9706_w23_qp_22 - revisedeck

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P Limited sells electronic goods online. The directors provided the following information. Balances At 31 July 2023 $ At 1 August 2022 $ 8% debenture (2026) 36 000 – Inventory 43 190 36 800 Other payables: administrative expenses – Other receivables: administrative expenses 1 820 Other receivables: distribution costs 1 490 – Trade payables 25 250 29 610 Bank account extract for the year ended 31 July 2023 $ Payments To credit suppliers 122 050 Administrative expenses 66 920 Distribution costs 51 730 Receipts From customers 284 200 The following information is also available. All goods are despatched to customers immediately on receipt of payment. Inventory at 31 July 2023 included damaged items that had cost $3600. One half of these items will be scrapped and have no value. The remaining items will be sold for $900 after repairs costing $420. The 8% debenture (2026) was issued on 1 April 2023. The charge for taxation was estimated to be $10 700. Prepare the statement of profit or loss for the year ended 31 July 2023. Use the space provided to show your workings. P Limited Statement of profit or loss for the year ended 31 July 2023 $ Workings: Cost of sales Administrative expenses Distribution costs Additional information Balances at 1 August 2022 $ Share capital (ordinary shares of $0.50 each) 120 000 Share premium 19 000 Retained earnings 23 560 On 1 September 2022, a bonus issue of shares was made of one ordinary share for every six shares held. Reserves were maintained in their most flexible form. On 1 January 2023, a final dividend of $0.07 per share was paid on all shares in issue at 1 August 2022. On 31 March 2023, a rights issue of one ordinary share for every four shares held was made at a premium of $0.15 per share. The issue was fully subscribed. Prepare the statement of changes in equity for the year ended 31 July 2023. P Limited Statement of changes in equity for the year ended 31 July 2023 Share capital $ Share premium $ Retained earnings $ Total $ At 1 August 2022 120 000 19 000 23 560 162 560 State two examples of revenue reserves of a limited company. Advise the directors whether or not they were correct to make a bonus issue of shares rather than make a new issue of shares. Justify your answer.

1. Financial accounting (AS Level) → 1.5. Preparation of financial statements

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Simon formed a parcel delivery business on 1 July 2021. On 1 July 2021, he purchased a delivery vehicle for $29 000 from his business bank account. He decided to depreciate delivery vehicles on a monthly basis using the straight‑line method. He estimated that the delivery vehicle would have a useful working life of four years and would have a residual value of $5000. On 1 November 2022, a new delivery vehicle was purchased at a cost of $44 000. The old delivery vehicle was part exchanged at a value of $16 800. The balance was settled by a bank loan repayable over two years. He estimated that the new delivery vehicle would have a useful working life of five years and would have a residual value of $8000. State two factors that cause the value of non‑current assets to depreciate. Prepare the following accounts for the year ended 30 June 2023. Use the space provided to show your workings. Delivery vehicles at cost Date Details $ Date Details $ Delivery vehicles provision for depreciation Date Details $ Date Details $ Workings: Calculate the profit or loss on disposal of the delivery vehicle sold on 1 November 2022. Explain why it may be more appropriate to depreciate motor vehicles using the reducing balance method rather than the straight‑line method.

1. Financial accounting (AS Level) → 1.3. Accounting for non-current assets

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Malik prepared a sales ledger control account for July 2023. However, the balance of the control account did not agree with the total of customers’ account balances in the sales ledger. He provided the following information. $ At 1 July 2023 Sales ledger control account balance 76 250 For the month of July 2023 Contra purchases ledger Sales journal 69 634 Cash book: customer cheques dishonoured Cash book: discounts allowed Journal: irrecoverable debts Cash book: receipts from credit customers 74 118 Sales returns journal 2 090 The following errors were discovered which accounted for the difference. The balance of a sales ledger customer’s account had been undercast by $300. The total of the sales returns journal had been overcast by $580. A journal entry to write off a customer account balance of $95 as irrecoverable had been correctly entered in the general ledger but had been posted to the debit side of the customer’s account. A cheque received from a customer, $320, had been correctly entered in the cash book but had been posted to the debit side of the customer’s account as $230. A further dishonoured cheque from a customer, $215, had not been entered in the cash book but had been correctly entered in the customer’s account. The list of customer account balances extracted from the sales ledger totalled $69 211. Prepare the sales ledger control account for the month of July 2023, taking into account the errors discovered. Dates are not required. Sales ledger control account Details $ Details $ Prepare a schedule of the corrected sales ledger account balances. Increase $ Decrease $ Total $ Per original list 69 211 Corrected balances State two limitations of preparing a control account.

1. Financial accounting (AS Level) → 1.4. Reconciliation and verification

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Andreas owns a business manufacturing bicycles. The business operates two production departments, Machining and Assembly, and two service departments, Stores and Maintenance. The following information is available for one bicycle. Direct materials $45.60 Direct labour: Machining ($10 per hour) 30 minutes Direct labour: Assembly ($12 per hour) 105 minutes Machine hours: Machining 20 minutes Machine hours: Assembly 15 minutes Total budgeted overheads for the year ended 31 August 2023 are as follows: $ Indirect wages 420 000 Factory rent and rates 30 000 Machine overheads 22 000 The following information is also available. Production departments Service departments Machining Assembly Stores Maintenance Floor space (square metres) 4 000 5 600 1 800 Number of orders from stores 2 100 1 600 Maintenance call outs Budgeted direct labour hours 22 200 77 700 Budgeted machine hours 34 300 25 700 Number of indirect employees Machine overheads are apportioned on the basis of machine hours. Complete the table to show the apportionment of the budgeted overheads for the year ended 31 August 2023. Production departments Service departments Total $ Machining $ Assembly $ Stores $ Maintenance $ Indirect wages 420 000 Factory rent and rates 30 000 Machine overheads 22 000 Total overheads 472 000 Apportion Stores Subtotal Apportion Maintenance Total overhead costs Calculate, to two decimal places, an overhead absorption rate for each production department, using a suitable basis. Additional information The actual results for the year ended 31 August 2023 were as follows: Machining Assembly Total overheads $226 952 $267 465 Direct labour hours 28 450 72 580 Machine hours 44 120 15 270 Calculate the over‑absorption or under‑absorption of overheads for each production department. Additional information Andreas has been approached by a new customer wishing to make a special order for 120 bicycles with modifications to the customer’s own specification. In order to complete the order, the following would apply for the manufacture of one bicycle. The total material cost would increase by 30%. The direct labour hours in the machinery department would increase by 50% and an additional 15 minutes of direct labour hours would be required in the assembly department. Due to workers in the assembly department already working at full capacity, these workers would have to work overtime to complete the order at a premium of 25% on the usual direct labour rate. Calculate the direct cost of producing one bicycle for the special order. Additional information In order to remain competitive, Andreas wishes to achieve a 30% gross profit margin on all work. Prepare a statement to show the total selling price that Andreas should quote to the customer in order to achieve a 30% gross profit margin on the order. Additional information Having received the quotation from Andreas, the customer has stated that he will commit to a regular monthly order of 100 of the special bicycles if Andreas will offer a 10% discount on the quoted price and allow 2 months’ credit. Andreas’s business is successful, though managing cash flow is often difficult. Advise Andreas whether he should accept the terms offered by the customer. Justify your answer.

2. Cost and management accounting (AS Level) → 2.2. Traditional costing methods

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