9706_s14_qp_23 - revisedeck

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The treasurer of the Ocean Fishing Club has prepared the following receipts and payments account for the year ended 31 March 2014. Receipts Payments $ $ Balance at 1 April 2013 6 570 Payments to trade payables 2 974 Subscriptions received 7 400 Shop wages 3 670 Donations 1 450 Administration expenses 2 790 Receipts from annual family day 2 300 New equipment 5 600 Shop takings 7 690 Repairs to equipment 2 500 Transfer to deposit account 7 000 _____ Balance c/d 25 410 25 410 1 April 2013 31 March 2014 $ $ Shop inventory Trade payables for shop Deposit account 6 000 13 000 Equipment at cost 9 800 ? Provision for depreciation 2 940 ? Repairs to equipment owing Shop wages due Shop fittings at net book value Additional information The donations are to be capitalised. There are 350 members who pay an annual subscription of $20. At 1 April 2013, 30 members had paid in advance for the coming year but 24 members had not yet paid for the year ended 31 March 2013. At 31 March 2014, 10 members had yet to pay and some members had paid in advance but the treasurer has not yet calculated how many. Interest of 5% per annum is credited to the deposit account by the bank on 31 March each year. This has not yet been entered in the books. The transfer of $7000 to the deposit account was made on the 31 March 2014. Equipment is depreciated at 15% per annum using the reducing balance method. A full year’s depreciation is charged in the year of purchase. REQUIRED Prepare the shop trading account for the year ended 31 March 2014. Prepare the income and expenditure account for the year ended 31 March 2014. Prepare the statement of financial position at 31 March 2014. Additional information The club wishes to buy a new boat for use by members. It will cost $12 500. REQUIRED Suggest three ways the club could raise the finance to purchase the new boat. State one advantage and one disadvantage of each method you have suggested. 1 Advantage Disadvantage

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

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Helen Ossetia provides the following information for the year ended 31 May 2013. Non-current assets Buildings Machinery Motor vehicles Total $000 $000 $000 $000 Cost Accumulated depreciation at 31 May 2013 (120) (800) (300) (1220) Net Book Value Depreciation charge for the year A full year’s depreciation is charged in the year of purchase and no depreciation is charged in the year of disposal. Buildings and machinery are depreciated using the straight line method. Motor vehicles are depreciated using the reducing balance method. REQUIRED Explain why Helen needs to depreciate her non-current assets. State three causes of depreciation of motor vehicles. Calculate the rate of depreciation used by Helen at 31 May 2013 to depreciate each class of non-current asset. Explain why machinery is usually depreciated using the straight line method while motor vehicles are usually depreciated using the reducing balance method. Additional information During the year ended 31 May 2014: Helen bought new machinery costing $720 000 and sold old machinery which had cost $160 000. The old machinery had been bought on 1 December 2011. Helen bought a new motor vehicle. She traded in an old vehicle valued at $40 000 and paid the balance of $160 000, by cheque. The trade in vehicle had cost $100 000 and had a net book value of $60 000 at the date of disposal. A new building costing $1 000 000 was completed during the year. REQUIRED Complete the non-current asset schedule below for the year ended 31 May 2014. Buildings Machinery Motor vehicles Total $000 $000 $000 $000 COST Balance at 31 May 2013 Additions Disposals Balance at 31 May 2014 DEPRECIATION Balance at 31 May 2013 Charge for the year Disposals Balance at 31 May 2014 NBV at 31 May 2014 NBV at 31 May 2013

1. Financial accounting (AS Level) → 1.3. Accounting for non-current assets

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Chester Limited manufactures clothing. The work takes place in three production departments – cutting, sewing and finishing. In addition, the business has two service departments – stores and maintenance. The budgeted overheads for the year ending 31 March 2014 were as follows: $ Indirect wages 185 400 Rent and rates 38 500 Power 32 600 Light and heat 18 800 Machine depreciation 73 700 Buildings insurance 18 200 The following information is available. Cutting Sewing Finishing Stores Maintenance Number of indirect employees Floor space (square metres) 5 000 6 000 3 000 3 000 4 000 Net book value of machinery ($) 86 000 64 000 12 000 - 5 000 Machine hours 40 000 50 000 4 000 - - Direct labour hours 84 000 22 000 56 000 - - Raw material issues 75% 17.5% 2.5% - 5% Chester Limited uses a single overhead rate to absorb all overheads on a direct labour hour basis. REQUIRED State one advantage and one disadvantage to Chester Limited of using a single overhead absorption rate. Advantage Disadvantage Calculate, correct to two decimal places, the overhead absorption rate for the year ending 31 March 2014. Additional information The directors of Chester Limited are considering changing the basis for recovering overheads to calculate a separate overhead absorption rate for each production department. REQUIRED Apportion the costs to the five departments and re-apportion the service departments’ costs to production departments using a suitable basis. Total $ Cutting $ Sewing $ Finishing $ Stores $ Maintenance $ Indirect wages Rent and rates Power Light and heat Machine depreciation Buildings insurance Reapportion stores Reapportion maintenance Calculate, correct to two decimal places, appropriate overhead absorption rates for each production department. Additional information The actual results for the year were as follows: Cutting Sewing Finishing Factory overheads $168 180 $146 320 $51 870 Direct labour hours 85 200 20 950 58 140 Direct machine hours 42 330 52 450 4 280 REQUIRED Calculate the under- or over-absorption of overheads for each production department. Cutting $ Sewing $ Finishing $ Manufacturing businesses classify costs by function. State three functional groups of costs.

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

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