SERIES 2 EXAMINATION 1999

BOOK-KEEPING

FIRST LEVEL

(Code No 1006)

FRIDAY 16 APRIL

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Instructions to Candidates

(a) The time allowed for this examination is 2 hours 30 minutes.

(b) Answer all 4 questions.

(c) All questions carry equal marks.

(d) Candidates are advised to study the “REQUIRED” section of each question carefully. They should then extract from the information supplied the data required for their answers.

(e) All answers must be clearly and correctly numbered but need not be in numerical order.

(f) Your answers should be written in blue or black ink/ballpoint. Pencil may be used only for graphs, charts, diagrams, etc.

(g) Presentation is important and marks may be lost through lack of neatness.

(h) Candidates may use calculators provided the calculators give no printout, have no word display facilities, are silent and cordless. The provision of batteries and responsibility for their condition must rest with the candidate.

(i) Workings must be shown.

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QUESTION 1

Set out the following table in your Answer Book.

Name of Account Name of Ledger

(1) A Kent, debtor(2) Rent payable(3) Motor vehicles(4) F Cawle, creditor(5) Capital(6) Discount received

REQUIRED

(a) In the right-hand column of the table enter the name of the Ledger in which each of the Accounts is recorded.

(6 marks)

(b) State 3 ways by which the Sales Ledger might be sub-divided.(6 marks)

The Accounts of Steven Hall show the following balances at 30 September Year 8, the end of his financial year:

£

Debtors 32,640Business rates, prepaid 240Stock at 30 September Year 8 5,410Creditors 23,190Light and heat accrued 75Drawings 6,825Provision for doubtful debts 816Motor vehicles, at cost 14,800Loan from Dominion Bank, repayable 31 January Year 9 10,500Insurance prepaid 135Cash 167Fixtures and fittings, at cost 9,300Capital 18,230Bank (Dr) 6,494Net Profit for the year ended 30 September Year 8 14,400Accumulated provision for depreciation: Fixtures and fittings 3,600 Motor vehicles 5,200

REQUIRED

(c) Prepare a Balance Sheet for Steven Hall at 30 September Year 8.(13 marks)

(Total 25 marks)

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QUESTION 2

Ian Stuart’s Cash Book at 30 June Year 6 showed a balance at bank of £2,346.78 in his favour. This did not agree with the balance as shown on the bank statement at the same date.

When he checked the bank statement with his Cash Book, Ian Stuart found the following:

(1) He had drawn the following cheques; none of these had yet been presented for payment:

Cheque No Payee £

215635 B Hunt 293.60215639 L Tongue 157.90215644 K Riddle 306.40215645 A Welling 95.70

(2) On 21 June Year 6, £392.70 had been paid direct to the bank by a debtor, J Collins, but this had not been recorded in Ian Stuart’s Cash Book.

(3) On 29 June Year 6, Stuart paid the following cheques into his Bank Account but these were not included in the bank statement.

£J Mills 173.00F Tarrant 96.50

(4) A payment by cheque of £372.00 to T Daunt had been entered in the Cash Book as £327.00.

(5) Stuart had omitted sales receipts amounting to £728.00 from his Cash Book but this item was shown on the bank statement.

(6) A standing order payment for cleaning services of £215 had not been entered in the Cash Book.

(7) A cheque for £463 from L Wren had been returned by the bank marked ‘refer to drawer’ but this had not been recorded in the Cash Book.

(8) Bank charges of £37 had not been entered in the Cash Book.

REQUIRED

(a) From the information Ian Stuart obtained from his bank statement, complete his Cash Book at 30 June Year 6.

(9 marks)

(b) Prepare a Bank Reconciliation Statement at 30 June Year 6, commencing with the revised Cash Book balance.

(13 marks)

(c) State the full name for each of the following:

(i) D/D(ii) C/T(iii) Div

(3 marks)

(Total 25 marks)

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OVER

QUESTION 3

The following Trial Balance was prepared for Tim Sangster at 30 June Year 8, with some balances entered in the wrong column:

Dr£

Cr£

Premises 110,000Purchases 142,320Sales 201,468Insurance 580Drawings 12,300Salaries and wages 21,070Motor vehicles 25,600Carriage outwards 754Lighting and heating 920Cash at bank and in office 13,260Motor vehicle running expenses 8,760Returns outwards 630Debtors 18,370Stock at 1 July Year 7 21,400Rent receivable 6,200Bad debts written off 680Carriage inwards 430Creditors 9,840Provision for depreciation on motor vehicles 6,400Returns inwards 490Provision for doubtful debts 560Capital                             151,836

367,310 386,558

REQUIRED

(a) Prepare a corrected Trial Balance for Tim Sangster at 30 June Year 8.(11 marks)

Tim Sangster’s stock at 30 June Year 8 was valued at cost £22,700. He then learned that this figure included the following 2 items of stock:

ItemsCost Price£

Net Realisable Value£

1 115 652 240 270

REQUIRED

(b) In a brief statement, starting with the stock value of £22,700, show any adjustment required in respect of the above 2 items of stock, to give a revised valuation of stock at 30 June Year 8.

(6 marks)

(c) Using your revised Trial Balance in answer to Part (a), and your revised stock valuation in answer to Part (b), prepare for Tim Sangster a Trading Account for the year ended 30 June Year 8.

(8 marks)

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QUESTION 4 CONTINUEDQUESTION 4

On 1 January Year 3, Janice Slater a trader, purchased a motor vehicle by cheque for £9,800. She decided to provide for depreciation on this asset using the straight line method over 4 years. She estimated that the scrap value at the end of that time would be £1,200.

On 7 March Year 3, she purchased a machine by cheque for £13,000. In this case she decided to provide for depreciation at the rate of 40% per annum using the reducing balance method. She allowed a full year’s depreciation in the years of purchase and sale.

On 31 December Year 5, she sold the machine for £2,400 and was paid by cheque.

Her practice is to record and leave the asset accounts at cost price and to accumulate the depreciation in a Provision for Depreciation Account for each asset. Her financial year ends on 31 December.

REQUIRED

In the books of Janice Slater, open the following Accounts and enter the transactions for the years ended 31 December Years 3, 4 and 5:

(a) Motor Vehicle(b) Provision for Depreciation of Motor Vehicle(c) Machine(d) Provision for Depreciation of Machine(e) Disposal of Machine.

(25 marks)

1006/2/99 © LCCI CET 19995