NVQ/SVQ Level 2 in Accounting Preparing Ledger Balances and an Initial Trial Balance (PLB) (2003 standards) Tuesday 15 June 2004 (afternoon) EXAMINATION Time allowed - 3 hours plus 15 minutes reading time Please complete the following information in BLOCK CAPITALS. You must give your registration number below. If you do not, your paper may not be marked. AAT Registration Number Approved Assessment Centre Code Desk number... Date... Approved Assessment Centre Name... Important: This examination paper is in two sections. You must show competence in both sections, so you should attempt and aim to complete every task in each section. We recommend that you use the 15 minutes reading time to study the examination paper fully and carefully so that you understand what to do for each task. However, you may begin to write your answers within the reading time, if you wish. You may not use programmable calculators or dictionaries in the examination. Do NOT open this paper until instructed to do so by the Supervisor. For Assessor s use only SECTION 1 TOTAL TOTAL CROSS CHECKED INITIALS SECTION 2 TOTAL TOTAL CROSS CHECKED INITIALS AAT 154 Clerkenwell Road, London EC1R 5AD, UK Tel: +44 (0)20 7837 8600 Fax: +44 (0)20 7837 PLB
This examination paper is in TWO sections. You must show competence in BOTH sections. You should therefore attempt and aim to complete EVERY task in EACH section. Section 1 Section 2 Processing exercise Complete all six tasks 10 tasks and questions Complete all tasks and questions You should spend about 90 minutes on each section. There is blank space for your workings on pages 10, 18 and 19, but you should include all essential workings within your answers, where appropriate. Sections 1 and 2 are both about the business described below. Introduction Wendy Mason is the owner of a printing business which trades as WM Printing. You are employed by the business as a bookkeeper. The business uses a manual accounting system. Double entry takes place in the Main (General) ledger. Individual accounts of debtors and creditors are kept in subsidiary ledgers as memorandum accounts. Bank payments and receipts are recorded in the Cash Book, which is part of the double entry system. Assume today s date is 2004 unless you are told otherwise. 2
Section 1 Processing exercise You should spend 90 minutes on this section Please use the blank space on pages 10, 18 and 19 to show your workings. DATA Balances at the start of the day on 2004 The following balances are relevant to you at the start of the day on 2004: Credit suppliers TGB Limited 3,000 Compton and Company 8,600 Rowley Associates 10,432 Elton and Lowe Limited 1,750 Purchases 285,200 Purchases returns 3,000 Purchases ledger control 40,698 Motor vehicles 5,000 General repairs 200 Insurance 2,900 Motor tax 180 VAT (credit balance) 15,560 Task 1.1 Enter these opening balances into the following accounts given on pages 5-7. Subsidiary (Purchases) ledger TGB Limited Compton and Company Rowley Associates Elton and Lowe Limited Main (General) ledger Purchases Purchases returns Purchases ledger control Motor vehicles General repairs Insurance Motor tax VAT Note: The lines shown in the accounts on pages 5-7 are there to help you present your work neatly and clearly. You may not need to use all of the lines. 3
DATA Transactions The following transactions all took place on 2004 and have been entered into the relevant books of prime entry as shown below. No entries have yet been made into the ledger system. The VAT rate is 17 ½%. Date 2004 Purchases day book Details Invoice Total VAT Net Number TGB Limited 1602 5,875 875 5,000 Compton and Company 1011 1,175 175 1,000 Rowley Associates P/101 10,575 1,575 9,000 Elton and Lowe Limited 1974 2,350 350 2,000 Totals 19,975 2,975 17,000 Date 2004 Purchases returns day book Details Credit Note Total Number TGB Limited C042 47 Rowley Associates 336 94 VAT 7 14 Net 40 80 Totals 141 21 120 Date 2004 Cash book Details Bank Date Details 2004 VAT Bank Balance b/f 21,642 Motor vehicle General repairs Insurance Motor tax Compton and Company (creditor) Balance c/f 28 6,000 188 150 90 3,000 12,214 21,642 28 21,642 Task 1.2 From the day books and cash book shown above, make the relevant entries into the accounts in the Subsidiary (Purchases) Ledger and Main (General) Ledger. Task 1.3 Balance the accounts showing clearly the balances carried down at (closing balance). Task 1.4 Now show the balances brought down at 1 July (opening balance). 4
Subsidiary (Purchases) Ledger TGB Limited Compton and Company Rowley Associates Elton and Lowe Limited [ ] 5
Main (General) Ledger Purchases Purchases returns Purchases ledger control Motor vehicles 6 [ ]
Main (General) Ledger General repairs Insurance Motor tax VAT 7 [ ]
DATA Other balances to be transferred to the trial balance. Office equipment 15,000 Stock 17,500 Cash 186 Sales ledgers control 106,842 Capital 30,710 Sales 418,200 Sales returns 2,605 Discounts allowed 350 Wages 42,181 Rent 3,000 Rates 2,100 Stationery 620 Telephone 800 Heat and light 1,300 Miscellaneous expenses 562 Task 1.5 Transfer the balances that you calculated in Task 1.3, and the bank balance, to the trial balance on page 9. Task 1.6 Transfer the remaining balances shown above to the trial balance, and total each column. 8
Trial balance as at 2004 Debit Credit Motor vehicles Office equipment Stock Bank Cash Sales ledger control Purchases ledger control VAT Capital Sales Sales returns Purchases Purchases returns Discounts allowed Motor tax General repairs Wages Insurance Rent Rates Stationery Telephone Heat and light Miscellaneous expenses Total 9
You may use this page for your workings. 10
Section 2 Tasks and questions You should spend about 90 minutes on this section. Answer all of the questions on pages 11 17. Write your answers in the spaces provided. You can use pages 18 and 19 for your workings. Note: you do not need to adjust the accounts in Section 1 as part of any of the following tasks. Task 2.1 The cheque below has been received today. WESTERN BANK plc 65-29-38 Bedford Branch High Street, Bedford, BF15 8ZX Date 25 June 2004 Pay W M Printing One hundred and five pounds only 150.00 Design Data Limited Director 00-04-93 65-29-38 82157802 a) Give TWO reasons why the cheque will not be honoured by the bank. b) What would you do in this situation? 11
Task 2.2 WM Printing buys goods from and sells goods to Haven Stationers Limited. It has been agreed to set off a debt of 50 owing between them by a contra entry. What accounts in the main (general) ledger of WM Printing would be adjusted to record this set off? Debit Credit Task 2.3 During the last VAT quarter sales amounted to 122,000 plus VAT. Purchases totalled 9,870 including VAT. What would have been the amount payable to H M Customs and Excise at the end of that quarter? Show workings. Task 2.4 WM Printing offers its customers both trade and cash settlement discounts. Briefly explain the reason why each of these discounts is offered. A trade discount is offered A cash settlement discount is offered Task 2.5 Wendy Mason is considering purchasing some new office furniture. The seller is not willing to accept a cheque because of the time it would take to clear. Briefly explain why it takes time for a cheque to clear. 12
Task 2.6 WM Printing s transactions in June included the items listed below. Show whether each is a capital transaction or a revenue transaction by circling the correct answer. a) Purchase of office stationery Capital / Revenue b) Decoration of offices Capital / Revenue c) Purchase of a delivery van Capital / Revenue d) Purchase of fuel for the delivery van Capital / Revenue Task 2.7 Wendy Mason is considering introducing a computerised accounting system. She has been advised to purchase integrated accounting software. Briefly explain the meaning of integrated accounting software. TURN OVER FOR FURTHER TASKS 13
Task 2.8 You are reminded that you do NOT need to adjust, or refer to, the accounts in Section 1 or Section 2. The following information has become available. a) An amount of 78 has been debited to the miscellaneous expenses account instead of the heat and light account. b) An amount paid by cheque for rent has been recorded as 50 instead of the correct amount of 500. c) An amount of 75 has been credited to the suspense account. The following two errors have now been discovered. A payment of 1000 has been recorded as 1100 in the insurance account. An amount of 25 has been omitted from the stationery account. Record the journal entries needed in the Main (General) ledger, to deal with the above. Narratives are not required. Details a) THE JOURNAL Dr Cr b) c) 14
Task 2.9 This is a summary of transactions with customers during the month of June. Balance of debtors at 1 June 2004 100,102 Goods sold on credit 40,140 Money received from credit customers 32,250 Discounts allowed 150 Goods returned by credit customers 1,000 a) Prepare a sales ledger control account from the above details. Show clearly the balance carried down at (closing balance) and brought down at 1 July (opening balance). Sales ledger control The following closing debit balances were in the Subsidiary (sales) ledger on. PDG Commercials 28,333 A B Smith Limited 15,020 South and Attwood 235 Francis and Company 18,212 Langley and Law 22,400 IJB Limited 22,792 b) Reconcile the balances shown above with the sales ledger control account balance you have calculated in part a. Sales ledgers control account balance as at 2004 Total of Subsidiary (sales) ledger accounts as at 2004 Difference c) What may have caused the difference you calculated in part b? 15
Task 2.10 On 28 June WM Printing received the following bank statement as at 21 June: CENTREPOINT BANK plc High Street, Bedford, BF13 8RF To: WM Printing Account No 54387299 21 June 2004 STATEMENT OF ACCOUNT Date Details Paid out Paid in Balance 2004 2 June Balance b/f 21,421C 9 June Cheque No 300175 3,550 17,871C 10 June Cheque No 300176 368 17,503C 11 June Cheque No 300178 412 17,091C 14 June Bank Giro Credit Law and Lodge 12,100 29,191C 21 June Cheque No 300180 158 29,033C 21 June Direct Debit Bedford MBC 210 28,823C 21 June Direct Debit LTM Limited 4,800 24,023C 21 June Bank charges 97 23,926C 21 June Bank Giro Credit BGC Limited 1,569 25,495C D = Debit C = Credit The cash book as at 28 June 2004 is shown below. Date 2004 1 June 25 June 27 June Details Balance b/f Paper Design Bate Limited Bank 21,421 1,500 2,000 CASH BOOK Date Cheque 2004 number 03 June 300175 03 June 300176 04 June 300177 06 June 300178 17 June 300179 17 June 300180 20 June Details Mills Limited Baker and Brown Legge Limited Parker Papers Beta Limited Paper Unlimited Bedford MBC Bank 3,550 368 100 412 300 158 210 16
a) Check the items on the bank statement against the items in the cash book. b) Update the cash book as needed. c) Total the cash book and clearly show the balance carried down at 28 June and brought down at 29 June. Note: you do not need to adjust the accounts in Section 1. d) Using the information on page 16, complete the bank reconciliation statement as at 28 June. Bank reconciliation statement as at 28 June 2004 Balance as per bank statement Add: Less: Balance as per the updated cash book 17
You may use this page for your workings. 18
You may use this page for your workings. 19
Association of Accounting Technicians 154 Clerkenwell Road, London EC1R 5AD, UK Tel: +44 (0)20 7837 8600 Fax: +44 (0)20 7837 6970 06.04