Answer the following questions on prepaid expenses:      
                 
                 
1)   In the trial balance:          
          DR CR    
      Insurance 3,500      
                 
    The insurance has been pre-paid by £600 pounds.    
                 
  a) What is the insurance expense for the income statement?  
                 
  b) How much is to be entered in the balance sheet?  
                 
  c) In which section of the balance sheet should your answer to b) go?
                 
  d) How should this asset be described in the balance sheet?  
                 
2)   In the trial balance:          
          DR CR    
      Wages   25,000      
                 
    The insurance has been pre-paid by £1,200 pounds.    
                 
  a) What is the insurance expense for the income statement?  
                 
  b) How much is to be entered in the balance sheet?  
                 
  c) In which section of the balance sheet should your answer to b) go?
                 
  d) How should this asset be described in the balance sheet?  
                 
3)   In the trial balance:          
          DR CR    
      Carriage Out 3,400      
                 
    The insurance has been pre-paid by £150 pounds.    
                 
  a) What is the insurance expense for the income statement?  
                 
  b) How much is to be entered in the balance sheet?  
                 
  c) In which section of the balance sheet should your answer to b) go?
                 
  d) How should this asset be described in the balance sheet?  
                 
4)   In the trial balance:          
          DR CR    
      Stationery 7,600      
                 
    The insurance has been pre-paid by £850 pounds.    
                 
  a) What is the insurance expense for the income statement?  
                 
  b) How much is to be entered in the balance sheet?  
                 
  c) In which section of the balance sheet should your answer to b) go?
                 
  d) How should this asset be described in the balance sheet?  
                 
    g item needed to calculate gross profit                
    fa Fixed Asset                
    ca current asset                
    cl current liability                
    fl fixed liability                
    d information needed for calculation                
    pe prepaid expense                
                       
    Use "ADD" for Allowance for doubtful debts.                
    "ADD increase/decrease" in the income statement, "Less ADD" in Balance Sheet.          
                       
    "*asset name* depreciation" in the income statement, "less accumulated depreciation" in the balance sheet.      
                       
    Expenses as named in the trial balance for the income statement.            
    "prepaid *expense*" in the Balance Sheet (e.g. "prepaid insurance").            
                       
                       
  Q1)                  
    ID Trial Balance (TB) DR CR            
    Purchases and Sales £50,000 £300,000            
    Land £400,000              
    Accounts Receivable £18,000              
    Carriage Out £1,200              
    Capital   £112,310            
    Returns £1,000 £2,500            
    Carriage In £1,300              
    Discounts allowed £2,400              
    Discounts Received   £4,300            
    Rent Received   £18,600            
    Bad Debts £1,200              
    Insurance £4,500              
    Loan (repay in 5 years, 6% p.a.)   £200,000            
    Equipment £55,000              
    Accumulated depreciation (Equip)   £12,000            
    Bank   £3,800            
    Allowance for doubtful debts   £900            
    Opening Inventory 23000              
    Commissions   £7,000            
    Drawings £15,000              
    Accounts Payable   £25,890            
    Cash £1,200              
    Loan Interest              
    Vehicles £75,000              
    Accumulated depreciation (Vehicles)   £18,000            
    Wages £27,000              
    Motor Expenses £10,500              
    General Expenses £7,000              
                   
                       
    End of Year Adjustments:            
    Closing Inventory 8600              
    Allowance for Doubtful Debts rate 9% of debtors            
    Depreciation Method:              
    3% straight line              
    8% reducing balance            
      Insurance is prepaid by 450              
      Motor Expenses are prepaid by 2300              
      Wages are prepaid by 1700              
                       
      Income Statement £ £            
                   
                   
                     
                     
                   
                   
                   
                   
                   
                     
                   
                     
                   
                   
                   
                     
      Less Expenses (use TB order)                
                   
                   
                   
                   
                   
      EOYA (Use EOYA order)                
                   
                   
                   
                   
                   
                   
                     
                   
                       
      Balance Sheet £ £ £          
      Fixed Assets (use TB order)                
                   
                   
                 
                   
                 
                     
      Current Assets (use TB order)                
                   
                   
                     
                   
      EOYA (Use EOYA order)                
                   
                   
                   
                   
                     
      Current Liabilities (use TB order)                
                   
                   
                     
      Fixed Liabilities                
                   
      Net Assets