5.6. Incomplete records
A subsection of Accounting, 7707, through 5. Preparation of financial statements
Listing 10 of 60 questions
Gok is a wholesaler. He prepares his financial statements to the end of February each year. At 29 February 2020, Gok’s ledger account balances included the following. $ Revenue 420 000 Purchases 311 400 Sales returns 12 000 Discount allowed 9 000 Wages 12 360 Rent and rates 11 750 General expenses 4 220 Irrecoverable debts 8 600 Insurance 4 500 Telephone expenses 4 565 Inventory at 1 March 2019 26 700 Drawings 9 500 Fixtures and equipment at cost 120 000 Provision for depreciation of fixtures and equipment 43 200 Additional information Gok did not have time to count and value his inventory at 29 February 2020. His margin is 25%. A loan of $60 000 was obtained from the bank on 1 July 2019. Interest is charged at 7% per annum. The fixtures and equipment are being depreciated at 20% per annum using the reducing balance method. The insurance includes $1500 which covers the period from 1 March to 30 September 2020. Drawings include a payment of $1660 for Gok’s personal telephone expenses. One quarter of this amount was for business use. REQUIRED Prepare Gok’s income statement for the year ended 29 February 2020. Gok Income Statement for the year ended 29 February 2020 $ $ …………………………………………………………… …………………………………………………………… …………………………………………………………… …………………………………………………………… …………………………………………………………… …………………………………………………………… …………………………………………………………… …………………………………………………………… …………………………………………………………… …………………………………………………………… …………………………………………………………… …………………………………………………………… …………………………………………………………… …………………………………………………………… …………………………………………………………… …………………………………………………………… …………………………………………………………… …………………………………………………………… …………………………………………………………… …………………………………………………………… …………………………………………………………… …………………………………………………………… …………………………………………………………… ……………. ……………. ……………. ……………. ……………. ……………. ……………. ……………. ……………. ……………. ……………. ……………. ……………. ……………. ……………. ……………. ……………. ……………. ……………. ……………. ……………. ……………. ……………. ……………. ……………. ……………. ……………. ……………. ……………. ……………. ……………. ……………. ……………. ……………. ……………. ……………. ……………. ……………. ……………. ……………. ……………. ……………. ……………. ……………. ……………. The wages paid by Gok are to his part-time warehouse assistant, Aiman. REQUIRED Advise Gok whether or not he should offer Aiman a partnership in the business. Justify your answer with two advantages and two disadvantages.
7707_s20_qp_22
THEORY
2020
Paper 2, Variant 2
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Stalla started trading on 1 April 2021. All receipts are paid into the bank and all payments are made from the bank. She has not kept a full set of books but has provided the following information. Summary of receipts and payments for the year ended 31 March 2022 $ Receipts Capital introduced 8 000 Loan received (repayable 2027) 5 000 Sales (all cash) 36 000 Payments Trade payables 17 850 Fixtures and fittings 12 000 General expenses 1 920 Rent and insurance 7 100 Drawings ? Bank balance at 31 March 2022 2 330 REQUIRED Record the total receipts and total payments to Stalla’s bank account showing the cash drawings for the year ended 31 March 2022. Balance the bank account and bring the balance down on 1 April 2022. Stalla Bank account Date Details $ Date Details $ During the year ended 31 March 2022, Stalla took goods from the business for her own personal use. The selling price of these goods is $3375. Her mark-up is 25%. REQUIRED Calculate Stalla’s total drawings for the year ended 31 March 2022. Stalla has provided a list of balances at 31 March 2022. $ Fixtures and fittings (net book value) 10 800 Inventory 2 150 Prepaid rent Balance at bank 2 330 Trade payables 1 875 Loan (repayable 2027) 5 000 Capital ? REQUIRED Prepare a statement of affairs to calculate Stalla’s capital at 31 March 2022. Stalla Statement of Affairs at 31 March 2022 $ $ Calculate Stalla’s profit for the year ended 31 March 2022. Stalla is now considering whether she should start to sell at least some of her goods on credit. REQUIRED Advise Stalla whether or not she should start selling on credit terms. Justify your answer.
7707_s22_qp_22
THEORY
2022
Paper 2, Variant 2
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Questions Discovered
60