2. I always leave it until 6th year
I cover all the 60 mark options in 5th year that
are relevant for successful completion of Q1
adjustments, especially suspense;
depreciation & revaluation
I usually leave out one topic (depending on
the group‟s progress), usually Published
Accounts, so I stress the importance to
students of mastering Q1 in case Published
Accounts comes up as a 60 marker
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
3. I would try to cover adjustments for Sole
Trader; Company Final Accounts and
Manufacturing Accounts all in one go so that
students don‟t feel that they have three
separate topics to master
e.g. if we are mastering a Q1 adjustment that
appears on a Sole Trader past paper, I will
assign a similar Q1 adjustment for homework
but from a Company Final Account or
Manufacturing Account Question
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
4. Most questions worked on in class and for
homework would be from the past exam
papers and past pre exam papers, with all
tests coming from past pre exam papers
After mastering the required adjustments for
a Question One, I encourage them to closely
watch their timing for future questions on
this topic by using an egg timer or similar
device for homework assignments, it focuses
their mind, speeds up the length of time to
complete Q1 and acts as a competitive spur
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
5. Focus their minds: Company Final accounts
came up in 2012 so Sole Trader or
Manufacturing Accounts should come up in
2013!
Adjustments that we will cover today come up
in both these Q1 options
Work on one exam question (2010 Sole
Trader) & give another for homework (e.g.
2008 Sole Trader or most of 2007 Company
Final accounts adjustments)
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
7. Go down through the trial balance first
Explain how to get the opening balance for
Depreciation of Buildings and Delivery Vans
Note that Investments were only acquired
during the year
Show that some of the Mortgage wasn‟t
received until start of April
Purchases and Sales PS at end of a letter
State that Stock 1/1/09 is opening stock
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
9. Commission – instil/drill into them to remember
to visualise where all expenses/gains go in the
bank account and then they go on the opposite
side of the expense/gain account, so commission
is therefore an expense
Explain that while suspense is included in
Salaries & General Expenses this does not
necessarily mean that we subtract it to take it out
Explain that Provision for Bad Debts is totally
unrelated to Bad debts and mention the prudence
concept
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
11. Discount (net): remind them of A before R in
the alphabet and put the A and R on either
side of a T account showing Allowed on the
debit(left) and Received on the credit(right)
Mortgage Interest appearing in the trial
balance = the amount paid during the year
Bank: emphasise the basic rule of:
DR Assets
CR Liabilities
implying that Bank is an overdraft in this
case
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
13. Explain what VAT/PAYE & PRSI are and that
therefore they are usually owed to the Revenue
Commissioners and will then go into the
Liabilities in the Balance Sheet
Explain the difference between Drawings and
Capital (unless you have done Correction of
Errors question with them previously)
State that Capital and Drawings will only appear
in Sole Trader and that in Company Final
Accounts and Manufacturing Account it will be
Authorised and Issued Share Capital that we
encounter with drawings not being possible
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
15. Involves separating patents from investment
income and transferring part of the new
patents figure into the p & l account
Beware of the commencement year for
patents being written off, there may be a few
years written off before this year‟s accounts
Always sort investment income provision
while doing this adjustment
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
16. Patents, which incorporate three months
investment income received, are to be written
off over a five year period commencing in
2009.
Relevant figures from the trial balance:
4% Investments (1/7/09) €120,000
Patents € 60,400
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
19. „Incorporation/included in‟ rule:
Option A: same side we would have added so
now we subtract
Option B: opposite side we would have
subtracted so now we add
Patents is on left(debit) side; investment
income is on right(credit) side so they are on
opposite sides so its Option B
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
23. Complete lines 1, 2 and 3
Line 1 = the investment X number of months that
we have it for this year/12 X % interest rate
Line 2 = the amount of investment income
received during the year (usually the amount
incorporated in Patents)
Watch out for additional investment income
received directly into bank account if there is a
bank reconciliation adjustment
Line 3 = Line 1 minus Line 2 (this is the amount
of investment income still owed to us and is
therefore a Current Asset in the Balance Sheet)
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
27. Usually involves disposal of delivery van;
purchase of new delivery van with a trade-in
allowance on the old van along with the
cheque payment for the new van being
treated as a purchase for resale as opposed
to a purchase of a fixed asset
Following T accounts required:
Delivery Vans
Depreciation of Delivery Vans
Disposal of Delivery Vans
Purchases Account
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
28. Provide for depreciation on vans at the annual
rate of 12½% of cost from the date of
purchase to the date of sale. NOTE: On
31/03/2009 a van, which cost €24,000 on
30/09/2006, was traded in against a new van
which cost €48,000. An allowance of €12,000
was given on the old van. The cheque for the
net amount of this transaction was incorrectly
treated as a purchase of trading stock. This
was the only entry made in the books in
respect of this transaction.
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
43. Usually included in something in the trial
balance for which we will have to do an
account
Usually have two errors to sort out, with one
of them generally to do with a wrong figure
being used for payment of
mortgage/debenture interest in the trial
balance
Always sort provision of mortgage/debenture
interest here also
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
44. The suspense arises as a result of the
incorrect figure for mortgage interest
(although the correct entry had been made in
the bank account) and from €1,000 paid
towards PAYE and PRSI entered only in the
bank account.
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
50. „Incorporation/included in‟ rule:
Option A: same side we would have added so
now we subtract
Option B: opposite side we would have
subtracted so now we add
Salaries & General Expenses is on left(debit)
side; suspense original balance figure is on
left (debit) side so they are on same sides so
its Option A
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
53. Now we need to adjust the accounts that we
sorted in the middle column of the three
column system by entering them into those T
accounts on the same side as they are on in
the middle column.
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
57. Similar to investment income we need to
complete Line 1, 2 & 3
Line 1 = the mortgage X number of months that
we have the mortgage for this year/12 X %
interest rate(needs to be calculated in two parts if
part of the mortgage was received during the
year)
Line 2 = the correct amount of interest paid
during the year(having sorted suspense)
Line 3 = Line 1 minus Line 2 (this is the amount
of mortgage interest still owed by us and is
therefore a Current Liability in the Balance Sheet)
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
63. Usually involves working out depreciation
charge for the year and revaluing at the end
of the year.
Accounts required:
Buildings Account
Depreciation of Buildings Account
Revaluation Reserve Account
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
64. Provide for depreciation on buildings at a rate
of 3% of cost per annum. It was decided to
revalue the buildings at €850,000 on
31/12/2009.
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
69. Revaluation part involves two things:
In Buildings Account let the revalued figure
equal to your closing balance at the end of
the year as Balance B/d on the debit side and
bring it back up to the credit side (remind
them of DR Assets CR Liabilities with Bal B/d)
In the Depreciation of Buildings Account get
rid of all depreciation up to the date of
revaluation meaning there will be no closing
balance in this account if the revaluation is at
the end of the year as it is in 2010 question
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
76. Usually a figure in the trial balance, let this =
“the old” figure
Usually asks in the adjustments to adjust
provision for bad debts to a certain % of
debtors, let this adjusted figure =“the new”
figure(make sure to check all other
adjustments so that the debtors figure that
you are getting a % of has taken all
adjustments into account)
Let the difference between both = “the
change”
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
77. Rules for dealing with Provision for bad debts
“The old” goes nowhere
“The change” goes into the Trading & Profit &
Loss Account, if it goes up it goes down
under “Less expenses” as an expense and if it
goes down it goes up under “gross profit” as
a gain (now dealt with as an add-on to
operating income after expenses and before
arriving at operating profit)
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
78. “The new” goes into the Balance Sheet as a
minus figure subtracted from Debtors under
Current Assets
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
79. Provision for bad debts to be adjusted to 3% of
debtors.
Relevant figures from trial balance:
Debtors € 76,500
Provision for Bad Debts € 3,900
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
84. Usually asked in Company Final Accounts
question but can potentially be asked in Sole
Trader/Manufacturing Account also
Trial balance bank figure forms opening balance
in your own cash book
Bank statement figure (given in the adjustment)
forms opening balance in the bank reconciliation
statement
Explain that it‟s a miniature version of what they
did at Junior Cert level but you also have to
adjust the individual accounts that are affected
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
95. Not relevant for Sole Trader
Usually worth 12 marks in Company Final
Accounts and potentially also in
Manufacturing Account but easy mistakes
made calculating figures
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
96. Always work out the interim preference dividend
first, the remainder of interim dividends is then
equal to interim ordinary dividends
Work out the remaining number of months for
the final preference dividend
The final ordinary dividend depends on the
wording of the adjustment, in 2007 the interim
ordinary dividend will reduce the amount of the
final ordinary dividend but potentially the final
ordinary dividend may not be affected by the
interim ordinary dividend.
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
97. (a) The Preference dividend due be paid
(b) A final dividend on ordinary shares be
provided bringing the total dividend up to 11
cent per share
Relevant figures from the trial balance:
600,000 10% Authorised Preference Shares at
€1 each
Issued Ordinary Shares €800,000
Issued Preference Shares €400,000
Interim dividends for 1st 6 months € 48,000
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
99. (a) The Preference dividend due be paid
(b) A final dividend on ordinary shares be
provided bringing the total dividend up to 11
cent per share
Relevant figures from the trial balance:
600,000 10% Authorised Preference Shares at
€1 each
Issued Ordinary Shares €800,000
Issued Preference Shares €400,000
Interim dividends for 1st 6 months € 48,000
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
102. All four calculated figures go into “less
appropriations” being:
Interim preference dividend
Interim ordinary dividend
Final preference dividend
Final ordinary dividend
Only the two final dividends go into the
Balance Sheet under Current Liabilities
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
