(i) 3.6 (ii) 3.7

Size: px

Start display at page:

Download "(i) 3.6 (ii) 3.7"

Dana Davidson
6 years ago
Views:

1 3.6 (i) Partnership of A & B Bank 80,000 Capital A 40,000 Capital B 40,000 Capital introduced at commencement of business 3.6 (ii) Partnership of C & D Bank 75,000 Capital C 50,000 Capital D 25,000 Capital introduced at commencement of business 3.7 Partnership of In and Out Cash 10,000 Inventory 17,000 Accounts receivable 8,000 Motor vehicle 15,000 Capital In 50,000 Assets introduced by In Cash 5,000 Inventory 20,000 Accounts receivable 17,500 Office furniture 7,500 Capital Out 50,000 Assets introduced by Out 2

2 3.9 (a) Jones and Smith Date 20X5 Jul 1 Motor vehicle 32,000 Inventory 28,000 Accounts receivable 54,000 Accounts payable 14,000 Capital Jones 100,000 Capital introduced by Jones at commencement Land and buildings 280,000 Inventory 44,000 Accounts receivable 47,000 Bank 56,000 Accounts payable 27,000 Capital Smith 400,000 Capital introduced by Smith at commencement (b) Jones and Smith Balance Sheet as at 1st July 20X5 $ $ $ Current assets 229,000 (28, ,000) Inventory 72,000 (54, ,000) Accounts receivable 101,000 Bank 56,000 Non-current assets 312,000 Land and buildings 280,000 Motor vehicle 32,000 Total assets 541,000 Current liabilities 41,000 (14, ,000) Accounts payable 41,000 Total liabilities 41,000 Net assets $500,000 Proprietorship $500,000 Capital Jones 100,000 Capital Smith 400,000 (c) Jones 1/5 and Smith 4/5 Jones 100,000 / 500,000 = 1 / 5 Smith 400,000 / 500,000 = 4 / 5 4

3 3.11 (a) Here and There Bank 600,000 Capital Here 300,000 Capital There 300,000 Capital introduced at commencement Land and buildings 180,000 Plant and machinery 50,000 Inventory 20,000 Accounts receivable 15,000 Goodwill (balancing item) 25,000 Accounts payable 10,000 Vendor Salmon Bros 280,000 Purchase of business from Salmon Bros Vendor Salmon Bros 280,000 Bank 280,000 Discharge of purchase consideration (b) Here and There Balance Sheet $ $ $ Current assets 355,000 Inventory 20,000 Accounts receivable 15,000 Bank 320,000 Non-current assets 255,000 Land and buildings 180,000 Plant and machinery 50,000 Goodwill 25,000 Total assets 610,000 Current liabilities 10,000 Accounts payable 10,000 Total liabilities 10,000 Net assets $600,000 Proprietorship $600,000 Capital Here 300,000 Capital There 300,000 6

4 3.12 (a) P Royal and J Paul Bank 100,000 Capital P Royal 100,000 Cash introduced as capital by P Royal Bank 50,000 Capital J Paul 50,000 Cash introduced as capital by J Paul Plant and machinery 35,000 Motor vehicle 28,000 Inventory 26,400 Accounts receivable 32,600 Goodwill (balancing item) 7,000 Accounts payable 9,000 Vendor R Young 120,000 Purchase of business from R Young Vendor R Young 120,000 Bank 120,000 Discharge of purchase consideration (b) Bank Capital P Royal 100,000 Vendor R Young 120,000 Capital J Paul 50,000 Balance c/d 30,000 $150,000 $150,000 Balance b/d 30,000 Capital P Royal Bank 100,000 Capital J Paul Bank 50,000 Plant and Machinery Vendor R Young 35,000 Motor Vehicle Vendor R Young 28,000 7

5 Inventory Vendor R Young 26,400 Accounts Receivable Vendor R Young 32,600 Goodwill Vendor R Young 7,000 Accounts Payable Vendor R Young 9,000 Vendor R Young Bank 120,000 Sundry Net Assets 120,000 (c) P Royal and J Paul Balance Sheet $ $ $ Current assets 89,000 Inventory 26,400 Accounts receivable 32,600 Bank 30,000 Non-current assets 70,000 Plant and machinery 35,000 Motor vehicle 28,000 Goodwill 7,000 Total assets 159,000 Current liabilities 9,000 Accounts payable 9,000 Total liabilities 9,000 Net assets $150,000 Proprietorship $150,000 Capital P Royal 100,000 Capital J Paul 50,000 8

6 3.13 Free and Easy (a) Bank 400,000 Capital Free 200,000 Capital Easy 200,000 Cash introduced at commencement Plant and machinery 30,000 Motor vehicle 20,000 Inventory 150,000 Accounts receivable 100,000 Accounts payable 20,000 Gain on acquisition* (balancing item) 30,000 Vendor B Parkes 250,000 Purchase of business from B Parkes Gain on acquisition 30,000 Profit and Loss 30,000 Elimination of gain on acquisition to profit and loss. Vendor B Parkes 250,000 Bank 250,000 Discharge of purchase consideration (b) Bank Capital Free 200,000 Vendor B Parkes 250,000 Capital Easy 200,000 Balance c/d 150, , ,000 Balance b/d 150,000 Capital Free Bank 200,000 Capital Easy Bank 200,000 9

7 Plant and Machinery Vendor B Parkes 30,000 Motor Vehicle Vendor B Parkes 20,000 Inventory Vendor B Parkes 150,000 Accounts Receivable Vendor B Parkes 100,000 Accounts Payable Vendor B Parkes 20,000 Gain on Acquisition Profit and Loss 30,000 Sundry assets 30,000 $30,000 $30,000 Vendor B Parkes Bank 250,000 Sundry net assets 250,000 Profit and Loss Gain on Acquisition 30,000 10

8 (c) Free and Easy Balance Sheet $ $ $ Current assets 400,000 Inventory 150,000 Accounts receivable 100,000 Bank 150,000 Non-current assets 50,000 Plant and machinery 30,000 Motor vehicle 20,000 Total assets 450,000 Current liabilities 20,000 Accounts payable 20,000 Total liabilities 20,000 Net assets $430,000 Proprietorship $430,000 Capital Free 200,000 Capital Easy 200,000 Net Profit 30,000 11

9 3.15 (a) Penny Land and buildings 160,000 Plant and machinery 70,000 Office furniture 10,000 Inventory 30,000 Accounts receivable 20,000 Bank 30,000 Accounts payable 60,000 Capital Jenny (balancing item) 260,000 Capital introduced at commencement Plant and machinery 60,000 Office furniture 15,000 Inventory 35,000 Accounts receivable 30,000 Bank 100,000 Allow for doubtful debts 2,000 Accounts payable 10,000 Capital Kenny (balancing item) 228,000 Capital introduced at commencement Land and buildings 140,000 Plant and machinery 20,000 Office furniture 30,000 Inventory 60,000 Accounts receivable 10,000 Gain on acquisition* (balancing item) 24,000 Accounts payable 36,000 Vendor Lenny 200,000 Purchase of business from Lenny Gain on acquisition 24,000 Profit and Loss 24,000 Elimination of gain on acquisition to profit and loss. Vendor Lenny 200,000 Bank 200,000 Payment of purchase consideration 14

10 (b) Penny Balance Sheet as at 1st July 20X2 $ $ $ $ Current assets 183,000 (30,000+35,000+60,000) Inventory 125,000 (20,000+30,000+10,000) Accounts receivable 60,000 Less Allow doubtful debts 2,000 58,000 Non-current assets 505,000 (160, ,000) Land and buildings 300,000 (70,000+60,000+20,000) Plant and machinery 150,000 (10,000+15,000+30,000) Office furniture 55,000 Total assets 688,000 Current liabilities 176,000 (60,000+10,000+36,000) Accounts payable 106,000 (30, , ,000) Bank overdraft 70,000 Total liabilities 176,000 Net assets $512,000 Proprietorship $512,000 Capital Jenny 260,000 Capital Kenny 228,000 Net Profit 24,000

Test Series: September, 2014

MOCK TEST PAPER 1 INTERMEDIATE (IPC) : GROUP I PAPER 1: ACCOUNTING Question No. 1 is compulsory. Answer any five questions from the remaining six questions. Test Series: September, 2014 Wherever necessary