9706_w24_qp_21
A paper of Accounting, 9706
Questions:
4
Year:
2024
Paper:
2
Variant:
1
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1
The financial year end of T Limited was 30 June 2024. On that date the following balances were extracted from the books of account. Debit $ Credit $ 8% Bank loan (2024) 54 000 Administrative expenses 131 310 Bank overdraft 12 380 Cash Carriage inwards Distribution costs 114 870 Finance costs 5 180 Fixtures and fittings Cost Provision for depreciation at 1 July 2023 16 200 9 560 Inventory at 1 July 2023 93 400 Land and buildings Cost Provision for depreciation at 1 July 2023 165 000 6 300 Motor vehicles Cost Provision for depreciation at 1 July 2023 82 000 34 590 Purchases 293 780 Retained earnings 38 450 Revenue 705 100 Share capital 80 000 Trade payables 32 160 Trade receivables 69 740 The following information is also available. On 15 June 2024, goods were delivered and invoiced to a credit customer on a sale or return basis. The goods had a selling price of $12 000 including a mark-up of 25%. On 30 June 2024, inventory was counted and valued at cost, $86 400. On the same date, the customer informed T Limited that he had not yet decided whether to keep the goods. Distribution costs include a charge of $3120 for motor insurance for the year ending 30 November 2024. An irrecoverable debt of $540 is to be written off to administrative expenses. The directors have decided to create an allowance for irrecoverable debts of 5% of trade receivables to be charged to administrative expenses. Prepare the statement of profit or loss for the year ended 30 June 2024. Use the space provided on page 5 to show your workings. T Limited Statement of profit or loss for the year ended 30 June 2024 $ Revenue Cost of sales Gross profit Distribution costs Administrative expenses Profit from operations Finance costs Profit before Taxation Taxation Profit for the year Workings: Cost of sales Allowance for irrecoverable debts Depreciation Distribution costs Administrative expenses Finance costs Calculate the balance of cash and cash equivalents at 30 June 2024. Prepare an extract from the statement of financial position at 30 June 2024 to show the equity and liabilities section only. T Limited Statement of financial position at 30 June 2024 $ Equity Total equity Liabilities Non-current liabilities Current liabilities Total liabilities Total equity and liabilities Workings: Assess the directors’ decision on 30 June 2024 to take out the 5% debenture (2028–2029). Justify your assessment by considering both advantages and disadvantages of the decision to the company.
1. Financial accounting (AS Level)  →  1.5. Preparation of financial statements
3. Financial accounting (A Level)  →  3.1. Preparation of financial statements
1. Financial accounting (AS Level)  →  1.3. Accounting for non-current assets
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2
Deepak maintains a full set of accounting records. The trial balance at 30 September 2024 did not balance and the difference was posted to a suspense account. The sales ledger control account and the purchases ledger control account are part of the double entry system. The following errors were discovered. A cheque received, $610, from Sanjay, a credit customer, had been dishonoured by the bank but no entry had been made in the books of account. Goods returned, $240, by Kamal, a credit customer, had been credited to the sales ledger control account and debited to the purchases account. Goods returned, $150, to Kohli, a credit supplier, had been correctly entered in both the purchases returns journal and the purchases ledger control account but had been posted to the debit of the sales returns account. A credit note, $498, received from Bharti, a credit supplier, had been correctly entered in the purchases returns journal but had been debited to the purchases ledger control account as $489. Prepare journal entries to correct each error. Narratives are not required. Journal Error Debit $ Credit $ Prepare the suspense account at 30 September 2024 clearly showing the opening balance brought down. Dates are not required. Suspense account Details $ Details $ Additional information The trial balance included the following balances: Debit $ Credit $ Purchases ledger control account 8 640 Sales ledger control account 12 420 Calculate the revised balances of the: Purchases ledger control account Sales ledger control account.
1. Financial accounting (AS Level)  →  1.4. Reconciliation and verification
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3
Clarissa started her business on 1 July 2022, and she is preparing her financial statements for the year ended 30 June 2024. She depreciates her motor vehicles at 25% per annum using the straight-line method. Depreciation is charged on a monthly basis. She purchased a motor vehicle on 1 July 2022 costing $24 000. She estimated that the motor vehicle would have a useful life of four years with no residual value. On 30 September 2023 she purchased a new motor vehicle costing $70 000. The old motor vehicle was part-exchanged at a value of $14 800. The balance was settled with an interest-free loan repayable in equal monthly instalments over two years. The first loan instalment was due to be paid on 31 October 2023. She estimated that the new motor vehicle would have a useful life of four years with a residual value of $16 000. Prepare each account for the year ended 30 June 2024. Motor vehicle at cost account Date Details $ Date Details $ Motor vehicle provision for depreciation account Date Details $ Date Details $ Calculate the outstanding balance on the interest-free loan at 30 June 2024. State how the interest-free loan would be shown in the statement of financial position at 30 June 2024. Additional information Clarissa has been advised that she should consider charging depreciation on the reducing balance method rather than the straight-line method. Advise Clarissa whether or not she should change her method of charging depreciation. Justify your advice by discussing both methods.
1. Financial accounting (AS Level)  →  1.3. Accounting for non-current assets
3. Financial accounting (A Level)  →  3.1. Preparation of financial statements
1. Financial accounting (AS Level)  →  1.5. Preparation of financial statements
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4
Alberto owns a manufacturing business. Define each term: cost centre cost unit direct cost indirect cost. Additional information Alberto’s business operates a system of absorption costing. There are two production departments, Machining and Finishing, and two service departments, Stores and Canteen. The budgeted information for the year ended 30 September 2024 is available. Production departments Service departments Machining $ Finishing $ Stores $ Canteen $ Number of employees - Floor area (square metres) 3 000 5 000 1 500 Stores requisitions 3 600 5 400 – – Direct labour hours 14 300 18 500 – – Machine hours 28 900 3 600 – – The following indirect overheads have not yet been apportioned. $ Light and heat 12 800 Production supervisors’ wages 42 000 Complete the table to apportion costs to the production departments. Total $ Production departments Service departments Machining $ Finishing $ Stores $ Canteen $ Allocated overheads 512 100 195 200 234 700 66 400 15 800 Light and heat 12 800 Production supervisors’ wages 42 000 Total overheads 566 900 Reapportion Canteen Reapportion Stores Calculate, to two decimal places, a suitable overhead absorption rate for each production department. Additional information The actual results for the year ended 30 September 2024 were as follows: Machining Finishing Total overheads $249 200 $320 400 Direct labour hours 14 220 18 650 Machine hours 26 880 3 910 Calculate the over-absorption or under-absorption of overheads for each production department. Additional information Alberto has been asked to prepare a quotation for a new customer to supply 12 units of a product. Each unit would require the following: Direct material 4 metres at $3.85 per metre Direct labour Machining department – 0.75 hours Finishing department – 1.5 hours Overheads Machining department 0.5 direct labour hours 0.5 machine hours Overheads Finishing department 1 direct labour hour 0.75 machine hours The budgeted hours for the year ending 30 September 2025 will remain unchanged from the previous year. The total direct labour budget for the year is as follows: $ Machining department 127 270 Finishing department 183 150 Alberto wishes to achieve a gross margin of 40% on the work. Calculate the budgeted hourly direct labour rate for each department. Prepare a statement to show the total selling price that Alberto should quote the customer. Additional information Alberto is aware that the factory is not currently working at full capacity. In order to secure the work, he has quoted a very competitive price. The new customer has agreed to accept the quotation only if Alberto agrees to allow a 20% discount for immediate settlement on delivery. Advise Alberto whether or not he should accept the proposed terms offered by the customer. Justify your advice by discussing both financial and non-financial matters.
2. Cost and management accounting (AS Level)  →  2.2. Traditional costing methods
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