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9706_s20_qp_22
A paper of Accounting, 9706
Questions:
4
Year:
2020
Paper:
2
Variant:
2
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1
Tariq owns a retail business but does not maintain full accounting records. All goods are purchased on credit, but all sales are on a cash basis. Tariq provided the following information for the year ended 30 September 2019. $ Trade payables 1 October 2018 4 980 30 September 2019 7 220 Payments to trade payables 70 300 Discounts received REQUIRED Calculate credit purchases for the year ended 30 September 2019. Additional information Assets and other liabilities 30 September 1 October $ $ Furniture and equipment at valuation 28 300 26 800 Inventory 8 080 7 410 Other receivables: rent prepaid – Cash at bank 1 960 3 360 Cash in hand Bank loan 15 000 12 000 Other payables: rent accrued 1 040 Summary of information taken from bank statements $ Receipts Cash takings banked 112 400 Additional bank loan 3 000 Payments Trade payables 70 300 Rent of premises 14 930 New furniture 5 200 Accountant’s fees Loan interest Drawings 25 150 Tariq took goods for personal use valued at cost $390 during the year. REQUIRED Calculate the depreciation of furniture and equipment for the year ended 30 September 2019. Additional information Tariq took some cash from the cash box as drawings during the year. However, no record was made of the amounts withdrawn. The following information is also available about cash. $ Cash sales 133 200 Wages of assistant 18 800 REQUIRED Calculate Tariq’s cash drawings for the year ended 30 September 2019. Prepare the income statement for the year ended 30 September 2019. Tariq Income statement for the year ended 30 September 2019 Workings: Explain the accounting concepts of: business entity substance over form. Additional information Tariq has become concerned about his business’s liquidity. He is considering two options. Option 1: reduce the inventory levels Option 2: delay payments to suppliers REQUIRED Advise Tariq which of these actions he should take. Justify your advice.
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
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2
Q Limited is a small wholesale business. It uses the reducing balance method of depreciation to depreciate delivery vehicles. REQUIRED Explain one advantage and one disadvantage to a business of using the reducing balance method of depreciation. Advantage Disadvantage Additional information Delivery vehicle A was purchased on 1 January 2018 for $36 000. Delivery vehicle B was purchased on 1 April 2018 for $40 000. Depreciation of 20% per annum has been provided annually using the reducing balance method. A full year’s depreciation is charged in the year of acquisition and none in the year of disposal. The business’s financial year end is 31 December. REQUIRED Calculate the balance of the delivery vehicles provision for depreciation account at 31 December 2019. Additional information On 1 February 2020 delivery vehicle C was purchased at a cost of $38 000. Delivery vehicle B was sold in part-exchange for delivery vehicle C. A cheque for $30 000 was paid on that date in full settlement of the amount remaining after part-exchange. REQUIRED Prepare the delivery vehicles cost account. Delivery vehicles cost account $ $ Additional information Delivery vehicles are depreciated because they are subject to wear and tear. REQUIRED State two reasons, other than wear and tear, for depreciating non-current assets.
1. Financial accounting (AS Level)  →  1.3. Accounting for non-current assets
Open
3
Xu and Zoe have been in partnership for a number of years. They decided to dissolve their partnership on 1 October 2019. REQUIRED State three reasons why a partnership might be dissolved. Additional information The partners did not have a formal agreement on sharing of profits and losses. At the date of the dissolution the partnership’s statement of financial position was as follows. Statement of financial position at 1 October 2019 Assets $ $ Non-current assets at net book value Motor vehicle 19 400 Furniture and equipment 11 900 31 300 Current assets Inventory 7 480 Trade receivables 11 200 18 680 Total assets 49 980 Capital and liabilities Capital accounts Xu 18 000 Zoe 22 000 40 000 Current accounts Xu (2 480) Zoe (2 050) Total capital and current accounts 37 950 Loan account: Xu 4 300 Current liabilities Trade payables 5 400 Bank overdraft 2 330 7 730 Total capital and liabilities 49 980 The following information is also available. Xu took the motor vehicle at an agreed value of $15 100. The account of a credit customer, $800, had to be written off as irrecoverable. The accounts of remaining trade receivables were settled in full less a 5% cash discount. Other assets were sold for cash. $ Furniture and equipment Inventory The accounts of trade payables were settled in full less a 5% cash discount. The costs of dissolution, $620,were paid by cheque. REQUIRED Prepare the realisation account. Realisation account $ $ Calculate the amount due to, or from, Xu as a result of the dissolution.
3. Financial accounting (A Level)  →  3.1. Preparation of financial statements
1. Financial accounting (AS Level)  →  1.5. Preparation of financial statements
Open
4
DL Limited will soon be introducing a system of budgetary control. The directors are aware that this should provide a number of advantages. However, they are not sure how budgetary control will affect the company’s departmental managers. REQUIRED Explain three ways in which the introduction of a system of budgetary control will affect the departmental managers of a business. Additional information DL Limited manufactures a single product at one of its factories. The following information is available about one unit of production. Selling price $69 Direct materials 2 kg at $3.30 per kg Direct labour 5.2 hours at $8.30 per hour Other variable costs $2.24 The factory’s fixed costs are $374 000 per annum. The factory has the capacity to make 28 000 units per annum in normal working conditions. REQUIRED Calculate the contribution per unit. Additional information The annual target profit for this factory is $50 000. During the year ended 31 December 2019 24 500 units were made and sold and the target profit was not achieved. REQUIRED Calculate by how much the target profit was not achieved for the year ended 31 December 2019. REQUIRED Calculate the annual profit if the directors choose: Option A Option B Advise the directors which option they should choose, taking account of financial and non-financial factors. Justify your choice.
4. Cost and management accounting (A Level)  →  4.3. Budgeting and budgetary control
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