1. Financial accounting (AS Level)
A section of Accounting, 9706
Listing 10 of 1775 questions
Nadiya maintains control accounts as part of the double-entry system of her business. The purchases ledger and sales ledger contain memorandum accounts only. State three benefits of maintaining control accounts. Additional information On 31 March 2024 Nadiya found that the closing balance of the control accounts did not agree with the totals of the individual account balances in the purchases and sales ledgers. $ Purchases ledger control account balance 28 540 Total of trade payables in purchases ledger 31 790 Sales ledger control account balance 35 790 Total of trade receivables in sales ledger 36 410 Nadiya discovered the following errors which accounted for the differences. A credit note issued by Nadiya for $490 had been entirely overlooked. The total of the purchases journal had been understated by $3250. A cheque for $380 received from a credit customer had been dishonoured by the bank. This had been incorrectly recorded on the debit side of the cash book but had been posted correctly to the ledger account. An error of original entry had occurred when a purchases invoice for $4650 had been recorded as $5640. Interest of $70 charged on an overdue customer’s account had been credited to the customer’s account. Complete the following statements to correct the accounting records for trade payables. Correction of purchases ledger control account Correction of total of purchases ledger balances $ $ Incorrect balance 28 540 Incorrect total 31 790 Complete the following statements to correct the accounting records for trade receivables. Correction of sales ledger control account Correction of total of sales ledger balances $ $ Incorrect balance 35 790 Incorrect total 36 410 Additional information Control accounts sometimes contain contra entries. Explain why contra entries may be made in control accounts. ,   ,
9706_s24_qp_23
THEORY
2024
Paper 2, Variant 3
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Answer Section A and Section B. A The sales ledger control account of Dream Beds for the year ended 31 December 2010 is shown below. $ $ Jan 1 Balance b/d 43 900 Dec 31 Sales returns 28 510 Dec 31 Sales 522 650 Bank 436 300 Bank (dishonoured cheques) 2 200 Discount allowed 28 800 Bad Debts 8 400 PLCA 3 210 Balance c/d 63 530 568 750 568 750 The schedule of trade receivables extracted from the sales ledger at 31 December 2010 totalled $61 140. The following errors were subsequently discovered: A sale of $750 had been entered in John’s account in the sales ledger as $570. The correct entry had been made in the sales journal. An entry of $850 was correctly entered in Samera’s account in the sales ledger, closing the account owing to Samera’s bankruptcy. No other entry had been made. A sum of $120 discount allowed had been debited to Beach’s account in the sales ledger. The correct entry had been made in the cash book. At 31 December 2010 the balances in Richard’s accounts were: $ Purchases Ledger Credit Sales Ledger Debit It was decided to set off Richard’s balance in the sales ledger against the balance in the purchases ledger. No entries had been made. Goods to the value of $800 were sold to Claire in June 2010, and the account had not yet been paid. Interest charges of $30 are to be applied on the overdue account, but no entries for this had yet been recorded. In addition a provision for doubtful debts of 10% on the new outstanding balance is to be created. Dream Beds had sent goods with a selling price of $400 on a sale or return basis to Majit. Majit had not yet signified any intention to purchase the goods. Dream Beds had considered the goods as sold, and made the relevant accounting entries. A page in the sales returns journal in October 2010 had been undercast by $1600. No correction had yet been made. REQUIRED Prepare the corrected sales ledger control account for the year ended 31 December 2010. Prepare a statement reconciling the schedule of trade receivables total with the corrected balance in the sales ledger control account. Explain two advantages of using a sales ledger control account. B S Turner owns a food wholesale business. The following amounts were extracted from books of account at 31 December 2010. $ Inventory – 1 January 45 000 Inventory – 31 December 65 000 Cost of sales 880 000 Business expenses 130 000 Trade payables 100 000 Trade receivables 150 000 Bank overdraft 50 000 Capital – 31 December 2010 1 125 000 The mark up on goods is 25%. REQUIRED Calculate the profit for the year (net profit) ended 31 December 2010. Calculate the following ratios, giving your answer to one decimal place. Return on capital employed Inventory turnover (as a number of times) Liquid (acid test) ratio. S Turner is considering expanding her business by purchasing another food wholesale business. She has obtained the following information on two possible business purchases. Paradis Foods Jones Wholesalers Return on capital employed 15% 6% Current ratio 3.4:1 1.8:1 Liquid (acid test) ratio 0.5:1 1.4:1 REQUIRED Advise which business, if any, she should purchase on the basis of all of the information provided. Justify your answer.
9706_w11_qp_22
THEORY
2011
Paper 2, Variant 2
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Raheem is a trader who makes all his sales on credit. He prepared the following sales ledger control account for the month of December 2015: $ $ Balance b/d 22 380 Sales returns journal 1 440 Sales journal 16 910 Bank 17 380 Balance c/d 20 470 39 290 39 290 Balance b/d 20 470 Raheem extracted a list of customer account balances from the sales ledger at 31 December 2015 totaling $18 740. This did not agree with the balance on the control account. The following errors were found: A sales invoice for $960 had been correctly recorded in the sales journal, but had not been posted to the customer’s ledger account. A customer’s irrecoverable debt of $250 had not been written off in any of Raheem’s books of account. A cheque received, $670, from a customer had been correctly recorded in the cash book. It had been entered on the debit side of the customer’s ledger account as $760. A cheque received, $200, from a customer had been returned unpaid by the customer’s bank. No entry in respect of the returned cheque had been made in any of Raheem’s books of account. Discounts allowed of $830 had not been entered in the control account. They had been entered in the customers’ ledger accounts. A contra to the purchases ledger of $1370 had been entered in the customer’s sales ledger account, but had not been included in the control account. REQUIRED Prepare the updated sales ledger control account for the month of December 2015. Start your answer with the balance brought down of $20 470. Sales ledger control account Prepare a statement to reconcile the original total of sales ledger balances of $18 740 with the closing balance on the amended sales ledger control account. State three advantages to a business of maintaining a sales ledger control account. State two types of errors that will not be identified by producing a sales ledger control account.
9706_w16_qp_21
THEORY
2016
Paper 2, Variant 1
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A sales ledger control account had a debit balance of $38 600. The total of individual sales ledger debit balances was $36 500. The only errors found were as follows. An irrecoverable debt had been recorded in the ledger of Smith but not the control account. The sales journal was undercast by $1500. A contra of $1750 had been correctly recorded in the control account but only $1250 recorded in the ledgers. What was the value of the irrecoverable debt?
9706_w17_qp_12
MCQ
2017
Paper 1, Variant 2
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1775