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9706_w06_qp_2
A paper of Accounting, 9706
Questions:
3
Year:
2006
Paper:
2
Variant:
0
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1
Examiner's Use Frank and Ernest have been in partnership for some years, sharing profits and losses in the ratio 2 : 1. The partnership Balance Sheet at 31 January 2006 was as follows: Balance Sheet at 31 January 2006 $ $ $ Fixed Assets at Net Book Value Motor vehicles 58 200 Equipment 35 400 Fixtures and fittings 39 000 132 600 Goodwill 10 000 142 600 Current Assets Stock 64 000 Trade debtors 45 600 Bank 19 200 128 800 Amounts due within 1 year Trade creditors 22 400 Net current assets 106 400 249 000 Capital accounts Frank 80 000 Ernest 120 000 200 000 Current accounts Frank 35 400 Ernest 13 600 49 000 249 000 Frank and Ernest, who had been renting business premises, accepted an offer by Devious to move to his premises on 1 February 2006 on condition that he would be accepted into the partnership on that date. Additional information: The new partnership commenced on 1 February 2006 with Frank, Ernest and Devious sharing profits and losses in the ratio 2 : 1 : 1. The new partnership took ownership of Devious’s premises on 1 February 2006 at a valuation of $196 000. Goodwill was revalued at 1 February 2006 at $30 000 but would not be shown in the balance sheet in the future. Equipment was revalued at $34 100 on 1 February 2006. Stock at 1 February 2006 was valued at $63 000. Current Accounts will remain separate. For Examiner's Use REQUIRED Prepare the partnership Goodwill account at 1 February 2006 following the amendments. Prepare the partnership Revaluation account at 1 February 2006 following the amendments. For Examiner's Use Prepare Capital accounts for Frank, Ernest and Devious, in columnar format. For Examiner's Use Prepare the Balance Sheet of Frank, Ernest and Devious at 1 February 2006. For Examiner's Use Discuss the treatment of Goodwill in partnership accounts, with particular reference to retiring and incoming partners.
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
Examiner's Use The following balances occur in Delboi’s books of account at 30 September 2006. $000 Purchases Sales Stock at 1 October 2005 Fixed assets Debtors Creditors Bank 15 Long-term loan from bank at 10% per annum Loan interest paid Operating costs Drawings Capital ? Additional information: Stock at 30 September 2006 was valued at $12 000. From the above information the following trading and profit and loss account has been prepared. Trading and Profit and Loss Account for year ended 30 September 2006 $000 $000 Sales Less cost of sales Opening stock Purchases Closing stock Gross profit Operating costs Loan interest Net Profit For Examiner's Use REQUIRED Prepare Delboi’s Balance Sheet at 30 September 2006, showing his net current assets. Calculate the following to two decimal places. Net profit ratio For Examiner's Use Current ratio Acid test ratio Rate of Stockturn Return on owner’s capital employed Return on total capital employed Debtors’ collection period in days Creditors’ payment period in days For Examiner's Use Delboi’s gross profit ratio for the year ended 30 September 2006 is 30.83 %, but has in previous years been constant at 35 %. He discovers that his new assistant, Rodders, is stealing goods. REQUIRED Calculate, at cost price, the value of goods that Rodders is stealing. REQUIRED State and explain one advantage and one disadvantage of using ratio analysis as a means of evaluating performance. Advantage Disadvantage
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
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3
Examiner's Use The following Contribution/Sales chart was prepared for Larry Ltd for the first year of business. Larry Ltd – Profit (Contribution/Sales) Chart $2000 $4000 $6000 $8000 $10 000 $4000 $3000 $2000 $1000 $1000 $2000 $3000 $4000 Selling price is $30 per unit Fixed costs $2000 Variable costs are $9.00 per unit All of the output of 300 units is sold. REQUIRED State what each of the numbers 1, 2, 3 and 4 on the chart represent. Calculate the break-even point in both units and sales value. The formula for your calculations must be shown. For Examiner's Use Define and explain margin of safety. Calculate the margin of safety in units and in value. In the second year of business, expected production and sales is 400 units, and fixed costs are expected to rise by 15 %. Selling price and variable costs will remain as before. REQUIRED Calculate the anticipated profit in the second year of business. Prepare a break-even chart for the second year of business. $12 000 $10 000 $8000 $6000 $4000 $2000 For Examiner's Use REQUIRED State four assumptions made when using break-even charts.
2. Cost and management accounting (AS Level)  →  2.2. Traditional costing methods
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