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9706_w21_qp_21
A paper of Accounting, 9706
Questions:
4
Year:
2021
Paper:
2
Variant:
1
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1
Eleni owns a business selling computers. She does not maintain full accounting records. The following information is available. At 30 June $ At 1 July $ Equipment at valuation Inventory Trade receivables Provision for doubtful debts ? Other receivables: rent prepaid Trade payables Other payables: wages Bank 1420 Credit 860 Credit Cash in hand – Bank loan – A summary of receipts and payments made through the bank for the year ended 30 June 2021 was as follows: Receipts $ Receipts from credit customers 58 960 Cash sales banked 3 980 Sale of equipment Payments $ Payments to credit suppliers 39 750 Purchase of equipment General expenses Rent 6 860 Bank loan repayments 1 390 Bank charges Cash withdrawn 14 080 All cash sales are banked. REQUIRED Calculate total revenue for the year ended 30 June 2021. Additional information Of the cash withdrawn from the bank, Eleni took $450 each month for drawings and paid total wages of $7620 for the year. The remaining cash from the cash till was used to pay for general expenses. REQUIRED Prepare the cash account to calculate the amount paid in cash for general expenses. Cash account $ $ Additional information The following information is also available. Eleni wishes to write off an irrecoverable debt of $50 at 30 June 2021. She wishes to maintain the provision for doubtful debts at the same percentage as the previous year. Equipment sold during the year had a valuation of $140. REQUIRED Prepare the income statement for the year ended 30 June 2021. Eleni Income statement for the year ended 30 June 2021 Workings: Prepare an extract from the statement of financial position at 30 June 2021 to show the capital and liabilities section only. Eleni Statement of financial position at 30 June 2021 Capital and liabilities Additional information Eleni is concerned that she is not earning enough profit. She is considering increasing her prices by 5%. REQUIRED Advise Eleni whether or not she should increase her prices by 5%. Justify your answer. State three factors that a business should consider when making a provision for doubtful debts.
1. Financial accounting (AS Level)  →  1.5. Preparation of financial statements
3. Financial accounting (A Level)  →  3.1. Preparation of financial statements
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2
The following balances have been extracted from the books of account of G Limited at 1 October 2020. Account $ 6% debentures (2022–23) 50 000 Retained earnings 34 500 Revaluation reserve 28 000 During the year ended 30 September 2021 the following took place. Date Transaction 1 November 2020 Made a rights issue of one ordinary share of $1 each for every ten shares held at a premium of 20%. The issue was fully subscribed. 1 March 2021 Paid a dividend of $0.05 per share on all shares in issue at that date. 1 May 2021 Made a bonus issue of one ordinary share of $1 each for every four shares held. The directors decided to leave the reserves in the most flexible form. 30 September 2021 Revalued property downwards by $35 000. The profit for the year ended 30 September 2021 was $96 000. REQUIRED Prepare the statement of changes in equity for the year ended 30 September 2021. G Limited Statement of changes in equity for the year ended 30 September 2021 Share capital $ Share premium $ Revaluation reserve $ Retained earnings $ Total $ At 1 October 2020 28 000 34 500 At 30 September 2021 440 000 4 600 Workings: Additional information The directors of G Limited wish to raise $500 000 additional capital for expansion. They have identified two options to raise the full amount. Option 1: Issue ordinary shares of $1 each. Option 2: Issue 8% preference shares. REQUIRED Advise the directors which option they should choose. Justify your answer. Additional information The finance director has suggested that the company could issue further debentures. REQUIRED State two characteristics of a debenture.
1. Financial accounting (AS Level)  →  1.5. Preparation of financial statements
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3
Martina has prepared the following sales ledger control account for the month of August 2021. All sales are on credit. Sales ledger control account for the month of August 2021 $ $ Balance b/d 14 280 Sales returns journal Sales journal 9 540 Bank 11 860 Discounts received Balance c/d 11 470 23 820 23 820 Balance b/d 11 470 Martina produced a list of all customer account balances at 31 August 2021 totalling $10 020. She discovered that the following errors had been made in the records. Discounts allowed of $1190 had been entered in customers’ accounts but had not been entered in the control account. A credit transfer from a customer of $420 had been correctly entered in the cash book but had been credited to the customer’s account as $240. A credit balance of $60 on a customer’s account had been recorded on the list of balances as a debit balance. A contra to the purchases ledger of $860 had been entered in the customer’s sales ledger account but had not been entered in the control account. A cheque received from a customer of $380 had been returned unpaid by the bank. No entries had been made in Martina’s books of account in respect of the unpaid cheque. Martina had sent a cheque for $20 to a customer who had overpaid his account. The payment had been correctly processed in both the cash book and the customer’s account but had been posted to the purchases ledger control account in error. REQUIRED Prepare an adjusted sales ledger control account. Sales ledger control account $ $ Balance b/d 11 470 Prepare an adjusted list of sales ledger balances to agree with the adjusted sales ledger control account balance in part . $ Original total of sales ledger balances 10 020 Adjusted total of sales ledger balances Explain how the preparation of a sales ledger control account assists in the prevention of fraud. State three types of error that will not be identified by preparing a sales ledger control account.
1. Financial accounting (AS Level)  →  1.4. Reconciliation and verification
1. Financial accounting (AS Level)  →  1.2. The accounting system
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4
B Limited is a manufacturing business. The business uses marginal costing techniques and manufactures three products, Ess, Tee and Ewe. The following budgeted monthly information is available. Per unit Ess Tee Ewe $ $ $ Selling price Direct material Direct labour at $8 per hour Variable overhead Maximum monthly demand 300 units 400 units 360 units Fixed overheads are budgeted to be $96 000 per annum. REQUIRED Calculate the contribution per unit for each product. Prepare a statement to show the maximum monthly contribution and maximum monthly profit that B Limited can earn. Calculate the monthly direct labour hours that B Limited requires to meet the budgeted maximum monthly demand. Additional information Due to a shortage of skilled labour, the directors are aware that only 900 direct labour hours per month will be available from 1 December 2021. REQUIRED Calculate the maximum contribution and maximum profit for December 2021, taking into account the limited direct labour hours available. Additional information In order to overcome the shortage of skilled labour and also be able to meet maximum demand, the directors are considering paying an overtime premium of 25% and paying a total monthly bonus of $200 to be shared between all workers. REQUIRED Calculate the total contribution and total profit for the month of December 2021 if the directors decide to carry out this proposal. Explain two disadvantages to a business of offering a bonus payment to its employees. Explain two disadvantages to a business of operating a system of budgetary control.
4. Cost and management accounting (A Level)  →  4.3. Budgeting and budgetary control
2. Cost and management accounting (AS Level)  →  2.2. Traditional costing methods
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