Paper Reference(s) London Examinations...
60
Examiner’s use only Team Leader’s use only Surname Initial(s) Signature Centre No. Turn over Candidate No. Question Leave Number Blank 1 2 3 4 5 6 7 Total Paper Reference(s) 6001/01 London Examinations GCE Accounting (Modular Syllabus) Advanced Subsidiary/Advanced Level Unit 1: The Accounting System and Costing Friday 21 May 2010 – Morning Time: 3 hours Materials required for examination Items included with question papers Nil Source booklet Instructions to Candidates In the boxes above, write your centre number, candidate number, your surname, initial(s) and signature. Answer FIVE questions, choosing TWO from Section A and THREE from Section B. Indicate which question you are answering by marking the box ( ). If you change your mind, put a line through the box ( ) and then indicate your new question with a cross ( ). All calculations must be shown. Write your answers in the spaces provided in this question paper. Do not return the insert with the question paper. Information for Candidates The marks for individual questions and the parts of questions are shown in round brackets: e.g. (2). The total mark for this paper is 200. There are 44 pages in this question paper. Any blank pages are indicated. Calculators may be used. The source material for use with questions 1 to 7 is in the enclosed source booklet. Advice to Candidates Write your answers neatly and in good English. Paper Reference 6001 01 This publication may be reproduced only in accordance with Edexcel Limited copyright policy. ©2010 Edexcel Limited. Printer’s Log. No. M36983A W850/6001/57570 1/1/ *M36983A0144*
Transcript of Paper Reference(s) London Examinations...
Examiner’s use only
Team Leader’s use only
Surname Initial(s)
Signature
Centre No.
Turn over
Candidate No.
Question Leave Number Blank
1
2
3
4
5
6
7
Total
Paper Reference(s)
6001/01London Examinations GCEAccounting (Modular Syllabus)Advanced Subsidiary/Advanced LevelUnit 1: The Accounting System and CostingFriday 21 May 2010 – MorningTime: 3 hours
Materials required for examination Items included with question papers
Nil Source booklet
Instructions to CandidatesIn the boxes above, write your centre number, candidate number, your surname, initial(s) and signature. Answer FIVE questions, choosing TWO from Section A and THREE from Section B.Indicate which question you are answering by marking the box ( ).If you change your mind, put a line through the box ( ) and then indicate your new question with a cross ( ). All calculations must be shown.Write your answers in the spaces provided in this question paper.Do not return the insert with the question paper.
Information for CandidatesThe marks for individual questions and the parts of questions are shown in round brackets: e.g. (2).The total mark for this paper is 200. There are 44 pages in this question paper. Any blank pages are indicated.Calculators may be used.The source material for use with questions 1 to 7 is in the enclosed source booklet.
Advice to CandidatesWrite your answers neatly and in good English.
Paper Reference
6 0 0 1 0 1
This publication may be reproduced only in accordance with Edexcel Limited copyright policy. ©2010 Edexcel Limited.
Printer’s Log. No.
M36983AW850/6001/57570 1/1/
*M36983A0144*
36983A_Paper_GCE_Accounting_Unit1 1 16/11/2009 13:07:38
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SECTION A
Answer TWO questions from this section.
If you answer question 1, put a cross in this box ( ).
Source material for question 1 is on pages 2 to 4 of the source booklet.
1. (a) Prepare for the year ended 30 April 2010 the:
(i) capital accounts of Georgia, Harriet and Ionna
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36983A_Paper_GCE_Accounting_Unit2 2 16/11/2009 13:07:42
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(ii) profit and loss account of the partnership
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36983A_Paper_GCE_Accounting_Unit3 3 16/11/2009 13:07:46
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36983A_Paper_GCE_Accounting_Unit4 4 16/11/2009 13:07:48
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(iii) profit and loss appropriation account
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36983A_Paper_GCE_Accounting_Unit5 5 16/11/2009 13:07:50
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(iv) current accounts of Georgia, Harriet and Ionna.
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36983A_Paper_GCE_Accounting_Unit6 6 16/11/2009 13:07:51
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(b) Prepare the balance sheet of the partnership as at 30 April 2010.
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36983A_Paper_GCE_Accounting_Unit7 7 16/11/2009 13:07:53
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Ionna considered setting up business as a sole trader before agreeing to join the partnership of Georgia and Harriet.
(c) Evaluate the decision of Ionna to join the partnership of Georgia and Harriet as an alternative to opening a new business of her own, as a sole trader.
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....................................................................................................................................... (8) Q1
(Total 52 marks)
36983A_Paper_GCE_Accounting_Unit8 8 16/11/2009 13:07:55
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If you answer question 2, put a cross in this box ( ).
Source material for question 2 is on pages 5 to 7 of the source booklet.
2. (a) Prepare the:
• journal entries recording the correction of the errors and transfers in (i) to (viii) (narratives are not required)
• suspense account following the correction of the errors in (i) to (viii).
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36983A_Paper_GCE_Accounting_Unit9 9 16/11/2009 13:07:56
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36983A_Paper_GCE_Accounting_Unit10 10 16/11/2009 13:07:58
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(b) Prepare for Jaida, for the year ended 31 March 2010, the:
(i) Stock account
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(ii) Provision for doubtful debts account
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36983A_Paper_GCE_Accounting_Unit11 11 16/11/2009 13:08:00
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(iii) Motor vehicles account.
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36983A_Paper_GCE_Accounting_Unit12 12 16/11/2009 13:08:01
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(c) Re-draft the trading and profit and loss account following correction of the errors in (a).
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36983A_Paper_GCE_Accounting_Unit13 13 16/11/2009 13:08:03
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(d) Explain the accounting concept of materiality.
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36983A_Paper_GCE_Accounting_Unit14 14 16/11/2009 13:08:05
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(e) Evaluate whether it is useful for Jaida to prepare the draft trading and profit and loss account when the trial balance contains a suspense account.
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(Total 52 marks)
36983A_Paper_GCE_Accounting_Unit15 15 16/11/2009 13:08:06
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*M36983A01644*
If you answer question 3, put a cross in this box ( ).
Source material for question 3 is on pages 8 and 9 of the source booklet.
3. (a) Prepare for the year ended 30 April 2010, the manufacturing account, in columnar format, showing the:
• prime cost of producing the Standard and the Super • manufacturing cost of producing the Standard and the Super.
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36983A_Paper_GCE_Accounting_Unit16 16 16/11/2009 13:08:08
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36983A_Paper_GCE_Accounting_Unit17 17 16/11/2009 13:08:10
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(b) Calculate:
(i) the cost of manufacturing:
• one Standard • one Super.
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(ii) the total annual gross profit from sales of the:
• Standard • Super.
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36983A_Paper_GCE_Accounting_Unit18 18 16/11/2009 13:08:11
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Soller Products is considering ceasing production of the Standard which it considers to be unprofitable. The Production Manager is concerned at this development and believes that if overheads were apportioned to production lines, instead of being allocated, this would show that the Standard was profitable.
Additional information: Standard Super Employees (number) 20 15 Floor area occupied (sq m) 2 500 3 500 Equipment value (£’000) 10 000 12 000
(c) Calculate, with overheads apportioned instead of allocated, the:
(i) total overhead which would be charged to each production line
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36983A_Paper_GCE_Accounting_Unit19 19 16/11/2009 13:08:13
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(ii) total annual gross profit from sales for each production line.
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36983A_Paper_GCE_Accounting_Unit20 20 16/11/2009 13:08:15
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(d) (i) Distinguish between apportionment of overheads and absorption of overheads
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(ii) Explain the circumstances in which there would be over absorption of overheads.
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36983A_Paper_GCE_Accounting_Unit21 21 16/11/2009 13:08:16
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(e) Evaluate whether Soller Products should cease the production of the Standard.
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Q3
(Total 52 marks)TOTAL FOR SECTION A: 104 MARKS
36983A_Paper_GCE_Accounting_Unit22 22 16/11/2009 13:08:18
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36983A_Paper_GCE_Accounting_Unit23 23 16/11/2009 13:08:20
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SECTION B
Answer THREE questions from this section.
If you answer question 4, put a cross in this box ( ).
Source material for question 4 is on page 10 of the source booklet.
4. (a) Prepare for the White Lightning Fan Club the:
(i) receipts and payments account for the year ended 31 March 2010
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36983A_Paper_GCE_Accounting_Unit24 24 16/11/2009 13:08:21
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(ii) income and expenditure account for the year ended 31 March 2010 showing clearly the profit or loss made on the raffle of concert tickets and the sales of the band’s album
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36983A_Paper_GCE_Accounting_Unit25 25 16/11/2009 13:08:23
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36983A_Paper_GCE_Accounting_Unit26 26 16/11/2009 13:08:25
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(iii) balance sheet as at 31 March 2010.
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36983A_Paper_GCE_Accounting_Unit27 27 16/11/2009 13:08:26
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(b) Evaluate the decision of the fan club not to write off any bad debts.
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(Total 32 marks)
36983A_Paper_GCE_Accounting_Unit28 28 16/11/2009 13:08:28
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If you answer question 5, put a cross in this box ( ).
Source material for question 5 is on page 11 of the source booklet.
5. (a) (i) Explain the term fixed cost.
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(ii) Give one example of a fixed cost to be incurred by Kerrys’ business.
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36983A_Paper_GCE_Accounting_Unit29 29 16/11/2009 13:08:30
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(b) Calculate for Kerry, the cost of making:
(i) one Budget vehicle trailer
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36983A_Paper_GCE_Accounting_Unit30 30 16/11/2009 13:08:31
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(ii) one Superior vehicle trailer.
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36983A_Paper_GCE_Accounting_Unit31 31 16/11/2009 13:08:33
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(c) Calculate for Kerry, the total profit if he specialises in making the:
(i) Budget vehicle trailer
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(ii) Superior vehicle trailer.
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36983A_Paper_GCE_Accounting_Unit32 32 16/11/2009 13:08:35
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To start the new business making vehicle trailers, Kerry would need to leave his employment as an accounts manager earning £15 000 per annum.
(d) Evaluate the decision of Kerry to leave his employment to start the new business, and advise him which vehicle trailer, if any, he should make.
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(Total 32 marks)
36983A_Paper_GCE_Accounting_Unit33 33 16/11/2009 13:08:36
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If you answer question 6, put a cross in this box ( ).
Source material for question 6 is on pages 12 and 13 of the source booklet.
6. (a) Distinguish between the profitability and the liquidity of a business.
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36983A_Paper_GCE_Accounting_Unit34 34 16/11/2009 13:08:38
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(b) Calculate the bank balance at 31 March 2010.
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(c) Calculate for both the years ended 31 March 2009 and 31 March 2010, the:
(i) Current ratio
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(ii) Liquid (acid test) ratio
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(iii) Creditors payment period (in days).
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(d) Evaluate the liquidity of Panjit’s business.
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(Total 32 marks)
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If you answer question 7, put a cross in this box ( ).
Source material for question 7 is on page 14 of the source booklet.
7. (a) Explain two limitations of the trial balance.
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(b) Prepare, incorporating any adjustments for errors and showing the balance at 30 April 2010, the:
(i) purchases ledger control account
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(ii) sales ledger control account.
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(c) Evaluate the contribution of control accounts in ensuring that the debtors and creditors accounts are always accurate.
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(Total 32 marks)
TOTAL FOR SECTION B: 96 MARKSTOTAL FOR PAPER: 200 MARKS
END
36983A_Paper_GCE_Accounting_Unit43 43 16/11/2009 13:08:53
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36983A_Paper_GCE_Accounting_Unit44 44 16/11/2009 13:08:54
Turn overPrinter’s Log. No.
M36983A
This publication may be reproduced only in accordance with Edexcel Limited copyright policy. ©2010 Edexcel Limited.
W850/6001/57570 1/1/
*M36983A*
Paper Reference(s)
6001/01London Examinations GCEAccounting (Modular Syllabus)Advanced Subsidiary/Advanced LevelUnit 1 – The Accounting System and CostingFriday 21 May 2010 – Morning
Source booklet for use with Questions 1 to 7.
Do not return the insert with the question paper.
36983A_Source_Booklet_GCE_Accoun1 1 16/11/2009 13:12:49
M36983A 2
SECTION A
SOURCE MATERIAL FOR USE WITH QUESTION 1
1. Georgia and Harriet are in partnership, sharing profits and losses equally. No interest is paid on capital or charged on drawings. No salaries are paid to the partners.
On 30 April 2009, the capital account balances of the partners were:
Capital accounts: Georgia £35 000 Harriet £15 000
On 1 May 2010 Georgia and Harriet agreed to admit Ionna as a partner. It was agreed that:
(i) Ionna would bring £15 000 cash into the partnership.
(ii) Goodwill was valued at £50 000.
(iii) Goodwill would not be retained in the books of the new partnership.
(iv) No interest would be paid on capital.
(v) Interest would be charged on drawings at the rate of 5% on balances at the end of the year.
(vi) Salaries would be paid to: Harriet £9 000 and Ionna £6 000.
(vii) Profits and losses would be shared: Georgia two fifths; Harriet two fifths; Ionna one fifth.
36983A_Source_Booklet_GCE_Accoun2 2 16/11/2009 13:12:49
M36983A 3 Turn over
At the end of the first year of trading, on 30 April 2010, with the exception of the capital accounts, the following balances remained in the books of the partnership after the preparation of the trading account.
£ Gross profit 63 270 Carriage inwards 340 CR Carriage outwards 4 650 Insurance 1 800 Rent 8 500
Rent receivable 1 500Motor vehicles running expenses 9 180Motor vehicles (Cost £16 000) 10 000Office equipment (Cost £11 000) 9 800Wages and salaries 17 000Sundry expenses 6 750Loan interest paid 1 000 8% Loan repayable 30.4.2015 20 000Provision for doubtful debts 3 800Stock at 30 April 2010 52 000Debtors 26 000Creditors 17 690Bank 9 500 DRCurrent accounts at 1 May 2009 Georgia 430 CR Harriet 1 850 DRDrawings Georgia 1 000 Harriet 10 000 Ionna 3 000
The following information is available for the year ended 30 April 2010:
(i) Insurance includes an annual fire insurance renewal of £1 200 paid on 1 January 2010.
(ii) Rent receivable of £500 is outstanding.
(iii) Wages and salaries includes drawings of £5 000 made by Ionna which had been incorrectly posted to the wages and salaries account.
(iv) Depreciation is charged at the rate of 25% on motor vehicles using the reducing balance method and 20% on office equipment using the straight line method.
(v) The provision for doubtful debts is to be maintained at 4% of debtors.
36983A_Source_Booklet_GCE_Accoun3 3 16/11/2009 13:12:49
M36983A 4
Required:
(a) Prepare for the year ended 30 April 2010 the:
(i) capital accounts of Georgia, Harriet and Ionna(7)
(ii) profit and loss account of the partnership(15)
(iii) profit and loss appropriation account(6)
(iv) current accounts of Georgia, Harriet and Ionna.(6)
(b) Prepare the balance sheet of the partnership as at 30 April 2010.(10)
Ionna considered setting up business as a sole trader before agreeing to join the partnership of Georgia and Harriet.
(c) Evaluate the decision of Ionna to join the partnership of Georgia and Harriet as an alternative to opening a new business of her own, as a sole trader.
(8)
(Total 52 marks)
Answer space for question 1 is on pages 2 to 8 of the question paper.
36983A_Source_Booklet_GCE_Accoun4 4 16/11/2009 13:12:49
M36983A 5 Turn over
SOURCE MATERIAL FOR USE WITH QUESTION 2
2. Jaida is in business buying and selling goods on credit. On 31 March 2010, Jaida extracted a trial balance for the business which failed to agree, the debit total of balances exceeding the credit total of balances by £1 750. A suspense account was opened to record the difference.
Jaida then prepared the draft trading and profit and loss account for the year, before locating the errors, which had resulted in the suspense account balance.
The draft trading and profit and loss account prepared on 31 March 2010 was as follows:
Jaida – Trading and Profit and Loss Account for the year ended 31 March 2010
£ £ Sales 133 000 Sales returns 6 500 126 500 Opening stock 12 900 Purchases 62 000 74 900 Closing stock 13 500 Cost of sales 61 400 Gross profit 65 100 Less Wages 35 000 Operating expenses 28 900 Depreciation on motor vehicle 3 200 Bad debt 600 Provision for doubtful debts 550 68 250 Net loss 3 150
36983A_Source_Booklet_GCE_Accoun5 5 16/11/2009 13:12:50
M36983A 6
After the preparation of the draft trading and profit and loss account, the following errors were located:
(i) A sale of goods £2 300 on credit to Salem, had been recorded in the sales account as £230.
(ii) Sales returns £170 had been correctly recorded in the account of the debtor, but had been credited as £150 in the sales returns account.
(iii) Purchases included a cash payment of £450 for operating expenses.
(iv) Stock at 31 March 2010 contained one stock sheet valued at the list price of £6 000, including the ‘mark up’ of 25%.
(v) The calculation and recording of wages for the year was incorrect. The following actual payments were made to Jaida’s three staff members:
Ahmed Paid an annual salary of £12 000 plus a bonus of £500.
Beena Paid a monthly salary of £750 plus a commission of 5% of sales. Average monthly sales were £8 000.
Chandra Paid an hourly rate of £3 per hour for 40 hours per week, 52 weeks per year. Average overtime worked for 50 weeks of the year was 6 hours at time and a half.
(vi) During the year operating expenses of £5 000 for repairing the vehicle, were recorded in the vehicle asset account. Depreciation was charged on the balance of the vehicles account at the year end at the rate of 20% on cost using the straight line method.
(vii) The provision for doubtful debts on 1 April 2009 was £550 and this was entered in the draft profit and loss account.
(viii) During the year, debts of £600 were written off as bad debts. On 31 March 2010 the debtors balance was £18 700 and it was decided to write off an additional £1 200 as bad debts and to maintain the provision for doubtful debts at 4% of the remaining debts. This adjustment had not been made.
36983A_Source_Booklet_GCE_Accoun6 6 16/11/2009 13:12:50
M36983A 7 Turn over
Required:
(a) Prepare the: • journal entries recording the correction of the errors and transfers in (i) to (viii) (narratives
are not required) • suspense account following the correction of the errors in (i) to (viii).
(20)
(b) Prepare for Jaida, for the year ended 31 March 2010, the:
(i) Stock account(4)
(ii) Provision for doubtful debts account(4)
(iii) Motor vehicles account(4)
(c) Re-draft the trading and profit and loss account following correction of the errors in (a).(8)
(d) Explain the accounting concept of materiality.(4)
(e) Evaluate whether it is useful for Jaida to prepare the draft trading and profit and loss account when the trial balance contains a suspense account.
(8)
(Total 52 marks)
Answer space for question 2 is on pages 9 to 15 of the question paper.
36983A_Source_Booklet_GCE_Accoun7 7 16/11/2009 13:12:50
M36983A 8
SOURCE MATERIAL FOR USE WITH QUESTION 3
3. Soller Products makes two products: the Standard and the Super. The following information is available for the year ended 30 April 2010.
(i) Both products use the same raw material. On 1 May 2009, the stock of raw material was 5 000 units at a value of £10 per unit.
(ii) During the year, 40 000 units of raw material were issued to production and the following purchases of raw material were made:
May – July 12 000 units @ £12 August – October 10 000 units @ £13 November – January 15 000 units @ £12 February – April 8 000 units @ £11
Stock is valued using the First In First Out (F.I.F.O) method based upon periodic valuation.
(iii) One unit of raw material will make either one Standard or one Super.
(iv) During the year 25 000 Standards and 15 000 Supers were produced.
(v) The factory has two production lines, one to make the Standard and one to make the Super. Twenty production staff made Standards and fifteen production staff made Supers.
(vi) Manufacturing wages are paid on the basis of day-work rate plus bonus. • All production staff work 40 hours per week for 50 weeks of the year and are paid at a rate
of £5 per hour. • A bonus payment of £1 for each Standard produced is shared amongst the Standard line
workers. • A bonus payment of £1 for each Super produced is shared amongst the Super line
workers.
(vii) Factory overheads were allocated to the production lines of the Standard and the Super on the following basis:
Standard Super Total £ £ £ Management salaries 160 000 50 000 210 000 Premises costs 100 000 80 000 180 000 Depreciation 70 000 40 000 110 000
(viii) Work in progress:
1 May 2009 30 April 2010 £ £ Standard 50 000 25 000 Super 30 000 15 000
(ix) The Standard was sold for £35 per unit and the Super for £50 per unit. All units produced during the year were sold and there were no stocks of finished goods at the start or end of the year.
36983A_Source_Booklet_GCE_Accoun8 8 16/11/2009 13:12:50
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Required:
(a) Prepare for the year ended 30 April 2010, the manufacturing account, in columnar format, showing the:
• prime cost of producing the Standard and the Super • manufacturing cost of producing the Standard and the Super.
(16)
(b) Calculate:
(i) the cost of manufacturing: • one Standard • one Super
(4)
(ii) the total annual gross profit from sales of the: • Standard • Super
(4)
Soller Products is considering ceasing production of the Standard which it considers to be unprofitable. The Production Manager is concerned at this development and believes that if overheads were apportioned to production lines, instead of being allocated, this would show that the Standard was profitable.
Additional information: Standard Super Employees (number) 20 15 Floor area occupied (sq m) 2 500 3 500 Equipment value (£’000) 10 000 12 000
(c) Calculate, with overheads apportioned instead of allocated, the:
(i) total overhead which would be charged to each production line (8)
(ii) total annual gross profit from sales for each production line.(4)
(d) (i) Distinguish between apportionment of overheads and absorption of overheads. (4)
(ii) Explain the circumstances in which there would be over absorption of overheads. (4)
(e) Evaluate whether Soller Products should cease the production of the Standard.(8)
(Total 52 marks)
Answer space for question 3 is on pages 16 to 22 of the question paper.
36983A_Source_Booklet_GCE_Accoun9 9 16/11/2009 13:12:50
M36983A 10
SECTION B
SOURCE MATERIAL FOR USE WITH QUESTION 4
4. White Lightning is a popular music band recording albums and performing at concerts. On 1 April 2009, the band started the White Lightning Fan Club with £1 000 cash which was paid into a bank account.
The following is the summarised information for the year ended 31 March 2010.
(i) Fans were asked to register ‘on-line’ and were then sent a membership pack and an invoice for a £10 subscription for the year. The number of fans registering ‘on-line’ was 2 000. At 31 March 2010, subscriptions from 400 fans were in arrears and 75 fans had paid their subscriptions in advance for a second year.
(ii) The fan club decided not to write off any subscription debts as bad debts.
(iii) A fan club secretary was appointed on 1 April 2009 at a salary of £8 000 per annum. Other expenses paid were: telephone and postage £3 600, rent £2 000 and general office expenses £1 850. At 31 March 2010, £250 was owing for a telephone bill.
(iv) Office furniture and a second hand photocopier were purchased on credit on 1 April 2009 for £4 000. During the year £3 000 was paid to the creditor. It is estimated that the office furniture and the second hand photocopier will have a life of 5 years, and a residual value of £600.
(v) A monthly newsletter was circulated to all members at a cost of £1 080.
(vi) During the year the fan club raffled two tickets to a White Lightning concert. The cost of the tickets was £280 and 400 fans entered the raffle each paying £1 for a raffle ticket.
(vii) The fan club offered autographed copies of the band’s latest album. The club purchased 300 albums at a cost of £12 each. During the year the club sold 280 of the autographed albums at £15 each.
Required:
(a) Prepare for the White Lightning Fan Club the:
(i) receipts and payments account for the year ended 31 March 2010(8)
(ii) income and expenditure account for the year ended 31 March 2010 showing clearly the profit or loss made on the raffle of concert tickets and the sales of the band’s album
(12)
(iii) balance sheet as at 31 March 2010.(8)
(b) Evaluate the decision of the fan club not to write off any bad debts. (4)
(Total 32 marks)
Answer space for question 4 is on pages 24 to 28 of the question paper.
36983A_Source_Booklet_GCE_Accoun10 10 16/11/2009 13:12:50
M36983A 11
SOURCE MATERIAL FOR USE WITH QUESTION 5
5. Kerry is considering starting a business making vehicle trailers. He has carried out market research and has determined that there is a market for inexpensive Budget vehicle trailers and also high quality Superior vehicle trailers. He has decided to specialise in one type of trailer only, either the Budget or the Superior. His market research has revealed the following:
Budget Superior Sales per annum 50 20 Retail price £1 700 £3 800 Costs: Raw materials List price £200 £300 Trade discount on materials 20% 10% Labour Hours per trailer 64 130 Rate per hour £5 £6 Overheads Marketing £19 000 per annum Administration £30 000 per annum Equipment Cost £12 000, life 5 years, residual value £2 000
Required:
(a) (i) Explain the term fixed cost.(2)
(ii) Give one example of a fixed cost to be incurred by Kerry’s business.(2)
(b) Calculate for Kerry, the cost of making:
(i) one Budget vehicle trailer(9)
(ii) one Superior vehicle trailer.(9)
(c) Calculate for Kerry, the total profit if he specialises in making the:
(i) Budget vehicle trailer(3)
(ii) Superior vehicle trailer.(3)
To start the new business making vehicle trailers, Kerry would need to leave his employment as an accounts manager earning £15 000 per annum.
(d) Evaluate the decision of Kerry to leave his employment to start the new business, and advise him which vehicle trailer, if any, he should make.
(4)
(Total 32 marks)
Answer space for question 5 is on pages 29 to 33 of the question paper.
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36983A_Source_Booklet_GCE_Accoun11 11 16/11/2009 13:12:50
M36983A 12
SOURCE MATERIAL FOR USE WITH QUESTION 6
6. Panjit is in business buying and selling goods on credit. He is concerned that, although his business is making a good profit, his balance at the bank is not increasing. The following information is available:
(i) Summarised transactions for the year ended 31 March 2010
£ Receipts from debtors 151 000 Payments to creditors 99 000 Fixed assets purchased 18 000 6% Loan taken out by Panjit 10 000 Expenses paid 25 000 Drawings 43 000
(ii) Asset and liabilities
31 March 2009 31 March 2010 £ £ Bank 3 000 ? Debtors 15 000 12 000 Creditors 22 000 7 000 Stock 25 000 26 000 Prepaid expenses 4 000 2 000 Fixed assets 40 000 45 000 6% Loan – 10 000
(iii) Credit purchases for the year ended:
31 March 2009 31 March 2010 £ £ 80 000 84 000
36983A_Source_Booklet_GCE_Accoun12 12 16/11/2009 13:12:50
M36983A 13 Turn over
Required:
(a) Distinguish between the profitability and the liquidity of a business.(4)
(b) Calculate the bank balance at 31 March 2010.(6)
(c) Calculate for both the years ended 31 March 2009 and 31 March 2010, the:
(i) Current ratio(6)
(ii) Liquid (acid test) ratio(6)
(iii) Creditors payment period (in days)(6)
(d) Evaluate the liquidity of Panjit’s business.(4)
(Total 32 marks)
Answer space for question 6 is on pages 34 to 39 of the question paper.
36983A_Source_Booklet_GCE_Accoun13 13 16/11/2009 13:12:50
M36983A 14
SOURCE MATERIAL FOR USE WITH QUESTION 7
7. Capela is a general trader. She has been busy with the business and has not maintained the debtors and creditors personal accounts for April 2010. All other entries have been made in the accounts.
Capela wishes to complete her accounts for April 2010. She has extracted a trial balance at 30 April 2010 with the exception of the balances for debtors and creditors, although she is aware that there are some errors in the accounts.
The following balances were available at 30 April 2010: £ Total creditors at 1 April 2010 9 730 Total debtors at 1 April 2010 14 250 Purchases on credit 12 420 Cheques received 25 000 Returns outwards 380 Discount received 460 Debtor cheque returned dishonoured 600 Discount allowed 160 Sales on credit 28 310 Cheques paid 13 500 Returns inwards 250 Purchases for cash 5 350 Bad debt written off 800 Provision for doubtful debts 750
The following errors have been discovered in the books:
(i) a credit note £750 for goods returned to Capela, had not been entered into the accounts
(ii) discount received of £95 had been claimed in error by Capela
(iii) invoices for credit purchases of £2 500, had not been entered into the accounts
(iv) a debtor who owed £600 has now been declared bankrupt.
Required:
(a) Explain two limitations of the trial balance.(4)
(b) Prepare, incorporating any adjustments for errors and showing the balance at 30 April 2010, the:
(i) purchases ledger control account(10)
(ii) sales ledger control account.(14)
(c) Evaluate the contribution of control accounts in ensuring that the debtors and creditors accounts are always accurate.
(4)
(Total 32 marks)
Answer space for question 7 is on pages 40 to 43 of the question paper.
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