1.5. Preparation of financial statements
A subsection of Accounting, 9706, through 1. Financial accounting (AS Level)
Listing 10 of 637 questions
Amit, Wang and Susi have been trading in partnership for several years and prepare their financial statements annually to 31 March. They have never had a partnership agreement. REQUIRED State four provisions which would apply in the absence of a partnership agreement. Question 3is on the next page. REQUIRED Prepare the partners’ capital accounts to record the retirement of Amit from the partnership. Amit, Wang and Susi Capital accounts Additional information Amit has recently advised the partners that he is having financial difficulties. He has asked Wang and Susi for the payment of the balance on his loan account as soon as possible. REQUIRED Advise Wang and Susi whether or not they should agree to Amit’s request. Justify your answer.
9706_s17_qp_22
THEORY
2017
Paper 2, Variant 2
View
Cherie and Harry are in partnership. REQUIRED Explain three disadvantages of operating as a partnership rather than being in business as a sole trader. Additional information The following information was available for the partnership on 30 June 2017. $ Bank overdraft 1 680 Capital accounts Cherie 42 000 Harry 28 000 Current accounts balances at 1 July 2016 Cherie 1 470 credit Harry 2 430 debit Drawings Cherie 18 300 Harry 16 820 Gross profit for the year 40 960 Inventory at 30 June 2017 25 540 Loan Account Cherie 8 000 Non-current assets Cost 64 000 Provision for depreciation 22 000 Operating expenses 28 390 Trade payables 1 170 The following information is also available. Operating expenses included a payment for rent, $3450, for three months ended 31 August 2017. Non-current assets are to be depreciated at 20% per annum using the reducing balance method. Inventory at 30 June 2017 was overvalued by $380. Cherie is to receive interest at 8% per annum on her loan to the partnership. No entries have been made to record the interest for the year ended 30 June 2017. The balance of her loan account has remained unchanged throughout the year. REQUIRED Prepare the income statement for the year ended 30 June 2017. Start the statement with gross profit for the year of $40 960. Additional information Interest on drawings has been calculated as follows: $ Cherie Harry The partners are to receive interest on their fixed capital account balances at 10% per annum. Residual profits and losses are to be shared in proportion to their capital account balances. REQUIRED Prepare the appropriation account for the year ended 30 June 2017. Prepare the partners’ current accounts for the year ended 30 June 2017. Current Accounts Cherie $ Harry $ Cherie $ Harry $ Additional information Cherie and Harry are concerned about some aspects of the business’s efficiency and provide the following information. Ratio Year ended 30 June 2017 Year ended 30 June 2016 Industry Average Non-current asset turnover 1.68 times 1.11 times 1.34 times Trade payables turnover 28 days 33 days 31 days REQUIRED Analyse the efficiency of the business using these ratios. Additional information The partners are also concerned that the rate of inventory turnover has fallen below the industry average. Cherie has suggested that this could be improved by reducing inventory levels. Harry disagreed and suggested instead that an advertising campaign should be organised. REQUIRED Advise which course of action the partners should take in order to improve the rate of inventory turnover. Justify your advice by discussing both of the suggested options.
9706_s18_qp_22
THEORY
2018
Paper 2, Variant 2
View
Questions Discovered
637