# Principle of Accounts help..

#### ICCWC2015

Could someone explain or post the way to solve this question because I want to see if my way of doing this is correct...I couldn't find the mark scheme

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#### scouserlfc

these all things go on debit side
Returns Outwards (180) , Bank (5170) , Discount ( 190) , set off from sales ledger (350) ,Balance c/d (3270)

These all things go on credit
Balance b/d (2580) , Purchases (6480) ,Refund of cash (60) , Balance c/d (40)

the totals of both debit and credit sides is 9160

Hope u get it and i hope u dont have a problem in the second part

#### ICCWC2015

these all things go on debit side
Returns Outwards (180) , Bank (5170) , Discount ( 190) , set off from sales ledger (350) ,Balance c/d (3270)

These all things go on credit
Balance b/d (2580) , Purchases (6480) ,Refund of cash (60) , Balance c/d (40)

the totals of both debit and credit sides is 9160

Hope u get it and i hope u dont have a problem in the second part
I understand everything but can you pls explain why you didn't include Trade discount in the entries even thought you deducted it. It would be a great help

#### scouserlfc

trade discount is a discount which is not recorded in the books of a buyer or a seller it is just a discount to allow for more buyers and make them buy in bulk make sure u see the difference between cash and trade discount

#### ICCWC2015

trade discount is a discount which is not recorded in the books of a buyer or a seller it is just a discount to allow for more buyers and make them buy in bulk make sure u see the difference between cash and trade discount
Only Cash discount (allowed/recieved) is recorded...am I right?
Thank you so much, you were of great help

#### scouserlfc

Only Cash discount (allowed/recieved) is recorded...am I right?
Thank you so much, you were of great help
Yes exactly they are recorded and no problem ill be privileged to help u again

#### ICCWC2015

Yes exactly they are recorded and no problem ill be privileged to help u again
can you help me with this question please?

Pradeep is a trader. The following information is provided.
Stock at cost on 1 August 2005 $1600 For the year ended 31 July 2006 Purchases$ 39200
Sales $48000 On the evening of 31 july 2006 a fire destroyed a quantity of stock. The cost of the stock salvaged from the fire was$700.
Pradeep marks up the goods by 25% on cost when calculating the selling price.
Calculate, by means of a trading account, the cost of the stock which was destroyed.

#### ICCWC2015

I have learnt about Margin, Mark-up and Rate of stock turnover. (also about calculating missing figures in Trading acc)
But I can't get this one

#### scouserlfc

can you help me with this question please?

Pradeep is a trader. The following information is provided.
Stock at cost on 1 August 2005 $1600 For the year ended 31 July 2006 Purchases$ 39200
Sales $48000 On the evening of 31 july 2006 a fire destroyed a quantity of stock. The cost of the stock salvaged from the fire was$700.
Pradeep marks up the goods by 25% on cost when calculating the selling price.
Calculate, by means of a trading account, the cost of the stock which was destroyed.
I think u do this like this
And it looks quite simple first use the mark up thing and find the gross profit and then make a trading account with the figures u have and now find the closing stock by using the trading account that is first find all cost of sales and then the cost of sales are minused from the opening stock and purchases to give the closing stock, now as we know that 700 was remaining of the closing stock after fire the 700 is minused from ur closing stock value found and u have ur stock destroyed !

I hope i didnt confuse u !

#### ICCWC2015

I think u do this like this
And it looks quite simple first use the mark up thing and find the gross profit and then make a trading account with the figures u have and now find the closing stock by using the trading account that is first find all cost of sales and then the cost of sales are minused from the opening stock and purchases to give the closing stock, now as we know that 700 was remaining of the closing stock after fire the 700 is minused from ur closing stock value found and u have ur stock destroyed !

I hope i didnt confuse u !
Thank you so much...This meant a lot to me ...
My answer is \$1700....is it correct ?

isnt it 1900 !

#### ICCWC2015

isnt it 1900 !
Explain why a sole trader's capital account is adjusted for goodwill before his business is amalgamated with that of another sole trader?

State 2 reasons why 2 sole traders may amalgamate their businesses?

#### scouserlfc

Explain why a sole trader's capital account is adjusted for goodwill before his business is amalgamated with that of another sole trader?

State 2 reasons why 2 sole traders may amalgamate their businesses?
See goodwill is to be provided in his capital account because the goodwill the trader has built up is taken as a benefit which will provide more than usual profits to the other trader so his capital is increased by adding the goodwill and then if u see that when he is given the Interest on Capital he gets more profits due to goodwill when its added to his account ! on the other hand you can think of goodwill as being owned by one trader who when amalgamates adds this goodwill to increase his capital and as a result provides compensation for himself as the other trader now benefits from his business due to the goodwill he built

Very confusing i know it took me 6 months to get this idea

two reasons are simple !
they want to expand their business,looking for extra capital,more and new expertise of different traders ,they will share losses equally ,a decision will be taken after a long thought process between both trader making them mostly successful businesses and not close down soon

#### ICCWC2015

See goodwill is to be provided in his capital account because the goodwill the trader has built up is taken as a benefit which will provide more than usual profits to the other trader so his capital is increased by adding the goodwill and then if u see that when he is given the Interest on Capital he gets more profits due to goodwill when its added to his account ! on the other hand you can think of goodwill as being owned by one trader who when amalgamates adds this goodwill to increase his capital and as a result provides compensation for himself as the other trader now benefits from his business due to the goodwill he built

Very confusing i know it took me 6 months to get this idea

two reasons are simple !
they want to expand their business,looking for extra capital,more and new expertise of different traders ,they will share losses equally ,a decision will be taken after a long thought process between both trader making them mostly successful businesses and not close down soon
I had a bit of an idea..but thanks a lot for clearing everything for me

#### scouserlfc

http://www.xtremepapers.com/papers/CIE/Cambridge International O Level/Principles of Accounts (7110)/7110_w02_qp_2.pdf

This is my working but it's not balancing..please point out my mistakes

Dude in the capital acount that u draw now u didnt account for the adjustment no 1 u dont take hills building and dales loan and also u messed up the capital account equipment in Hills account is to be 30000 take all the adjustments in account man !
Start all over again and look at the adjustments and make the Capital account the adjustments are not only for balance sheet !
if u dont get it ill scan my answer to this question that i had done for my preparation to CIEs !

#### ICCWC2015

Dude in the capital acount that u draw now u didnt account for the adjustment no 1 u dont take hills building and dales loan and also u messed up the capital account equipment in Hills account is to be 30000 take all the adjustments in account man !
Start all over again and look at the adjustments and make the Capital account the adjustments are not only for balance sheet !
if u dont get it ill scan my answer to this question that i had done for my preparation to CIEs !
Yea...I still don't get it...If you can pls post the answer because then I can figure out what to do

#### scouserlfc

okay wait man atleast one day and ill try my best to scan it

#### ishma ahmed

would you tell me plz how i do my preparation of principle off accounts i am giving exam in this oct nov and i completely for get near about every thing

#### scouserlfc

would you tell me plz how i do my preparation of principle off accounts i am giving exam in this oct nov and i completely for get near about every thing
Well you just have to go through the book once with the syllabus and cover all its points from the book and as soon as u finish one topic do past papers for that topic i used to do 80s and 90s past papers when i finished a topic and then when everything was finished i completed all 2000s past papers read all ers and then i revised the book with the points i am weak in being the most thoroughly revised BTW accounts is not a subject to get scared of