1.4. Reconciliation and verification
A subsection of Accounting, 9706, through 1. Financial accounting (AS Level)
Listing 10 of 385 questions
The following departmental accounts have been prepared for a limited company for the year ended 30 September 2013. department X $ department Y $ revenue 810 000 515 000 cost of sales 470 000 265 000 gross profit 340 000 250 000 overheads 210 000 295 000 profit / for the year 130 000 (45 000) The following errors have been found. Department X overheads include $10 000 for the purchase of goods for resale of department X. Revenue of $40 000 has been credited to department X when it should have been credited to department Y. What is the corrected profit for the year for department X?
9706_w13_qp_12
MCQ
2013
Paper 1, Variant 2
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The following is the draft statement of financial position of Chan Ya Wen, a sole trader, at 31 May 2014. Statement of Financial Position at 31 May 2014 $000 Assets Non-current assets Buildings at valuation Equipment at net book value Motor vehicles at net book value Current assets Inventories Trade receivables Other receivables Cash and cash equivalents Total assets Capital and Liabilities Opening capital Add profit for the year Less drawing Closing capital Non-current liabilities Loan Current liabilities Trade payables Other payables Total capital and liabilities Additional information After preparation of the draft statement of financial position the following errors were discovered: A purchase credit note received for $12 000 had been completely omitted from the books. Inventory at 31 May 2014, cost $6000, was found to be damaged. A customer has agreed to buy the goods for $2500. Delivery costs will be $250. The loan was received on 1 December 2013. Loan interest of 4% per annum has not been paid. During the year vehicle repairs of $2000 had been incorrectly debited to the motor vehicles account. Motor vehicles have been depreciated by 25% per annum on the year end value. On 1 May 2014 a motor vehicle with a net book value of $16 000 had been badly damaged in a collision. No entry has yet been made in the accounts for this. The insurance company has agreed to pay $13 000 in compensation. The trader will receive a further $1200 for the scrap value. On 27 May 2014 a credit customer was declared bankrupt and it was decided to write off the $8000 owing. No record in the accounts has yet been made. REQUIRED Prepare a statement to show the corrected profit for the year ended 31 May 2014. Prepare a corrected statement of financial position at 31 May 2014. Additional information At 31 July 2014 Cha Ya Wen had a debit balance of $8000 in the bank column of his cash book. His bank statement showed a credit balance of $5600 at the same date. On comparing the cash book with the bank statement the following discrepancies were found: Bank charges of $150 appeared in the bank statement but had not been entered in the cash book. A credit of $450 for dividends received had not been entered in the cash book. Cheques received from customers amounting to $3500 had been entered in the cash book but had not yet been credited by the bank. A cheque for $1200 received from a debtor had been returned by the bank marked ‘insufficient funds for payment’. Cheques issued by the business amounting to $2000 were recorded in the cash book but did not appear in the bank statement. REQUIRED Update the bank columns of Cha Ya Wen’s cash book for the month of July 2014. Prepare a bank reconciliation statement as at 31 July 2014.
9706_w14_qp_21
THEORY
2014
Paper 2, Variant 1
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Ross, a sole trader, owns a business selling computer equipment. He prepared the following income statement for the year ended 31 March 2017, which contained errors. Ross Income Statement for the year ended 31 March 2017 $ $ Revenue 96 520 Add: Returns outwards 96 960 Cost of sales Inventory at 31 March 2017 23 400 Purchases 38 950 Carriage outwards 1 090 63 440 Inventory at 1 April 2016 (21 640) 41 800 Gross profit 55 160 Less expenses: Property rental paid 16 240 Returns inwards 1 240 Drawings 8 600 Heating and lighting 1 940 Travel expenses 2 060 General expenses 6 690 Shop fittings – accumulated depreciation at 31 March 2017 3 320 40 090 Profit for the year 15 070 Additional information The following notes also need to be taken into account when correcting the income statement. Revenue includes goods sent on a sale or return basis to a customer who has not yet accepted the goods. The goods cost $2500 and had been invoiced for $4000. Depreciation on shop fittings for the year ended 31 March 2017, $1490, had been entered in the books of account. A prepayment of $1160 for property rental paid at 31 March 2017 had been incorrectly entered in the books of account as an accrual. A customer owing Ross $1250 has been declared bankrupt. This debt should have been written off in these accounts, but no entry has yet been made. REQUIRED Prepare the corrected income statement for the year ended 31 March 2017. Ross Income Statement for the year ended 31 March 2017 Additional information Ross provided the following information about his assets and liabilities at 31 March 2017: $ Accruals 1 960 Bank loan 8 580 Bank overdraft 2 610 Capital at 1 April 2016 10 950 Shop fittings – cost at 31 March 2017 11 930 Prepayments 2 080 Trade payables 6 440 Trade receivables 12 870 No adjustment had been made to any of these balances in respect of errors discovered in the income statement or notes 1 to 4 on page 2. Ross introduced capital of $3000 into the business bank account on 31 March 2017. No entries for this have yet been made in the books of account. One half of the bank loan is repayable in the year ending 31 March 2018. The remainder is due for repayment after that date. REQUIRED Prepare the statement of financial position at 31 March 2017 taking account of all relevant information and information from part . Ross Statement of Financial Position at 31 March 2017 Additional information At present Ross does not make any provision for doubtful debts. REQUIRED Advise Ross whether or not he should create a provision for doubtful debts. Justify your answer.
9706_w17_qp_22
THEORY
2017
Paper 2, Variant 2
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Questions Discovered
385