3. Financial accounting (A Level)
A section of Accounting, 9706
Listing 10 of 734 questions
Robbie and Liza are in partnership with capitals of $90 000 and $60 000 respectively. The following information is available for the year ended 30 April 2011. Revenue $240 000 Inventory (30 April 2011) $9 000 Gross profit as a percentage of turnover 35% Inventory turnover 12 times Expenses ratio 15% All purchases and sales of inventory are on credit. REQUIRED Prepare a detailed income statement (profit and loss account) showing gross profit and profit for the year (net profit) for the year ended 30 April 2011. On 1 May 2010 the current account balances were Robbie $5000 and Liza $2000 . The partnership agreement provides for the following: Partners are permitted to withdraw up to a maximum of 20% of capital invested. Interest is charged on drawings at 8% per year. Interest on capital is payable at 5% per year. Liza is to receive a salary of $1250 per month. Profits and losses are shared in the ratio of capital invested. Both partners withdrew the maximum amount of drawings permitted during the year. REQUIRED Prepare the appropriation account of the partnership for the year ended 30 April 2011. At 30 April 2011 Robbie and Liza had a debit balance in the bank column of their cash book of $12 000. Their bank statement, however, showed that the partnership had $9000 in the bank at that date. On comparing the cash book with the bank statement the following differences were found: Bank charges of $250 appeared in the bank statement but had not been entered in the cash book. Cheques received from customers amounting to $3750 had been entered in the cash book but had not been credited by the bank. A cheque for $600 received from a debtor had been entered in the cash book but had been returned by the bank marked ‘insufficient funds for payment’. Cheques issued by the business amounting to $1600, recorded in the cash book, did not appear in April’s bank statement. REQUIRED Update Robbie and Liza’s cash book for the month of April 2011. Prepare a bank reconciliation statement at 30 April 2011 to reconcile the bank statement balance with the updated cash book balance. Give three reasons why the bank column balance in the cash book does not always agree with the balance shown in the bank statement at the same date.
9706_s11_qp_23
THEORY
2011
Paper 2, Variant 3
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Jackie and Kim are in partnership sharing profits and losses in the ratio of 3:2. The following statement of financial position was provided on 30 April 2012. Statement of Financial Position at 30 April 2012 Maura is a long-term employee of the partnership. Her current annual salary is $16 500. She recently inherited a sum of $60 000 and is considering an invitation from Jackie and Kim to invest $50 000 in the business in return for becoming a partner on 1 May 2012. If she agrees, the following terms would apply: $ $ $ Non-current assets at net book value Premises 120 000 Fixtures and fittings 72 000 192 000 Current assets Inventory 30 000 Trade receivables 20 000 Bank 16 000 66 000 Current liabilities Trade payables 12 000 Wages accrued 1 000 13 000 Net current assets 53 000 Net assets 245 000 Capital accounts Jackie 141 000 Kim 94 000 235 000 Current accounts Jackie 6 000 Kim 4 000 10 000 245 000 Maura is to be paid a partnership salary of $11 000 per year. All partners are to receive interest on capital of 3% per year. All partners are permitted to withdraw up to $10 000 per year. All partners are to pay interest on annual drawings at 5% per year. Maura is to receive a 10% residual share of profits and losses. The remaining profit or loss is to be divided between the other partners in ratio to their capital. Jackie and Kim will withdraw the full amount available to them while Maura will withdraw $5 500. The profit for the year ended 30 April 2013 is forecast to be $121 000. For Examiner's Use REQUIRED Prepare an estimated profit and loss appropriation account for the year ended 30 April 2013, assuming Maura accepts the invitation to join the partnership. For Examiner's Use Prepare Maura’s current account for the year ended 30 April 2013. Instead of investing in the partnership Maura could bank her $50 000 at an annual interest rate of 5%. Using appropriate figures calculated in and , advise Maura whether or not to accept the offer of a partnership. For Examiner's Use Jackie and Kim provided the following accounting ratios: Year ended Year ended 30 April 2011 30 April 2012 Percentage of gross profit to sales 21% 24% Percentage of net profit to sales 10% 11% REQUIRED Suggest two reasons for the change in the percentage of gross profit to sales. Suggest two reasons for the change in the percentage of net profit to sales.
9706_s12_qp_21
THEORY
2012
Paper 2, Variant 1
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The following statement of financial position of Mhairi, a sole trader, was drawn up at 30 April 2012. Statement of Financial Position at 30 April 2012 $ $ $ Non-current assets Equipment 232 000 Fixtures and fittings 160 000 392 000 Current assets Inventory 86 000 Trade receivables 16 000 102 000 Current liabilities Trade payables 38 000 Bank 14 000 52 000 Net current assets 50 000 442 000 Financed by Capital 400 000 Add Profit for the year 86 000 486 000 Less Drawings 44 000 442 000 . Additional information: On 1 May 2012 Mhairi admitted Aiden as a partner. The profit sharing ratio between Mhairi and Aiden was agreed at 3:2. Aiden agreed to pay a cheque to the partnership for $200 000 and bring in vehicles valued at $94 000 and inventory valued at $26 000. It was agreed that goodwill be valued at 2 times the average net profit earned over the past 4 years. Goodwill is not to be retained in the books. The following figures were available: Year ended 30 April Net sales income $ Net profit percentage % 200 000 400 000 500 000 860 000 For Examiner's Use REQUIRED Calculate the value of the goodwill. Prepare the capital accounts of Mhairi and Aiden after the admission of Aiden as a partner. For Examiner's Use Prepare the statement of financial position of the new partnership at 1 May 2012. For Examiner's Use Outline four advantages to Mhairi of forming a partnership with Aiden.
9706_s12_qp_22
THEORY
2012
Paper 2, Variant 2
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Questions Discovered
734