CIMA

CERTIFICATE IN BUSINESS ACCOUNTING

PAPER C2
FUNDAMENTALS OF FINANCIAL ACCOUNTING

COURSE TEST 5
QUESTION PAPER

Answer all questions

CMC2CT10(N) CT5 Questions

CC210 C2 CT (5)

CMC2CT10(N) CT5 Questions

You must attempt all questions.

Each correct answer will score two marks. No deduction will be made for wrong answers.
An answer sheet is provided on the last page of this test. You must indicate your answer in the box provided.
No workings should be submitted on the answer sheet
1

A business paid out $12,450 in net wages to its employees. In respect of these wages, the following
amounts were shown in the balance sheet.
$
Income tax creditor
2,480
National Insurance creditor
employees'
1,350
employer's
1,500
Employees' gross wages, before deductions, were $

The sales tax account in Atomic Limited's nominal ledger currently shows output tax and input tax for the
quarter at $228,816 and $176,949 respectively. A detailed review of the account highlights the following:

$8,301 of sales tax included on payable credit notes has been posted to output sales tax

Output tax of $3,606 has been posted to the debit of the input tax account

The correct amount payable to the tax authorities is $

3

Cox Ltd has a debit balance on its suspense account of $4,200. On investigation an error is identified
where a discount received of $1,420 has been debited to both the purchase ledger control account and
the discounts received account.
The double entry required to correct this is
Dr

Cr

Suspense

Discounts received

Cornucopia Ltd has a standard mark-up of 25% on cost. During 20X8, its sales are $125,000 and its
purchases were $80,000. Opening inventory was $35,000. The company did not carry out a stocktake at
31.12.X8 and has no records of an inventory figure at that date.
Using the information above the closing inventory is $

The gross profit margin is 20% where

A

Cost of sales is $100,000 and sales are $120,000

Cost of sales is $100,000 and sales are $125,000

Cost of sales is $80,000 and gross profit is $16,000

Cost of sales is $80,000 and sales are $96,000

Winn Ltd has opening trade payables of $24,183 and closing trade payables of $34,665. Purchases for
the period totalled $254,192 ($31,590 relating to cash purchases).
Total payments recorded in the payables ledger for the period were

CMC2CT10(N) CT5 Questions

The following information was disclosed in the financial statements of Highfield limited for the year ended
31/12/2008
2007
2008
Plant & Machinery cost
Accumulated depreciation

255,000
(100,000)

235,000
(110,000)

During 2007, the following occurred in respect of Plant & Machinery:

Purchases of P&M
Depreciation charged on P&M
Loss on disposal of P&M

10,000
25,000
8,000

The sales proceeds received on disposal of the P&M were $

8

Given a selling price of $350 and a gross profit mark-up of 40%, the cost price would be $

The following data has been extracted from the payroll records of Kleen Ltd for the month of February
2001.
$
PAYE
17,000
Employer's NIC
7,500
Employees' NIC
6,000
Net amount paid to employees
50,000
The wage expense for the month is $

10

11

Which of the following errors would result in a trial balance imbalance?

(i)

The discounts allowed balance was listed as a credit on the trial balance.

(ii)

Drawings for the last month of the year had been posted to the sundry expenses account.

(iii)

A contra settlement had been recorded only in the receivables and payables ledgers.

all of the errors

(i) only

(i) and (ii)

(iii) only

Richard is a sales tax registered trader. All his sales and purchases carry sales tax at the standard rate of
17%. A customer is sold goods on credit for $4,600 exclusive of sales tax. The double entry to record
this transaction is
Dr

12

Cr

Receivables

Sales

Sales tax

There is $100 in the cash till at the year end at Peggy Limited, but the accountant has discovered that
some cash has been stolen. At the beginning of the year there was $50 in the cash till and receivables
were $2,000. Total sales for the year were $230,000. Receivables at the end of the year were $3,000.
Cheques banked from credit sales were $160,000 and cash sales of $50,000 have been banked.
The amount of cash stolen during the year was $

CMC2CT10(N) CT5 Questions

FUNDAMENTALS OF FINANCIAL ACCOUNTING COURSE

TEST 5
Answer Sheet
Name: ..........................................................................

Date: ..........................................................................

Student number: ....................................................

1
2
3

Dr

Cr

Suspense
Discounts received
4
5
6
7
8
9
10
11

Dr

Cr

Debtors
Sales
VAT
12

CMC2CT10(N) CT5 Questions

CMC2CT10(N) CT5 Questions

BPP House, Aldine Place, London W12 8AA

Tel: 0845 0751 100 (for orders within the UK)
Tel: +44 (0)20 8740 2211
Fax: +44 (0)20 8740 1184
www.bpp.com/learningmedia

CIMA
CERTIFICATE IN BUSINESS ACCOUNTING
PAPER C2
FUNDAMENTALS OF FINANCIAL ACCOUNTING

COURSE TEST 5
SOLUTIONS

CMC2CT10(N) CT5 Solutions

CC210 C2 CT (5)

CMC2CT10(N) CT5 Solutions

SOLUTIONS TO COURSE TEST 5

1

$16,280

$59,079

Dr suspense $2,840, Cr Discounts received $2,840

$15,000

$212,120

$7,000

$250

$80,500

10

11

Dr Receivables $5,405, Cr Sales $4,600, Cr VAT $805

12

$18,950

CMC2CT10(N) CT5 Solutions

WORKINGS
1

$16,280
Wages paid
Employee deductions

12,450
2,480
1,350
16,280

tax
NI

Gross wages
2

$59,079
Sales tax account
Output sales tax
less credit notes
plus output sales tax posting error

$
228,816
(8,301)
3,606

Input sales tax

less output sales tax posting error
less credit notes

176,949
(3,606)
(8,301)

224,121

(165,042)
59,079
OR
Sales Tax
B/d
C/d

176,949
59,079

B/d
Correction of misposting
(3,606 X 2)

228,816
7,212
_______
236,028

236,028

The sales tax on the payable credit notes is owed to the tax authorities so it should be credited to the
sales tax account which it has been
3

Dr Suspense $2,840, Cr Discounts received $2,840

$15,000
Sales

125%

125,000

COS
Gross profit

100%
25%

100,000

x 100/125

Opening stock
Purchases

35,000
80,000
115,000
(15,000)
$100,000

Less closing stock (balancing figure)

COS

CMC2CT10(N) CT5 Solutions

B
Gross profit margin is based on sales:, i.e. gross profit is a % of sales:
Sales
COS
Gross profit

100%
80%
20%

Sales x 20% = Gross Profit

$125,000 x 20% = 25,000
$
125,000
100,000
25,000

Sales
Cost of Sales
Gross Profit Margin
6

$212,120
Payables
$
B/d
Payments
C/d

212,120
34,655

Purchases
($254,192 - $31,590)

222,602
246,785

246,785

$
24,183

$7,000
P+M (NBV)
B/d (255-100)
Purchases of P+M

155
10

Depreciation charge in year

NBV of sale
C/d (235-110)

165

Proceeds 7
NBV
Loss

(15)
(8)

$250
Sales

140%

350

COS
Gross profit

100%
40%

250

x 100/140

PAYE
Employer's NIC
Employee's NIC
Net amount paid to employees

10

CMC2CT10(N) CT5 Solutions

17,000
7,500
6,000
50,000
80,500

25
15
125
165

11

12

Dr

Cr

Receivables

$5,405

Sales

$4,600

Sales tax

$805

$18,950
Cash
B/d

50
Bankings

50,000

Theft
C/d

18,950
100
69,050

69,000

(2) Cash sales ()

(230,000-161,000)

69,050
Receivables
B/d

2,000
Bankings (receipts from
receivables)
161,000
163,000

(1) Credit sales ()

C/d

160,000
3,000
163,000

CMC2CT10(N) CT5 Solutions

BPP House, Aldine Place, London W12 8AA

Tel: 0845 0751 100 (for orders within the UK)
Tel: +44 (0)20 8740 2211
Fax: +44 (0)20 8740 1184
www.bpp.com/learningmedia