ACCOUNTING

HIGHER LEVEL

BOOK 2

BOOK 1

185

I. Sole Trader - Final Accounts

The following rnal balance was extracttd from the books of M. O'Brie-n on 31/1212002.

9% Investments [ /6/2002 Ff ,4Buildings (cos1 (980,000) F /iDelivery vans (cost€ 150,000) 5% Fixed Mongage (including increase of €200,000 5% f �

mortgage received on l /4/2002) I Patents (incorporating 3 months investment income) F;lDebtors and Creditors B $Purchases and Sales T Stocks l /l /2002 1 Commission I::� S £([) Provision for Bad Debts cAG SSalaries and General Expenses Admi"Discount (net; op, 'h( ()h'l�Rent Op 1rco1n£_Mortgage lnterest paid for first 3 months�Insurance (incorporating suspense) Adrr,1n ·V.A.TC'.L BSPRSI CL e,£ Bank CL, [,<;. Drawings f'.' � (!;5'Capital F ¼, £, S

The following information and instructions are to be taken into account:

€ 200.000933,00080,500

55,50077,600

668,00067,70024,000

I 94, I 00

4,0008,700

37,500

2,350.600

r

500.000

86,500982,000

3.800

4,60015,000

5,5002,300

70,900

680.000�350,600

(i) Stock at 3 l/12/2002 at cost was €74,500. This figure includes damaged stock which cost €6,600 but whichnow has a net realisable value of €1 ,900.

(ii) Provide for depreciation on vans at the annual rate of 15% of cost from the date of purchase to the date ofsale. NOTE: On 3 I /3/2002 a delivery van which had cost €42,000 on 3 I /5/1999 was traded against a new van which cost €48,000. An allowance of €20,000 was made on the old van. The cheque for the net amount ofthis transaction was entered in the bank account but was incorrectly treated as a purchase of trading stock.These were the only entries made in the books in respect of this transaction.

(iii) Patents, which incorporate 3 months investment income, are to be written off over a 5 year periodcommencing in 2002.

(iv) The suspense figure arises as a result of the posting of an incorrect figure for mortgage interest to the mortgage interest account and discount received €700 entered only in the creditors account. The correctinterest was entered in the bank account.

(v) Provision to be made for mortgage interest due. (vi) A new warehouse was purchased during the year for €240,000 plus VAT 12.5%. The amount paid to the

vendor was entered in the Buildings account. No entry was made in the VAT account. (vii) Provide for depreciation on buildings at the rate of 2% of cost per annum. It was decided to re-value the

buildings at €I, 100,000 o� 3 l /12/2OO2. (viii) Provision for bad debts to be adjusted to 4% of debtors.

You are required to prepare a:

(a) Trading and profit and loss account for the year ended 31 /I 2/2002.(b) Balance sheet as at 31/12/2002.

(75)(45)

(120 marks)

2

s·oLE -rR.AOCR

-2...oos

(1) c Los\·� -stock rl+ S0O

DQ./"'r\� PortlOr'\ (Lt- 7-0 0 J bbOO � \90G

6Cf300

SOLO l.- 2.000 X Ci 5 JC.. 3j12 .;; I 575

RES, lO'iSOO u X � is , b '20 C,

NEW 4-'3000 )<. "15 ;,,;:. q},2 5400

D<2..pre.c. i o-. ti o ri Or""\ Vo.,,'$

�

cost

Cl.Ct. �.

..:: 42000

.:;

1 O �on\-hS

4-2000 J< • \ 5

cl, t .. d.

42000 lr-350

2.l.;-150

LOSS

2..0.000

4- 1 5 G

\ so. 000 - 4-2000 + 48000

�_JQQ.. + 2.317- 5 -- i rSSO

668000 - 28000 �·

I 56000.

64-0 00 0

3

\ ' I )

�v)

5'5500 -,.. ( 2.00 coo x · 0 9 /4

- 55500 + 4-500·-

60 000

- (12ooo)

{4000 ]X.

,

5.

G-.J. «\ ; r--

60 Q00 - I 2 OC (J

'250 0

4

/ [nsoJ/

�o-o_c-,o-0 -,(-.-0$-x -3,--.2-] /

1�00 l 1

v

"1,,.,_ V(!�� � U\l-

)

1- o o I

OOIO fX

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; " c...o""' e.

0. lj- )(.. 7--/n_ =- l \o.5'ot>] S hov...lJ

- 4. 5 C!>O

6. oaO o"-"- � Cc... b 'S

i...f.00 fiJ1-oo 0

5

. (v)

300. 000 x , 05 I 5000

7 500 ·200 ooo

930 000 I��

(vii)

X - 0 5 /4 Cff l'2

A}( 12-5/

3QOOO 0

'1 SO OD(!

£,�;\di f")_.95

� \�J�. 37-5U V

,- \, I ,,. i_ r co , t-o

f

>,

1-.e�,, rJ ., J,

0 3q o o o Bo.i 5 so 0

� �

c.A . .fLS

2-/. 0 t qso. ooO ::: �A).,vi:f\ �f,wice.,

C/ so. 000

(I; ,soooo

7'

c-�-, i-C-◊-. Ci-�

Ba.c\ O�b�

@) 3"800

3,800

'3 iCL;.

3i04-·-

ace � .A)<

8 6t.OOC B� 41-000

Rl¢.Ja\ u.<.\.l i Cl") g_QSUVQ. .Aj (

I

PrL IC/DOC

iSOcco([; 4-'�

(;(,OOC 0 -

Accounting - Higher Level 2003

QUESTION l

(a)

Trading, Profit and Loss Account the year ended 31/12/2002

Sales Less Cost of sales

Stock l/1/2002 Add Purchases

Less Stock 3 l /12/2002 Gross profit

Less Expenses

Administration Salaries and general expenses Patents written off Insurance

Depreciation - buildings

Selling and Distribution Loss on sale of delivery van Commission Depreciation- delivery vans

Add Operating income

WI

Wl

W3 W4 W5

W7

W6

Reduction in provision for bad debt.-s W 8 Rent Discount W 9

Operating profit Investment income

Mortgage interest W 10

Net profit for year

€

194,100 8 12,000 0

€

67,700 8 640.0000 707,700 (69,800) 0

9,650 0 19,000@ 234,750

4,1500 24,000@ 23,1750 51,325

€

982,000 8

(637,900) 344,100

(286,075) 58,025

6969 15,000 8 5,3000

79,021 10.500 8 89,521

(22,500) 0

�-

6

QU

ESTION 1-(continued)

(b)

Balance Sheet as at 31 December 2002

Cost Accumulated

Intangible Fixed Assets Patents (€60,000 - €12,000)

Tangible Fixed Assets Buildings Delivery vans

Financial Assets Investments

Current assets Stock VAT Investment income due Debtors Less provision

€

W 11 1,100,000@ 156,000@

�.!)00

W 12

Creditors: ameunts falling due within one year Creditors Mortgage interest due PRSI

Depreciation Net €

74,8258 �

86,S0o@ 18,7509 2,3008

€

1,100,000 81,175

I 1181 I 115

69,800@ 24,5000

6,0008

74,496 174,796

Total €

48,0008

1,181,175

200,000 @ 1,429,175

Bank 70,9008 (178,450) (3,654) 1,125.521

Financed by Creditors: amounts falling due after more than one year

9% Fixed mortgage

Capita) and reserves Capital l /1 /2002 Add Net profit

Less Drawings

Revaluation reserve Capital employed

W 13

3

680,0000 67,0210

747,021 37,S00@

709,521 216,0008

500,0008

925.521 1,425,5.21_

7

SECTION l (120 marks) Answer Question l OR any TWO other questions

1. Sole Trader - Final Accounts

The following Trial Balance was extracted from the Books ofOrla Dolan on 31/12/2007:

Buildings (Cost €580,000) Delivery Vans (Cost €85,000) 8% Investments (1/4/2007) 6% Fixed Mortgage (including increase of€50,000

received on 1/4/2007) Patents Debtors and Creditors Purchases and Sales Stock 1/1/2007 Commission Salaries and General Expenses Provision for Bad Debts Discount (net) Rent Mortgage interest paid for the first three months Insurance ( incorporating Suspense) VAT

Bank PRSI Drawings Capital

€ € 485,000 73,000

130,000

52,400 40,000

512,400 65,600

4,200 85,000

1,900 9,000 1,250 6,150

36,200

1.502.100

150,000

113,000 729,000

1,200

4,100 15,900 3,900

485,000 1,502,l0Q

The following information and instructions are to be taken into account:

(i) Stock at 31/12/2007 at cost was €75,000. No record has been made in the books for goods in transit on31/12/2007. The invoice for these goods had been received showing the recommended retail selling price of €6,000 which is cost plus 25%.

(ii) Provide for depreciation on vans at the annual rate of 15% of cost from date of purchase to date of sale.NOTE: On 31/3/2007 a delivery van which cost €30,000 on 30/9/2004 was traded against a new van which cost€36,000. An allowance of€10,000 was made on the old van. The cheque for the net amount of this transaction was entered in the bank account but was incorrectly treated as a purchase of trading stock. These were the only entries made in the books in respect of this transaction.

(iii) The suspense figure arises as a result of the posting of an incorrect figure for Mortgage Interest in the mortgage interest account and discount received €200 entered only in the creditors account. The correct interest wasentered in the bank account.

@ Goods with a retail selling price of €10,000 were returned to a supplier. The sel1ing price was cost plus 25%.The supplier issued a credit note showing a restocking charge of I 0% of cost price. No entry has been made in respect of the restocking charge.

@J Provision to be made for mortgage interest due. 20% of the mortgage interest for the year refers to the privatesection of the building.

(vi) Patents, which incorporate 3 months investment income received, are to be written off over a five year period,commencing in 2007.

(vii) Provide for depreciation on buildings at the rate of 2% of cost per annum. It was decided to revalue theBuildings at €800,000 on 31/12/2007.

@:i1J Goods withdrawn by the owner for private use during the year with a retail value of €2,000 which is cost plus25% were omitted from the books. @J A cheque for €600 had been received on 31 /I 2/2007 in respect of a debt of €1 ,000 previously written off as bad. The debtor has agreed to pay the remainder within I month. No entry was made in the books to record this transaction.

You are required to prepare a:

( a) (b)

Trading and Profit a· .. Loss Account for the year ended 31/12/2007. Balance Sheet as at;) ·12/2007 .

Page 2 of 12

(80) (40)

(120 marks)

8

+

0 r\c'- Do\CU")

1n H··-Q.

R.RP

Su.,,'\· bQ.d, corre.c.Hy 6v..� v..;t\h.0\,1..,\-

r�c.::crc,\.. cf o.. �<::'.S tcc.k;� Chcv..9.Q.

[,go@

,0000 ,._ , uu

\ '2.. s

pr { <: '<.. po...--.o.\ \ �Q S UJ?

o-/.> ·f C \..\. o,.,,J 'S

goo l gooo J

by

(sooo {

V

-+

'S000

\O'/,

,o�,. of

/

Cosr

8000

gOO

9

(v)

(1x)

0

2.0 '/.

to 0..

Good.-c>

D.d t-hQ.

0 f

'2.00 0

Mort.9qye

SQ.(+ic"J

DR.AwnvG-�

e D.Qb it

C�d.it 0

D rau.;; "J'.6 A )C

p ;J.,rC h c,✓-).Q/.) A Jc

Ba.d D.e.b r

'2.. 000 � , oo

,25

R.e C(A.JQ,('Q_ c\

Bo.r,'t, olD �<.\ i.A t1H.l by 600

Ba.(,\ D-«.bt R�t-cv12..--ecl

l1�o0eJ by 60 0

�b-\-ci-5 , ·-x:::reevo:?.ci by 40 0 .

go.<,\. D�br Rec0verQ.c\

\ �lV)Q.c.\ t;_y 4-00 ,.

10

251.

'.)c, .. .,eA

( l)

l' ,)

'200g

P\U"cho.A-V) S 12400

c r-Q.,c;l � l: o f'5 I 13 000

C lo'5 i ()Jj St:ock

t.000 X \00

I .. 2.S

So\d 30.000

R1<..Dl: ssooo

'"1-5000

X 0 i 5

>( 0 i 5

+- 4800

t- 4800

� 4800

;( 3j12.

N�\A.I '3600 C, X • l 5 lit. qjr2.,

., ' f\

� -: > t C

"30000 X � \ S

'30000 - Ii '2 .. 50

Loss on Di sposo..\

.,;;

18'1-50

10.00(J

,.;

"BSOOCJ -30.000 + 3b000

acc. � • \ 'l. COO + 1·'3,t,.'2.5 ._ l\ 2. 5 0

·-

,.:;;

-·

-·-

�

11

511-200

llr80O

7/- 9 <iSO 0

11·1.s

'8250

4050

\3425"

I l '2. 5 0 c!, t .cl ·

9 l 00 0

491·200

Accounting Higher Leve) - Marking Scheme

Question 1

Trading and Profit and Loss Account for the year ending 31/12/2007 [l]

€ € €

Sales 729,000 [3] Less Cost of Sales

Stock Add Purchases

Less Stock 31/12/2007 Gross Profit Less Expenses Administration

Patent written off Salaries and General expenses Discount Rent Insurance Depreciation - Buildings

Selling and Distribution Commission Depreciation -Delivery van Loss on sale of van

Add Operating Income Bad debt recovered

Operating Profit Add Investment Income

Less Mortgage Interest Net Profit

�., .... � ·c ._,, (., ,;,_ ,,, •. . ,.._ c, (',\ [

WI

W2

W3

W4

W5

W6 W7

W8

W9

11,000 (5) 85,000 [3]

l,700f6] 9,000 (3] 6,100 [7]

11,600 [4]

4,200 [3] 13,425 [5] 8,750 [5]

2

65,600 ["3] 490,400 [10] 556,000 {79,800l [6]

124,400

26,375

,

(476,200) 252,800

(150,775) 102,025

1,000 [3] 103,025

7,800 [4] 110,825

(6,600) [5] 104,225 [4]

! ·

., <

13

80

·,. f

Question I - continued

Balance Sheet as at 31/12/2007

lntangible Fixed Assets Patents (55,000 - 11,000)

Tangible Fixed Assets Buildings Delivery Vans

Financial Assets 8% Investments

Current Assets Stock Debtors Less provision Investment income due

WJO WI l & 12

Wl3

W8

Cost €

800,000 [J] 91,000 [2]

891.000

40,400 [2] (],200)(2]

Creditors: Amounts faJling due within one year Creditors WI4 Bank W15 VAT PRSI Mortgage interest due

Financed by Creditors: amounts faJling due after more than one year

6% Mortgage

Capital Add Net Profit

Less Drawings

Revaluation Reserve Capital Employed

Wl6

Wl7

3

Acc.Dep €

14,175 [3] �

79,800 [2]

39,200 5,200 [1]

118,600 [2] 15,300 [2J 4,100 [2] 3,900 [2] 6,750 [.2]

Net €

800,000 76,825

876,825

124,200

(148,650}

40

Total €

44,000 (4]

876,825

130,000 [2j 1,050,825

(24,450) 1,026,315

150,000 [2]

485,000 [2} 104,225 [l] 589,225 (39,450) [3] 549,775

326,600 i2J I 026.375

14

SECTlON 1 (120 marks) 2..0\0 Answer Question l OR any TWO other questions

1. Sole Trader - Final Accounts

The following Trial Balance was extracted from the books of Nora O'Connell on 31/12/2009:

Buildings (Cost €620,000) Delivery Vans (Cost €90,000) 4% Investments (01/07/2009) Patents 6% Fixed Mortgage (including increase of€80,000

received on 01/04/2009) Debtors and Creditors Purchases and Sales Stock 01/01/2009 Commission Salaries and General Expenses (incorporating Suspense) Provision for Bad Debts Discount (Net) Rent Mortgage Interest paid for the first three months Advertising VAT Bank PA YE and PRSI Drawings Capital

€ €

515,000 80,000

120,000 60,400

180,000 50,000 120,000

465,200 659,650 63,200 5,550

75,000 1,800

1,600 8,000 1,400 2,400

4,600 13,300 5,400

32,000 495,000

l,412,750 1,472,150

The following information and instructions are to be taken into account:

(i) Stock at 31/12/2009 at cost was €75,400. This figure includes damaged stock which cost€8,200 but which now has a net realisable value of€3,400.

(ii) Patents, which incorporate three months investment income received, are to be written offover a five year period commencing in 2009.

( iii) Provide for depreciation on vans at the annual rate of 12 ½% of cost from the date of purchase tothe date of sale. NOTE: On 31/03/2009 a van, which cost €24,000 on 30/09/2006, was traded inagainst a new van which cost €48,000. An allowance of€12,000 was given on the old van. Thecheque for the net amount of this transaction was incorrectly treated as a purchase of tradingstock. This was the only entry made in the books in respect of this transaction.

(iv) The suspense arises as a result of the incorrect figure for mortgage interest (although thecorrect entry had been made in the bank account) and from €1,000 paid towards PAYE andPRSI entered only in the bank account

(v) Goods with a retail selling price of €8,400 were returned to a supplier. The selling price wascost plus 20%. The supplier issued a credit note showing a restocking charge of I 0% of thecost price. No entry has been made in respect of this restocking charge.

(vi) Provision to be made for mortgage interest due. 10% of the mortgage interest for the yearrefers to the private section of the building.

(vii) Provide for depreciation on buildings at a rate of3% of cost per annum. It was decided torevalue the buildings at €850,000 on 31/12/2009.

(viii) The advertising payment is towards a 24 month campaign which began on 01/10/2009.(ix) A cheque for €400 had been received on 31/12/2009 in respect of a debt of €900 previously

written off as bad. The debtor has agreed to pay the remainder within one month. No entrywas made in the books to record this transaction.

You are required to prepare a:

(a) Trading and Profit and Loss Account for the year ended 31/12/2009.(b) Balance Sheet as at 31/12/2009.

Page 2 of9

(75) (45)

(120 marks)

15

·20lQ

!Vero..

i f'\Vo\v i r,.J

C..a.r·--.po,..;..9n

0

0 CC:'ll'")Ql \

.;

300

2400

2 i.,- .� 0 n\h S

(\ <J v Q.r\ i S ; ('")__}·

16

'2.,.0\ 0 17

50 \u..tion

(,) c \.osit:,y stock .;;; 7-54-00

Qo.,r--,.o.ged. srock ·- 4300 ·-

-frod i 09 7-0 600 i

l' ,) Po..\-Q.()'\-5 + 3 i""""'\\-h5 l:')vl2.l.:)�C"let")t i(")CO('(")e

60400 +· ( \ 20,000 X • 04 X 3/ri.)

--

61600

12;:.'2.0

6\ &00

-,_

-5

� A d � i ("'\ Q.,'X.f

·- \'2."320

4-9 2'30

'24000 x: t 2..½.1 \

6b 000 J< l2½. t.

r50

,g2.5O Ne.u..J I;-SO O O X l 2 '2 I · /4 9 JI 2 .= 4-S O C,

Der�iaJ,o" on vo.ns '3 50 0

Bo.c\-<:c\.o..tQ..

30\qlof> � 3.l\3)09

'2.4000 x.

21.+ooo - 7- soo - 16 soo

.:;;

L.055

\ )..00 0

4-SOO

: --=t S 00 J... t.cl

N.B.V.

18

Vc:,..nS qoooo ...:. 24000 + 4goOO- l, 4-000·-

(v)

(Vi)

O..cc . 0-Qf> \0000 + 13500 -7500 _, I bOOO

P�n:.,hc,..(.)Q/) 4&5200 -'3f.000 - 42.92.0 0

j,sooJ v [ooo] v

\)uAC,h� (�"�) Aj(

+oo j [Jooo]

Mer \-.90.gQ.

O\d • \00_000 X '

NQ;I).) goooo X

C/600 'I.. iO .. /. � C/60 -

•• ,ooo l � 5',-00

S. A Cr. 5 ,Af (.

B� "1-5000 l

I

\000 ° �

100 0

[7000]

I7-00

6/. )( * - 6000

61. )(. qj,1... - 3600

f)ro.w;".95 CJ bOO \

500

9600 y.._ qQ�/. .; �b.4-0 �s Q.. �8100 �

(v, i)

Be& 6'200001 0 1.30000

£1s600

Ace. De.p 1r}c

, o n .. '3 bOO Bol PrL

"2..30. CJOO o

31.)

1osooo

1'3600

I \ 1. 3 600 ° �

Bo.Q.

Bo.rJc o\ D

.., Oeb\-or5

-+ 900

l3300 - l;-0 0

so.ooo + 500

50. so 0

\ nvw\-f"l(;:r·J· \ "l col""') �

4 /. )( \20, ooo ')( 61 \2.

- 2..400

\ 2.00 dv-Q..

32000 q 6 0 fY"'or-tJo...92- tr-i\--Q..€.0�

32'160

12900

19

Accounting - Higher Level - Marking Scheme

Question 1

(a)

Trading and Profit and Loss Account for the Year ended 31/12/2009 [1]

€ € €

Sales Less Cost of Sales Stock 1/1/2009 63,200 Add Purchases WI 429,900

493,100 Less Stock 31/12/2009 W2 (70,600) Gross Profit

Less Expenses:

Administration Salaries and General expenses W3 73,900 [7] Rent 8,000 &�]Patents written off W4 12,320 [5]Depreciation Buildings 18,600 [3] 112,820

Selling and Distribution Commission 5,550 [3] Discount 1,600 fjJAdvertising WS 300 tsJLoss on sale of van W6 4,500 [6]Depreciation on vans W7 13,500 [S] 25,450

Add Operating Income Bad debt recovered Operating Profit Investment Interest W8

Less Mortgage Interest W9

Net Profit for the Year

[3] [6]

[5]

€

659,650 [3J

(422,500) 237,150

{138,270) 98,880

_2QQ(iJ 99,780

2,400 I�J 102,180

(8,640) [�] 93,540 [6']

Penalties: Deduction of2 x 1 mark for the omission of2 expense headings in the Profit & Loss account

4

20

(b)

Balance Sheet as at 31/12/2009

Intangible Fixed Assets Patents

Tangible fixed Assets Buildings Delivery Vans

Financial Assets 4% Investments

Current Assets Stock

WlOWll

Debtors W12 Less Provision for bad debts Investment Interest due Advertising prepaid

Cost Accumulated Depreciation

Net

€ € €

850,000 [l] 114,000 [2] 964,000

50,500 (1,800)

850,000 J6,000 [3] 98,000 � 948000

70,600 [2]

48,700 [3] 1,200 t2J 2,100 [2] 122,600

Creditors: Amounts falling due within one year: Creditors W13 Mortgage interest due PAYE & PRSI Wl4 VAT

120,700 [4] 8,100 [2] 4,400 f3J 4,600 [2]

Bank overdraft WJS 12,900 [3)(150,700)

Financed by Creditors: Amounts falling due after more than one year: [1]

6% Fixed Mortgage

Capital and Reserves Capital Add Revaluation Reserve W16 Add Net Profit

495,000 fl] 353,600 {3]

93.540 941,940

Total

€

49,280 [4]

948,000

120,000 {2] 1,117,280

(28,100) 1,089,180

I 80,000 [2]

Less Drawings Wl7 (32,960) [3J 908.980 I.089,180

5

21

22

PANY

. INAL

AC OUNTS

,, .., 1.,,' 1

' <

'

.,�'

, . ' ~ L '-.

) (\ �

\ \ l I \( 1 • ! , ,

23

Tynan Ltd. ha.a an Autlwriaed C&pital of £850,000 divided into 550,000 Ordinary Shares £1 each and 300,000 6% Preference Shares s.t £1 each. The follcrwing Trial Ba!Mee was extracted from its books on 31/12/1897.

Land and buildings at cost ............................... :; ..... m ..................... ., •••••

Accumulated depreciation• Land and buildings ..... : ........................... . Delivery vans at coat ............................................................................. . Accumulated depreciation • Delivery vans .......................................... . Patents (incorporating 4 months investment :income received} .......... . 9% Investments ..................................................................................... . Stocks 1/1/1997 ................................. ..................................................... . Purchases and Sales ........................................................ ...................... . Director's fees ....................................................................................... .. Salaries and general expenses .............................................................. . Debenture interest paid (1st Jan - Slat Marcil} ................................ ... Debtors and Creditors ........................................................................... . Provision for bad debts .•• � ...................................................................... . Interim dividends for first 3 months .................................................... . Profit and. lOBS balance 1/1/1997 .................................................... -. .... . 8% Debentures

(including £100,000 8% debentures issued at par on 31/3/1997) ... . VAT ......................................................................................................... .

Bank ....................................................................................................... . Iseued capital

400,000 Ordinary shares at £1 each ................................................ . 200,000 6% Preference shares of fl each ........................................ .

£ 700,000

180,000

47,000 100,000 45,000

480,000 50,000

186,000 3,000

69,000

15,000

1,825,000

The following information and instructions are to be taken into account:

£

86,000

80,000

770.000

44,000 2,100

22,000

250,000 14,000 6,900

400,000 200,000

1,825,000

(i) Stock at SJ/12/1997 a.t cost was £40,000 • this figure :includes old stock which cost £8,000 but hasa net realisttble value of 60% of cost.

(ii) Patents, which incol:"porated 4 months investment income, are to be w1•itten off over a 4 yearperiod commencing in 1997.

(iii) The figure for bank in the trial balance has been taken from the firm's bank account. However, abank statement dated 31/12/1997 has arrived showing an overdraft of £1,980. A comparison ofthe bank account and the bank statement bas revealed the following discrepancies:

1. .Investment income £3,750 1ha.d'b1t"� paicI1firect to the firm's bank account.2. A direct debit to ESB of £900 had not been recorded in the firm's books.3. A cheque for £760, issued to a supplier, had been entered in the books (cash book and ledger)

a.s.£57O.

4. A credit transfer of £260 had been pa.id direct to the firm's bank account on behalf of abankrupt debtor. This represents a first and final payment of l0p in the £1.

5. A cheque issued for £2,000 to a director had not yet been preSe'bl,l;\d '::•r payment.(iv) Provide for depreciation on delivery vans at the annual rate of 20% 1., � cost from the date of

purchase to the date of sale.NOTE: On 81/5/1997 a delivery van, which had cost £46,000 on 1/6/1995, was traded against anew van which cost £67,000. An allowance of £20,000 was made on the old van. The cheque for the net amount of thia transaction wae incorrectly treated aa a purchase of trading stock. Thiswas the only entry made in the books in :respect of this transaction.

(v) Buildings are to be depreciated at the rate of2% of coat per annum (land at cost was £160,000).At the end of 1997 the company re-valued the land and buildings at £850,000.

(vi) Provision be made for both investment :income and debenture interest due.(vii} Provision for bad debts be adjusted to 6% of debtors.

(viii) The directors recommend that:1. The preference dividend due be paid.2. A final dividend on ordinary shares be provided bringing the total dividend up to 8%.

You. are required to prepare a:

(a) Trading, Profit and Loss Account for the year ending 3.Vl2/1997.(b) Balance Sheet as at 31/12/1997.

Page2 of8

{75)

(45) ".'(l.2Jt marks}

24

(0

Stoel"

G. \ l998

40000 ' 8000) 36800

4 �000 + cl 00, 00() X .. 09 )( 4/ri.)

47--000 +- 3000 = 50,000 ·-:- 4

, 1-soo

3'1-SOC,

Bonk o\ D _A\c b'100 -3750 + qoo t-180 - 2.s-0

'r"\V. \r'\CO�.Q.. -· +3t50

s.A.&.5 13 6000 + 900 .: \36900

CrQ.cl,l:-orS ,. 4-L,. 000 ·- l80 r' 4?>7520

O'<--bt-or;, .: 6C, 000 -250 - 2250 : 66500

F,o.,d. D"-bt5 - 6 -

So\d 45000 X . 2. 'I- sb2 37-50 ..:

RJu> l:: \"3 S 000 X II 2. : 2 -i,00 0

N�vV s�oo (J X ·2 x 7J\2 665 0

25

---.:\ s 11 sjc;,-

4sooo X GL._ X 2yeor? 'w l800(J OL

Good. J Eo..<k DecJ 4- S-000 ·- 13000

-· 2rooo l\.JBV

v.2-0,000 a.tlol.,VO./\ lQ..

t-OO(J LOSS

vo..ns

a.ct. dA,,p

\150.000 ·- 45000 + SrOOO

13000

l 9200O

99400

®

4'80. 000 - 37-000 443,00C,

�),{J. r r A.

Bu.;\ cl I r,95 \ ' \-

1-00.00O + ISO.ODO

R.�vc& .. (f 1- /" .r-.-

I I

Qeu>e.rv'<.. + \ s·o. oo o t- Li--7-00C,

').' J. ,1" .,/,

D�('Q,C I G'-,t iO<'l 36.000 t- l I 000 - 47-000

\ :'IV e.Dh·••""')�-J- \ r'-1 c.o ("'""\ Q_

9 /, of l 00.000

- p � l-

B on k

I I

, , ,_,1,[,j C'•

9000 SHOULD

3000

"21..50 c..A. B.S

26

@

®

27

Deb<2r\ \-tLJ'(L I� t;Qr0:)t

•

.,,

,(•

@ 8/,o\d.. l 50, ooo .:; \2000

N�u...., l 0O.OO0 @ g ;, )(. '-f/i2 __ bOOO

l <[{000 (sHouLD)

D\ °" (J,ooo)

D� CrS L i yw.-r- ISOOO

b;. c-Q.- dtbt-orS

bbSOO � --ob

(dQ wJo 15000 - 3000

Ord..lc,o,y Div� P,4

PoJ J.. I 1..000 6' (_ b /. of 200.oo� 1,. 3/,2.)

"2.O.OO0

',.),'/ l_\f ' ·-

c '32.000 ::; C<2. i \ i "'.9 g / •- 12.000 Pd

p�Q Divl�J. � 6 .. /. J.- 200k

� , 2,000� PCM�::. 3000.. DvJL .: c, ooo

Accounting - Higher Level 1998

Question I - Final Accounts or a limited cdrnpany

(a) Trading, Profit and Loss Arrount of Tynan Ltd for the year ended 31/12/1997 \Bl

Sales Less Cost of sales

Stock l/ l/ I 997 Add Purchases

Less Stock

Gross profit less Expenses Administration

3 l/l2/1997

Directors fees Salaries & general expenses Patents written off Depreciation - buildings

Selling and Distribution Bad debts written off Depreciation- delivery vans Loss on sale of van lncrease in provision for bad debts

Operating profit Investment income

Debenture interest Net profit for year before taxation Less Appropriation

Preference dividend paid Ordinary dividend paid Preference dividend proposed Ordinary dividend proposed

Retained profit Profit and loss balance l/1/i997 Profit and loss balance 31/llil 997

WI

W2

W3 w ➔

ws

W6 W 7 W8

£

50.000 e\36.900@

12 . .500@ 11.000 e

2,250@ 37-400@

1,000@[,890@

C. R.t:011

£ £ 770,000@

45,000@ 443,000@ 488,000 (36,800}0 {451,200}

318,800

210,400

48,540 258,940 59,860

9.000 0 68,860

{18.000}@ ·so,860

3,000 fl11,000@ 9,000 49

20,000 @ (44,000)

(::ALAt\.CG 6,860

22.000@ 28,860@

2