Net Profit Add: interest on drawings: Jane x Allen x 5

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Silvester Summers
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1 ACCOUNTING ORDINARY LEVEL GRADE Jane and Allen are in partnership. Their partnership agreement provides that 1. Interest on capital is allowed at 10% per annum. 2. Interest on drawings is charged at 5% per annum, calculated on the balances of the Drawings accounts at the end of the financial year. 3. Allen receives a salary of N$15 00 a year 4. Remaining profits are shared: Jane three quarters (¾) Allen one quarter (¼) The financial year end of the partnership is 30 September. On 30 September 2010 balances in the partnership books included: N$ Profit and Loss Account (net profit for year) Capital account: Jane Allen Drawings account: Jane Allen Prepare the partnership s Profit and Loss Appropriation Account for the year ended 30 September Jane and Allen Profit and Loss Appropriation Account for the year ended 30 September 2010 Net Profit Add: interest on drawings: Jane x Allen x Less: interest on capital: Jane x Allen x Less: salary: Allen Profit share: Jane x Allen x [14]

2 2. On 31 October a Trial Balance showed a difference, which was posted to a Suspense account. The following errors were later discovered A payment of N$ 520 for electricity had been entered on the debit side of the electricity account as N$ Machinery repairs costing N$1 000 had been debited to the Machinery account. 3. Insurance premiums paid, N$1 200, had been posted to the credit side of the insurance account. (a) Give the journal entries, without narratives, to correct the above errors. JOURNAL 31 Suspense 100 Electricity 100 Machinery Repairs Machinery (b) Insurance Suspense [12] Write up the Suspense account below, including your figure for the opening balance. Show your calculation. Calculation of opening balance: Electricity Difference as per Trial Balance SUSPENCE ACCOUNT Insurance [4]

3 3 3. On 31 October the Cash Book (bank columns) and Bank Statement of Sara Perez were as follows. Cash Book (bank columns) Oct 24 Balance b/d Oct 27 Paris Fashions Fine Fabrics Thai Exports Super Satins Balance c/d Sales Nov 1 Balance b/d Bank Statement 31 October Debit Credit Balance N$ N$ N$ Oct 24 Balance 5 203Cr 26 Fine Fabrics Super Satins Cheque S.O. Motor Insurance S.O. Rent Bank Charges Dishonoured Cheque (Fine Fabrics) The following errors were discovered. A. The debit side of the bank column in the Cash Book had been undercast. B. The bank had debited a standing order for payment of rent for N$25 to Sara s business account instead of her personal account. (a) Make any additional entries that are required in the Cash Book of Sara Perez. Calculate a new bank balance at 31 October. Bring down the balance on 1 November. CASH BOOK Balance Insurance 26 Undercast 100 Drawings 25 Bank charges 88 Fine Fabrics 242 Balance c/d Nov 1 Balance b/d [7]

4 4 b) Give two reasons for drawing up a bank reconciliation statement. To explain any difference between the bank balance appearing in the Cash Book and the balance of Bank Statement. Bank charges, debit orders, standing order, etc. [2] c) Prepare a bank reconciliation statement at 31 October. BANK RECONCILIATION STATEMENT AS AT 31 OCTOBER Balance as per Bank Statement Add: Late deposits Less: Outstanding cheques 240 Debit Balance as per Cash Book [7]

5 5 4. Elmar is a self-employed builder whose financial year ends on 30 September. His trial balance drawn up on 30 September included the following balances. Dr Cr N$ N$ Sales Purchases Purchases returns Stock 1 October Insurance Wages General expenses Motor expenses Rent Motor vehicle at cost You are given the following additional information. 1. On 30 September insurance prepaid was N$250, motor expenses due but unpaid were N$ Stock on 30 September was N$ Depreciation is to be charged on the motor vehicle at 20% on cost. Prepare Elmar s Trading and Profit and Loss account for the year ended 30 September. ELMAR Trading and Profit and Loss account for the year ended 30 September Sales Less: Cost of Sales Opening stock Add: Purchases Less: Closing stock Gross profit Less: Expenses Insurance ( ) Wages General expenses Motor expenses ( ) Rent Depreciation x Net Profit [18]

6 6 5. Koba bought a printing press on 1 October 2007 for N$ She is preparing her final accounts for the year ended 30 September 2008 and needs to decide which method of depreciation should be used. She expects the printing press to have a useful life of ten years, and to be able to sell it at the end of that time for N$ Using this information she could use the straight line method, or the reducing (diminishing) balance method at 20% per annum. (a) Calculate how much depreciation will be charged in Koba s Profit and Loss account for the next three years under each of the two methods. Year ended 30 September Straight line Method N$ Reducing (diminishing) balance method N$ You may use space below for your workings. Straight line = = = N$3 600 Reducing balance = Y x 20 = Y = x 20 = Y = x 20 = Koba decides to use the reducing balance method of depreciation. [5] (b) Show the entries in the provision for depreciation of machinery account below for each of the three years ending 30 September 2008, and 2010.

7 Provision for Depreciation of Machinery account Balance c/d Depreciation Balance c/d Oct 1 Balance c/d Balance b/d Depreciation Oct Balance b/d Depreciation [7]

UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS International General Certificate of Secondary Education ACCOUNTING 0452/02

Centre Number Candidate Number Name UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS International General Certificate of Secondary Education ACCOUNTING 0452/02 Paper 2 Candidates answer on the Question