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Book-keeping Level 1

Model Answers Series 2 2006 (Code 1606) Malaysia

1606/2/06/MA 2

Book- Keeping Level 1 Malaysia Series 2 2006

How to use this booklet

Model Answers have been developed by Education Development International plc (EDI) to offer additional information and guidance to Centres, teachers and candidates as they prepare for LCCI International Qualifications. The contents of this booklet are divided into 3 elements:

(1) Questions – reproduced from the printed examination paper (2) Model Answers – summary of the main points that the Chief Examiner

expected to see in the answers to each question in the examination paper, plus a fully worked example or sample answer (where applicable)

(3) Helpful Hints – where appropriate, additional guidance relating to individual

questions or to examination technique Teachers and candidates should find this booklet an invaluable teaching tool and an aid to success. EDI provides Model Answers to help candidates gain a general understanding of the standard required. The general standard of model answers is one that would achieve a Distinction grade. EDI accepts that candidates may offer other answers that could be equally valid.

© Education Development International plc 2005 All rights reserved; no part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise without prior written permission of the Publisher. The book may not be lent, resold, hired out or otherwise disposed of by way of trade in any form of binding or cover, other than that in which it is published, without the prior consent of the Publisher.

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QUESTION 1 The following list of balances was extracted from Angela’s books at 31 March 2006. RM Angela’s Capital account at 1 April 2005 20,597 Drawings 9,842 Sales 157,325 Returns inwards 234 Provision for depreciation: Vehicles 6,200 Premises 720 Trade debtors 26,549 Overhead expenses 55,428 Purchases 72,612 Returns outwards 438 Carriage inwards 338 Creditors 12,850 Stock at 1 April 2005 6,000 Cash 250 Long term loan 10,000 Vehicles at cost 15,500 Premises at cost 24,000 Bank ? REQUIRED (a) Prepare Angela’s trial balance at 31 March 2006 to calculate the bank balance

(22 marks) (b) Copy the following list into your answer book and state the classification of each account as real, personal or nominal. Only one classification will apply to each account:

(i) Premises at cost account

(ii) Overhead expenses account

(iii) Carriage inwards account

(iv) A creditor’s account

(v) Cash account

(vi) Drawings account (3 marks)

(Total 25 marks)

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MODEL ANSWER TO QUESTION 1 Angela – Trial balance at 31 march 2006 (a) Debit Credit RM RM Angela’s Capital account at 1 April 2005 20,597 Drawings 9,842 Sales 157,325 Returns outwards 438 Provision for depreciation - Vehicles 6,200 Provision for depreciation - Premises 720 Trade debtors 26,549 Overhead expenses 55,428 Purchases 72,612 Returns inwards 234 Carriage inwards 338 Creditors 12,850 Stock at 1 April 2005 6,000 Cash 250 Long term loan 10,000 Vehicles at cost 15,500 Premises at cost 24,000 Bank balance (overdraft) 2,623 210,753 210,753

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MODEL ANSWER TO QUESTION 1 CONTINUED

(b) Premises at cost account Real Overhead expenses account Nominal Carriage inwards account Nominal A creditor’s account Personal Cash account Real Drawings account Personal

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QUESTION 2 Laura keeps her petty cash book on the imprest system, she balances her books monthly and makes up the balance to RM 200.00 on the first day of each month. On 31 January 2006 petty cash in hand was RM68.35. The petty cash book has 3 analysis columns – “Postage and stationery expenses”, “Travelling expenses” and “Office expenses”. The following transactions were dealt with by the petty cashier: RM February 1 Restored imprest 3 Paid for stationery 15.25 5 Paid for petrol 25.07 7 Paid for postage stamps 3.25 10 Paid for coffee 16.49 17 Paid for train ticket 30.00 20 Paid for sugar 2.50 28 Paid for petrol 22.77 March 1 Restored imprest 5 Paid for postage stamps 5.80 7 Paid for tea 4.70 11 Paid for cleaning materials 2.50 15 Paid for train ticket 18.50 18 Received from sale of postage stamps 1.95 26 Paid for stationery 24.30 30 Paid for petrol 24.86 On 1 April Laura reduced the imprest to RM 150. REQUIRED: (a) Write up the petty cash book for the two month period. It should be balanced at the end of each

month and the imprest restored on the first day of the following month. (18 marks)

(b) Prepare the following ledger accounts for both months:

(i) Postage and stationery expenses (ii) Travelling expenses (iii) Office expenses

(7 marks) (Total 25 marks)

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MODEL ANSWER TO QUESTION 2 (a) Laura - Petty cash book Receipts Payments Total Postage & Travelling Office Stationery Expenses Expenses

2006 RM RM RM RM RM February 1 68.35 Balance b/f 131.65 Bank 3 Stationery 15.25 15.25 5 Petrol 25.07 25.07 7 Stamps 3.25 3.25 10 Coffee 16.49 16.49 17 Train ticket 30.00 30.00 20 Sugar 2.50 2.50 28 Petrol 22.77 22.77 115.33 18.50 77.84 18.99 28 Balance c/d 84.67 200.00 200.00 March 1 84.67 Balance b/d 115.33 Bank 5 Stamps 5.80 5.80 7 Tea 4.70 4.70

11 Cleaning materials 2.50 2.50

15 Train ticket 18.50 18.50 18 1.95 Sale of stamps 26 Stationery 24.30 24.30 30 Petrol 24.86 24.86 80.66 30.10 43.36 7.20 31 Balance c/d 121.29 201.95 201.95 April 1 121.29 Balance b/d 28.71 Bank

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MODEL ANSWER TO QUESTION 2 CONTINUED (b) Postage & stationery 2006 RM 2006 RM February 28 PCB 18.50 March 31 PCB 30.10 March 31 PCB 1.95 Travelling expenses 2006 RM February 28 PCB 77.84 March 31 PCB 43.36 Office expenses 2006 RM February 28 PCB 18.99 March 31 PCB 7.20

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QUESTION 3 Andrew is a wholesaler who records invoices in day books. The following transactions occurred during January 2006: Purchases: Invoice No List Price - RM Trade

Discount % January 11 Bill 726 240 60 12 Charles 727 650 50 15 Ella 728 420 40 23 Bill 729 360 60 28 Ella 730 500 40 30 Ella 731 280 40 Sales: Invoice No List price – RM Trade

Discount % January 9 Jack 853 120 25 16 Kelly 854 150 20 19 Mona 855 190 10 23 Kelly 856 100 20 (1) Bill allows a cash discount of 5% on items paid within 14 days of invoice (2) Ella allows a cash discount of 2% on items paid within 7 days of invoice date (3) Charles allows no cash discount Payments: January 24 Payment was made to clear Bill’s account 25 Payment was made to Ella for invoice 728 29 Payment was made to Ella for invoice 730 REQUIRED For Andrew’s business

(a) (i) the Purchase day book (6 marks)

(ii) the Sales day book (4 marks) (iii) the Cash book (7 marks)

(b) The ledger accounts for:

(i) Ella (4 marks)

(ii) Sales (1 mark)

(iii) Purchases (1 mark)

(iv) Discount received (2 marks)

(Total 25 marks)

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MODEL ANSWER TO QUESTION 3 (a) (i) Purchase Day Book RM Jan 11 Bill 96 12 Charles 325 15 Ella 252 23 Bill 144 28 Ella 300 30 Ella 168 1285 Sales Day Book (ii) RM Jan 9 Jack 90 16 Kelly 120 19 Mona 171 23 Kelly 80 461 Cash Book (iii) Discount Bank RM RM Jan 24 Bill 12 228 25 Ella 252 29 Ella 6 294 18 (b) Ella Account (i) RM RM

Jan 15 Purchases 252 Jan 25 Bank/Cash 252 28 Purchases 300 29 Bank/Cash 294

Discount received 6

30 Purchases 168 31 Balance c/d 168 720 720 Feb 1 Balance b/d 168 Sales Account (ii) RM Jan 31 Sundries 461

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MODEL ANSWER TO QUESTION 3 CONTINUED Purchases Account (iii) RM Jan 31 Sundries 1285 Discount Received Account (iv) RM

Jan 31 Sundries 18

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QUESTION 4 James, a sole trader, has produced his own financial statements for the year ended 31 March 2006. James’ attempt at a balance sheet is shown below: Assets RM RM Stock at 31 March 2006 4,200 Creditors 3,600 Cash 150 Drawings 4,000 Equipment (cost) 2,000 Vehicles (cost) 10,000 Accruals 125 Bank overdraft 1,075 Provision for doubtful debts 300 Net profit for the year 12,300 37,750 Liabilities Debtors 6,500 Prepayments 250 Provision for depreciation of equipment 1,200 Provision for depreciation of vehicles 5,000 12,950 Net assets 24,800 Capital at 1 April 2005 3,500 Additional information: (1) No depreciation has been charged for the year. Calculations, in line with previous years, should

have been: Equipment 20% using the straight line method Vehicles 30% using the reducing balance method

No fixed assets were purchased or sold during the year ended 31 March 2006. (2) A debt of RM200 should be written off, but the provision for doubtful debts should remain at

RM300. (3) An item of stock valued at RM500 (included in the RM4,200) is damaged and its value should be reduced to RM150. The profit of RM12,300 must be amended to take account of the 3 notes above. REQUIRED Prepare a revised Balance Sheet at 31 March 2006, in good form, for James’ business.

(Total 25 marks)

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MODEL ANSWER TO QUESTION 4 James – Balance Sheet at 31 March 2006 Fixed Assets Cost

RM Depreciation RM

NBV RM

Equipment 2,000 1,600 400 Vehicles 10,000 6,500 3,500 12,000 8,100 3,900 Current Assets Stock 3,850 Debtors 6,300 Less provision for doubtful debts 300 6,000 Prepayments 250 Cash 150 10,250 Current Liabilities Bank overdraft 1,075 Creditors 3,600 Accruals 125 4,800 5,450 Net Assets 9,350 Capital 1 April 2005 3,500 Add net profit 9,850 13,350 Less drawings 4,000 9,350