aat fstp tutor qb 2015-16 - qs

7/23/2019 Aat Fstp Tutor Qb 2015-16 - Qs

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aat

AQ2013 Level 3

Prepare final accounts for sole

traders and partnerships

TUTOR QUESTION BANK

QUESTIONS


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AAT FSTP : PREPARE FINAL ACCOUNTS FOR SOLE TRADERS AND PARTNERSHIPS

i i KAPLAN PUBLISHING

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

The text in this material and any others made available by any Kaplan Group company does not

amount to advice on a particular matter and should not be taken as such. No reliance should be

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All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or

transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or

otherwise, other than for the sole purpose of making this publication available to the students of the

college, to whom this publication has been sent by Kaplan Publishing, who have purchased the

relevant Kaplan Publishing Textbook/Workbook for this unit.

Kaplan Financial Limited, 2015


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KAPLAN PUBLISHING i i i

INTRODUCTIONThis 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.

INDEX TO QUESTIONS AND ANSWERS

Support Advanced

Question

page

Answer

page

Question

page

Answer

page

Chapter 1 Preparation of accounts for a

sole trader

2 26 12 37

Chapter 2 Partnership accounts 4 28 16 42

Chapter 3 Incomplete records 7 32 19 44


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iv KAPLAN PUBLISHING


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SUPPORT QUESTIONS


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2 KAPLAN PUBLISHING

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. (Narratives are not

required.)


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QUESTIONS

KAPLAN PUBLISHING 3

2 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 5,000Receivables (SLCA) 6,072

Payables (PLCA) 10,680

Sales 36,191

Purchases 19,320

Drawings 6,120

Motor van at cost 5,040

Rent and rates 2,556

Insurance 200

General expenses 4,375

Wages 4,994

Cash at bank 3,154

Cash in hand 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.


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4 KAPLAN PUBLISHING

CHAPTER 2

PARTNERSHIP ACCOUNTS

3 LEN AND FRED

Len and Fred have been in partnership for many years sharing profits and losses in the ratio of

2 to 1. Fred is allowed a salary of 6,000 per annum and interest on capital is paid at 4% per

annum based upon the opening capital balance. Given below is the trial balance of the

partnership after the net profit has been calculated at the year end of 30 September 20X4.

Net profit 38,000

Receivables (SLCA) 32,000


Motor vehicles at cost 40,000Accumulated depreciation MV 16,000

Fixtures and fittings 22,000

Accumulated depreciation FF 8,000

Closing inventory 16,000

Bank 5,000

Cash 500

Loan 10,000

Current accounts Len 500 (debit)

Fred 1,000

Drawings Len 17,000

Fred 14,000

Capital accounts Len 33,000

Fred 20,000

Task:

(a) Prepare the partnership appropriation account for the year ending 30 September 20X4.

(b) Prepare the partners current accounts.

(c) Prepare the statement of financial position of the partnership as at 30 September 20X4.


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QUESTIONS

KAPLAN PUBLISHING 5

4 JACK AND JILL

Jack and Jill have been in partnership for a number of years sharing profits and losses equally.

On 30 June 20X1 they decide to admit Ross to the partnership and he will introduce 50,000 of

capital. On the date of admission the capital balances of Jack and Jill were 60,000 and 40,000

respectively and the goodwill at that date was estimated to be 20,000. After the admission of

Ross the partners will share profits and losses in the ratio of 2:2:1.

Task:

Write up the partners capital accounts to reflect the admission of Ross to the partnership.


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6 KAPLAN PUBLISHING

5 HARRY AND PHIL

Harry, Phil and Jo have been in partnership for a number of years sharing profits and losses in

the ratio of 3:2:1. On 30 June 20X3 Harry is to retire from the partnership. At 30 June 20X3 the

goodwill of the partnership was estimated to be 30,000 and the partners capital and current

account balances were as follows:

Capital Current

Harry 60,000 3,200

Phil 40,000 1,600

Jo 30,000 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.


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QUESTIONS

KAPLAN PUBLISHING 7

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:

1 January 20X3 31 December 20X3

Inventory 16,500 17,100

Receivables (SLCA) 14,200 15,900

Payables (PLCA) 10,200 8,300

Bank 1,400 900

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?


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8 KAPLAN PUBLISHING

7 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.



Motor vehicle at carrying value 9,200

Accruals 300

Bank account balance 5,400

Cash in till 200

Fixtures and fittings at carrying value 8,600

Computer at carrying value 1,500

Prepayments 800

Inventory 8,200

Bank loan 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?


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QUESTIONS

KAPLAN PUBLISHING 9

8 SUMMARISED CASH BOOK

Given below is the summarised cash book for a sole trader for the year ending 30 June 20X2.

Cash book summary

Cash from receivables 42,600

Payments to suppliers 22,700

Payments for expenses 4,300

Drawings 11,700

The owner can also provide you with details of the assets and liabilities at the start and end of

the year:

1 July 20X1 30 June 20X2

Receivables 6,900 7,200

Payables 3,800 5,100

Accruals 300 700

Inventory 7,200 6,300

Task:

(a) What is the sales revenue figure for the year?

(b) What is the purchases figure for the year?

(c) What is the gross profit for the year?

(d) What is the net profit for the year?


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10 KAPLAN PUBLISHING

9 BARNEY

Barney, a sole trader, produced the following list of balances for his business at 31 December

20X3.

Fixtures and fittings 6,430Delivery vans 5,790

Cash at bank (in funds) 3,720




Purchases 10,670

Sales revenue 25,340

Wages 4,550

Drawings 15,000

Lighting and heating 1,250

Rent, rates and insurance 2,070

Capital ?

Task:

(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?


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ADVANCED QUESTIONS


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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 25Bank 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) Depreciation on plant is charged at 10% per annum on cost.

Depreciation on office equipment is charged at 20% per annum on the carrying value at

the year end.

(ii) Administration costs include insurance prepaid of 3,000.

(iii) Salaries accrued amount to 2,000.

(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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QUESTIONS

KAPLAN PUBLISHING 13

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 Adjustments Statement of profit

or loss

Statement of

financial position

Dr

Cr

Dr

Cr

Dr

Cr

Dr

Cr

Capital 61,280 61,280

Sales revenue 487,360 870 486,490

Sales returns 8,900 8,900

Purchases 286,330 2,000 288,330

Purchase returns 650 650

Inventory at 1 November 20X0 25,870 25,870

Rent 33,000 3,000 36,000

General expenses 87,700 87,700

Motor expenses 28,540 28,540

Irrecoverable debts 1,220 300 1,520

Allowance for doubtful debts 3,200 950 2,250

Motor vehicles (MV) at cost 36,000 36,000

Accumulated depreciation (MV) 19,560 4,110 23,670

Fixtures and fittings (F&F) at cost 57,020 57,020

Accumulated depreciation (F&F) 34,580 8,553 43,133

Drawings 30,000 30,000

Receivables (SL) control account 56,550 1,020 55,530

Payables (PL) control account 31,500 2,350 33,850

Bank 2,700 2,700

VAT/sales tax 10,070 350 380 10,100

Suspense 230 230

Depreciation 12,663 12,663

Allowance for doubtful debts

adjustment

950 950

Closing inventory IS 29,665 29,665

Closing inventory SFP 29,665 29,665

Accruals 3,000 3,000

Profit 28,232 28,232

TOTALS

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.


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12 SIMPSON

Given below is the trial balance for Simpson as at 30 June 20X8.

Simpson

Trial balance as at 30 June 20X8

Dr

Cr

Revenue 784,518

Sales returns 5,436

Purchases 370,215

Purchases returns 1,447

Opening inventory 41,211

Payroll expenses 161,326


Motor expenses 14,633

Irrecoverable debts 4,825

Allowance for doubtful debts 3,425

Motor vehicles cost 37,400

Accumulated depreciation MV 19,160

Fixtures and fittings cost 46,100

Accumulated depreciation F&F 20,855

Capital account 45,000

Drawings 37,000

Receivables (Sales ledger) control account 70,367

Payables (Purchase ledger) control account 25,682

Bank 26,338

Sales tax 4,529

Closing inventory 54,426 54,426

Loss on disposal 3,870

Depreciation expense 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.


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QUESTIONS


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


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CHAPTER 2

PARTNERSHIP ACCOUNTS

13 TED, IAN AND JANE

Ted, Ian and Jane have been in partnership for a number of years sharing profits in the ratio of

3:2:1. Interest on partners capital accounts is at 5% and Jane is allowed a salary of 10,000 per

annum. During the year ending 31 March 20X3 the partnership made a net profit of 96,000.

The partners capital and current account balances at 1 April 20X2 were as follows:

Capital Current

Ted 50,000 1,000

Ian 40,000 500

Jane 30,000 200 (debit balance)

The partners drawings during the year were:

Ted 42,600

Ian 28,200

Jane 23,100

Task:

(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.


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QUESTIONS


14 RALPH AND HUGH

You have the following trial balance for Ralph and Hugh, who are in partnership running a

business. All the necessary year-end adjustments have been made.

Ralph and Hugh

Trial balance as at 30 September 20X7

Dr

Cr

Accruals 6,000

Bank 5,000

Capital account Ralph 9,500

Capital account Hugh 11,500

Closing inventory 11,000 11,000

Depreciation charge 1,800

Discounts allowed 800

Current account Ralph 2,400

Current account Hugh 1,500


Machinery at cost 15,500

Machinery accumulated depreciation 5,800

Opening inventory 9,800Prepayments 5,100

Purchases 46,000

Payables (Purchases ledger) control account 15,900

Rent 600

Sales 69,000

Receivables (Sales ledger) control account 17,100

Sales tax 1,500

Wages 5,000

134,100 134,100


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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) Wages expenses of 1,500 had been wrongly classified as general expenses.

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.

Ralph and Hugh

Statement of profit or loss for the year ended 30 September 20X7

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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QUESTIONS


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

Cash Bank Cash Bank

Bal b/d 550 7,000 Rent 6,500Payroll expenses 25,000

Sales 50,000 90,000 Drawings 20,000

Bank 12,000 Purchases 4,000 11,000

Payables 30,000

Advertising 2,000

Administration 4,800

Cash 12,000

Light and heat 4,000

Bal c/d 6,750 33,500

62,550 97,000 62,550 97,000

The following balances are also available:

Assets and liabilities at: 31 October 20X7 31 October 20X8

Fixtures and fitting Cost 50,000 50,000

Fixtures and fittings Accumulated depreciation 22,000 Not yet available

Inventory 2,500 1,500

Prepayments Rent 2,000 1,000

Payables Purchases 5,000 4,000

Accruals Light and heat 700 500


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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 Total

(c) 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 Total


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QUESTIONS


(f) Prepare the light and heat account for the year ended 31 October 20X8, showing clearly

the expense charged to profit or loss.

Total Total

(g) 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


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(h) Prepare the statement of financial position as at 31 October 20X8.

Michael Statement of financial position as at 31 October 20X8

Non-current assets Cost Depreciation Carrying value

Fixtures and fittings (part (d))

Current assets

Inventory

Prepayments

Bank

Cash

Current liabilitiesTrade payables

Accruals

Net current assets

Net assets

Financed by

Capital account

Balance brought forward

Profit for the year (part (f))

Drawings

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