Reference no: EM132594749

Question 1: On 1 October 2019, Donna Equipment signed a one-year, 8% interest-bearing note payable for £50,000. Donna Equipment prepares its accounts to 31 March each year. How much interest expense should be reported in the income statement for 31 March 2020?

£1,000
£2,000
£3,000
£4,000

Question 2: An extract of the equity section of the balance sheet as at 1 January 2019 of Falcon Ltd is given below:

£

Share capital at £ each 250,000

Share premium 40,000

Revaluation reserve 78,000

Retained profits 145,000

On 1 April, Falcon issued 50,000 bonus shares utilising any available share premium. On 1 July, the company issued one share for every 5 shares already in issue at £3 each.

Assuming that there is no other share issue apart from the two mentioned above, which of the following year-end balances are correct?

Share capital, £ share premium, £

a) 480,000              40,000

b) 360,000                200,000

c) 360,000              120,000

d) 300,000                120,000

Question 3: Which of the following statements is correct?

a) A purchases accounts only records purchases that have been made on a credit basis A

b) purchases account only records purchases that have been made on a cash basis A sales

c) account only records sales that have been made on a cash basis

d) None of the above statements are correct