2018 Accounting Written examination2018 ACCOUNTING EXAM QB 2 Question 1 (11 marks) Aaron’s Auto sells a range of car parts. Goods are bought and sold for both cash and credit. There

ACCOUNTINGWritten examination

Friday 9 November 2018 Reading time: 3.00 pm to 3.15 pm (15 minutes) Writing time: 3.15 pm to 5.15 pm (2 hours)

QUESTION BOOK

Structure of bookNumber of questions

Number of questions to be answered

Number of marks

8 8 100

• Studentsarepermittedtobringintotheexaminationroom:pens,pencils,highlighters,erasers,sharpeners,rulersandonescientificcalculator.

• StudentsareNOTpermittedtobringintotheexaminationroom:blanksheetsofpaperand/orcorrectionfluid/tape.

Materials supplied• Questionbookof11pages• Answerbookof20pages

Instructions• Writeyourstudent numberinthespaceprovidedonthefrontcoveroftheanswerbook.• Answerallquestionsintheanswerbook.• AllwrittenresponsesmustbeinEnglish.

At the end of the examination• Youmaykeepthisquestionbook.

Students are NOT permitted to bring mobile phones and/or any other unauthorised electronic devices into the examination room.

©VICTORIANCURRICULUMANDASSESSMENTAUTHORITY2018

Victorian Certificate of Education 2018

2018ACCOUNTINGEXAMQB 2

Question 1 (11marks)Aaron’sAutosellsarangeofcarparts.Goodsareboughtandsoldforbothcashandcredit.Thereisa100%mark-uponcost.Aaron’sAutowasclosedformostofJanuary2018andrecordedonlyfourtransactionsforthatmonth.Thedocumentsrelatingtothesetransactionsareshownbelow.On1January2018,theGSTClearingaccounthadanopeningbalanceof$500cr.

Aaron’s AutoDate:27/01/18Invoice No.: 330Supplied:10gearboxesAccount:Brabham Amount: $4100 plus GST: $410 Total: $4510Creditterms2/10,n/30

Aaron’s AutoDate:28/01/18Invoice No.: 331Supplied:20steeringwheelsAccount:Hamilton Amount: $1800 plus GST: $180 Total: $1980Creditterms2/10,n/30

Aaron’s AutoDate:29/01/18Credit Note No.:32Item:1gearboxAccount:Brabham Amount: $410 plus GST: $41 Total: $451

Gap SuppliersDate:30/01/18Credit Note No.: 81Item:1engineAccount:Aaron’sAuto Amount: $2200 plus GST: $220 Total: $2420Goodsdamagedintransit

a. PreparetheGeneralJournalentrytorecordthetransactionon30January2018. Anarrationisnotrequired. 3marks

b. CalculatethebalanceoftheGSTClearingaccountat31January2018. 2marks

c. ExplaintherelationshipbetweentheCreditorsControlledgeraccountandtheScheduleofCreditors. 3marks

d. ExplainhowSalesReturnsmeetsthedefinitionofonespecificaccountingelement. 3marks

3 2018ACCOUNTINGEXAMQB

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Question 2 (9marks)TheSportsStoresellscricketequipment.Reportsarepreparedannuallyon30June.At30June2018,twostockcardswereincompleteasthefollowingtransactionsandinformationhadnotbeenrecorded:• 28June2018 TwelveTestCricketballsweresoldtoWalesCricketClubfor$60eachplus

GST(Invoice2224).• 29June2018 SixTestCricketballswerereturnedtoCarlsonLtdfromthedeliveryon5June

(CreditNote45).

Additional information• Afterthesetransactionsweretakenintoaccount,astocktakeon30June2018showedthe

following:– TestCricketballs–therewasnostocklossorgain– PowerPluscricketbats–18wereonhand,includingfivethatweredamaged(Memo61)

• Thesellingpriceofthefivedamagedbatswillbereducedto$150eachplusGST.Abatcover(cost$10eachplusGST)willbeprovidedfreeofchargewitheachdamagedbatsold.(Memo62)

a. CompletetheStockCards. 5marks

b. TheownerofthestorecommentsthatthePowerPluscricketbatsaresellingverywell,sotheundamagedbatsshouldbevaluedatthecurrentsellingpriceof$400eachbecause‘thatiswhattheyareworthtothebusiness’.

ExplainwhythiswouldnotbeanappropriatemethodforvaluingthePowerPluscricketbats.Justifyyouranswerwithreferencetooneaccountingprinciple. 4marks

2018 ACCOUNTING EXAM QB 4

Question 3 – continued

Question 3 (20 marks)Dynamic Traders is preparing its Cash Flow Statement for the year ended 30 June 2018.The Income Statement for the year ended 30 June 2018 showed the following:• Saleswere$480000withaGrossProfitof$180000.• NetProfitwas$61520afterthefollowingexpenses:

Wages $87000InsuranceExpense 8000Depreciation of Equipment 4 000BadDebts 1500DiscountExpense 800InterestExpense 2000AdvertisingExpense 10800Loss on Disposal of Shop Fittings 4 380

Dynamic Traders Balance Sheet as at 30 June

2017 2018

Current Assets

Cash at Bank 4 100 8 400

Debtors Control 37000 40 000

PrepaidInsurance 2 000 1 000

Stock Control 95000 101 000

Non-Current Assets

Shop Fittings 9 000 4620

Equipment 240 000 250000

Less Accumulated Depreciation of Equipment (45000) (49 000)

Total Assets 342 100 356 020

Current Liabilities

Creditors Control 50500 55100

Accrued Wages 2500 3 000

GST Clearing 2 000 14620

Loan 4 000 5000

Non-Current Liabilities

Loan 40 000 51000

Total Liabilities 99 000 128 720

Owner’s Equity

Capital 243 100 227300

Total Equities 342 100 356 020


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Additional information

GST Clearing

Date Cross-reference Amount Date Cross-reference Amount

30/6/18 Bank 2780 1/7/17 Balance 2000

CreditorsControl 30600 30/6/18 DebtorsControl 48000

Bank 2000

Balance 14620

50000 50000

• Allsalesandpurchasesofstockwereoncredit.• OldshopfittingswerethrownoutinJune.Theywerenotreplaced.• Alldrawingswerecash.Noadditionalcontributionsweremadebytheowner.• Thescheduledloanrepaymentsweremadeduringtheyear.Anadditionalloanwastaken

outon30June2018.

a. Reconstructthefollowingledgeraccounts:• DebtorsControl• StockControl• CreditorsControl 8marks

b. PrepareaCashFlowStatementfortheyearended30June2018. 12marks


Question 4 (10marks)TheMuso’sShopsellsmusicalinstruments.Thebusinessbuysandsellsstockoncredit(credittermsforbotharen/30).Recently,theowneroftheshopstated,‘SalesandprofitarebothupthisyearbutIseemtobeshortofcashallthetime–sowhat’sgoingwrong?’Thefollowingdatawasextractedfromtheaccountingreports.

2017 2018WorkingCapitalRatio 2.4times 3.1timesQuickAssetRatio 1.7times 1.5timesDebtorsTurnover 58days 52daysStockTurnover 91days 111daysCreditorsTurnover 27days 23days

a. Usingthedataabove,discusswhythebusinessmaybeexperiencingashortageofcasheverymonth. 6marks

b. SuggestandjustifytwostrategiestoimproveStockTurnoverforTheMuso’sShop. 4marks


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Question 5 (20marks)DCComputingsellscomputerproductsforcashandoncredit.Allstockismarkedupby100%oncost.Thebusinessreportsonamonthlybasis.TheBalanceSheetasat31August2018isprovidedbelow.

DC Computing Balance Sheet as at 31 August 2018

Current Assets Current Liabilities

CashatBank 2400 CreditorsControl 7500

DebtorsControl 6600 GSTClearing 2100

StockControl 32700 PrepaidSalesRevenue 500

PrepaidAdvertising 800 42500 AccruedWages 1 300 11400

Non-Current Assets

OfficeEquipment 4300 Owner’s Equity

Van 45000 Capital 51600

LessAccumulatedDepreciationofVan

(28800) 16200

Total Assets $63 000 Total Equities $63 000

a. Takingintoaccounttheinformationabove,recordthefollowingtransactionsinthejournalsprovided.Narrationsarenotrequired.• 3September Wagespaid$4500(Cheque314)• 5September AcceptedlegaladvicethatDebtorBSmithwillonlybeabletopay

20centsineverydollarofthe$1200owing(Memo300)• 6September Customerwhohadpreviouslypaidthedepositof$500forasale

of$4000plusGSTpaidtheremainingbalanceandcollectedthegoods(Receipt345) 10marks

b. Explaintheeffectsontheaccountingequationifthetransactionon5Septemberwasnotrecorded. 3marks

DCComputinghasreplaceditsvanwithanewvan.Theoldvanwastradedinfor$10000on 30September2018.Thenewvanwaspurchasedoncreditfor$55000plusGSTfromNiftyVans(Invoice240X).

c. CalculatethedepreciationontheoldvanforSeptember2018,usingthereducingbalancemethodat40%perannum. 1mark

d. PreparetheGeneralJournalentriesrequiredtorecordthesaleoftheoldvanandthepurchaseofthenewvan.

Narrationsarenotrequired. 6marks


Question 6 (4marks)ThechangeintheDebtRatioforSpark’sElectricsforthelasttwoyearscanbedeterminedfromthegraphsbelow.

32%Liabilities

68%Owner’s Equity

48%Liabilities

52%Owner’s Equity

Total assets for 2017 Total assets for 2018

ExplaintheimplicationsforbusinessprofitabilityandliquidityofthechangeintheDebtRatioshowninthegraphs.


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Question 7 (8marks)Katy’sCakessellsmade-to-ordercakes.Thebusinessreportsmonthly.On15September2018,thebusinesspaid$2400plusGSTforathree-monthsocialmediaadvertisingcampaignthatcommencedon1September2018.ThebalanceofthePrepaidAdvertisingat30September2018is$1900.

a. CompletethePrepaidAdvertisingandAdvertisingExpenseaccountsat30September2018. Youarerequiredtobalanceorclosetheaccounts,asappropriate. 5marks

b. Withreferencetooneaccountingprinciple,explainwhyitisnecessarytocloseoneoftheseaccounts. 3marks


Question 8–continued

Question 8 (18marks)PeterPattersonownsandoperatesasmalltradingbusinesscalledPeter’sPots.ThefollowingjournalsummariesrelatetoSeptember2018.

Cash Receipts Journal (summary)

Date 2018

Details Rec. No. Bank Disc. Exp.

Debtors Control

Cost of Sales

Sales Sundries GST

30Sep. Totals – 101700 3 000 27400 34000 68000 2500 6800

Theiteminthe‘Sundries’columnwascapitalcontribution.

Cash Payments Journal (summary)

Date 2018

Details Chq. No. Bank Disc. Rev.

Creditors Control

Stock Control

Wages Sundries GST

30Sep. Totals – 82670 1 300 19200 36000 8 000 16000 4770

Theitemsinthe‘Sundries’columnwere:• Drawings$1500• Advertising$3500• PrepaidRent(forOctoberandNovember)$5200• Customsduty$3000• GSTClearing$2800.

Purchases Journal (summary)

Date 2018

Creditor Invoice Number

Stock Control

GST Creditors Control

30Sep. Totals – 25000 2500 27500

Sales Journal (summary)

Date 2018

Debtor Invoice Number

Cost of Sales

Sales GST Debtors Control

30Sep. Totals – 14500 29000 2900 31900


PeteralsoprovidedthefollowingestimatesforOctober2018:• estimatedSales$138000,ofwhich25%isanticipatedtobeoncredit• CostofSalesestimatedtobe50%ofsales• SalesReturns$1800• aStockWrite-Downforpots$500• Discountsfromsuppliers$1200• WagesExpense$9300• DepreciationofShopFittings$2800• BadDebtsexpense5%ofCreditSalesfromSeptember• CustomsDutyonimportedpots$1250• aLoanof$15000expectedtocommenceon1October;Peterhasplannedthatinadditiontothe

interestpaymentsof$100amonth,afurther$200principalamountwillberepaideachmonth.• Drawingsisestimatedtobe$4500,including$500ofstock

a. PrepareaBudgetedIncomeStatementforthemonthending31October2018. 8marks

b. Explain howPeter’sPotscouldusetheBudgetedIncomeStatementforplanningandcontrolpurposes. 4marks

c. AvariancereporthasbeenpreparedfortheCashFlowStatementat31October2018.Theinformationbelowhasbeenextractedfromthatreport.

$140000

$120000

$100000

$80000

$60000

$40000

$20000

0cash sales receipts from debtors payments to creditors

budget actual

Variance data for October 2018

Describethevariancesandprovideapossiblereasonforeachvariance. 6marks

END OF QUESTION BOOK

Instructions

• Aquestionbookisprovidedwiththisanswerbook.• Answerallquestionsinthespacesprovidedinthisbook.• Writeyourstudent numberinthespaceprovidedaboveonthispage.• RefertoInstructionsonthefrontcoverofthequestionbook.

Students are NOT permitted to bring mobile phones and/or any other unauthorised electronic devices into the examination room.

©VICTORIANCURRICULUMANDASSESSMENTAUTHORITY2018

ACCOUNTINGWritten examination

Friday 9 November 2018 Reading time: 3.00 pm to 3.15 pm (15 minutes) Writing time: 3.15 pm to 5.15 pm (2 hours)

ANSWER BOOK

SUPERVISOR TO ATTACH PROCESSING LABEL HEREVictorian Certificate of Education 2018

STUDENT NUMBER

Letter

2018ACCOUNTINGEXAMAB 2

ThIS pAGE IS BlANK

3 2018ACCOUNTINGEXAMAB

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ThIS pAGE IS BlANK


Question 1 –continued

Question 1 (11marks)a. 3marksAaron’s AutoGeneral Journal

Date 2018

Details General ledger Subsidiary ledger

Debit Credit Debit Credit

b. 2marks

Working space

Balance of the GST Clearing account at 31 January 2018 $

c. 3marks

Explanation


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d. 3marks

Explanation



Question 2 (9marks)a. 5marksStock Cards

product: Test Cricket balls Cost Assignment Method: FIFO

Date 2018

Details IN OUT BAlANCE

Qty Cost Total Qty Cost Total Qty Cost Total

1June Balance 48 30 1440

5June Inv.816 24 35 840

product: power plus cricket bats Cost Assignment Method: FIFO

Date 2018

Details IN OUT BAlANCE

Qty Cost Total Qty Cost Total Qty Cost Total

1June Balance 20 220 4400


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b. 4marks

Explanation and justification



Question 3 (20marks)

Working space

a. 8marksDebtors Control


Stock Control


Creditors Control



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b. 12marksDynamic Traders

Cash Flow Statement for the year ended 30 June 2018

$ $



Question 4 (10marks)a. 6marks

Discussion


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b. 4marks

Strategy 1

Strategy 2


Question 5–continued

Question 5 (20marks)a. 10marksDC Computing Cash Receipts Journal

Date 2018

Details Rec. No.

Bank Disc. Exp.

Debtors Control

Cost of Sales

Sales Sundries GST

Cash payments Journal

Date 2018

Details Chq. No.

Bank Disc. Rev.

Creditors Control

Wages Stock Control

Rent Expense

Sundries GST

General Journal

Date 2018




Question 5–continuedTURN OVER

b. 3marks

Explanation

c. 1mark

Working space

Depreciation of Van for September 2018 $


d. 6marksDC ComputingGeneral Journal

Working space

Date 2018




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Question 6 (4marks)

Explanation


Question 7 (8marks)a. 5marksKaty’s CakesGeneral ledger

prepaid Advertising

Date 2018

Cross-reference Amount Date 2018

Cross-reference Amount

1Sep. Balance 3800

Advertising Expense

Date 2018

Cross-reference Amount Date 2018

Cross-reference Amount

b. 3marks

Accounting principle

Explanation


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CONTINUES OVER pAGE



Question 8(18marks)a. 8marks

Working space

peter’s potsBudgeted Income Statement for the month ending 31 October 2018

$ $


Question 8 –continuedTURN OVER

b. 4marks

Explanation


c. 6marks

Description

END OF ANSWER BOOK

Documents

2018 Accounting Written examination2018 ACCOUNTING EXAM QB 2 Question 1 (11 marks) Aaron’s Auto sells a range of car parts. Goods are bought and sold for both cash and credit. There