The balance brought forward the cash book should have been

Fixtures 2,000

Stock 1/06/16 1,000

Electricity 500

Telephone 400

Creditors 3,000

Cash 5600

25,500 25,500

Additional information:

5) Stock as at 31/06/16 amount to sh. 3,000

6) Provision for bad and doubtful debt is to be set as at 10% of debtors

QUESTION TWO

The following transactions relate to Benta Ltd for the month of May 2016.

6 Paid wages in cash Sh.14, 000.

7 Sold goods on credit to: H Elliott Sh.35, 000; L Lane Sh.42, 000; J Canton Sh.72,000.

15 Bought shop fixtures on credit from Betta Ltd Sh.50, 000.

17 Paid M Hyatt by cheque Sh.84, 000.

30 J King lent us Sh.60, 000 by cash.

31 Bought a van paying by cheque Sh.400, 000.

Sh sh

Receipts 14690 Balance b/d 7610

1. Bank charges of sh1360 entered on the bank statement have not been entered in the cash book.

2. Cheques drawn amounting to sh2670 had not been presented to the bank for payment.

7. All dividends received are credited directly to the bank account. During October amounts totaling sh620 were credited by the bank but no entries were made in the cash book.

8. A cheque drawn for sh660 for stationery had been incorrectly entered in the cash book as sh600.

Question Four

i. Explain two methods of accounting for depreciation 4mks