Exam ID 322

Qualifications:

Level 3 Certificate in Bookkeeping QCF (Accreditation number: 500/8479/3)

Level 3 Certificate in Manual Bookkeeping QCF (Accreditation number: 500/9260/1)

Level 3 Certificate in Applied Bookkeeping QCF (Accreditation number: 500/9276/5)

Examination: January 2012

Units:

Prepare financial statements for a partnership – Y601/0742

Prepare financial statements for a sole trader – A601/0734

PAPER 2

MODEL ANSWERS

International Association of Book-keepers

Suite 30, 40 Churchill Square, Kings Hill, West Malling, Kent, ME19 4YU

Tel: 0844 330 3527, Fax: 0844 330 3514, Email: education@iab.org.uk

IAB L3 Cert (QCF)/ Jan 2012 Mod Ans (P2)

Page

1

SECTION A

QUESTION ONE

Amir and Omar Trading in Partnership

Trading and Profit and Loss Account – Answer Task A

Amir and Omar

Trading and Profit and Loss Account for the Year Ended 31 December 2011

£ £ £

Sales 1/2 792,200

Less Cost of Goods Sold

Opening stock 1/2 45,500

Add Purchases 1/2 566,125

611,625

Less Closing stock 1/2 41,600

Cost of Sales 1/2 570,025

Gross profit 1 222,175

Less Expenses

Heat and light (£5,025 + £1,600) 1 6,625

Wages 1/2 48,425

Vehicle expenses 1/2 8,675

Advertising 1/2 28,000

Operating expenses 1/2 2,250

Bank charges and interest 1/2 1,650

Rates (£15,200 - £3,600) 1 11,600

Insurances 1/2 2,400

Depreciation (£2,250 + £12,648) 1 14,898

124,523

Net profit 1 97,652

10½ Marks

IAB L3 Cert (QCF)/ Jan 2012 Mod Ans (P2)

Page

2

Amir and Omar Trading in Partnership

Profit and Loss Appropriation Account – Answer Task B

Amir and Omar

Profit and Loss Appropriation Account for the Year Ended 31 December 2011

£ £

Net profit 1/2 97,652

Add Interest on drawings: Amir 1/2 1,200

Omar 1/2 1,000

2,200

99,852

Less Interest on capital: Amir 1 6,900

Omar 1 5,400

12,300

87,552

Less Share of profits: Amir 1 43,776

Omar 1 43,776

87,552

-

5½ Marks

IAB L3 Cert (QCF)/ Jan 2012 Mod Ans (P2)

Page

3

Amir and Omar Trading in Partnership

Current Accounts – Answer Task C

DR Current Accounts CR

2011 Details Amir £

Omar £

2011 Details Amir £

Omar £

31 Dec Balance b/f ¼ 1,500 31 Dec Balance b/f ¼ 1,200

31 Dec Interest on drawings

¼ 1,200 ¼ 1,000 31 Dec Interest on capital

¼ 6,900 ¼ 5,400

31 Dec Drawings ¼ 40,000 ¼ 38,000 31 Dec Share of profit ¼ 43,776 ¼ 43,776

31 Dec Balance c/d ½ 7,976 ½ 11,376

50,676 50,376 50,676 50,376

31 Dec Balance b/d ¼ 7,976 ¼ 11,376

4 Marks

IAB L3 Cert (QCF)/ Jan 2012 Mod Ans (P2)

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4

Amir and Omar Trading in Partnership

Balance Sheet - Answer Task D

Amir and Omar Balance Sheet as at 31 December 2011

£ £ £

Fixed Assets Cost Less Dep’n to

Date

NBV

Premises ¼ 300,000 - ¼ 300,000

Fixtures and fittings ¼ 22,500 ½ 9,000 ¼ 13,500

Vehicles ¼ 79,050 ½ 28,458 ¼ 50,592

401,550 37,458 ½ 364,092

Current Assets

Stock ½ 41,600

Trade debtors ½ 110,980

Prepaid expenses ½ 3,600

156,180

Less Current Liabilities

Trade creditors ½ 73,650

Accrued expenses ½ 1,600

Bank ½ 15,670

90,920

Working capital ½ 65,260

1 429,352

Financed By:

Capital – Amir ½ 230,000

Add Current account ¼ 7,976

237,976

Capital – Omar ½ 180,000

Add Current account ¼ 11,376

191,376

1 429,352

10 Marks

Total This Question = 30 Marks

IAB L3 Cert (QCF)/ Jan 2012 Mod Ans (P2)

Page

5

QUESTION TWO

Eric, Kevin and Liam Trading in Partnership

Capital Accounts – Answer Task A

DR Capital Accounts CR

2011 Details Eric £

Kevin £

Liam £

2011 Details Eric £

Kevin £

Liam £

1 Jan Goodwill adjm’t - - 2 20,000 1 Jan Balance b/f 1 120,000 1 130,000 -

31 Dec Balance c/d 1 136,000 1 134,000 1 120,000 1 Jan Bank - - 1 140,000

1 Jan Goodwill adjm’t 2 16,000 2 4,000 -

136,000 134,000 140,000 136,000 134,000 140,000

31 Dec Balance b/d ½ 136,000 ½ 134,000 ½ 120,000

13½ Marks

Workings – Goodwill Adjustment

Partners Goodwill Creation

Goodwill Deletion

Net Adjustment

£ £ £

Eric 36,000 (CR) 20,000 (DR) 16,000 (CR)

Kevin 24,000 (CR) 20,,000 (DR) 4,000 (CR)

Liam - 20,000 (DR) 20,000 (DR)

60,000 (CR) 60,000 (DR) -

IAB L3 Cert (QCF)/ Jan 2012 Mod Ans (P2)

Page

6

Eric, Kevin and Liam Trading in Partnership

Profit and Loss Appropriation Account – Answer Task B

Eric, Kevin and Liam

Profit and Loss Appropriation Account

for the Year Ended 31 December 2011

£ £

Net profit ½ 114,600

Less Interest on capital: Eric 1 5,440

Kevin 1 5,360

Liam 1 4,800

15,600

99,000

Less Salary: Liam 1 9,000

90,000

Less Share of profit: Eric 1 30,000

Kevin 1 30,000

Liam 1 30,000

90,000

-

7½ Marks

IAB L3 Cert (QCF)/ Jan 2012 Mod Ans (P2)

Page

7

Eric, Kevin and Liam Trading in Partnership

Current Accounts - Answer Task C

DR Current Accounts CR

2011 Details Eric £

Kevin £

Liam £

2011 Details Eric £

Kevin £

Liam £

1 Jan Balance b/f - ½ 2,000 - 1 Jan Balance b/f ½ 1,500 - -

31 Dec Drawings ½32,000 ½32,000 ½ 32,000 31Dec Interest on capital ½ 5,440 ½ 5,360 ½ 4,800

31Dec Balance c/d ½ 4,940 ½ 1,360 ½11,800 31Dec Salary ½ 9,000

31Dec Share of profit ½ 30,000 ½ 30,000 ½ 30,000

36,940 35,360 43,800 36,940 35,360 43,800

31 Dec Balance b/d ½ 4,940 ½ 1,360 ½ 11,800

9 Marks

Total This Question = 30 Marks

Total This Unit = 60 Marks

IAB L3 Cert (QCF)/ Jan 2012 Mod Ans (P2)

Page

8

SECTION B

QUESTION ONE

Direct Plumbing Supples

Trial Balance – Answer Task A

Direct Plumbing Supplies Trial Balance as at 31 December 2011

DR £

CR £

Capital 1/4 270,000

Premises (cost) 1/4 180,000

Fixtures (cost) 1/4 5,000

Vehicles (cost) 1/4 68,000

Provision for depreciation - Fixtures 1/4 1,500

- Vehicles 1/4 13,600

Stock 1 January 2011 1/4 51,890

Sales 1/4 797,290

Provision for doubtful debts 1/2 800

Purchases 1/4 687,260

Wages and salaries 1/4 40,600

Rates 1/4 18,800

Vehicle expenses 1/4 8,100

Heat and light 1/4 1,510

Bad debts 1/4 1,260

General operating expenses 1/4 4,120

Sales ledger control (trade debtors) 1/4 40,260

Purchase ledger control (trade creditors) 1/4 48,570

Bank 1/4 5,350

Drawings 1/4 24,000

Value added tax (VAT) 1/4 5,830

Suspense 1 1,440

Totals 1/2 1,137,590 1/2 1,137,590

7½ Marks

IAB L3 Cert (QCF)/ Jan 2012 Mod Ans (P2)

Page

9

Direct Plumbing Supplies

Suspense Account – Answer Tasks B and D

DR Suspense Account CR 2011 Details £ 2011 Details £

31 Dec 31 Dec

Difference in books 1/2 Sales ledger control 1/2

1,440 560

31 Dec Sales 1/2 2,000

2,000 2,000

1½ Marks

Journal – Answer Task C

Journal

2011 Details DR

£

CR

£

31 Dec Sales 1/4 ½ 2,000

Suspense 1/4 ½ 2,000

Correction of error, sales overstated when transferred from Sales Day Book 1/4

31 Dec Suspense 1/4 ½ 560

Sales Ledger Control 1/4 ½ 560

Correction of error, bad debt written off not posted to Sales Ledger Control Account 1/4

3½ Marks

IAB L3 Cert (QCF)/ Jan 2012 Mod Ans (P2)

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10

Direct Plumbing Supplies

Extended Trial Balance – Answers Tasks E, F and G

Direct Plumbing Supplies – EXTENDED TRIAL BALANCE AS AT 31 December 2011

Trial Balance Adjustments Profit & Loss Balance Sheet

Ledger Account DR £

CR £

DR £

CR £

DR £

CR £

DR £

CR £

Capital 270,000 ¼ 270,000

Premises (cost) 180,000 ¼,180,000

Fixtures (cost)l 5,000 ¼ 5,000

Vehicles (cost) 68,000 ¼ 68,000

Prov’n dep’n - Fixtures 1,500 ¼ 500 ½ 2,000

- Vehicles 13,600 ¼10,880 ½ 24,480

Stock 1 January 2011 51,890 ¼ 51,890

Sales ½ 795,290 ¼ 795,290

Prov’n doubtful debts 800 ¼ 600 ½ 1,400

Purchases 687,260 ¼ 687,260

Wages and salaries 40,600 ¼ 40,600

Rates 18,800 ¼ 3,800 ½ 15,000

Vehicle expenses 8,100 ¼ 8,100

Heat and light 1,510 ¼ 500 ½ 2,010

Bad debts 1,260 ¼ 1,260

General operating exp’s 4,120 ¼ 4,120

Sales ledger control ½ 39,700 ¼ 39,700

Purchase ledger control 48,570 ¼ 48,570

Bank 5,350 ¼ 5,350

Drawings 24,000 ¼ 24,000

Value added tax (VAT) 5,830 ¼ 5,830

Totals ½ 1,135,590 ½ 1,135,590 - - - - - -

Closing stock – Profit & loss

¼53,560 ¼ 53,560

Closing stock – Balance Sheet

¼53,560 ¼ 53,560

Prov’n doubtful Debts Adjm’t – P & L

¼ 600 ½ 600

Prepayment adjustment ¼ 3,800 ¼ 3,800

Accruals adjustment ¼ 500 ¼ 500

Depreciation expense ¼11,380 ¼ 11,380

Net profit ½ 26,630 ½ 26,630

Totals ½69,840 ½69,840 ½ 848,850 ½ 848,850 ½ 379,410 ½ 379,410

17 Marks

IAB L3 Cert (QCF)/ Jan 2012 Mod Ans (P2)

Page

11

Direct Plumbing Supplies

Trading and Profit and Loss Account – Answer Task H

Direct Plumbing Supplies

Trading and Profit and Loss Account for the Year Ended 31December 2011

£ £ £

Sales 1/4 795,290

Less Cost of Goods Sold

Opening stock 1/4 51,890

Add Purchases 1/4 687,260

739,150

Less Closing stock ¼ 53,560

Cost of Sales ½ 685,590

Gross Profit ½109,700

Less Expenses

Wages and salaries 1/4 40,600

Rates 1/4 15,000

Vehicle expenses 1/4 8,100

Heat and light 1/4 2,010

Bad debts 1/4 1,260

General operating expenses 1/4 4,120

Provision for doubtful debts (increase) 1/4 600

Depreciation 1/4 11,380

83,070

Net profit 1 26,630

5 Marks

IAB L3 Cert (QCF)/ Jan 2012 Mod Ans (P2)

Page

12

Direct Plumbing Supplies

Balance Sheet – Answer Task H

Direct Plumbing Supplies Balance Sheet as at 31 December 2011

£ £ £

Fixed Assets Cost Less Dep’n to Date

NBV

Premises 180,000 - 1/4 180,000

Fixtures 5,000 1/4 2,000 1/4 3,000

Vehicles 68,000 1/4 24,480 1/4 43,520

253,000 26,480 1/4 226,520

Current Assets

Stock 1/4 53,560

Trade debtors (net of provision for doubtful debts) 1/2 38,300

Prepayment 1/4 3,800

Bank 1/4 5,350

101,010

Less Current Liabilities

Trade creditors 1/4 48,570

Accrual 1/4 500

Value added tax (VAT) 1/4 5,830

54,900

Working capital 1/4 46,110

½ 272,630

Financed By:

Capital 1/4 270,000

Add Net Profit 1/4 26,630

296,630

Less Drawings 1/4 24,000

½ 272,630

5½ Marks

Total This Question= 40 Marks

Total This Unit = 40 Marks