QUESTION PAPER 1 - IAB · Exam ID 321 Qualifications: Level 3 Certificate in Bookkeeping (QCF)...

Exam ID 321

Qualifications:

Level 3 Certificate in Bookkeeping (QCF) (Accreditation number: 500/8479/3)

Level 3 Certificate in Manual Bookkeeping (QCF) (Accreditation number: 500/9260/1)

Level 3 Certificate in Applied Bookkeeping (QCF) (Accreditation number: 500/9262/5)

June 2012

Units:

309: Record transactions and make accounting adjustments – M601/0732

308: Prepare financial statements for a not for profit organisation – D601/0757

QUESTION PAPER 1

Time Allowed: 3 hours

Suite 5, 20 Churchill Square, Kings Hill, West Malling, Kent, ME19 4YUTel: 0844 330 3527,

Fax: 0844 330 3514, Email: [email protected]

IAB L3 Cert (QCF)/June 2012 Exam QP (P1)

THIS PAPER CONSISTS OF TWO SECTIONS YOU MUST COMPLETE ALL THE

QUESTIONS AND ALL TASKS WITHIN EACH SECTION

SECTION A – RECORD TRANSACTIONS AND MAKE ACCOUNTING

ADJUSTMENTS

INSTRUCTIONS

There are THREE questions in this section of the paper. You must complete ALL

TASKS within the questions.

QUESTION ONE

RECONCILE TRADE CREDITORS

Part A

Double entry records are kept on behalf of Paragon Fabrics. Their General Ledger

contains Sales Ledger and Purchase Ledger Control Accounts. The control accounts

are within the double entry bookkeeping system, the personal accounts of trade

debtors and trade creditors are kept in the subsidiary Sales Ledger and Purchase

Ledger respectively as memorandum accounts.

As at l May 2012 the balance on the Purchase Ledger Control Account of Paragon

Fabrics was £124,560.

You are provided with the following information as at 31 May 2012:

£

Total purchases on credit per Purchase Day Book in May month 2012 Total purchase returns per Purchase Returns Day Book in May month 2012 Total payments to trade creditors per Cash Book in May month 2012 Total cash discounts received per Cash Book in May month 2012

Personal Account Balances of Trade Creditors per the Purchase

Ledger as at 31 May 2012

As at 31 May 2012 the personal accounts of trade creditors were balanced

off and listed – the list shows that total of trade creditor balances per the

Purchase Ledger as at that date was £117,500.

79,440 4,200 81,050 1,250


REQUIRED

TASK A (1 Mark) Post the balance brought forward as at 1 May 2012 to the Purchase Ledger Control Account

TASK B (6 Marks) Make postings as at 31 May 2012 to the Purchase Ledger Control Account from the list of May 2012 month transactions provided above. TASK C (2.5 Marks) Balance off the Purchase Ledger Control Account as at 31 May 2012 bringing down the account balance as at that date. TASK D (2 Marks)

Reconcile the balance on the Purchase Ledger Control Account as at 31 May 2012 with

the balance of total trade creditors per the Purchase Ledger as at that date.

Note: The following proformas are provided for your use in completing the above

tasks:

General Ledger (Extract): Purchase Ledger Control Account – see page 1 of your answer booklet.

Schedule reconciling Purchase Ledger Control Account balance to total trade creditors per the Purchase Ledger as at 31 May 2012 – see page 1 of your answer booklet.


Part B

One of your colleagues has prepared the Sales Ledger Control Account of Paragon

Fabrics for the month ended 31 May 2012, and has also prepared the following

reconciliation of the Sales Ledger Control Account balance to a total of trade debtors

taken from the Sales Ledger as at that date:

Schedule Reconciling Sales Ledger Control Account Balance to Total

Trade Debtors per the Sales Ledger as at 31 May 2012

£ Balance per the Sales Ledger Control Account as at

31 May 2012 113,700 (DR)

Total trade debtors per the Sales Ledger as at 31May

2012 106,660 (DR)

Difference 7,040

An investigation into the reason for the difference between the balance on the Sales

Ledger Control Account and total trade debtors per the Sales Ledger as at 31

May 2012 revealed the following:

(i) The balance of £3,200 (DR) on the personal account of a customer, as at 31 May 2012, had not been listed on the list of balances taken from the Sales Ledger as at that date.

(ii) A cheque for £4,600, received from Trent Tweeds in May month 2012, had been posted to the Bank Account in the Cash Book but had not been posted to the personal account of the customer in the Sales Ledger.

(iii) An invoice for £8,440, sent to The Cotton Mill in May month 2012, had

been listed in the Sales Day Book but had not been posted to the personal account of the customer in the Sales Ledger.


REQUIRED

TASK E (3.5 Marks)

Complete the schedule (provided in your answer booklet) and amend the

trade debtor total of £106,660 per the Sales Ledger as at 31 May 2012,

thereby bringing the personal account balances of trade debtors per the

Sales Ledger into agreement with the total per the Sales Ledger Control

Account.

Note: The following proforma is provided for your use in completing the above task:

Schedule amending the trade debtor total per the Sales Ledger as at 31 May 2012 – see page 2 of your answer booklet.

Total marks question 1 = 15 marks


QUESTION TWO

ACCOUNT FOR FIXED ASSETS

Elite Travel is a business owned by Ali Zafar. The business has a fleet of luxury

vehicles including three stretched limousines. The financial year of the business

ends on 31 May.

The business keeps separate accounts to account for the cost and depreciation of its

fixed assets. To account for the depreciation of fixed assets at each financial year

end the business uses a Depreciation Expense account in conjunction with Provision

for Depreciation accounts. A Fixed Assets Disposal account is also kept for the

purpose of accounting for any fixed assets disposed of in a financial year. As at

31 May 2011 the General Ledger of Elite Travel included the following accounts:

Limousines (Cost) – balance £156,000

Limousines(Provision for Depreciation) – balance £65,376

An extract of the General Ledger of Elite Travel is provided for your attention (see page 4 of your answer booklet). A Fixed Asset Register is kept on behalf of Elite Travel in which details of individual

fixed assets owned by the business are recorded. Each fixed asset item entered in

the Fixed Asset Register is given an identification code (made up of letters and

numbers), each code starting with the letters ET. You are provided with the

Limousines section of the Fixed Asset Register of the business (see page 5 of your

answer booklet).

Acquisitions and Disposals of Fixed Assets in the Year Ended 31 May 2012

In the year ended 31 May 2012 Elite Travel acquired and disposed of the following

limousines:

Acquisition of Limousine – a new limousine, a Lincoln Evolution, was purchased

on 1 September 2011 at a cost of £80,000 (ignore VAT), the limousine was paid for

by cheque. This limousine is to be given the code ET/0004 when entered in the

Fixed Asset Register.

Disposal of Limousine – an old limousine (Lincoln 120 - code ET/0001) which cost

£40,000 when it was originally purchased on 1 June 2007 was sold on 29 February

2012. A cheque for £17,250 (ignore VAT) was received on disposal.


Depreciation Policy

The policy of Elite Travel is to depreciate its limousines as follows:

Limousines Method and Basis of Depreciation

20% per year using the reducing balance method

Fixed assets are depreciated using the full year basis. A full year’s depreciation is

taken in the year of an assets acquisition with no depreciation being taken in the

year of disposal.

Physical Count of Limousines

As at 31 May 2012 one of the drivers employed by Elite Travel carried out a physical

count of vehicles on the premises from which the business operates and has

provided you with the following note:

Note:

Subject: Physical Count of Vehicles as at 31 May 2012

A physical count of vehicles on the premises was carried out at 31 May

2012, the following vehicles were on our site when the count was conducted

:

Coaches:

Scania Irizar

Mercedes 814D

Mercedes Plaxton

Limousines:

Lincoln Evolution

Hummer H3


REQUIRED TASK A (2 Marks) Post the balances provided above, relating to the cost of limousines and their accumulated depreciation as at 31 May 2011, to the ledger accounts provided in the General Ledger (extract). Task B ( 2 Marks) Enter details of the cost of the limousine purchased on 1 September 2011 into the Fixed Asset Register (extract) and the Limousines (Cost) Account in the General Ledger (extract)

TASK C (2 Marks) Enter details of the limousine disposed of on 29 February 2012 into the Fixed Asset Register (extract), and post the disposal proceeds of the limousine disposed of to the Fixed Assets Disposal Account in the General Ledger (extract). TASK D (6 Marks) Update the Fixed Asset Register (extract) as at 31 May 2012 by completing the columns ‘Annual Depreciation’, ‘Accumulated Depreciation’ and ‘Net Book Value’ for each limousine owned by the business as at the year end.

TASK E (2.75 Marks) Prepare the Journal entry as at 31 May 2012 to account for depreciation of

limousines at the year end. Date your Journal entry 31 May 2012 and provide a suitable narrative

TASK F (2 Marks) Post the entries from the Journal prepared in Task E above into the relevant ledger accounts in the General Ledger (extract) TASK G (5.5 Marks)

Prepare the Journal entries required to transfer the cost and accumulated depreciation on the limousine disposed of as at 29 February 2012 to the Fixed Assets Disposal Account. Date your Journal entries 31 May 2012 and provide a suitable narrative

TASK H (3 Marks)

Post the entries from the Journal prepared in Task G above into the relevant ledger accounts in the General Ledger (extract)

TASK I (2.75 Marks) Prepare the Journal entry as at 31 May 2012 to transfer the profit or loss on disposal of the limousine disposed of to the Profit and Loss Account. Date your Journal entry 31 May 2012 and provide a suitable narrative


TASK J (1 Mark) Post the Journal entry prepared in Task I above to the Fixed Assets Disposal Account in the General Ledger (extract). (Note that you are not provided with the Profit and Loss Account, therefore you can only post the ‘leg’ of the Journal entry which relates to the Fixed Assets Disposal Account). Close off the Fixed Assets Disposal Account as at 31 May 2012.

TASK K (1 Mark) Compare the contents of the limousines section of the Fixed Asset Register (extract) to the list of fixed assets per the note relating to the physical count of limousines as at 31 May 2012. Prepare a short note as at 31 May 2012 identifying any discrepancies between the record of limousines per the Fixed Asset Register and the count of limousines conducted by the driver. Note: In completing the tasks above, other than closing off the Fixed Assets Disposal Account as required in Task J, you are not required to close off or balance off any of the other accounts within the General Ledger (extract).

Total marks question 2 = 30 marks


tasks:

General Ledger (extract) – see page 4 of your answer booklet

Fixed Asset Register (extract) see page 5 of your answer booklet

Journal – see page 6 of your answer booklet

Note (for the purpose of completing Task K) – see page 7 of your answer booklet


QUESTION THREE

ACCOUNT FOR THE VALUE OF STOCK, PREPAYMENTS AND ACCRUALS

AND BAD AND DOUBTFUL DEBTS

Riverdale Pet Supplies is a business owned by Kate Walsh, the financial year of the

business ends on 31 May.

The following balances appeared in the General Ledger of the business as at the

financial year ended 31 May 2012:

£ Sales Ledger Control

Provision for Doubtful Debts (as at 31 May 2011) 104,200

750 Rates 24,800 Heat and Light 3,660 Rent Receivable 8,800 Stock (opening stock 1 June 2011) 156,620 You are provided with an extract from the General Ledger of Riverdale Pet Supplies showing the above balances brought forward (see pages 9 and 10 of your answer booklet) . Additional Information

You are provided with the following additional information as at 31 May 2012:

(i) The balance of £1,200 (ignore VAT) on the personal account of a trade debtor

is to be written off as a bad debt. The balance on the Provision for Doubtful

Debts Account is then to be adjusted to an amount equivalent of 1% of the

remaining trade debtors as at 31 May 2012.

(ii) The balance on the Rates Account per the General Ledger as at 31 May

2012, includes a payment of £14,400 in respect of business rates paid for the

period 1 April 2012 to 31 March 2013.

(iii) The last payment posted to the Heat and Light Account at the year end 31

May 2012 was a cheque for £1,180. The cheque was in respect of heat and

light bills for the three months period ended 31 March 2012. It is expected that

the heat and light bills for the next three months period, ended 30 June 2012,

will be 10% lower than bills for the previous three months.

(iv) The business rents out warehouse space to Pegasus Transport. Rent for the

year ended 31 May 2012 was agreed at £800 per month. Pegasus

Transport commenced renting the warehouse space as from 1 June 2011,

as at the year end 31 May 2012 Pegasus Transport is one month in arrears

with its rent.


(v) Closing stock as at 31 May 2012 had been valued at £163,500. However,

since the valuation was carried out it has been discovered that one line of

stock (Doggy Treats), was included in the original stock valuation at selling

price of £4,500. All stock lines are marked-up by 50% to give selling price.

Note: The General Ledger of Riverdale Pet Supplies includes ledger accounts used

for the specific purpose of accounting for Prepayments and Accruals.

REQUIRED

TASK A (2 Marks)

Prepare the Journal entry to account for the bad debt write off as at 31 May

2012.

TASK B (3 Marks)

Post the Journal entries prepared in Task A above into the relevant accounts

in the General Ledger.

TASK C (2 Marks)

Prepare the Journal entry to account for the Provision for Doubtful Debts

Account adjustment as at 31 May 2012.

TASK D (2 Marks)

Post the Journal entry prepared in Task C above into the relevant accounts

in the General Ledger (note that you are not provided with the Profit and

Loss Account, therefore you can only post the ‘leg’ of the Journal entry

which relates to the Provision for Doubtful Debts account).

TASK E (6 Marks)

Prepare the Journal entries to account for rates prepaid, heat and light

accrued, and rent receivable accrued at 31 May 2012.

TASK F (7 Marks)

Post the Journal entries prepared in Task E above into relevant accounts in

the General Ledger.


TASK G (4 Marks)

Amend the original closing stock valuation of £163,500 as at 31 May 2012 to

account for the stock line valued at selling price, by completing the schedule

provided on page 11 of your answer booklet.

TASK H (4 marks)

Prepare the Journal entries required to transfer the opening stock, and

closing stock (as amended in Task G above), to the Trading Account as at

the year end 31 May 2012.

TASK I (2 Marks)

Post the Journal entries prepared in Task H above to the Stock Account in

the General Ledger (note that you are not provided with the Trading

Account, therefore you can only post the ‘legs’ of the Journal entries which

relate to the Stock Account).

TASK J (8 Marks)

Prepare the Journal entries as at 31 May 2012 to transfer the expenses of

bad debts, rates, heat and light and the income of rent receivable to the

Profit and Loss Account.

TASK K (7 marks)

Post the Journal entries prepared in Task J above to the expense accounts

of Bad Debts, Rates, Heat and Light and the income account of Rent

Receivable in the General Ledger and close off the accounts. (Note that you

are not provided with a Profit and Loss Account, therefore you can only post

the ‘legs’ of the Journal entries which relate to the expense accounts and the

income account.

TASK L (8 Marks)

Balance off the Provision for Doubtful Debts, Sales Ledger Control, Stock,

Prepaid Expenses and Accrued Income, and Accrued Expenses accounts in

the General Ledger as at 31 May 2012 bringing down the account balances

as at that date.

Total marks question 3 = 55



tasks:

General Ledger (Extract) – see pages 9 and 10 of your answer booklet

Schedule amending closing stock valuation – see page 11 of your answer booklet

Journal – see pages 12 and 13 of your answer booklet

Total marks this unit = 100


SECTION B – PREPARE FINANCIAL STATEMENTS FOR A NOT FOR PROFIT

ORGANISATION

INSTRUCTIONS

There is ONE question in this section of the paper. You must complete ALL TASKS

within the question.

QUESTION ONE

Lakeside Dinghy Club is a well established sailing club. The club has in excess of one hundred members who each pay an annual membership subscription of £480. Subscriptions are collected monthly in advance directly from the bank accounts of members. The subscription allows members to use the club facilities and also store their dinghies in the club boatyard. The club owns several classes of sailing dinghy which it hires out, and employs a full-time and a part-time sailing instructor who give lessons leading to recognised sailing qualifications. The instructors are also responsible for the day-to-day administration of the club as well as health and safety matters. The clubhouse and boatyard are rented from the local authority. The following are the assets and liabilities of Lakeside Dinghy Club as at 1 June 2011: £ Cash at bank 6,840 Membership subscriptions received in advance Club dinghies and safety equipment (net book value) Clubhouse fixtures and fittings (net book value) Club safety boat (net book value)

5,120 32,000 4,500 12,500

Clubhouse rent (prepaid) 1,000 Clubhouse heat and light accrued 320

REQUIRED TASK A (4 Marks) Calculate the accumulated fund of the members of the Lakeside Dinghy Club as at 1 June 2011.

Note: The following proforma is provided for your use in completing the above task:

Workings – calculation of accumulated fund of members of the Lakeside Dinghy Club as at 1 June 2011 - see page 15 of your answer booklet)


The treasurer of the Lakeside Dinghy Club has presented you with the following

summary of the club’s receipts and payments for the year ended 31 May 2012,

together with a list of additional information as at that date:

Lakeside Dinghy Club

Receipts and Payments Account for the Year Ended 31 May 2012

(Cash and Bank)

Receipts £ Payments £ Balance b/f (1 June 2011) 6,840 Instructor salaries 36,480 Members subscriptions Dinghy hire

67,600 4,650

Clubhouse heat and light Clubhouse rent

1,260 12,200

Sailing lessons 32,120 New dinghy’s 25,200 Safety boat maintenance

Boatyard maintenance Health and safety training

5,800 5,600 2,400

Operating expenses 16,940 Balance c/d (31 May 2012) 5,330

111,210 111,210

Balance b/d (31 May 2012) 5,330

Additional Information as at 31 May 2012:

(i) Members subscriptions of £5,240 were received in advance at 31 May

2012.

(ii) Clubhouse rent of £1,200 was prepaid as at 31 May 2012.

(iii) An accrual of £400 is to be made in respect of clubhouse heat and light

bills unpaid as at 31 May 2012.

(iv) Depreciation for the year ended 31 May 2012 is to be charged to the

Income and Expenditure Account as follows;

- Club dinghies and safety equipment (includes depreciation on

the new dinghies purchased in the year ended 31 May 2012)

£16,000

- Clubhouse fixtures and fittings £1,000

- Club safety boat £2,500


REQUIRED

TASK B (15 Marks)

Prepare the following accounts for the year ended 31 May 2012:

Members Subscriptions (Income)

Clubhouse Rent

Clubhouse Heat and Light

TASK C (10 Marks)

Prepare the Income and Expenditure Account of the club for the year ended

31 May 2012

TASK D (11 Marks)

Prepare the Balance Sheet of the club as at 31 May 2012

Total marks question 1 = 40


tasks:

Accounts – Members Subscriptions (Income), Clubhouse Rent and Clubhouse Heat and Light - see page 16 of your answer booklet

Income and Expenditure Account - see page 17 of your answer booklet

Balance Sheet - see page 18 of your answer booklet

Total marks this unit = 40

QUESTION PAPER 1 - IAB · Exam ID 321 Qualifications: Level 3 Certificate in Bookkeeping (QCF)...

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Transcript of QUESTION PAPER 1 - IAB · Exam ID 321 Qualifications: Level 3 Certificate in Bookkeeping (QCF)...