7707_w24_qp_23
A paper of Accounting, 7707
Questions:
5
Year:
2024
Paper:
2
Variant:
3
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1
Jenny runs a small trading business. Jenny received her bank statement which showed a credit balance of $1367 on 29 February 2024. On the same date her bank column in her cash book showed an overdrawn balance of $1933. When comparing her bank statement and cash book she found that the following items appeared on her bank statement and not in her cash book: February $ M Stores, a credit customer, had paid by bank transfer 1 900 Interest received A cheque previously received from C Stores had been dishonoured 1 121 Bank charges A direct debit for electricity had been taken The following items appeared in her cash book but not on her bank statement February $ A cheque paid to B Properties 1 025 A payment by credit transfer to pay for rent and insurance 2 300 A cheque received from a credit customer Y Traders was paid into the bank Upon investigation, she discovered the following error: A cheque made payable to D Sports $45 had been recorded in the bank column of her cash book. The cheque had been written from her personal account to pay for her gym membership. REQUIRED: Update the bank column of Jenny’s cash book. Balance the account and bring down the balance on 1 March 2024. Jenny Cash book – bank columns Date Details $ Date Details $ Prepare a bank reconciliation statement at 29 February 2024. Start with the balance from Jenny’s bank statement. Jenny Bank reconciliation at 29 February 2024 $ $ Suggest two advantages of preparing a bank reconciliation statement. Explain why a bank overdraft is shown as a debit balance on a bank statement. Jenny is concerned about her bank overdraft and is considering adding additional capital into the business from her personal funds. REQUIRED: Advise Jenny whether she should contribute additional capital to pay off her bank overdraft. Justify your answer.
3. Verification of accounting records  →  3.3. Bank reconciliation
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2
Ali and Sai are in partnership. Their financial year ends on 30 June. Their partnership agreement includes the following items. Interest on capital is allowed at 6% per annum. Interest on drawings is charged at 5%. Sai is entitled to a partnership salary of $10 050 per annum. Ali and Sai share residual profits and losses in the ratio 3:2. Ali and Sai have provided the following information: Ali Sai $ $ Drawings for the year ended 30 June 2024 11 000 16 000 Capital at 1 July 2023 60 000 40 000 Current account at 1 July 2023 1800 debit 250 credit Profit for the year before interest on loan was $42 700. Ali provided a loan to the partnership of $10 000 at an interest rate of 5% per annum. The interest payment for the year ended 30 June 2024 has been made. The partnership has no other loans. REQUIRED: Prepare the profit and loss appropriation account on page 7 for the year ended 30 June 2024. Prepare the capital and current accounts for Sai for the year ended 30 June 2024 and bring down the balances on 1 July 2024. Sai Capital account for the year ended 30 June 2024 Date Details $ Date Details $ Sai Current account for the year ended 30 June 2024 Date Details $ Date Details $ State two disadvantages of operating as a partnership. Prepare the journal entry to record the payment of interest on the loan provided by Ali. A narrative is not required. Ali & Sai Journal Details Debit $ Credit $
5. Preparation of financial statements  →  5.2. Partnerships
4. Accounting procedures  →  4.1. Capital and revenue expenditure and receipts
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3
Natalie prepared her trial balance at the end of the year 31 March 2024. The totals did not agree and she had to open a suspense account. The debit side of the trial balance was $357 higher than the credit side. Natalie later discovered the following errors. A bank transfer, $420, received from a credit customer Sarah had been correctly recorded in the bank but no other entry had been made. Natalie contributed a personal vehicle to the business valued at $7000. This had been debited to the capital account and credited to the vehicle maintenance account. Purchases of $270 had been correctly entered in the suppliers account but had been debited as $207 in the purchases account. No entry had been made for general expenses, $126, paid by bank transfer. Cash drawings of $200 had been debited to the cash account and credited to the drawings account. REQUIRED: Prepare the journal entries on page 11 required to correct errors 1 to 5. Narratives are not required. Prepare the suspense account at 31 March 2024. Natalie Suspense Account Date Details $ Date Details $ Complete the table by identifying the type of errors that occurred in errors 4 and 5. Error Number Error type Error 4 Error 5 Complete the table below by placing a tick (3) in the appropriate column to indicate the effect on the profit for the year after correcting each of the errors. Error Number Effect on profit decrease increase no effect Error 1 Error 2 Error 3 Error 4 Error 5
3. Verification of accounting records  →  3.1. The trial balance
3. Verification of accounting records  →  3.2. Correction of errors
4. Accounting procedures  →  4.1. Capital and revenue expenditure and receipts
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4
A company has a fleet of delivery vehicles. Information from their statement of financial position at 31 December 2022 shows that the vehicles originally cost $440 000 with accumulated depreciation of $270 000. The business purchased two additional vehicles costing a total of $70 000 on 1 April 2023 on credit from L Autos. On 30 November 2023, the business sold one of its vehicles. The vehicle had originally cost $28 000 with accumulated depreciation of $16 800. The vehicle was sold for $10 500 to a local garage who paid by bank transfer. The business provides for depreciation using the straight-line method at a rate of 20% per annum. A full year’s depreciation is charged in the year of purchase. No depreciation is charged in the year of disposal. REQUIRED: Calculate the depreciation charge for the year ended 31 December 2023. Prepare the company’s ledger accounts for the delivery vehicles, provision for depreciation and disposal of delivery vehicles for the year ended 31 December 2023. Balance the accounts and bring down the balances on 1 January 2024. Delivery vehicles account Date Details $ Date Details $ Provision for depreciation of delivery vehicles account Date Details $ Date Details $ After talking to his accountant, the owner of the company is considering changing the method of depreciation for his delivery vehicles to the reducing balance method but maintaining the rate of depreciation at 20% per annum. REQUIRED: Advise the owner of the company whether he should pursue this course of action. Justify your answer by providing two advantages and two disadvantages of changing the method of depreciation to the reducing balance method. Complete the following table by placing a tick (3) in the appropriate column to indicate the most suitable method of depreciation for each of the non-current assets. Non-current asset Straight-line Revaluation No depreciation Land Fixtures & fittings Loose tools
4. Accounting procedures  →  4.2. Accounting for depreciation and disposal of non-current assets
5. Preparation of financial statements  →  5.1. Sole traders
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5
The following information was provided by G Limited, a manufacturing company, for the year ended 31 March 2024. $ Purchases: Raw materials 68 000 Finished goods 32 413 Wages: Factory operatives 183 700 Factory supervisors 47 200 Administration salaries 34 925 Factory machinery at cost 247 000 Provision for depreciation of factory machinery 51 500 Factory general expenses 20 250 Rates & insurance 7 100 Administration expenses 5 470 Carriage on purchases of finished goods 2 180 Royalties 3 240 1 April 2023 31 March 2024 $ $ Inventory: Raw materials 18 200 19 280 Work in progress 23 400 22 650 Finished goods 6 820 9 350 Additional information Factory machinery is to be depreciated at 15% per annum using the reducing balance method. On 31 March 2024 rates, $620, were owing. Rates and insurance are to be apportioned 60% to the factory and 40% to the office. REQUIRED Prepare the manufacturing account for the year ended 31 March 2024. G Limited Manufacturing account for the year ended 31 March 2024 $ $ G Limited apply a standard rate of mark-up of 35%. REQUIRED: Prepare the trading section of the income statement of G Limited for the year ended 31 March 2024. G Limited Income Statement (Trading section) for the year ended 31 March 2024 $ $ G Limited make all sales on credit and have supplied the following information: Trade receivables turnover Irrecoverable debts $ At 31 March 2024 32 060 At 1 April 2023 19 200 The directors of G Limited are worried about the level of debts from credit customers and are considering employing a consultant to review their credit control policy and implement any changes. They would provide training to the existing staff in the new procedures. The consultant would charge a fee of $14 000 for their services. REQUIRED: Advise G Limited whether to employ the consultant to review their credit control policy. Justify your answer with two advantages and two disadvantages.
4. Accounting procedures  →  4.1. Capital and revenue expenditure and receipts
5. Preparation of financial statements  →  5.5. Manufacturing accounts
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