3. Financial accounting (A Level)
A section of Accounting, 9706
Listing 10 of 734 questions
Colin, Darim and Emran are in partnership sharing profits and losses in the ratio 3 : 2 : 1. Their statement of financial position at 30 November 2015 was as follows: Additional information Darim retired on 1 December 2015. Colin and Emran continued in partnership sharing profits and losses in the ratio 2 : 1. Goodwill was valued at $48 000. It does not appear in the partnership’s financial statements. Darim took over one of the partnership motor vehicles at a net book value of $8000. The partners agreed to revalue some of the remaining assets as follows: $ Premises 180 000 Motor vehicles 25 000 Inventory 52 000 Trade receivables 46 000 Darim agreed to receive $50 000 as part of the amount owing to him on his retirement. The balance owing to him was to remain in the partnership as a loan to be repaid in 2018. $ Non-current assets (at net book value) Premises 135 000 Machinery 84 000 Motor vehicles 36 000 255 000 Current assets Inventory 56 000 Trade receivables 48 000 Bank 21 000 125 000 Total assets 380 000 Capital and liabilities Capital accounts Colin 120 000 Darim 80 000 Emran 40 000 240 000 Current accounts Colin 56 000 Darim 16 000 Emran 36 000 108 000 Current liabilities Trade payables 32 000 Total capital and liabilities 380 000 REQUIRED Prepare the revaluation account on Darim’s retirement on 1 December 2015. Revaluation account Additional information To help fund the payment to Darim on his retirement, Emran paid additional capital into the partnership bank account. After this payment had been made the balance on Emran’s capital account was $65 000. REQUIRED Prepare a statement to show how much cash Emran paid into the partnership bank account. State three advantages to a sole trader of forming a partnership. State three reasons why partnerships maintain separate capital accounts and current accounts for each partner.
9706_s16_qp_22
THEORY
2016
Paper 2, Variant 2
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Wang and Yuan, who share profits and losses in the ratio 2 : 1, decided to dissolve their partnership. Their summarised statement of financial position at 30 September 2015 was as follows: $ Non-current assets Land and buildings 60 000 Motor vehicles 10 000 70 000 Current assets Inventory 14 000 Trade receivables 16 000 30 000 Total assets 100 000 Capital and liabilities Capital accounts Wang 40 000 Yuan 25 000 65 000 Current accounts Wang (10 000) Yuan 13 000 3 000 Current liabilities Trade payables 26 000 Bank 6 000 32 000 Total capital and liabilities 100 000 Additional information Land and buildings were sold for $70 000. Yuan took one vehicle at an agreed value of $3000 and the remaining vehicle was sold for $3500. Trade receivables realised $15 000. Trade payables were paid after taking a discount of $1500. The inventory was sold for $12 000. The expenses of dissolution were $1700. REQUIRED Prepare the partnership realisation account. Calculate the amount due to each partner when the bank account is closed on dissolution. State two reasons why a partner may have an overdrawn current account. State why partnerships maintain separate capital accounts for each partner. Rahel manufactures a single product X and wishes to know the break-even point. REQUIRED State what is meant by break-even point. Additional information The following budgeted information is available for product X. Selling price per unit $2.00 Contribution to sales ratio 62.5% Fixed costs $50 000 Production and sales 100 000 units REQUIRED Calculate the break-even point in units and $ revenue. in units in revenue Prepare a break-even chart for product X. Calculate the margin of safety. in units as a percentage Additional information Rahel is considering opening another factory to produce two new products: Y and Z. The following information is available. Y Z $ per unit $ per unit Direct material Direct labour ($5 per hour) Variable overhead 1.5 1.5 Selling price Forecast demand for April is 4000 units of Y and 6000 units of Z. REQUIRED Calculate the contribution per unit of each product Y and Z. Additional information During April, fixed costs are forecast to be $60 000. REQUIRED Calculate the forecast profit for the new factory for the month of April. Additional information During April, direct labour hours are expected to be limited to 10 000 hours. REQUIRED Calculate the revised profit taking into account the limited direct labour hours. Additional information Rahel has to meet the forecast demand in April as she has contracts with her customers. In order to achieve this she has two alternatives. Ask the workers to work overtime. Buy in the products from another supplier. REQUIRED Advise Rahel which option she should choose. Justify your answer. State one advantage and one disadvantage of marginal costing. Advantage Disadvantage
9706_s16_qp_23
THEORY
2016
Paper 2, Variant 3
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L, M and N were in partnership sharing profit and losses in the ratio 4 : 3 : 1 respectively. N retired from the partnership on 31 October 2016 when the balance on her capital account was $142 000. Goodwill was valued at $54 000 and would not remain in the books of account. Non-current assets were revalued from $180 000 to $144 000. N was paid all amounts due to her from the business bank account. How much was N paid on retirement from the partnership?
9706_s17_qp_11
MCQ
2017
Paper 1, Variant 1
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Ali, Bharti and Chan were in partnership sharing profit and losses in the ratio 3 : 2 : 1. Bharti retired from the partnership on 30 June 2016. The following were the balances available at 30 June 2016. Ali ($) Bharti ($) Chan ($) capital accounts 60 000 Cr 40 000 Cr 20 000 Cr current accounts 18 650 Cr 6 100 Dr 8 950 Cr On her retirement, Bharti retained a partnership motor vehicle at an agreed valuation of $4000. Goodwill was valued at $39 000. How much was payable to Bharti on her retirement?
9706_s17_qp_12
MCQ
2017
Paper 1, Variant 2
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Amit and Binu are in partnership sharing profits and losses in the ratio 3 : 2 respectively. The partnership statement of financial position at 30 June 2016 is as follows: The partners agreed to dissolve the partnership on 30 June 2016. This resulted in the following: Trade receivables realised $12 600. Trade payables were settled in full for $9800. Inventory was sold for $15 000. The machinery was sold for $35 000. Amit agreed to take over the premises at an agreed valuation of $30 000. Binu agreed to take over one of the motor vehicles at an agreed valuation of $6500. The remaining motor vehicle was sold for $12 000. The costs of dissolution were $6300. $ $ Non-current assets Premises 40 000 Machinery 32 000 Motor vehicles 18 000 90 000 Current assets Inventory 18 600 Trade receivables 13 100 31 700 Total assets 121 700 Capital accounts Amit 30 000 Binu 20 000 50 000 Current accounts Amit 33 200 Binu 18 400 51 600 101 600 Current liabilities Trade payables 9 800 Bank overdraft 10 300 20 100 Total capital and liabilities 121 700 REQUIRED Prepare the realisation account on the dissolution of the partnership. Realisation account Prepare a statement to show how much Binu will receive when the partnership bank account is closed. State two reasons why a partnership may be dissolved. Explain what would happen if the dissolution of the partnership resulted in a debit balance on a partner’s capital account. [Total 15]
9706_s17_qp_21
THEORY
2017
Paper 2, Variant 1
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Ramadhin, Statham and Trueman formed a partnership on 1 January 2016. The draft profit for the year ended 31 December 2016 before appropriation was $232 000, but did not account for the following: A non-current asset costing $20 000 was purchased on 1 July 2016. No depreciation has been charged on this asset. The partnership’s policy is to charge depreciation at 20% using the reducing balance method on all assets. A full year’s depreciation is charged in the year of purchase and none in the year of disposal. Some inventory which had been valued at a cost of $15 000 had been damaged. The mark-up on inventory is 100%. The damaged inventory could only be sold for 20% of the normal selling price. REQUIRED Calculate the adjusted profit for the year ended 31 December 2016 before appropriation. Additional information On 1 January 2016 Ramadhin, Statham and Trueman had introduced capital of $600 000 in their agreed profit and loss sharing ratio of 3 : 2 : 1 respectively. The other terms of the partnership agreement were as follows: Interest of 6% per annum is to be paid on the opening capital account balances. Each partner is to take drawings of $10 000 per annum. Interest is to be charged on total annual drawings at 4% per annum. Trueman is to receive a salary of $1000 per month. REQUIRED Prepare the partnership appropriation account for the year ended 31 December 2016. Explain why partners may value goodwill and revalue the assets when one partner retires. Additional information Trueman received an offer of employment which would provide him with a gross annual income of $50 000. He decided to accept the offer and leave the partnership on 31 December 2016. At that date goodwill was valued at $12 000. It was also agreed that the partnership assets should be revalued at $7500 less than their net book values. Trueman agreed to leave 40% of the balance due to him as a loan to the partnership at an interest rate of 10% per annum. The remainder was paid to him from the business bank account. REQUIRED Prepare a statement showing the amount that Trueman received on leaving the partnership. Assess whether or not Trueman was correct in his decision to leave the partnership. Justify your answer by discussing the financial and non-financial factors involved. Additional information Trueman asks Ramadhin and Statham for an early repayment of his loan to the partnership. REQUIRED Advise the partners whether or not they should make an early repayment. Justify your answer.
9706_s17_qp_23
THEORY
2017
Paper 2, Variant 3
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