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AQ2013 Level 3
A AT F S T P : PRE PARE FINA L ACCOUN TS FOR SOLE TRADE RS A ND PAR TNERS HIPS
We are grateful to the Association of Accounting Technicians for permission to reproduce past
assessment materials. The solutions have been prepared by Kaplan Publishing.
Published by
Kaplan Publishing UK
Unit 2 The Business Centre
Molly Millars Lane
Wokingham
RG41 2QZ
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Kaplan Financial Limited, 2015
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K A P LA N P UB L I S HI NG
INTRODUCTION
This tutor question bank is designed for use by Kaplan colleges and external colleges who have
adopted Kaplan Publishings study material for this assessment.
We respectfully draw your attention to the copyright page of this publication and would remind you
that you should take every reasonable care to observe the restrictions placed on you and your
students use of this material.
This bank contains additional activities graded into two types:
some are designed to help students struggling with a topic (support questions), and
others are designed to challenge the more able student (advanced questions).
The contents page lists the topics which this question bank covers.
These topics broadly correspond with the order of the topics in the text book.
Advanced
Answer
page
Question
page
Answer
page
Chapter 1
26
12
37
Chapter 2
Partnership accounts
28
16
42
Chapter 3
Incomplete records
32
19
44
KAPLAN PUB LI S H I N G
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A AT F S T P : PRE PARE FINA L ACCOUN TS FOR SOLE TRADE RS A ND PAR TNERS HIPS
iv
K A P LA N P UB L I S HI NG
SUPPORT QUESTIONS
A AT F S T P : PRE PARE FINA L ACCOUN TS FOR SOLE TRADE RS A ND PAR TNERS HIPS
CHAPTER 1
PREPARATION OF ACCOUNTS FOR A SOLE TRADER
1
NED
A trial balance has been prepared for Ned, a sole trader, business but the following adjustments
are still to be made:
(i)
Depreciation of 980 for fixtures and fittings and 740 for motor vehicles has yet to be
provided for.
(ii)
Receivables total 38,600 but an irrecoverable debt of 1,600 is to be written off. The
opening allowance for doubtful debts is 900 but this is to be adjusted to 2% of the
receivables balance.
(iii)
An accrual for electricity is required of 200 and the advertising balance includes a
prepayment of 40.
(iv)
The closing inventory has been valued at 1,080. However this includes inventory with a
cost of 240 which due to damage can only be sold for 200.
Task:
Prepare the journal entries necessary to record these adjustments.
required.)
K A P LA N P UB L I S HI NG
QUESTI ONS
STEVE INMAN
Steve Inman started business on 1 January 20X2 and the following information is available for
the business at 31 December 20X2.
Capital paid in
Receivables (SLCA)
Payables (PLCA)
Sales
Purchases
Drawings
Motor van at cost
Rent and rates
Insurance
General expenses
Wages
Cash at bank
Cash in hand
5,000
6,072
10,680
36,191
19,320
6,120
5,040
2,556
200
4,375
4,994
3,154
40
The motor van has an expected useful life of four years and no residual value.
The closing inventory is valued at 2,460.
Task:
Prepare a statement of profit or loss for the first year of trading and a statement of financial
position as at 31 December 20X2.
KAPLAN PUB LI S H I N G
A AT F S T P : PRE PARE FINA L ACCOUN TS FOR SOLE TRADE RS A ND PAR TNERS HIPS
CHAPTER 2
PARTNERSHIP ACCOUNTS
3
38,000
32,000
21,000
40,000
16,000
22,000
8,000
16,000
5,000
500
10,000
500 (debit)
1,000
17,000
14,000
33,000
20,000
Task:
(a)
Prepare the partnership appropriation account for the year ending 30 September 20X4.
(b)
(c)
K A P LA N P UB L I S HI NG
QUESTI ONS
KAPLAN PUB LI S H I N G
A AT F S T P : PRE PARE FINA L ACCOUN TS FOR SOLE TRADE RS A ND PAR TNERS HIPS
Harry
Phil
Jo
Capital
60,000
40,000
30,000
Current
3,200
1,600
4,300
On retirement Harry has agreed to be paid 15,000 of what is owed to him in cash and to leave
the remainder as a loan to the partnership. After Harrys retirement Phil and Jo are to share
profits and losses in the ratio of 2:1.
Task:
Write up the partners capital accounts and current accounts to reflect the retirement of Harry.
K A P LA N P UB L I S HI NG
QUESTI ONS
CHAPTER 3
INCOMPLETE RECORDS
6
CAROLE
A sole trader, Carole, has provided you with the following information about her opening and
closing assets and liabilities:
Inventory
Receivables (SLCA)
Payables (PLCA)
Bank
1 January 20X3
16,500
14,200
10,200
1,400
31 December 20X3
17,100
15,900
8,300
900
During the year cash payments were made for purchases of 58,900 and for expenses of
10,500. Carole tells you that all sales are made at a profit margin of 25%. However she is not
able to tell you how much she took out of the business as drawings.
Task:
What were the drawings for the year?
KAPLAN PUB LI S H I N G
A AT F S T P : PRE PARE FINA L ACCOUN TS FOR SOLE TRADE RS A ND PAR TNERS HIPS
ADRIAN
The statement of financial position at 1 April 20X2 of Adrian, a sole trader, showed that he had
net assets totalling 28,900. During the year to 31 March 20X3 Adrian did not keep a full set of
accounting records but he can supply you with the following list of assets and liabilities.
Receivables (SLCA)
Payables (PLCA)
Motor vehicle at carrying value
Accruals
Bank account balance
Cash in till
Fixtures and fittings at carrying value
Computer at carrying value
Prepayments
Inventory
Bank loan
15,400
8,300
9,200
300
5,400
200
8,600
1,500
800
8,200
2,000
Adrian advised you that he withdrew 12,600 of cash for his own use during the year.
Task:
How much profit did the business make in the year ended 31 March 20X3?
K A P LA N P UB L I S HI NG
QUESTI ONS
42,600
Payments to suppliers
Payments for expenses
Drawings
22,700
4,300
11,700
The owner can also provide you with details of the assets and liabilities at the start and end of
the year:
Receivables
Payables
Accruals
Inventory
1 July 20X1
6,900
3,800
300
7,200
30 June 20X2
7,200
5,100
700
6,300
Task:
(a)
(b)
(c)
(d)
KAPLAN PUB LI S H I N G
A AT F S T P : PRE PARE FINA L ACCOUN TS FOR SOLE TRADE RS A ND PAR TNERS HIPS
BARNEY
Barney, a sole trader, produced the following list of balances for his business at 31 December
20X3.
Fixtures and fittings
Delivery vans
Cash at bank (in funds)
General expenses
Receivables (SLCA)
Payables (PLCA)
Purchases
Sales revenue
Wages
Drawings
Lighting and heating
Rent, rates and insurance
Capital
6,430
5,790
3,720
1,450
2,760
3,250
10,670
25,340
4,550
15,000
1,250
2,070
?
Task:
10
(a)
From the above list of balances, draw up a trial balance for Barney at 31 December 20X3
and calculate the capital balance at that date.
(b)
If Barney had wrongly classified a wages payment of 500 as drawings, what journal
adjustment would be required, and what would be the effect upon profit for the year?
(c)
If Barney had wrongly classified a cash sale as capital introduced, what journal
adjustment would be required, and what would be the effect upon profit for the year?
K A P LA N P UB L I S HI NG
ADVANCED QUESTIONS
A AT F S T P : PRE PARE FINA L ACCOUN TS FOR SOLE TRADE RS A ND PAR TNERS HIPS
CHAPTER 1
PREPARATION OF ACCOUNTS FOR A SOLE TRADER
10
LAURA
Laura has been in business for some years and has kept her drawings slightly below the level of
profits each year. She has never made a loss, and therefore feels that her business is growing
steadily. You act as her accountant and she has passed you the following list of balances at
30 April 20X7:
000
Capital at 1 May 20X6
228
Drawings
14
Plant at cost
83
Plant depreciation at 1 May 20X6
13
Office equipment at cost
31
Office equipment depreciation at 1 May 20X6
8
Receivables (SLCA)
198
Payables (PLCA)
52
Sales
813
Purchases
516
Returns inwards
47
Discounts allowed
4
Allowance for doubtful debts at 1 May 20X6
23
Administration costs
38
Salaries
44
Research costs
26
Loan to a friend, repayable in 6 months
25
Bank overdraft
50
Irrecoverable debts written off
77
You ascertain that inventory at 1 May 20X6 was 84,000 and inventory at 30 April 20X7 was
74,000. On 1 November 20X6 Laura brought her personal computer, valued at 2,000, from
home into the office; no entries have been made for this.
You are also given the following information at 30 April 20X7:
(i)
(ii)
(iii)
(iv)
The research costs are all in relation to pure research and are to be charged to the
income statement as an expense.
(v)
It is agreed that the allowance for doubtful debts figure is to remain at 23,000.
Task:
Prepare the statement of profit or loss for the year ended 30 April 20X7 and the statement of
financial position at that date. Work to the nearest 000.
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K A P LA N P UB L I S HI NG
QUESTI ONS
11
KW ENTERPRISE
Given below is the extended trial balance for KW Enterprise, a sole trader, for the year ended
31 October 20X1:
Description
Ledger balance
Dr
Capital
Purchases
Cr
Dr
Cr
Statement of profit
or loss
Dr
487,360
25,870
Rent
33,000
8,900
2,000
288,330
650
25,870
3,000
36,000
General expenses
87,700
87,700
Motor expenses
28,540
28,540
1,220
300
3,200
1,520
950
2,250
36,000
36,000
19,560
4,110
57,020
34,580
Drawings
30,000
56,550
8,553
43,133
30,000
1,020
31,500
Bank
55,530
2,350
33,850
380
10,100
2,700
VAT/sales tax
Suspense
2,700
10,070
350
230
230
Depreciation
12,663
12,663
950
950
29,665
29,665
29,665
Accruals
29,665
3,000
Profit
3,000
28,232
TOTALS
23,670
57,020
Cr
486,490
650
Dr
61,280
870
8,900
286,330
Purchase returns
Irrecoverable debts
Cr
Statement of
financial position
61,280
Sales revenue
Sales returns
Adjustments
28,232
651,130
651,130
50,028
50,028
517,755
517,755
208,215
208,215
Task:
You are required to prepare the statement of profit or loss for KW Enterprise for the year ended
31 October 20X1 and the statement of financial position at that date.
KAPLAN PUB LI S H I N G
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A AT F S T P : PRE PARE FINA L ACCOUN TS FOR SOLE TRADE RS A ND PAR TNERS HIPS
12
SIMPSON
Given below is the trial balance for Simpson as at 30 June 20X8.
Simpson
Trial balance as at 30 June 20X8
Dr
Revenue
Sales returns
Purchases
784,518
5,436
370,215
Purchases returns
Opening inventory
1,447
41,211
Payroll expenses
161,326
General expenses
72,900
Motor expenses
14,633
Irrecoverable debts
4,825
3,425
37,400
Accumulated depreciation MV
Fixtures and fittings cost
Cr
19,160
46,100
20,855
Capital account
45,000
Drawings
37,000
70,367
25,682
26,338
Sales tax
4,529
Closing inventory
54,426
Loss on disposal
3,870
Depreciation expense
54,426
12,995
959,042
959,042
Task:
You are required to prepare the statement of profit or loss for Simpson for the year ended
30 June 20X8.
14
K A P LA N P UB L I S HI NG
QUESTI ONS
Simpson
Statement of profit or loss for the year ended 30 June 20X8
Revenue
Opening inventory
Purchases
Closing inventory
Cost of goods sold
Gross profit
Less:
Payroll expenses
General expenses
Motor expenses
Irrecoverable debts
Loss on disposal
Depreciation expense
Total expenses
Profit for the year
KAPLAN PUB LI S H I N G
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A AT F S T P : PRE PARE FINA L ACCOUN TS FOR SOLE TRADE RS A ND PAR TNERS HIPS
CHAPTER 2
PARTNERSHIP ACCOUNTS
13
Ted
Ian
Jane
Capital
50,000
40,000
30,000
Current
1,000
500
200 (debit balance)
42,600
28,200
23,100
Task:
16
(a)
Prepare the partnership appropriation account for the year ended 31 March 20X3.
(b)
Prepare the partners capital and current accounts for the year ended 31 March 20X3.
K A P LA N P UB L I S HI NG
QUESTI ONS
14
Accruals
Bank
Cr
6,000
5,000
9,500
11,500
Closing inventory
Depreciation charge
Discounts allowed
11,000
11,000
1,800
800
2,400
1,500
General expenses
16,400
Machinery at cost
15,500
5,800
Opening inventory
9,800
Prepayments
5,100
Purchases
46,000
15,900
600
Sales
Receivables (Sales ledger) control account
69,000
17,100
Sales tax
Wages
1,500
5,000
134,100
KAPLAN PUB LI S H I N G
134,100
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A AT F S T P : PRE PARE FINA L ACCOUN TS FOR SOLE TRADE RS A ND PAR TNERS HIPS
Task:
(a)
Upon review of the accounting information, the following errors were identified:
(i)
Inventory which had cost 1,000 had been omitted from the year-end count and
valuation. This inventory was damaged and it was estimated that it could be sold
for only 750.
(ii)
You are required to state the accounting entries required to correct the two errors
identified (explanation is not required).
(b)
Prepare a statement of profit or loss for Ralph and Hughs business for the year ended
30 September 20X7, having made the appropriate accounting adjustments required from
part (a) of this task.
Revenue
Opening inventory
Purchases
Closing inventory
Cost of goods sold
Gross profit
Less:
Payroll expenses
General expenses
Rent
Discount allowed
Depreciation expense
Total expenses
Loss for the year
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K A P LA N P UB L I S HI NG
QUESTI ONS
CHAPTER 3
INCOMPLETE RECORDS
15
MICHAEL
You are working on the accounts of a restaurant business owned by Michael for the year ended
31 October 20X8. There are no credit sales and you have the following additional information
below:
Michael advised you that the balance on his capital account at 31 October 20X7 was 34,350.
Cash and bank summary for the year ended 31 October 20X8
Bal b/d
Cash
Bank
Cash
Bank
550
7,000 Rent
6,500
Payroll expenses
Sales
50,000
Bank
12,000
90,000 Drawings
25,000
20,000
Purchases
4,000
Payables
30,000
Advertising
2,000
Administration
4,800
Cash
12,000
11,000
97,000
4,000
6,750
33,500
62,550
97,000
31 October 20X7
31 October 20X8
50,000
22,000
Inventory
2,500
1,500
Prepayments Rent
2,000
1,000
Payables Purchases
5,000
4,000
700
500
KAPLAN PUB LI S H I N G
50,000
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A AT F S T P : PRE PARE FINA L ACCOUN TS FOR SOLE TRADE RS A ND PAR TNERS HIPS
Tasks:
(a)
Calculate the total sales for the year ended 31 October 20X8
Account name
Amount
Total
(b)
Prepare the purchases ledger control account for the year ended 31 October 20X8,
showing clearly the credit purchases of materials.
Total
(c)
Total
Calculate the total purchases for the year ended 31 October 20X8
Account name
Amount
Total
(d)
Depreciation is calculated at 20% per annum on a reducing balance basis. Calculate the
revised accumulated depreciation as at 31 October 20X8.
Account name
Amount
Total
(e)
Prepare the rent account for the year ended 31 October 20X8, showing clearly the rent
expense for the year
Total
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Total
K A P LA N P UB L I S HI NG
QUESTI ONS
(f)
Prepare the light and heat account for the year ended 31 October 20X8, showing clearly
the expense charged to profit or loss.
Total
(g)
Total
Prepare the statement of profit or loss for the year ended 31 October 20X8
Michael
Statement of profit or loss for the year ended 31 October 20X8.
Revenue (part(a))
Opening inventory
Purchases (part (c))
Closing inventory
Cost of goods sold
Gross profit
Less:
Payroll expenses
Light and heat (part (f))
Rent (part (e))
Advertising
Depreciation expense (part (d))
Administration
Total expenses
Loss for the year
KAPLAN PUB LI S H I N G
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A AT F S T P : PRE PARE FINA L ACCOUN TS FOR SOLE TRADE RS A ND PAR TNERS HIPS
(h)
Non-current assets
Cost
Depreciation
Carrying value
Current liabilities
Trade payables
Accruals
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K A P LA N P UB L I S HI NG