3.1. Preparation of financial statements
A subsection of Accounting, 9706, through 3. Financial accounting (A Level)
Listing 10 of 678 questions
Finn started business on 1 January 2017. He did not keep full accounting records. A summary of his bank statements for the year ended 31 December 2017 was as follows. Receipts $ Capital introduced 15 000 From credit customers 98 600 Loan taken out 4 000 117 600 Payments To credit suppliers 65 100 Rent 12 000 Cash 35 600 Purchase of fixtures and fittings 14 000 126 700 The following information was available. Receipts from customers paid into the bank but not yet showing on the bank statement were $1800. Cheques paid to suppliers not yet presented to the bank amounted to $1600. REQUIRED Calculate the balance at bank which would appear in the statement of financial position at 31 December 2017. Additional information All sales were made on a credit basis. There were no sales returns during the year. The total value of sales invoices issued during the year was $144 200. Finn had allowed one customer to pay $100 less than the invoice amount because he had paid promptly. REQUIRED Prepare a total trade receivables account for the year ended 31 December 2017 to show the amount owed to Finn at the year end. Total trade receivables account $ $ Additional information All purchases were made on a credit basis. There were no purchases returns during the year. The total value of purchases invoices received was $79 300. Of these, $12 100 had not been paid by the year end. Finn knew that he had sometimes taken a cash discount but had kept no record of the amounts involved. REQUIRED Prepare a total trade payables account for the year ended 31 December 2017 to show the total discount Finn had taken. Total trade payables account $ $ Additional information Finn paid wages of $1200 in cash each month. He also took cash drawings of $500 every month. Other operating expenses were all paid in cash. Cash in hand was $100 at the year end. REQUIRED Prepare a cash account for the year ended 31 December 2017 to show the amount paid for other operating expenses. Cash account $ $ Additional information The loan carried an interest rate of 10%. The loan had been received on 1 July 2017 and no interest had been paid by the year end. The fixtures and fittings were expected to last for 10 years and have no scrap value. They are to be depreciated using the straight-line method. The policy is to provide for a full year’s depreciation in the year of purchase. At the year end other operating expenses, $1000, were accrued. At the year end inventory was valued at cost, $6200. REQUIRED Prepare the income statement for the year ended 31 December 2017. Advise Finn whether or not he should employ a book-keeper at a cost of $500 a month. Justify your answer. State two reasons why a trader might maintain a provision for doubtful debts.
9706_w18_qp_22
THEORY
2018
Paper 2, Variant 2
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