O Level Sample Examination Paper

Candidate name  ……………………………………………………………………………………………

O Level Sample Examination Paper

PRINCIPLES OF ACCOUNT 2 hours

Paper 2

Read these instructions first

Answer all questions.
You may use a calculator.
Where layouts are to be completed, you may not need all the lines for your answer. The
businesses mentioned in this Question Paper are fictitious.
The number of marks is given in brackets [ ] at the end of each question or part question.

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 O Level Sample Examination Paper

1 Christos is in business buying and selling goods on credit. The following details relate to the account
of his customer Michelle for the month of July 2011.

$
July 1 Michelle owed Christos 200
July 7 Christos sent an invoice to Michelle 150
July 16 Christos sent a credit note to Michelle   8
July 31 Michelle sent Christos a cheque 195
July 31 Christos allowed Michelle cash discount   5

REQUIRED

(a) Prepare the account of Michelle in the books of Christos. Bring down the balance on 1 August
2011

Christos
Michelle account
Dr Cr
......................................................................................................................................................

$ $
......................................................................................................................................................
July 1 Balance b/d 200 July 16 Sales returns 8
......................................................................................................................................................
July 7 Sales 150 July 31 Bank 195
......................................................................................................................................................
July 31 Discount Allowed 5
......................................................................................................................................................
July 31 Balance c/d 142
......................................................................................................................................................
350 350
......................................................................................................................................................
Aug 1 Balance b/d 142
.................................................................................................................................................[6]

(b) Name the book of prime entry in which Christos would record the transaction of 16 July
2011.
Sales returns journal
......................................................................................................................................................

.................................................................................................................................................[1]

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 O Level Sample Examination Paper

The balances on Christos’ books at 31 July 2011 were as follows:

$
Capital ?
Drawings 8 000
Office furniture 5 000
Provision for depreciation on office furniture 3 200
Inventory 4 150
Bank overdraft 250
Trade payables 2 950
Sundry expenses 10 600
Purchases 32 400
Provision for doubtful debts 350
Revenue (sales) 53 750
Trade receivables 6 250

REQUIRED

(c) Prepare the trial balance for Christos at 31 July 2011, including the balance on the capital account.

Christos
Trial Balance at 31 July 2011
Dr Cr
$ $

Bank overdraft 250

......................................................................................................................................................
Drawings 8 000
......................................................................................................................................................
Office furniture 5 000
......................................................................................................................................................
Provision for depreciation on office furniture 3 200
......................................................................................................................................................
Inventory 4 150
......................................................................................................................................................
Trade payables 2 950
......................................................................................................................................................
Sundry expenses 10 600
......................................................................................................................................................
Purchases 32 400
......................................................................................................................................................
Revenue (sales) 53 750
......................................................................................................................................................
Trade receivables 6 250
......................................................................................................................................................
Provision for doubtful debts 350
......................................................................................................................................................
Capital 5 900
......................................................................................................................................................
66 400 66 400
......................................................................................................................................................
Total debit balances in table are $66 400 and total credit balances in table are $60 500. Therefore,
......................................................................................................................................................
credit balance for capital must equal $5 900 for two sides of trial balance to be equal.
.................................................................................................................................................[6]

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 O Level Sample Examination Paper

(d) State the item in the trial balance which would include the balance on Michelle’s account.
Trade receivables
......................................................................................................................................................

.................................................................................................................................................[1]

(e) State two differences between a trial balance and a balance sheet.
(Any one of the following) A trial balance contains all account balances including income and
1 ..............................................................................................................................................
expense accounts; account balances recorded in any order; contains account balances before any
......................................................................................................................................................
adjustments; proves if total debit balances = total credit balances in the double entry system.
......................................................................................................................................................
(Any one of the following) A statement of financial position includes only capital, liabilities and
2 ..............................................................................................................................................
assets (in order of their permanence and liquidity); contains net values for assets (e.g. non-current
......................................................................................................................................................
assets less accumulated depreciation; trade receivables net of provision for doubtful debts); proves
......................................................................................................................................................
agreement of the accounting equation (assets = capital + liabilities)
................................................................................................................................................ [4]
 [Total: 18]
Cambridge O Level Principles of Accounts 7110, Paper 2, Q1, October/November 2011

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 O Level Sample Examination Paper

2 Majda prepared a trial balance on 31 August 2011. The trial balance failed to agree and a suspense
account was opened. It was discovered that all of the errors had been made in one of the trade
receivable accounts, M.H. Supplies Ltd.

Details of the account for August 2011 were as follows:

M.H. Supplies Ltd account
Date Description Dr Cr Balance
2011 $ $ $
1 August Balance 1 650 Dr
10 August Sales 460 2 110 Dr
13 August Sales returns    60 2 050 Dr
23 August Bank 1 617   433 Dr
23 August Discount  33   466 Dr

The following errors were found:

1 On 10 August goods, list price $800, less 20% trade discount, were sold to M.H. Supplies Ltd. The
transaction was correctly recorded in the sales journal.

2 On 20 August a credit sale of goods, $1 200, to M.H. Supplies Ltd, was correctly entered in the
sales journal, but was posted to the account of M. Hardware Ltd.

3 On 23 August M.H. Supplies Ltd paid the balance on 1 August, less 2% cash discount. The
transaction was correctly recorded in the cash book.

REQUIRED

(a) Name the document sent to M.H. Supplies Ltd to record the transaction of 13 August 2011.
Credit note
......................................................................................................................................................

................................................................................................................................................ [1]

(b) Name the type of error made on 20 August 2011.

Error of commission
......................................................................................................................................................

................................................................................................................................................ [1]

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 O Level Sample Examination Paper

(c) Prepare the journal entries to correct the errors 1 to 3 above. Narratives are not required.

Journal
Dr Cr
$ $
2013
......................................................................................................................................................
Aug 31 M.H. Supplies Ltd 180
......................................................................................................................................................
Suspense 180
......................................................................................................................................................
Aug 31 M.H. Supplies Ltd 1 200
......................................................................................................................................................
M. Hardware Ltd 1 200
......................................................................................................................................................
Aug 31 Suspense 66
......................................................................................................................................................
M.H. Supplies Ltd 66
......................................................................................................................................................
Error 1: Full price $800 less 20% trade discount gives a net price of $740 but only $460 was debited
......................................................................................................................................................
to the MH Supplies Ltd account for the sale. Total debits to the account will therefore be understated
......................................................................................................................................................
by $180 ($740 - $460). To correct, debit an additional $180 to MH Supplies Ltd account and credit
......................................................................................................................................................
the suspense account.
......................................................................................................................................................
Error 2 : Total debits understated on MH Supplies Ltd account by $1 200 and overstated on MH
......................................................................................................................................................
Hardware Ltd account. To correct the error, debit $1 200 to MH Supplies Ltd and credit $1 200 to
......................................................................................................................................................
MH Hardware Ltd.
......................................................................................................................................................
Error 3 : The 2% cash discount allowed has been posted as a debit instead of as a credit against the
......................................................................................................................................................
balance on the account. Therefore total debits are overstated by $33 and total credits are understat-
......................................................................................................................................................
ed by $33. To correct a total of $66 must be credited to the account. Therefore, debit suspense $66
......................................................................................................................................................
and credit MH Supplies Ltd.
................................................................................................................................................ [6]

(d) Prepare the suspense account, clearly showing the original difference on the trial balance.

Suspense account
Dr Cr
......................................................................................................................................................
$ $
......................................................................................................................................................
Aug 31 Difference on trial balance 114 Aug 31 M.H. Supplies Ltd 180
......................................................................................................................................................
M.H Supplies Ltd. 66
......................................................................................................................................................
180 180
......................................................................................................................................................

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 O Level Sample Examination Paper

Note: from the journal above, total debits to suspense account were $180 and total credits were $66.
......................................................................................................................................................
If there were no further errors then the balance on the suspense account for the difference on the
......................................................................................................................................................
trial balance before the correction of errors must have been a debit balance of $114 ($180 Dr - $66 Cr).
......................................................................................................................................................
This is entered to the credit side of the suspense account to make the two sides equal.
................................................................................................................................................ [4]

(e) Calculate the correct balance owed by M.H. Supplies Ltd to Majda on 31 August.
$ $
......................................................................................................................................................
Balance on account at 31 August before correction of errors 466 Dr
......................................................................................................................................................
add Trade discount error ($180 Dr) 180
......................................................................................................................................................
add Correction of error of commission ($1 200 Dr) 1 200
......................................................................................................................................................

1 380
......................................................................................................................................................
less Correction of discount allowed posting error ($66 Cr) (66)
......................................................................................................................................................
Corrected debit balance on account 1 780 Dr
......................................................................................................................................................

................................................................................................................................................ [4]

(f) Majda uses Information and Communications Technology (ICT) book-keeping software to
prepare her accounts.

State two benefits to Majda from using ICT book-keeping software.

It saves time and reduces the need to keep and store paper records
1 ..............................................................................................................................................

......................................................................................................................................................
Speed and accuracy of accounting calculations is improved
2 ..............................................................................................................................................
(Or, large volumes of financial information can be searched rapidly; transactions can be analysed,
......................................................................................................................................................
reports prepared and summaries produced quickly; Data security may be improved)
................................................................................................................................................ [4]
 [Total: 20]
Cambridge O Level Principles of Accounts 7110, Paper 2, Q2, October/November 2011

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 O Level Sample Examination Paper

3 The treasurer of the Sandbury Sports Club did not keep full accounting records. The following
information was available at 31 October 2011:

Cash Book (summary)

$ $
Balance b/d 1 November 2010    105 Purchase of refreshments 19 000
Subscription received: Rent and rates   1 200
– for the year ended 31 Oct 2010    150 Operating expenses   3 750
– for the year ended 31 Oct 2011   3 200 Purchase of equipment    900
– for the year ended 31 Oct 2012    310
Sales of refreshments 25 000 Balance c/d 31 October 2011   3 915
28 765 28 765

Additional information
1 Balances
1 November 2010 31 October 2011
$ $
Inventory of refreshments 2 200   700
Operating expenses Prepaid   100 Prepaid Accrued   250 Accrued
Equipment (net book value) 3 200 2 700
Subscriptions in advance   175   310
Subscriptions in arrears   270    90

2  Subscriptions not collected for the year ended 31 October 2010 are to be considered as irrecoverable on 31
October 2011.

REQUIRED

(a) Calculate the accumulated fund at 1 November 2010.

Accumulated fund at 1 November 2012
......................................................................................................................................................
$ $
......................................................................................................................................................
Assets:
......................................................................................................................................................
Equipment 3 200
......................................................................................................................................................
Inventory of refreshments 2 200
......................................................................................................................................................
Subscriptions in arrears 270
......................................................................................................................................................
Prepaid operating expenses 100
......................................................................................................................................................
Bank 105
......................................................................................................................................................
5 875
......................................................................................................................................................
less Liabilities:
......................................................................................................................................................
Subscriptions in advance (175)
......................................................................................................................................................
Accumulated fund 5 100
................................................................................................................................................ [6]

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 O Level Sample Examination Paper

(b) Prepare the refreshments trading account for the year ended 31 October 2011.

Sandbury Sports Club

Refreshments Trading Account for the year ended 31 October 2011.
$ $
......................................................................................................................................................

Sales 25000
......................................................................................................................................................
less Cost of sales:
......................................................................................................................................................
   Opening inventory 2 200
......................................................................................................................................................
  add Purchases 19 000
......................................................................................................................................................
21 200
......................................................................................................................................................
  less Closing inventory 700
......................................................................................................................................................

20 500
......................................................................................................................................................
Gross profit on refreshments 4 500
................................................................................................................................................ [4]

(c) Prepare the income and expenditure account for the year ended 31 October 2011.

Sandbury Sports Club

Income and Expenditure Account for the year ended 31 October 2011.
$ $
......................................................................................................................................................
Income:
......................................................................................................................................................
   Subscriptions (3 200 + 175 + 90) 3 465
......................................................................................................................................................
   Gross profit on refreshments 4 500
......................................................................................................................................................
7 965
......................................................................................................................................................
Expenditure:
......................................................................................................................................................
   Bad debts * 120
......................................................................................................................................................
   Rent and rates 1 200
......................................................................................................................................................
   Operating expenses (3 750 +100 - 250) 4 100
......................................................................................................................................................
   Depreciation on equipment (3 200 + 900 – 2700) 1 400
......................................................................................................................................................
......................................................................................................................................................
6 820
Surplus for the year 1 145
......................................................................................................................................................
* Bad debts (subscriptions not collected at 31 October 2013) calculated as follows:
.............................................................................................................................................. [10]

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 O Level Sample Examination Paper

(d) (i) State the section of Sandbury Sports Club’s statement of financial position on 31 October
2011 in which subscriptions paid in advance will appear. Give a reason for your answer.
Current liabilities
Section: ................................................................................................................................
Subscriptions received in advance are for services to be provided by the club in the
Reason: ................................................................................................................................
next year. Until the club delivers these services to these members and earns their subscriptions
..............................................................................................................................................
they must be treated as prepaid income or other payables.
........................................................................................................................................ [2]

(ii) State the section of Sandbury Sports Club’s statement of financial position on 31 October
2011 in which purchase of equipment will appear. Give a reason for your answer.
Non-current assets
Section: ................................................................................................................................

Reason: The purchase of equipment with a useful life of more than one accounting year is
................................................................................................................................

capital expenditure.
........................................................................................................................................ [2]
 [Total: 24]
Cambridge O Level Principles of Accounts 7110, Paper 2, Q3, October/November 2011

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 O Level Sample Examination Paper

4 Zaynah is in business buying and selling goods on credit. The following balances were extracted
from her books on 30 April 2010.

$
Revenue (sales) 200 000
Cost of sales 130 000
Expenses   65 000
Inventory (stock) at 1 May 2009   20 000
Inventory (stock) at 30 April 2010   60 000
Trade receivables (debtors)   16 000
Trade payables (creditors)   35 000
Loans repayable within 12 months   5 000
  (Bank overdraft)
Closing capital 100 000

REQUIRED

(a) Calculate, to one decimal place, the following ratios for the year ended 30 April 2010. Clearly
show all workings.

(i) Gross profit to revenue (sales) percentage

Gross profit = revenue - cost of sales = 200 000 - 130 000 = $70 000
..............................................................................................................................................
So, gross profit to revenue percentage = (70 000 / 200 000) x 100 = 35%
..............................................................................................................................................

..............................................................................................................................................

..............................................................................................................................................

........................................................................................................................................ [3]

(ii) Working capital ratio (current ratio)

Working capital ratio = current assets / current liabilities, expressed as a ratio

..............................................................................................................................................
Current assets = (inventory at 30 April 2014 + trade receivables)
..............................................................................................................................................
= 60 000 + 16 000 = $76 000
..............................................................................................................................................
Current liabilities = (trade receivables + bank overdraft)
..............................................................................................................................................
= 35 000 + 5000 = $40 000
..............................................................................................................................................
Therefore, working capital ratio = 76 000 / 40 000 = 1.9 : 1
........................................................................................................................................ [3]

(iii) Quick ratio (acid test)

Quick ratio = (current assets - inventory) / current liabilities, as a ratio
..............................................................................................................................................
= 16 000 / 40 000 = 0.4 : 1
..............................................................................................................................................

..............................................................................................................................................

........................................................................................................................................ [4]

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(iv) Profit for the year (net profit) to capital percentage

ROCE (%) = (profit for the year / closing capital) x 100
..............................................................................................................................................
Profit for the year = Gross profit - Expenses = 70 000 - 65 000 = $5 000
..............................................................................................................................................
therefore, ROCE (%) = 5 000 / 100 000) x 100 = 5%
........................................................................................................................................ [4]

(b) Comment on the following ratios at 30 April 2010:

(i) Quick ratio (acid test)

The ratio, at 0.4 : 1 is very low. The business has no cash to pay off its current liabilities and
..............................................................................................................................................
also has insufficient trade receivables to pay its immediate debts in full. It will therefore have to
..............................................................................................................................................
sell off its inventory to do so. To do so quickly it may have to cut its prices and even sell at a
..............................................................................................................................................
loss. The business has purchased more goods on credit during the year than it was able to sell
..............................................................................................................................................
resulting in a high closing inventory and high trade payables.
........................................................................................................................................ [2]

(ii) Profit for the year (net profit) to capital percentage

At just 5% the return is low compared to the level of risk of the business. It is possible that the
..............................................................................................................................................
same amount of capital invested in a bank savings account would return a similar rate through
..............................................................................................................................................
interest.
........................................................................................................................................ [2]

In the previous year, ended 30 April 2009, the business of Zaynah achieved the following ratios:

Gross profit to revenue (sales) percentage 50%

Working capital ratio (current ratio) 1.7:1

REQUIRED

(c) Suggest one possible reason for the change over the year ended 30 April 2010 in the:

(i) Gross profit to sales percentage;

The fall in the gross profit to revenue percentage from 50% to 35% may have been due to a
..............................................................................................................................................
reduction in selling prices (Or, an increase in the cost price of goods purchased for resale)
........................................................................................................................................ [2]

(ii) working capital ratio (current ratio).

The improvement in the working capital ratio from 1.7:1 to 1.9:1 is most likely the result of an
..............................................................................................................................................
increase in its inventory from $20 000 at the end of the previous year to $60 000. Trade
..............................................................................................................................................
receivables may also have risen. (Or current liabilities have fallen, for example, a fall in its trade
..............................................................................................................................................
payables and/or bank overdraft)
........................................................................................................................................ [2]
 [Total: 20]
Cambridge O Level Principles of Accounts 7110, Paper 2, Q4, May/June 2010

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 O Level Sample Examination Paper

5 Thien has a retail business. The following balances were extracted from his books at the end of his
financial year on 31 March 2012.

$
Leasehold property – 25 years (cost) 50 000
Equipment (cost) 54 000
Provisions for depreciation:
  Leasehold property 10 000
 Equipment 17 000
6% Bank loan repayable 31 December 2015 25 000
Bank Dr   5 150 Dr
Trade receivables   6 750
Trade payables   4 010
Provision for doubtful debts    700
Revenue 78 580
Purchases 18 240
Purchase returns   1 600
Inventory at 1 April 2011   4 690
Equipment repairs    850
Equipment running expenses   2 650
General expenses   8 400
Wages 15 300
Insurance   3 640
Power and water   2 300
Advertising   5 100
Discount allowed   1 650
Discount received    330
Capital at 1 April 2011 50 000
Drawings   8 500

Additional information at 31 March 2012:

1 Inventory was valued at $3 870.
2 Thien took stock valued at $450 for his own use.
3 Equipment running expenses, $750, were accrued and insurance, $1 350, was prepaid.
4 The 6% bank loan was received on 1 December 2011.
5 An appropriate amount is to be written off the lease.
6 The purchase of additional equipment, $10 000, had been omitted from the books. Payment was
$5 000 by cheque with the remainder on credit.
7 Equipment is to be depreciated at the rate of 20% per annum using the diminishing (reducing)
balance method.
8 Provision for doubtful debts is to be maintained at 8% of trade receivables.

REQUIRED

(a) Prepare the income statement for the year ended 31 March 2012.  [20]

(b) Prepare the balance sheet at 31 March 2012.  [20]

 [Total: 40]
Cambridge O Level Principles of Accounts 7110, Paper 2, Q5, May/June 2012

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 O Level Sample Examination Paper

Answer Question 5 on the following pages

Thien
.....................................................................................................................................................................
Income statement for the year ended 31 March 2013
.....................................................................................................................................................................
notes $ $
.....................................................................................................................................................................
Revenue 78 580
.....................................................................................................................................................................
less Cost of sales:
.....................................................................................................................................................................
Opening inventory at 1 April 2012 4 690
.....................................................................................................................................................................
add Purchases 18 240
.....................................................................................................................................................................

22 930
.....................................................................................................................................................................
less Purchases returns 1 600
.....................................................................................................................................................................
less Drawings of goods for own use 450
.....................................................................................................................................................................
20 800
.....................................................................................................................................................................
less Closing inventory at 31 March 2013 3 870
.....................................................................................................................................................................
17 010
.....................................................................................................................................................................
Gross profit 61 570
.....................................................................................................................................................................

.....................................................................................................................................................................
add Discounts received 330
.....................................................................................................................................................................
add Decrease in provision for doubtful debts (i) 160
.....................................................................................................................................................................
62 060
.....................................................................................................................................................................
less Expenses:
.....................................................................................................................................................................
Equipment repairs 850
.....................................................................................................................................................................
Equipment running expenses (ii) 3 400
.....................................................................................................................................................................
General expenses 8 400
.....................................................................................................................................................................
Loan interest (iii) 500
.....................................................................................................................................................................
Wages 15 300
.....................................................................................................................................................................
Insurance (iv) 2 290
.....................................................................................................................................................................
Power and water 2 300
.....................................................................................................................................................................
Advertising 5 100
.....................................................................................................................................................................
Discount allowed 1 650
.....................................................................................................................................................................

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 O Level Sample Examination Paper

Depreciation :
.....................................................................................................................................................................
Lease (v) 2 000
.....................................................................................................................................................................
Equipment (vi) 9 400
.....................................................................................................................................................................
51 190
.....................................................................................................................................................................

.....................................................................................................................................................................
Profit for the year 10 870
.....................................................................................................................................................................
(i) Decrease in doubtful debts of $160 treated as other income and calculated as difference between total
.....................................................................................................................................................................
provision carried from year ended 31 March 2012 ($700) and total provision for year ended 31 Mach 2013
.....................................................................................................................................................................
(8% of trade receivables = 0.08 x 6 750 = $500).
.....................................................................................................................................................................
(ii) Equipment running expenses $2 650 + accrued expenses $750 = $3 400 of running expenses incurred.
.....................................................................................................................................................................
(iii) Loan interest = 6% of $25 000 = $1 500 payable over 3 x 12 months. Therefore, loan interest payable per
.....................................................................................................................................................................
month = $1 500 / 36 = $41.67. Loan interest payable per accounting year is therefore $41.67 x 12 = $500.
.....................................................................................................................................................................
(iv) Insurance paid for during year was $3 640 of which insurance prepaid and unused by the end of the year
.....................................................................................................................................................................
was $1 350. Therefore, insurance used up or incurred during accounting year = $3 640 - $1 350 = $2 290.
.....................................................................................................................................................................
(v) Annual depreciation charge for year on leasehold property = $50 000 / 25 years = $2 000 per year, using
.....................................................................................................................................................................
simple straight-line method over life of the lease.
.....................................................................................................................................................................
(vi) Net book value of equipment = equipment at cost – provision for depreciation = ($54 000 + $10 000) -
.....................................................................................................................................................................
$17 000 = $47 000. Therefore, annual depreciation charge on equipment = 0.2 x $47 000 = $9 400.
.....................................................................................................................................................................

.....................................................................................................................................................................

.....................................................................................................................................................................

.....................................................................................................................................................................

.....................................................................................................................................................................

.....................................................................................................................................................................

.....................................................................................................................................................................

.....................................................................................................................................................................

.....................................................................................................................................................................

............................................................................................................................................................. [20]

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 O Level Sample Examination Paper

Thien
.....................................................................................................................................................................
Statement of financial position at 31 March 2013
.....................................................................................................................................................................
Cost Accumulated depreciation Net book value
.....................................................................................................................................................................
$ $ $
.....................................................................................................................................................................
Non-current assets (a)
.....................................................................................................................................................................
Leasehold property (i) 50 000 12 000 38 000
.....................................................................................................................................................................
Equipment (ii) 64 000 26 400 37 600
.....................................................................................................................................................................
114 000 38 400 75 600
.....................................................................................................................................................................
Current assets (b)
.....................................................................................................................................................................
Inventory 3 870
.....................................................................................................................................................................
Trade receivables 6 750
.....................................................................................................................................................................
less provision for doubtful debts (iii) 540
.....................................................................................................................................................................
6 210
.....................................................................................................................................................................
Other receivables 1 350
.....................................................................................................................................................................
Bank
150
.....................................................................................................................................................................
11 580
.....................................................................................................................................................................
Current liabilities (c)
.....................................................................................................................................................................
Trade payables (iv) 9 010
.....................................................................................................................................................................
Other payables (v) 1 250
.....................................................................................................................................................................
10 260
.....................................................................................................................................................................
Net current assets (d) = (b - c) 1 320
.....................................................................................................................................................................
Total assets less current liabilities (a + d) 76 920
.....................................................................................................................................................................
Non-current liabilities (e)
.....................................................................................................................................................................
6% bank loan 25 000
.....................................................................................................................................................................
Net assets (a + d) – (e) 51 950
.....................................................................................................................................................................
Financed by:
.....................................................................................................................................................................
Capital at 1 April 2012 50 000
.....................................................................................................................................................................
add Profit for the year 10 870
.....................................................................................................................................................................

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 O Level Sample Examination Paper

60 870
.....................................................................................................................................................................
less Drawings (vi) 8 950
.....................................................................................................................................................................
51 920
.....................................................................................................................................................................
Notes:
.....................................................................................................................................................................
You will need to combine a number of values from the list of balances in the table with values you calculated
.....................................................................................................................................................................
for the income statement in question (a) to complete the statement of financial position as follows:
.....................................................................................................................................................................
(i), (ii) Accumulated deprecation = provision for depreciation at 31 March 2012 + annual depreciation charge
.....................................................................................................................................................................
for year ended 31 March 2013. For leasehold property = $10 000 + $2 000 = $12 000. For equipment =
.....................................................................................................................................................................
$17 000 + $9 400 = $26 400.
.....................................................................................................................................................................
(iii) Provision at 8% of trade receivables = 0.08 x $6 750 = $540
.....................................................................................................................................................................
(iv) Trade payables of $4 010 plus $5 000 owed on for purchase of equipment on credit terms (see additional
.....................................................................................................................................................................
information note 6 in question).
.....................................................................................................................................................................
(v) Accrued equipment running expenses of $750 plus $500 of loan interest payable over the next
.....................................................................................................................................................................
accounting year.
.....................................................................................................................................................................
(vi) Drawings of $8 500 plus goods for own use of $450 (see additional information note 2).
.....................................................................................................................................................................

.....................................................................................................................................................................

.....................................................................................................................................................................

.....................................................................................................................................................................

.....................................................................................................................................................................

.....................................................................................................................................................................

.....................................................................................................................................................................

.....................................................................................................................................................................

.....................................................................................................................................................................

.....................................................................................................................................................................

.....................................................................................................................................................................

.....................................................................................................................................................................

............................................................................................................................................................. [20]

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