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Higher National ITE Certificate

ACCOUNTING

INTERlllEDIATE ACCOUNTING
(AC 4002PA / AC4002I\/A)

THEORY PAPER

2 HOURS 30 IVINUTES

SEP 2OO8

SOLUTIONS

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This solution paper con-ssts of 6 printed pages (Excluding this cover page)
 ln1 Acc Sep 0t So ut l,n

Queltion 1 {A) - Solution

Rent Account
30 Jun 08 Bal b/d 1200011 30Jun 08 Prepaid rent 240C
30 Jun 08 P/L 960[
lt

=:4gll 1200c

Provision for Doubtful Debts Account

30 Jun 08 P/L 17211 30 Jun 08 Bal b/d 100c
30 Jun 08 Bal c/d 82811

_@i 10 0c

Question 1 {C) - Solution

L-
Smith Enterprise
Balance Sheet as at 30 Jun 08
$ $ $ $ $
Fixed Assets Own f
Delivery Vehicles 55,0 00 Capital 47,483
Less : Prov for Dep 18,050 36,950 Add: Net Profit 48,069
Furniture & Equipment 35,500 95,552
Less : Prov for Dep 11,200 24,300 61,250 Less: Drawings 3,000 92,552
Non Current Assets Non-Currenl Liabilities
lnvestment 35,000 Mortgage - ABN Finance 30,000
lcurrent Assets
Stock 9,80 0
Debtors 41,400 Current Liabilities
Less : Prov for Doubtful Debts 828 40,572 Creditors 13,540
Comm in arrears 1,500 Accrued interest 500
Prepaid rent 2,400 ank overdraft 15,000 29,040
Prepaid postage & stationery 70
Petty cash 1,000 s5,342

lrsr,ssz 151,592

Wrong Fornrat : Deduct 5 marks (overall)

 lnt AC Sep C8 Sotution

lntermediate Accountinq (AC 4002 PA ) Mar 2008 - Solution

Question 1(B) - Solution

Smith Enterprise
Trading, Profit and Loss AJC for the ear ended 30 Jun 08
s $ $
Sales 329,500
Less: Sales Returns 4,750
Discounts Allowed 3,600
321,1 50
Less : Cost of Goods Sold
Opening Stock 28,300
Purchases 180,500
Less: Purchases Returns 5,650
Discounts Received 4,250
1 7 0,600
Add: lmport Duty on Purchases 1,200 171,800
200,100
Less: Closing Slock 9,800 190,300
Gross Profit 130,850
Commission Rec (2,575+1 ,500) 4,O7 5
Bad Debts Recovered 5,000
Decrease in Provision for DD 172
Total lncome 140,097
Sellinq & Distribution Ex penses
Salesmen salaries 36,890
Carriage outwards 5,322
Upkeep of delivery 5,980
Depn - Delivery Vehicles 8,250 56,442

Geleril& Ad mrllistratjve Ex pe nses

Postage & stationery 1,986
Rent 9,600
Admin staff salaries 15,000
Bad Debts 5,800
Depn-Furniture&Equip 2,700 35,086

EllqIlElal Elpqnses
lnterest on Loan 500 92,O2A
Net Profit _ 48,069
__l
 int Acc Sep 0B SolLrlrorl

Question 2( A) - Solution

Subscription Account
1.1.2007 Bal b/d 1,150 1.1.2007 Bal b/d 900
31.12.2007 t/E 32,100 31.12.2407 Bank 950
31.12.2007 Bal c/d 1,000 31.12.2007 Bank 31,000
31.12.2007 l/E-written off 200
31_12.2007 Bal c/d 1,200

34,250 34,250
1.1-2008 Bal bid 1,200 1.1.2008 Bal b/d 1,000

Provn for Dep Account - Office E ul ment

31.12.2007 Disposal 1,300 1.1.2007 Bal b/d 10,000
31.12.2007 Ba! cld 12,730 31.12.2007 Dep 4,030
14,030 __!4!q
1.1.2008 Bal b/d 12,730

Question 2(B) - Solution

Bar Trading,Profit & Loss Account

for the year ended 31 Dec 2007
$ $
Bar Takings 6300
Less: Cost of Bar Supplies Sold
Opening Bar Stock 2300
Purchases 4000
6300
Less: Closing Stock 1900 4400
Gross Profit 1900
Less: Operating Expenses
Barman wages (950+200-150) 1000
Net Profit 900
Ouestion 2(C) - Solution Int Acc Sep 08 Solutron
Sunshine Recreatiob Club
Income & Expenditure Account
for the year ended 31 December 2007
$ $
lncome
Bar Profit 900
Subscription 32,-10
Gain on sale of investment 1,200
Dividend received 5,950
Donation 6,000
46,150
Expenditure
Subscription-written off 20
Repairs & maintenance 5,700
Sundry erpenses 1,220
Secretary's expenses 7,800
Depreciation - Office Equipment 4,030
Loss on sale of Office Equipment 200 19,150
Surplus 27,000
Wrong format: Deduct 5 marks (overall)

-__)

Question 2 (D) -Solution

Accumulated Fund as at 1.1 2007
Assets:
$ lsi
Bank 3,000
Office Equipment 45,000
Less : Pn for Dep 10,000 35,000
Bar Stock 2,300
lnvestment 15,000
Prepaid barman wages 200
Dividend in arrears ' 100
Subscription in arrears 1,1s0
56,75
Less : Liabilities
Bar creditors 3,500
Accrued sundry expenses 300
Subscription in advance 900 4,700
52,050
 lnt Acc Sep 0B Solutlcn
Question 3 - Solution

GEC Ltd
General Journal
Date Particu lars Dr($) c($)
30 Jun 2008
a Sales 1,800
Purchases 1 ,800
Smith Ltd 3,600

b Suspense 4,500
Dividend Received 4,500

Ang Engineering 180

Returns lnwards 180

d Rent expense 1,500

Rent received 1,500
Bank 3,000

e Quest Ltd 100

Returns lnwards 100

t AA Ltd 2,000
Ban k 2,000
AA Ltd 200
Discount Allowed 200

r- iiL l
Please accept any appropriate alternative answers'
Question 4(A) ' Solution
Product A
lssued Out) Balance
Date Received (ln Value ($)
Units Unit Price $) Value $ U nits tlnit Price($)
U nits Unit Price $ Value($)
Au 2,250
500
1
500 4.5 2,250
3 400 5 2,000
400 5 2,000

500 4.5 2,250

13 5 1,500
100 5 5UU 300 l

q 1,500
300
19 650 6.5 4,225
650 6.5 4,225

300 1,500
29 6.5 1 ,625
400 6.5 2,60 0 250
6,850 I 1,625 I

6,225

t- ]

Que st ion 4(B) - So lution

Va lue o fcr os tn Stock as at 31. 8.20 08

Market Article
Method
Prod uct Cost ($I Yelgcl$)
360 300
A01 300
645 675 315
402 450
450 550
801
1,0s0 570 1,120 570
802 600
1,795 1,635
1,695
--l
[-,
Value of Clos tn Stoc kasa t 31.8. 2008:
Article method = $1,635
Categorymethod = $645 + $1,050 = $1'695
Aggregate method = $1,695