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1. Financial accounting (AS Level)
A section of Accounting, 9706
Listing 10 of 1775 questions
Anton, a sole trader, does not keep proper books of account. He supplies the following information for the year ended 30 September 2015. 1 October 2014 30 September 2015 $ $ Office fixtures at net book value 9 500 8 600 Delivery vehicles Cost 15 700 ? Accumulated depreciation 4 600 ? Trade payables 12 670 13 460 Trade receivables 10 500 9 670 Rent payable owing 1 500 2 400 Cash Inventory 24 640 40 800 Bank 2 400 Credit ? Summary of Anton’s bank account is as follows. Bank Account Summary $ Receipts Receipts from credit customers 153 300 Cash sales banked 12 900 Sale of delivery vehicle 5 400 Payments Payments to credit suppliers 118 900 Wages 17 800 Rent 8 500 Electricity 7 540 General expenses 4 630 Purchase of delivery vehicle 13 600 Additional information The inventory at 30 September 2015 was valued at selling price. Anton applies a mark up of 50%. During the year a delivery vehicle which had cost $9000 on 1 October 2012 was sold for $5400. Delivery vehicles are depreciated at 20% per annum using the reducing balance method. Depreciation is charged in the year of purchase but not in the year of sale. Anton took cash drawings of $600 per month before the cash sales were banked but has not recorded these. He also took goods for his own use which had a sales value of $2763. Total cash sales were $20 476. There are unrecorded delivery vehicle expenses not accounted for. REQUIRED Prepare Anton’s income statement for the year ended 30 September 2015. Prepare a statement of financial position at 30 September 2015. Additional information Anton is not sure if he will recover all trade receivables due and has been advised to set up a provision for doubtful debts. He plans to write off a bad debt of $750 and set up a provision for doubtful debts at 4%. REQUIRED Calculate the effect these adjustments would have on his profit. Explain why he should include the provision for doubtful debts in his accounts.
9706_w15_qp_23
THEORY
2015
Paper 2, Variant 3
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Maneesh has not maintained a full set of accounting records for the year ended 31 December 2015. The following information has been provided: Assets and liabilities at 1 January 2015 Assets Liabilities $ $ Non-current assets at net book value 83 400 Inventory 18 500 Trade receivables 22 460 Prepaid rent 1 900 Cash in hand Trade payables 12 770 Accrued general expenses 1 320 Bank overdraft 5 640 Balance at 1 January 2015 106 710 126 440 126 440 Summary bank account for the year ended 31 December 2015 $ $ Receipts from credit customers 176 750 Balance at 1 January 2015 5 640 Cash sales banked 7 450 Payments to credit suppliers 138 132 Balance at 31 December 2015 17 272 Non-current assets 5 200 Drawings 14 120 General expenses 11 280 Rent 27 100 201 472 201 472 Balance at 1 January 2016 17 272 Additional information Maneesh makes both cash and credit sales. All sales were made at 40% gross margin. Credit sales for the year totalled $184 190. Credit purchases for the year totalled $136 422. There were no cash purchases. The business maintains a cash float of $180. Maneesh withdrew $20 per week from cash sales for drawings, before banking the rest. Maneesh depreciates his non-current assets at 20% per annum using the reducing balance method. The rent charge for the year was $24 600. The general expenses charge for the year was $14 160. Irrecoverable debts of $900 should be written off at 31 December 2015. REQUIRED Prepare the income statement for the year ended 31 December 2015. Prepare the statement of financial position at 31 December 2015. Additional information Maneesh is concerned that the bank overdraft has increased substantially during the year ended 31 December 2015. REQUIRED Suggest to Maneesh four possible reasons for the increase in the bank overdraft. Additional information Maneesh has been advised by the bank manager that the bank overdraft must be repaid in full as soon as possible. Maneesh’s brother has offered the following possible solutions. Lend Maneesh $20 000 repayable in five equal annual instalments of $5000 each (including interest). Enter into a formal partnership with Maneesh in which his brother: immediately pays $20 000 into the business bank account; and receives 10% share of the future profits for the year. REQUIRED Advise Maneesh which option he should choose. Justify your answer. State two items which may be included in a partnership agreement (other than the share of profit) which will affect the appropriation account which will not affect the appropriation account.
9706_w16_qp_23
THEORY
2016
Paper 2, Variant 3
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Questions Discovered
1775