Level 3 Certificate in Manual Bookkeeping QCF (Accreditation number: 500/9260/1)

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Exam ID 322 Qualifications: Level 3 Certificate in Bookkeeping QCF (Accreditation number: 500/8479/3) Level 3 Certificate in Manual Bookkeeping QCF (Accreditation number: 500/9260/1) Level 3

1 Exam ID 322 Qualifications: Level 3 Certificate in Bookkeeping QCF (Accreditation number: 500/8479/3) Level 3 Certificate in Manual Bookkeeping QCF (Accreditation number: 500/9260/1) Level 3 Certificate in Applied Bookkeeping QCF (Accreditation number: 500/9276/5) Examination: January 2012 Units: Prepare financial statements for a partnership Y601/0742 Prepare financial statements for a sole trader A601/0734 PAPER 2 MODEL ANSWERS International Association of Book-keepers Suite 30, 40 Churchill Square, Kings Hill, West Malling, Kent, ME19 4YU Tel: , Fax: , education@iab.org.uk

2 SECTION A QUESTION ONE Amir and Omar Trading in Partnership Trading and Profit and Loss Account Answer Task A Amir and Omar Trading and Profit and Loss Account for the Year Ended 31 December 2011 Sales 1/2 792,200 Less Cost of Goods Sold Opening stock 1/2 45,500 Add Purchases 1/2 566, ,625 Less Closing stock 1/2 41,600 Cost of Sales 1/2 570,025 Gross profit 1 222,175 Less Expenses Heat and light (5, ,600) 1 6,625 Wages 1/2 48,425 Vehicle expenses 1/2 8,675 Advertising 1/2 28,000 Operating expenses 1/2 2,250 Bank charges and interest 1/2 1,650 Rates (15,200-3,600) 1 11,600 Insurances 1/2 2,400 Depreciation (2, ,648) 1 14, ,523 Net profit 1 97,652 10½ Marks Page 1

3 Amir and Omar Trading in Partnership Profit and Loss Appropriation Account Answer Task B Amir and Omar Profit and Loss Appropriation Account for the Year Ended 31 December 2011 Net profit 1/2 97,652 Add Interest on drawings: Amir 1/2 1,200 Omar 1/2 1,000 2,200 Less Interest on capital: Amir 1 6,900 Omar 1 5,400 99,852 12,300 Less Share of profits: Amir 1 43,776 Omar 1 43,776 87,552 87,552-5½ Marks Page 2

4 Amir and Omar Trading in Partnership Current Accounts Answer Task C DR Current Accounts CR 2011 Details Amir Omar 2011 Details Amir Omar 31 Dec Balance b/f ¼ 1, Dec Balance b/f ¼ 1, Dec Interest on drawings ¼ 1,200 ¼ 1, Dec Interest on capital ¼ 6,900 ¼ 5, Dec Drawings ¼ 40,000 ¼ 38, Dec Share of profit ¼ 43,776 ¼ 43, Dec Balance c/d ½ 7,976 ½ 11,376 50,676 50,376 50,676 50, Dec Balance b/d ¼ 7,976 ¼ 11,376 4 Marks Page 3

5 Amir and Omar Trading in Partnership Balance Sheet - Answer Task D Amir and Omar Balance Sheet as at 31 December 2011 NBV Fixed Assets Cost Less Dep n to Date Premises ¼ 300,000 - ¼ 300,000 Fixtures and fittings ¼ 22,500 ½ 9,000 ¼ 13,500 Vehicles ¼ 79,050 ½ 28,458 ¼ 50, ,550 37,458 ½ 364,092 Current Assets Stock ½ 41,600 Trade debtors ½ 110,980 Prepaid expenses ½ 3,600 Less Current Liabilities Trade creditors ½ 73,650 Accrued expenses ½ 1,600 Bank ½ 15, ,180 90,920 Working capital ½ 65,260 Financed By: Capital Amir ½ 230,000 Add Current account ¼ 7,976 Capital Omar ½ 180,000 Add Current account ¼ 11, , , , , Marks Total This Question = 30 Marks Page 4

6 QUESTION TWO Eric, Kevin and Liam Trading in Partnership Capital Accounts Answer Task A DR Capital Accounts CR 2011 Details Eric Kevin Liam 2011 Details Eric Kevin Liam 1 Jan Goodwill adjm t ,000 1 Jan Balance b/f 1 120, , Dec Balance c/d 1 136, , ,000 1 Jan Bank ,000 1 Jan Goodwill adjm t 2 16, , , , , , , , Dec Balance b/d ½ 136,000 ½ 134,000 ½ 120,000 Workings Goodwill Adjustment Partners Goodwill Creation Goodwill Deletion Net Adjustment Eric 36,000 (CR) 20,000 (DR) 16,000 (CR) Kevin 24,000 (CR) 20,,000 (DR) 4,000 (CR) Liam - 20,000 (DR) 20,000 (DR) 60,000 (CR) 60,000 (DR) - 13½ Marks Page 5

7 Eric, Kevin and Liam Trading in Partnership Profit and Loss Appropriation Account Answer Task B Eric, Kevin and Liam Profit and Loss Appropriation Account for the Year Ended 31 December 2011 Net profit ½ 114,600 Less Interest on capital: Eric 1 5,440 Kevin 1 5,360 Liam 1 4,800 15,600 99,000 Less Salary: Liam 1 9,000 Less Share of profit: Eric 1 30,000 Kevin 1 30,000 Liam 1 30,000 90,000 90,000-7½ Marks Page 6

8 Eric, Kevin and Liam Trading in Partnership Current Accounts - Answer Task C DR Current Accounts CR 2011 Details Eric Kevin Liam 2011 Details Eric Kevin Liam 1 Jan Balance b/f - ½ 2,000-1 Jan Balance b/f ½ 1, Dec Drawings ½32,000 ½32,000 ½ 32,000 31Dec Interest on capital ½ 5,440 ½ 5,360 ½ 4,800 31Dec Balance c/d ½ 4,940 ½ 1,360 ½11,800 31Dec Salary ½ 9,000 31Dec Share of profit ½ 30,000 ½ 30,000 ½ 30,000 36,940 35,360 43,800 36,940 35,360 43, Dec Balance b/d ½ 4,940 ½ 1,360 ½ 11,800 9 Marks Total This Question = 30 Marks Total This Unit = 60 Marks Page 7

9 SECTION B QUESTION ONE Direct Plumbing Supples Trial Balance Answer Task A Trial Balance as at 31 December 2011 DR CR Capital 1/4 270,000 Premises (cost) 1/4 180,000 Fixtures (cost) 1/4 5,000 Vehicles (cost) 1/4 68,000 Provision for depreciation - Fixtures 1/4 1,500 - Vehicles 1/4 13,600 Stock 1 January /4 51,890 Sales 1/4 797,290 Provision for doubtful debts 1/2 800 Purchases 1/4 687,260 Wages and salaries 1/4 40,600 Rates 1/4 18,800 Vehicle expenses 1/4 8,100 Heat and light 1/4 1,510 Bad debts 1/4 1,260 General operating expenses 1/4 4,120 Sales ledger control (trade debtors) 1/4 40,260 Purchase ledger control (trade creditors) 1/4 48,570 Bank 1/4 5,350 Drawings 1/4 24,000 Value added tax (VAT) 1/4 5,830 Suspense 1 1,440 Totals 1/2 1,137,590 1/2 1,137,590 7½ Marks Page 8

10 Suspense Account Answer Tasks B and D DR Suspense Account CR 2011 Details 2011 Details 31 Dec Difference in books 1/2 1, Dec Sales 1/2 2, Dec Sales ledger control 1/ ,000 2,000 1½ Marks Journal Answer Task C Journal 2011 Details DR 31 Dec Sales 1/4 ½ 2,000 Suspense 1/4 ½ 2,000 Correction of error, sales overstated when transferred from Sales Day Book 1/4 CR 31 Dec Suspense 1/4 ½ 560 Sales Ledger Control 1/4 ½ 560 Correction of error, bad debt written off not posted to Sales Ledger Control Account 1/4 3½ Marks Page 9

11 Extended Trial Balance Answers Tasks E, F and G EXTENDED TRIAL BALANCE AS AT 31 December 2011 Trial Balance Adjustments Profit & Loss Balance Sheet Ledger Account DR CR DR CR DR CR DR CR Capital 270,000 ¼ 270,000 Premises (cost) 180,000 ¼,180,000 Fixtures (cost)l 5,000 ¼ 5,000 Vehicles (cost) 68,000 ¼ 68,000 Prov n dep n - Fixtures 1,500 ¼ 500 ½ 2,000 - Vehicles 13,600 ¼10,880 ½ 24,480 Stock 1 January ,890 ¼ 51,890 Sales ½ 795,290 ¼ 795,290 Prov n doubtful debts 800 ¼ 600 ½ 1,400 Purchases 687,260 ¼ 687,260 Wages and salaries 40,600 ¼ 40,600 Rates 18,800 ¼ 3,800 ½ 15,000 Vehicle expenses 8,100 ¼ 8,100 Heat and light 1,510 ¼ 500 ½ 2,010 Bad debts 1,260 ¼ 1,260 General operating exp s 4,120 ¼ 4,120 Sales ledger control ½ 39,700 ¼ 39,700 Purchase ledger control 48,570 ¼ 48,570 Bank 5,350 ¼ 5,350 Drawings 24,000 ¼ 24,000 Value added tax (VAT) 5,830 ¼ 5,830 Totals ½ 1,135,590 ½ 1,135, Closing stock Profit & loss ¼53,560 ¼ 53,560 Closing stock Balance Sheet ¼53,560 ¼ 53,560 Prov n doubtful Debts Adjm t P & L ¼ 600 ½ 600 Prepayment adjustment ¼ 3,800 ¼ 3,800 Accruals adjustment ¼ 500 ¼ 500 Depreciation expense ¼11,380 ¼ 11,380 Net profit ½ 26,630 ½ 26,630 Totals ½69,840 ½69,840 ½ 848,850 ½ 848,850 ½ 379,410 ½ 379, Marks Page 10

12 Trading and Profit and Loss Account Answer Task H Trading and Profit and Loss Account for the Year Ended 31December 2011 Sales 1/4 795,290 Less Cost of Goods Sold Opening stock 1/4 51,890 Add Purchases 1/4 687, ,150 Less Closing stock ¼ 53,560 Cost of Sales ½ 685,590 Gross Profit ½109,700 Less Expenses Wages and salaries 1/4 40,600 Rates 1/4 15,000 Vehicle expenses 1/4 8,100 Heat and light 1/4 2,010 Bad debts 1/4 1,260 General operating expenses 1/4 4,120 Provision for doubtful debts (increase) 1/4 600 Depreciation 1/4 11,380 83,070 Net profit 1 26,630 5 Marks Page 11

13 Balance Sheet Answer Task H Balance Sheet as at 31 December 2011 NBV Fixed Assets Cost Less Dep n to Date Premises 180,000-1/4 180,000 Fixtures 5,000 1/4 2,000 1/4 3,000 Vehicles 68,000 1/4 24,480 1/4 43,520 Current Assets Stock 1/4 53,560 Trade debtors (net of provision for doubtful debts) 1/2 38,300 Prepayment 1/4 3,800 Bank 1/4 5,350 Less Current Liabilities Trade creditors 1/4 48,570 Accrual 1/4 500 Value added tax (VAT) 1/4 5, ,000 26,480 1/4 226, ,010 54,900 Working capital 1/4 46,110 Financed By: Capital 1/4 270,000 Add Net Profit 1/4 26, ,630 Less Drawings 1/4 24,000 ½ 272,630 ½ 272,630 5½ Marks Total This Question= 40 Marks Total This Unit = 40 Marks Page 12

Exam ID 322. Qualifications: Level 3 Certificate in Bookkeeping QCF (Accreditation number: 500/8479/3)

Exam ID 322. Qualifications: Level 3 Certificate in Bookkeeping QCF (Accreditation number: 500/8479/3) Exam ID 322 Qualifications: Level 3 Certificate in Bookkeeping QCF (Accreditation number: 500/8479/3) Level 3 Certificate in Manual Bookkeeping QCF (Accreditation number: 500/9260/1) Level 3 Certificate