This exam paper is in two sections. You should try to complete every task in both sections.

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Exam NVQ/SVQ Level 2 in Accounting Preparing Ledger Balances and an Initial Trial Balance (PLB) 2003 Standards Tuesday 17 June 2008 (afternoon) Time allowed - 3 hours plus 15 minutes reading time

1 Exam NVQ/SVQ Level 2 in Accounting Preparing Ledger Balances and an Initial Trial Balance (PLB) 2003 Standards Tuesday 17 June 2008 (afternoon) Time allowed - 3 hours plus 15 minutes reading time Please complete the following information in BLOCK CAPITALS: Student member number Desk number Venue code Date Venue name Important: This exam paper is in two sections. You should try to complete every task in both sections. We recommend that you use the 15 minutes reading time to study the exam paper fully and carefully so that you understand what to do for each task. However, you may begin to write your answers within the reading time, if you wish. We strongly recommend that you use a pen rather than a pencil. You may not use programmable calculators or dictionaries in the exam. Do NOT open this paper until instructed to do so by the Supervisor. PLB

2 This exam paper is in TWO sections. You must show competence in BOTH sections. So, try to complete EVERY task in BOTH sections. Section 1 contains 6 tasks and Section 2 contains 10 tasks. You should spend about 90 minutes on each section. There is blank space for your workings on page 10, but you should include all essential calculations in your answers. Both Sections 1 and 2 are based on the business described below. Introduction Ben Mohr is the owner of First Fashions, a clothing warehouse. You are employed by the business as a bookkeeper. The business uses a manual accounting system. The VAT rate is 17.5%. Double entry takes place in the main (general) ledger. Individual accounts of debtors and creditors are kept in subsidiary ledgers as memorandum accounts. Payments and receipts from the bank current account are recorded in the cash book, which is part of the double entry system. Assume today s date is 2008 unless you are told otherwise. 2

3 Note: This page is perforated. You may remove it for easy reference. Section 1 processing exercise You should spend about 90 minutes on this section. Write your answers in the blank spaces provided. Please use the blank space on page 10 to show your workings. Data The following balances are relevant to you at the start of the day on 2008: Subsidiary (sales) ledger accounts Sharif Clothing 4,963 Andrews & Company 3,210 Linens Ltd 21,695 Denton Designs 5,425 Main ledger accounts Motor vehicles 10,110 Bank savings (debit balance) 15,245 Sales 432,148 Sales returns 5,400 Sales ledger control 174,163 Discount allowed 2,650 Hotel expenses 3,994 VAT (debit balance) 13,762 Task 1.1 Enter the opening balances shown above into the accounts on pages 5-7. Note: The lines shown in the accounts on pages 5-7 are there to help you present your work neatly and clearly. You may not need to use all the lines. 3

4 Note: This page is perforated. You may remove it for easy reference. Data The following transactions all took place on 2008 and have been entered into the relevant books of prime entry as shown below. No entries have yet been made into the ledger system. Sales day book Date 2008 Details Sharif Clothing Andrews & Company Linens Ltd Denton Designs Invoice number Total VAT Net 3, ,964 2, , , ,480 1,800 Totals 15,557 2,317 13,240 Sales returns day book Date 2008 Details Sharif Clothing Denton Designs Credit note number Total VAT Net 188 1, ,480 Totals 1, ,640 Cash book Date 2008 Details Discount allowed Bank Date 2008 Details Bank Balance b/f Linens Ltd VAT refund ,426 6,445 18,653 Transfers to bank savings account Motor vehicles (ignore VAT) Hotel expenses Balance c/d 2,500 28, , ,524 37,524 1 July Balance b/d 6,249 Task 1.2 From the day books and cash book shown above, make the relevant entries into the accounts in the subsidiary (sales) ledger and main ledger shown on pages 5-7. Task 1.3 Balance the accounts, showing clearly the balances carried down at (closing balance). Task 1.4 Now enter the balances brought down at 1 July (opening balance), showing clearly the date and details, as well as the amount. 4

5 Subsidiary (sales) ledger Sharif Clothing Andrews & Company Linens Ltd Denton Designs 5

6 Main ledger Motor vehicles Bank savings Sales Sales returns 6

7 Main ledger Sales ledger control Discount allowed Hotel expenses VAT 7

8 Task 1.5 Transfer the balances that you calculated in tasks 1.3 and 1.4, and the bank balance, to the trial balance on page 9. Data Other balances to be transferred to the trial balance: Stock 18,754 Petty cash control 75 Purchases ledger control 90,218 Capital 68,781 Purchases 278,100 Purchases returns 15,350 Discount received 1,907 Wages 45,426 Motor expenses 3,276 Office expenses 5,382 Rent and rates 18,000 Subscriptions 450 Professional fees 1,263 Miscellaneous expenses 648 Suspense account (credit balance) 720 Task 1.6 Transfer the balances shown above to the trial balance on page 9, and total each column. 8

9 First Fashions Trial balance as at 2008 Dr Cr Motor vehicles Stock Bank current account Bank savings account Petty cash control Sales ledger control Purchases ledger control VAT Capital Sales Sales returns Purchases Purchases returns Discount received Discount allowed Wages Motor expenses Office expenses Rent and rates Hotel expenses Subscriptions Professional fees Miscellaneous expenses Suspense account Total 9

10 Note: You may use this page for your workings. 10

11 Section 2 tasks and questions You should spend about 90 minutes on this section. Answer all the questions on pages 11 to 19. You should show your answers by inserting a tick, words or figures, as appropriate. Please use the blank space on page 10, and where indicated in the task, to show your workings. Note: You do not need to adjust the accounts in Section 1 as part of any of the following tasks. Task 2.1 You have been asked to reconcile the petty cash control account balance ( 75.00) with the cash in hand. The following notes and coins are in the petty cash tin: Notes and coins p 10 10p 100 1p (a) Complete the following reconciliation. Petty cash reconciliation p Balance of petty cash control account Cash in hand Difference (b) 1. Suggest THREE possible reasons for the difference

12 Task 2.2 At the end of the last VAT period, the VAT account showed that a refund was due from HM Revenue & Customs. (a) State ONE reason that would cause a refund to be due to First Fashions. Sales in June totalled 129,250 including VAT (b) What is the VAT amount? Workings: Task 2.3 A customer has offered to pay for goods by a banker s draft. What is a banker s draft? 12

13 Task 2.4 Ben Mohr is considering computerising the accounting system. (a) 1. Name TWO items of hardware that Ben will need. 2. (b) 1. Name TWO advantages of computerising the accounting system. 2. Task 2.5 On, the suspense account has a credit balance of 720. On 1 July, the following errors were discovered: A bank payment of 225 has been omitted from the rent and rates account. A bad debt expense of 945 has been credited correctly to the sales ledger control account, but debited to both the bad debt account and the sales account (ignore VAT). (a) (b) Enter the opening balance in the suspense account below. Make the necessary entries to clear the suspense account. Suspense account 13

14 Task 2.6 In what circumstances would First Fashions use a non trade debtors control account? Task 2.7 Some accounting errors cause the trial balance totals to disagree. Show what effect the errors below will have on the trial balance, by placing a tick in the relevant column for each error. Error The entries in the main ledger to record a sales invoice were duplicated. The entries to record payment of an electricity bill have been reversed. The motor expenses account has been added up incorrectly. A purchase invoice was entered correctly in the purchases ledger control account but incorrectly in the purchases account. A customer did not take the discount offered. The trial balance will balance a The trial balance will NOT balance a 14

15 Task 2.8 Note: Remember that you do not need to adjust, or refer to, the accounts in Section 1 or in the previous tasks in Section 2. You now have the following information. (a) (b) (c) 50 has been debited to the discount received account instead of the discount allowed account. A payment of 200 for office expenses has been credited to the bank savings account instead of the bank current account. A credit customer, Kit & Company, has ceased trading, owing First Fashions 2,800 plus VAT. The net amount and VAT must be written off in the main ledger. Record the journal entries needed in the main ledger to deal with this information. You do not need to give dates and narratives. Journal Account names (a) Dr Cr (b) (c) 15

16 Task 2.9 This is a summary of transactions with credit suppliers during June Balance of creditors at 1 June ,299 Goods bought on credit 39,300 Payments made to credit suppliers 33,106 Discount received 1,000 Goods returned to credit suppliers 275 (a) Prepare a purchases ledger control account from the details shown above. Show clearly the balance carried down at (closing balance) AND brought down at 1 July (opening balance). Purchases ledger control 16

17 Task 2.9, continued The following balances were in the subsidiary (purchases) ledger on 1 July. B & M Ltd 23,000 Bright Stuff 15,394 Rail Trail 11,249 FGT Ltd 28,429 Walton & Company 12,140 (b) Reconcile the balances shown above with the purchases ledger control account balance you have calculated in part (a). Purchases ledger control account balance as at 1 July 2008 Total of subsidiary (purchases) ledger accounts as at 1 July 2008 Difference (c) The purchases ledger control account and subsidiary (purchases) ledger do not agree. Which ONE of the following errors might have caused the difference? a One of the accounts in the subsidiary ledger has been understated. One of the accounts in the subsidiary ledger has been overstated. One supplier has offered a discount. First Fashions has underpaid a supplier. First Fashions has overpaid a supplier. 17

18 Task 2.10 On 21 June, First Fashions received the following bank statement as at 20 June. Middle Bank plc Cornbow House, Romsleigh, R45 2LD To: First Fashions Account no: Date: 20 June 2008 STATEMENT OF ACCOUNT Date 2008 Details Paid out Paid in Balance 02 June Balance b/f 12,100 C 06 June Cheque ,600 C 10 June Cheque ,425 5,175 C 10 June Cheque ,125 C 14 June Cheque ,777 C 16 June Bank Giro Credit - DVM Ltd 850 5,627 C 16 June Cheque ,998 C 20 June Bank Giro Credit - Remnants Ltd 3,400 8,398 C Direct Debit - Property Maintenance 725 7,673 C Direct Debit - LDM Ltd 100 7,573 C 20 June Bank charges 15 7,558 C 20 June Bank interest 20 7,578 C D = Debit C = Credit The cash book as at 21 June is shown below. Cash book Date 2008 Details Bank Date 2008 Cheque no. Details Bank 01 June Balance b/f 12, June Stone & Company June Laura Laing 5, June Barker Ltd June DVM Ltd June Belt and Braces 6, June Matthew Mann June DRL Ltd June Philip Gee June David Kay

19 Task 2.10, continued (a) (b) (c) Check the items on the bank statement against the items in the cash book. Update the cash book as needed. Total the cash book and clearly show the balance carried down at 21 June (closing balance) AND brought down at 22 June (opening balance). Note: You do not need to adjust the accounts in Section 1. (d) Using the information on page 18, prepare a bank reconciliation statement as at 21 June. Note: Do not make any entries in the shaded boxes. Bank reconciliation statement as at 21 June 2008 Balance per bank statement Add: Name: Name: Total to add Less: Name: Name: Total to subtract Balance as per cash book 19

20 NVQ/SVQ qualification codes Foundation (2003 standards) - 100/2940/0 / G Unit number (PLB) H/101/8100 Association of Accounting Technicians (AAT) Aldersgate Street, London EC1A 4HY, UK t: (UK) +44 (0) (non-uk) e: aat@aat.org.uk w: aat.org.uk

This exam paper is in two sections. You should try to complete every task in both sections.

This exam paper is in two sections. You should try to complete every task in both sections. Exam NVQ/SVQ Level 2 in Accounting Preparing Ledger Balances and an Initial Trial Balance (PLB) 2003 Standards Tuesday 4 December 2007 (afternoon) Time allowed 3 hours plus 15 minutes reading time Please