9706_w22_qp_21 - revisedeck

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The directors of Y Limited have provided the following balances at 30 June 2022. $ 6% debentures (2025–2026) 60 000 Administrative expenses 89 540 Bank overdraft 1 440 Carriage inwards 4 310 Delivery vehicles – valuation 74 000 Distribution costs 72 910 Dividends paid 6 400 Finance costs 1 800 Inventory at 1 July 2021 105 600 Office equipment – cost 54 600 Office equipment – provision for depreciation 22 300 Provision for doubtful debts 3 540 Purchases 338 200 Retained earnings 16 920 Returns inwards 7 550 Revenue 615 300 Share capital (ordinary shares of $1 each) 80 000 Trade payables 48 650 Trade receivables 93 240 The following information is also available. Inventory at 30 June 2022 was valued at $126 800. Inventory at 30 June 2022 included damaged goods costing $3200 that could be sold for $3950 after repairs costing $910. The delivery vehicles have an estimated value at 30 June 2022 of $62 000. Office equipment is to be depreciated at 10% per annum using the reducing balance method. Administrative expenses included $1800 office rent for the three months ending 31 August 2022. Distribution costs of $850 were owing at 30 June 2022. The 6% debentures (2025–2026) were issued in 2017. An irrecoverable debt of $490 is to be written off to administrative expenses. The provision for doubtful debts is to be maintained at 4% of trade receivables. 10 There is no interest charged on the bank overdraft. REQUIRED Prepare the income statement for the year ended 30 June 2022. Y Limited Income Statement for the year ended 30 June 2022 $ Revenue Cost of sales Gross profit Administrative expenses Distribution costs Profit from operations Finance costs Profit for the year Workings: Cost of sales Administrative expenses Distribution costs Prepare the statement of financial position at 30 June 2022. Y Limited Statement of Financial Position at 30 June 2022 Additional information The directors of Y Limited wish to repay the 6% debentures (2025–2026) early. They are considering making a rights issue of one ordinary share for every two shares held at a premium of 50%. REQUIRED Advise the directors whether or not they should make a rights issue of ordinary shares to repay the debentures. Justify your answer.

1. Financial accounting (AS Level) → 1.5. Preparation of financial statements

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Bharti owns a small business. The following information was extracted from her accounting records. Balances at 1 July 2021 $ Delivery vehicles cost 52 000 provision for depreciation 14 000 Extract from asset register Date of purchase Vehicle Cost $ 1 July 2019 DV1 18 000 1 July 2020 DV2 34 000 On 1 October 2021, Bharti purchased a new delivery vehicle (DV3) costing $26 000. She paid $14 500 by cheque and the balance was settled by part-exchange of the old delivery vehicle, DV1. Bharti depreciates delivery vehicles using the straight-line method on a month-by-month basis. The estimated useful life of all delivery vehicles is five years with no residual value. REQUIRED Prepare the following ledger accounts for the year ended 30 June 2022. Delivery Vehicles – Cost Date Details $ Date Details $ State one reason why non-current assets are depreciated, with reference to an appropriate accounting concept. Explain one difference between capital expenditure and revenue expenditure. State one example of a: capital receipt revenue receipt

1. Financial accounting (AS Level) → 1.3. Accounting for non-current assets

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The directors of H Limited provided the following details from the statement of financial position at 30 September 2021. $ Equity and reserves Share capital (ordinary shares of $0.50 each) 200 000 Share premium 50 000 Retained earnings 120 000 During the year ended 30 September 2022, the following transactions took place. Date Transaction 1 November 2021 Paid a final dividend of $0.06 per ordinary share. 1 January 2022 Made a rights issue of two ordinary shares for every five shares held at a price of $0.60. The issue was fully subscribed. 1 July 2022 Paid an interim dividend of $0.02 per ordinary share. 31 August 2022 Made a bonus issue of one ordinary share for every four shares held. The directors decided to leave the reserves in the most flexible form. REQUIRED Prepare journal entries to record transactions 1 – 4. Dates and narratives are not required. Workings: State three reasons why a company may make a bonus issue of shares. State two features of preference shares.

1. Financial accounting (AS Level) → 1.5. Preparation of financial statements

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Mandeep owns two manufacturing businesses. REQUIRED State what is meant by: Variable costs Fixed costs Semi-variable costs Additional information One of Mandeep’s businesses manufactures three products, Ess, Tee and Ewe. The following monthly budgeted information is available for December 2022. Per unit Ess Tee Ewe Selling price $90 $105 $150 Contribution $41.50 $45.00 $55.20 Maximum monthly demand 80 units 50 units 75 units Budgeted fixed overheads are absorbed at $14 per unit based on maximum monthly demand. REQUIRED Calculate the total maximum contribution and also total maximum profit that Mandeep can earn in December 2022. Additional information The business uses the same material to manufacture Ess, Tee and Ewe. The following information is available for direct material. Per unit Ess Tee Ewe Direct material ($6 per metre) 5 metres 6 metres 8 metres REQUIRED Calculate the total material (in metres) required to meet the maximum demand in December 2022. Additional information Mandeep has been told that due to a national shortage of material, he will only be able to obtain 1000 metres of material each month for the next three months. REQUIRED Prepare a statement to show the maximum contribution and also maximum profit that Mandeep can earn in December 2022 taking account of the shortage of material. Additional information Mandeep made enquiries and found an overseas supplier who would be able to provide enough material to meet his requirements each month. Mandeep has never used this supplier before. He has been assured that the material will be of a similar quality to his current supply and that the price would be $5 per metre. REQUIRED Advise Mandeep whether or not he should purchase all future supplies of material from the overseas supplier. Justify your answer. Additional information Mandeep is currently preparing budgets for his other business for the next year. He operates a system of absorption costing and provides the following information for one unit of product. Direct material 6 kg at $4.80 per kg Direct labour Machining department 2 hours at $9 per hour Assembly department 3 hours at $8 per hour Overheads Machining department 2 direct labour hours 3 machine hours Assembly department 3 direct labour hours 0.5 machine hours Overhead absorption rates Machining department $6.75 per machine hour Assembly department $4.60 per direct labour hour REQUIRED Calculate the price per unit that Mandeep should charge customers in order to obtain a 20% profit margin. State three benefits to a business of preparing budgets. State two limitations of budgetary control.

2. Cost and management accounting (AS Level) → 2.1. Costs and cost behaviour

4. Cost and management accounting (A Level) → 4.2. Standard costing

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