9706_s24_qp_21
A paper of Accounting, 9706
Questions:
4
Year:
2024
Paper:
2
Variant:
1
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1
Haroon and Rakesh are in partnership. They provide cleaning services for local businesses. They started their business on 1 January 2023 when the partners introduced the following assets. Haroon Rakesh $ $ Cash at bank 4 000 2 000 Furniture and equipment 14 000 Motor vehicle 16 000 The partners have not maintained full accounting records. However, they provided the following information for the year ended 31 December 2023. Bank statements included the following receipts. $ Cash takings 9 410 Receipts from credit customers 60 230 Amounts received from credit customers were after deducting cash discounts of 5%. At 31 December 2023, credit customers owed $5580. Before banking cash takings, the partners withdrew the following amounts each month for personal use. $ Haroon Rakesh The business does not keep any cash in hand. Calculate the total revenue for the year ended 31 December 2023. Prepare the statement of profit or loss for the year ended 31 December 2023. Haroon and Rakesh Statement of profit or loss for the year ended 31 December 2023 Workings: Prepare an extract from the statement of financial position at 31 December 2023 to show the current assets section only. $ Current assets Workings: Additional information Partnership current accounts are not maintained. Interest on capital has been agreed at: $ Haroon Rakesh Haroon is entitled to an annual salary of $5000. Profits and losses are to be shared in the ratio Haroon three-fifths : Rakesh two-fifths. Calculate the balance on Rakesh’s capital account at 31 December 2023. Additional information The partners have considered maintaining a full accounting system using an accounting software package. Advise the partners whether or not they should maintain a full accounting system using an accounting software package. Justify your answer.
1. Financial accounting (AS Level)  →  1.5. Preparation of financial statements
3. Financial accounting (A Level)  →  3.1. Preparation of financial statements
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2
Sana maintains full accounting records. She has prepared a trial balance, but the totals do not agree. State two benefits of preparing a trial balance. Additional information Sana discovered some errors which did not affect the agreement of the trial balance totals. Type of error Error Omission A dishonoured cheque for $80 received from Aryan Stores. Commission An entry was made in the account of K Limited for goods returned to JK Limited, $110. Complete reversal Goods taken for own use, cost $260. Compensating The total of the discounts allowed column in the cash book, $320, was not posted to the general ledger. The total of one of the returns journals was also not posted to the general ledger. Prepare journal entries to correct the errors. Narratives are not required. Journal Debit $ Credit $ State what is meant by an error of principle. Support your answer with one example. Explain, with reference to an accounting concept, why Sana needs to make an entry for goods taken for own use. Accounting concept Explanation
1. Financial accounting (AS Level)  →  1.4. Reconciliation and verification
1. Financial accounting (AS Level)  →  1.2. The accounting system
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3
J Limited’s financial year ended on 31 March 2024. The following information is available. $ At 1 April 2023 Retained earnings 98 000 At 31 March 2024 Issued share capital: ordinary shares of $0.25 each 1 000 000 Share premium 360 000 On 1 August 2023 the directors made a rights issue of two ordinary shares for every three ordinary shares held at that date. The shares were issued at a premium of $0.10 per share. The rights issue was fully subscribed. On 1 October 2023 the directors paid an interim dividend of $0.02 per share on all shares in issue at that date. On 31 March 2024 the directors revalued property at $390 000. Property had previously been revalued at $450 000 in 2020. The profit for the year ended 31 March 2024 was $37 000. Complete, on page 11, the statement of changes in equity for the year ended 31 March 2024. Additional information The directors are considering raising additional finance. They believe investors will prefer to invest in debentures rather than in ordinary shares. Explain two reasons why investors may prefer to invest in debentures rather than in ordinary shares. State three uses of a share premium account.
1. Financial accounting (AS Level)  →  1.5. Preparation of financial statements
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4
K Limited is a manufacturing company which has recently changed from using absorption costing to using marginal costing. Explain two reasons why a manufacturing company might change from using absorption costing to using marginal costing. Additional information At one of K Limited’s factories a single type of product is manufactured. This month’s marginal cost statement is as follows: Marginal cost statement $ Sales revenue 660 000 Variable costs (462 000) Contribution 198 000 Fixed costs (95 000) Profit 103 000 Calculate the contribution to sales ratio. Calculate the break-even point in sales revenue. Additional information The directors require a target profit of $140 000 to be made next month. Calculate the sales revenue required to achieve the target profit. Additional information The directors are prepared to accept a special order with a negative contribution. State three reasons why a special order with a negative contribution might be accepted. Additional information At another factory of K Limited three different types of product are made. The following details are available. Aye Bee Cee Selling price per unit $35 $43 $28 Maximum monthly demand per product 2400 units 3200 units 1800 units Materials used per unit 6 kg 8 kg 4 kg Labour cost per unit $12 $14 $10 Materials cost $1.50 per kg. Only 35 000 kg of material are forecast to be available in January 2025. Forecast fixed costs are $63 000 per month. Calculate the optimum profit to be made in January 2025. Additional information A director has found an overseas supplier of materials who is prepared to make up the shortfall in materials. The supplier will charge $2.60 per kg and there will be a delivery charge of $8000. Calculate the additional profit to be made if the shortfall in materials is made up by the overseas supplier. Advise the directors whether or not they should purchase the shortfall in materials from the overseas supplier. Justify your answer, considering both advantages and disadvantages.
2. Cost and management accounting (AS Level)  →  2.2. Traditional costing methods
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