends. 150,000 .:. Balance of retained earnings that would appear on a statement of financial position at December 31, 2017

Solution ③ Particulars Property, plant and Equipment (Before adjustments ) Less: Accumulated depreciation Less: Current year depreciation enprenses. . Property, plant and equipment amout on December 31, 2017 (net) amount 438,000 |(58,000) (24,000 356 000

solution ④ Particulars Amount Cash. 20,000 14 poo Accounts Receivable 8,000 Supplies Prepaid insurance. 12,000 of 54,000 .. Total Current Assets, that would appear on the statement francial posities at Decembes 3), 2017
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