1
(a) Show the entries in the general journal of Robin Sports to correct each of the errors
(narratives are not required). [4]
General journal
Date Particulars Dr Cr
2016 $ $
Mar 31 Cash at bank 2 700 √
Sales revenue 2 700 √
Mar 31 Fixtures and fittings 8 800 √
Inventory 8 800 √
(b) Name the type of error in each case. [2]
Error Type of error
1 Error of original entry √
2 Error of principle √
(c) State the effect of each of the errors on the profit for the year ended 31 March 2016. Write your answers as “understated”, “overstated” and the amount, or “no
effect” with “nil” amount. [2]
Error Effect on profit Amount ($)
1 Understated 2 700 √
2 No effect Nil √
2
(a) Explain the difference between trade discount and cash discount. [2] Trade discount is offered to customers to encourage them to buy in large quantities. It is a deduction off the list price of goods or services. √ Cash discount is given to a credit customer to encourage the customers to pay earlier. It is a deduction off the amount owing. √ (b)State the journals where the transactions dated as follows were first recorded by
Cynthia. [2]
(i) April 5: Cash book √
(ii) April 10: Sales journal √
(c)Record the ledger account of Yusli in Cynthia’s business for the month of April 2016. [6] Trade receivable - Yusli
Date Particulars Dr
$
Cr $
Balance $ 2016
Apr 1 Balance b/d 875 Dr
5 Cash at bank 800 75 Dr √
5 Discount allowed 75 0 √
10 Sales revenue (80%x4000) 3 200 3 200 Dr √
13 Sales return (80%x300) 240 2 960 Dr √
28 Cash in hand 1 000 1 960 Dr √
28 Allowance for impairment on trade receivables
1 960 0 √
3
(a) Calculate the cost of sales for the year ended 31 March 2016. [1] Cost of sales = 80 000 + 90 000 + 120 000 = $290 000 √ (b) Prepare the inventory account for the year ended 31 March 2016. [4]
Inventory account
Date Particulars Dr
$
Cr $
Balance $ 2015
Apr 1 Balance b/d 80 000 Dr √
May 1 Trade payables 90 000 170 000 Dr
Aug 9 Trade payables 120 000 290 000 Dr
Dec 25 Trade payables 45 000 335 000 Dr
2016
Jan 1 Trade payables 60 000 395 000 Dr √
Mar 31 Cost of sales 290 000 105 000 Dr √
Apr 1 Balance b/d 105 000 Dr √
(c) (i) State the value for inventory that would appear in Erica’s balance sheet at
31 March 2016. [1]
$99 000 √
(ii) Prepare the journal entries that Erica would make on inventory on 31 March 2016 by completing the table below. Narrative is not required. [2]
General journal
Date Particulars Dr Cr
2016 $ $
Mar 31 Impairment loss on inventory 6 000 √
(iii) State the effect of the adjustment in part (c) (ii) on profit for the period ended
31 March 2016. [1]
Profit decrease by $6 000 √
(iv) State the accounting concept applied for the valuation of inventory in Erica’s
balance sheet at 31 March 2016. [1]
Prudence concept √
[Total: 10]
4
(a) Explain the meaning of:
(i) Standing order [1]
Business instructs the bank to pay direct to the payee’s bank account from the
business bank account on a regular basis. √
(ii) Credit transfer [1]
Business receives money into its bank account through transfer from debtor’s bank
account. √
(b) State one purpose of preparing a bank reconciliation statement. [1]
To reconcile the difference between the cash book and bank statement balances. √
(c) Prepare an updated Cash Book as 31 March 2016. Bring down the new balance to
1 April 2016. [4]
Cash at bank account
Date Particulars Dr
$ Cr$ Balance$
2016
Mar 31 Balance b/d 10 610 Dr
31 Insurance expense 1 200 9 410 Dr √
31 Trade receivable, Kane 3 200 6 210 Dr √
31 Dividend income 2 100 8 310 Dr √
(d) Prepare a statement, appropriately headed, which reconciles the balances between the amended cash book and the bank statement at 31 March 2016. [5]
Bank reconciliation statement at 31 March 2016 √
Balance as per bank statement $4 330 √
Add: Uncredited deposit - Thomas 6 980 √ Less: Unpresented cheque – Shawn (3 000) √ Balance as per updated cash book 8 310 √
OR
Bank reconciliation statement at 31 March 2016 √ Balance as per updated cash book $8 310 √ Add: Unpresented cheque – Shawn 3 000 √ Less: Uncredited deposit - Thomas (6 980) √
Balance as per bank statement 4 330 √
YCKSS 4E Mid Year 2015 Paper 2 Solution
1(a)
Gatsby Enterprise
Income statement for the year ended 31 March 2016
$ $
Sales revenue 105 700
Less: Sales returns (9 250)
Net sales revenue 96 450 √
Less: Cost of sales (62 200)
Gross profit 34 250 √
Add: Other income
Discount received 1 810
Commission income (+50) 1 850 √
3 660 37 910 Less: Expenses
Discount allowed 3 500
Salaries expense 7 800
Rental expense (- 2 000) 12 000 √
Advertising expense (+ 1 600) 16 200 √
Depreciation of motor vehicle (10%x(60 000 – 6 000))
5 400 √
Depreciation of fixtures and fittings (12 000 / 10)
1 200 √
Impairment loss on trade receivables
(2 000 – (2 450-3 150)) 2 700 √√
(48 800)
Loss for the period (10 890) √
(b)
Gatsby Enterprise
Balance sheet as at 31 March 2016
$ $ $
Non-current assets Cost Accumulated
depreciation
Net book value
Fixtures and fittings 12 000 (3 600) 8 400 √
Motor vehicle 60 000 (11 400) 48 600 √
57 000 Current assets
Trade receivables (-3 150) 18 350 √
Less: Allowance for impairment of
trade receivables (2 000) √
Net trade receivables 16 350
Inventory 45 150
Cash in hand 5 500
Prepaid rent expense 2 000 √
Commission income receivable 50 √
69 050
Total assets 126 050
Owner’s equity
Capital, 1 April 2015 70 000
Less: Loss for the period (10 890)
Less: Drawings (1 900)
Capital, 31 March 2016 57 210 √
Non-current liabilities
Long-term borrowings 50 000 √
Current liabilities
Trade payables 16 240
Short-term borrowings 1 000 √
Accrued advertising expense 1 600 √
18 840
Total equities and liabilities 126 050
2(a) COE – Capital expenditure √ The COE is part of the cost of new delivery van to put it in a usable state. √
2 marks
(b)
General Journal
Date Particulars Debit Credit
2013 $ $
Apr 4 Motor vehicle 90 000 √
Cash at bank 90 000 √
Paid for delivery van by cheque. √
3 marks
(c)
Accumulated depreciation for motor vehicle
Date Particulars Dr
$
Cr $
Balance $ 2014
Mar 31 Depreciation of motor vehicle (20% x (90 000 – 0))
18 000 18 000 Cr √
Apr 1 Balance b/d 18 000 Cr
2015
Mar 31 Depreciation of motor vehicle (20% x (90 000 – 18 000))
14 400 32 400 Cr √
Apr 1 Balance b/d 32 400 Cr
2016
Jan 22 Sale of non-current asset 32 400 0 √√
(d)
Sale of non-current assets
Date Particulars Dr
$ Cr $ Balance $ 2014
May 15 Motor vehicle 90 000 90 000 Dr √
May 15 Accumulated depreciation for motor vehicle
32 400 57 600 Dr √
May 15 Cash in hand 48 000 9 600 Dr √
Dec 31 Profit and loss 9 600 0 √
4 marks
3(a)(i)
Rent expense
Date Particulars Dr
$ Cr $ Balance $ 2015
Apr 1 Accrued rent expense 200 200 Cr √
2016
Mar 31 Cash at bank 12 000 11 800 Dr √
Mar 31 Prepaid rent expense 400 11 400 Dr √
Mar 31 Profit and loss 11 400 0 √
4 marks
(ii)
Insurance expense
Date Particulars Dr
$ Cr $ Balance $ 2014
Apr 1 Prepaid insurance expense 1 300 1 300 Dr √
2015
Mar 31 Cash at bank 7 400 8 400 Dr √
Mar 31 Accrued insurance expense 600 9 000 Dr √
Mar 31 Profit and loss 9 000 0 √
4 marks
Fees income
Date Particulars Dr
$
Cr $
Balance $ 2014
Apr 1 Fees income receivable 800 800 Dr √
2015
Mar 31 Cash at bank 8 000 7 200 Cr √
Mar 31 Fee income received in advance
200 7 000 Cr √
Mar 31 Profit and loss account 7 000 0 √
4 marks
(b)
Balance sheet as at 31 March 2016 (Extract) Current asset
Prepaid rent expense 400 √
Current liabilities Accrued insurance
expense 600 √
Fee income received in
advance 200 √
4(a)
Trade receivables control account
Date Particulars Dr
$
Cr $
Balance $ 2016
Jan 1 Balance b/d 13 400 Dr
Jan 31 Sales revenue 66 800 80 200 Dr √
31 Sales return 3 420 76 780 Dr √
31 Cash at bank (- 21 200) 54 600 22 180 Dr √
31 Discount allowed 1 100 21 080 Dr √
31 Allowance for impairment of trade receivables
840 20 240 Dr √
31 Cash at bank 420 20 660 Dr √
31 Trade payables control account 620 20 040 Dr √
31 Interest charged 100 20 140 Dr √
Feb 1 Balance b/d 20 140 Dr √
9 marks
(b) General Ledger √
1 mark
(c) Objectivity √
The accountant must be an independent party, free from any personal interest, in
5(a)
General journal
Date Particulars Dr Cr
2014 $ $
Apr 1 Cash in hand 6 000 √
Capital 6 000 √
2 marks (b)
Drawings account
Date Particulars Dr
$
Cr $
Balance $ 2016
Mar 29 Cash at bank 700 700 Dr √
Mar 31 Capital 700 0 √
2 marks
(c)
Capital account
Date Particulars Dr
$
Cr $
Balance $ 2014
Apr 1 Cash in hand 6 000 6 000 Cr √
2015
Feb 28 Motor vehicle 38 500 44 500 Cr √
Mar 31 Profit and loss 23 800 68 300 Cr √
Apr 1 Balance b/d 68 300 Cr
2016
Mar 31 Profit and loss 44 100 112 400 Cr √
Mar 31 Drawings 700 111 700 Cr √
Apr 1 Balance b/d 111 700 Cr √
6 marks
(d) Objectivity √
The accountant must be an independent party, free from any personal interest, in
