1. Financial accounting (AS Level)
A section of Accounting, 9706
Listing 10 of 1775 questions
The following information is given about the Schubert Music Club. Schubert Music Club Balance Sheet at 31 December 2008 Cost Depreciation Net Book Value Non-current (Fixed) Assets $ $ $ Clubhouse 50 000 10 000 40 000 Instruments 06 000 05 000 01 000 56 000 15 000 41 000 Current Assets Inventory of cafe supplies 4 000 Subscriptions in arrears Cash and cash equivalents 2 100 6 500 Current Liabilities Trade payables for cafe supplies 3 000 Cafe expenses owing 1 200 Subscriptions in advance 0 300 4 500 02 000 43 000 Accumulated fund 41 000 Life subscriptions 02 000 43 000 Schubert Music Club Receipts and Payments Account for the year ended 31 December 2009 $ $ Balance b/d 2 100 Suppliers for cafe 8 400 Subscriptions – 2008 Cafe expenses 4 200 Subscriptions – 2009 2 200 Wages – cafe staff 5 000 Life subscriptions 4 000 Clubhouse repairs 6 000 Cafe takings 18 500 Sundries 2 500 Balance c/d 01 000 27 100 27 100 Additional information at 31 December 2009 Inventory for the cafe was $2 000. Suppliers for cafe purchases were owed $2 200. Cafe expenses of $50 were owing. Depreciation is to be charged on a straight line basis: Clubhouse: 4% on cost per annum Instruments: $1 000 per annum Life subscriptions are available under a scheme which started 8 years ago. The cost remains at the original $500 per person. At 31 December 2008 there were six members with life subscriptions. The life subscriptions are brought into income over 20 years commencing from the year in which payment of life subscription takes place. The ordinary subscription rate for 2009 was $100 per person. This is to be increased by 50% in 2010. No subscriptions are prepaid for 2010. $300 remained owing from 2009 but these are expected to be received during January 2010. Subscriptions owing at 31 December 2008, which were not received during 2009, are to be written off as bad debts. REQUIRED Prepare a Subscriptions Account for ordinary members for the year ended 31 December 2009 (a life subscriptions account is not required). Prepare a Cafe Trading Account for the year ended 31 December 2009. Prepare an Income and Expenditure Account for the year ended 31 December 2009. The treasurer had suggested increasing cafe prices and the rate of lifetime subscriptions but the club committee refused to do this. Instead, the committee decided to raise the ordinary subscriptions by 50%. REQUIRED Suggest three additional ways in which the club could try to minimise or eliminate the deficit in future years.
9706_w10_qp_22
THEORY
2010
Paper 2, Variant 2
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Kirsty, a sole trader, prepared the following trial balance at 30 April 2011. $ $ Rent 4 000 General expenses 6 000 Insurance 3 300 Salaries 14 000 Electricity 2 000 Capital 44 000 Motor expenses 4 900 Bad debts Drawings 6 000 Trade receivables 6 200 Trade payables 3 800 Cash and cash equivalents 2 600 Inventory 3 600 10% Loan 15 000 Loan interest 1 250 Carriage outwards Commission received Ordinary goods purchased 56 000 Revenue 108 000 Purchases returns 2 500 Sales returns 4 800 Discounts allowed Discounts received Provision for doubtful debts Equipment 48 000 Provision for depreciation of equipment 14 400 Motor vehicles 36 000 Provision for depreciation of motor vehicles 10 800 200 150 200 150 The following information is also available: The closing inventory at 30 April 2011 was valued at $4200. Included in the general expenses is an item of equipment purchased during the year for $1200. This item has not yet been included in the equipment account. A cheque for $800 received from a credit customer has not yet been entered in the accounts. At 30 April 2011: loan interest owing amounted to $250 electricity owing was $380 insurance was prepaid by $460 During the year Kirsty had withdrawn, for her personal use, goods costing $1800. This has not been recorded in the accounts. Commission receivable of $150 was owing to Kirsty at 30 April 2011. The provision for doubtful debts is to be provided for a specific debt of $200, plus 2% of the remaining debtors. One half of the 10% loan is repayable during the year ending 30 April 2012, and the balance is repayable after that date. Depreciation is to be provided as follows: Equipment 10% per annum on cost. A full year’s depreciation is provided on all equipment held at 30 April 2011, regardless of the date of purchase. Motor vehicles 25% by the reducing balance method. There were no additions or disposals during the year. REQUIRED Prepare the income statement (trading and profit and loss account) for Kirsty for the year ended 30 April 2011. Prepare the statement of financial position (balance sheet) for Kirsty at 30 April 2011. During May 2011 Kirsty purchased new machinery with the following pricing details. $ List price 60 000 10% trade discount 6 000 Delivery costs 1 000 Installation costs 2 000 The machinery maintenance costs are estimated to be $5000 per annum. Kirsty plans to keep the machinery for 5 years and then dispose of it for an estimated residual value of $4000. REQUIRED Calculate the cost figure which should be used as the basis for depreciation. Calculate the annual depreciation charge using the straight line method. Prepare the Disposal of Machinery Account if the machinery is sold for $12 000 at the end of four years.
9706_w11_qp_22
THEORY
2011
Paper 2, Variant 2
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Questions Discovered
1775