June 2014 Examination Question Paper

June 2014 Examination Question Paper 208 Exam ID 2050 Exam ID Question Paper for the following Qualifications: 200: Level 2 Certificate in Bookkeeping QCF: 50090537 210: Level 2 Award in Manual Bookkeeping QCF: 50092595 230: Level 2 Certificate in Applied Bookkeeping QCF: 50092625 2000: Level 2 Certificate in Bookkeeping QCF: 60107303 2030: Level 2 Award in Manual Bookkeeping QCF: 60104806 Units 206: Maintaining the Journal: T6008772 205: Maintaining Control Accounts: K6008770 207: Processing Ledger Transactions and Extracting a Trial Balance: F6008760 2005: Maintaining the Journal: H5051123 2004: Maintaining Control Accounts: K5051124 2006: Processing Ledger Transactions and Extracting a Trial Balance: M5051125 Time Allowed 2 Hours 30 Minutes Paper No: 0039 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. Cross out errors neatly or use correcting fluid in moderation 4. Calculators are permitted 5. A blank page is provided in the Answer Booklet for workings if required 6. The Question Paper and Answer Booklet have information and data printed on both sides of the pages 7. Mobile phones are not permitted International Association of Book-keepers, Suite 5, 20 Churchill Square, Kings Hill, West Malling, Kent ME19 4YU Tel: 01732 897750, Fax: 01732 897751, email:education@iab.org.uk Website: www.iab.org.uk

Maintaining the Journal Question One Question One is in three parts (Parts A, B, and C) Question One (Part A) Use the Journal to Correct Errors. Eliminate a Suspense Account Balance and Redraft a Trial balance The following Trial Balance was extracted from the double entry books of Kirkwood Supplies as at the month end 31 July 201Y. On listing the ledger account balances the bookkeeper found that debit balances did not agree with credit balances. The amount necessary to make the Trial Balance totals agree was added to the Trial Balance as a Suspense Account balance: Kirkwood Supplies Trial Balance as at 31 July 201Y Ledger Account Bank Cash Sales Sales Returns Purchases Purchase Returns Sales Ledger Control Purchase Ledger Control VAT Utilities Sundry Expenses Wages Capital Suspense (Difference in books) DR 2,500 150 1,200 5,946 20,415 821 3,993 3,600 CR 16,700 877 9,827 1,060 10,000 161 Totals 38,625 38,625 IAB L2 Cert Bookkeeping (QCF) QP June 2014 Page 1

An investigation into the reason for the difference between the debit balances and credit balances as at 31 July 201Y revealed the following bookkeeping errors, and it also revealed a number of other errors not disclosed by the trial balance: REQUIRED: 1. It has now been discovered that a purchase invoice for 2,600 plus VAT at the standard rate of 20% received from a credit supplier in July 201Y, has not been entered into the books. 2. A cheque for cash purchases of 980 was posted in the books as follows: Debit Purchases 908 Credit Bank 908 3. A payment of 2,400 by cheque in July 201Y in respect of wages was posted in the books as follows: Debit Sundry Expenses 2,400 Credit Bank 2,400 4. An error was made in balancing off the Purchases Account in the ledger as at 31 July 201Y, resulting in the balance on the account being understated by 1,000. 5. A payment of 129 by cheque in July 201Y in respect of sundry expenses was posted in the books as follows: Debit Sundry Expenses 1,290 Credit Bank Account 129 You are required to complete the following tasks: Task A Prepare the Journal entries required to correct each of the bookkeeping errors listed above. Please note that some transactions will involve the suspense account and others won t. Date your Journal entries 31 July 201Y and provide a suitable narrative for each entry including the name of the type of error. Task B Enter the difference in books balance as at 31 July 201Y into the Suspense Account provided in the Answer Booklet. Task C Post the Journal entries above to relevant ledger accounts. Date your postings 31 July 201Y. The following accounts are provided in the Answer Booklet for the purpose of completing this task: Suspense Purchases VAT Purchase Ledger Control Wages Sundry Expenses Bank IAB L2 Cert Bookkeeping (QCF) QP June 2014 Page 2

Note The Purchases, VAT, Purchase Ledger Control, Wages, Sundry Expenses and Bank accounts provided show the balances (as listed on the Trial Balance) brought forward (b/f) as at 31 July 201Y. Task D Close off the Suspense Account Balance as at 31 July 201Y thereby showing the elimination of the account balance. Balance off the Purchases, VAT, Purchase Ledger Control, Wages, Sundry Expenses and Bank Account as at 31 July 201Y bringing down the corrected account balances as at that date. Task E Redraft the Trial Balance of Kirkwood Supplies as at 31 July 201Y provided in the Answer Booklet. The redrafted Trial Balance should show the account balances having corrected the bookkeeping errors. Balances on ledger accounts, other than those on the Purchases, VAT, Purchase Ledger Control, Wages, Sundry Expenses and Bank Account, have already been entered on the Trial Balance for you. Note: The following proformas are provided for your use in completing the above tasks: Journal (see page 1 of your Answer Booklet) General Leger (extract) Suspense Account, Purchases, VAT, Purchase Ledger Control, Wages, Sundry Expenses and Bank (see page 2 and 3 of your Answer Booklet) Trial Balance (see page 4 of your Answer Booklet) IAB L2 Cert Bookkeeping (QCF) QP June 2014 Page 3

Question One (Part B) Use the Journal to Write Off a Bad Debt You are presented with the Sales Ledger Control Account, Bad Debts Account and VAT Control Account in the General Ledger of Thorpe Supplies on page 5 of the Answer Booklet. The bookkeeper of the business maintains double entry records for the business which is registered for VAT. Double entry takes place in the General Ledger with the personal accounts of trade debtors and trade creditors being kept in the subsidiary Sales Ledger and Purchase Ledger respectively as memorandum accounts. As at 30 June 201Y the balance on the Sales Control Account as per the General Ledger of Thorpe Supplies was 13,410. There was a balance of 1,540 on the Bad Debts Account as at 30 June 201Y relating to bad debts already written off in the year, and the VAT Control Account as at 30 June 201Y carried a balance of 3,570 (Credit). A review of trade debtors as at 30 June 201Y resulted in the credit controller advising that the balance on the account of a trade debtor (ARF Craft Supplies) should be written off as a bad debt. The invoice relates to goods invoiced over nine months ago, but the business had recently gone into liquidation and it was thought very unlikely that any of the balance on their account would be recovered. The balance on the account of ARF Craft Supplies was 780. REQUIRED: You are required to complete the following tasks: Task A Prepare the Journal entry to write off the balance on the account of ARF Craft Supplies as a bad debt and claim the VAT bad debt relief. Date your Journal entry 30 June 201Y and provide a suitable narrative. Task B Post the entry from the Journal prepared in Task A above to the Sales Ledger Control Account, Bad Debts Account and VAT Control Account in the General Ledger and into the account of ARF Craft Supplies in the Sales Ledger. You are not required to balance off any of the ledger accounts having made the postings from the Journal Note: The following proformas are provided for your use in completing the above tasks: Journal (see page 5 of your Answer Booklet) General Ledger (extract) Sales Ledger Control Account, Bad Debts Account and VAT Control Account (see page 5 of your Answer Booklet) Sales Ledger (extract) ARF Craft Supplies (see page 5 of your Answer Booklet) IAB L2 Cert Bookkeeping (QCF) QP June 2014 Page 4

Question One (Part C) Use the Journal to Account for Wages, Salaries and Employer On-Costs All employees of Standford Confectionery are paid monthly. They are paid on the last day of each month via the BACS direct credit system. The following accounts are kept in the ledger of Standford Confectionery for the purpose of accounting for wages and salaries Wages and Salaries Control Account PAYE / NIC Creditor Account Wages, Salaries and Contributions (Expense) Account The payroll figures extracted from the Payroll Analysis sheet are as follows: Net pay 36,700.00 PAYE deductions 8,991.68 NIC deductions (employee) 6,239.24 NIC contributions (employer) 6,862.56 REQUIRED: You are required to complete the following task: Task A Complete the following Journal entries provided on page 6 of the Answer Booklet and account for wages salaries and employment costs on 30 June (month 3) of the current tax year (201Y/201Z). You will need to use the above payroll figures extracted from the Payroll Analysis sheet to prepare journals for the following: Journal 1) Payment of net pay from the business Bank Account Journal 2) Employee PAYE income tax deductions Journal 3) Employee NIC deductions Journal 4) Employer NIC deductions Journal 5) Transfer of total employment costs for 30 June 201Y (month 3) from the Wages and Salaries Control Account to the Wages, Salaries and Contributions (Expense) Account. Please note that for each journal, one entry has the account name already entered into the journal as well as the narrative. You must enter the figures and the opposite general ledger accounts. IAB L2 Cert Bookkeeping (QCF) QP June 2014 Page 5

Task B Post the journal entries from Task A into the general ledger accounts on page 7 of your answer booklet. Task C Close off the Wages and Salaries Control Account as at 30 June 201Y, and balance off the PAYE /NIC Creditor Account as at 30 June 201Y bringing down the account balance at that date. You are not required to balance off and the Wages, Salaries and Contributions (Expense) Account, this account can be left open Note: The following proforma is provided for your use in completing the above tasks: Journal (see page 6 of your Answer Booklet) General Ledger Accounts - (see page 7 of your Answer Booklet) IAB L2 Cert Bookkeeping (QCF) QP June 2014 Page 6

Maintaining Control Accounts Question Two The Vale Car Showroom is registered for VAT, a double entry bookkeeping system is maintained on behalf of the business. The personal accounts of customers and suppliers are kept as memorandum accounts in the subsidiary Sales Ledger and Purchase Ledger respectively. A Sales Ledger Control Account and Purchase Ledger Control Account are kept in the General Ledger as part of the double entry bookkeeping system. At the end of each week the balances from the two control accounts are reconciled with the balances on the personal accounts of customers and suppliers from the Sales Ledger and Purchase Ledger. A VAT Control Account is also kept in the General Ledger. Transactions are posted to the Control Accounts from totals extracted from the books of Prime Entry. The books of Prime Entry consist of four Day Books, the Cash Book and the Journal. Transactions for the week ended 24 August 201Y have been posted to the customer and supplier personal accounts in the subsidiary Sales Ledger and Purchase Ledger and the personal accounts have been balanced off as at 24 August 201Y. On 31 August 201Y, the total debtors from the Sales Ledger was 61,505 and the total creditors from the Purchase Ledger was 35,300. Totals from the Cash Book have already been posted to the Sales Ledger Control Account, Purchase Ledger Control Account and VAT Control Account in the General Ledger. Please find below extracts of information from the accounts of The Vale Car Showroom which relate to the Sales Ledger Control Account and the Purchase Ledger Control Account: Balance per Purchase Ledger Control Account as at 24 August 201Y 45,124 Balance per Sales Ledger Control Account as at 24 August 201Y 67,895 Sales Day Book total at 31 August 201Y 28,200 Sales Returns Day Book total at 31 August 201Y 2,400 Purchase Day Book total at 31 August 201Y 7,890 Purchase Returns Day Book total at 31 August 201Y 564 Please find below extracts of information from the accounts of The Vale Car Showroom which relate to the VAT Control Account: Balance per VAT Control Account as at 1 August 201Y 6,456 (CR) VAT on Sales - total at 31 August 201Y 4,700 VAT on Sales Returns - total at 31 August 201Y 400 VAT on Purchases total at 31 August 201Y 1,315 VAT on Purchase Returns total at 31 August 201Y 94 IAB L2 Cert Bookkeeping (QCF) QP June 2014 Page 7

REQUIRED: You are required to complete the following tasks: Task A Make postings of relevant totals from extracts of information from page 7 of this question paper, as at 31 August 201Y, to the Sales Ledger Control Account and Purchase Ledger Control Account in the General Ledger provided. Task B - Make postings of relevant totals from extracts of information from page 7 of this question paper, as at 31 August 201Y, to the VAT Control Account in the General Ledger provided. Task C Balance off each of the three Control Accounts in the General Ledger, as at 31 August 201Y, bringing down the account balances as at 1 September 201Y. Task D Prepare a reconciliation of the balances from the Sales Ledger Control Account and Purchase Ledger Control Account as at 31 August 201Y, with the balances from the personal accounts of customers and suppliers from the subsidiary Sales Ledger and Purchase Ledger as at 31 August 201Y. Note: The following proformas are provided for your use in completing the above tasks: Sales Ledger and Purchase Ledger Control Accounts (see page 8 of your Answer Booklet) Value Added Tax (VAT) Control Account (see page 8 of your Answer Booklet) Forms for the reconciliation of the personal account balances to the control account balances (see page 9 of your Answer Booklet) IAB L2 Cert Bookkeeping (QCF) QP June 2014 Page 8

Processing Ledger Transactions and Extracting a Trial Balance Question Three Rangethorpe Furniture Showroom is a local business owned by Chris Chapman, the business is registered for VAT. The books of account of the business are kept on a double entry basis. A General Ledger and Cash Book are maintained as part of the double entry bookkeeping system. The personal accounts of trade debtors and trade creditors are kept as memorandum accounts in the subsidiary Sales Ledger and subsidiary Purchase Ledger respectively. Sales Ledger and Purchase Ledger Control Accounts are kept within the General ledger. At the end of each week of trading a Trial Balance is prepared for the purpose of checking the arithmetic accuracy of the double entry records. You are presented below with a list of account balances extracted from the General Ledger and the Petty Cash Book as at the week ended 31 July 201Y: Account Name Account Balance ( ) Bank (DR balance) 39,460 Cash 250 Sales (balance at 24 July 201Y) 175,918 Sales Returns (balance at 24 July 201Y) 15,161 Sales Ledger Control (balance at 24 July 201Y) 101,946 Purchases (balance at 24 July 201Y) 23,672 Purchase Returns (balance at 24 July 201Y) 4,890 Purchase Ledger Control (balance at 24 July 201Y) 35,607 Wages (balance at 24 July 201Y) 61,770 Capital 62,000 VAT (balance at 24 July 201Y) 13,600 Sundry Expenses (balance at 24 July 201Y) 2,800 Office Equipment 22,626 Rent Received 37,870 You are presented on page 10 of this question booklet with the Cash Book Payments (Summary showing total of Analysis columns) for the week ended 31 July 201Y. The cash book forms part of the double entry book keeping system and therefore there are no transactions required to the bank account or cash account: IAB L2 Cert Bookkeeping (QCF) QP June 2014 Page 9

Rangethorpe Furniture Showroom Cash Book Payments (Summary showing total of Analysis columns) for the week ended 31 July 201Y Date 201Y Details Cash Bank PL Control VAT Purchases Wages Sundry Expenses 31 July Totals 420 61,780 15,900 200 680 45,000 420 Rangethorpe Furniture Showroom Totals Extracted from the Day Books as at 31 July 201Y Day Book Transaction Details Balance Sales Day Book Net Sales 23,560 VAT on Sales 4,712 Invoice Totals 28,272 Purchase Day Book Net Purchases 10,660 VAT on Purchases 2,132 Invoice Totals 12,792 Purchase Returns Day Book Net Purchases Returns 4,210 VAT on Purchases Returns 842 Credit Note Totals 5,052 Sales Returns Day Book Net Sales Returns 1,040 VAT on Sales Returns 208 Credit Note Totals 1,248 IAB L2 Cert Bookkeeping (QCF) QP June 2014 Page 10

You are presented in the Answer Booklet (pages 10, 11 and 12) with an extract of the General Ledger of the business, showing the following ledger account balances brought forward as at 24 July 201Y: Sales Sales Returns Sales Ledger Control Purchases Purchase Returns Purchase Ledger Control Wages VAT Sundry Expenses REQUIRED: You are required to finalise the posting of transactions to the double entry system, and check the arithmetic accuracy of the double entry records, by completing the following tasks: Task A Make postings of totals, as at 31 July 201Y, from the Sales Day Book to the following accounts in the General Ledger Sales Ledger Control Account, Sales Account and VAT Control Account Task B Make postings of totals, as at 31 July 201Y, from the Sales Returns Day Book to the following Accounts in the General Ledger Sales Ledger Control Account, Sales Returns Account and VAT Control Account. Task C Make postings of totals, as at 31 July 201Y, from the Purchase Day Book to the following Accounts in the General Ledger Purchase Ledger Control Account, Purchases Account and VAT Control Account. Task D Make postings of totals, as at 31 July 201Y, from the Purchase Returns Day Book to the following accounts in the General Ledger Purchase Ledger Control Account, Purchase Returns Account and VAT Control Account. Task E Make postings of totals, as at 31 July 201Y from the Cash Book Payments side to the following Accounts in the General Ledger Purchase Ledger Control Account, VAT Account, Purchases Account, Wages Account and Sundry Expenses Account. Task F Balance off all the accounts within the General Ledger extract to which you have made postings from the Day Books as at 31 July 201Y bringing down the account balances as at that date. Task G Prepare the Trial Balance provided on page 13 of the Answer Booklet thereby proving the arithmetic accuracy of the double entry records as at 31 July 201Y. To complete this task you will need to use the account balances from the ledger accounts to which you made postings in Tasks A,B,C,D,E and F above. You will also need to use those balances which were not in need of updating at 31 July 201Y from the list of balances given on page 9 of this Question Booklet. IAB L2 Cert Bookkeeping (QCF) QP June 2014 Page 11

Note: The following proformas are provided for your use in completing the above tasks: General Ledger Accounts (see pages 10, 11 and 12 of your Answer Booklet) Trial Balance (see page 13 of your Answer Booklet) IAB L2 Cert Bookkeeping (QCF) QP June 2014 Page 12