Exam ID 322 Qualifications: Level 3 Certificate in Book-keeping 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: June 2011 Units: Prepare financial statements for a partnership Y601/0742 unit 310 Prepare financial statements for a sole trader A601/0734 unit 311 MODEL ANSWERS Suite 30, 40 Churchill Square, Kings Hill, West Malling, Kent, ME19 4YU Tel: 0844 330 3527, Fax: 0844 330 3514, Email: mail@iab.org.uk
SECTION A QUESTION ONE Alex and Sara Trading in Partnership Trading and Profit and Loss Account Answer Task A Alex and Sara Trading and Profit and Loss Account for the Year Ended 31 May 2011 Sales 1/4 1,064,180 Less Cost of Goods Sold Opening stock 1/4 86,320 Add Purchases 1/4 837,160 923,480 Less Closing stock 1/4 89,650 Cost of Sales 1/4 833,830 Gross profit 1 230,350 Less Expenses Wages and salaries 1/4 117,540 Heat and light (6,620 + 1,245) 1/2 7,865 Rates (31,800-10,000) 1/2 21,800 Vehicle expenses 1/4 6,820 Advertising 1/4 4,800 Bank charges 1/4 400 Other expenses 1/4 5,200 Depreciation 1/2 17,625 182,050 Net profit 1 48,300 6 Marks Page 1
Alex and Sara Trading in Partnership Profit and Loss Appropriation Account Answer Task B Alex and Sara Profit and Loss Appropriation Account for the Year Ended 31 May 2011 Net profit 1/2 48,300 Add Interest on drawings: Alex 1/2 600 Sara 1/2 400 1,000 Less Interest on capital: Alex 1/2 8,000 Sara 1/2 6,000 49,300 14,000 Less Share of profits: Alex 2 21,180 Sara 2 14,120 35,300 35,300-6½ Marks Page 2
Alex and Sara Trading in Partnership Current Accounts Answer Task C DR Current Accounts CR Date Details Alex Sara Date Details Alex 31/5/10 Balance b/f ¼ 2,120 31/5/10 Balance b/f ¼ 3,440 31/5/11 Interest on drawings ¼ 600 ¼ 400 31/5/11 Interest on capital Sara ¼ 8,000 ¼ 6,000 31/5/11 Drawings ¼ 24,000 ¼ 18,000 31/5/11 Share of profit ¼ 21,180 ¼ 14,120 31/5/11 Balance c/d ½ 2,460 ½ 5,160 29,180 23,560 29,180 23,560 31/5/11 Balance b/d ¼ 2,460 ¼ 5,160 4 Marks Page 3
Alex and Sara Trading in Partnership Balance Sheet - Answer Task D Alex and Sara Balance Sheet as at 31 May 2011 NBV Fixed Assets Cost Less Dep n to Date Premises 225,000 - ¼ 225,000 Equipment 60,000 ½ 36,000 ¼ 24,000 Vehicles 40,000 ½ 23,125 ¼ 16,875 325,000 59,125 ½ 265,875 Current Assets Stock ¼ 89,650 Trade debtors ¼ 68,350 Prepaid expenses ¼ 10,000 Bank ¼ 10,320 Cash ¼ 200 Less Current Liabilities Trade creditors ¼ 85,530 Accrued expenses ¼ 1,245 178,520 86,775 Working capital ½ 91,745 Financed By: Capital Alex ¼ 200,000 Add Current account ¼ 2,460 Capital Sara ¼ 150,000 Add Current account ¼ 5,160 202,460 155,160 1 357,620 1 357,620 7½ Marks Total This Question = 24 Marks Page 4
QUESTION TWO Sena, Tariq and Vikram Trading in Partnership Capital Accounts Answer Task A DR Capital Accounts CR Date Details Sena Tariq Vikram Date Details Sena Tariq Vikram 1/6/10 Goodwill adjm t - - 2 15,000 31/5/10 Balance b/f 1 90,000 1 50,000-1/6/10 Balance c/d 1 100,000 1 55,000 1 55,000 1/6/10 Bank - - 1 70,000 1/6/10 Goodwill adjm t 2 10,000 2 5,000-100,000 55,000 70,000 100,000 55,000 70,000 1/6/10 Balance b/d ½ 100,000 ½ 55,000 ½ 55,000 Workings Goodwill Adjustment Partners Goodwill Creation Goodwill Deletion Net Adjustment Sena 35,000 (CR) 25,000 (DR) 10,000 (CR) Tariq 15,000 (CR) 10,,000 (DR) 5,000 (CR) Vikram - 15,000 (DR) 15,000 (DR) 50,000 (CR) 50,000 (DR) - 13½ Marks Page 5
Sena, Tariq and Vikram Trading in Partnership Profit and Loss Appropriation Account Answer Task B Sena, Tariq and Vikram Profit and Loss Appropriation Account for the Year Ended 31 May 2011 Net profit ½ 80,000 Less Interest on capital: Sena 1 3,000 Tariq 1 1,650 Vikram 1 1,650 6,300 Less Salaries: Sena 1 12,000 Tariq 1 12,000 Vikram 1 8,000 73,700 32,000 Less Share of profit: Sena 2 20,850 Tariq 2 8,340 Vikram 2 12,510 41,700 41,700-12½ Marks Page 6
Sena, Tariq and Vikram Trading in Partnership Current Accounts - Answer Task C DR Current Accounts CR Date Details Sena Tariq Vikram Date Details Sena Tariq Vikram 31/5/10 Balance b/f - ½ 500-31/5/10 Balance b/f ½ 1,500 - - 31/5/11 Drawings ½36,000 ½20,000 ½ 20,000 31/5/11 Interest on capital ½ 3,000 ½ 1,650 ½ 1,650 31/5/11 Balance c/d ½ 1,350 ½ 1,490 ½ 2,160 31/5/11 Salaries ½ 12,000 ½ 12,000 ½ 8,000 31/5/11 Share of profit ½ 20,850 ½ 8,340 ½12,510 37,350 21,990 22,160 37,350 21,990 22,160 31/5/11 Balance b/d ½ 1,350 ½ 1,490 ½ 2,160 10 Marks Total This Question = 36 Marks Total This Unit = 60 Marks Page 7
SECTION B QUESTION ONE Trial Balance Answer Task A Trial Balance as at 31 May 2011 DR Bank 1/4 2,420 Bank loan 1/4 40,000 Capital 1/4 155,000 Carriage inwards 1/4 4,440 Discounts allowed 1/4 2,500 Discounts received 1/4 3,050 Drawings 1/4 36,000 Fixtures (Cost) 1/4 12,000 Fixtures (Provision for depreciation 31 May 2010) 1/4 2,400 Insurances 1/4 1,200 Loan interest paid 1/4 900 Operating expenses 1/4 22,740 Premises (Cost) 1/4 120,000 Purchases 1/4 617,400 Rates 1/4 6,800 Sales 1/4 803,410 Stock (31 May 2010) 1/4 70,240 Trade creditors 1/4 56,440 Trade debtors 1/4 37,780 Value added tax (VAT) 1/4 4,260 Vehicles (Cost) 1/4 40,000 Vehicles (Provision for depreciation 31 May 2010) 1/4 8,000 Vehicle expenses 1/4 4,610 Wages and salaries 1/4 92,950 Suspense 580 1/2 Totals 1/2 1,072,560 1/2 1,072,560 CR 7½ Marks Page 8
Suspense Account Answer Tasks B and D DR Suspense Account CR 2011 Details 2011 Details 31 May Difference in books 1/2 580 31 May Purchases 1/2 1,000 31 May Discounts received 1/2 420 1,000 1,000 1½ Marks Journal Answer Task C Journal 2011 Details DR 31 May Suspense 1/4 ½ 420 Discounts Received 1/4 ½ 420 Correction of error, discounts received not transferred from Cash Book 1/4 CR 31 May Purchases 1/4 ½ 1,000 Suspense 1/4 ½ 1,000 Correction of error balance on Purchases Account understated 1/4 3½ Marks Page 9
Extended Trial Balance Answers Tasks E, F and G EXTENDED TRIAL BALANCE AS AT 31 MAY 2011 Trial Balance Adjustments Profit & Loss Balance Sheet Ledger Account DR CR DR CR DR CR DR CR Bank 2,420 ¼ 2,420 Bank loan 40,000 ¼ 40,000 Capital 155,000 ¼ 155,000 Carriage inwards 4,440 ¼ 4,440 Discounts allowed 2,500 ¼ 2,500 Discounts received ½ 3,470 ¼ 3,470 Drawings 36,000 ¼ 36,000 Fixtures (Cost) 12,000 ¼ 12,000 Fixtures (Prov n for dep n) 2,400 ¼ 2,400 ½ 4,800 Insurances 1,200 ¼ 1,200 Loan interest paid 900 ¼ 900 Operating expenses 22,740 ¼ 2,500 ½ 25,240 Premises (Cost) 120,000 ¼ 120,000 Purchases ½ 618,400 ¼ 618,400 Rates 6,800 ¼ 2,800 ½ 4,000 Sales 803,410 ¼ 803,410 Stock (31 May 2010) 70,240 ¼ 70,240 Trade creditors 56,440 ¼ 56,440 Trade debtors 37,780 ¼ 37,780 Value added tax (VAT) 4,260 ¼ 4,260 Vehicles (Cost) 40,000 ¼ 40,000 Vehicles (Prov n for dep n) 8,000 ¼ 6,400 ½ 14,400 Vehicle expenses 4,610 ¼ 4,610 Wages and salaries 92,950 ¼ 92,950 Totals ½ 1072,980 ½ 1,072,980 - - - - - - Closing stock Profit & loss ¼67,440 ¼ 67,440 Closing stock Balance Sheet ¼67,440 ¼ 67,440 Prepayment adjustment ¼ 2,800 ¼ 2,800 Accruals adjustment ¼ 2,500 ¼ 2,500 Depreciation expense ¼ 8,800 ¼ 8,800 Net profit ½ 41,040 ½ 41,040 Totals ½81,540 ½81,540 ½ 874,320 ½ 874,320 ½ 318,440 ½ 318,440 16½ Marks Page 10
Trading and Profit and Loss Account Answer Task H Trading and Profit and Loss Account for the Year Ended 31 May 2011 Sales 1/4 803,410 Less Cost of Goods Sold Opening stock 1/4 70,240 Add Purchases 1/4 618,400 Add Carriage inwards 1/4 4,440 693,080 Less Closing stock 1/4 67,440 Cost of Sales ½ 625,640 Gross Profit ½ 177,770 Add Other Income Discounts received 1/4 3,470 Less Expenses Discounts allowed 1/4 2,500 Insurances 1/4 1,200 Loan interest paid 1/4 900 Operating expenses 1/4 25,240 Rates 1/4 4,000 Vehicle expenses 1/4 4,610 Wages and salaries 1/4 92,950 Depreciation 1/4 8,800 181,240 140,200 Net profit 1 41,040 5½ Marks Page 11
Balance Sheet Answer Task H Balance Sheet as at 31 May 2011 NBV Fixed Assets Cost Less Dep n to Date Premises 120,000-1/4 120,000 Fiuxtures 12,000 1/4 4,800 1/4 7,200 Vehicles 40,000 1/4 14,400 1/4 25,600 Current Assets Stock 1/4 67,440 Trade debtors 1/4 37,780 Prepayment 1/4 2,800 Bank 1/4 2,420 Less Current Liabilities Trade creditors 1/4 56,440 Accrual 1/4 2,500 Value added tax (VAT) 1/4 4,260 172,000 19,200 1/4 152,800 110,440 63,200 Working capital 1/4 47,240 Financed By: Capital 1/4 155,000 Add Net Profit 1/4 41,040 196,040 Less Drawings 1/4 36,000 ½ 200,040 160,040 Long-Term Liabilities Bank loan ¼ 40,000 ½ 200,040 5½ Marks Total This Question= 40 Marks Total This Unit = 40 Marks Page 12