# Question about Past Paper Dec '05

Registered Posts: 88 ? ? ?
Fellow students........

Here's a bit of a question that's got me stumped. Q2.1 Dec '05 exam

Got all other corrections but the disposal got me a little confused.

Why has that 10,000 been taken OUT of the Vehicle at cost account??

It may be the wording of the question that I've missed but as I see it, 10,000
was paid from bank for the new car which would go to Dr. V@C account...I hope!
Along with the 3500 trade in, this gives total value of new car as 13,500. The given answer for the Disposal account is also clear to me - it's just the balance between Dr 12000 and Cr 5856 (Acc Dep'n) and 3500 (P/X)

Vehicle at cost has the 12000 Cr for the Disposal but I have no idea why 10000 has also been taken OUT of the Vehicle @ cost account....Maybe it has got something to do with the 10000 from the bank but I just can't see it.

Read DATA on p14 of the question paper.

Thanks for help......and I'm sure there will be someone...:confused1:

• Registered Posts: 88 ? ? ?

Sorry - Forgot to say it is Intermediate Level
• Registered Posts: 218 ? ? ?
I presume you are looking at the suggested answer and on the adjustment column there is a credit of £10,000 against Vehicle at Cost?

The reason is that there should only be a debit of £3,500 on the debit side of the adjustment column against Vehicle at Cost and NOT £13,500. (as £10,000 has already been debited to MV@cost and credited to the bank a/c when a cheque was issued) and therefore an ajustment of 10,000 is needed on the credit side.

Remember these are suggested/guidance answers: Your net balance on the Motor vehicle a/c should be (12,000 + 13,500 – 12,000 = 13,500)

When you work out the balance on the suggested answer it is (22,000 + 13,500 – 12,000 – 10,000(adjustment) = 13,500)

The journals should have been (J1,J2,and J3)

Disposal a/c............J1..................12,000
Disposal.................J2................................5,856
Disposal.................J3................................3,500.........Net Loss 2,644

Acc. Depreciation....J2...................5,856

Bank a/c (MV@Cost).................................10,000

Motor Vehicle at cost.....J1........................12,000
Motor Vehicle at cost.....J3............3,500 .................(Answer Error Here-debit.as13,500)

Bank........................................10.000...............New Bal c/d 13,500

The Error on the answer is indicated above.
• Registered Posts: 88 ? ? ?
Thank you visha,

You posted a very in depth answer and your input was appreciated.

Sorry I took so long to reply

Kevin
• Registered Posts: 21 Dedicated contributor ? ? ?