General Certificates of Education Advanced Level Examination- 2012

Revision Question Paper

Accounting II

Prepared by Ministry of Education

Model answers and the Marking Scheme

01.(a) PILOT PLC

Income statement for the year ending 31st of March 2012

Sales

Cost of sales

Gross profit

Other income

Distribution cost

Administration expense

Other expense

Finance expense

Profit before tax

Income tax

Profit for the year

Rs'000

01

02

03

04

05

06

3 400

^1 625&

1 775

135

^260&

^960&

^40&

^140&

510

-

510

Accounting notes for the year ending 31st march 2012(000)

Note 01 - Sales

Electric item 2 400

Textile 1 000

3 400

Note02 - other income

Interest 135

Note 03 - Other expenses

Stock written down 10

Stoke issue expenses 30

40

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Note 04 - Financial expenses

Debenture interest 120

Lease interest 20

140

Note 05 - Income tax

Free from income tax.

Note 06 - profit before tax has been calculated after deducting following expenses

Rs.

depreciation 240

Auditing chargers 60

Provision for warranties ^ 120-100& 20

Directors chargers 210

(b) Statement for the changes in equity for the years ending 31.3.2012

2011 04 01Balance

Building revaluation

Shares issue

Profit for the year

Paid dividends

Ordinary

shares

Evaluation

reserves

General

reserves

Rejoined

earnings

total

2 000

-

600

-

-

400

^200&

-

-

-

200

-

-

-

-

520

-

-

550

^40&

3 120

^200&

600

550

^40&

2 600 200 200 1 030 4 030

Transaction No(ix)

Relevant standards a Provisions, Contingent, Assets and Liabilities

SLAS 36 / LKAS 37

A probable obligation

Value cannot be measured reliably

No need to make a provision and should make a disclose.

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Transaction No(x)

Relevant standard - Provisions contingent asset & liabilities

Have a present obligation as a result of past transaction

Can be measured reliably since provisions should be made in financial statements

(c) Property, plant & equipment Rs.’000

Assets 2011 03 31

Balance/revaluation/

cost

revaluation Added

$disposal

Balance

Land and building

Computers

Leasing assets

Photocopy machine

1 600

800

400

^ 200 &

-

-

-

-

-

1 400

800

400

3 800 ^ 200 & - 2 600

Depreciation

Computers

Photocopy machine

Net value

2011 04 01 2012 03

31

280

-

-

-

160

80

440

80

520

2 080

02. ^a&1. (i)

Year Machine - 1 Machine- 2

Net cash flow Net cash flow Net cash flow Net cash flow

0

1

2

3

4

5

^250 000&

65 000

75 000

110 000

60 000

30 000

^250 000&

^185 000&

^110 000&

0

-

-

^250 000&

70 000

90 000

120 000

80 000

60 000

^250 000&

^180 000&

^90 000&

-

-

-

Machine- 1 Payback period in 3 years

Machine-2 Payback period in 2 years 9 month

2 + 90 000 x 12

120 000

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(ii)

years

Discount

factor

Machine- 1 Machine- 1

Cash flow Net present

value

Cash flow Net present

value

0

1

2

3

4

5

1

9.0

0.8

0.7

0.6

0.5

^250 000&

65 000

75 000

110 000

60 000

30 000

^250 000&

58 500

60 000

77 000

36 000

15 000

^250 000&

70 000

90 000

120 000

80 000

60 000

^250 000&

63 000

72 000

84 000

48 000

30 000

NPV - 3 500 + 47 000

2. As per payback period -2nd

machine is suitable

According to the NPV- 2nd

machine is suitable

According to above calculation machine number 2 is recommended ,

Especially second machine has more profit than the 1st machine. Since selecting second is more

profitable. Have no risk due to selecting 2nd

machine as profit and future risk already have been

considered.

wd 1. Fixed cost = 6000000 = unit 12 000 Contribution 500 = Rs..12 000 000

Value = 12 000 x 1000 = Rs. 12 000 000 2. Margin of safety in unit = Expected sales – sales of BEP = 30 000 – 12 000

= unit18 000 Value of margin of safety

= unit18 000 x 1 000

= Rs.18 000 000 3. Expected annual profit or loss

Total contribution- Fixed cost

= 15 000 000 - 6 000 000

= Rs9 000 000 ^ Have No of alternative method &

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4. to earn 10000000 profit,

Fixed cost+expected profit

Unit contribution

= 6 000 000 + 10 000 000

500

=unit 32 000 5. to earn Rs 10000000 profit giving100/- discount

Fixed cost + expected profit Unit contribution = 6 000 000 + 10 000 000

400

= Unit40 000 6. if annual salaries and sales price were increased the no of units to be produced at BEP

Fixed cost

unit cost = 6 900 000

600

= unit11 500 03 ^w&

1 Net profit correction statement Rs’ 000

Profit before correction

Add:-Salary correction Drawing Deduct:-Rent

Motor vehicle damage loss

100 110

15

175

1 680

210 1890

^190& 1 700

2 Profit & loss appropriation (corrected) RS.’ 000

Net profit

Interest on capital –Kumudu

Vijaya

Saliya

Salaries

Profit shares -kumudu Vijaya

Saliya

200 400 400

160 80 80

1 700

^1000& ^380&

^320&

-

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3 Current Account Rs’ 000

Drawings

Drawings

Salaries B/C/D

Kumudu Vijaya Saliya B/B/F

Interest capital

Salaries

Profit shares

Rent

Kumudu Vijaya Saliya 100

55

-

465

100

55

-

520

100

-

100

660

245

202

-

160

15

19

403

-

80

-

-

295

380

80

-

620 675 860 620 675 860

Capital Accounts Rs.’ 000

B/C/D

Kumudu Vijaya Saliya B/B/F

Motor Vehicle

Kumudu Vijaya Saliya

2 000

4 000

4 000

2 000

4 000

3 000

1 000

2 020 4 030 4 000 2 020 4 030 4 000

^b&1metirial month8 x 2 000 x 10 = 160 000 Unit usage month4 x 3 000 x 10 = 120 000 month 8 x 500x2= 8 000

month4 x 1000x2 = 8 000

16 000 x 10

Production cost - direct materials 160 000 = 160 000

direct labored 80 000

Royalties 48 000 Overhead cost 32 000 Produces no of Units

= 320 000 up to December 500 x 8 = 4 000

Unit cost 320 000 up to March 1000 x 4 = 4 000

8 000 8 000

= Rs. 40/= ^04& a' Bank Account

dividends

B/C/D

3 000 4 000

7 000

B/B/F

Bank chargers

B/B/F

6 000 1 000

7 000

4 000

Bank reconciliation statement for the month of march -2012

Bank overdraft as per Bank accounts Added

Unrealized cheque- 5563020 4153362 less

unrealized cheque - 076814 overdraft as per bank statement

3 000 4 000

4 000

7 000 11 000

^4 000&

7 000

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alternative ^1& Bank reconciliation statement

Balance as per Bank A/C

Add - issued

Un presented cheque - 076814 Loss -unrealized cheque 5563020 4153362 Over draft as per Bank Statement

3 000 4 000

^4 000&

4 000

0

^7 000&

^7 000&

Alternative ^2& Bank reconciliation statement

Over draft as per bank Statement

Add - Un presented cheque Less- unrealized cheque

Over draft as per bank

3 000 4 000

7 000

4 000

11 000

^7 000&

4 000

Alternative^3&

Bank reconciliation statement

Over draft as per bank Account

Add-unrealized Cheque

Less – unpresented Over draft as per bank Account

3 000 4 000

^7 000&

7 000 0

^4 000&

^4 000&

^04& ^a&

01' Income and Expenditure A/C

Misplace sports equipment

M/V/Depreciation

Balding rent

Telephone charges

Salaries and Wages

Sundry expenses

2 000 5 000

45 000 15 000 12 100 32 200 11 000

122 300

Members subscription

Profit of musical show

Donation

Deficit

65 000 12 000 45 000 300

122 300

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Working musical show A/C

Dancing group

Ticket printing

Stage arrangement

Income & expenditure A/C

10 000 1 000 12 000 12 000

35 000

From sponsors

sales of tickets

15 000 20 000

35 000

02. Balance sheet as at 31

st of March 2012

Non current Assets

Sports equipment

Motor vehicle Non Current Assets

cash Accumulated fund

Balance 01.04.2012

Motor vehicle Donation

deficit of the year current

Accrued-Stage assessment

Expences-Telephone chargers

Salaries/wages

24 000

59 500 855 000 ^300&

5 000 1 600 3 200

45 000

855 000

24 000 924 000

914 200

9 800

924 000 05 (a)

Overhead distribution report Item Apportioned base Total Value Production dept Service dept

Rs Rs Rs Indirect salaries Number of employee 5: 5: 1 220 000 100 000 100 000 20 000 Power of machine Machine hours 4: 3 112 000 64 000 48 000 - Lighting Electricity Land area 7: 7:1 90 000 42 000 42 000 6 000 Rent and rates Land area 7: 7:1 30 000 14 000 14 000 2 000 Machine depreciation Machine Value 7: 4 110 000 70 000 40 000 - 562 000 290 000 244 000 Distribution of O.H.

of service department

Machinery hours 4: 3

16 000

12 000

(28 000)

562 000 306 000 256 000 -

(b)

S

e

r

i

a

l

No

Name earnings losses Total

deduct

ion

Net

salary

EPF

employ

ee Basic

salary

O.T. Total

salary

EPF

empl

oyee

Festival

advance

Housing

loan

Advan

ce

1 Yapa 32000 6000 38000 3200 1000 - 3000 7200 30800 4800

2 Mapa 32000 5300 37300 3200 1000 1000 - 5200 32100 4800

- - 75300 6400 2000 1000 3000 12400 62900 9600

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2 Salaries and Wages Control A/C

Paid E.T.F

Festival Advance

Housing loan

Salary advance

Cash

6400 2000 1000 3000

62 900

Salary 75300

75 300 75 300

Salaries and wages A/C Salaries and wages control

A/C

62 900

P/L 62 900

EPF Expenditure Paid EPF 9 600

P/L 9 600

Salary Advance

S.W. Control A/C 3000

Festival Advance A/C

S.W. Control 2 000

Paid EPF A/C B/C/D/ 16 000

16 000

S.W. Control

EPF Expense

6 400

9 600 16 000

Housing loan

S.W. Control 1 000

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01 ^a& Remain Stock Value 200 500 700 1400

Lost unit 1000 Remain unit 400 Value 0f remain stock= 400 x 10 4000 ^ 02 Marks &

^b& Cost of sold goods 200 x 6 = 1200

500 x 6 = 3000

300 x 10=3000

7200 ^ 02 Marks &

^c& gross profit Sales income 1000 x 20 - 20000 (-) cost of sales -(7200)

gross profit 12800 ^ 02 Marks &

^06& ^a& Thilakawardana LTD Cash flow statement for the years ending 31'30'2012

Oparating Activites

Profit befor tax

Adgesment -Depreciation Profit of land sale

Interest expense

Oparating profit before working captal changes

Deduction of debtors

Deduction of creditors and accrued expenses

Inventory increase

Paid interest

Paid tax Net cash genarated from oparating activities Investment activities

Sales of land

Purches of motor vehicals

Net cash genarated from Investment activities

Finance activities

Share issue

Obtain loans

re-payment of loan

paid devidends

Net cash genarated from finance activities

Increases of cash and cash equivalants of the year

re"000 555 300 ^50& 85

890 180

^265& ^50& 755 ^60&

^150&

250 ^800&

1000 500 ^800&

^75&

re'000

545

^550&

625 620

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Workings -(

Calculating profit before tax

3$31 retained earnings 800

Paid dividends 75

4$1 retained earnings ^500&

Profit for the year 375

Income tax 180

Profit before tax 555

^a& Kapugedara PLC

Suspense A/C

Deference trial balance

Purchase

Sales

Debtors A/C

2 690

90

2 520

700

Errors in trial

Balance

6 000

6 000 6 000

4 Creditors A/C De

Capital A/C

^ being lossede of not recording cash paid by the owner to

creditors &

5 400

5 400

6 Machinary A/C De

Purchahse A/C

( Being corrected reording a machine purchese in purchese

A/C)

40 000

40 000

Machine depreciation A/C De

Provition for depreciation A/C

^ being corrected ommission of machine depriciation &

8 000

8 000

7 Suspense A/C De

Creditor (Saratha&

^ being corrected crediting received cash from a debitor to

suspense A/C &

15 000

15 000

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^07& ^a&i. Debtors control A/C

Balance

sales

B/B/F

100 000

325 000

Cash

Returned inword

Bad debt

Discount allowed

Creditors control

B/C/D

185 000

20 000

3 000

6 500

20 000

190500

425 000 425 000

190 500

ii. Amals A/C

Balance

sales

20 000 60 000

Cash

Returned inwords

Bad debt

B/C/D

65 000 2 000 3 000

10 000

80 000 80 000 B/B/F 10 000

Sunils A/C

Balance

Sales

Sales

Discount allowance

30 000 100 000

5 000 500

Cash

Discount allowed

B/C/D

55 000 5 000 75500

135 500 135 500 B/B/F 75500

Kamals A/C

Balance

Sales

40 000 125 000

cash return inward

B/C/D

40 000 10 000

115 000

165 000 165 000 B/B/F 115 000

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Chamilas A/C

Balance

40 000 Balance

Return inward A/C

Discount allowed

Creditors control

10 000 8 000 2 000

20 000

40 000 40 000

Vipulas A/C

Balance

B/C/D

10 000

5 000

Cash

15 000

15 000 15 000 B/B/F 5 000

iii. debtors list as at 30th of June 2011

Amila

Sunil

Kamal

Vipula

10 000 75 500 110 000 ^5 000& 190 500

^b& ^i&

Income Expenses Capital Liability Assets

6/1

+ 5000^Rent& -30 000^cash& +25000^prepaid rent&

6/2 +150 000

creditors& +150 000^Stock)

6/3 -20 000^Cash& +20 000(furniture&

6/10 +75 000

^Sales& +60 000

^Cost of sales& -60 000^stocks)

+75 000 ^cash&

6/15 +40 000 +40 000^office

equpment) 6/30 + 3 000 (Electricity) + 3 000

(Accsued

Electricity)

(ii) Windan business Equity Capital = 40 000 +Income = 75 000

115 000

- Expense = (68 000) 47 000

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