TEST CODE 001092

TEST CODE 001092FORM TP 2238 JANUARY 2002C A R I B B E A N E X A M I N A T I O N S C O U N C I L

SECONDARY EDUCATION CERTIFICATE

EXAMINATION

PRINCIPLES OF ACCOUNTS

Paper 02 General Proficiency

3 hours

07 JANUARY 2002 (a.m.)

1.Answer ALL the questions in Section I and TWO questions from Section II.

2.Begin EACH answer on a separate page.

3.Keep ALL parts of EACH answer together.

4.Silent electronic calculators may be used, but ALL necessary working should be clearly

shown.

5.Each question is worth twenty marks.

______________________________________________________________________________________

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SOCopyright 2001 Caribbean Examinations Council.

All rights reserved.001092/JANUARY/F 2002

SECTION I

Answer all THREE questions in this section.

1.M Pradash prepared his Trading and Profit and Loss Account for the year ending March 31 2000. which showed a profit of $69 050. He then provided you with the following list of balancesand additional information:

$

Provision for bad debts (April 1 1999)

200

Provision for depreciationPlant and machinery (April 1 1999)

800

Furniture and fittings (April 1 1999)

600

Motor vehicles (April 1 1999)

15 000

Capital (M Pradash)

27 000

Plant and Machinery (cost)

40 000

Fixtures and fittings (cost)

25 000

Sundry creditors

8 000

Sundry debtors

6 000

Bank overdraft

13 000

Land and buildings (cost)

55 000

Ending stock

14 000

Drawings

7 500

Mortgage (20 Years)

30 000

Cash in hand

1 500

Motor vehicles (cost)

30 000

Additional information

(i)Depreciation written-off during the year and accounted for in the profit

and loss account was:

Plant and machinery 10% of cost

Fixtures and fittings 15% of cost

Motor vehicles 25% of cost

(ii)Provision for bad debts (originally $200) was increased to 5% of debtors.

The increase was accounted for in the profit and loss account.

(a)Prepare M Pradashs Balance Sheet as at March 31 2000 listing items in order of

permanence.(16 marks)

(b)Calculate M Pradashs working capital.

(1 mark)

(c)(i)Calculate ONE ratio which will indicate how liquid Pradashs business is.

(Show the formula)

(ii)Use the ratio in (c) (i) above to make a BRIEF comment (one short sentence) on

the liquidity of Pradashs business. (3 marks) 001092/JANUARY/F 2002 GO ON TO THE NEXT PAGE

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2.(a)State the Book of Original Entry in which the following transactions should be recorded.

(i)Wrote a receipt to K Willis for $2 500

(ii)Invoice received from B Stupart - $3 700

(iii)Sent credit note to L Mills for $300

(iv)Sent invoice to B Williams for $5 250

(v)Received a credit note from T Brooks for $250

(5 marks)

(b)Write up the following transactions in a three-column cash book of T Jordan. Balance

the cash book and bring down the balances.

January 1Overdrawn balance in bank $3 500

Cash balance $150

2Cash sales $70

Paid by cheque J Blackburn $200 less 7 % cash discount

3Paid for sundry expenses by cash $23

4Received cheque for $95 from C long having taken a 5% discount to which he

was entitled

7Cheque cashed for the office $200

8Received a cheque for $250 from J Smart in full settlement for goods sold valued

at $275

12Cash sales $50

Wages paid by cash $25

17Cash paid into the bank $300

20Sundry expenses paid by cash $35

21Cash sales $105

25Cheque drawn for personal use $43 (12 marks)

(c)Post the totals of the discount columns. (1 mark)(d)Which of the following is a Revenue item and which is an Expense item:

(i)Discount allowed

(ii)Discount received (2 marks)

GO ON TO THE NEXT PAGE001092/JANUARY/F 2002-4-3.(a)From the following details

(i)make adjustments to the cash book

(ii)draw up a bank reconciliation statement

$

Cash at bank as per cash book

984

Balance as per bank statement

200

Unpresented cheques

158

Deposit not entered by bank

1 092

Dividend received by bank not entered in the cash book

100

Cheque drawn for $1 344 entered in the cash book as $1 434

Bank charges not entered in cash book

54

Cheque returned refer to drawer not entered in cash book

166

Credit transfer received by bank not entered in cash book

180

(10 marks)(b)On 31 July 1999 a trader decided to raise provision for bad debts based on 5% of debtors and to maintain the provision at that percentage at the end of each financial year. The following particulars relate to THREE financial years:

YEAR

DEBTORS BALANCE

$

1999

25 200

2000

21 400

2001

35 700

(i)Construct the provision for bad debts account for the THREE years.

(ii)Show the entries in the balance sheet for EACH of the THREE years..

(iii)How would the amount for bad debts provision be dealt with in the profit and loss

account in 2000?

(10 marks) GO ON TO THE NEXT PAGE001092/JANUARY/ 2002

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SECTION II

Answer any TWO questions in this section.

4.A Ramsook keeps a cash book as his only book-keeping record. The following is a summary of transactions for the year ending 30 June 2000.

______________________Cash Book (Cash and Bank combined_________________

$

$

Opening balance

3 284

Cash paid to creditors

74 496

Cash received from debtors 97 056

Salaries

8 996

Closing balance

4 120

Rent and rates

3 296

Electricity

672

General expenses

7 124

Drawings

9 876

_______

______

104 460

104 460

His assets and liabilities on 30 June 1999 and 30 June 2000 were:

30.06.99

30.06.2000

$

$

Fixed assets at cost

8 800

8 800

Stock

8 484

10 592

Debtors

12 876

13 552

Rent and rates prepaid

400

480

Creditors

7 368

7 564

Electricity

124

168

Fixed assets should be depreciated at 15% of cost.

Prepare the following:

(a)Trading and Profit and Loss Account of A Ramsook for the year ending 30 June

2000.

(11 marks)

(b)A balance sheet as at that date. (9 marks)

GO ON TO THE NEXT PAGE-6-5.The following list of balances as at December 31 2000 has been extracted from books of K Pringle a door manufacturer:

$

Stocks of lumber and other raw materials 1.1.2000

32 000

Work in progress (incomplete doors) 1.1.2000

20 000

Completed doors 1.1.2000

48 000

Purchases of lumber and other raw materials

110 000

Carriage inwards

2 400

Carriage outwards

1 300

Manufacturing wages (worker making doors)

56 000

Supervisory wages

15 200

Rent and rates

9 200

Electricity and cleaning

14 000

Office salaries

12 800

Plant and machinery at cost

136 000

Sales

281 200

Returns inwards (damaged doors)

7 500

The following additional information is available:

$

(1)Stocks at 31.12.2000

Lumber and other raw materials

40 000

Work in progress (incomplete doors)

38 000

Completed doors

28 000

(2)Rent and rates are to be apportioned 75% to factory, 25% to administration.

(3)Electricity and cleaning expenses are to be apportioned 80% to the factory and 20% to

administration.

(4)Plant and machinery is to be depreciated by 5% of cost.

(a)Prepare the Manufacturing Trading and Profit and Loss A/C for K Pringle for the year

ending 31 December 2000. Your accounts should clearly show the following:

(i)Raw materials (lumber) used

(ii)Prime cost

(iii)Factory overheads

(iv)Cost of production

(v)Cost of goods sold

(vi)Gross profit

(vii)Net profit

(18 marks)

(b)If 400 doors were manufactured during the year what was the cost of producing ONE

door? Show workings. (2 marks)GO ON TO THE NEXT PAGE001092/JANUARY/F 2002

-7-6.(a)Give TWO differences between ordinary shares and preference shares. (2 marks)

(b)What is the difference between authorized capital and issued capital? (1 mark)

(c)Give TWO reasons why a partnership might choose to convert to a company. (2 marks)

(d)The draft final accounts of Gasoline Retailers Ltd are shown below. The accounts are

badly presented. Re-draft the accounts using the vertical format after providing for a

dividend of 10% and a transfer to general reserve of $1 500.

Profit and Loss Account

For year ending 30 April 2000

Purchases

54 000

Investment income

250

Opening stock

25 000

Closing stock

15 000

Office salaries

5 500

Sales

81 250

Office expenses

2 675

Directors remuneration 2 875

Bad debts expenses

350

Debenture interest

375

Net profit

5 725

_____

______

96 500

96 500Balance Sheet a at 30 April 2000

$

$

Authorized share capital

25 000 ordinary shares $1 each

25 000

Bank

500

Less shares not issued

5 000

Debtors

12 500

20 000

Pre-payments

500

5% debentures

5 000

Property at cost

8 250

Trade creditors

8 000

Investment at cost 4 500

Share premium

5 000

Plant and machinery

Profit and loss account

18 750

12 000

Provision for doubtful debts

500

Stocks

15 000

Goodwill

7 500

_____

_____

57 250

60 750

(15 marks)GO ON TO THE NEXT PAGE

001092/JANUARY/F 2002

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7.(a)The following is a summary of the receipts and payments for the year 1 April 1999 to 31

March 2000 of the Rock Hall Cricket Club:

Receipts

$

Club subscriptions

25 500

Donations

2 250

Christmas dance

1 275

Bar takings

40 500

Payments

Rates

1 350

General expenses

39 300

Bar purchases

27 750

Christmas dance expenses

225

Other relevant information at the beginning and end of the year is as follows:

April 1 1999

March 31 2000

$

$

Rates

-

150

Bar stocks

3 000

3 750

Club premises (cost $75 000)

30 000

27 000

Furniture (cost $15 000)

4 500

3 000

Bank and cash in hand

2 400

3 300

(i)Prepare the clubs Bar Trading Account for the year ending 31 March 2000.

(5 marks)

(ii)Prepare the clubs income and expenditure account for the year to 31 March

2000. (8 marks)

(b)Prepare the subscriptions account for a sports club at December 31 1999 from the

following information:

Members paid $2 per annum in 1998 and $4 per annum in 1999 and 2000.

At 31.12.986 members had not yet paid last years subscription while 3 had paid in

advance.

At 31.12.995 members had not paid their 1999 subscriptions while 12 had paid in

advance for 2000.

Cash received in respect of subscriptions in 1999 was $126. (7 marks)

END OF TEST

001092/JANUARY/F 2002