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9706_s08_qp_2
A paper of Accounting, 9706
Questions:
3
Year:
2008
Paper:
2
Variant:
0
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1
For Examiner's Use Amah Retto's ledger accounts for the year ended 30 April 2008 showed the following balances: $ Premises at cost 250 000 Machinery at cost 52 000 Provision for depreciation on machinery at 1 May 2007 15 600 Provision for doubtful debts at 1 May 2007 Sales 243 000 Purchases 184 000 Sales returns 2 040 Purchases returns 1 980 Carriage inwards Carriage outwards Rent received 2 420 Discount allowed 1 800 Discount received 1 300 Electricity 2 100 General expenses 9 340 Stock at 1 May 2007 13 500 Debtors 9 000 Creditors 11 460 Bank (Credit) 8 260 Cash Drawings 18 600 Long-term loan at 11 % per annum 60 000 Capital ? Additional information at 30 April 2008 Stock was valued at $15 100. No interest had been paid or provided for on the loan, which had been taken out on 1 November 2007. Amah Retto's tenant had paid only eleven months' rent; one month's rent was due and unpaid. Electricity prepaid amounted to $40. General expenses accrued amounted to $50. Debts of $200 were to be written off. Depreciation was to be provided on machinery at 40 % using the reducing balance method. Doubtful debts provision was to be 3 % of debtors at the end of the year. For Examiner's Use REQUIRED Prepare Amah Retto's trading and profit and loss account for the year ended 30 April 2008. For Examiner's Use Prepare Amah Retto's balance sheet at 30 April 2008. For Examiner's Use Use the answers to and to calculate the following ratios to two decimal places. Current ratio; Liquid ratio; Rate of stock turnover; Gross profit as a percentage of sales; Net profit as a percentage of sales. For Examiner's Use State two reasons for calculating ratios. State four user groups who might be interested in or make use of accounting ratios.
3. Financial accounting (A Level)  →  3.5. Analysis and communication of accounting information
1. Financial accounting (AS Level)  →  1.6. Analysis and communication of accounting information
1. Financial accounting (AS Level)  →  1.5. Preparation of financial statements
Open
2
For Examiner's Use A Marie Motiwala’s draft profit and loss account for the year ended 30 April 2008 was prepared by her new book-keeper and showed a loss of $100 000. The following errors were then discovered. Capital of $80 000 contributed by Marie Motiwala had been included in sales. Sales returns of $20 000 had been debited to purchases returns. No provision for depreciation on equipment had been charged for the year. Depreciation should have been provided for using the reducing balance method at 40 % per annum. The book value of equipment at 1 May 2007 was $240 000. Accrued bank interest of $10 000 payable at 30 April 2008 had been omitted from the accounts. Marie Motiwala’s drawings of $50 000 had been debited to wages. Stock valued at $10 000 at 30 April 2008 should have been valued at $1000. Stock costing $11 000 taken for Marie Motiwala’s personal use during the year had not been recorded in the accounts. A $20 000 interest free loan to an employee had been debited to the wages account. $100 000 had been debited to the equipment account. Of this amount, $25 000 should have been debited to equipment repairs. 10 Stock costing $22 000 was delivered to the business on 28 April 2008 and was included in the end-of-year stocktaking. The invoice was received and entered into the accounting records on 3 May 2008. For Examiner's Use REQUIRED Prepare JR's sales ledger control account for the month of March 2008. For Examiner's Use State three possible reasons why a debtor's account might have a credit balance. State three reasons for keeping control accounts.
3. Financial accounting (A Level)  →  3.1. Preparation of financial statements
1. Financial accounting (AS Level)  →  1.5. Preparation of financial statements
1. Financial accounting (AS Level)  →  1.4. Reconciliation and verification
Open
3
For Examiner's Use Aloysius Dixon of Dixon's Tableworks anticipates that in 2009 he will be able to sell 10 000 tables at $1100 each. However, his works manager has already produced the following figures for 2009 based on the factory's current production of 8000 tables per annum. $ $ Sales (8000 x $1100) 8 800 000 Direct materials 1 024 000 Direct wages 5 000 000 Production overhead 640 000 Sales overhead 480 000 7 144 000 Profit 1 656 000 All overheads are 50 % fixed, 50 % variable. 250 000 labour hours are worked. There are 3 options under consideration which allow sales to increase to 10 000 tables. Option 1 Purchase 2000 tables from another manufacturer at $920 each. Option 2 Lease new and improved machinery at a cost of $260 000 for the year. This would allow production of 10 000 tables per annum with no change in unit variable costs. This was previously under consideration and $40 000 had been spent on a feasibility study. Option 3 Using the existing machinery, introduce an evening shift thus providing an additional 62 500 labour hours. Wage rates for this shift would have to increase by 15 % to take into account unsocial hours to be worked. Also the additional staff needed would have to be trained at a cost of $50 000 - this cost to be absorbed in 2009. REQUIRED Calculate the original unit contribution. For Examiner's Use Prepare financial statements showing in detail the calculations for the additional profits or losses arising from each of the three options. For Examiner's Use State which option should be accepted, giving one advantage and one disadvantage, of that option.
2. Cost and management accounting (AS Level)  →  2.2. Traditional costing methods
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