9706_m17_qp_22 - revisedeck

1

Razia, a sole trader, started her business on 1 July 2015 selling ladies’ clothing. Razia did not keep proper books of account, but was able to provide the following information. Summary of bank account for the year ended 30 June 2016 $ $ Capital introduced 36 340 Payments to trade payables 80 690 Cash banked 78 780 Shop rental 25 200 Balance c/d 4 330 Shop fixtures and fittings 3 600 Purchase of motor vehicle 5 800 Motor expenses 3 140 Light and heat 1 020 119 450 119 450 Additional information Total revenue for the year was $92 600. All sales were made for cash. Razia kept no record of her cash drawings. The following expenses were paid from cash takings before the money was banked: $ General expenses 950 Assistants’ wages 2870 Cash in hand at 30 June 2016 was $1250. REQUIRED Prepare the cash account, showing clearly the value of Razia’s drawings for the year. Additional information All sales made a gross margin of 40%. During the year, Razia had taken goods, $640 at cost price, for her own use. Inventory at 30 June 2016 had been counted and was valued at cost price $31 900. Razia was aware that some goods had been stolen during the year. Razia owed $8940 to trade suppliers at 30 June 2016. REQUIRED Calculate the value of inventory stolen during the year ended 30 June 2016 at cost price. Additional information At 30 June 2016, the following expenses were accrued: $ Assistants’ wages Light and heat Non-current assets should be depreciated as follows: Shop fixtures and fittings at 15% per annum using the reducing balance method Motor vehicle using the straight-line method over five years. The estimated residual value of the motor vehicle after five years is $400. The annual charge for shop rental is $21 600. REQUIRED Prepare the income statement for the year ended 30 June 2016. Calculate, to two decimal places, the following ratios at 30 June 2016. State the formula used in each case. Current ratio Formula Calculation Liquid (acid test) ratio Formula Calculation Name two other ratios a business could calculate to explain its liquidity position. State two limitations of using ratio analysis. Additional information Razia’s brother has suggested that Razia should increase the mark-up on her goods. REQUIRED Advise Razia whether or not she should increase the mark-up on her goods. Justify your answer by discussing advantages and disadvantages of doing this.

3. Financial accounting (A Level) → 3.1. Preparation of financial statements

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

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

Open

2

Sturgess has provided the following information: The provision for doubtful debts at 1 August 2015 was $1940. Trade receivables at 31 July 2016 were $48 500. A customer owing $2100 has been declared bankrupt. This amount is to be written off. A customer owing $900 did not pay within the agreed credit terms. There are concerns about the recovery of this debt. The business policy is to make a 5% provision for doubtful debts on remaining trade receivables. REQUIRED State one reason why a business may make a provision for doubtful debts. State one accounting concept applied while making the provision for doubtful debts. Prepare the provision for doubtful debts account for the year ended 31 July 2016. Explain how a provision for doubtful debts is treated in: the statement of financial position the income statement Additional information Accrued telephone expenses at 1 August 2015 were $275. Prepaid telephone expenses at 1 August 2015 were $380. The total amounts paid for telephone expenses during the year were $4750. This included a rental charge of $2980 covering the period from 1 November 2015 to 31 October 2016. Telephone call charges of $840 were paid on 12 September 2016 covering the period from 1 June 2016 to 31 August 2016. REQUIRED Prepare the telephone expenses account for the year ended 31 July 2016.

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

3. Financial accounting (A Level) → 3.1. Preparation of financial statements

Open

3

King provided the following information for non-current assets at 1 April 2015. $ Property plant and machinery Land and buildings – cost 252 000 Plant and machinery – cost 123 000 Accumulated depreciation Buildings 21 000 Plant and machinery 49 000 During the year ended 31 March 2016, the following took place: Land was revalued to $202 500. It had originally cost $182 000. A machine was sold on 30 November 2015. It had a net book value on 1 April 2015 of $46 350 and an original cost of $76 200. A machine was purchased on 1 December 2015 at a cost of $62 850. The depreciation policy for non-current assets is as follows: Buildings 2% per annum using the straight-line method Plant and machinery 20% per annum using the reducing balance method Depreciation is charged on a month-by-month basis. REQUIRED Calculate the total depreciation charge for buildings for the year ended 31 March 2016. Calculate the total depreciation charge for plant and machinery for the year ended 31 March 2016. Prepare an extract from the statement of financial position at 31 March 2016 for non-current assets. King Extract from Statement of Financial Position at 31 March 2016 Accumulated Cost / Valuation Depreciation Net Book Value $ $ $ Workings: State three causes of depreciation.

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

Open

4

Miu owns a manufacturing business making a single product. REQUIRED State the difference between a cost unit and a cost centre. State the difference between a production cost centre and a service cost centre. State what is meant by contribution. REQUIRED Prepare a budgeted profit statement for each of the two months, January and February, using marginal costing. Clearly show the opening and closing inventories each month. Budgeted Profit Statement January February $ $ $ $ Additional information Miu is considering using absorption costing to value her inventory. REQUIRED Calculate the production overhead absorption rate per unit. Prepare a budgeted profit statement for each of the two months, January and February, using absorption costing. Clearly show the opening and closing inventories each month. Budgeted Profit Statement January February $ $ $ $ Reconcile the difference in budgeted profit figures in parts and . January February $ $ Advise Miu whether or not she should change from marginal costing to absorption costing. Give reasons to justify your answer.

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

4. Cost and management accounting (A Level) → 4.3. Budgeting and budgetary control

Open