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Year 11 Aug Sept 2021 Mock Exam2 - Paper 2
Year 11 Aug Sept 2021 Mock Exam2 - Paper 2
1. Beth is a trader. Her financial year ends on 31 March. The trial balance prepared on 31
March 2014 failed to agree. The difference was entered in a suspense account.
1 The total of the discount received column in the cash book, $96, had not been
posted to the ledger.
2 Cash received from a tenant, $340, had been entered in the cash book but had
not been posted to the rent received account.
4 The balance of the petty cash book, $100, had not been included in the trial
balance.
1
REQUIRED
[8]
Before the errors were discovered Beth calculated that she had made a profit for the year
ended 31 March 2014 of $14 940.
REQUIRED
(b) Prepare a statement to show the effect of correcting errors 1 – 5 on the original profit
for the year.
If the error does affect the profit for the year write “No
example.
Beth
Statement of corrected profit for the year ended 31 March 2014
$
Profit for the year before corrections 14 940
Effect on profit
Increase Decrease
$ $
Error 1 96
2
3
4
5
REQUIRED
(c) Calculate the quick ratio. The calculation should be corrected to two decimal places.
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(e) Explain why the quick ratio is more reliable as an indicator of liquidity than the current ratio.
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[Total: 20]
2. (a) Ravi provided the following information about inventory held at the end of his financial
year.
Product Units held Cost per Selling and distribution Selling price
unit cost per unit per unit
$ $ $
A 600 15 2.00 21
B 100 12 1.50 13
C 50 18 2.00 17
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(b) Name two business documents used to make entries in the accounting records of a
business. (i)
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(ii)............................................................................................................................. *2+
(c) Tapac Limited has issued 200 debentures of $100 each. Interest at the rate of 3% per
annum is payable in two equal instalments on 30 June and 31 December each year.
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(d) (i) Explain what is meant by a bad debts.
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(e) Smart ordered 300 computer components from Raj. The price of each component was
$10.30. Raj allowed a trade discount of 4% and a cash discount of 5% if paid within
credit period.
Calculate the total of the invoice Smart received. Show your workings.
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[Total: 20]
3. GMM limited is a manufacturing business.
The manufacturing account of GMM Limited for the year ended 31 December 2012 showed the
following:
$
Inventory of raw materials – 1 January 2012 5 000
- 31 December 2012 7 500
Purchases of raw materials 112 500
Production labour 82 000
Factory overheads excluding depreciation of 41 800
machinery
Depreciation of machinery 6 000
REQUIRED
(a) Calculate the following for the year ended 31 December 2012.
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GMM Limited provided the following additional information for the year ended 31 December 2012.
$
Revenue 550 000
Inventory of finished goods – 1 January 2012 51 000
- 21 December 2012 47 300
Purchases of finished goods 95 200
Distribution costs 61 800
Administration costs 95 100
Finance charges 16 100
REQUIRED
(b) Prepare the income statement for the year ended 31 December 2012.
GGM Limited
Income Statement for the year ended 31 December 2012
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The directors of the company know that the factory machinery is very old and they are considering
replacing it at a cost of $100 000. They provided the following information.
1 The old machinery was being depreciated at $6000 per annum. This machinery
would be sold at net book value.
4 The cost of raw material used would decrease by 4% if the new machinery
was purchased.
REQUIRED
(e) Complete the following table to calculate the change in profit for the year if the new
machinery was purchased. [6]
Savings $
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Increase/(decrease) in profit
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[Total: 20]
4. The financial year of Kapitan Ltd ends on 31 August.
During the year ended 31 August 2016 the company paid the following:
1 Final dividend of $0.10 per share on ordinary share, for the financial year
ended 31 August 2015
2 Interim dividend of $0.05 per share on ordinary share
The profit for the year ended 31 August 2016 before the preference share dividend was
$174 000.
REQUIRED
(a) Calculate the profit for the year ended 31 August 2016 after taking into account the
preference share dividend.
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(b) Prepare the Statement of Changes in Equity for the year ended 31 August 2016.
Kapitan Ltd
Statement of Changes in Equity for the year ended 31 August 2016
Ordinary General Retained Total
share reserve earnings
capital
$ $ $ $
On 1 Sept 2015
[9]
(c) (i) Explain how the proposed final dividend of $0.08 per share on the ordinary shares of
Kapitan Ltd on 31 August 2016 would be treated in the accounts?
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Kapitan Ltd requires extra finance. It is considering increasing the total preference share capital to
$100 000 by the issue of additional 5% preference share of $1 each.
REQUIRED
1……………………………………………………………………………………………………………………………………………………
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(ii) State how much money the company could raise from the issue of the preference shares.
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(iii) State the amount of additional preference dividend which would have to be paid each
year if the extra shares are issued.
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(iv) State one way in which the issue of preference shares may affect the existing
ordinary shareholders.
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[Total: 20]
5. Melany is a trader. Her financial year ends on 31
July.
She provided the following information.
$
For the year ended 31 July 2016
Total sales – credit 288 000
- cash 42 000
330 000
1.95 : 1
1.15 : 1
27 days
32 days
[8]
(b) Suggest two reasons for the change in the current ratio.
1 …………………………………………………………………………………………………………………………………………………..
2 ……………………………………………………………………………………………………………………………………………. *2+
(c) Complete the following table by placing a tick (√) in the correct column to show how each
of the following courses of action would affect Melany’s current ratio.
[4]
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(f) (i) Suggest one advantage to Melany of the change in the trade payables payment periods.
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(ii) Suggest one disadvantage to Melany of the change in the trade payables payment period.
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[Total: 20]