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: 500/9262/5) Examination: June 2012 Units: Prepare financial statements for a partnership Y601/0742 Prepare financial statements for a sole trader A601/0734 PAPER 2 MODEL ANSWERS Suite 5, 20 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 Ryan and Vera Trading in Partnership Trading and Profit and Loss Account Answer Task A Ryan and Vera Trading and Profit and Loss Account for the Year Ended 31 May 2012 Sales 1/2 812,540 Less Cost of Goods Sold Opening stock 1/2 65,280 Add Purchases 1/2 626,130 Add Carriage inwards 1/2 2,800 694,210 Less Closing stock 1/2 64,200 Cost of Sales 1 630,010 Gross profit 1 182,530 Less Expenses Heat and light (3,240 + 1,020) 1 4,260 Wages 1/2 66,220 Vehicle expenses 1/2 7,450 Insurances 1/2 1,400 Rates (25,200-11,000) 1/2 14,200 Operating expenses (16,400 +1,600-1,200) 1 16,800 Depreciation(500 + 9,600) 1 10,100 120,430 Net profit 1 62,100 10½ Marks Page 1
Ryan and Vera Trading in Partnership Profit and Loss Appropriation Account Answer Task B Ryan and Vera Profit and Loss Appropriation Account for the Year Ended 31 May 2012 Net profit 1/2 62,100 Add Interest on drawings: Ryan 1/2 1,000 Vera 1/2 600 1,600 Less Interest on capital: Ryan 1 8,000 Vera 1 6,000 63,700 14,000 Less Share of profits: Ryan 1 29,820 Vera 1 19,880 49,700 49,700-5½ Marks Page 2
Ryan and Vera Trading in Partnership Current Accounts Answer Task C DR Current Accounts CR 2012 Details Ryan Vera 2012 Details Ryan 31 May Balance b/f ¼ 1,250 31 May Balance b/f ¼ 1,600 31 May Interest on drawings ¼ 1,000 ¼ 600 31 May Interest on capital Vera ¼ 8,000 ¼ 6,000 31 May Drawings ¼ 32,000 ¼ 24,000 31 May Share of profit ¼ 29,820 ¼ 19,880 31 May Balance c/d ½ 3,570 ½ 2,880 37,820 27,480 37,820 27,480 31 May Balance b/d ¼ 3,570 ¼ 2,880 4 Marks Page 3
Ryan and Vera Trading in Partnership Balance Sheet - Answer Task D Ryan and Vera Balance Sheet as at 31 May 2012 NBV Fixed Assets Cost Less Dep n to Date Premises ¼ 250,000 - ¼ 250,000 Fixtures and fittings ¼ 5,000 ½ 2,000 ¼ 3,000 Vehicles ¼ 75,000 ½ 36,600 ¼ 38,400 330,000 38,600 ½ 291,400 Current Assets Stock ½ 64,200 Trade debtors ½ 82,800 Prepaid expenses (11,000 + 1,200) ½ 12,200 Bank ½ 8,200 Less Current Liabilities Trade creditors ½ 99,730 Accrued expenses (1,020 +1,600) ½ 2,620 167,400 102,350 Working capital ½ 65,050 Financed By: Capital Ryan ½ 200,000 Add Current account ¼ 3,570 Capital Vera ½ 150,000 Add Current account ¼ 2,880 203,570 152,880 1 356,450 1 356,450 10 Marks Total This Question = 30 Marks Page 4
QUESTION TWO Ava and Boris Trading in Partnership Capital Accounts Answer Task A DR Capital Accounts CR 2011 Details Ava Boris 2011 Details Ava Boris 1 June Goodwill adjm t 3 4,000 31 May Balance b/f 1 60,000 1 130,000 1 June Balance c/d 1 64,000 1 126,000 1 June Goodwill adjm t 3 4,000 ¼ 64,000 ¼ 130,000 ¼ 64,000 ¼ 130,000 1 June Balance b/d ½ 64,000 ½ 126,000 Workings Goodwill Adjustment Partners Goodwill Creation Goodwill Deletion Net Adjustment Ava 20,000 (CR) 16,000 (DR) 4,000 (CR) Boris 20,000 (CR) 24,000 (DR) 4,000 (DR) 40,000 (CR) 40,000 (DR) - 12 Marks Page 5
Ava and Boris Trading in Partnership Profit and Loss Appropriation Account Answer Task B Ava and Boris Profit and Loss Appropriation Account for the Year Ended 31 May 2012 Net profit 1 54,800 Less Interest on capital: Ava 1 1,920 Boris 1 3,780 5,700 49,100 Less Salary: Boris 1 5,000 Less Share of profit: Ava 2 17,640 Boris 2 26,460 44,100 44,100-8 Marks Page 6
Ava and Boris Trading in Partnership Current Accounts - Answer Task C DR Current Accounts CR 2012 Details Ava Boris 2012 Details Ava Boris 31 May Drawings ½ 18,000 ½ 32,000 31 May Balance b/f ½ 1,500 ½ 1,200 31 May Balance c/d 1½ 3,060 1½ 4,440 31 May Interest on capital ½ 1,920 ½ 3,780 31 May Salary ½ 5,000 31 May Share of profit ½ 17,640 ½ 26,460 ½ 21,060 ½ 36,440 ½ 21,060 ½ 36,440 560 31 May Balance b/d ¼ 3,060 ¼ 4,440 10 Marks Total This Question = 30 Marks Total This Unit = 60 Marks Page 7
SECTION B QUESTION ONE Trial Balance Answer Task A Trial Balance as at 31 May 2012 DR Premises (cost) 1/4 100,000 Equipment (cost) 1/4 25,000 Vehicles (cost) 1/4 40,000 Capital 1/4 155,000 Drawings 1/4 22,000 Provision for depreciation - Equipment 1/4 5,000 - Vehicles 1/4 16,000 Stock 31 May 2011 1/4 16,240 Sales 1/4 530,360 Purchases 1/4 438,800 Wages and salaries 1/4 35,200 Rates 1/4 22,800 Vehicle expenses 1/4 6,100 Heat and light 1/4 1,820 Bad debts 1/4 600 General operating expenses 1/4 6,400 Trade debtors 1/4 21,260 Trade creditors 1/4 26,510 Bank 1/4 2,160 Value added tax (VAT) 1/4 2,290 Suspense 1/2 1,100 Totals 1 737,320 1 737,320 CR 7½ Marks Page 8
Suspense Account Answer Tasks B and D DR Suspense Account CR 2012 Details 2012 Details 31 May Difference in books 1/2 1,100 31 May Drawings 1/2 2,000 31 May Purchases 1/2 900 2,000 2,000 1½ Marks Journal Answer Task C Journal 2012 Details DR 31 May Drawings 1/4 ½ 2,000 Suspense 1/4 ½ 2,000 Correction of error, drawings not posted to ledger account 1/4 CR 31 May Suspense 1/4 ½ 900 Purchases 1/4 ½ 900 Correction of error, purchases account incorrectly balanced off 1/4 3½ Marks Page 9
Extended Trial Balance Answers Tasks E, F and G EXTENDED TRIAL BALANCE AS AT 31 May 2012 Trial Balance Adjustments Profit & Loss Balance Sheet Ledger Account DR CR DR CR DR CR DR CR Premises (cost) 100,000 ¼,100,000 Equipment (cost)l 25,000 ¼ 25,000 Vehicles (cost) 40,000 ¼ 40,000 Capital 155,000 ¼155,000 Drawings 1 24,000 ¼ 24,000 Prov n dep n - Equipment 5,000 ¼ 2,500 ½ 7,500 - Vehicles 16,000 ¼ 8,000 ½ 24,000 Stock 31 May 2011 16,240 ¼ 16,240 Sales 530,360 ¼ 530,360 Purchases 1 437,900 ¼ 437,900 Wages and salaries 35,200 ¼ 35,200 Rates 22,800 ¼12,000 ½ 10,800 Vehicle expenses 6,100 ¼ 6,100 Heat and light 1,820 ¼ 600 ½ 2,420 Bad debts 600 ¼ 760 ¼ 1,360 General operating exp s 6,400 ¼ 6,400 Trade debtors 21,260 ¼ 760 ½ 20,500 Trade creditors 26,510 ¼ 26,510 Bank 2,160 ¼ 2,160 Value added tax (VAT) 2,290 ½ 2,290 Totals ½ 737,320 ½ 737,320 - - - - - - Closing stock Profit & loss ¼18,480 ¼ 18,480 Closing stock Balance ¼18,480 ¼ 18,480 Sheet Prepayment adjustment ¼12,000 ¼ 12,000 Accruals adjustment ¼ 600 ¼ 600 Depreciation expense ¼10,500 ¼ 10,500 Net profit ½ 21,920 ½ 21,920 Totals ¼42,430 ¼42,430 ½ 548,840 ½ 548,840 ½ 239,980 ½ 239,980 17 Marks Page 10
Trading and Profit and Loss Account Answer Task H Trading and Profit and Loss Account for the Year Ended 31 May 2012 Sales 1/4 530,360 Less Cost of Goods Sold Opening stock 1/4 16,240 Add Purchases 1/4 437,900 454,140 Less Closing stock ¼ 18,480 Cost of Sales ½ 435,660 Gross Profit ½ 94,700 Less Expenses Wages and salaries 1/4 35,200 Rates 1/4 10,800 Vehicle expenses 1/4 6,100 Heat and light 1/4 2,420 Bad debts 1/4 1,360 General operating expenses 1/4 6,400 Depreciation 1/2 10,500 72,780 Net profit 1 21,920 5 Marks Page 11
Balance Sheet Answer Task H Balance Sheet as at 31 May 2012 NBV Fixed Assets Cost Less Dep n to Date Premises 100,000-1/4 100,000 Equipment 25,000 1/4 7,500 1/4 17,500 Vehicles 40,000 1/4 24,000 1/4 16,000 Current Assets Stock 1/4 18,480 Trade debtors 1/2 20,500 Prepayments 1/4 12,000 Less Current Liabilities Trade creditors 1/4 26,510 Accruals 1/4 600 Value added tax (VAT) 1/4 2,290 Bank 1/4 2,160 165,000 31,500 1/4 133,500 50,980 31,560 Working capital 1/4 19,420 Financed By: Capital 1/4 155,000 Add Net Profit 1/4 21,920 176,920 Less Drawings 1/4 24,000 ½ 152,920 ½ 152,920 5½ Marks Total This Question= 40 Marks Total This Unit = 40 Marks Page 12