Question 1


Clifford Limited trade receivables balance as at 31 October 2019 was €212,280. The following transactions took place during November and December 2019:


  Nov 2019

Dec 2019

Cash sales

Credit sales

Sales returns from credit customers

Settlement discounts allowed

Cheques received from credit customers

Bad debts written off

Recovery of bad debt written off in 2018

Amounts due from customers to be offset against purchases in the purchase ledger

Cash refunds to customers who returned items after payment






















At 31 December 2019, there was no bad debt provision for outstanding balances recognised in the financial statements. However, due to an increase in credit customers in 2019 Brown’s directors believe that a provision of 2% of outstanding balances at 31 December 2019 would be prudent.



  1. Prepare the receivables control account for both November 2019 and December 2019.
  2. Prepare the bad debt expense account and the provision for bad debts account for both November 2019 and December 2019.
  3. Prepare the ‘statement of financial position’ extract for receivables as at 31 December 2019.


Question 2


(a) Outline your understanding, with the use of relevant examples, of capital and revenue expenditure.

(b) On 1 January 2019 E. Walsh books and records contained the following balances:


Delivery vans at cost                                                  101,750

Accumulated depreciation delivery vans                   32, 410


During the financial year ending 31 December 2019 the following occurred:

–  On 1 April 2019 delivery van A was traded in against a new delivery van D.  Delivery van A had been purchased on 1 December 2015 for €25,000.

–  E. Walsh paid for delivery van D in cash.  The list price of delivery van D was €37,500. E.Walsh wrote a cheque in full payment for delivery van D of €32,000 (hence trade in allowance of  €5,500)


Delivery vans are depreciated at 15% per annum on the straight line basis from month of purchase to the month of sale.  Depreciation is calculated to the nearest whole number.


  1. Prepare the delivery van at cost T account.
  2. Prepare the delivery van accumulated depreciation T account for the year ended 31 December 2019.
  3. Prepare the disposal T account for delivery van A.


(c) Outline your understanding of the terms straight line depreciation and reducing balance depreciation as they relate to non-current assets.


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