MARCH 2018

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 Rebsoph. The following trial balance has been
compiled on 28 February 2018:
£dr £cr
Capital at 01 03 17 280,000
Purchases 124,000
Returns outwards 2,000
Accounts receivable 26,000
Accounts payable 13,000
Cash 1,000
Bank 6,000
Rent, rates and insurance 39,000
Energy costs 22,000
Sales 435,000
Advertising expenses 15,000
Returns inwards 1,000
Inventory at 01 03 17 23,000
Payroll costs 132,000
Communication expenses 26,000
Interest paid 3,000
Drawings 32,000
Premises 280,000
Equipment at cost 100,000
Depreciation a/c (01 03 17) 40,000
Long-term loan 60,000
------------ -------------
830,000 830,000
======= ========
NOTES as at 28 February 2018:
• Inventory was valued at £22,000
• Rent prepaid amounted to £3,000
• Payroll costs owing amounted to £5,000
• Advertising expenses owing amounted to £3,000
• Equipment is to be depreciated at 25% on cost
TASKS
a) Prepare the income statement (trading and profit and loss account) for the year ended 28 February
2018. [11]
b) Prepare the position statement (balance sheet) as at 28 February 2018. [9]

continued overleaf
2. The following are the first 12 transactions of a new business:
Feb. 01 Put £45,000 into a business bank account.
Feb. 01 Paid rent £2,400 by cheque.
Feb. 02 Paid £16,000 for office equipment, paying by cheque.
Feb. 02 Bought goods for resale £8,500, paying by cheque.
Feb. 04 Bought stationery for £950, paying by cheque.
Feb. 06 Sold goods for 4,800, and immediately banked the cheque.
Feb. 08 Paid wages £1,900, paying by cheque.
Feb. 11 Bought goods for resale £9,000, paying by cheque.
Feb. 12 Paid insurance premium £2,600, paying by cheque.
Feb. 14 Sold goods for £6,800, and immediately banked the cheque.
Feb. 16 Paid wages £1,900, paying by cheque.
Feb. 19 Sold goods for £5,500, 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 February 2018. [4]
c) Explain briefly the purpose of a trial balance. [4]

3. The following fixed asset transactions took place during the period 1 Jan. 2014 to 31 Dec. 2017:
04 01 2014 Machine A purchased for £22,000
03 02 2015 Machine B purchased for £24,000
05 03 2016 Machine C purchased for £30,000
21 03 2016 Machine A was sold for £10,100
NOTES
• Machines are depreciated at 25% pa 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 1 January 2014 to 31 December 2017. [4]
b) Write up the provision for machine depreciation account for the period 1 January 2014 to 31
December 2017. [9]
c) Write up the machine disposal account. [4]
d) Outline the importance of maintaining an accurate provision for depreciation account. [3]

4. The following petty cash transactions took place in February 2018:

£
Feb. 01 Opening balance 200
Feb. 02 Paid for stationery 22
Feb. 03 Paid postage 21
Feb. 07 Paid for office tea/coffee 9
Feb. 13 Paid postage 18
Feb. 15 Paid for stationery 19
Feb. 23 Paid postage 16
Feb. 24 Paid postage 15
Feb. 25 Paid for stationery 17
Feb. 26 Paid for office tea/coffee 10
Feb. 26 Paid postage 22
Feb. 27 Paid for stationery 14
Feb. 28 Paid postage 16
Feb. 28 Received from the main cashier the amount required to make up the imprest to £200.
TASKS
a) Record the above transactions in the petty cash book – use the following three headings:
stationery, postage and office tea/coffee. [14]
b) Explain the principal functions of a bank reconciliation statement. [6]

continued overleaf
5. The following credit sales took place during February 2018:
Feb. 01 Invoice for goods £800 to Aron
Feb. 03 Invoice for goods £600 to Chubua
Feb. 04 Invoice for goods £400 to Boadu
Feb. 06 Invoice for goods £300 to Boadu
Feb. 11 Invoice for goods £800 to Aron
Feb. 13 Invoice for goods £600 to Chubua
Feb. 19 Invoice for goods £700 to Aron
Feb. 21 Invoice for goods £1,200 to Boadu
Feb. 24 Invoice for goods £900 to Chubua
Feb. 28 Invoice for goods £1,000 to Aron
All the above purchase invoices need 20% VAT (sales tax) added to the goods values.
Aron is a new customer and sent in a cheque for £1,920 on 27 February 2018.
TASKS
a) Fully record the above transactions in the sales day book. [10]
b) State the amount to be posted to the sales account (state whether it should be debited or
credited). [2]
c) Explain the purpose of day books. [4]
d) Write up the ledger account of Aron for the month of February 2018. [4]

6. a) Explain the possible sources of finance available to a partnership. [6]

b) Discuss the needs of THREE ‘users’ of accounting information – sometimes referred to as
interested parties or stakeholders. [6]
c) Explain the major services that a bank can provide for a business account holder. [8]

7. You have the following details regarding the sales and purchase ledgers of a business:
£
February 1 Total creditors (accounts payable) 78,000
Total debtors (accounts receivable) 184,000
Transactions in February:
Cash sales 5,000
Cash purchases 6,000
Credit sales 201,000
Credit purchases 99,000
Returns to credit suppliers 1,800
Returns from credit customers 1,200
Discounts received 4,200
Discounts allowed 3,400
Bad debts written off in February 600
Contras (set offs) 2,500
Increase in provision for bad debts 300
Payments to creditors 81,000
Receipts from debtors 195,000
TASKS
a) Prepare the sales ledger control account as at 28 February 2018. [8]
b) Prepare the purchase ledger control account as at 28 February 2018. [7]
c) Explain the major purpose of control accounts. [5]

8. Write short notes on FOUR of the following:

a) A suspense account
b) VAT (sales tax)
c) Journal entries
d) Depreciation
e) Intangible assets
f) HP finance
g) Management accounting [5 each]

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