TEST CODE 01239020

FORM TP 2010023 JANUARY 2010

CAR I B B EAN E XAM I NAT I O N S C O U N C I L
SECONDARY EDUCATION CERTIFICATE
EXAMINATION
PRINCIPLES OF ACCOUNTS
Paper 02 – General Proficiency
3 hours
07 JANUARY 2010 (a.m.)

1. Answer ALL questions in Section I, and TWO questions from Section II.

2. Begin EACH answer on a separate page.

3. Keep ALL parts of EACH answer together.

4. Silent electronic calculators may be used, but ALL necessary workings should be clearly
shown.

5. Each question is worth 20 marks.

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO

Copyright © 2008 Caribbean Examinations Council ®.

All rights reserved.

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SECTION I
Answer all THREE questions in this section.

1.
The following balances were taken from the books of Woodruffe Enterprise, a small proprietor,
on April 30, 2009.

$

Motor vehicles 102 000

Bad debts 10 500
Return inwards 3 600
Commission received 6 600
Cash on hand 41 100
Return outwards 4 500
Purchases 174 000
Sales 360 000
Bank overdraft 45 000
Carriage inwards 8 400
Carriage outwards 8 700
Advertising expenses 10 000
Provision for bad debts 15 000
Debtors 75 000
Creditors 144 000
Equipment 140 000
Salaries 120 000
Long term loans 66 000
Opening stock 34 500
Miscellaneous expenses 54 000

(a) Prepare the trial balance for Woodruffe Enterprise. The amount for capital must be
included. (14 marks)

(b) The following entries appeared in the Sales Day Book of Woodruffe Enterprise for the
month of April.

Sales Day Book

Date Details Invoice number Amount ($)

April 1 V. Lucky 2691/7 2 000
April 5 M. Davis 2692/4 4 500
April 11 M. Davis 2694/6 7 200
April 29 V. Lucky 2695/2 6 450

Post the entries from the Sales Day Book into the appropriate ledgers. ( 6 marks)

Total 20 marks

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2. The following is a list of transactions for Clouden, a sole trader.

2009
May 1 Balances brought forward, Cash $2 530; Bank $15 600.
May 3 Paid wages by cheque $6 300.
May 5 Received a loan of $10 000 by cheque from the Big Development Bank.
May 8 Cash Sales to T. Richards amounted to $465.
May 10 Paid M. Duff account in full by cheque. The outstanding amount was $5 000
before taking 5% cash discount.
May 13 Paid electricity by cash $765.
May 17 The following paid their accounts:
L. Joseph $4 500 ; V. Thola $2 560.
Each deducted 5% cash discount and paid the difference by cheque.
May 22 Transferred $500 from cash to bank.
May 26 Paid Quashie $2 940 by cheque having deducted 2% cash discount.
May 29 Mr. Clouden bought a car for his personal use, at a cost of $25 000 paying by
cheque.
May 30 Received cash settlement of $200 from Magna Insurance Company.

(a) (i) Write up and balance Clouden’s THREE column cash book. (12 marks)
(ii) Indicate what the closing balance on the Bank Account signifies.
( 1 mark )

(b) In June 2009, Mr. Clouden made the following credit purchases from three suppliers who
each offered a 10% trade discount and a 3% cash discount if the account is paid within
one month.
HARRIS & SONS LTD

June 5 6 bags of rice @ $430 each

4 cases of milk @ $265 each
6 bottles of oil @ $15 each

L. J. ENTERPRISES

June 11 2 bags salt @ $60 each

3 bags onions @ $120 each
A. HARDEN

June 26 5 cases soda @ $42 each

3 cases orange juice @ $75 each
3 cases ketchup @ $135 each

(i) Record the above invoices received by Mr. Clouden in the appropriate Day Book
showing correct net amounts owed. ( 6 marks)

(ii)
If Mr. Clouden pays L. J. Enterprises within the month, what would be the amount
of his cash discount? ( 1 mark )

Total 20 marks

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3. The trial balance of Beck Hammond showed that the credit totals were greater than the debit
totals by $2 570. Mr. Hammond draws up his Profit and Loss Account which shows a Net Profit
of $15 750. He later discovers the following errors.

1. A purchase of furniture for $1 500 cash had been debited to the Purchases Account.

2. A payment of $2 000 by cheque had been made by customer Ronal Dinho whose account
was correctly credited but the amount was entered in the Bank Account as $200.

3. A discount allowed to Fergie Alexander of $256 was debited to the Discount Allowed
Account as $236.

4. Goods with a value of $3 700 sold to Russell Smith had been debited to Dwight Smith’s
Account.

5. A cheque for $375 drawn on behalf of Terry Henry had been credited to his account.

(a) (i) Draw up the Suspense Account and correct the errors that have caused the differ-
ence in Beck Hammond’s Trial Balance. ( 5 marks)

(ii) Draft the journal entries necessary to correct the errors which do not affect the
Suspense Account. ( 5 marks)

(iii) Draw up a statement to show the revised net profit. ( 3 marks)

(b) Lara Bryan has a large number of debtors. She keeps a Control Account in her General
Ledger. On March 31 2009, she extracts the following information.

2009 $
March 1 Sales ledger debit balance 5 030
March 1 Sales ledger credit balance 620
Credit sales for the month 54 010
Cash and cheques received 47 100
Bad debts written off 2 570
Discounts allowed 490
Returns inwards 1 240
Dishonoured cheques 980
Interest due on overdue accounts 180

(i) Prepare the Debtors Control Account for March 2009. ( 6 marks)

(ii) State ONE reason why Lara Bryan prepares a Control Account for debtors.
( 1 mark )

Total 20 marks

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SECTION II

Answer any TWO questions in this section.

4. The Garrifruit Company started business in January, 2007 and made all sales on a credit basis.
Being prudent, management decided to create a provision for bad debts of 2% of the year-end
debtors. The debtors for the following three years were as follows:

December 31, 2007 $25 000

December 31, 2008 $27 500
December 31, 2009 $22 500

(a) Prepare the Provision for Bad Debts Account for the three years. ( 8 marks)

(b) On examining the company’s Rent Expense Account and the Commission Revenue
Account for the year ending December 31, 2009 the following details were revealed:

Rent Expense Account Commission Revenue Account

Accrued rent December 31, 2008 $2 500 Accrued commissions December 31, 2008 $1 500
Rent paid by cheque: Commissions received by cheque:
May 31, 2009 $6 000 January 31, 2009 $7 000
November 30, 2009 $9 500 June 30, 2009 $7 000
Prepaid rent December 31, 2009 $1 000 Accrued commission December 31, 2009 $2 500

Using the above information prepare the following:

(i) Rent Expense Account

(ii) Commission Revenue Account.

Show clearly the amount to be transferred to the Income Statement. (10 marks)

(c) Show the Classified Balance Sheet Extract at December 31, 2009 for the Prepaid Rent and
Accrued Commission Revenue. ( 2 marks)

Total 20 marks

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5. The community of Swains Spring operates a Chess Club for its senior citizens. The following is the
Receipts and Payments Account for the year ended August 31, 2009.

Swains Spring Chess Club

Receipts and Payments Account
For year ended August 31, 2009

Receipts Payments
$ $
Bank balance 3 000 Rent of community centre 2 400
Subscriptions 6 000 Purchase of refreshments 1 900
Tea Party 5 300 Expenses of Tea Party 2 000
Gifts 500 General expenses 1 700
Sale of refreshments 2 650 Bank balance 9 450
17 450 17 450

Additional information provided is as follows:

September 1, 2008 August 31, 2009

$ $
Stock of refreshments 500 700
Subscriptions due 220 440
Subscriptions in advance 100 –
Rent paid in advance – 200
Chess equipment (cost) 8 000 8 000

Chess equipment is to be depreciated at the rate of 10 % per annum.

Prepare the following:

(a) A statement showing the Accumulated Fund at September 1, 2008 ( 5 marks)

(b) A Subscriptions Account ( 4 marks)

(c) A statement showing the profit or loss made on refreshments ( 4 marks)

(d) An Income and Expenditure Account for the year ended August 31, 2009 ( 7 marks)

Total 20 marks

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6. (a) Define the following terms, giving ONE example of EACH.

(i) Statutory deductions

(ii) Voluntary deductions ( 4 marks)

(b) Nalini Kalicharan’s regular rate of pay is $35 per hour for an eight-hour work day. Overtime
is paid at a rate of time and a half for extra hours worked Monday to Friday. Double time is
paid for hours worked on weekends and public holidays.

Below is Nalini’s time card for the week ended April 15.

Sunday Monday Tuesday Wednesday Thursday Friday Saturday

Public
Holiday

1:00 p.m.- 8:00 a.m.- 8:00 a.m.- 8:00 a.m.- 8:00 a.m.- 10:00 a.m.- 12:00 p.m.-
4:00 p.m. 5:00 p.m. 4:00 p.m. 6:00 p.m. 4:00 p.m. 3:00 p.m. 4:00 p.m.

On the ANSWER SHEET provided, calculate Nalini’s gross pay for the week. (11 marks)

(c) Kevin Stuart earns a monthly gross salary of $16 000.00. His monthly deductions are as
follows.

National Insurance – 2% of gross pay

Credit Union – $1 000
Education Tax – 1.5% of gross pay
Pension plan – $500
Income Tax – 20% after all other deductions

Calculate Kevin’s monthly net pay. (Show your workings.) ( 5 marks)

Total 20 marks

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7. (a) (i) Identify TWO essential features of co-operatives. ( 2 marks)

(ii) State TWO similarities between co-operatives and corporations (Limited Liability
Companies). ( 2 marks)

(b) The Silver Quays Fishermen’s Co-operative Society began operation on January 1, 2009 with
200 members. Each member purchased 50 shares for $20 each.

Prepare the journal entry to show the ‘start up’ of the co-operative. ( 4 marks)

(c) The Brighton Teachers Credit Union's share capital stands at $300 000. Shares were sold to
the members at $3 each. The credit union’s Trading and Profit and Loss Account (Income
Statement) for year ended June 30, 2009 showed a surplus of $70 000. Undistributed surplus
brought forward from June 2008 was $55 000.

The total available surplus is to be shared in the following manner:

1. 20% to be transferred to Teachers’ Education Development Fund

2. 5% to be given as charitable donation to the School for the Hearing Impaired
3. 30% to be transferred to Loan Fund
4. 25% to be paid out as dividends to members

(i) Prepare the Credit Union’s Appropriation of Profits Account, for the year ended
June 30, 2009. ( 6 marks)

(ii) Calculate the dividend that was paid on EACH share. (Show your workings.)
( 3 marks)

(iii) Calculate the Return on Capital Employed. (Show your workings.) ( 3 marks)

Total 20 marks

END OF TEST

01239020/JANUARY/F 2010
 TEST CODE 01239020
FORM TP 2010023 JANUARY 2010
CAR I B B EAN E XAM I NAT I O N S C O U N C I L
SECONDARY EDUCATION CERTIFICATE
EXAMINATION
PRINCIPLES OF ACCOUNTS
Paper 02 – General Proficiency

Answer Sheet for Question 6 (b) Candidate No: ___________________

Centre No: ______________________

Nalini Kalicharan

Regular Hours Overtime Hours Overtime Hours

(Time and a Half) (Double Time)

Sunday
Monday
Tuesday
Wednesday

Thursday
Friday
Saturday
Total

Pay at regular hours (show workings) $

Pay at overtime hours

(time and a half) (show workings) $

Pay at overtime hours

(double time) (show workings) $

Gross Pay $

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