1. Financial accounting (AS Level)
A section of Accounting, 9706
Listing 10 of 1775 questions
The trial balance of Seema Limited for the year ended 30 June 2015 shows these figures: Debit Credit $ $ Revenue 526 000 Purchases 342 000 Inventory at 1 July 2014 37 500 Selling and distribution expenses 37 510 Administrative expenses 36 130 Provision for doubtful debts Interest paid Non-current assets at cost Warehouse buildings 300 000 Motor vehicles 70 000 Office equipment 25 000 Provision for depreciation Warehouse buildings 12 000 Motor vehicles 12 500 Office equipment 1 500 Trade receivables 5 020 Trade payables 6 270 Cash and cash equivalents 27 200 140 000 Ordinary shares of $1 each 140 000 5% Debentures (2021 – 2025) 25 000 General reserve 25 000 Retained earnings 140 990 Interim ordinary dividends paid 8 400 889 385 889 385 Additional information Inventory on 30 June 2015 was valued at $29 400. Depreciation is to be charged as follows: Warehouse buildings 4% using straight line method Motor vehicles 25% using straight line method Office equipment 10% using reducing balance method. The provision for doubtful debts is to be maintained at 5% of the trade receivables. An irrecoverable debt of $200 should be written off. The directors have decided to transfer $25 000 to the general reserve. The directors have proposed a final dividend of $0.07 per share. The debentures were issued in 2011. The motor vehicles were used by the sales team. REQUIRED Prepare the income statement for the year ended 30 June 2015. Prepare the statement of financial position at 30 June 2015. Explain the importance to a business of the current ratio. Additional information The directors of Seema Limited have calculated the current ratio to be 8.87 : 1. They regard the ratio calculated to be too high and are considering repaying the debentures. REQUIRED Discuss the effect of this course of action on: working capital the return on capital employed Advise the directors on whether they should repay the debentures early. Justify your answer.
9706_m16_qp_22
THEORY
2016
Paper 2, Variant 2
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For Examiner's Use Amirtha commenced business on 1 January 2010. During the first two years of business the following non-current assets were purchased on the dates shown: Motor vehicles $ 1 January MV1 26 000 1 July MV2 18 000 1 April MV3 24 000 Equipment 1 January EQ1 30 000 1 January EQ2 44 000 Amirtha has a policy to depreciate motor vehicles at 20% per annum on cost (straight line method) and equipment at 15% per annum on cost (straight line method), rates being charged for each month of ownership. REQUIRED Calculate the total depreciation for each of the years 2010 and 2011. Motor vehicles Equipment For Examiner's Use Early in 2012, consideration was given to changing to the reducing balance method, with the following rates applying to the balance at the end of each year. Motor vehicles 25% Equipment 20% A full year’s depreciation would be charged irrespective of the date of purchase. REQUIRED Calculate the total depreciation for each of the years 2010 and 2011, using the reducing balance method for: Motor vehicles Equipment. For Examiner's Use The original profits for the first two years in business were: $86 000 $94 000 REQUIRED Prepare a statement to show the revised profits for the years 2010 and 2011, if the reducing balance method had been used. Explain why it is appropriate to use the reducing balance method for motor vehicles. For Examiner's Use The following information is also available from the books of Amirtha. 1 January 2011 31 December 2011 $ $ Wages 2 040 accrued 2 130 accrued Insurance 130 accrued 610 prepaid Rent received 1 490 prepaid 1 320 prepaid During the year ended 31 December 2011 the following transactions took place. $ Wages paid 24 100 Insurance paid 1 400 Rent received 14 000 All transactions are through the bank account. REQUIRED Prepare the following ledger accounts for the year ended 31 December 2011, showing the closing entry to the financial statements at the end of the year. Dates are not required. Wages account For Examiner's Use Insurance account Rent received account For Examiner's Use 3 Wigmore Ltd uses one factory overhead recovery rate which is a percentage of total direct labour costs. The rate is calculated from the following budgeted data. Department Factory overheads Direct labour costs Direct labour hours Direct machine hours $ $ Production 150 000 500 000 120 000 7 000 Assembly 450 000 1 000 000 225 000 10 000 Packing 360 000 900 000 200 000 – The cost sheet for job 787 shows the following information. Department Direct labour costs Direct labour hours Direct machine hours Direct material costs $ $ Production 2 400 Assembly 1 100 Packing 1 000 – General administration expenses of 20% are added to the total factory cost. The selling price to the customer is based on a 25% net profit margin. REQUIRED Calculate the current factory overhead rate for Wigmore Ltd. For Examiner's Use Prepare a detailed cost statement to calculate the selling price for job 787. Calculate the overhead rate for each department using the following methods: Percentage of direct labour cost Production Assembly Packing For Examiner's Use Direct labour hour rate Production Assembly Packing Using the direct labour hour rates calculated in , prepare a detailed cost statement to calculate the new selling price for job 787. For Examiner's Use Discuss the problems associated with using predetermined overhead absorption rates. State the effect on profits if the factory does not operate at full capacity.
9706_s12_qp_23
THEORY
2012
Paper 2, Variant 3
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Questions Discovered
1775