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
TURN OVER
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
5 2018ACCOUNTINGEXAMQB
TURN OVER
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
2018ACCOUNTINGEXAMQB 6
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
7 2018ACCOUNTINGEXAMQB
TURN OVER
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
2018ACCOUNTINGEXAMQB 8
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.
9 2018ACCOUNTINGEXAMQB
TURN OVER
Question 7 (8marks)Katy’sCakessellsmade-to-ordercakes.Thebusinessreportsmonthly.On15September2018,thebusinesspaid$2400plusGSTforathree-monthsocialmediaadvertisingcampaignthatcommencedon1September2018.ThebalanceofthePrepaidAdvertisingat30September2018is$1900.
a. CompletethePrepaidAdvertisingandAdvertisingExpenseaccountsat30September2018. Youarerequiredtobalanceorclosetheaccounts,asappropriate. 5marks
b. Withreferencetooneaccountingprinciple,explainwhyitisnecessarytocloseoneoftheseaccounts. 3marks
2018ACCOUNTINGEXAMQB 10
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
11 2018ACCOUNTINGEXAMQB
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
TURN OVER
ThIS pAGE IS BlANK
2018ACCOUNTINGEXAMAB 4
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
5 2018ACCOUNTINGEXAMAB
TURN OVER
d. 3marks
Explanation
2018ACCOUNTINGEXAMAB 6
Question 2 –continued
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
7 2018ACCOUNTINGEXAMAB
TURN OVER
b. 4marks
Explanation and justification
2018ACCOUNTINGEXAMAB 8
Question 3 –continued
Question 3 (20marks)
Working space
a. 8marksDebtors Control
Date Cross-reference Amount Date Cross-reference Amount
Stock Control
Date Cross-reference Amount Date Cross-reference Amount
Creditors Control
Date Cross-reference Amount Date Cross-reference Amount
9 2018ACCOUNTINGEXAMAB
TURN OVER
b. 12marksDynamic Traders
Cash Flow Statement for the year ended 30 June 2018
$ $
2018ACCOUNTINGEXAMAB 10
Question 4 –continued
Question 4 (10marks)a. 6marks
Discussion
11 2018ACCOUNTINGEXAMAB
TURN OVER
b. 4marks
Strategy 1
Strategy 2
2018ACCOUNTINGEXAMAB 12
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
Details General ledger Subsidiary ledger
Debit Credit Debit Credit
13 2018ACCOUNTINGEXAMAB
Question 5–continuedTURN OVER
b. 3marks
Explanation
c. 1mark
Working space
Depreciation of Van for September 2018 $
2018ACCOUNTINGEXAMAB 14
d. 6marksDC ComputingGeneral Journal
Working space
Date 2018
Details General ledger Subsidiary ledger
Debit Credit Debit Credit
15 2018ACCOUNTINGEXAMAB
TURN OVER
Question 6 (4marks)
Explanation
2018ACCOUNTINGEXAMAB 16
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
17 2018ACCOUNTINGEXAMAB
TURN OVER
CONTINUES OVER pAGE
2018ACCOUNTINGEXAMAB 18
Question 8 –continued
Question 8(18marks)a. 8marks
Working space
peter’s potsBudgeted Income Statement for the month ending 31 October 2018
$ $
19 2018ACCOUNTINGEXAMAB
Question 8 –continuedTURN OVER
b. 4marks
Explanation
2018ACCOUNTINGEXAMAB 20
c. 6marks
Description
END OF ANSWER BOOK