DECEMBER 2015

BOOKKEEPING

Instructions to candidates:
a) Time allowed: Three hours (plus an extra ten minutes’ reading time at the start – do not write anything
during this time)
b) Answer any FIVE questions
c) All questions carry equal marks. Marks for each question are shown in [ ]
d) Non-programmable calculators are permitted in this examination

1. You work as an accountant to a small business called GoodMart. The following trial balance has been
compiled on 30 November 2015:
£dr £cr
Accounts receivable 19,000
Accounts payable 13,000
Cash 1,000
Bank 3,000
Stationery expenses 5,000
Rent, rates and insurance 31,000
Purchases 95,000
Sales 400,000
Advertising expenses 13,000
Returns inwards 2,000
Inventory (01 12 14) 22,000
Payroll costs 119,000
Communication expenses 19,000
Energy costs 28,000
Interest paid 2,000
Drawings 24,000
Premises 250,000
Equipment at cost 80,000
Depreciation a/c (01 12 14) 20,000
Long-term loan 45,000
Capital a/c (01 12 14) 235,000
------------ -------------
713,000 713,000
======= ========
NOTES as at 30 November 2015:
• Inventory was valued at £23,000
• Advertising expenses prepaid amounted to £1,000
• Payroll costs owing amounted to £6,000
• Equipment is to be depreciated at 20% pa on cost
TASKS
a) Prepare the income statement for the year ended 30 November 2015. [11]
b) Prepare the position statement as at 30 November 2015. [9]

continued overleaf
2. The following are the first 12 transactions of a new business:
Nov. 01 Put £35,000 into a business bank account
Nov. 01 Paid rent £25,000 by cheque
Nov. 01 Paid £9,000 for office equipment, paying by cheque
Nov. 02 Bought goods for resale £10,000, paying by cheque
Nov. 05 Bought stationery for £600, paying by cheque
Nov. 07 Sold goods for £4,000, and immediately banked the cheque
Nov. 08 Paid wages £1,000, paying by cheque
Nov. 10 Bought goods for resale £7,000, paying by cheque
Nov. 12 Paid insurance premium £2,000, paying by cheque
Nov. 14 Sold goods for £8,000, and immediately banked the cheque
Nov. 15 Paid wages £1,000, paying by cheque
Nov. 19 Sold goods for £4,000, and immediately banked the cheque
TASKS
a) Record the above transactions in the relevant ledger account, and balance the accounts off. [12]
b) Prepare the trial balance as at the end of 19 November 2015. [4]
c) Explain the consistency concept. [4]

3. The following fixed asset transactions took place during the period 1 January 2012 to 31 December 2014:
01 01 2012 Machine A purchased for £20,000
01 01 2013 Machine B purchased for £24,000
16 02 2014 Machine C purchased for £25,000
18 02 2014 Machine A was sold for £10,000
NOTES
• Machines are depreciated at 20% per year on cost
• In the year of purchase a full year of depreciation is to be provided
• In the year of disposal no depreciation is to be provided
TASKS
a) Write up the machines at cost account for the period ended 31 12 14. [4]
b) Write up the provision for machine depreciation account for the period ended 31 12 14. [8]
c) Write up the machine disposal account. [4]
d) Explain the importance of maintaining competent depreciation records. [4]

4. a) Explain the sources of capital available to a partnership. [10]

b) Distinguish between capital and revenue expenditure. [5]
c) Explain the functions of a trial balance. [5]

5. You have the following details regarding the sales and purchase ledgers of a business:
£
Nov. 1 Total debtors (accounts receivable) 221,000
Total creditors (accounts payable) 105,000
Transactions in November:
Credit sales 209,000
Cash sales 6,000
Credit purchases 114,000
Cash purchases 4,000
Returns to credit suppliers 1,500
Returns from credit customers 1,900
Contras (set offs) 2,800
Discounts allowed 3,400
Discounts received 1,600
Bad debts written off in November 700
Increase in provision for doubtful debts 600
Receipts from debtors 218,000
Payments to creditors 104,000
TASKS
a) Prepare the sales ledger control account as at 30 November. [8]
b) Prepare the purchase ledger control account as at 30 November. [7]
c) Explain the reasons for the use of control accounts. [5]

continued overleaf
6. a) Calculate the total provision for doubtful debts from the following data:
Closing debtors (accounts receivable) £110,000
Provision for doubtful debts are assessed to be 4% of the closing debtors [3]
b) Explain the accounting treatment of writing off bad debts. [6]
c) Explain the role of an accountant. [5]
d) Explain the functions of a bank reconciliation statement. [6]

7. The following credit purchases took place during November 2015:

Nov. 01 Invoice for goods from Axel £400
Nov. 02 Invoice for goods from Bella £500
Nov. 04 Invoice for goods from Cipriani £800
Nov. 06 Invoice for goods from Bella £700
Nov. 10 Invoice for goods from Axel £300
Nov. 14 Invoice for goods from Cipriani £900
Nov. 18 Invoice for goods from Bella £600
Nov. 21 Invoice for goods from Axel £700
Nov. 25 Invoice for goods from Bella £800
Nov. 27 Invoice for goods from Axel £600
All the above purchase invoices need 20% VAT (sales tax) added to the goods values.
Axel is a new supplier, and a cheque amounting to £480 was sent out to him on 28 November.
TASKS
a) Fully record the above transactions in the purchase day book. [10]
b) State the amount to be posted to the purchase account, AND state whether it is a debit OR credit
entry. [2]
c) Write up the account for Axel for the period ending 30 11 15. [4]
d) Explain the functions of a suspense account. [4]

8. Write short notes on FOUR of the following:

a) Share capital
b) An overdraft
c) Petty cash voucher
d) VAT
e) The advantages of computerised accounting
f) Direct debits
g) A cash book [5 each]

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