Accounting Qualification

Answers

Intermediate level
Maintaining financial records
and preparing accounts (FRA) / Level 3 Diploma for Accounting Technicians (QCF)
Financial accounting (FRA)

December 2010


Section 1

Task 1.1

(a)

Sales ledger control account

£ / £
Balance b/f / 5,130 / Bank / 56,700
Credit sales / 56,390 / Balance c/f / 4,820
61,520 / 61,520

(b)

£

Sales / 56,390
x 40% = Cost of goods sold / 22,556

Or

£56,390 x 60% = £33,834

£56,390 - £33,834 = £22,556

(c)

Cost of goods sold / 22,556
Opening stock / (1,900)
Closing stock / 2,500
Purchases / 23,156

(d)

Purchases ledger control account

£ / £
Bank / 22,570 / Balance b/f / 2,675
Discounts received / 651 / Purchases / 23,156
Balance c/f / 2,610
25,831 / 25,831


Task 1.2

Loan account

£ / £
Bank – repayments / 1,800 / Bank – receipt / 10,000
Balance c/f / 8,665 / Loan interest / 465
10,465 / 10,465

Task 1.3

(a)

£ / £
Equipment at cost / 18,000
Equipment accumulated depreciation / (6,480)
Net book value / 11,520
x 20% = depreciation charge for the year / 2,304

(b)

£
Accumulated depreciation as at 30 September 2009 / 6,480
Depreciation for year ended 30 September 2010 / 2,304
Updated accumulated depreciation / 8,784


Task 1.4

Rent

£ / £
Balance b/f / 750 / Rent for the year / 4,875
Bank / 4,500 / Balance c/f / 375
5,250 / 5,250

Workings:

£1,125 / 3 = £375

Task 1.5

Current accounts

Amy £ / Lin £ / Amy £ / Lin £
Bank/drawings / 13,000 / 11,000 / Balance b/f / 800 / 885
Balance c/f / 12,200 / 10,115
13,000 / 11,000 / 13,000 / 11,000


Task 1.6

Bake4u

Trial balance as at 30 September 2010

Dr £ / Cr £
Bank / 2,490
Capital – Amy / 5,000
Capital – Lin / 5,000
Closing stock – balance sheet / 2,500
Closing stock – profit and loss account / 2,500
Current account – Amy (1.5) / 12,200
Current account – Lin (1.5) / 10,115
Depreciation charge for the year (1.3a) / 2,304
Discounts received (1.1d) / 651
Equipment at cost / 18,000
Equipment accumulated depreciation (1.3b) / 8,784
General expenses / 6,400
Loan (1.2) / 8,665
Loan interest (1.2) / 465
Opening stock / 1,900
Prepayments (1.4) / 375
Purchases (1.1c) / 23,156
Purchases ledger control account / 2,610
Rent (1.4) / 4,875
Sales (1.1a) / 56,390
Sales ledger control account / 4,820
Total / 89,600 / 89,600


Task 1.7

(a)

The lower of cost and net realisable value.

(b)

Purchase price of goods

Carriage inwards


Section 2

Task 2.1

(a)

From:

To:

Sent: 1 December 2010

Subject: Purchases day books, ledgers and control accounts

The purchases day-book is the book of original entry for credit purchases. It lists details from all the supplier invoices received each day. Individual entries for each supplier are transferred to the purchases ledger and totals are transferred to the purchases ledger control account (and also to purchases and VAT control accounts).

The purchases ledger contains the individual accounts for each supplier and shows the balances due to each one.

The purchases ledger control account is a summary of all the activity between the business and its suppliers. It is used to give a trade creditors figure for the trial balance and as a control to check the total of the balances on the purchases ledger.

(b)

/ £

Total from listing of purchases ledger balances

/ 13,835
Adjustment for 1. – subtract / (890)
Adjustment for 2. – subtract (2 x £140) / (280)
Adjustment for 3. – add (£3,200 - £2,300) / 900
Adjustment for 4. – no change / –
Revised purchases ledger balance / 13,565
Purchases ledger control account balance / 13,600
Adjustment for 4. – subtract / (35)
Revised purchases ledger control account balance / 13,565


Task 2.2

Journal

Dr £ / Cr £
(a) / Purchases ledger control account / 35
Interest received / 35
(b) / General expenses / 3,500
Accruals / 3,500
(c) / Payroll expenses / 2,000
Bank / 2,000
Drawings / 2,000
Bank / 2,000
(d) / Disposals / 15,000
Vehicles at cost / 15,000
Vehicles accumulated depreciation / 11,250
Disposals / 11,250


Task 2.3

Jim Kemp – Extended trial balance as at 30 September 2010
Ledger balances / Adjustments / Profit and Loss Account / Balance Sheet
Dr £ / Cr £ / Dr £ / Cr £ / Dr £ / Cr £ / Dr £ / Cr £
Advertising / 16,890 / 16,890
Bank / 12,335 / (c) 2,000
2,000 / 8,335
Capital / 15,435 / 15,435
Cash / 250 / 250
Cost of goods sold / 152,050 / 152,050
Closing stock / 9,300 / 9,300
Depreciation charge for the year / 12,000 / 12,000
Disposals / 3,100 / (d)
15,000 / (d)
11,250 / 650
Drawings / 35,000 / (c)
2000 / 37,000
General expenses / 10,300 / (b)
3,500 / 13,800
Interest received / 90 / (a) 35 / 125
Payroll expenses / 28,000 / (c)
2,000 / 30,000
Purchases ledger control account / 13,600 / (a) 35 / 13,565
Rent / 11,420 / 11,420
Sales / 289,000 / 289,000
VAT / 5,820 / 5,820
Vehicles at cost / 48,000 / (d)
15,000 / 33,000
Vehicles accumulated depreciation / 23,500 / (d)
11,250 / 12,250
Vehicle running expenses / 15,000 / 15,000
Accruals / (b)
3,500 / 3,500
Net profit / 37,315 / 37,315
Total / 350,545 / 350,545 / 33,785 / 33,785 / 289,125 / 289,125 / 87,885 / 87,885


Task 2.4

Jim Kemp

Profit and loss account for the year ended 30 September 2010

£ / £
Sales / 289,000
Cost of goods sold / (152,050)
Gross profit / 136,950
Other income:
Interest received / 125
137,075
Expenses:
Advertising / 16,890
Depreciation charge / 12,000
Loss on disposal / 650
General expenses / 13,800
Payroll expenses / 30,000
Rent / 11,420
Vehicle running expenses / 15,000
Total expenses / (99,760)
Net profit / 37,315

Task 2.5

(a) Request authorisation from Jim Kemp before placing an order

(b) Annual depreciation on computers, year ended 31 October 2010

10