1. Financial accounting (AS Level)
A section of Accounting, 9706
Listing 10 of 1775 questions
Jing is a sole trader. He does not maintain full accounting records. All sales and purchases are on credit. He provided the following information for the year ended 30 April 2015. $ Cheques received from credit customers 96 300 Cheques paid to credit suppliers 73 540 Rent paid 5 500 Electricity paid Carriage inwards Carriage outwards Other operating expenses Irrecoverable debts written off Purchases returns 2 480 Jing had the following assets and liabilities. At 30 April 2014 At 30 April 2015 $ $ Equipment ? ? Inventory 15 000 11 500 Trade receivables 3 750 2 250 Rent prepaid Electricity owing Trade payables 3 460 1 790 All equipment was originally purchased for $2700 on 1 May 2013. Jing depreciates his equipment using the reducing balance method at a rate of 10% per annum. REQUIRED Calculate the sales for the year ended 30 April 2015. Calculate the purchases for the year ended 30 April 2015. Prepare Jing’s income statement for the year ended 30 April 2015. Jing Income Statement for the year ended 30 April 2015 Additional information After preparing the financial statements, Jing remembered the following: He had paid his cleaner $60 cash, out of his own money, to clean the offices and his house. He agreed that this should be split in the ratio 3 : 2 respectively. REQUIRED Prepare the journal entry to record this transaction. A narrative is not required. State two types of entries, other than the correction of errors, which would usually be recorded in the general journal. Additional information Jing calculated the gross margin and the profit margin for his business. He discovered that the gross margin had decreased for the year ended 30 April 2015. For the same period the profit margin had increased. REQUIRED Assess the performance of the business for the year ended 30 April 2015. Suggest possible reasons for the changes. State three benefits to a business of using ratios.
9706_s16_qp_22
THEORY
2016
Paper 2, Variant 2
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Zak owns a wholesale business. He makes sales on credit. REQUIRED Explain why it may be important for a business to maintain a provision for doubtful debts. Additional information Zak has prepared an aged schedule of trade receivables at 31 December 2020. Period outstanding Amount $ Estimated irrecoverable debts Less than 1 month 34 200 1% Between 1 month and 3 months 6 680 5% Between 4 and 6 months 2 130 10% In addition, two accounts had been outstanding for over 6 months. $ P Limited Q Limited Zak’s policy is to write off as irrecoverable any amounts outstanding for more than 6 months. Zak updates the provision for doubtful debts at each financial year end based on the estimated percentage of irrecoverable debts. REQUIRED Prepare a journal entry to write off the irrecoverable debts. A narrative is not required. Journal Dr Cr $ $ State two ways in which the risk of irrecoverable debts may be reduced. Additional information At 1 January 2020 the business had a provision for doubtful debts of $980. REQUIRED Calculate the adjustment required to the provision for doubtful debts at 31 December 2020. Prepare the provision for doubtful debts account for the year ended 31 December 2020. Provision for doubtful debts account $ $ State two factors that should be taken into account when setting a provision for doubtful debts.
9706_s21_qp_22
THEORY
2021
Paper 2, Variant 2
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Questions Discovered
1775