9706_s14_qp_21
A paper of Accounting, 9706
Questions:
3
Year:
2014
Paper:
2
Variant:
1
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1
Shane Limited is a small manufacturing company. The directors provided the following information for the six months ended 31 December 2013. $000 Trade receivables at 1 July 2013 Trade receivables at 31 December 2013 Cash received from trade receivables Sales returns Bad debts All sales are on credit. REQUIRED Prepare a sales ledger control account to calculate Shane Limited’s sales for the 6 months ended 31 December 2013 REQUIRED Prepare Shane Limited’s manufacturing account for the 6 months ended 31 December 2013. Prepare Shane Limited’s income statement for the 6 months ended 31 December 2013. Explain the following concepts: Matching Materiality
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
Richard commenced business on 1 May 2011. At the end of the first year of trading an extract from his statement of financial position showed: Non-current assets Cost $ Accumulated Depreciation $ Net book value $ Freehold land and Buildings 100 000 2 000 98 000 Machinery 64 000 16 000 48 000 Motor vehicle 12 000 3 600 8 400 Richard has a policy to depreciate non-current assets as follows: • Buildings at 2% per annum on cost. • Machinery at 25% per annum on cost. • Motor vehicles at 30% per annum using the reducing balance method. • Depreciation is charged for each month of ownership. On 1 August 2012 additional machinery, costing $18 000, was purchased. On 1 January 2013 a new motor vehicle costing $24 000 was purchased. On the same date the old motor vehicle was traded in. Richard received an allowance of $2 600 against the cost of the new vehicle. The vehicle disposed had originally cost $12 000 and was purchased on 1 May 2011. All payments and receipts for purchases and disposals were in cash. REQUIRED Prepare the following ledger accounts for the year ended 30 April 2013. Dates are not required. Motor vehicles (at cost) Provision for depreciation of motor vehicles Disposal of motor vehicles Calculate the depreciation charge for the year ended 30 April 2013 to be shown in the income statement, clearly identifying the amount charged for each category of asset. Additional information Richard is considering the admission of a partner and feels that he should be rewarded for his efforts in starting and developing the business. His accountant has advised him that there is an asset called goodwill. REQUIRED Explain the meaning of the term goodwill and suggest two reasons how it may arise. Explain how goodwill should be treated in the books of partnership.
1. Financial accounting (AS Level)  →  1.3. Accounting for non-current assets
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3
Airlie Limited manufactures one product. The following information is available for the production of one unit of product for the year ending 30 June 2014. $ Selling price 32.00 Direct materials 6.50 Direct labour 8.50 Fixed factory overheads 5.00 Variable factory overheads 3.00 Fixed selling and administration overheads 3.50 Variable selling and administration overheads 2.50 The budgeted output is 18 000 units per year, which represents 75% of total production capacity. REQUIRED Calculate the breakeven point in units. Calculate the breakeven point as a percentage of capacity. Prepare a marginal cost statement to show Airlie Limited’s budgeted total profit for the year ending 30 June 2014 based on the budgeted output of 18 000 units. Marginal cost statement year ending 30 June 2014 $ $ Additional information The directors are considering purchasing additional machinery at a cost of $45 000. This will increase capacity by 10%. The machinery will be written off over five years, with an estimated residual value of $5000. The directors plan to reduce the selling price by 12.5% and this will increase demand by 50%. Fixed selling and administration overheads will increase by 10%. REQUIRED Calculate the revised breakeven point in units. Calculate the revised breakeven point as a percentage of capacity. Prepare a marginal cost statement to show Airlie Limited’s revised total profit for the year ending 30 June 2014 if the machinery is purchased. Revised marginal cost statement year ending 30 June 2014 $ $ Advise the directors whether they should go ahead with their plans. Give reasons for 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
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