Mark Scheme (Results)

January 2014

International A Level Accounting

WACO1 Paper 01
Edexcel and BTEC Qualifications

Edexcel and BTEC qualifications are awarded by Pearson, the UK’s largest awarding body.
We provide a wide range of qualifications including academic, vocational, occupational and
specific programmes for employers. For further information visit our qualifications websites
at www.edexcel.com or www.btec.co.uk. Alternatively, you can get in touch with us using
the details on our contact us page at www.edexcel.com/contactus.

Pearson: helping people progress, everywhere

Pearson aspires to be the world’s leading learning company. Our aim is to help everyone
progress in their lives through education. We believe in every kind of learning, for all kinds
of people, wherever they are in the world. We’ve been involved in education for over 150
years, and by working across 70 countries, in 100 languages, we have built an
international reputation for our commitment to high standards and raising achievement
through innovation in education. Find out more about how we can help you and your
students at: www.pearson.com/uk

January 2014
Publications Code IA037540
All the material in this publication is copyright
© Pearson Education Ltd 2014
General Marking Guidance

• All candidates must receive the same treatment. Examiners

must mark the first candidate in exactly the same way as they
mark the last.
• Mark schemes should be applied positively. Candidates must
be rewarded for what they have shown they can do rather than
penalised for omissions.
• Examiners should mark according to the mark scheme not
according to their perception of where the grade boundaries
may lie.
• There is no ceiling on achievement. All marks on the mark
scheme should be used appropriately.
• All the marks on the mark scheme are designed to be
awarded. Examiners should always award full marks if
deserved, i.e. if the answer matches the mark scheme.
Examiners should also be prepared to award zero marks if the
candidate’s response is not worthy of credit according to the
mark scheme.
• Where some judgement is required, mark schemes will provide
the principles by which marks will be awarded and
exemplification may be limited.
• When examiners are in doubt regarding the application of the
mark scheme to a candidate’s response, the team leader must
be consulted.
• Crossed out work should be marked UNLESS the candidate has
replaced it with an alternative response.

FOR ALL QUESTIONS: No markscheme can cover all possible responses.

Therefore, reward analysis which is relevant to the question even if this is not
specifically identified in the markscheme.
 SECTION A

1(a)(ii)
Journal
Dr CR
£ £
Goodwill 75 000
Delivery vehicle 9 000
Inventory 16 000
Trade receivables 7 000
Trade payables 15 000
Capital Anthi 92 000 √
Land and buildings 80 000
Capital Keri 80 000 √
Opening assets and liabilities of the partnership √
(3)
Capital Anthi 45 000 √
Capital Keri 30 000 √
Goodwill 75 000
Goodwill of the partnership written off √
(3)

(b)(i)
Anthi and Keri – Statement of Comprehensive Income and Appropriation Account for the
year ended 31 December 2013
£ £
Gross profit 103 350
Less expenses:
Wages and salaries (47 000 – 15 000) 32 000 √
Loan interest (2 000 + 1 000) 3 000 √
Delivery vehicle expenses (12 250 – 650) 11 600 √
Sundry expenses 21 900 √
Depreciation – Delivery vehicles 2 800 √
Fixtures and fittings 1 200 √
Bad debts 800 √
Provision for Doubtful Debts 700 √
74 000
Profit for the year 29 350
Interest on capital:
Anthi 2 350 √√( √of)
Keri (2 500 + 500) 3 000 √√ (√of)
5 350
Salary Anthi 15 000 √

Share of profit:
Anthi 5 400 √of if in correct ratio
Keri 3 600 √of if in correct ratio
9 000
29 350
(15)

(ii)
Capital Accounts
Anthi Keri Anthi Keri
£ £ £ £
Goodwill 45 000 30 000 √ Journal 92 000 80 000 √
Balance c/d 47 000 70 000 Bank 20 000 √
92 000 100 000 92 000 100 000
Balance b/d 47 000 70 000 √of
(4)
(iii)
Current Accounts
Anthi Keri Anthi Keri
£ £ £ £
Salary paid 15 000 √ - Interest 2 350 3 000 √ of
Drawings 5 500 6 000 √ Salary 15 000 -
Balance c/d 2 250 600 Share of profit 5 400 3 600
22 750 6 600 22 750 6 600
Balance b/d 2 250 600 √of
(4)
(c)
Statement of Financial Position at 31 December 2013

Cost Accumulated Carry

Depreciation over
£ £ £
Non-current assets
Land and buildings 80 000
Delivery vehicles 19 000 2 800 16 200 √of if <19 000
Fixtures and fittings 14 000 1 200 12 800 √of if <14 000
109 000 √

Current assets
Inventory 63 000 √
Trade receivables 17 500 √
Less PDD 700 16 800 √of
Other receivables 650 √
Cash and Bank 7 800 √
88 250
197 250
Capital and equity:
Capital accounts:
Anthi 47 000
Keri 70 000
117 000 √of
Current accounts:
Anthi 2 250
Keri 600
2 850 √of
119 850
Creditors: due in less than one year
Trade payables 25 900 √
8% Bank loan repayment 10 000 √
Other payables (1 000 + 500) 1 500 √√
37 400
Creditors: due in more than one year
8% Bank loan 40 000 √ (√of £50,000)
40 000
197 250
(15)
(d) ) Valid points may include:
Positive
• Land generally does not decrease in value through deterioration
• Historically land and buildings have appreciated in value
• Annual depreciation charge would be very small due to the long life of the
asset

Negative
• Buildings will deteriorate with the passage of time
• Does not comply with concept of prudence, matching or going concern
• Unrealistic not to charge
• Non current assets not overstated

Do not accept higher profit, save time, make it easier

√√ per point x 4 - MAX 2 points positive and 2 points negative

(8)
(Total 52 marks)

2 (a) £ £ £
Plus Minus Balance
Inventory count 15 600
(1) 900 √√
(2) (750) √√
(3) (500) √√
(4) 800 √√
(5) 350 √√
2 050 1 250
Adjusted inventory balance 16 400

(10)
(b)
£
Assets
Bank 1 680
Fixtures 1 700
Inventory 12 850
Trade receivables 6 170
Prepaid 300
22 700 √
Less
Liabilities
Trade payables (6 700) √

Capital 16 000 √of

(3)
(c)(i)
Gary - Statement of Comprehensive Income for the year ended 31 December 2013
£ £
Revenue 52 960 – 6 170 + 6 330 53 120 √√
Less
Cost of sales:
Opening inventory 12 850
Purchases 38 900 – 6 700 +9 350 41 550 √√
54 400
Closing inventory (16 400) √of
Cost of sales 38 000
Gross profit 15 120
Plus Other income
Playing fees 28 800 x 5% 1 440 √
Club salary 4 500 + 500 5 000 √
Golf tuition fees 8 250 √
14 690
29 810
Less Expenses
Rent 2 150 √
Heat and light 1 760 + 300 + 460 2 520 √√
Sundry expenses 4 420 √
Depreciation – Fixtures and fittings 450 √
9 540
Profit for the year 20 270
(13)
(ii)
Statement of Financial Position at 31 December 2013
£ £
Non-current assets
Fixtures and fittings 1 650 √

Current assets
Inventory 16 400 √of
Trade receivables 6 330 √
Other receivables 500 √
23 230
24 880
£ £
Capital and equity:
Capital 16 000 √of
Profit for the year 20 270 √of
36 270
Drawings (29 500) √
6 770
Current liabilities
Trade payables 9 350 √
Other payables 2 360 + 250 + 460 3 070 √√√
Bank overdraft 5 690 √
18 110
24 880
(12)

(d)(i)(ii)
1 January
Current ratio – Current assets 12 850 + 6 170 + 300 + 1 680 = 21 000 √= 3.13:1 √of
Current liabilities 6 700 6 700 √
(3)
31 December
Current assets 16 400 of + 6 330 + 500 = 23 230 of √= 1.28:1√of
Current liabilities 9 350 + 2 360 of + 250 of +460 +5 690 18 110 of √
(3)
(e) Valid points may include:
Note : OF Rule applies
Positive
• Although current ratio is low, it is still just sufficient but not 2:1
• A significant profit is still being made if drawings can be reduced liquidity will
rise

Negative
• Current ratio has deteriorated significantly during the year
• A positive bank balance has now become an overdraft
• Most of the current assets are in inventory
• Drawings are greater than profit for the year, draining cash
• Trade payables have increased significantly due to lack of cash to pay them

√√ per point x 4 - MAX 2 points positive and 2 points negative

(8)
(Total 52 marks)
3(a) Vaso Technology
Manufacturing Account for the year ended 31 December 2013
£ £
Opening inventory of raw materials 30 000 √
Purchases of raw materials 195 000 √
225 000
Less Closing inventory of raw materials (75 000) √√
Cost of raw materials consumed 150 000 √
Production wages (134 000 + 6 500) 140 500 √
Packaging (25 000 x 70%) 17 500 √
Prime cost 308 00 √ of+w
Plus overheads:
Packaging (25 000 x 30%) 7 500 √
Production salaries 85 000 √
Depreciation – Production equipment 16 000 √
Premises rent 22 500 √
Sundry expenses 18 000 √
149 000
457 000
Work in progress at start 52 000 √
at end (49 000) √
3 000
Production cost 460 000 √ of+w
Profit on manufacture 20 000 √ (of)
Transfer to trading account 480 000 √ of+w
(18)
(b) Office Computers Account
£ £
1 Jan Balance b/d 20 000 √ 30 June Disposal √ 6 000 √
1 Oct Bank 8 000 √ 31 Dec Balance c/d 22 000 √
28 000 28 000
1 Jan Balance b/d 22 000 √of
(6)
Office Computers – Provision for Depreciation Account
£ £
30 June Disposal √ 3 000 √ 1 Jan Balance b/d 8 000 √
31 Dec Balance c/d 8 800 √ 31 Dec Income statement/deprec.
(600 +400+2 800) 3 800 √√√ (√of)
11 800 11 800
1 Jan Balance b/d 8 800 √of
(8)
(c)
Statement of Comprehensive Income for the year ended 31 December 2013
£ £
Sales 650 000 √
Opening inventory of finished goods 78 000 √
Goods transferred from manufacturing 480 000 √ of
558 000
Less Closing inventory of finished goods (63 000) √
Cost of sales 495 000
Gross profit 155 000 √ of
Less
Office salaries 106 000 √
Premises rent 7 500 √
Sundry expenses 6 000 √
Depreciation office computers 3 800 √of
Loss on sale of office computers 500 √of
(123 800)
31 200
Plus Profit on manufacture 20 000 √of
Profit for the year 51 200 √ w + of
(12)

(d) Valid points may include:

Positive
• Office computers will give equal benefit to the business in each year
• Profit will not be distorted over the early years

Negative
• Office computers will lose most of their value in the early years
• Office computers will not be accurately valued in the Financial Position
Statement
• The cost of the office computers will increase as repairs are required
• Straight line is not accepted by the tax authorities.

DO NOT ACCEPT easy to calculate or consistency.

√√ per point x 4 - MAX 2 points positive and 2 points negative
(8)
(Total 52 marks)
 SECTION B
4 (a)
Journal
Dr Cr
£ £

Suspense 400 √
Discount received 400 √

Suspense 180 √
Archana 180 √

Purchases 2 500 √
Suspense 2 500 √

B Vincent 300 √
C Vissing 300 √
(8)
(b)
Purchases Ledger Control Account
£ £
Balance b/d 430 Balance b/d 78 000
Payments to creditors 497 000 √√ Refund 4 000 √√
Discount rec’d (8 200√+400√) 8 600 √ Credit purchases
Sales ledger contra 2 150 √√ (505 000√+2 500√) 507 500 √

Returns outwards 15 600 √√

Balance c/d 66 370 Balance c/d 650
590 150 590 150
Balance b/d 650 √ Balance b/d 66 370 √of
(16)
(c)
• Goods returned after payment made
• Discount received not posted
• Overpayment to creditor
• Contra from sales ledger

2 marks x 2 points (4)

(d)Valid points may include:

Positive
• Tests arithmetical accuracy
• Helps to identify areas where errors exist
• Through separation of duties protects against fraud
• Provides total of trade payables or trade receivables.

Negative
• Time consuming
• Requires double entry accounting and a high level of staff skill
• Some errors are not discovered by control accounts e.g errors of omission.

√√ per point x 2 - MAX 1 points positive and 1 points negative

(4)
(Total 32 marks)

5 (a)
Allocation occurs where a cost is wholly identifiable with one cost centre √√

Apportionment occurs where costs are shared and must be apportioned across the
cost centres on some equitable basis √√
(4)
(b) (i)
East Town Weststead Northerton
£000’s £000’s £000’s
Marketing 90 36 54 √√√√
Premises running costs 70 50 60 √√√√
Management salaries 550 125 225 √√√√
Depreciation 36 12 24 √√√√
746 223 363
(16)
(ii)
Profit for the year 750 260 500 √√
Less revised overheads 746 223 363 √√ of
Revised profit for the year 4 37 137 √√√√(√√of)

(8)
 (c)Valid points may include:
Positive
• Weststead is carrying the least overhead which may be able to be saved
• Less overall management control required
Negative
• Weststead is making the second highest profit
• Some of the costs will be fixed and will need to be charged to other stores if
Weststead is closed
• Loses profit
• Reduce their customer base

√√ per point x 2 - MAX 1 points positive and 1 points negative

(4)
(Total 32 marks)

6 (a)(i) Mark up Gross profit 75 000 √ x 100 √ = 30% √

Cost of sales 250 000 √
(4)
(ii)Profit for the year as a Profit for the year 10 000 √ x 100 √ = 3.1 % √
Percentage of Revenue (Sales) Revenue (Sales) 325 000 √
(4)
(b) Prices are higher than last year
Cost of sales is lower due to market conditions or more efficient buying
Change in selling mix
2 x √√ per point (4)

(c)(i) Owners capital refers to the personal investment/equity of the owner(s) in the
business √√
Capital employed refers to the total long term capital used by the owner(s) to
generate profit. This may include owners’ capital, plus long term loans √√ (4)

(ii) Profit for the year √ before interest √ x 100 = %

Owners capital + Long term liabilities √
(Capital employed)
(3)

(iii) Return on capital employed

Profit for the year(working 1) 23 000 x 100 √ = 11.5% √of
Capital employed 100 000 + 100 000 √√
Working 1: £75 000 - £60 000 = 15 000 + 8 000 = 23 000 (4)
(d)(i) Goodwill √ (1)
(ii) Location
Customer base
Reputation
√√ x 2 points
(4)
(e) Valid points may include:
OF Rule applies
Positive
• Established business with good mark-up
• Return on capital employed high
• Goodwill/reputation
Negative
• Raising the capital from a bank
• Risk of using all his savings
• Profit to revenue is low at 3.1%
√√ per point x 2 - MAX 1 points positive and 1 points negative
(4)
(Total 32 marks)
7(a)
Bourne Cricket Club – Trial Balance at 31 December 2013
Dr Cr
£ £
Accumulated fund 30 200 √
Subscriptions (8 850 – 250) 8 600 √√
Competition fees 1 000 √
Donations 250 √
Purchases of refreshments 14 650 √
Sales of refreshments 30 250 √
Clubhouse (at cost) 35 000 √
Equipment (at cost) (4 800 – 1 800) 3 000 √
Provision for depreciation –
Equipment (3 200 – 1 100) 2 100 √
Profit on sale of equipment 100 √
Wages and salaries 18 950 √
Other expenses 10 550 √
Trade payables 9 850 √
Bank (-600 + 800) 200 √√
82 350 82 350

(16)
(b) (i)
Subscriptions Account
£ £
Donations 250 √ Bank/Balance/ 8 850 √
Income and expenditure √ 8 550 √of Subscriptions
Balance c/d 1 410 √ Balance c/d 1 360 √
10 210 10 210
Balance b/d 1 360 √ Balance b/d 1 410 √
(8)

(ii) The matching concept √√ must apply to ensure that the income for the period is
matched against the expenditure of the period.√√
(4)

(c)
Valid points may include:
Positive
• Five year membership would increase short term cash flow
• Tie members into the club long term
• Save annual collection fees
• Reduce bad debts
• May attract more members

Negative
• The discount will reduce the overall income
• Commitment to providing services long term

√√ per point x 2 - MAX 1 points positive and 1 points negative

(4)
(Total 32 marks)
 ASSESSMENT GRID
Syllabus AO1 AO2 AO3 AO4 TOTAL
Q1
(a) 3 2 2 2 6
(b) 3 6 12 5 23
(c) 3 5 5 5 15
(d) 3 8 8

Q2
(a) 4 2 4 4 10
(b) 3 2 1 3
(c) 3 6 12 7 25
(d) 5 2 2 2 6
(e) 5 8 8
Q3
(a) 3 4 10 4 18
(b) 1 4 8 2 14
(c) 3 4 4 4 12
(d) 1 8 8
Q4
(a) 2 4 4 8
(b) 2 6 6 4 16
(c) 2 2 2 4
(d) 2 4 4
Q5
(a) 4 4 4
(b) 4 8 8 8 24
(c) 4 4 4
Q6
(a) 5 2 2 2 6
(b) 5 4 4
(c) 5 7 3 3 13
(d) 5 1 4 5
(e) 5 4 4
Q7
(a) 1 4 4
(b) 3 12 8 4 24
(c) 3 4 4

Marks 87 97 60 40 284

Syllabus(%) 32 34 20 14 100
Pearson Education Limited. Registered company number 872828
with its registered office at Edinburgh Gate, Harlow, Essex CM20 2JE