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9706_s05_qp_2
A paper of Accounting, 9706
Questions:
3
Year:
2005
Paper:
2
Variant:
0
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1
John, Georgina and Paul are in partnership but have no written partnership agreement. The partners wish to expand the partnership, and require additional funds. Their capital accounts at 1 May 2005 were as follows. $ John 60 000 Georgina 45 000 Paul 45 000 Under the existing circumstances, profit of $67 500 is anticipated for the year ended 30 April 2006. There are two options for expanding the business, either of which is acceptable to all three partners. The selected option would take effect from 1 May 2005. The two options are: Borrow $75 000 from the bank at 12% interest per annum. The bank would require repayment of $6750 at the end of each financial year, in addition to interest. A manager would have to be employed at a wage of $15 000 per annum and profits should increase by $27 000 before taking into account bank interest and the manager’s salary. Bring Ringo in as a partner. He would take on the role of manager and would provide $75 000 of capital. Ringo would join the partnership, provided an agreement was drawn up requiring interest on capital to be paid at 7.5% per annum. Remaining profits would be split in the ratio 3:3:2:2, with John and Ringo receiving the larger shares. Goodwill would be ignored and net profit would increase by $27 000. REQUIRED For the year ended 30 April 2006, calculate the profit to be received by each partner under option . Use [T For the year ending 30 April 2006, calculate the amount to be received by each partner under option . Make a brief comparison of options and . Examiner s Use
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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2
After completion of the Trading, Profit and Loss and Appropriation Account for the year ended 31 May 2005, the following balances were extracted from the books of James Defirst Ltd. $ Motor vehicles at cost 60 000 Equipment at cost 30 000 Goodwill 15 000 Stock 45 750 Debtors 78 000 Bank 13 125 (Dr) General reserve 15 000 Creditors 30 075 Retained profit ? Additional information: Authorised share capital of the company is 100 000 ordinary shares of $1 each, of which 75 000 were issued and fully paid at $1.15 per share. All fixed assets were bought on 1 June 2002, the date the company was incorporated. Depreciation is applied as follows. Motor vehicles – 40% reducing balance. Equipment – 20% straight line, after taking into account a 10% residual balance. A dividend of $0.12 per share has been proposed for the year ended 31 May 2005. A provision for doubtful debts of 5% of debtors at 31 May 2005 is to be created. Stock costing $2500 had been sent to a customer on a sale or return basis on 25 May 2005. It had been neither returned nor sold by the year end, and no entries regarding it had been made in the accounts. Use [T REQUIRED James Defirst Ltd’s balance sheet at 31 May 2005 in vertical format. Examiner s Use Calculate the following for the year ended 31 May 2005 to two decimal places. Show your working in the boxes. Examiner s Use Working capital ratio Liquid (acid test) ratio [T Explain the function of an Appropriation Account in: a Partnership a Limited Company a Partnership a Limited Company Examiner s Use
1. Financial accounting (AS Level)  →  1.3. Accounting for non-current assets
3. Financial accounting (A Level)  →  3.1. Preparation of financial statements
Open
3
Quango Ltd produces four types of lamp – Platinum, Gold, Silver and Bronze. Unit selling prices and costs are as follows: Product Platinum Gold Silver Bronze $ $ $ $ Selling price Costs Direct materials Direct labour Overheads Direct material and Direct labour are variable costs. Overheads are 40% variable and 60% fixed. Quango’s intention was to produce and sell the following quantities during the year ended 31 May 2005. Product Quantity Platinum Gold Silver Bronze REQUIRED A statement, in marginal costing format, of profitability for each product, and in total. Use It was then discovered that fixed overheads were likely to rise by 8% and the total amount available to pay overheads could not be increased. REQUIRED A statement, taking into account the possibility of the increase in fixed overheads, and maximising profit, showing the quantity of each product to be produced. A statement in marginal costing format of profitability for each product and in total, based on your answer to . Examiner s Use
2. Cost and management accounting (AS Level)  →  2.2. Traditional costing methods
2. Cost and management accounting (AS Level)  →  2.1. Costs and cost behaviour
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