9706_w15_qp_21
A paper of Accounting, 9706
Questions:
3
Year:
2015
Paper:
2
Variant:
1
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1
The City Cricket Club’s Receipts and Payments Account for the year ended 30 September 2015 is as follows: Receipts Payments $ $ Balance at 1 October 2014 5 604 Supplies for refreshments 2 697 Subscriptions received 6 650 Groundsman’s wages 3 500 Sale of refreshments 4 430 New equipment 3 600 Sale of advertising space 2 600 Team travelling expenses Donations Rent of the ground 4 500 Sale of old equipment 1 500 Balance at 30 September 2015 6 315 21 554 21 554 Other balances were as follows: at 1 October 2014 at 30 September 2015 $ $ Trade payables for refreshments Inventory of refreshments Subscriptions in advance Subscriptions in arrears Life membership fund 2 800 ? Equipment at cost 10 700 ? Accumulated depreciation 4 800 ? 5% Loan account repayable in 2017 5 000 Additional information Some of the subscriptions in arrears at 1 October 2014, amounting to $50, were never received and are to be written off. The equipment is depreciated monthly at 20% per annum using the straight-line basis. Old equipment sold on 31 March 2015 had been purchased on 1 January 2012 for $5000. New equipment was purchased on 1 April 2015. Life membership costs $40 and there were 10 new members during the year included in subscriptions received. The life membership is written off over 10 years. REQUIRED Prepare the refreshments trading account for the year ended 30 September 2015. Prepare the club’s income and expenditure account for the year ended 30 September 2015. Prepare the club’s statement of financial position at 30 September 2015. Explain the accounting treatment of a life membership fund. Explain why the balance on the club’s bank account is not the same as its surplus.
3. Financial accounting (A Level)  →  3.1. Preparation of financial statements
1. Financial accounting (AS Level)  →  1.2. The accounting system
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2
Alex and Barry have been in partnership for many years. The terms of the partnership agreement are as follows. Interest is payable to the partners on their loan accounts at 10% per annum. Interest on capital is allowed at the rate of 5% per annum. Barry is entitled to a salary of $6000 per annum. Interest on drawings is charged at the rate of 4% on the annual drawings. 5 Profits and losses are shared in the ratio of 3:1. The following balances were taken from their books of account at 31 May 2014. Alex Barry $ $ Capital account 90 000 60 000 Current account 14 000 Cr 12 500 Dr Loan account 15 000 16 000 During the year ended 31 May 2015, drawings for Alex totalled $5000 and for Barry $12 000. After the deduction of loan interest, the draft profit for the year ended 31 May 2015 was $90 000. REQUIRED Prepare the partnership appropriation account for the year ended 31 May 2015. Prepare the current accounts of Alex and Barry for the year ended 31 May 2015. Current accounts Details Alex Barry Details Alex Barry $ $ $ $ «« « « « «« « «« « «« « « « «« « «« « «« « « « «« « «« « «« « « « «« « «« « «« « « « «« « «« « «« « « « «« « «« « «« « « « «« « «« « «« « « « «« « «« « «« « « « «« « «« « «« « « « «« « «« « «« « « « «« « «« « «« « « « «« « «« « «« « « « «« « «« « «« « « « «« « «« « «« « « « «« « «« « «« « « « «« « «« « «« « « « «« « «« « «« « « « «« « «« « Additional information The partners agreed that it would be beneficial to admit another partner and on 1 June 2015 Cesar joined the partnership. REQUIRED State two possible advantages to Alex and Barry of the admission of a new partner. Additional information Cesar joined the partnership on 1 June 2015 and paid $100 000 into the partnership bank account as his capital. It was agreed that the goodwill was to be valued at $60 000 and that no goodwill account would remain in the books of account. The new profit sharing ratio for Alex, Barry and Cesar from 1 June 2015 was to be 3:2:1. REQUIRED Prepare the capital accounts of Alex, Barry and Cesar to show the admission of Cesar on 1 June 2015. Capital accounts Details Alex Barry Cesar Details Alex Barry Cesar $ $ $ $ $ $ «« « «. «« « «« « «« « «« « «. «« « «« « «« « «« « «. «« « «« « «« « «« « «. «« « «« « «« « «« « «. «« « «« « «« « «« « «. «« « «« « «« « «« « «. «« « «« « «« « «« « «. «« « «« « «« « «« « «. «« « «« « «« « «« « «. «« « «« « «« « «« « «. «« « «« « «« « «« « «. «« « «« « «« « Additional information When the books of account were finally checked the following errors were discovered. The sales day book had been undercast by $20 000. Closing inventory valued at cost of $5000 had a net realisable value of $3000. Repairs to motor vehicles of $7000 had been wrongly debited to the motor vehicles at cost account. (Ignore any depreciation.) A purchase invoice of $4000 had been wrongly entered in the books as $400. REQUIRED Prepare a statement to show the corrected profit for the year ended 31 May 2015.
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
Highlander Limited has two production departments, Machining and Assembling, and one service department, Maintenance. The following estimates had been made for year 1. Annual budgeted information Machining Assembling Maintenance Total Number of employees Floor area (square metres) 7 000 5 000 4 000 16 000 Power (kilowatt hours) 70 000 52 500 17 500 140 000 Direct machine hours 14 000 - 14 400 Direct labour hours 1 000 6 000 - 7 000 $ $ $ $ Indirect material Indirect wages 2 720 1 480 5 060 Value of machinery 52 000 48 000 - 100 000 Annual budgeted overheads $ Rent 12 800 Machinery depreciation 10 000 Power 7 200 Supervision of employees 6 400 Indirect materials Indirect labour 5 060 Total overheads 42 348 REQUIRED Apportion the budgeted overheads to the three departments and re-apportion the maintenance department costs to the two production departments on the basis of the value of machinery. Overhead Analysis Sheet Overheads Basis of Apportionment Machining Assembling Maintenance Totals $ $ $ $ Rent floor area Machinery depreciation value of machinery Power kw hours Supervision of employees number of employees Indirect materials allocated Indirect labour allocated re-apportionment of maintenance department overheads Additional information The Machining department overhead absorption rate is applied on a machine hour basis. The Assembling department overhead absorption rate is applied on a direct labour hour basis. REQUIRED Calculate overhead absorption rates for each of the two production departments. Calculations should be to two decimal places. Machining department Assembling department Additional information The following information relates to Job 68 which was completed during year 1. Machining Assembling $ $ Direct materials 3 500 Direct labour 1 400 Machine hours Direct labour hours REQUIRED Prepare a statement to show the total cost of Job 68. Clearly identify the prime cost and the total overhead cost. Calculate the selling price of Job 68 if the profit margin is 20% of selling price. Round-up your answer to the nearest whole number. Additional information At the end of year 1 the estimated cost figures were compared with the actual cost figures. Machining department Indirect wages amounted to $2020 and not the $2720 estimated. Assembling department Actual direct labour hours used in the department totalled 5570 hours and not the 6000 hours estimated. REQUIRED Explain the meaning of the following terms. Illustrate your answer by reference to the additional information and, where appropriate, your answer to part . Overhead over absorption Overhead under absorption
2. Cost and management accounting (AS Level)  →  2.2. Traditional costing methods
4. Cost and management accounting (A Level)  →  4.1. Activity based costing (ABC)
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