June 2014 Examination Question Paper

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June 2014 Examination Question Paper 321 Exam ID Question Paper for the following Qualifications: 300: Level 3 Certificate in Bookkeeping QCF: 50084793 320: Level 3 Certificate in Manual Bookkeeping

1 June 2014 Examination Question Paper 321 Exam ID Question Paper for the following Qualifications: 300: Level 3 Certificate in Bookkeeping QCF: : Level 3 Certificate in Manual Bookkeeping QCF: : Level 3 Certificate in Applied Bookkeeping QCF: : Level 3 Certificate in Bookkeeping QCF: : Level 3 Diploma in Bookkeeping QCF: Units: 309: Record transactions and make accounting adjustments: M : Prepare financial statements for a not for profit organisation: D Time Allowed 3 Hours Paper No: 0040 General Instructions 1. Enter your IAB Student Number, Candidate Number and Name of Examination Centre in the spaces provided on the front cover of your Answer Booklet 2. All Answers to be written in blue or black ink 3. All Questions and tasks within each section must be answered 4. Cross out errors neatly or use correcting fluid in moderation 5. Calculators are permitted 6. A blank page is provided in the Answer Booklet for workings if required 7. The Question Paper and Answer Booklet have information and data printed on both sides of the pages 8. Mobile phones are not permitted International Association of Book-keepers, Suite 5, 20 Churchill Square, Kings Hill, West Malling, Kent ME19 4YU Tel: , Fax: , education@iab.org.uk Website:

2 SECTION A RECORD TRANSACTIONS AND MAKE ACCOUNTING ADJUSTMENTS INSTRUCTIONS There are THREE questions in this section of the paper. You must complete ALL TASKS within the questions. QUESTION ONE RECONCILE TRADE DEBTOR and TRADE CREDITOR BALANCES Double entry records are kept on behalf of Marton Engineering. Their General Ledger contains Sales Ledger and Purchase Ledger Control Accounts. The control accounts are within the double entry bookkeeping system, the personal accounts of trade debtors and trade creditors are kept in the subsidiary Sales Ledger and Purchase Ledger respectively as memorandum accounts. As at 1 May 2014 the balance on the Purchase Ledger Control Account of Marton Engineering was 189,240. You are provided with the following information at 31 May 2014: Total purchases per Purchase Day Book in May month 2014 Total purchase returns per Purchase Returns Day Book in May month 2014 Total payments to trade creditors per Cash Book in May month 2014 Total cash discounts received per Cash Book in May month ,560 4, ,300 1,540 Personal Account Balances of Trade Creditors in the Purchase Ledger at 31 May 2014 As at 31 May 2014 the personal accounts of trade creditors were balanced off and listed the list shows that total of trade creditor balances in the Purchase Ledger at that date was 178,760. 1

3 REQUIRED TASK A (1 Mark) Post the balance brought forward at 1 May 2014 to the Purchase Ledger Control Account TASK B (4 Marks) Make postings at 31 May 2014 to the Purchase Ledger Control Account from the list of May 2014 month transactions provided above. TASK C (4 Marks) Balance off the Purchase Ledger Control Account as at 31 May 2014 bringing down the account balance at that date. TASK D (2 Marks) Reconcile the balance on the Purchase Ledger Control Account as at 31 May 2014 with the balance of total trade creditors in the Purchase Ledger at that date. Note: The following proformas are provided for your use in completing the above tasks: General Ledger (Extract): Purchase Ledger Control Account see page 1 of your answer booklet. Schedule reconciling the Purchase Ledger Control Account balance to total trade creditors in the Purchase Ledger at 31 May 2014 see page 1 of your answer booklet. 2

4 Part B One of your colleagues has prepared the Sales Ledger Control Account of Marton Engineering for the month ended 31 May 2014, and has also prepared the following reconciliation of the Sales Ledger Control Account balance to the total of trade debtors in the Sales Ledger at that date: Schedule Reconciling Sales Ledger Control Account Balance to Total Trade Debtors in the Sales Ledger at 31 May 2014 Balance on the Sales Ledger Control Account at 31 May 2014 Total trade debtor balance in the Sales Ledger at 31 May ,960 (DR) 152,220 (DR) Difference 3,260 An investigation into the reason for the difference between the balance on the Sales Ledger Control Account and the total of trade debtors in the Sales Ledger at 31 May 2014 revealed the following: (i) An invoice for 1,200 issued to a trade debtor in May month 2014 had been posted to the debtor personal account as 2,100. (ii) A bad debt of 2,400 written off in May month 2014 had not been posted to the debtor personal account in the subsidiary Sales Ledger, as a result the debtor account balance was on the list of balances extracted from the Sales Ledger as at 31 May 2014 (iii) A cheque for 1,800 received from a trade debtor in May month 2014 had been entered in the Cash Book but had not been posted to the debtor personal account in the subsidiary Sales Ledger (iv) The balance of 1,840 on the personal account of a trade debtor had not been included on the list of trade debtors extracted from the subsidiary Sales Ledger as at 31 May

5 REQUIRED TASK E (4 Marks) Complete the schedule (provided in your answer booklet) and amend the trade debtor total of 152,220 in the Sales Ledger at 31 May 2014, thereby bringing the personal account balances of trade debtors in the Sales Ledger into agreement with the balance on the Sales Ledger Control Account at that date. Note: The following proforma is provided for your use in completing the above task: Schedule amending the trade debtors total in the Sales Ledger at 31 May 2014 see page 2 of your answer booklet. Total marks question 1 = 15 marks 4

6 QUESTION TW0 ACCOUNT FOR FIXED ASSETS The financial year of Alpha-cabs ends on 31 May. The business classifies its fixed assets into several different categories, one of which is vehicles The business keeps separate accounts to account for the cost and depreciation of fixed assets. To account for the depreciation of fixed assets at each financial year end the business uses a Depreciation Expense account in conjunction with Provision for Depreciation accounts. A Fixed Assets Disposal account is also kept for the purpose of accounting for any fixed assets disposed of in a financial year. As at 31 May 2013 the business had the following two accounts in its ledger: Vehicles (Cost) balance 81,000 Vehicles (Provision for Depreciation) balance 26,908 An extract of the General Ledger of Alpha-cabs is provided for your attention, (see page 4 of your answer booklet). A Fixed Asset Register is kept on behalf of Alpha-cabs in which details of individual fixed assets owned by the business are recorded. You are provided with the vehicles section of the Fixed Asset Register of the business (see page 6 of your answer booklet). Acquisitions and Disposals of Vehicles in the Year Ended 31 May 2014 In the year ended 31 May 2014 Alpha-cabs acquired and disposed of the following vehicles: Acquisition of Vehicle a new vehicle (Vauxhall Movano BD13 ACS) was purchased on 1 November 2013 at a cost of 30,000 (ignore VAT), the vehicle was paid for by cheque. Disposal of Vehicle The Vauxhall Vivaro BD08 ACS originally purchased on 1 August 2010 was sold on 31 May A cheque for 11,500 (ignore VAT) was received on disposal. Depreciation Policy Alpha-cabs depreciates its vehicles by 20% each year using the reducing balance method. A full year s depreciation is taken in the year of a vehicles acquisition with no depreciation taken in the year a vehicle is disposed of. 5

7 REQUIRED TASK A (2 Marks) Post the balances provided above, relating to the cost of vehicles and their accumulated depreciation as at 31 May 2013, to appropriate ledger accounts provided in the General Ledger (extract). Task B ( 2 Marks) Enter details of the cost of the Vauxhall Movano BD13 ACS purchased on 1 November 2013 into the Fixed Asset Register (extract) and the Vehicles (Cost) Account in the General Ledger (extract) TASK C (2 Marks) Enter details of the vehicle disposed of on 31 May 2014 into the Fixed Asset Register (extract), and post the disposal proceeds of the vehicle disposed of to the Fixed Assets Disposal Account in the General Ledger (extract). TASK D (6 Marks) Update the Fixed Asset Register (extract) as at 31 May 2014 by completing the columns Annual Depreciation, Accumulated Depreciation and Net Book Value for each vehicle owned by the business as at the year end. TASK E (2.75 Marks) Prepare the Journal entry as at 31 May 2014 to account for depreciation of vehicles at the year end. Date your Journal entry 31 May 2014 and provide a suitable narrative TASK F (2 Marks) Post the entries from the Journal prepared in Task E above into the relevant ledger accounts in the General Ledger (extract) TASK G (5.5 Marks) Prepare the Journal entries required to transfer the cost and accumulated depreciation on the vehicle disposed of on 31 May 2014 to the Fixed Assets Disposal Account. Date your Journal entries 31 May 2014 and provide a suitable narrative TASK H (3 Marks) Post the entries from the Journal prepared in Task G above into the relevant ledger accounts in the General Ledger (extract) TASK I (2.75 Marks) Prepare the Journal entry as at 31 May 2014 to transfer the profit or loss on disposal of the vehicle disposed of to the Profit and Loss Account. Date your Journal entry 31 May 2014 and provide a suitable narrative 6

8 TASK J (2 Marks) Post the Journal entry prepared in Task I above to the Fixed Assets Disposal Account in the General Ledger (extract). (Note that you are not provided with the Profit and Loss Account, therefore you can only post the leg of the Journal entry which relates to the Fixed Assets Disposal Account). Close off the Fixed Assets Disposal Account as at 31 May Note: In completing the tasks above, other than closing off the Fixed Assets Disposal Account as required in Task J, you are not required to close off or balance off any of the other accounts within the General Ledger (extract). Total marks question 2 = 30 marks Note: The following are provided for your use in completing the above tasks: General Ledger (extract) see page 4 of your answer booklet Journal see page 5 of your answer booklet Fixed Asset Register (extract) see page 6 of your answer booklet 7

9 QUESTION THREE ACCOUNT FOR THE VALUE OF STOCK, PREPAYMENTS AND ACCRUALS AND BAD AND DOUBTFUL DEBTS The financial year of Sola-Tech ends on 31 May. The following balances appeared in the General Ledger of the business as at the financial year ended 31 May 2014: Sales Ledger Control Provision for Doubtful Debts (as at 31 May 2013) 178,500 2,145 Rates 26,400 Power Heat and Light 3,845 Operating Expenses 7,540 Stock (Opening Stock 1 June 2013) 154,500 You are provided with an extract from the General Ledger of Sola-Tech showing the above balances brought forward (see pages 8 and 9 of your answer booklet). Additional Information You are provided with the following additional information as at 31 May 2014: (i) (ii) (iii) (iv) (v) The balance of 1,500 (ignore VAT) on the personal account of a trade debtor at 31 May 2014 is now to be written off as a bad debt. The balance on the Provision for Doubtful Debts Account is to be adjusted as at 31 May 2014 to represent an amount equivalent to1.5% of total debtors following the bad debt write off. The balance on the Rates Account per the General Ledger as at 31 May 2014 includes a payment of 9,000 in respect of business rates paid for the six months period 1 April 2014 to 30 September The last payment posted to the Power Heat and Light Account at the year end 31 May 2014 was a cheque for 1,200. The cheque was in respect of power heat and light bills for the three months period ended 31 March It is expected that power heat and light bills for the three months period ending 30 June 2014 will be 10% lower than bills for the previous quarter. At the year end 31 May 2014 operating expenses of 900 were prepaid, there were also operating expenses of 1,750 accrued at that date. Closing stock as at 31 May 2014 had been valued at 164,750. However, since the valuation was carried out the following discrepancy has been discovered. - One end of line item of stock was included in the original valuation at a cost of 1,500 but was now found to have been damaged in storage. Repairs costing 200 would have to be carried out to make the item saleable. The item would then be sold in a clearance sale for 1,000. 8

10 Note: The General Ledger of Sola-Tech includes ledger accounts used for the specific purpose of accounting for Prepayments and Accruals. REQUIRED TASK A (2 Marks) Prepare the Journal entry to account for the bad debt write off as at 31 May TASK B (2 Marks) Post the entries from the Journal prepared in Task A above into the relevant accounts in the General Ledger. TASK C (2 Marks) Prepare the Journal entry to account for the Provision for Doubtful Debts Account adjustment as at 31 May TASK D (2 Marks) Post the entries from the Journal prepared in Task C above into the relevant accounts in the General Ledger (note that you are not provided with the Profit and Loss Account, therefore you can only post the leg of the Journal entries which relate to the Provision for Doubtful Debts account). TASK E (8 Marks) Prepare the Journal entries to account for rates prepaid, power heat and light accrued, and operating expenses prepaid and accrued at 31 May TASK F ( 8 Marks) Post the entries from the Journal prepared in Task E above into relevant accounts in the General Ledger. TASK G (2 Marks) Amend the original closing stock valuation of 164,750 at 31 May 2014 to account for the stock item damaged, by completing the schedule provided on page 10 of your answer booklet 9

11 TASK H (4 Marks) Prepare the Journal entries required to transfer the opening stock and closing stock (as amended in Task G above) to the Trading Account as at the year end 31 May TASK I (2 Marks) Post the Journal entries prepared in Task H above to the Stock Account in the General Ledger (note that you are not provided with the Trading Account, therefore you can only post the legs of the Journal entries which relate to the stock account). TASK J (8 Marks) Prepare the Journal entries as at 31 May 2014 to transfer the expenses of bad debts, rates, power heat and light and operating expenses to the Profit and Loss Account. TASK K (7 Marks) Post the Journal entries prepared in Task J above to the expense accounts of Bad Debts, Rates, Power Heat and Light and Operating Expenses in the General Ledger and close off the accounts. (Note that you are not provided with a Profit and Loss Account, therefore you can only post the legs of the Journal entries which relate to the expense accounts. TASK L (8 Marks) Balance off the Provision for Doubtful Debts, Sales Ledger Control, Stock, Prepayments and Accruals accounts in the General Ledger as at 31 May 2014 bringing down the account balances as at that date. Total marks question 3 = 55 Note: The following proformas are provided for your use in completing the above tasks: General Ledger (Extract) see pages 8 and 9 of your answer booklet Schedule amending stock valuation see page 10 of your answer booklet Journal see pages 11 and 12 of your answer booklet Total marks this unit =

12 SECTION B PREPARE FINANCIAL STATEMENTS FOR A NOT FOR PROFIT ORGANISATION INSTRUCTIONS There is ONE question in this section of the paper. You must complete ALL TASKS within the question. QUESTION ONE The following are the assets and liabilities of the Trent Rowing Club at 31 May 2013: Clubhouse fixtures and fittings (net book value) 4,800 Clubhouse rent (accrued) 700 Members subscriptions (in arrears) 560 Cash and Bank 3,620 Clubhouse heat and light (accrued) 380 Club boats and boating equipment (net book value) 18,500 Club vehicle (net book value) 10,000 REQUIRED TASK A (4 Marks) Calculate the accumulated fund of the members of the Trent Rowing Club at 31 May Note: The following proforma is provided for your use in completing the above task: Workings Calculation of Accumulated Fund of Members of the Trent Rowing Club at 31 May see page 14 of your answer booklet) The club treasurer has presented you with the following summary of the club s receipts and payments for the year ended 31 May 2014, together with a list of additional information as at that date. 11

13 Trent Rowing Club Receipts and Payments Account for the Year Ended 31 May 2014 (Cash and Bank) Receipts Payments Balance b/f (31 May 2013) 3,620 Clubhouse rent 5,100 Members subscriptions 12,500 Clubhouse heat and light 1,180 Christmas disco 2,680 New boat and boating equipment 6,000 Christmas disco expenses 1,150 Clubhouse maintenance Vehicle expenses Boat repairs 1,260 1,650 1,250 Balance c/d (31 May 2014) 1,210 18,800 18,800 Balance b/d (31 May 2014) 1,210 Additional Information: (i) Members subscriptions of 480 were in arrears at 31 May (ii) Clubhouse rent of 800 is accrued at 31 May (iii) An accrual of 480 is to be made in respect of clubhouse heat and light bills unpaid as at 31 May (iv) Depreciation for the year ended 31 May 2014 is to be charged as follows- Clubhouse fixtures and fittings 480, Boats and boating equipment 1,500 (this includes depreciation on the new boat and boating equipment bought in the year), Club vehicle 1,

14 REQUIRED TASK B (12 Marks) Prepare the following accounts for the year ended 31 May 2014: Members Subscriptions (Income) Clubhouse Rent Clubhouse Heat and Light TASK C (12 Marks) Prepare the Income and Expenditure Account of the club for the year ended 31 May 2014 TASK D (12 Marks) Prepare the Balance Sheet of the club at 31 May 2014 Total marks question 1 = 40 Note: The following proformas are provided for your use in completing the above tasks: Accounts Members Subscriptions (income), Clubhouse Rent and Clubhouse Heat and Light - see page 15 of your answer booklet Income and Expenditure Account - see page 16 of your answer booklet Balance Sheet - see page 17 of your answer booklet Total marks this unit = 40 13

Time Allowed: 3 hours

Time Allowed: 3 hours ANSWER BOOKLET: Exam ID 321 Qualifications: Level 3 Certificate in Bookkeeping (QCF) Accreditation number: 500/8479/3 IAB ID 300 Level 3 Certificate in Manual Bookkeeping (QCF) Accreditation number 500/9260/1