Chapter 7 [PDF]

FANLING LUTHERAN SECONDARY SCHOOL 20162017 1st Term Examination

S.5 BUSINESS, ACCOUNTING AND FINANCIAL STUDIES ACCCOUNTING MODULE

Marking Scheme 1.

(a) Sales Day Book Date 2013 Sept " " " "

Details 1 8 15 27 30

Tai Kee Hong [(50 x $600 + 11 x $1,300 + 5 x $1,200) x (1  20%)] Wing Tai Hong [(6 x $1,300 + 20 x $200) x (1  25%)] Sunrise Ltd [(2 x $600 + 30 x $1,200) x (1  10%)] Yu Kee Seafood (3 x $1,200 + 4 x $200 + 5 x $600) Total credit sales for the month

Amount $ 40,240 8,850 33,480 7,400 89,970

(b) Sales Ledger 2013 Sept

2013 Sept

2013 Sept

2013 Sept

Tai Kee Hong $ 40,240

1 Sales

Wing Tai Hong $ 8,850

8 Sales

Sunrise Ltd $ 33,480

15 Sales

27

Sales

Yu Kee Seafood $ 7,400

General Ledger Sales 2013 Sept

30 Total credit sales for the month

$ 89,970 (Total 5 marks)

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2

Cash Book Date 2016 Jul

Particulars

Discount

Cash

Bank Date

$

$

$ 2016

1 Balance b/d

3,100

"

6 Capital

2,500

"

7 Mario Chan

"

11 Capital

"

18 Kelvin Wong

30

7,500

970 3,350

35

3,465

31 Balance c/d

2,400 65

10,035

Particulars

Jul

1 Balance b/d

"

10 Mary Cheung

"

14 Sammy Au

"

31 Overdraft interest

"

31 Balance c/d

Discount

Cash

Bank

$

$

$ 12,500 500

100

2,200 250 7,835

"

13,250

100

10,035 13,250 (Total 5 marks)

3. 2011 Nov

2011 Dec

2011 Dec

2011 Dec "

31 Bank

31 Profit and loss

15 Bank

20 Bank 31 Accrued c/f

Motor vehicle expenses $ 2011 28,000 Dec 31 Profit and loss " 31 Prepaid c/f ($5,000  3/12) 28,000 Commission Revenue $ 2011 55,870 Dec 1 Bank " 31 Accrued c/f 55,870 Insurance $ 2011 39,500 Dec " 39,500

31 Profit and loss 31 Prepaid c/f ($8,400  9/12)

Sundry Expenses $ 2011 7,900 Dec 31 Profit and loss 1,200 9,100

$ 26,750 1,250 28,000

$ 47,980 7,890 55,870

$ 33,200 6,300 39,500

$ 9,100 9,100

(Total 7 marks)

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4

Journal Details

Date 2014 (i)

Dec

31 Allowance for doubtful accounts

Dr $

Cr $

2,000

Profit and loss – Decrease in allowance [$8,000 – ($300,000 × 2%)] (ii) Dec

31 Profit and loss – Increase in allowance [($300,000 × 8%) – $8,000]

2,000 16,000

Allowance for doubtful accounts (iii) Dec

31 Wendy Tang

16,000 2,550

Bad debts Bank

2,550 2,550

Wendy Tang (iv) Nov

11 Judy Choi

2,550 21,400

Bad debts recovered Bank

21,400 21,400

Judy Choi (v) Dec

31 Bad debts Trade receivables

21,400 2,050 2,050 (Total 7 marks)

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SECTION B

(36 marks)

5. (a)

Cash Book (Bank) $ 12,913 Rent and rates 5,900 Miclara Chong Bank charges Balance c/d 18,813

Balance b/d Mandy Mok

$ 2,100 1,250 530 14,933 18,813

(b)

Bank Reconciliation Statement as at 31 December 2013 $ 14,933 6,683 21,616 7,870 13,746

Balance as per adjusted cash book Add: Unpresented cheques Less: Uncredited deposit balance as per bank statement

(Total 10 marks)

6. (A) (a) Weighted average cost per unit = [(315 – 15) × $1,350 + 200 × $1,450 + (320 – 20) × $1,550] / [(315 – 15) + 200 + (320 – 20)] = $1,450 (b)

Inventory as at 31 December = [(315 – 15) – 100 + 200 – 200 + (320 – 20) – 300 – 5] × $1,450 = $282,750

(B)

Chan’s Company Statement to Calculate the Value of Inventory as at 31 March 2014 $ Value of inventory at 7 April 2014 Add Net sales (1 April 2014 – 7 April 2014), at cost (iii) ($69,500 ÷ 125%) Inventory sent on a sale-or-return basis, at cost (iv) ($8,000 ÷ 125%) Returns outwards after the end of reporting period (vi) Less Inventory value written down to net realisable value (ii) ($3,000 – $2,000) Net purchases (1 April 2014 – 7 April 2014) (v) Inventory value written down to net realisable value (vii) ($3,650 – $3,560) Value of inventory at 31 March 2014

55,600 6,400 5,000 1,000 55,660 90

$ 211,500

67,000 278,500

56,750 335,250 (Total 10 marks)

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7. (a)

Journal 2014 December 31 (i)

(ii) (iii) (iv) (v) (vi) (vii) (viii)

Dr $ 2,500

Motor expenses Motor vehicles Accumulated depreciation: Motor vehicles ($2,500 × 20%) Depreciation: Motor vehicles Bad debts Shirley Luk Drawings Purchases Suspense Debtor Sales Trade receivables Bank Creditor Increase in allowance for doubtful accounts[($554,400 × 3%) − $16,000] Allowance for doubtful accounts Cleaning expenses Cash

Cr $ 2,500

500 500 5,000 5,000 6,500 6,500 3,580 3,580 25,000 25,000 1,500 1,500 632 632 1,220 1,220

(b)

Statement to correct net profit for the year ended 31 December 2014 $ Draft net profit Add Depreciation of motor vehicles overstated Purchases overstated Less Motor expenses wrongly treated Bad debts omitted Sales overstated Increase in allowance for doubtful accounts not recorded Cleaning expenses omitted Corrected net loss

(i) (iii)

500 6,500

(i) (ii) (v) (vii) (viii)

2,500 5,000 25,000 632 1,220

$ 45,432 7,000 52,432

34,352 18,080 (Total 16 marks)

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SECTION C (a) Accumulated depreciation: Office equipment 2014 $ 2014 Jan 31 Disposal: Office equipment (W1) 102,400 Jan 1 Balance b/d Jun 1 Disposal: Office equipment (W2) 60,000 Dec 31 Profit and loss – Depreciation: Dec 31 Balance c/d 202,000 Office equipment (W3) 364,400

$ 300,000 64,400 364,400

W1: Accumulated Depreciation = 128,000 x 20% x 4 = 102,400 W2: Accumulated Depreciation = 100,000 x 20% x 3 = 60,000 W2: Depreciation = ($500,000 ˗ $128,000 ˗ $100,000 + $50,000) × 20% = $64,400 (b) Accumulated depreciation: Furniture and Fittings

2014 $2014 Dec 1 Disposal: Furniture and fittings (W4) 50,000Jan 1 Balance b/d “ 31 Balance c/d 141,250Dec 31 Profit and loss – Depreciation: Furniture and fittings (W5) 191,250

$ 100,000 91,250 191,250

W4: Accumulated Depreciation = 50,000 x 25% x 4 = 50,000 W5: Depreciation = ($280,000 + $135,000 ˗ $50,000) × 25% = $91,250 (c) 2014 Jan 31 Office equipment Jun 1 Office equipment

Disposal: Office equipment $ 2014 128,000 Jan 31 Accumulated depreciation: Office equipment 100,000 “ 31 Cash Jun 1 Accumulated depreciation: Office equipment “ 1 Office equipment — Trade-in value Dec 31 Profit and loss — Loss on disposal 228,000

$ 102,400 50,000 60,000 10,000 5,600 228,000

(d) 2014 Dec 1 Furniture and fittings “ 31 Profit and loss-Profit on disposal

Disposal: Furniture and fittings $ 2014 $ 50,000 Dec 1 Accumulated depreciation: Furniture and fittings 50,000 20,000 “ 1 Other receivables 20,000 70,000 70,000

(e) Office Equipment 2014 $ 2014 Jan 1 Balance b/d 500,000 Jan 31 Disposal: Office equipment Jun 1 Disposal: Office equipment –Trade-in value 10,000 Jun 1 Disposal: Office equipment “ 1 Bank 40,000 Dec 31 Balance c/d 550,000

$ 128,000 100,000 322,000 550,000 (Total 20 marks)

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9. (a)

Journal Dr $

Details

(i) (ii) (iii)

(iv) (v) (vi) (vii)

Inventories Profit and loss Trade Creditor - Terry Siu Suspense Prepaid insurance Insurance Commission revenue Unearned commission revenue Depreciation–Office equipment [$800,000 × (5% − 3.5%)] Accumulated depreciation – Office equipment Bank Trade debtor Allowance for doubtful accounts {$2,400 − [($37,400 − $5,000) × 5%]} Profit and loss–Decrease in allowance for doubtful accounts Suspense Sales

Cr $

16,472 16,472 55 55 4,240 4,240 6,700 6,700 12,000 12,000 5,000 5,000 780 780 15,900 15,900

(b)

Teddy Bear Company Statement of Financial Position as at 31 December 2014 $ $

$

Non-current assets Office equipment Less Accumulated depreciation ($125,000 + $12,000) Current assets Inventory ($38,520 + $16,472) Trade receivables ($37,400 − $5,000) Less Allowance for doubtful accounts Prepayments Bank ($14,500 + $5,000) Cash Current liabilities Trade payables ($30,690 − $55) Unearned revenues

Capital Balance as at 1 January 2014 Add Net profit for the year Less Drawings

$ 800,000 137,000 663,000

54,992 32,400 1,620

30,780 4,240 19,500 4,550

114,062

30,635 6,700

37,335

76,727 739,727

460,000 315,568 775,568 35,841 739,727 (Total 20 marks)

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