Final accounts for sole traders and partnerships

Transcription

1 Osborne Books Tutor Zone Final accounts for sole traders and partnerships Practice assessment 2 Osborne Books Limited, 2013

2 2 f i n a l a c c o u n t s f o r s o l e t r a d e r s a n d p a r t n e r s h i p s t u t o r z o n e Task 1 This task is about incomplete records and reconstructing general ledger accounts. You are working on the accounting records of a sole trader for the year ended 31 March 20X1. You have the following information: Day book summaries for the year Net VAT Total Sales 168,500 33, ,200 Sales returns 3, ,368 Purchases 94,160 18, ,992 Purchases returns 2, ,496 Note: all sales and purchases are on credit terms. Further information Net VAT Total Selling expenses 20,340 4,068 24,408 Note: selling expenses are not included in the purchases day book. Bank summary Dr Cr Balance b/d 14,920 Travel expenses 18,515 Sales ledger control 192,840 Selling expenses 24,408 Interest received 35 Purchases ledger control 95,585 HMRC for VAT 10,930 Drawings 15,400 Payroll expenses 31,854 Balance c/d 11, , ,795 Further information: Cash (settlement) discounts allowed during the year were 380. Cash (settlement) discounts received during the year were 420. Select your entries from the following list: Balance b/d, Balance c/d, Bank, Cash purchases, Cash sales, Discounts allowed, Discounts received, Drawings, Interest received, Inventory, Payroll expenses, Purchases day book, Purchases returns day book, Sales day book, Sales returns day book, Selling expenses, Travel expenses, Value Added Tax.

3 p r a c t i c e a s s e s s m e n t 2 3 (a) Using the figures given on the previous page, prepare the sales ledger control account for the year ended 31 March 20X1. Show clearly the amount of trade receivables at the year end as the balance carried down. Sales ledger control account Balance b/d 19,455 (b) Using the figures given on the previous page, prepare the purchases ledger control account for the year ended 31 March 20X1. Show clearly the amount of trade payables at the year end as the balance carried down. Purchases ledger control account Balance b/d 16,341

4 4 f i n a l a c c o u n t s f o r s o l e t r a d e r s a n d p a r t n e r s h i p s t u t o r z o n e (c) Using the figures given on page 2, prepare the VAT control account for the year ended 31 March 20X1. Show clearly the amount of VAT due to HM Revenue & Customs at the year end as the balance carried down. Note: the business is not charged VAT on its travel expenses. VAT control account Balance b/d 4,125

5 p r a c t i c e a s s e s s m e n t 2 5 Task 2 This task is about calculating missing balances and the preparation of financial statements. You have the following information about a sole trader. The value of assets and liabilities as at 1 April 20X1 was: Inventory 8,490 Bank (overdrawn) 5,645 Trade payables 12,765 Non-current assets at carrying amount 35,450 Bank loan 15,500 Trade receivables 22,935 There were no other assets or liabilities. (a) Calculate the following as at 1 April 20X1. Do not enter any figures as negative. Assets Liabilities Capital For the year ended 31 March 20X1 you have the following information: Trade receivables at 1 April 20X0 20,845 Trade receivables at 31 March 20X1 22,935 Bank receipts from trade receivables during the year 134,850 Cash sales during the year 2,355 Settlement (cash) discount allowed 1,045 (b) Calculate the sales for the year ended 31 March 20X1.

6 6 f i n a l a c c o u n t s f o r s o l e t r a d e r s a n d p a r t n e r s h i p s t u t o r z o n e (c) Which of the following is best described as a non-current asset? Select one answer. (a) A bank loan repayable in two years time (b) Computers used in the office that are due to be replaced next month (c) Owner s drawings (d) Trade receivables that have been outstanding for more than a year You are now working on the accounts of a different business. Full accounting records have not been kept and you have been asked to produce some figures for the financial statements. The business makes all its purchases in cash. The figures you need to calculate and the sources of the information available to you are given below. (d) For each missing figure indicate the one source of information that will help you. Put a tick in the relevant column of the table below. Missing figures Sources of information Bank Physical Trade Gross profit statement inventory count payables mark-up Closing inventory Cash purchases Total sales

7 p r a c t i c e a s s e s s m e n t 2 7 Task 3 This task is about preparing financial statements for sole traders. You have the following trial balance for a sole trader known as Southern Supplies. All the necessary year end adjustments have been made. The following accounting policy is used by Southern Supplies: Sales revenue should include sales returns, if any. (a) Calculate the sales revenue figure to be included in the Statement of Profit or Loss for Southern Supplies. (b) Prepare a Statement of Profit or Loss (on the next page) for Southern Supplies for the year ended 31 March 20X1. If necessary, use a minus sign to indicate only the following: the deduction of an account balance used to make up cost of sales (cost of goods sold) a loss for the year Southern Supplies Trial balance as at 31 March 20X1 Dr Cr Accruals 695 Bank 2,450 Capital 33,380 Closing inventory 10,290 10,290 Depreciation charges 4,560 Discounts allowed 795 Drawings 15,835 General expenses 11,345 Office equipment at cost 29,330 Office equipment accumulated depreciation 15,760 Opening inventory 9,175 Payroll expenses 30,720 Payroll liabilities 360 Prepayments 455 Purchases 75,430 Purchases ledger control 11,890 Rent and rates 7,450 Sales returns 620 Sales revenue 149,975 Sales ledger control 28,175 Value Added Tax 4, , ,630

8 8 f i n a l a c c o u n t s f o r s o l e t r a d e r s a n d p a r t n e r s h i p s t u t o r z o n e Select your entries from the following list: Accruals, Bank, Capital, Closing inventory, Depreciation charges, Discounts allowed, Drawings, General expenses, Office equipment at cost, Office equipment accumulated depreciation, Opening inventory, Payroll expenses, Payroll liabilities, Prepayments, Purchases, Purchases ledger control, Rent and rates, Sales ledger control, Sales returns, Sales revenue, Value Added Tax. Southern Supplies Statement of Profit or Loss for the year ended 31 March 20X1 Sales revenue Cost of sales Gross profit Less: Total expenses Profit/loss for the year

9 p r a c t i c e a s s e s s m e n t 2 9 (c) Where should prepayments of income be shown in the Statement of Financial Position. Select one from: (a) (b) (c) (d) As a non-current asset As a current asset As a current liability As a non-current liability (d) Identify one valid reason for preparing a Statement of Financial Position. Select one from: (a) (b) (c) (d) It shows the profitability and performance of the business during the accounting period It shows the owner of the business the amount of profit that can be taken as drawings It shows what the business is worth (in terms of assets, liabilities and capital) at the end of the accounting period It shows whether any errors have been made in the bookkeeping system

10 1 0 f i n a l a c c o u n t s f o r s o l e t r a d e r s a n d p a r t n e r s h i p s t u t o r z o n e Task 4 This task is about accounting for partnerships. You have the following information: The financial year ends on 31 March. The partners are Kim and Leo. Jan was admitted to the partnership on 1 April 20X1 when she paid 30,000 into the bank account as her capital. Profit share, effective until 31 March 20X1: Kim 60% Leo 40% Profit share, effective from 1 April 20X1: Jan 25% Kim 40% Leo 35% Goodwill was valued at 50,000 on 31 March 20X1. Goodwill is to be introduced into the partners capital accounts on 31 March and then eliminated on 1 April. Select your entries from the following list: Balance b/d, Balance c/d, Bank, Capital Jan, Capital Kim, Capital Leo, Current Jan, Current Kim, Current Leo, Drawings, Goodwill. (a) Prepare the goodwill account of the partnership, showing clearly the transactions on the admission of Jan, the new partner. Goodwill account

11 p r a c t i c e a s s e s s m e n t (b) Prepare the capital account for Jan, the new partner, showing clearly the balance carried down as at 1 April 20X1. Capital account Jan Balance b/d 0 (c) Identify whether the following statements about the partnership of Jan, Kim and Leo are true or false by putting a tick in the relevant column of the table below. Statement True False Jan has paid a premium for a 25% share of the profits of the partnership With goodwill valued at 50,000, the capital accounts of Kim and Leo will increase by 25,000 each With the admission of Jan, the profit of the partnership before appropriations will reduce by a third If the business should be sold in the near future, Jan will receive 25% of the value of the business

12 1 2 f i n a l a c c o u n t s f o r s o l e t r a d e r s a n d p a r t n e r s h i p s t u t o r z o n e You have the following information about another partnership business: The financial year ends on 31 March. The partners at the beginning of the year were Dot, Eva and Fin. Dot retired on 30 June 20X0. Partners annual salaries: Dot 15,000 Eva 20,000 Fin 10,000 Partners interest on capital: Dot 1,000 per full year Eva 1,200 per full year Fin 800 per full year Profit share, effective until 30 June 20X0: Dot 30% Eva 50% Fin 20% Profit share, effective from 1 July 20X0: Eva 70% Fin 30% Profit for the year ended 31 March 20X1 was 84,000. The profits were accrued evenly during the year. (d) Prepare the appropriation account for the partnership business for the year ended 31 March 20X1. You must enter zeros where appropriate. Do not use brackets, minus signs or dashes.

13 p r a c t i c e a s s e s s m e n t Partnership appropriation account for the year ended 31 March 20X1 Profit for appropriation Salaries: Dot Eva Fin Interest on capital: Dot Eva Fin Profit available for distribution 1 April 20X0 1 July 20X0 30 June 20X0 31 March 20X1 Total Profit share Dot Eva Fin Total profit distributed

14 1 4 f i n a l a c c o u n t s f o r s o l e t r a d e r s a n d p a r t n e r s h i p s t u t o r z o n e Task 5 This task is about preparing a partnership Statement of Financial Position. You are preparing the Statement of Financial Position for the Barkla Partnership for the year ended 31 March 20X1. The partners are Paulo and Veena. All the necessary year end adjustments have been made, except for the transfer of profit to the current accounts of the partners. Before sharing profits the balances of the partners current accounts are: Paulo 550 credit Veena 340 debit Each partner is entitled to 7,790 profit share. (a) Calculate the balance of each partner s current account after sharing profits. Indicate whether these balances are DEBIT or CREDIT. Current account: Paulo DEBIT / CREDIT Current account: Veena DEBIT / CREDIT Note: these balances will need to be transferred into the Statement of Financial Position of the partnership which follows. You have the following trial balance. All the necessary year end adjustments have been made.

15 p r a c t i c e a s s e s s m e n t (b) Prepare a Statement of Financial Position for the partnership as at 31 March 20X1. You need to use the partners current account balances that you have just calculated in (a). Do not use brackets, minus signs or dashes. Barkla Partnership Trial balance as at 31 March 20X1 Dr Cr Allowance for doubtful debts 855 Allowance for doubtful debts adjustment 110 Bank 1,415 Capital account Paulo 24,000 Capital account Veena 20,000 Cash 365 Closing inventory 12,495 12,495 Current account Paulo 550 Current account Veena 340 Depreciation charges 5,140 Disposal of non-current asset 1,045 Office expenses 12,830 Opening inventory 11,960 Payroll expenses 44,395 Prepayments 395 Purchases 102,685 Purchases ledger control 16,175 Sales revenue 181,030 Sales ledger control 40,085 Value Added Tax 2,965 Vehicles at cost 38,400 Vehicles accumulated depreciation 10,540 Total 270, ,135 Select your entries from the following list: Bank, Capital accounts, Cash, Current accounts, Expenses, Inventory, Prepayments, Purchases, Sales, Trade payables, Trade receivables, Value Added Tax, Vehicles.

16 1 6 f i n a l a c c o u n t s f o r s o l e t r a d e r s a n d p a r t n e r s h i p s t u t o r z o n e Barkla Partnership Statement of Financial Position as at 31 March 20X1 Non-current assets Cost Accumulated Carrying amount depreciation Current assets Total current assets Current liabilities Total current liabilities Net current assets Net assets Financed by: Paulo Veena Total