1.

Rania is in business as a general trader preparing final accounts on 30 April each year. Rania
keeps a cash book but does not keep a full set of books.
The following information is available for the year ended 30 April 2016:
(i) Sales are made for credit and for cash. All credit sales have been invoiced and cash sales
have been banked after making the following deductions:
$
150 per week
450 per month

Staff wages
Operating expenses

(ii) After deducting the cash expenditure in (i) above, all cash takings had been paid into the
bank. The following is a summary of the bank account:

Balance b/d
Cash sales
Credit sales banked
Equipment sale receipt

$
2250
19850
77600
1350

Operating expenses
Rent
Suppliers of goods
Drawings
Carriage expenses

$
7250
5500
48000
25000
17700

(iii) During the year Rania received discount of $2500 from suppliers and gave discount of
$3200 to credit customers for prompt payment.
(iv) Rent of $500 was owing at 30 April 2016.
(v) One third of the carriage expenses were incurred in collecting purchases and two thirds in
delivering goods to customers.
(vi) During the year, equipment with a book value of $1200 was sold for $1350.
(vii) Other balances:

Equipment (book value)

Trade receivables
Trade payables
Inventories
8% Bank loan

1 May 2015
$
15000
9800
4300
8250
10000

30 April 2016
$
12000
7950
4800
5150
10000

Required:

(a) Calculate for the year ended 30 April 2016, the:

(i) Sales
(ii) Purchases.
[10]
(b) Prepare for Rania the:
(i) Income statement for the year ended 30 April 2016
(ii) Statement of financial position as at 30 April 2016.
[20]
[Total marks 30]

2.

Marios and Tamsin agreed to dissolve their partnership on 31 March 2016. On that date, their
statement of financial position (balance sheet) was as follows:
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Statement of financial position (balance sheet) at 31 March 2016

Non-current assets:
Property (Premises)
Motor vehicles at net book value
Current assets:
Inventory
Trade receivables
Bank
(-) Current liabilities:
Trade payables
Net current liabilities
Capital employed
Non-current liabilities:
Loan from Marios
Net assets

$
75000
18000

$
93000

8500
11500
1000
21000
(23000)
(2000)
91000
(30000)
61000

Financed by:
Capital accounts: Marios
Tamsin

32000
25000

Current accounts: Marios

Tamsin

3000
1000

57000
4000
61000

Additional information at 31 March 2016:

(i) One of the motor vehicles was taken over by Marios for $7500.
(ii) Trade receivables paid $11000 in full settlement.
(iii) Trade payables were paid in full less $1200 discount received.
(iv) The cost of dissolution was $1250.
(v) All remaining assets were sold to Woodman & Co for $140000.
(vi) Profits and losses are shared by Marios and Tamsin in the ratio 3:2 respectively.

Required:
(a) Prepare the following to record the dissolution:

(i) Dissolution account

(ii) Partners capital accounts
(iii) Bank account.
[9]
(b) State two reasons why a partnership may be dissolved.
[2]
Marios stated that, by selling many of the assets to Woodman & Co, the partnership would be
able to realise the goodwill in the business.
(c) (i) Explain the term goodwill.
[2]
(ii) Suggest two possible reasons why Woodman & Co may wish to pay for goodwill when
purchasing the business of Marios and Tamsin.
[2]
[Total marks 15]

3.

The following information is available from the accounts of Rupa for the year ended 30 November
2016. On 1 December 2015 the following account balances were in the books:

$
250 CR
720 CR
2000 CR

Electricity
Marketing expenses
Provision for doubtful debts
(i) The electricity account records show the following:
Cheque payments:
7 December 2015
14 March 2016
7 June 2016
26 September 2016

$
250
425
385
190

Refund by cheque:
8 July 2016

65

On 30 November 2016 it was estimated that $170 was owing for electricity.
(ii) Marketing expenses records show the following:
Cheque payaments:
20 December 2015
18 April 2016
10 July 2016
1 October 2016

$
1800
600
1350
1200

General marketing expenses

Marketing brochures
General marketing expenses
Advertising campaign (for 3 months)

On 30 November 2016 it was estimated that the following were prepaid:

Half of the marketing brochures purchased on 18 April 2016 remained.
The proportion of the advertising campaign unused.
(iii) A provision for doubtful debts was to be maintained from the following schedule of debtors:
Age of Debt (months)

03 months
36 months
Over 6 months

Trade receivables
(as at 30 November 2016)
$
15000
6000
2000

Provision (%)

5
10
20

Required:
(a) Suggest three advantages of applying accounting concepts when preparing the final
accounts of a business.
[3]
5

(b) Prepare the following ledger accounts for the year ended 30 November 2016. Each account
should include the transfer to the profit and loss account for the year, and the balance to be
carried down.
(i) Electricity account
(ii) Marketing expenses account
(iii) Provision for doubtful debts account.
[12]
[Total marks 15]

4.

The sales team at Nicolopoulos Insurance Limited sells insurance policies to customers
by telephone.
The following information is available:

(i) Rent of premises is $1500 per quarter (three month period).

(ii) The sales team is paid $30 every time an insurance policy is sold.
(iii) Other variable costs are $10 for each insurance policy sold.
(iv) Equipment purchased for $29000 has a life of 10 years and a scrap value of $1000.
Depreciation is charged on a straight line basis.
(v) The telephone company makes a fixed charge to Nicolopoulos Insurance Limited of $3000
per annum.
(vi) Other fixed costs are $18200 per annum.
(vii) Each insurance policy sells for $80.
(viii) Nicolopoulos Insurance Limited sells 2400 policies per year.
Required:
(a) Calculate for the year the:
(i) Number of insurance policies needed to be sold to break even
(ii) Forecast profit or loss.
[12]
The telephone company has offered Nicolopoulos Insurance Limited for the next year a choice
of two options:
Option 1: the same fixed rate charge of $3 000 for the year OR
Option 2: a measured system of charging according to usage at a rate of $ 0.5 per minute
Each sale is made after an average of 500 minutes telephone usage. All other costs and prices
will remain unchanged for the next year. The company is expected to sell 2400 policies next
year.

(b) Using Option 2, calculate for the next year the:

(i) Number of insurance policies needed to be sold to break even
(ii) Forecast profit or loss.
7

[10]
(c) Evaluate the two options for the telephone charge, and recommend which option should be
chosen.
[8]
[Total marks 30]

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