Thank you for your inquiry. I agree with both comments.

Question 03 – Total elimination entries are added up to $1,431,000

Question 04 – Inter company sales are $90,000 therefore Elimination entry (2) should be corrected as $90,000. Consolidated column should also change accordingly.

Question 3 – the total of the debit and credit columns is showing $1,411,000 but I have added them up many times and they seem to total $1,431,000.  The calculations seem to be correct added across and at the bottom of the consolidated balance column.

Question 4 – in the solutions the figure for Sales is DR $150,000 and Purchases CR $150,000 but the question says the inter-company sales were $90,000.

Am I misunderstanding the questions?

Thanks

Jo

If you are using the template provided to submit the answers,  please answer the question in provided template. Otherwise answer the question from the text book. We have students using few different version of the text books therefore either one would be accepted.

Chapter 6, question 1(c) in the word document is a different question from the book (fourth edition). I have checked both word documents and they are the same question (different to the book).

Your document: <span style=”margin: 0px; line-height: 107%; font-family: ‘Calibri’,sans-serif; font-size: 11pt;”><b><span style=”color: #000000;”>Which are the steps used to account for income tax under the tax payable method?</span></b></span>

Book: Which method must be used by reporting entities?

Which question should I answer?

Thanks

Jo

It’s a secured debentures. “Floating charge ” means security is non specific current asset/s , usually it’s inventory , Trade debtors or both. In this case provided security was inventory. It is a disclosure requirement according to accounting standards. Disclose by a way of a note.

Please can somebody advise how I go about solving “The debentures are 10% pa, due 1 July 2017, and are secured by a floating charge over the inventory” this has me stumped as to what I should do with it in the Financial statement and Notes

Many thanks

Lynn

Kind regards
Chandrika

Regards

Credit side of the ledger – Opening balance $80,000 from Table one of the question
Current year earnings $ 312,000 – from 2nd table last sentence ie Net Profit before tax less Tax ($500,000 less $188,000).

Debit Side of the Ledger –
Interim Dividend – Feb 2017 = $10,000
Final preference June -2017 = 6% X 200,000 Shares of $1 = $12,000
Final dividends – June 2017 Ordinary 240,000 shares (Refer the Note) x 5 cents = $12,000
Credit Side total is higher ie $392,000 , balance the ledger to find the closing balance ie $392,000 less ($10,000+$12,000+$12,000) = $358,000.
Aug 2016 are payment of previous year dividends –
Double entry is Dr Dividend payable account , Credit Bank Account.($12,000 + $7000)
Therefore no affect to current year Retained earnings account.
Hope this helps.

Also I am having difficultly working out where the figures for the “Balances” $358000 & $392000 on the solution comes from or how it is calculated? Is it just a total of the from the Balance on the right hand side and the profit and loss less the dividends paid out?