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: 500/9262/5)

June 2012
Units:
310: Prepare financial statements for a partnership – Y601/0742
311: Prepare financial statements for a sole trader – A601/0734

QUESTION PAPER 2

Time Allowed: 3 hours

Suite 5, 20 Churchill Square, Kings Hill, West Malling, Kent, ME19 4YU
Tel: 0844 330 3527, Fax: 0844 330 3514, Email: mail@iab.org.
 Level 3 (QCF) Qu Paper June 2012/P2

THIS PAPER CONSISTS OF TWO SECTIONS YOU MUST COMPLETE ALL THE
QUESTIONS AND ALL TASKS WITHIN EACH SECTION

SECTION A – PREPARE FINANCIAL STATEMENTS FOR A PARTNERSHIP

INSTRUCTIONS

There are TWO questions in this section of the paper. You must complete ALL
TASKS within the questions.

QUESTION ONE

Ryan and Vera are in partnership. The following Trial Balance was extracted from
the books of their business as at 31 May 2012:
DR CR
£ £
Premises (cost) 250,000
Fixtures and fittings (cost) 5,000
Vehicles (cost) 75,000
Purchases 626,130
Sales 812,540
Trade debtors 82,800
Trade creditors 99,730
Stock (31/5/2011) 65,280
Heat and light 3,240
Wages 66,220
Vehicle expenses 7,450
Carriage inwards 2,800
Insurances 1,400
Rates 25,200
Operating expenses 16,400
Bank 8,200
Fixtures and fittings accumulated depreciation (31/5/2011) 1,500
Vehicles accumulated depreciation (31/5/2011) 27,000
Capital accounts - Ryan 200,000
- Vera 150,000
Current Accounts - Ryan 1,250
- Vera 1,600
Drawings: - Ryan 32,000
Vera 24,000
1,292,370 1,292,370

You are presented with the following additional information:

1 Stock at 31 May 2012 has been valued at £64,200.

2 Heat and light charges of £1,020 are accrued at 31 May 2012, rates of
£11,000 are prepaid at that date.

3 There are operating expenses of £1,600 accrued at 31 May 2012, there are
also operating expenses of £1,200 prepaid at that date

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Level 3 (QCF) Qu Paper June 2012/P2

4 There were no fixed assets acquired or disposed of in the year ended 31 May
2012. Depreciation is to be provided for as follows:

Fixtures and Fittings 10% per year using the straight line method

Vehicles 20% per year using the reducing balance method

5 Ryan is to be charged £1,000, and Vera £600, as interest on drawings for the
year ended 31 May 2012.

6 Partners are to be credited with interest on capital at the rate of 4% per year.

7 Remaining profits / losses are to be shared 60% Ryan and 40% Vera..

NB: Neither of the partners has introduced further capital to the business during
the year ended 31 May 2012.

REQUIRED

TASK A (10.5 Marks)

Prepare the Trading and Profit and Loss Account of the partnership for the
year ended 31 May 2012.

TASK B (5.5 Marks)

Prepare the Profit and Loss Appropriation Account of the partnership for the
year ended 31May 3012.

TASK C (4 Marks)
Prepare the Current Account of each partner for the year ended
31 May 2012.

TASK D (10 Marks)

Prepare the Balance Sheet of the partnership as at 31 May 2012.

Total marks question 1 = 30

Note: The following proformas are provided for your use in completing the above
tasks:
 Trading and Profit and Loss Account – see page 1 of your answer
booklet

 Profit and Loss Appropriation Account – see page 2 of your answer

booklet

 Current Accounts – see page 3 of your answer booklet

 Balance Sheet – see page 4 of your answer booklet

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Level 3 (QCF) Qu Paper June 2012/P2

QUESTION TWO

Ava and Boris have been in partnership for several years. The financial year of their
business ends on 31 May. As at 31 May 2011 the partners had the following
balances on their capital and current Accounts:

£
Ava - Capital account 60,000
Boris - Capital account 130,000
Ava - Current account 1,500 (CR)
Boris - Current account 1,200 (CR)

On the initial formation of the partnership an agreement drawn up on behalf of the

partners included the following terms:

 Partners would receive interest on their capital at the rate of 3% per year

 Boris would receive a partnership salary of £5,000 per year.

 Remaining profits or losses would be shared equally

As from 1 June 2011 it was decided that the profit sharing ratio within the original
agreement be revised as follows:

 Ava 40%
 Boris 60%

All other terms of the original agreement were to remain the same.

At the time of the change in the profit sharing ratio the goodwill of the business was
valued at £40,000.

In the year ended 31 May 2012 the partnership generated a net profit of £54,800.
Drawings in the year were:

 Ava £18,000
 Boris £32,000

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Level 3 (QCF) Qu Paper June 2012/P2

REQUIRED

TASK A ( 12 Marks)
Prepare the partners’ Capital Accounts for the year ended 31 May 2012.

TASK B (8 Marks)
Prepare the Profit and Loss Appropriation Account of the partnership for the
year ended 31 May 2012.

TASK C (10 Marks)

Prepare the partners’ Current Accounts for the year ended 31 May 2012.

Note: A goodwill account is not to be kept in the books of the business

Total marks question 2 = 30

Note: The following proformas are provided for your use in completing the above
tasks:
 Capital Accounts – see page 6 of your answer booklet

 Profit and Loss Appropriation Account – see page 7 of your answer

booklet

 Current Accounts – see page 8 of your answer booklet

Total marks this unit = 60

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Level 3 (QCF) Qu Paper June 2012/P2

SECTION B – PREPARE FINANCIAL STATEMENTS FOR A SOLE TRADER

INSTRUCTIONS

There is ONE question in this section of the paper, the question comprises three
parts . You must complete ALL TASKS within each of the parts of the question.

QUESTION ONE

Part A: Oliver Faroux is the proprietor of a business trading in the name of Catering
Supplies. The following list of balances was extracted from the books of
the business as at 31 May 2012:
£
Premises (cost) 100,000
Equipment (cost) 25,000
Vehicles (cost) 40,000
Capital 155,000
Drawings 22,000
Provisions for depreciation - Equipment 5,000
- Vehicles 16,000
Stock 31 May 2011 16,240
Sales 530,360
Purchases 438,800
Wages and salaries 35,200
Rates 22,800
Vehicle expenses 6,100
Heat and light 1,820
Bad debts 600
General operating expenses 6,400
Trade debtors 21,260
Trade creditors 26,510
Bank 2,160 (CR)
VAT 2,290 (CR)

REQUIRED

TASK A (7.5 Marks)

List the balances given above on the Trial Balance provided on Page 10 of
your Answer Booklet. You are to make the Trial Balance debit and credit
column totals agree by adding any imbalance in the books as a Suspense
Account balance.

TASK B (0.5 Marks)

Post the imbalance in the books calculated in Task A above to the Suspense
Account provided on page 11 of your Answer Booklet.

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Level 3 (QCF) Qu Paper June 2012/P2

Note: The following proformas are provided for your use in completing the above
tasks:
 Trial Balance – see page 10 of your answer booklet

 Suspense Account - see page 11 of your answer booklet

Part B: Since listing the balances above the following errors have been
discovered:

- Drawings of £2,000 taken by Oliver in May 2012 has been

posted correctly to the bank account, but the
corresponding entry to the drawings account has not been
posted.

- A transposition error was made in balancing off the

Purchases account as at the year end 31 May 2012,
resulting in the balance on the account in the General
Ledger being overstated by £900.

REQUIRED

TASK C (3.5 Marks)

Prepare the Journal entries necessary to correct the two errors given above.
Your Journal entries should be dated 31 May 2012 and should include
suitable narratives.

TASK D (1 Mark)
Post the Journal entries prepared in Task C above to the Suspense
Account, thereby eliminating the difference in books balance.

TASK E (3 Marks)
Using the ledger account balances per the Trial Balance extracted from the
books of Catering Supplies as at 31 May 2012, and the Journal entries
prepared in Task C above, list the balances (adjusted where necessary) on
the Extended Trial Balance provided.

Note: The following proformas are provided for your use in completing the above
tasks:
 Journal – see page 11 of your answer booklet

 Suspense Account – see page 11 of your answer booklet

 Extended Trial Balance – see page 12 of your answer booklet

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Level 3 (QCF) Qu Paper June 2012/P2

Part C: You are provided with the following information relating to accounting
adjustments to be applied in preparing financial statements on behalf of
Catering Supplies at the year end 31 May 2012:

i Stock as at 31 May 2012 is valued at £18,480.

ii The balance of £760 on the account of The Corner Cafe, a credit customer, is
to be written off as bad debt as at 31 May 2012.

iii Depreciation for the year ended 31 May 2012 is to be provided for as follows:

Equipment – £2,500

Vehicles – £8,000

iv Rates paid in advance as at 31 May 2012 amount to £12,000.

v An amount of £600 is to be accrued in respect of heat and light owing as at

31 May 2012.

REQUIRED

TASK F (3.25 Marks)

Process the adjustments given above through the Adjustments column of

the Extended Trial Balance.

TASK G (10.50 Marks)

Extend the Trial Balance, calculate net profit or loss in the year ended
31 May 2012 and balance the Balance Sheet columns.

TASK H (10.5 Marks)

Use account balances extended to the Profit and Loss Account and
Balance Sheet columns of the Extended Trial Balance to prepare the
following financial statements on behalf Catering Supplies:

 Trading and Profit and Loss Account for the year ended 31 May
2012.

 Balance Sheet as at 31 May 2012.

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Level 3 (QCF) Qu Paper June 2012/P2

Note: The following proformas are provided for your use in completing the above
tasks:
 Extended Trial Balance – see page 12 of your answer booklet

 Trading and Profit and Loss Account – see page 13 of your answer
booklet

 Balance Sheet – see page 14 of your answer booklet

Total marks question 1 = 40

Total marks this unit = 40

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