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1. Financial accounting (AS Level)
A section of Accounting, 9706
Listing 10 of 1775 questions
The following is the draft balance sheet of Marshall Klingsman, a sole trader, at 30 April 2011. Balance Sheet at 30 April 2011 $ $ $ Non-current assets Buildings at valuation 300 000 Equipment at book value 540 000 Motor vehicles at book value 330 000 1 170 000 Current assets Inventories 70 000 Trade receivables 19 000 Other receivables 2 000 Cash and cash equivalents 4 000 95 000 Current liabilities Trade payables 57 000 Other payables 3 000 60 000 Net current assets 35 000 1 205 000 Non-current liabilities Loan 200 000 Net assets 1 005 000 Financed by: Capital at start 1 000 000 Add Profit for the year (net profit) 80 000 1 080 000 Less Drawings 75 000 Capital at end 1 005 000 Additional information: After preparation of the draft balance sheet the following errors were found. Goods in inventory at 30 April 2011, valued at cost $15 000, were found to be damaged. The estimated net realisable value is $8 000. Loan interest of 4% per annum had been omitted from the accounts. No provision for depreciation on equipment had been made for the year. Depreciation should have been provided at 5% per annum using the reducing balance method. Motor vehicles are depreciated by 10% per annum. During the year vehicle repairs of $10 000 had been incorrectly debited to the motor vehicles account. On 28 April 2011 a credit customer, who owed $3600, was declared bankrupt. It was decided to write off this amount in full. No record of this has been made in the accounts. REQUIRED Prepare a statement to show the corrected profit for the year (net profit) ended 30 April 2011. Prepare the corrected balance sheet at 30 April 2011. Explain two differences between cost and net realisable value. Discuss the accounting treatment of the damaged inventory in item 1. Using your answers to and calculate the following ratios to two decimal places: current ratio liquid ratio (acid test). State four ways in which Klingsman could improve his working capital. Explain why the liquid ratio (acid test) is a more reliable indicator of liquidity than the current ratio.
9706_s11_qp_23
THEORY
2011
Paper 2, Variant 3
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Bart, a sole trader, provided the following trial balance for the year ended 30 April 2012. $ $ Sales Revenue 799 000 Inventory at 1 May 2011 (at cost) Raw materials 20 000 Work-in-progress 52 000 Finished goods 78 000 Purchase of raw materials 238 000 Purchase returns 10 000 Manufacturing wages 265 000 Indirect factory wages 46 000 Factory buildings at cost 600 000 Factory machinery at cost 260 000 Office equipment at cost 148 000 Provision for depreciation: Factory machinery 60 000 Office equipment 44 000 Insurance 14 000 General factory expenses 6 000 Factory supervision salaries 15 000 Heat and light 6 000 Administrative expenses 33 000 Office salaries 55 000 Trade receivables 40 000 Provision for doubtful debts 2 000 Trade payables 32 000 Bank 3 000 Capital 932 000 1 879 000 1 879 000 . Additional Information: Inventory at 30 April 2012 (at cost): $ Raw materials 56 000 Work-in-progress 58 000 Finished goods 72 000 Depreciation is provided on non-current assets at a rate of 20% per year using the reducing balance method. The following expenses should be apportioned as follows: Factory Office Insurance 70% 30% Heat and light 80% 20% On 30 April 2012 indirect factory wages of $5000 were unpaid and insurance of $7000 had been paid in advance. Provision for doubtful debts is to be maintained at 3% of trade receivables. For Examiner's Use REQUIRED Prepare Bart’s manufacturing account for the year ended 30 April 2012. For Examiner's Use Prepare Bart’s income statement for the year ended 30 April 2012. For Examiner's Use State three examples of how the prudence concept has been applied in the preparation of Bart’s manufacturing account and income statement.
9706_s12_qp_22
THEORY
2012
Paper 2, Variant 2
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Questions Discovered
1775