Professional Documents
Culture Documents
* 6 3 0 5 5 1 9 0 5 5 *
9706/21
ACCOUNTING
Paper 2 Structured Questions
May/June 2011
1 hour 30 minutes
[Turn over
2
1
Henry and Robin are in partnership with capitals of $120 000 and $80 000 respectively.
On 1 June 2010 Henry had a debit balance on his current account of $6 600 and Robin had
a credit balance on his current account of $1 000.
On 31 May 2011 Henry had a credit balance on his current account of $10 400.
The partnership agreement stated:
1
The maximum drawings permitted in any one year is 10% of capital invested.
Both partners withdrew the maximum amount permitted during the year.
REQUIRED
(a) Prepare the current account of each partner for the year ended 31 May 2011.
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UCLES 2011
9706/21/M/J/11
For
Examiners
Use
3
(b) Calculate the profit for the year (net profit) made by the partnership for the year ended
31 May 2011.
For
Examiners
Use
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(c) Before forming a partnership both Henry and Robin were sole traders.
State four advantages of a partnership compared to a sole trader.
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[Total: 30]
UCLES 2011
9706/21/M/J/11
[Turn over
4
2
The Welcome Cricket Club has the following assets and liabilities.
30 April 2011
$
104 000
14 400
4 800
?
3 600
3 500
4 000
20 000
?
1 May 2010
$
40 000
4 000
6 500
12 800
2 200
5 000
500
nn
nn
The receipts and payments for the year ended 30 April 2011 are:
Receipts
Caf revenue (sales)
Subscriptions
Loan from cricket association
Donations
Ticket sales
$
90 000
34 000
20 000
450
14 560
Payments
Equipment
Rent
Heating and lighting
Wages of caf staff
Caf purchases for resale
$
64 000
21 000
18 000
28 800
36 000
Additional information:
1
Wages are a direct cost of the caf and are charged to the trading account.
The rent and heating and lighting are apportioned 40% to the caf and 60% to the
rest of the club.
The loan from the cricket association was received on 1 November 2010. Interest is
payable at 10% per year.
UCLES 2011
9706/21/M/J/11
For
Examiners
Use
5
REQUIRED
(a) Prepare the caf income statement to show the gross profit and the profit for the year
(net profit) made by the caf during the year ended 30 April 2011.
For
Examiners
Use
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UCLES 2011
9706/21/M/J/11
[Turn over
6
(b) Prepare the income and expenditure account of the Welcome Cricket Club for the year
ended 30 April 2011.
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UCLES 2011
9706/21/M/J/11
For
Examiners
Use
7
(c) Prepare the balance sheet of the Welcome Cricket Club at 30 April 2011.
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For
Examiners
Use
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[Total: 30]
UCLES 2011
9706/21/M/J/11
[Turn over
8
3
Largos Ltd produces three types of security camera Ojo 1, Ojo 2 and Ojo 3.
The following forecast data is available for the year ended 30 June 2012.
Ojo 1
Ojo 2
Ojo 3
1 000
700
400
$400
$450
$550
$150
$100
$50
$50
$170
$150
$60
$60
$241
$175
$70
$60
Labour is highly skilled and may be used to produce any of the three types of security
camera.
REQUIRED
(a) Prepare a statement to show the forecast contribution and profit or loss made by one
unit of each type of camera produced.
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UCLES 2011
9706/21/M/J/11
For
Examiners
Use
9
(b) Prepare a statement to show the forecast total contribution and profit/loss made by
each product for the year ended 30 June 2012.
For
Examiners
Use
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(c) If the forecast output is produced, calculate the break-even point and the margin of
safety in units for each product. Show your workings.
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UCLES 2011
9706/21/M/J/11
[Turn over
10
Largos Ltd also operates a factory which manufactures and sells underwater cameras.
The following details per unit are available for the quarter ended 30 April 2011.
Sales price
Variable costs
Fixed production overhead
$0
700
400
100
Sales
Inventory at start of month
Inventory at end of month
February
March
April
30
10
0
40
0
5
45
5
10
REQUIRED
(d) Prepare an income statement to show the profit or loss in each month using marginal
costing.
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UCLES 2011
9706/21/M/J/11
For
Examiners
Use
11
(e) Prepare an income statement to show the profit or loss in each month using absorption
costing.
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[Total: 30]
UCLES 2011
9706/21/M/J/11
For
Examiners
Use
12
BLANK PAGE
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.
University of Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of
Cambridge Local Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.
UCLES 2011
9706/21/M/J/11
* 2 1 2 0 4 3 7 0 8 5 *
9706/22
ACCOUNTING
Paper 2 Structured Questions
May/June 2011
1 hour 30 minutes
[Turn over
2
1
Marcel owns a wholesale business supplying shops, hotels and restaurants with tea and
coffee. He does not keep formal accounting records but is able to supply the following
information for the year ended 30 April 2011.
Trade receivables
Trade payables
Inventories
Wages accrued
General expenses prepaid
General expenses owing
30 April 2011
$
17 000
14 800
20 600
9 350
800
1 May 2010
$
18 200
16 600
33 000
9 200
900
Prepare a purchases ledger control account to find out the total amount of credit
purchases for the year ended 30 April 2011.
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UCLES 2011
9706/22/M/J/11
For
Examiners
Use
3
(ii)
Prepare a sales ledger control account to find out the amount of credit sales for the
year ended 30 April 2011.
For
Examiners
Use
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Additional information:
1
Goods sold in the annual clearance sale, $29 700, were sold at cost price.
UCLES 2011
9706/22/M/J/11
[Turn over
4
REQUIRED
(b) There were no further losses of goods during the year. Starting with the opening
inventory, calculate the value of the goods destroyed by the fire on 8 March 2011.
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UCLES 2011
9706/22/M/J/11
For
Examiners
Use
5
(c) Prepare the income statement (trading account only) for the year ended 30 April 2011.
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For
Examiners
Use
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[Total: 30]
UCLES 2011
9706/22/M/J/11
[Turn over
6
2
The following information is available for the Northern Division of Blackford Industrial Ltd:
Statement of financial position at 30 April 2011
$000
$000
Non-current assets at net book value
$000
180
Current assets
Inventory
Trade receivables
Bank
40
35
43
118
Current liabilities
Trade payables
Other payables
55
23
78
40
220
Equity
Ordinary share capital $1 each
Share premium
Retained earnings
190
10
20
30
220
$000
28
15
REQUIRED
(a) Calculate the following amounts for the year ended 30 April 2011:
(i)
cost of sales
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UCLES 2011
9706/22/M/J/11
For
Examiners
Use
7
(ii)
For
Examiners
Use
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An analysis of the Southern Division of Blackford Industrial Ltd for the year ended 30 April
2011 yielded the following results.
Southern Division
1
2
3
4
5
6
7
Mark-up 40%
Gross profit percentage 28.57%
Expenses to sales 20%
Net profit percentage 8.57%
Return on capital employed 18.00%
Rate of inventory (stock) turnover 8.95 times
Liquid ratio (acid test) 1.1:1
REQUIRED
Northern Division
(b) Calculate each of the same ratios for the Northern Division of Blackford Industrial Ltd,
for the year ended 30 April 2011. The calculations should be correct to two decimal
places.
(i)
Mark-up
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(ii)
UCLES 2011
9706/22/M/J/11
[Turn over
8
(iii)
Expenses to sales
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(iv)
(v)
(vi)
(vii)
UCLES 2011
9706/22/M/J/11
For
Examiners
Use
9
(c) Using the profitability ratios (i) (v) compare the performance of the Northern and
Southern Divisions of Blackford Industries and explain the significance of each ratio.
For
Examiners
Use
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[Total: 30]
UCLES 2011
9706/22/M/J/11
[Turn over
10
3
Ventana Ltd produce three different types of slatted wooden blinds, Pine, Teak and Oak. The
companys forecast figures for the year ended 30 April 2012 were:
Pine
$
Teak
$
Oak
$
61
158
170
30
15
6
60
46
12
80
24
16
2000 units
1600 units
1000 units
REQUIRED
(a) For the year ended 30 April 2012:
(i)
Prepare a statement to show the contribution per unit for each product.
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(ii)
UCLES 2011
9706/22/M/J/11
For
Examiners
Use
11
(iii)
Prepare a statement to show the break-even point for each type of blind in units
and dollars.
For
Examiners
Use
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(b) Prepare a statement, using the contribution per unit, to show the total profit or loss
made by each type of blind for the year.
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UCLES 2011
9706/22/M/J/11
[Turn over
12
One of the directors wishes to stop production of the pine blinds.
This would increase the total forecast fixed costs by 25%. However, the director estimates
that sales of the teak and the oak blinds would increase by 50%.
For
Examiners
Use
REQUIRED
(c) Prepare a detailed marginal cost statement, using the contribution per unit, to show the
effect on total profit of stopping production of the pine blinds.
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[Total: 30]
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.
University of Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of
Cambridge Local Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.
UCLES 2011
9706/22/M/J/11
* 8 3 8 8 0 9 8 3 9 3 *
9706/23
ACCOUNTING
Paper 2 Structured Questions
May/June 2011
1 hour 30 minutes
[Turn over
2
1
The following is the draft balance sheet of Marshall Klingsman, a sole trader, at 30 April 2011.
Balance Sheet at 30 April 2011
$
Non-current assets
Buildings at valuation
Equipment at book value
Motor vehicles at book value
300 000
540 000
330 000
1 170 000
Current assets
Inventories
Trade receivables
Other receivables
Cash and cash equivalents
Current liabilities
Trade payables
Other payables
70 000
19 000
2 000
4 000
95 000
57 000
3 000
60 000
35 000
1 205 000
Non-current liabilities
Loan
Net assets
200 000
1 005 000
Financed by:
Capital at start
Add Profit for the year (net profit)
1 000 000
80 000
1 080 000
75 000
1 005 000
Less Drawings
Capital at end
Additional information:
After preparation of the draft balance sheet the following errors were found.
1
Goods in inventory at 30 April 2011, valued at cost $15 000, were found to be
damaged. The estimated net realisable value is $8 000.
Loan interest of 4% per annum had been omitted from the accounts.
No provision for depreciation on equipment had been made for the year. Depreciation
should have been provided at 5% per annum using the reducing balance method.
Motor vehicles are depreciated by 10% per annum. During the year vehicle repairs
of $10 000 had been incorrectly debited to the motor vehicles account.
On 28 April 2011 a credit customer, who owed $3600, was declared bankrupt. It
was decided to write off this amount in full. No record of this has been made in the
accounts.
UCLES 2011
9706/23/M/J/11
For
Examiners
Use
3
REQUIRED
(a) Prepare a statement to show the corrected profit for the year (net profit) ended
30 April 2011.
For
Examiners
Use
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UCLES 2011
9706/23/M/J/11
[Turn over
4
(b) Prepare the corrected balance sheet at 30 April 2011.
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UCLES 2011
9706/23/M/J/11
For
Examiners
Use
5
(c) (i)
For
Examiners
Use
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(ii)
(d) Using your answers to (a) and (b) calculate the following ratios to two decimal places:
(i)
current ratio
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(ii)
UCLES 2011
9706/23/M/J/11
[Turn over
6
(e) State four ways in which Klingsman could improve his working capital.
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(f)
Explain why the liquid ratio (acid test) is a more reliable indicator of liquidity than the
current ratio.
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[Total: 30]
UCLES 2011
9706/23/M/J/11
For
Examiners
Use
7
BLANK PAGE
UCLES 2011
9706/23/M/J/11
[Turn over
8
2
Robbie and Liza are in partnership with capitals of $90 000 and $60 000 respectively.
The following information is available for the year ended 30 April 2011.
Revenue
Inventory (30 April 2011)
Gross profit as a percentage of turnover
Inventory turnover
Expenses ratio
$240 000
$9 000
35%
12 times
15%
UCLES 2011
9706/23/M/J/11
For
Examiners
Use
9
On 1 May 2010 the current account balances were Robbie $5000 (credit) and Liza $2000
(debit).
For
Examiners
Use
Both partners withdrew the maximum amount of drawings permitted during the year.
REQUIRED
(b) Prepare the appropriation account of the partnership for the year ended 30 April 2011.
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UCLES 2011
9706/23/M/J/11
[Turn over
10
At 30 April 2011 Robbie and Liza had a debit balance in the bank column of their cash book
of $12 000. Their bank statement, however, showed that the partnership had $9000 in the
bank at that date.
On comparing the cash book with the bank statement the following differences were found:
1
Bank charges of $250 appeared in the bank statement but had not been entered in
the cash book.
Cheques received from customers amounting to $3750 had been entered in the
cash book but had not been credited by the bank.
A cheque for $600 received from a debtor had been entered in the cash book but
had been returned by the bank marked insufficient funds for payment.
Cheques issued by the business amounting to $1600, recorded in the cash book,
did not appear in Aprils bank statement.
REQUIRED
(c) (i)
Update Robbie and Lizas cash book for the month of April 2011.
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(ii)
UCLES 2011
9706/23/M/J/11
For
Examiners
Use
11
(d) Give three reasons why the bank column balance in the cash book does not always
agree with the balance shown in the bank statement at the same date.
For
Examiners
Use
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[Total: 30]
UCLES 2011
9706/23/M/J/11
[Turn over
12
3
Paul owns two car wash businesses, called City Centre Car Wash and Suburban Car Wash.
City Centre Car Wash has the following monthly costs:
Per car
Detergent
Electricity
Water costs
Wage costs
$
1.00
0.50
0.05
1.25
Per month
Insurance of site
Lease of equipment
Managers salary
$
800
2040
1000
Additional information:
Both car wash businesses are open for 400 hours every month.
The cars are washed one at a time.
The average time taken to wash each car is 10 minutes.
City Centre Car Wash is currently operating at 80% capacity and Suburban Car Wash at
70% capacity.
REQUIRED
(a) For City Centre Car Wash, calculate the following correct to two decimal places:
(i)
(ii)
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(iii)
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(iv)
(v)
(vi)
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(b) Using the price calculated in (a)(v) above, calculate the following for City Centre Car
Wash, correct to two decimal places:
(i)
(ii)
(iii)
(iv)
(v)
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Suburban Car Wash charges the same price as City Centre Car Wash.
At that price Suburban Car Wash shows a contribution to sales (C/S) ratio of 40%. Fixed
costs are $3240.
REQUIRED
(c) Calculate, for Suburban Car Wash
(i)
(ii)
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UCLES 2011
9706/23/M/J/11