aat
AQ2013 Level 3
Prepare final accounts for sole traders and partnerships
TUTOR QUESTION BANK ANSWERS
AAT FSTP : PREPARE FINAL ACCOUNTS FOR SOLE TRADERS AND PARTNERSHIPS
24 KAPLAN PUBLISHING
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AAT FSTP : PREPARE FINAL ACCOUNTS FOR SOLE TRADERS AND PARTNERSHIPS
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CHAPTER 1
PREPARATION OF ACCOUNTS FOR A SOLE TRADER
1 NED
£ £
(i) Debit Depreciation expense (980 + 740) 1,720
Credit Accumulated depreciation – fixtures and fittings 980
Accumulated depreciation – motor vehicles 740
(ii) Debit Irrecoverable debts expense (1,600 – 160) (W1) 1,440
Debit Allowance for doubtful debts (W1) 160
Credit Receivables (SLCA) 1,600
(iii) Debit Electricity 200
Credit Accruals 200
Debit Prepayments 40
Credit Advertising 40
(iv) Debit Closing inventory – SOFP (W2) 1,040
Credit Closing inventory – S of P&L 1,040
Workings:
(W1) Doubtful debt allowance required £ (£38,600 – 1,600) × 2% = 740 Opening Allowance 900 –––– Decrease in Allowance 160 ––––
(W2) Closing inventory £ £ Closing inventory at valuation 1,080 Inventory at cost 240 Net realisable value 200 –––– Reduction in inventory value (40) ––––– 1,040 –––––
ANSWERS
KAPLAN PUBLISHING 27
2 STEVE INMAN
Statement of profit or loss for the year ended 31 December 20X2
£ £ Sales revenue 36,191 Purchases 19,320 Less: Closing inventory (2,460) –––––– Cost of sales (16,860) –––––– Gross profit 19,331 Less: Expenses: Depreciation of van (5,040/4) 1,260 Rent and rates 2,556 Insurance 200 General expenses 4,375 Wages 4,994 –––––– (13,385) –––––– Net profit 5,946 ––––––
Statement of financial position as at 31 December 20X2
Cost Depreciation Carrying value Non-current assets: £ £ £ Motor van 5,040 (1,260) 3,780 –––––– –––––– Current assets: Inventory 2,460 Receivables 6,072 Cash at bank 3,154 Cash in hand 40 –––––– 11,726 Less: payables (10,680) –––––– 1,046 –––––– 4,826 –––––– £ Capital 5,000 Profit for the year 5,946 –––––– 10,946 Less: drawings (6,120) –––––– 4,826 ––––––
AAT FSTP : PREPARE FINAL ACCOUNTS FOR SOLE TRADERS AND PARTNERSHIPS
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CHAPTER 2
PARTNERSHIP ACCOUNTS
3 LEN AND FRED
(a) Partnership appropriation account for the year ended 30 September 20X4 £ £ Net profit 38,000 Salary – Fred (6,000) Interest on capital Len (33,000 × 4%) 1,320 Fred (20,000 × 4%) 800 –––––– (2,120) –––––– 29,880 Profit share: Len (29,880 × 2/3) 19,920 Fred (29,880 × 1/3) 9,960 –––––– 29,880 –––––– (b) Current accounts
Len Fred £ £ Balance b/d 500 Drawings 17,000 14,000 Balance c/d 3,740 3,760 –––––– –––––– 21,240 17,760 –––––– ––––––
Len Fred £ £ Balance b/d 1,000 Salary 6,000 Interest on capital 1,320 800 Profit share 19,920 9,960 –––––– –––––– 21,240 17,760 –––––– –––––– Balance b/d 3,740 3,760
ANSWERS
KAPLAN PUBLISHING 29
(c) Statement of financial position as at 30 September 20X4
Cost Accumulated Carrying depreciation value £ £ £ Non-current assets: Motor vehicles 40,000 16,000 24,000 Fixtures and fittings 22,000 8,000 14,000 ––––––– ––––––– ––––––– 62,000 24,000 38,000 ––––––– ––––––– ––––––– Current assets: Inventory 16,000 Receivables 32,000 Cash at bank 5,000 Cash in hand 500 ––––––– 53,500 Payables (21,000) ––––––– 32,500 ––––––– 70,500 Loan (10,000) ––––––– 60,500 ––––––– Capital accounts Len 33,000 Fred 20,000 ––––––– 53,000 Current accounts Len 3,740 Fred 3,760 ––––––– 7,500 ––––––– 60,500 –––––––
AAT FSTP : PREPARE FINAL ACCOUNTS FOR SOLE TRADERS AND PARTNERSHIPS
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4 JACK AND JILL
Capital accounts
Jack Jill Ross £ £ £ Goodwill 8,000 8,000 4,000 Balance c/d 62,000 42,000 46,000 –––––– –––––– –––––– 70,000 50,000 50,000 –––––– –––––– ––––––
Jack Jill Ross £ £ £ Balance b/d 60,000 40,000 Cash 50,000 Goodwill 10,000 10,000 –––––– –––––– –––––– 70,000 50,000 50,000 –––––– –––––– –––––– Balance b/d 62,000 42,000 46,000
ANSWERS
KAPLAN PUBLISHING 31
5 HARRY AND PHIL
Capital accounts
Harry Phil Jo £ £ £ Goodwill 20,000 10,000 Cash 15,000 Loan 63,200 Balance c/d – 30,000 25,000 –––––– –––––– –––––– 78,200 50,000 35,000 –––––– –––––– ––––––
Harry Phil Jo £ £ £ Balance b/d 60,000 40,000 30,000 Current account 3,200 Goodwill 15,000 10,000 5,000 –––––– –––––– –––––– 78,200 50,000 35,000 –––––– –––––– –––––– Balance b/d 30,000 25,000
Current accounts
Harry Phil Jo £ £ £ Capital account 3,200 Balance c/d 1,600 4,300 –––––– –––––– –––––– 3,200 1,600 4,300 –––––– –––––– ––––––
Harry Phil Jo £ £ £ Balance b/d 3,200 1,600 4,300 –––––– –––––– –––––– 3,200 1,600 4,300 –––––– –––––– ––––––Balance b/d 1,600 4,300
AAT FSTP : PREPARE FINAL ACCOUNTS FOR SOLE TRADERS AND PARTNERSHIPS
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CHAPTER 3
INCOMPLETE RECORDS
6 CAROLE
Drawings = £4,600
Payables (PLC) account
£ Cash payments 58,900Closing balance 8,300 –––––– 67,200 ––––––
£ Opening balance 10,200 Purchases (bal fig) 57,000 –––––– 67,200 ––––––
Trading account £ £ % Sales revenue (bal fig) 75,200 100 Opening inventory 16,500 Purchases 57,000 –––––– 73,500 Less: Closing inventory (17,100) –––––– Cost of sales 56,400 75 –––––– Gross profit 18,800 25 ––––––
Receivables (SLC) account
£ Opening balance 14,200Sales revenue 75,200 –––––– 89,400 ––––––
£ Cash received (bal fig) 73,500 Closing balance 15,900 –––––– 89,400 ––––––
Bank account
£ Opening balance 1,400Cash from sales (receivables a/c) 73,500 –––––– 74,900 ––––––
£ Purchases 58,900 Expenses 10,500 Drawings (bal fig) 4,600 Closing balance 900 –––––– 74,900 ––––––
ANSWERS
KAPLAN PUBLISHING 33
7 ADRIAN
Net assets at 31 March 20X3 £ Receivables 15,400 Motor vehicles at carrying value 9,200 Bank account balance 5,400 Cash in till 200 Fixtures and fittings at carrying value 8,600 Computer at carrying value 1,500 Prepayments 800 Inventory 8,200 ––––––– 49,300 Payables (8,300) Accruals (300) Bank loan (2,000) ––––––– Net assets 38,700 ––––––– Increase in net assets = profit – drawings
£38,700 – 28,900 = profit – 12,600
£9,800 = profit – 12,600
Profit = 9,800 + 12,600
Profit = £22,400
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8 SUMMARISED CASH BOOK
(a) Receivables (SLC) account £ Opening balance 6,900Sales revenue (bal fig) 42,900 –––––– 49,800 ––––––
£ Cash received 42,600 Closing balance 7,200 –––––– 49,800 ––––––
(b) Payables (PLC) account
£ Cash payments 22,700Closing balance 5,100 –––––– 27,800 ––––––
£ Opening balance 3,800 Purchases (bal fig) 24,000 –––––– 27,800 ––––––
(c)
£ £ Sales revenue 42,900 Opening inventory 7,200 Purchases 24,000 –––––– 31,200 Less: closing inventory (6,300) –––––– Cost of sales (24,900) –––––– Gross profit 18,000 ––––––
(d) £ Gross profit 18,000 Less: Expenses (4,300 – 300 + 700) (4,700) –––––– Net profit 13,300 ––––––
ANSWERS
KAPLAN PUBLISHING 35
9 BARNEY
(a) Trial balance at 31 December 20X3 Dr Cr £ £ Fixtures and fittings 6,430 Delivery vans 5,790 Cash at bank 3,720 General expenses 1,450 Receivables (SLCA) 2,760 Payables (PLCA) 3,250 Purchases 10,670 Sales 25,340 Wages 4,550 Drawings 15,000 Lighting and heating 1,250 Rent, rates and insurance 2,070 Capital (balancing figure) 25,100 ––––––– ––––––– 53,690 53,690 ––––––– ––––––– (b) Profit for the year would be reduced by £500. To ensure that wages and drawings were
correctly stated, the following adjustment would be required:
Dr Wages £500
Cr: Drawings £500
(c) Profit for the year would be increased by £1,500. To ensure that sales and capital are correctly stated, the following adjustment would be required:
Dr: Capital £1,500
Cr: Sales £1,500
AAT FSTP : PREPARE FINAL ACCOUNTS FOR SOLE TRADERS AND PARTNERSHIPS
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ADVANCED ANSWERS
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CHAPTER 1
PREPARATION OF ACCOUNTS FOR A SOLE TRADER
10 LAURA
Laura – Statement of profit or loss for the year ended 30 April 20X7 £000 £000 Sales revenue 813 Less: Returns inwards (47) ––––– 766 Opening inventory 84 Purchases 516 ––––– 600 Closing inventory (74) ––––– Cost of sales (526) ––––– Gross profit 240 Discount allowed 4 Administration costs (38 – 3) 35 Salaries (44 + 2) 46 Research costs 26 Irrecoverable debts written off 77 Depreciation of plant (£83,000 × 10%) 8 Depreciation of office equipment ((31 + 2 – 8) × 20%) 5 ––––– (201) ––––– Net profit 39 –––––
ANSWERS
KAPLAN PUBLISHING 39
Laura – Statement of financial position as at 30 April 20X7 Cost or Accum CV valuation dep’n £000 £000 £000 Non-current assets: Plant 83 21 62 Office equipment (31 + 2) 33 13 20
–––– –––– –––– 116 34 82
–––– –––– Current assets: Inventory 74 Receivables (198 – 23) 175 Loan 25 Prepayment 3 277 –––– Current liabilities: Overdraft 50 Payables 52 Accruals 2 –––– (104) –––– Net current assets 173 –––– 255 –––– Financed by: Capital (228 + 2) 230 Add: Profit 39 Less: Drawings (14) 25 –––– –––– 255 ––––
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11 KW ENTERPRISE
Statement of financial position as at 31 October 20X1 Cost Depreciation CV £ £ £ Non-current assets: Motor vehicles 36,000 23,670 12,330 Fixtures and fittings 57,020 43,133 13,887 ––––––– ––––––– ––––––– 93,020 66,803 26,217 ––––––– ––––––– Current assets: Inventory 29,665 Receivables 55,530 Less: Allowance (2,250) ––––––– 53,280 ––––––– 82,945 Current liabilities Bank overdraft 2,700 Payables 33,850 Accruals 3,000 VAT/sales tax 10,100 ––––––– (49,650) ––––––– Net current assets 33,295 ––––––– 59,512 ––––––– Capital 61,280 Net profit 28,232 ––––––– 89,512 Less: drawings 30,000 ––––––– 59,512 –––––––
ANSWERS
KAPLAN PUBLISHING 41
KW Enterprise – Statement of profit or loss for the year ending 31 October 20X1 £ £ Sales revenue 486,490 Less: sales returns (8,900) ––––––– 477,590 Less: cost of sales Opening inventory 25,870 Purchases 288,330 Less: purchases returns (650) ––––––– 313,550 Less: closing inventory (29,665) ––––––– (283,885) ––––––– Gross profit 193,705 Less: expenses: Rent 36,000 General expenses 87,700 Motor expenses 28,540 Irrecoverable debts (1,520 – 950) 570 Depreciation 12,663 ––––––– (165,473) ––––––– Net profit 28,232 –––––––
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12 SIMPSON
Simpson
Statement of profit or loss for the year ended 30 June 20X8
£ £
Revenue (784, 518 – 5,436) 779,082
Opening inventory 41,211
Purchases (370,215 – 1,447) 368,768
Closing inventory (54,426)
Cost of goods sold (355,553)
Gross profit 423,529
Less:
Payroll expenses 161,326
General expenses 72,900
Motor expenses 14,633
Irrecoverable debts 4,825
Loss on disposal 3,870
Depreciation expense 12,995
Total expenses (270,549)
Profit for the year 152,980
ANSWERS
KAPLAN PUBLISHING 43
CHAPTER 2
PARTNERSHIP ACCOUNTS
13 TED, IAN AND JANE
(a) Partnership appropriation account for the year ending 31 March 20X3 £ £ Net profit 96,000 Salary – Jane (10,000) Interest on capital Ted (50,000 × 5%) 2,500 Ian (40,000 × 5%) 2,000 Jane (30,000 × 5%) 1,500 –––––– (6,000) –––––– 80,000 Profit share: Ted (80,000 × 3/6) 40,000 Ian (80,000 × 2/6) 26,667 Jane (80,000 × 1/6) 13,333 –––––– 80,000 ––––––
(b) Capital accounts
Ted Ian Jane £ £ £
Ted Ian Jane £ £ £ Balance b/d 50,000 40,000 30,000
Current accounts
Ted Ian Jane £ £ £ Balance b/d 200Drawings 42,600 28,200 23,100 Balance c/d 900 967 1,533 –––––– –––––– –––––– 43,500 29,167 24,833 –––––– –––––– ––––––
Ted Ian Jane £ £ £ Balance b/d 1,000 500 Salary 10,000 Interest on capital 2,500 2,000 1,500 Profit share 40,000 26,667 13,333 –––––– –––––– –––––– 43,500 29,167 24,833 –––––– –––––– –––––– Balance b/d 900 967 1,533
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14 RALPH AND HUGH
(a) Journal adjustments required:
Debit £
Credit £
(i) Dr: Closing inventory (SOFP) 750
Cr: Closing Inventory (SOP&L) 750
(ii) Dr: Wages 1,500
Cr: General expanses 1,500
Ralph and Hugh
Statement of profit or loss for the year ended 30 September 20X7
£ £
Revenue 69,000
Opening inventory 9,800
Purchases 46,000
Closing inventory (11,750)
Cost of goods sold (44,050)
Gross profit 24,950
Less:
Payroll expenses 6,500
General expenses 14,900
Rent 600
Discount allowed 800
Depreciation expense 1,800
Total expenses (24,600)
Loss for the year (350)
ANSWERS
KAPLAN PUBLISHING 45
CHAPTER 3
INCOMPLETE RECORDS
15 MICHAEL
(a) Calculate the total sales for the year ended 31 October 20X8
Account name Amount £
Cash 50,000
Bank 90,000
Total 140,000
(b) Prepare the purchases ledger control account for the year ended 31 October 20X8, showing clearly the credit purchases of materials.
£ £
Payments to payables 30,000 Balance b/d 5,000
Balance c/d 4,000 Credit purchases (bal) 29,000
Total 34,000 Total 34,000
(c) Calculate the total purchases for the year ended 31 October 20X8
Account name Amount £
Credit purchases (part b) 29,000
Cash 4,000
Bank 11,000
Total 44,000
(d) Depreciation is calculated at 20% per annum on a reducing balance basis. Calculate the revised accumulated depreciation as at 31 October 20X8.
Account name Amount £
Accumulated depreciation 22,000
Charge in the year (50,000 – 22,000) × 20% 5,600
Total 27,600
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(e) Prepare the rent account for the year ended 31 October 20X8, showing clearly the rent expense for the year
£ £
Balance b/d 2,000 P&L expense (bal) 7,500
Bank 6,500 Balance c/d – prepayment 1,000
Total 8,500 Total 8,500
(f) Prepare the light and heat account for the year ended 31 October 20X8, showing clearly the expense for the year
£ £
Bank 4,000 Balance b/d 700
Balance c/d – accrual 500 P&L expense (bal) 3,800
Total 4,500 Total 4,500
(g) Prepare the statement of profit or loss for the year ended 31 October 20X8 year
Michael
Statement of profit or loss for the year ended 31 October 20X8.
£ £
Revenue (part(a)) 140,000
Opening inventory 2,500
Purchases (part (c)) 44,000
Closing inventory 1,500
Cost of goods sold 45,000
Gross profit 95,000
Less:
Payroll expenses 25,000
Light and heat (part (f)) 3,800
Rent (part (e)) 7,500
Advertising 2,000
Depreciation expense (part (d)) 5,600
Administration 4,800
Total expenses 48,700
Loss for the year 46,300
ANSWERS
KAPLAN PUBLISHING 47
(h) Prepare the statement of financial position as at 31 October 20X8.
Michael – Statement of financial position as at 31 October 20X8
£ £ £
Non-current assets Cost Depreciation Carrying value
Fixtures and fittings (part (d)) 50,000 27,600 22,400
Current assets
Inventory 1,500
Prepayments 1,000
Bank 33,500
Cash 6,750
42,750
Current liabilities
Trade payables 4,000
Accruals 500
4,500
Net current assets 38,250
Net assets 60,650
Financed by
Capital account
Balance brought forward 34,350
Profit for the year (part (f)) 46,300
Drawings 20,000
60,650
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