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ACCOUNTING UNIT 3
© VCTA Published April 2011 page 1
Accounting Unit 3 practice exam 2011 and suggested solutions
Phil Hutton Matthew Christopher
Camberwell Grammar School
The following VCE Accounting Unit 3 practice exam consists of two questions, each worth 45 marks. An answer book and suggested solutions follow the question book.
Please note that the questions and solutions have no official status and teachers should refer to the Victorian Curriculum and Assessment Authority website http://www.vcaa.vic.edu.au for further information.
The practice exam and solutions are based on the authors’ interpretation of the VCE Accounting Study Design.
Teachers are advised to preview and evaluate all practice exam material before distributing it to students.
Disclaimer: This practice examination has been written by the authors (Phil Hutton and Matthew Christopher) for use with students of VCE Accounting. This does not imply that it has been endorsed by the Victorian Curriculum and Assessment Authority (VCAA). While every care is taken, we accept no responsibility for the accuracy of information or advice contained in Compak. Teachers are advised to preview and evaluate all Compak classroom resources before using or distributing them to students.
ACCOUNTING UNIT 3
© VCTA Published April 2011 page 2
ACCOUNTING UNIT 3
Practice written examination 2011
Reading time: 15 minutes Writing time: 1 hour 30 minutes
QUESTION BOOK
Structure of book
Number of questions Number of questions to be answered
Number of marks
2
2 90
Students are permitted to bring into the examination room: pens, pencils, highlighters, erasers, sharpeners, rulers and one scientific calculator.
Students are NOT permitted to bring into the examination room: blank sheets of paper and/or white-out liquid/tape.
Materials supplied Question book
Answer book Instructions Answer both questions in the answer book.
All written responses must be in English.
Students are NOT permitted to bring mobile phones and/or any other unauthorised electronic devices into the examination room.
NOTE: This practice examination has no official status and represents an indication only of the type of questions that VCAA examiners may set.
ACCOUNTING UNIT 3
© VCTA Published April 2011 page 3
Question 1
U Esby’s Computers
Ursula Esby runs a small computer store called U Esby’s Computers, selling local and imported computer componentry (parts) to businesses. Ursula uses a double-entry accrual accounting system and records stock transactions with the perpetual inventory system. Other features of her accounting system include:
• the use of control accounts and subsidiary records for debtors, creditors and stock
• the FIFO cost assignment method for stock
• reports are prepared quarterly.
Ursula’s bookkeeper recorded her transactions for the quarter ending 31 March 2011. The totals for the special journals and the entries for the General Journal are shown below.
Cash Receipts Journal Date 2011
Details Rec. No.
Bank Disc. Exp.
Debtors Cost of Sales
Sales GST Sundries
31 Mar. Totals to date 158 067 1 605 53 500 38 608 96 520 9 652 0
Cash Payments Journal
Date 2011
Details Chq No.
Bank Disc. Rev.
Creditors Stock Control
Wages Drawings GST Sundries
31 Mar. Totals to date
125 550 650 55 000 23 000 25 450 15 500 2 750 4 500*
* Sundries consist of a prepaid insurance payment on 1 February.
Sales Journal
Date 2011
Debtor Invoice No.
Cost of Sales Sales GST Total Debtors
31 Mar. Totals to date 19 888 49 720 4 972 54 692
Purchases Journal
Date 2011
Creditor Invoice No.
Stock GST Total Creditors
31 Mar. Totals to date 62 250 6 225 68 475
ACCOUNTING UNIT 3
© VCTA Published April 2011 page 4
General Journal
Date Particulars General Ledger Subsidiary Ledger
Debit Credit Debit Credit
21 Jan. Drawings 2 000
Stock Control 2 000
(Owner withdrew 1 computer. Memo #225)
3 Feb. Prepaid Rent Expense 4 500
Prepaid Insurance Expense
4 500
(Correcting entry for 3 months rent incorrectly recorded as Prepaid Insurance. Memo #226)
Ursula discovers that the following documents from the period have not been recorded.
DOCUMENT 1
U ESBY’S COMPUTERS ABN: 463 675 734 54 Balwyn Road Balwyn North VIC 3128 Date: 31 March 2011
MEMO 227
To: Abdulah Mohhamed, Accountant Re: Donation of Stock Abdulah please note that I gave 4 computer systems costing $10 500 in total to loyal customers in country Victoria affected by the recent flooding. I am hopeful that this will enhance our reputation and lead to future sales in the area. Kind regards Ursula Esby
ACCOUNTING UNIT 3
© VCTA Published April 2011 page 5
DOCUMENT 2
U ESBY’S COMPUTERS ABN: 463 675 734 54 Balwyn Road Balwyn North VIC 3128 Date: 31 March 2011
MEMO 228
To: Abdulah Mohhamed, Accountant Re: Debtor – Dellios Traders I have received a letter from Zhang and Zhao, Chartered Accountants, stating that Dellios Traders has been declared bankrupt. It had a cheque attached for $6 000 (Cheque #455662) and stated that we will not receive the other $24 000 owed. Please make the necessary entries in our records and send them a receipt for the payment (Receipt #2445). Kind regards Ursula Esby
DOCUMENT 3
COASTAL TRADING 150 Orchard Road Street SINGAPORE 787572 Date: 31 March 2011 Tax Invoice No: 265432 Customer: U ESBY’S COMPUTERS 54 BALWYN ROAD BALWYN NORTH VIC 3128 AUSTRALIA Item Quantity Unit Price Total Price 22” LCD Monitors 1 500 500 26” LCD Monitors 1 650 650 TOTAL SGD 1 150
Terms 2/7 Net 30 Note: All prices are in Singapore dollars
Ursula’s accountant has advised her that on 31 March 2011 the conversion for the above transaction would be $920 Australian dollars.
ACCOUNTING UNIT 3
© VCTA Published April 2011 page 6
DOCUMENT 4
SUN & YE IMPORTS Date: 31 March 2011
26 Hutton Street
Clayton VIC 3210
ABN: 832 543 395
Statement of Account
For: U Esby’s Computers
54 Balwyn Road
Balwyn North VIC 3128
Date Details Debit Credit Balance
1/01/2011
6/01/2011
7/01/2011
18/01/2011
26/02/2011
Balance
Invoice G242
Receipt 476
Discount
Receipt 491
Invoice G312
36 000
24 500
24 990
510
9 000
25 500 Dr
61 500 Dr
36 510 Dr
36 000 Dr
27 000 Dr
51 500 Dr
Payment terms: 30 days from invoice date
Days outstanding Current 30–60 60+
Amount outstanding 0 24 500 27 000
Required
1.1.1 Record the relevant documents into the appropriate journals. Total the special journals. (Narrations are not required in the General Journal.)
2 + 2 + 1 + 2 + 1 = 8 marks
1.1.2 Complete the Stock Control and Cash at Bank ledger accounts using the information contained in the journals.
5 + 3 + 1 = 9 marks
1.1.3 Using the Stock Control account in question 1.1.3 for reference, explain the purpose of a cross reference in a ledger account.
2 marks
1.1.4 Referring to the General Journal entry on 3 February, record the appropriate journal entry at the end of the reporting period. (A narration is required.) (Memo #229)
3 marks
1.1.5 Referring to the appropriate accounting principle, justify the value at which you recorded Document 3 in the journals of U Esby’s Computers.
2 marks
1.1.6 Explain why a business such as Sun and Ye Imports would issue a Statement of Account.
2 marks
ACCOUNTING UNIT 3
© VCTA Published April 2011 page 7
1.1.7 Explain how U Esby’s Computers should use Document 4 to make their accounting records and reports more reliable.
2 marks
1.2 U Esby’s Computers’ Creditors Subsidiary Ledger for April is set out below.
Creditor—Sun & Ye Imports
Date 2011
Cross Reference $ Date 2011
Cross Reference $
3 Apr. Bank 27 000 1 Apr. Balance 51 500
20 Apr. Bank 24 500 4 Apr. Stock Control/ 4 500
GST Clearing 450
18 Apr. Stock Control/ 11 700
GST Clearing 1 170
Creditor—Coastal Trading
Date 2011
Cross Reference $ Date 2011
Cross Reference $
2 Apr. Bank 2 352 1 Apr. Balance 2 400
Disc. Rev. 48 6 Apr. Stock Control/ 5 000
GST Clearing 500
Creditor—Cummings Computers
Date 2011
Cross Reference $ Date 2011
Cross Reference $
8 Apr. Bank/ 7 524 3 Apr. Stock Control/ 7 200
Disc. Rev. 396 GST Clearing 720
25 Apr. Bank 4 000 15 Apr. Stock Control/ 6 400
GST Clearing 640
26 Apr. Stock Control/ 2 200
GST Clearing 220
ACCOUNTING UNIT 3
© VCTA Published April 2011 page 8
Required
1.2.1 Use the entries in the Subsidiary Ledger accounts to reconstruct the Credit Purchases Journal and relevant entries in the Cash Payments Journal. You are to total the Credit Purchases Journal and the highlighted columns in the Cash Payments Journal.
4 + 1 = 5 marks
1.2.2 Complete the Creditors Control account in the General Ledger.
4 marks
Required
1.3.1 Using all the information in Question 1, complete the Cash Flow Statement for U Esby’s Computers for the three months ending 30 June 2011. Some of the information has been included for you.
6 marks
Cash Receipts Journal
Date 2011
Details Rec. No.
Bank Disc. Exp.
Debtors Cost of Sales
Sales GST Sundries
30 June Totals 214 040 1 910 63 750 40 800 102 000 10 200 40 000*
* Sundries consist of a loan from the NBA Bank.
Cash Payments Journal
Date 2011
Details Chq No.
Bank Disc. Rev.
Creditors Stock Control
Wages Drawings GST Sundries
30 June Totals 148 265 1 250 62 345 21 000 26 120 15 500 3 150 21 400*
* Sundries consist of:
Interest on Loan $500
Loan (Repayment) $3 000
Accrued Wages $2 200
Office Equipment $6 000
GST Clearing $5 200
Prepaid Rent Expense $4 500
1.3.2 During the reporting period some of the Prepaid Rent Expense was consumed. Explain why all of the Rent Expense is shown as ‘Prepaid’ in the answer book.
2 marks
Total: 45 marks
ACCOUNTING UNIT 3
© VCTA Published April 2011 page 9
Question 2
Bikemart
Cameron Armstrong owns and manages a business that buys and sells bicycles, bicycle accessories, and bicycle carriers for cars. His business is called Bikemart. Cameron maintains a double-entry accounting system using a perpetual inventory system for stock, the accrual method for recording and reporting, and the FIFO method for cost assignment of his stock. The following two accounts are maintained as Control accounts.
Balances at 1 January 2011 Debtors Control $16 000
Stock Control $45 000
Cameron’s Capital at 1 January 2011 is $285 000.
Cost assignment: FIFO Stock item: Bicycle Carriers
Date 2011
Particulars IN OUT BALANCE
Qty
Unit Cost
Total
Qty
Unit Cost
Total
Qty
Unit Cost
Total
1 Jan. Balance 600 25 15 000
1 Jan. Inv. A719 80 25 2 000 680 25 17 000
3 Jan. Inv. 300 200 25 5 000 480 25 12 000
15 Jan. Inv. A877 100 26 2 600 480
100
25
26
14 600
20 Jan. Inv. 301 400 25 10 000 80
100
25
26
4 600
26 Jan. Inv. A980 200 26 5 200 80
300
25
26
9 800
29 Jan. Inv. 302 80
120
25
26
2 000
3 120
180
26
4 680
30 Jan. Memo X54 3 26 78 177 26 4 602
ACCOUNTING UNIT 3
© VCTA Published April 2011 page 10
Additional Information:
• Memorandum X54 is for 3 bicycle carriers, which Cameron withdrew for his own family.
• All bicycle carrier stock is bought and sold on credit.
• GST is charged at 10% on all purchases and sales.
• There were no bad debts during January 2011.
• A physical stocktake done on 31 January 2011 revealed 175 bicycle carriers in the store. (Memorandum X59).
Required
2.1 Suggest one advantage of a firm maintaining control accounts.
1 mark
2.2 The balance of the Stock Control account at 1 January 2011 is different to the balance for bicycle carriers on the stock card at the same date. Provide a reason for this.
1 mark
2.3 Use the stock card to calculate the Cost of Sales for bicycle carriers.
1 mark
2.4 Stock is sold at a mark-up of 200%. Use the stock card to calculate the Credit Sales of bicycle carriers.
1 mark
In addition to the buying and selling of bicycle carriers as shown on the Stock Card above, the firm buys and sells bicycles and bicycle accessories.
The following transactions relate to these other items during January 2011 (not the bicycle carriers).
Cash Sales $ 50 000
Credit Sales $ 250 000
Cost of Sales $ 100 000
Other information: GST charged on ALL Credit Sales $ 31 036
GST received on Cash Sales $ 5 000
Receipts from Debtors $ 340 000
Discounts allowed to Debtors $10 000
Required
2.5 Complete the Debtors Control account for January to determine its balance at 31 January 2011. Record this balance in the account.
4 marks
2.6 Record the adjustment on the Stock Card as a result of the stocktake.
2 marks
ACCOUNTING UNIT 3
© VCTA Published April 2011 page 11
2.7 Suggest a possible reason for the findings of the stocktake, other than theft or a mistake in the counting of stock during the stocktake.
1 mark
The GST Clearing account for January 2011 is as follows:
GST CLEARING
Date Cross Reference $ Date Cross Reference $
31 Jan. Bank 1 13 000 1 Jan. Balance
13 000
Bank 20 000 31 Jan. Debtors Control
31 036
Creditors Control
2 25 000 Bank
3 5 000
Balance 8 964
58 000
58 000
Required
2.8 Identify the reason for the entries marked 1, 2 and 3.
3 marks
The business had Equipment costing $200 000 at 1 January 2011 and depreciates it at 10% per annum. The cash purchase of further equipment for $40 000 took place on 2 January 2011.
Required
2.9.1 Calculate the Depreciation of Equipment Expense for January 2011.
2.9.2 Record the depreciation adjustment in the General Journal. (A narration is not required.) 2 + 2 = 4 marks
Although wages are paid weekly, there was still $1 800 owing to employees at 31 January 2011.
Required
2.10 Prepare the General Journal entry to record the wages adjustment. (A narration is not required.)
2 marks
ACCOUNTING UNIT 3
© VCTA Published April 2011 page 12
During January 2011, Cameron wrote a memorandum to correct an error made in the accounts.
Memorandum No X60 31/01/11
TO: Jim Green, Accountant
Reason: Correction of Error
Three bicycle carriers were incorrectly recorded as being withdrawn by me for personal use by my family. These carriers are in fact used as display advertising in stores to promote sales.
Signed: C. Armstrong
Required
2.11 Prepare the General Journal entry to record the necessary correction. Refer to the Stock Card. (A narration is not required.)
2 marks
2.12.1 Identify the effect on Net Profit if the correction in 2.11 was not made. Would Net Profit be overstated, understated, or have no effect?
1 mark
2.12.2 Identify the effect on Owner’s Equity if the correction in 2.11 was not made. Would Owner’s Equity be overstated, understated or have no effect?
1 mark
2.13 Referring to a qualitative characteristic, explain the purpose of Cameron recording this request to his accountant in a memorandum to correct an error.
2 marks
The following cash outflows took place during January 2011 in addition to the non-cash expenses and adjustments shown above. Paid to Creditors ($300 000)
Wages ($60 000)
Accrued Wages ($2 000)
GST Settlement ($13 000)
GST Paid to Suppliers ($20 000)
Advertising ($15 000)
Administration ($8 000)
Drawings ($80 000)
Equipment ($40 000)
ACCOUNTING UNIT 3
© VCTA Published April 2011 page 13
Required
2.14 Prepare a Classified Profit and Loss Statement for the reporting period. This is to include all sales of bicycles, bicycle accessories and bicycle carriers.
7 marks
2.15 Calculate total expenses and then complete a Profit and Loss Summary account for January 2011. Revenues for the month totalled $360 360.
1 + 2 = 3 marks
2.16 Referring to the Profit and Loss Statement for January 2011, justify your treatment of discounts as an expense.
2 marks
2.17 Show how the Owner’s Equity section of the Balance Sheet would appear at 31 January 2011.
3 marks
2.18 The owner, Cameron Armstrong, is aware that although Bikemart is making a satisfactory profit, its cash flow has deteriorated causing the bank account to go into overdraft. He is concerned that by charging depreciation on the assets, their carrying value is falling, thereby not providing sufficient cash to eventually replace the assets.
Required
2.18.1 Is Cameron correct to be concerned? Justify your answer
2.18.2 Using the information in the question, explain how a profit has been made in January while the bank has fallen into overdraft.
2 + 2 = 4 marks
Total: 45 marks
ACCOUNTING UNIT 3
© VCTA Published April 2011 page 14
ACCOUNTING UNIT 3
Practice written examination 2011
Reading time: 15 minutes Writing time: 1 hour 30 minutes
ANSWER BOOK
Instructions
A question book is provided with this answer book.
Answer all questions in the spaces provided in this book.
Refer to the Instructions on the front cover of the question book.
Name ……………………………………………………....... Teacher ……………………………........
Students are NOT permitted to bring mobile phones and/or any other unauthorised electronic devices into the examination room.
ACCOUNTING UNIT 3
© VCTA Published April 2011 page 15
Question 1
U Esby’s Computers
1.1.1 Cash Receipts Journal
Date 2011
Details Rec. No.
Bank Disc. Exp.
Debtors Cost of Sales
Sales GST Sundries
31 Mar. Totals to date 158 067 1 605 53 500 38 608 96 520 9 652 0
Cash Payments Journal
Date 2011
Details Chq No.
Bank Disc. Rev.
Creditors Stock Control
Wages Drawings GST Sundries
31 Mar. Totals to date
125 550 650 55 000 23 000 25 450 15 500 2 750 4 500*
* Sundries consist of a prepaid insurance payment on 1 February.
Sales Journal
Date 2011
Debtor Invoice No.
Cost of Sales Sales GST Total Debtors
31 Mar. Totals to date 19 888 49 720 4 972 54 692
Purchases Journal
Date 2011
Creditor Invoice No.
Stock GST Total Creditors
31 Mar. Totals to date 62 250 6 225 68 475
ACCOUNTING UNIT 3
© VCTA Published April 2011 page 16
General Journal
Date Particulars General Ledger Subsidiary Ledger
Debit Credit Debit Credit
2 + 2 + 1 + 2 + 1 = 8 marks
1.1.2 Stock Control
Date 2011
Cross Reference $ Date 2011
Cross Reference $
1 Jan. Balance 65 300
Cash at Bank
Date 2011
Cross Reference $ Date 2011
Cross Reference $
1 Jan. Balance 58 700
5 + 3 + 1 = 9 marks
ACCOUNTING UNIT 3
© VCTA Published April 2011 page 17
1.1.3
Explanation
2 marks
1.1.4 General Journal
Date Particulars General Ledger Subsidiary Ledger
Debit Credit Debit Credit
3 marks
1.1.5
Principle
Explanation
2 marks
1.1.6
Explanation
2 marks
1.1.7
Explanation
2 marks
ACCOUNTING UNIT 3
© VCTA Published April 2011 page 18
1.2.1 Purchases Journal
Date 2011
Creditor Invoice No.
Stock GST Total Creditors
Cash Payments Journal
Date 2011
Details Chq No.
Bank Disc. Rev.
Creditors Stock Control
Wages Drawings GST Sundries
4 + 1 = 5 marks
1.2.2 Creditors Control
Date 2011
Cross Reference $ Date 2011
Cross Reference $
4 marks
ACCOUNTING UNIT 3
© VCTA Published April 2011 page 19
1.3.1
U ESBY’S COMPUTERS Cash Flow Statement for the three months ended 30 June 2011
CASH FLOWS FROM OPERATING ACTIVITIES $ $
Cash Sales 102 000
Payments to Creditors (61 095)
Wages Expense (26 120)
Prepaid Rent Expense (4 500)
Purchases of Stock (21 000)
GST Paid (3 150)
Net Cash Flows from Operating Activities
CASH FLOWS FROM INVESTING ACTIVITIES
Net Cash Flows from Investing Activities
CASH FLOWS FROM FINANCING ACTIVITIES
Loan Repayment (3 000)
Net Cash Flows from Financing Activities
Cash Surplus (Deficit)
Bank Balance as at 1 April 2011
Bank Balance as at 30 June 2011
6 marks
ACCOUNTING UNIT 3
© VCTA Published April 2011 page 20
1.3.2
Explanation
2 marks
Question 2
Bikemart
2.1
One advantage
1 mark
2.2
Reason
1 mark
2.3 Calculate the Cost of Sales for bicycle carriers.
1 mark
2.4 Calculate the Credit Sales for bicycle carriers.
1 mark
ACCOUNTING UNIT 3
© VCTA Published April 2011 page 21
2.5 Debtors Control
Date 2011
Cross Reference $ Date 2011
Cross Reference $
4 marks
2.6 Record the adjustment on the Stock Card as a result of the stocktake.
Cost assignment: FIFO Stock item: Bicycle Carriers
Date 2011
Particulars IN OUT BALANCE
Qty
Unit Cost
Total
Qty
Unit Cost
Total
Qty
Unit Cost
Total
1 Jan. Balance 600 25 15 000
1 Jan. Inv A719 80 25 2 000 680 25 17 000
3 Jan. Inv 300 200 25 5 000 480 25 12 000
15 Jan. Inv A877 100 26 2 600 480
100
25
26
14 600
20 Jan. Inv 301 400 25 10 000 80
100
25
26
4 600
26 Jan. Inv A980 200 26 5 200 80
300
25
26
9 800
29 Jan. Inv 302 80
120
25
26
2 000
3 120
180
26
4 680
30 Jan. Memo X54 3 26 78 177 26 4 602
2 marks
2.7
Reason
1 mark
ACCOUNTING UNIT 3
© VCTA Published April 2011 page 22
2.8 Identify the reason for the entries in the GST Clearing account marked 1, 2 and 3.
1.
2.
3.
3 marks
2.9.1 Calculate the Depreciation of Equipment Expense for January 2011.
2 marks
2.9.2 Record the depreciation adjustment in the General Journal. (A narration is not required.)
General Journal
Date Particulars General Ledger Subsidiary Ledger
Debit Credit Debit Credit
2 marks
2.10 Prepare the General Journal entry to record the wages adjustment. (A narration is not required.)
General Journal
Date Particulars General Ledger Subsidiary Ledger
Debit Credit Debit Credit
2 marks
ACCOUNTING UNIT 3
© VCTA Published April 2011 page 23
2.11 Prepare the General Journal entry to record the necessary correction. Refer to the Stock Card. (A narration is not required.)
General Journal
Date Particulars General Ledger Subsidiary Ledger
Debit Credit Debit Credit
2 marks
2.12.1 Identify the effect on Net Profit. (Tick the correct box.)
Overstated Understated No effect
1 mark
2.12.2 Identify the effect on Owners Equity. (Tick the correct box.)
Overstated Understated No effect
1 mark
2.13
Qualitative characteristic
Explanation
2 marks
ACCOUNTING UNIT 3
© VCTA Published April 2011 page 24
2.14
BIKEMART Classified Profit and Loss Statement for January 2011
$ $
7 marks
2.15.1 Calculate total expenses for January.
1 mark
2.15.2 Complete the following account.
Profit and Loss Summary
Date 2011
Cross Reference $ Date 2011
Cross Reference $
2 marks
ACCOUNTING UNIT 3
© VCTA Published April 2011 page 25
2.16 Justification of discounts as an expense.
2 marks
2.17
Balance Sheet (extract) as at 31 January 2011
$ $
3 marks
2.18.1
Explanation
2 marks
2.18.2
Explanation
2 marks
Total: 45 marks
ACCOUNTING UNIT 3
© VCTA Published April 2011 page 26
Solutions to Unit 3 practice exam 2011
Question 1
U Esby’s Computers
1.1.1
Cash Receipts Journal
Date 2011
Details Rec. No.
Bank Disc. Exp.
Debtors Cost of
Sales
Sales GST Sundries
31 Mar. Totals to date 158 067 1 605 53 500 38 608 96 520 9 652 0
31 Mar. Dellios Traders
2 445 6 000 6 000
Total 164 067 1 605 59 500 38 608 96 520 9 652 0
Cash Payments Journal
Date 2011
Details Chq No.
Bank Disc. Rev.
Creditors Stock Control
Wages Drawings GST Sundries
31 Mar. Totals to date
125 550 650 55 000 23 000 25 450 15 500 2 750 4 500*
* Sundries consist of a prepaid insurance payment on 1 February.
Sales Journal
Date 2011
Debtor Invoice No.
Cost of Sales Sales GST Total Debtors
31 Mar. Totals to date 19 888 49 720 4 972 54 692
Purchases Journal
Date 2011
Creditor Invoice No.
Stock GST Total Creditors
31 Mar. Totals to date 62 250 6 225 68 475
31 Mar. Coastal Trading 265 432 920 0 920
Total 63 170 6 225 69 395
ACCOUNTING UNIT 3
© VCTA Published April 2011 page 27
General Journal
Date Particulars General Ledger Subsidiary Ledger
Debit Credit Debit Credit
31 Mar. Advertising 10 500
Stock Control 10 500
31 Mar. Bad Debts 24 000
Debtors Control 24 000
Debtor—Dellios Traders
24 000
2 marks are allocated to each entry in the Purchases Journal and the General Journal. 1 mark is allocated for the entry in the Cash Receipts Journal and 1 mark for totalling the journals.
2 + 2 + 1 + 2 + 1 = 8 marks
1.1.2 Stock Control
Date 2011
Cross Reference $ Date 2011
Cross Reference $
1 Jan. Balance 65 300 31 Mar. Advertising 10 500
31 Mar. Bank 23 000 Drawings 2 000
Creditors Control 63 170 Cost of Sales 38 608
Cost of Sales 19 888
Balance 80 474
151 470 151 470
Subtract 1 mark for each incorrect entry
ACCOUNTING UNIT 3
© VCTA Published April 2011 page 28
Cash at Bank
Date 2011
Cross Reference $ Date 2011
Cross Reference $
31 Mar. Cash Receipts 164 067 1 Jan. Balance 58 700
Balance 20 183 31 Mar. Cash Payments 125 550
184 250 184 250
Subtract 1 mark for each incorrect entry. 1 mark has been allocated for balancing the ledgers
5 + 3 + 1 = 9 marks
1.1.3
Explanation
It enables the corresponding entry in another ledger account to be found. It assists in the
audit trail. Answers should refer to an entry in the Stock Control account.
1 mark for the explanation. 1 mark for a reference to an entry in the account.
2 marks
1.1.4 General Journal
Date Particulars General Ledger Subsidiary Ledger
Debit Credit Debit Credit
31 Mar. Rent Expense 3 000
Prepaid Rent Expense 3 000
(Adjusting entry for 2
months rent used. Memo
# 229)
1 mark is allocated for the correct accounts, 1 mark for the correct amount and 1 mark for the narration.
3 marks
1.1.5
Principle Monetary unit principle
Explanation The transaction was recorded at $920 as this is the Australian dollar conversion
of the invoice price. The monetary unit principle requires businesses trading in Australia to
record transactions in Australian dollars.
1 mark for the principle, 1 mark for the explanation.
2 marks
ACCOUNTING UNIT 3
© VCTA Published April 2011 page 29
1.1.6
Explanation
To document transactions between the two businesses to ensure that the records of the
two businesses agree. It also serves to remind the customer (U Esby Computers) of the amount
they owe and the amount overdue for payment.
2 points are required for 2 marks.
2 marks
1.1.7
Explanation
To check their journal entries and ledger accounts to ensure that their records match. This
provides a means of making sure that reports are free from error.
2 marks
1.2.1
Purchases Journal
Date 2011
Creditor Invoice No.
Stock GST Total Creditors
3 Apr. Cummings Computers 7 200 720 7 920
4 Apr. Sun & Ye Imports 4 500 450 4 950
6 Apr. Coastal Trading 5 000 500 5 500
15 Apr. Cummings Computers 6 400 640 7 040
18 Apr. Sun & Ye Imports 11 700 1 170 12 870
26 Apr. Cummings Computers 2 200 220 2 420
30 Apr. TOTALS 37 000 3 700 40 700
ACCOUNTING UNIT 3
© VCTA Published April 2011 page 30
Cash Payments Journal
Date 2011
Details Chq No.
Bank Disc. Rev.
Creditors Stock Control
Wages Drawings GST Sundries
2 Apr. Coastal Trading
2 352 48 2 400
3 Apr. Sun & Ye 27 000 27 000
8 Apr. Cummings Comp.
7 524 396 7 920
20 Apr. Sun & Ye 24 500 24 500
25 Apr. Cummings Comp.
4 000 4000
30 Apr. TOTALS 65 376 444 65 820
Subtract 1 mark per incorrect entry. 1 mark is allocated for totals.
4 + 1 = 5 marks
1.2.2 Creditors Control
Date 2011
Cross Reference $ Date 2011
Cross Reference $
30 Apr. Bank/ Disc. Revenue 65 820 1 Apr. Balance 53 900
Balance 28 780 30 Apr. Stock Control/ GST Clearing
40 700
94 600 94 600
1 mark per entry. Entries will be consequential to the journal totals.
4 marks
ACCOUNTING UNIT 3
© VCTA Published April 2011 page 31
1.3.1 U ESBY’S COMPUTERS Cash Flow Statement for the three months ended 30 June 2011
CASH FLOWS FROM OPERATING ACTIVITIES $ $ Cash Sales 102 000
Receipts from Debtors 61 840
GST received 10 200 174 040
Payments to Creditors (61 095)
Wages Expense (26 120)
Prepaid Rent Expense (4 500)
Purchases of Stock (21 000)
GST paid (3 150)
Interest on Loan (500)
Accrued Wages paid (2 200)
GST Settlement (5 200) (123 765)
Net Cash Flows from Operating Activities
50 275
CASH FLOWS FROM INVESTING ACTIVITIES Office Equipment (6 000)
Net Cash Flows from Investing Activities (6 000)
CASH FLOWS FROM FINANCING ACTIVITIES Loan from NBA Bank 40 000
Drawings (15 500)
Loan Repayment (3 000)
Net Cash Flows from Financing Activities 21 500
Cash Surplus (Deficit) 65 775
Bank Balance as at 1 April 2011 (20 183)
Bank Balance as at 30 June 2011 45 592
Subtract 1 mark per error and 1 mark in total for incorrect totalling.
6 marks
ACCOUNTING UNIT 3
© VCTA Published April 2011 page 32
1.3.2
Explanation
At the time of the payment it was all prepaid. The Cash Flow Statement reflects the cash
journals. The fact that some has been expensed does not affect the cash flow.
2 points are required for 2 marks.
2 marks
Question 2
Bikemart
2.1
One advantage
Removes detail from the General Ledger. Provides a checking mechanism in relation to
subsidiary records. Enables the specialisation/allocation of duties.
1 mark
2.2
Reason
Stock control represents ALL stock, not just the bicycle carriers shown on the Stock Card.
The Stock Card represents one type of stock only.
1 mark
2.3 Calculate the Cost of Sales for bicycle carriers.
$5 000 + 10 000 + 2 000 + 3 120
= $20 120
1 mark
ACCOUNTING UNIT 3
© VCTA Published April 2011 page 33
2.4 Calculate the Credit Sales for bicycle carriers.
Sales = (1 + mark-up percentage) x cost price
= (1 + 200%) x $20 120 = $60 360
1 mark
2.5 Debtors Control
Date 2011
Cross Reference $ Date 2011
Cross Reference $
1 Jan. Balance 16 000 31 Jan. Bank/Discount Exp. 350 000
31 Jan. Credit Sales/GST Clearing
341 396 Balance 7 396
357 396 357 396
1 mark for each correct entry.
Subtract 1 mark for incorrect cross reference and 1 mark for incorrect date.
4 marks
ACCOUNTING UNIT 3
© VCTA Published April 2011 page 34
2.6 Record the adjustment on the Stock Card as a result of the stocktake.
Cost assignment: FIFO Stock item: Bicycle carriers
Date 2011
Particulars IN OUT BALANCE
Qty
Unit Cost
Total
Qty
Unit Cost
Total
Qty
Unit Cost
Total
1 Jan. Balance 600 25 15 000
1 Inv. A719 80 25 2 000 680 25 17 000
3 Inv 300 200 25 5 000 480 25 12 000
15 In A877 100 26 2 600 480
100
25
26
14 600
20 In 301 400 25 10 000 80
100
25
26
4 600
26 Inv. A980 200 26 5 200 80
300
25
26
9 800
29 Inv. 302 80
120
25
26
2 000
3 120
180
26
4 680
30 Memo X54 3 26 78 177 26 4 602
31 Memo X59 2 26 52 175 26 4 550
2 marks for whole line correct. Deduct 1 mark for omission of memo number. No loss of marks if date is omitted.
2 marks
2.7
Reason
The undersupply of stock by the supplier.
The oversupply of stock to the customer.
1 mark
2.8 Identify the reason for the entries in the GST Clearing account marked 1, 2 and 3.
1. GST settlement to the ATO for amount owed for prior period.
2. GST incurred on the credit purchase of stock.
3. GST received from the cash sale of stock.
1 mark per correct entry. Expect, prior period, incurred and received.
3 marks
ACCOUNTING UNIT 3
© VCTA Published April 2011 page 35
2.9.1 Calculate the Depreciation of Equipment Expense for January 2011.
200 000 + 40 000 = 240 000
240 000 x 10% = 24 000 per annum
= 2 000 for January
1 mark for adding $40 000 and 1 mark for calculating 1 month.
2 marks
2.9.2 Prepare the General Journal entry to record the depreciation adjustment. (A narration is not required.)
General Journal
Date Particulars General Ledger Subsidiary Ledger
Debit Credit Debit Credit
31 Jan. Depreciation of Equipment
2 000
Accumulated Depreciation of Equipment
2 000
1 mark per correct line. Watch for consequentials in amount. Only 1 mark if entries reversed.
2 marks
2.10 Prepare the General Journal entry to record the wages adjustment. (A narration is not required.)
General Journal
Date Particulars General Ledger Subsidiary Ledger
Debit Credit Debit Credit
31 Jan. Wages Expense 1 800
Accrued Wages Exp. 1 800
1 mark per correct line. Watch for consequential amount.
2 marks
ACCOUNTING UNIT 3
© VCTA Published April 2011 page 36
2.11 Prepare the General Journal entry to record the necessary correction. Refer to the Stock Card. (A narration is not required.)
General Journal
Date Particulars General Ledger Subsidiary Ledger
Debit Credit Debit Credit
31 Jan. Advertising Expense 78
Drawings 78
1 mark per correct line. 1 mark only if entries are reversed.
2 marks
2.12.1 Identify the effect on Net Profit. (Tick the correct box.)
Overstated Understated No effect
√
1 mark
2.12.2 Identify the effect on Owner’s Equity (Tick the correct box)
Overstated Understated No effect
√
1 mark
2.13
Qualitative characteristic Reliability
Explanation The memorandum is a source document. It provides evidence that the event
was requested by the owner. The source document ensures that the information in the reports
Is free from error and bias.
1 mark for correct characteristic. 1 mark for evidence/explanation.
2 marks
ACCOUNTING UNIT 3
© VCTA Published April 2011 page 37
2.14
BIKEMART Classified Profit and Loss Statement for January 2011
REVENUES $ $
Credit Sales 310 360
Cash Sales 50 000 1 360 360
Less Cost of Goods Sold
Cost of Sales 1 120 120
Gross Profit 240 240
Less Stock Loss 1 52
Adjusted Gross Profit 240 188
Less Other Expenses
Depreciation of Equipment 1 2 000
Advertising Expense 1 15 078
Administration Expense 8 000
Wages Expense 1 61 800
Discount Expense 1 10 000 96 878
NET PROFIT 143 310
1 mark as shown; to include correct amount. Minus 1 mark in total for aliens or omission of administration expense. Minus 1 mark if no attempt to calculate net profit.
7 marks
ACCOUNTING UNIT 3
© VCTA Published April 2011 page 38
2.15.1 Calculate total expenses for January.
120 120 + 52 + 96 878 = 217 050
1 mark
2.15.2 Complete the following account.
Profit and Loss Summary
Date 2011
Cross Reference $ Date 2011
Cross Reference $
31 Jan. Total Expenses 217 050 31 Jan. Total Revenues 360 360
Capital 143 310
360 360 360 360
1 mark for correct entry of expenses and revenues. 1 mark for closing to capital and totals.
2 marks
2.16 Justification of discounts as an expense.
Discounts are a reduction in inflow of resources (the business receives less cash), which
decreases an asset (Debtors) and decreases Owner’s Equity.
1 mark for reduction in inflow and 1 for reduction in Owner’s Equity.
2 marks
2.17 Balance Sheet (extract) as at 31 January 2011
$ $
Capital as at 1 January 2011 1 285 000
Add Net Profit 1 143 310
428 310
Less Drawings 1 80 000 348 310
1 mark as shown. Minus 1 mark if no total shown.
3 marks
ACCOUNTING UNIT 3
© VCTA Published April 2011 page 39
2.18.1
Explanation Cameron should not be concerned as the charging of depreciation on an asset
does not cause a change in cash flow. It is not creating a fund to replace the asset; it is merely
allocating the cost of the asset over its useful life.
1 mark for not a cash flow. 1 mark for allocation of cost not a fund.
2 marks
2.18.2
Explanation The bank has fallen into overdraft because the cash outflows have exceeded the cash inflows. Some of these cash outflows were not expenses and do not therefore affect the Profit and Loss Statement. Examples are drawings and the purchase of equipment.
1 mark for explanation that cash differs from profit. 1 mark for examples.
2 marks