9706_s10_qp_23 - revisedeck

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For Examiner’s Use Jasper, a sole trader, has provided the following summary of his bank receipts and payments for the year ended 30 April 2010. Dr $ Cr $ Cash and cheques 424 000 Machinery 30 400 Payments to creditors 228 000 Rent 24 200 Insurance 14 200 Wages 104 200 Postage Electricity 8 400 Sundries 4 200 Jasper’s year-end balances were as follows: At 30 April $ $ Trade receivables 46 400 ? Inventory 24 400 30 600 Trade payables 29 200 32 200 Machinery at net book value 206 400 216 000 Rent prepaid – 6 200 Insurance prepaid – 3 400 Bank ? 5 400 Cr Additional information During the year machinery with a net book value of $5600 was sold for $1000, which was paid into Jasper’s private bank account. Jasper took a salary of $28 000 which was included in the wages account. Mark-up is calculated as 75% on cost. For Examiner’s Use REQUIRED For the year ended 30 April 2010: Calculate Jasper’s ordinary goods purchased . Calculate Jasper’s sales. For Examiner’s Use Prepare Jasper’s income statement (trading and profit and loss account). For Examiner’s Use Prepare Jasper’s balance sheet at 30 April 2010.

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

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For Examiner’s Use The following information has been extracted from the accounts of Harvey Rabbit for the year ended 31 March 2010. $ Sales ledger balance at 1 April 2009 29 040 Credit sales 499 892 Cash sales 14 634 Credit sales returns 9 878 Receipts from debtors, banked 462 680 Discount allowed on credit sales 21 404 Bad debts written off 9 510 Debtors’ cheques dishonoured Contra entries 1 153 REQUIRED Prepare Harvey Rabbit’s sales ledger control account for the year ended 31 March 2010. The total of Harvey Rabbit’s sales ledger balances at 31 March 2010 was $26 845, which did not agree with the closing balance of his sales ledger control account. On checking his accounts he discovered the following errors. A credit note for $420 which had been sent to a debtor had been entered in the sales journal (day book) and posted as a sale to both accounts. A debit entry in the sales ledger for $698 had been set off as a contra entry in the purchases ledger, but no entry had been made in the control accounts. For Examiner’s Use The discount allowed account had been overstated by $310. A sales invoice for $998 had been completely omitted from the accounts. A debit balance of $2102 had been omitted from the list of debtors. A debtor who owed $896 had been declared bankrupt during March 2010. The debt had been written off in the control account, but no entry had been made in the debtor’s account. A receipt for $630 had been debited to the bank account but omitted from the debtor’s account. An entry for $816 in the sales journal (day book) had not been posted to the debtor’s account. A sales ledger account had been understated by $200. 10 A page of the sales journal (day book) with entries totalling $3856 had been omitted from total sales. The amounts had, however, been posted to the debtors’ accounts. REQUIRED Beginning with the closing balance which you have calculated in , prepare a statement showing the amended balance on the control account. Amendments to sales ledger control account For Examiner’s Use Beginning with Harvey Rabbit’s sales ledger balance of $26 845, prepare a statement amending the total of the sales ledger balance to agree with the new control account balance. State three advantages of keeping control accounts.

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

1. Financial accounting (AS Level) → 1.2. The accounting system

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For Examiner’s Use Garth Vader is a wholesaler who sells specialist cabinets. His fixed costs are $8 million. He buys in cabinet 1 for $400 and sells it for $500. As an alternative he is considering manufacturing the cabinets and has studied two methods of production. The manufacture of cabinet 2 relies more on labour whilst cabinet 3 relies more on machinery. The costs would be as follows: Cabinet 2 Cabinet 3 Variable costs per cabinet $240 $220 Additional fixed costs per production line $36 million $79.2 million Proposed selling price per cabinet $480 $520 The additional fixed costs for cabinet 3 are higher as more expensive machinery has to be leased and additional factory rent will be paid. It is assumed, whichever option is chosen, that all production will be sold. Only one type of cabinet will be sold. REQUIRED Calculate for cabinet 2 the number to be sold so that the total annual costs equal the total purchase costs for cabinet 1. Calculate for cabinet 3 the number to be sold so that the total annual costs equal the total purchase costs for cabinet 1. For Examiner’s Use Calculate the production levels in units at which the net profit for cabinet 2 would equal the net profit for cabinet 3. Calculate the profit or loss attainable for each of the three options at annual sales levels of: 200 000 units Cabinet 1 Cabinet 2 Cabinet 3 250 000 units Cabinet 1 Cabinet 2 Cabinet 3 For Examiner’s Use 300 000 units Cabinet 1 Cabinet 2 Cabinet 3 Calculate the minimum production level in units at which it would pay Garth Vader to manufacture the cabinets instead of buying in cabinet 1. State four assumptions made when using break-even analysis.

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

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

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