FRA Dec 2005 past exam

Sally5065Sally5065 Feels At HomePosts: 48Registered
Hi,

I was hoping someone could shed some light on the following question:-

Scenerio:-

Sam James part exchanged his business vehicle during the year:-

- Original cost of vehicle which was part exchanged £12,000
- NBV of the vehicle which was part exchanged £6144
- £10,000 was paid from the bank account. The amount credited to the bank account was and debited to the vehicles at cost account.
- A part exchange allownace of £3,500 was given.

I have done the calculations for the new vehicle at £13,500 (debit vehicle at cost account)
I've also credited the vehicle cost account for the £12,000 (part ex vehicle)
I've debited the accumulated dep'n account by £5856 and credited it with £3,375 for the new vehicle.
I've debited dipsposal loss on FA as £2,644 (P &L).

When i checked the answers I had missed off crediting the vehicles at cost account with the £10,000. What I don't understand is why, if the vehicle only costs £12,000? And i've already reduced the Vehicles at cost by this amount?

Does that mean the original vehicle that has been part exchanges cost £22,000?

The original amount for Vehicles at cost is on the TB as £22,000 - so does that answer my question?????


I don't know if i'm looking into it too deeply!!!


Thanks


Sally

Comments

  • RinskeRinske Font Of All Knowledge Posts: 2,453Registered
    In the question it says the 10,000 is credited to the bank and debited to the vehicles at cost account.

    So where it is supposed to be credited to the bank, you don't want to credit it to the bank again if it's already done. So instead you credit it out of the vehicles cost account where it was put in, so you can debit the same account again but instead with the total cost of the vehicle of 13,500.

    However, I found the question reasonably vaguely worded.
  • Sally5065Sally5065 Feels At Home Posts: 48Registered
    Fra Past exam

    Thank you for your help. I realised a didn't need to adjust the bank - my mind just went blank of where to put the debit entry.

    I'm on my 7th past exam paper now and starting topanic slightly.........

    Have a good day


    sally
  • RinskeRinske Font Of All Knowledge Posts: 2,453Registered
    Sally5065 wrote: »
    Thank you for your help. I realised a didn't need to adjust the bank - my mind just went blank of where to put the debit entry.

    I'm on my 7th past exam paper now and starting topanic slightly.........

    Have a good day


    sally
    No need to panic, I'm sure you'll be fine. You had all the entries correct apart from the bank one, so I am sure you'll be fine with all the journal entries!

    Although I think the weekend before the exams, everyone starts to panic slightly to find out their fine during the exams!

    Cheers,
    Rinske
  • emma123emma123 Well-Known Posts: 108Registered
    I'm panicking this weekend! I just wish my exam was on monday to get it over with. The more I look at my notes and past papers the more I think I know nothing when in actual fact I do! Plus it's a gorgeous day today. I wana be at the beach not studying! :(
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