9706_w14_qp_23
A paper of Accounting, 9706
Questions:
3
Year:
2014
Paper:
2
Variant:
3
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1
Asif operates a delivery service and does not keep proper accounting records. He provided the following information for the year ended 30 June 2014. $ Cash in hand at 1July 2013 3 270 Cash in hand at 30 June 2014 2 349 Cash receipts and payments: Vehicle repairs 2 400 Fuel payments for vehicles 14 301 Driver’s wages 4 748 Rent of a garage 1 600 Sundry expenses 2 972 Drawings 11 450 Receipts from sale of old vehicle 1 300 Cash stolen by Asif’s driver Cash received from customers ? REQUIRED Prepare Asif’s cash account for the year ended 30 June 2014. Additional information $ Trade receivables at 1 July 2013 Trade receivables at 30 June 2014 Bad debts written off during the year ended 30 June 2014 REQUIRED Calculate Asif’s revenue figure for the year ended 30 June 2014. Additional information The vehicle which had been sold was purchased in May 2012 for $6200. Asif’s policy is to depreciate the vehicles at 50% per annum using the reducing balance method. A full year’s depreciation is charged in the year of acquisition. No depreciation is charged in the year of disposal. At 30 June 2014 driver’s wages of $200 were owing and garage rent of $400 was prepaid. Question 1is on the next page. REQUIRED Prepare Asif’s income statement for the year ended 30 June 2014. Additional information Asif is considering introducing a system of credit control. REQUIRED Explain the benefits this may bring to the business. State two ratios that Asif could use to measure the profitability of his business.
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
1. Financial accounting (AS Level)  →  1.5. Preparation of financial statements
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2
Lance, a trader, has provided the following balances at 30 November 2014 after the preparation of the income statement for the year. $000 Profit for the year Non-current assets – at cost –accumulated depreciation Accrued expenses Cash in hand Bank overdraft Inventory Trade payables Trade receivables Bank loan (2020) Opening capital Drawings REQUIRED Prepare the statement of financial position at 30 November 2014. Lance Statement of Financial Position at 30 November 2014 Calculate, stating the formula used, the following ratios correct to two decimal places. Ratio Formula Calculation Current Liquid (acid test) Additional information Ratio Current 2.0:1 2.30:1 Liquid (acid test) 1.40:1 1.0:1 REQUIRED Evaluate the change in Lance’s liquidity position over the three years. Additional information Lance has provided the following forecast for December 2014: Sales are expected to be $75 000 of which 30% will be on a cash basis and the remainder payable the month after sale. All trade receivables outstanding at 30 November 2014 were expected to pay in full during December 2014. Purchases are expected to be $45 000 of which 40% will be cash and the remainder payable the month after purchase. All trade payables at 30 November 2014 were expected to be paid in full during December 2014. Business expenses of $12 500 will be paid in the month incurred. Depreciation on non-current assets will be $9500 per month. A loan of $25 000 will be negotiated with the bank and interest at 6% per annum will be paid on a monthly basis from December 2014 onwards. REQUIRED Complete the following cash budget for December 2014. Lance Cash budget for December 2014 $ Receipts Payments Net cash flow Opening balance Closing balance
1. Financial accounting (AS Level)  →  1.5. Preparation of financial statements
3. Financial accounting (A Level)  →  3.1. Preparation of financial statements
1. Financial accounting (AS Level)  →  1.6. Analysis and communication of accounting information
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3
KC Global Limited provides the following budgeted information. January 2015 February 2015 Production 10 000 units 10 000 units Sales 7 000 units 13 000 units Production costs per unit: Direct materials $4.50 $4.50 Direct labour $6.00 $6.00 Variable overheads $2.50 $2.50 Additional information The budgeted selling price per unit is $17. Budgeted production for the year is 120 000 units spread equally over the year. There is no opening inventory at 1 January 2015. Annual fixed overheads are budgeted to be $324 000. Fixed overheads are absorbed on a unit basis. REQUIRED Calculate the monthly breakeven point in units. Prepare forecast profit statements for January and February 2015 using absorption costing. January 2015 $ February 2015 $ Prepare forecast profit statements for January and February 2015 using marginal costing. January 2015 $ February 2015 $ Prepare a reconciliation statement showing the difference between the absorption costing profit and the marginal costing profit for January and February 2015. January 2015 $ February 2015 $ Absorption costing profit Marginal costing profit Explain why the absorption costing statement produces a different profit figure to the marginal costing statement. Additional information The directors of KC Global Limited are considering an advertising campaign starting in January 2015. This will cost $60 000 spread evenly over the year. The volume of sales and production would both increase by 10%. REQUIRED Prepare a revised profit statement for January 2015, using absorption costing. State three situations where marginal costing would help in making a short term decision. Evaluate the limitations of marginal costing.
2. Cost and management accounting (AS Level)  →  2.2. Traditional costing methods
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