9706_w13_qp_22
A paper of Accounting, 9706
Questions:
3
Year:
2013
Paper:
2
Variant:
2
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1
Joe Brown has a petrol station which has three departments, fuel, car wash and café. The following information is available for the year ended 31 December 2012. Fuel Car wash Cafe $ $ $ Revenue 735 600 30 650 61 300 Inventory at 1 January 2012 38 700 3 650 4 725 Purchases 454 320 7 240 9 620 Inventory at 31 December 2012 39 760 2 480 4 820 Direct wages 36 000 3 000 12 000 Non-current assets at cost 120 000 15 000 2 760 Accumulated depreciation 6 000 1 200 Additional information Depreciation rate 10% 15% 15% Depreciation method Straight line Reducing balance Straight line Floor area (square metres) 3 400 Other expenses for the year are: $ Rent of premises 46 288 Electricity 18 300 Administration charges 17 119 Other expenses 54 023 The expenses are split between the departments on the following basis: Rent of premises in the ratio of floor area, Electricity in the ratio 4:1:1 between fuel, car wash and café, Administration charges in the ratio of wages, Other expenses in the ratio of sales. For Examiner's Use REQUIRED Prepare a departmental income statement for the year ended 31 December 2012. For Examiner's Use Joe is considering closing the car wash department due to its poor profitability. Advise Joe on the long term effects of this decision. Joe is looking for funds to improve the business. He is considering applying for either a bank loan or an overdraft. Explain three differences between a bank loan and an overdraft.
1. Financial accounting (AS Level)  →  1.5. Preparation of financial statements
1. Financial accounting (AS Level)  →  1.3. Accounting for non-current assets
3. Financial accounting (A Level)  →  3.1. Preparation of financial statements
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2
For Examiner's Use Alec and Jean were in partnership with capitals of $90 000 and $60 000 respectively. On 1 June 2012 Alec had a debit balance on his current account of $2900 and Jean had a credit balance on her current account of $3100. On 31 May 2013 Alec had a credit balance on his current account of $3000 and Jean had a credit balance on her current account of $340. The partnership agreement stated: Interest on capital is payable at 5% per annum. Interest on drawings is charged at 8% per annum. Annual partnership salaries were Alec $14 000 and Jean $12 000. Profits and losses are to be shared in the ratio of capital invested. Alec withdrew $20 000 and Jean $22 000 during the year. REQUIRED Prepare the current account of each partner for the year ended 31 May 2013. For Examiner's Use Calculate the profit for the year ended 31 May 2013 before appropriation. Explain the term goodwill. For Examiner's Use On 1 June 2013 Alec and Jean agreed to admit Chris as a new partner. It was agreed that Chris would pay cash into the business for goodwill. Goodwill was valued at $36 000. In addition Chris also introduced a motor vehicle valued at $12 150 and inventory of $5850. The partners agreed that profits and losses are to be shared between Alec, Jean and Chris in the ratio of 3:2:1. No goodwill account is to be maintained on the books. REQUIRED Prepare the capital accounts of Alec, Jean and Chris after Chris’s admission to the partnership.
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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3
For Examiner's Use Kirkton manufactures a single product, the Kirk. The following information relates to one unit of Kirk: Per unit $ Selling price 35.00 Variable production costs 13.50 Fixed production costs 3.50 Variable selling costs 1.50 Fixed selling costs 1.00 Kirkton produces and sells 800 Kirks a week. REQUIRED Calculate the weekly breakeven point in units. Calculate the weekly breakeven point in revenue. Calculate the margin of safety in revenue. Calculate the margin of safety as a percentage. For Examiner's Use Additional information: Kirkton has four different machines that are used in the production of the Kirk. One of the machines has broken down, causing production to stop completely. The company will be without the machine for a period of four weeks and the owners have two alternatives. Lease a machine at a cost of $2000 per week. Staff will need to be trained on the new machine. This will cost $3000. Production will reduce from the current level of 800 units each week to 500 units each week. Buy in the Kirks from a competitor. Each Kirk will cost $26.25. The competitor is able to supply 800 units each week and will charge Kirkton $50.00 delivery for each 100 units. REQUIRED Calculate the profit for the four weeks if Kirkton decide to lease a machine. For Examiner's Use Calculate the profit for the four weeks if Kirkton decide to buy the Kirks from the competitor. State two advantages if Kirkton decides to buy the Kirks from the competitor rather than lease the machine. State two disadvantages if Kirkton decides to buy the Kirks from the competitor rather than lease the machine.
2. Cost and management accounting (AS Level)  →  2.2. Traditional costing methods
3. Financial accounting (A Level)  →  3.1. Preparation of financial statements
2. Cost and management accounting (AS Level)  →  2.1. Costs and cost behaviour
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