INTERNATIONAL

ADVANCED LEVEL
ACCOUNTING

WORKSHEET
- ACCOUNTING SYSTEM -

Question 1
The trial balance of Eden on 31 August 2020 showed a difference which was posted to a
suspense account. Upon inspection of the books and draft >inancial statement, the below
errors were discovered:

(1) The Sales Day Book had been undercast by £3 250

(2) Purchases on credit from Godak of £850, had been recorded in the ledger account
of Godak

(3) On 31 August 2020, one page from the inventory count for a total £900, had been
omitted

(4) Discount allowed of £280 had been credited to Discount Allowed Account.

(5) Rent of £6 000 had been paid for the period 1 May – 31 October 202. The full
amount had been charged to the Statement of Pro>it or Loss and Other
Comprehensive Income.

(6) Telephone expenses of £750 had been correctly recorded in the Bank Account
but had been recorded in the Telephone Expenses Account as £570.

(7) The purchase of new computer, £5 000, had been recorded in the Computer
Expenses Account. Depreciation was charged on computers at the rate of 25 per
cent per annum the straight line method.

Required:

(a) Identify which of the above errors could be corrected by using the Suspense
Account. (3 marks)

(b) Record the correction of all the errors (1-7) with journal entries. Narrative are not
required. (16 marks)

(c) Prepare a Suspense Account after the correction of all error, with the opening
balance demonstrated. (5 marks)

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ACCOUNTING

On the 31 August 2020, the following balances were recorded in the ledger before the
correction of errors:
£
Inventory 41 600
Discount Allowed 1 320
Computer Expense 12 300

Required:

(d) Prepare the following corrected ledger accounts:

(i) Inventory Account (3 marks)
(ii) Discount Allowed Account (3 marks)
(iii) Computer Expenses Account (3 marks)

Despite the failure to balance of the trial balance, Eden prepared draft >inancial
statements that showed a draft pro>it for the year of £23 350

(e) Computerise the revised pro>it or loss for the year after the correction of all errors
by completing the table. (10 marks)

£
Draft pro?it for the year 23 350
Increase Decrease
Error No changed
£ £
(1) ▢
(2) ▢
(3) ▢
(4) ▢
(5) ▢
(6) ▢
(7) ▢
Sub-total ▢
Revised pro?it for the year


(f) Evaluate the usefulness of preparing draft >inancial statements when it is known
that there are errors in the books. (12 marks)

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ACCOUNTING

Question 2
Benny and Sammy have been in partnership for several years. On 1 September 2021,
Jenny was admitted to the partnership.

The following information is available as the deed of partnership:

Benny and Sammy Benny, Sammy and Jenny
Partnership Partnership
Interest on capital 6% 4%
Annual salary
Sammy £24 600 £24 600
Pro?it and loss sharing ratio
Benny 50% 35%
Sammy 50% 40%
Jenny - 25%

Additional information:

(1) The >inancial year ends on 31 January.

(2) At 1 February 2021, the balance brought down on Benny and Sammy’s capital
accounts was £45 000 and £84 000 respectively.

(3) On 1 September 2021, Benny paid additional capital into the partnership bank
account of £25 000.

(4) On admission to the partnership, Jenny made a capital investment of £21 000.

(5) Goodwill has been agreed at a valuation of £54 000. It has been agreed that
goodwill will not be maintained in the books of account.

(6) The pro>it for the year ended 31 January 2022 was £100 500. Pro>its accrue evenly
throughout the year.

(7) At 31 January 2022, the drawings of the partners for the year were:

Benny £26 000
Sammy £35 000
Jenny £10 000


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 INTERNATIONAL ADVANCED LEVEL
ACCOUNTING

Required:


(a) (i) De>ine the term goodwill. (2 marks)

(ii) State two examples of goodwill. (2 marks)

(iv) State two reasons why goodwill is not normally recorded in the books.
(2 marks)
(v) State the effect on each of the following if goodwill is retained in the books:
• pro>it/loss for the year
• bank overdraft (2 marks)


(b) Prepare the partnership appropriation account for the year ended 31 January
2022, showing clearly all the relevant >igures for the seven months before Jenny
joined and the ?ive months later. (12 marks)

(c) On joining the partnership, Jenny notice Benny and Sammy maintain separate
capital and current accounts. Jenny would like to change this so that each partner
has a combined capital and current account.

Evaluate whether the partnership should make this change. (10 marks)