9706_s06_qp_2 - revisedeck

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Examiner's Use After completion of the Trading Account, the following balances were extracted from the books of Peter Jordan plc on 30 April 2006. $ Authorised and issued share capital Ordinary shares of $1 each fully paid 1 500 000 7 % Preference shares of $1 each fully paid 200 000 Premises 2 300 000 Motor vehicles 500 000 Fixtures and fittings 170 000 Provision for depreciation on motor vehicles 375 000 Provision for depreciation on fixtures and fittings 102 000 Gross profit 1 620 000 Stock 204 000 Office expenses 460 000 Selling and distribution expenses 486 000 6 % debentures – 2011 (issued in 2001) 100 000 Debenture interest paid 3 000 Profit on sale of motor vehicle 2 000 Profit and loss account balance – 1 May 2005 143 600 Cr Debtors 132 000 Creditors 116 000 Bank 26 800 Cr Cash Share premium 150 000 Interim dividend paid – ordinary shares 75 000 preference shares 8 000 Provision for doubtful debts 3 000 Additional information at 30 April 2006: Office expenses prepaid $8000 Selling and distribution expenses accrued $23 000 Provision for doubtful debts to be maintained at 2 % of debtors Depreciation to be provided as follows: Motor vehicles 50 % per annum reducing balance Fixtures and fittings 20 % per annum on cost The following are proposed: Final dividend of $0.10 per share to be paid to ordinary shareholders Remaining dividend due is to be paid to preference shareholders. For Examiner's Use REQUIRED Prepare Peter Jordan plc’s Profit and Loss and Appropriation Account for the year ended 30 April 2006. For Examiner's Use Prepare Peter Jordan plc’s Balance Sheet at 30 April 2006. For Examiner's Use Calculate the current ratio at 30 April 2006 to two decimal places. Calculate the acid test ratio at 30 April 2006 to two decimal places. Explain the uses of these two ratios, using Peter Jordan plc as an example.

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

3. Financial accounting (A Level) → 3.5. Analysis and communication of accounting information

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Examiner's Use The Netherdale Sports Club’s Receipts and Payments Account shows the following transactions for the year ended 30 April 2006. $ $ RECEIPTS PAYMENTS Balance b/d 20 000 National club fees 3 000 Subscriptions 72 000 Restaurant supplies 51 000 Restaurant takings 108 000 Purchase of clubhouse 50 000 Annual dance 8 900 Loan interest 2 200 Sale of equipment 6 000 Purchase of equipment 14 000 Loan to purchase clubhouse 20 000 Restaurant wages 22 000 Repairs and maintenance 12 400 Annual dance 4 950 Administration of annual dance Electricity 11 000 General wages 60 000 Balance c/d 4 030 234 900 234 900 Balance b/d 4 030 When the club’s bank statements for the year ended 30 April 2006 were studied, the following were discovered. Bank interest of $100 for the year had been credited in the bank statement but no entry appeared in the receipts and payments account. Electricity was paid by direct debit at $1000 per month but the entry for January 2006 had been omitted from the receipts and payments account. $4000 had been banked for restaurant takings on 30 April 2006. This had been entered in the receipts and payments account but did not appear on the bank statement. A cheque for $2800 for repairs and maintenance, posted on 29 April 2006, was included in the receipts and payments account but had not yet been presented to the bank for payment. For Examiner's Use REQUIRED Update the Netherdale Sports Club’s Receipts and Payments Account. Prepare a bank reconciliation statement at 30 April 2006 to reconcile the bank statement with the updated receipts and payments balance. For Examiner's Use Additional information: Net book value of the equipment owned on 1 May 2005 was $56 000 and the equipment sold during the year ended 30 April 2006 had a net book value of $4000. Depreciation on equipment is provided at 20 % reducing balance, with a full year’s depreciation written off in the year of purchase and none in the year of sale. The club’s other assets and liabilities were as follows: 1 May 2005 30 April 2006 $ $ Restaurant stock 7 600 9 400 Creditors for restaurant supplies 4 400 5 200 Subscriptions in arrears - 1 800 Subscriptions in advance 2 000 1 400 Fixtures and fittings 21 400 20 800 There were no purchases or sales of fixtures and fittings during the year. REQUIRED Prepare a Restaurant Trading Account for the year ended 30 April 2006. Depreciation, repairs and maintenance and electricity are not to be included in this account. For Examiner's Use Prepare an Income and Expenditure Account for the year ended 30 April 2006. For Examiner's Use State three reasons why, for most clubs, a Receipts and Payments Account is not always a satisfactory record of the club’s activities.

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

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

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Examiner's Use Hoi Poloi plc makes 3 types of filing cabinet, four-drawer, three-drawer and two-drawer. The business uses general purpose machines which are equally suitable to be used in the manufacture of all three products. Data for the year ended 30 April 2005 was as follows: four three two drawer drawer drawer $ $ $ Total sales 410 400 123 900 427 500 Total variable costs 304 000 88 500 285 000 Allocated fixed costs 98 000 48 000 135 000 Profit (Loss) 8 400 (12 600) 7 500 It had been proposed that the three-drawer cabinet be discontinued, as it was making a loss. REQUIRED State whether this proposal should have been agreed, giving your reasons. Sales and cost data for the year ended 30 April 2006 were as follows: four three two drawer drawer drawer Sales in units 15 000 6 000 30 000 Raw materials $12 $8 $4 Variable overheads $3 $2 $2 Unit contribution $7 $6 $5 Machine hours per unit 0.5 0.5 0.4 Machine operators are paid $10 per hour. Allocation of fixed costs $98 000 $48 000 $135 000 For Examiner's Use REQUIRED Calculate the selling price per unit for each product. Calculate for each product the break-even point in both units and sales value. For Examiner's Use Calculate for each product the profit or loss for the year ended 30 April 2006. For Examiner's Use To try to improve profits for the year ending 30 April 2007, it has been suggested that a better quality, more easily worked, raw material be purchased. This would increase the cost of raw materials by five percent (5 %) but would offer savings of ten percent (10 %) on labour. Sales and other costs would remain unchanged. REQUIRED Calculate for each product and in total the profit or loss if this suggestion is put into effect.

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

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

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