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Book-keeping and Accounts Level 2
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Book-keeping and Accounts Level 2

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Model Answers
Series 4 2009 (2007)
For furtherinformationcontact us:Tel. +44 (0) 8707 202909Email.
enquiries@ediplc.comwww.lcci.org.uk
LCCI International Qualifications
Book-keeping and AccountsLevel 2

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Page 1 of 14
Book- Keeping and Accounts Level 2
Series 4 2009
How to use this booklet
Model Answers have been developed by EDI to offer additional information and
guidance to Centres,teachers and candidates as they prepare for LCCI
International Qualifications. The contents of thisbooklet are divided into 3
elements:(1) Questions

reproduced from the printed examination paper(2) Model Answers

summary of the main points that the Chief Examiner expected tosee in the answers
to each question in the examination paper,plus a fully worked example or sample
answer (where applicable)(3) Helpful Hints

where appropriate, additional guidance relating to individualquestions or to

examination techniqueTeachers and candidates should find this booklet an
invaluable teaching tool and an aid to success.EDI provides Model Answers to
help candidates gain a general understanding of the standardrequired. The
general standard of model answers is one that would achieve a Distinction grade.
EDIaccepts that candidates may offer other answers that could be equally valid.
Education Development International plc 2009All rights reserved; no part of
this publication may be reproduced, stored in a retrieval system ortransmitted
in any form or by any means, electronic, mechanical, photocopying, recording or
otherwisewithout prior written permission of the Publisher. The book may not be
lent, resold, hired out orotherwise disposed of by way of trade in any form of
binding or cover, other than that in which it ispublished, without the prior
consent of the Publisher.

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2007/4/09/MA Page 2 of 14
QUESTION 1
After stocktaking for the year ended 31 October 2009 had taken place, the
closing stock of Fell Ltdwas valued at cost 80,500. The following adjustments
are required:(i) Some items were no longer up to date and it was decided to sell
them at half the cost price. Theoriginal selling price had been 2,400.(ii) Ten
items at a cost of 69 each had been included in the stock list at 96
each.(iii) A total of 12,900 on one stock sheet had been carried forward as
9,120 to the next sheet.(iv) A damaged item, which had cost 630, was to be
written off.(v) Goods that had been set aside, and are awaiting collection by a
customer, had been included instock at a valuation of 1,850.(vi) The last stock
sheet, totalling 11,900, had not been included in the stock value.(vii) Goods
sent on a sale or return basis to Jones, at a sale price of 3,300, had not been
sold orreturned at 31 October 2009.Fell Ltd applies a mark up of 50% on cost.
REQUIRED
(a) Copy the following layout into your answer book and calculate the correct
cost of stock at31 October 2009.
Add

Less

Original Cost of Stock 80,500Item (i)(ii)(iii)(iv)(v)(vi)(vii)(viii)

..
Correct Cost of Stock
..
(16 marks)Simms valued his stock on 30 November 2009 at a cost of 10,200. On
the night of 5 December 2009a fire occurred in the warehouse. The following
transactions took place between 1 December 2009and 5 December 2009:


Purchases 700Purchases returns 50Sales 1,800Sales returns 300Some stock, with a
cost price 2,000, was saved from the fire but due to smoke damage this will
besold for 1,500.The gross profit margin of Simms is 33
1
/
3
%.
REQUIRED
(b) Prepare a statement for the stock destroyed to show the value to be claimed
from the insurancecompany.(9 marks)
(Total 25 marks)

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2007/4/09/MA Page 3 of 14
MODEL ANSWER TO QUESTION 1
(a)
Fell Ltd

Adjusted Stock Valuation at 31 October 2009Add

Less

Original Cost of Stock 80,500(i)

Less:
Reduction to NRV(2,400

800* / 2) 800(ii)
Less:
Overvaluation(96

69 x 10) 270(iii)
Add:
Stock sheet error(12,900

9,120) 3,780(iv)
Less:
Written off item 630(v)
Less:

Customers goods
1,850(vi)
Add:
Stock sheet total 11,900(vii)
Add:
Sale or return(3,300

1,100) 2,200
..
17,880 3,55014,330Correct Cost of Stock 94,830 (b)
Simms

Statement of Stock Destroyedon 5 December 2009

Stock: 30 November 2009 10,200Add: Purchases 700Less: Returns 50 65010,850Less:
Sales 1,800Less: Returns 3001,500(1,500

500) 1,0009,850Less: Stock saved

NRV Adjustment 1,500Value to be claimed 8,350

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2007/4/09/MA Page 4 of 14
QUESTION 2
The following information relates to the business of C Ward.Balances in the
books at 30 June 2009:

Purchases Ledger Debit 1,458Credit 111,129Sales Ledger Debit 196,326Credit

5,580The following balances were extracted from the books for the month ended 31
July 2009:


Cash purchases 57,309Credit purchases 316,773Returns outwards 5,499Payments by
cheque to creditors 289,440Carriage charged to debtors 14,805Transfers of debit
balances in sales ledger to purchases ledger 12,825Interest charged to debtors
1,467Credit sales 597,804Returns inwards 8,721Bad debts written off
3,840Discounts received 7,728Cash sales 343,446Debtors cheque dishonoured
11,877Discount allowed 16,647Payments from debtors by cheque 651,690Allowance to
a debtor, K. Miller, for damaged goods 2,250Balances in the books at 1 August
2009:

Purchases Ledger Debit 2,535Sales Ledger Credit 9,693Provision for doubtful

debts Credit 19,710
REQUIRED
(a) Prepare for the month ended 31 July 2009:(i) Purchases Ledger Control
Account.(9 marks)(ii) Sales Ledger Control Account.(14 marks)(b) State one
advantage of preparing Control Accounts.(2 marks)
(Total 25 marks)
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2007/4/09/MA Page 5 of 14
MODEL ANSWER TO QUESTION 2
(a) (i)
Purchases Ledger Control Account 2009 2009
July 1 Balance b/d 1,458 July 1 Balance b/d 111,129July 31 Returns outwards
5,499 July 31 Purchases 316,773July 31 Bank 289,440 July 31 Balance c/d
2,535July 31 Contra/set off 12,825July 31 Discount received 7,728July 31 Balance
c/d 113,487430,437 430,437Aug 1 Balance b/d 2,535 Aug 1 Balance b/d 113,487(ii)

Sales Ledger Control Account

July 1 Balance b/d 196,326 July 1 Balance b/d 5,580July 31 Carriage 14,805July
31 Interest 1,467 July 31 Contra/set off 12,825July 31 Sales 597,804 July 31
Returns inwards 8,721July 31 Dishonoured cheque 11,877 July 31 Bad debts
3,840July 31 Balance c/d 9,693 July 31 Discount allowed 16,647July 31 Bank
651,690July 31 K. Miller - allowance 2,250July 31 Balance c/d 130,419831,972
831,972Aug 1 Balance b/d 130,419 Aug 1 Balance b/d 9,693(b)One advantage from
examples below for 2 marks:The identification of errors in the sales and
purchases ledger.Assist in preparing final accounts.Locate total debtors and
creditors.The location of errors via control accounts eliminates the need to
consider the sales andpurchases ledgers when errors are revealed by the trial
balance.An audit of staff efficiency where control accounts are prepared
independently by a seniormember of staff.For management purposes, control
account balances can be taken to equal debtors and creditorswithout the
extraction of individual balances.
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2007/4/09/MA Page 6 of 14
QUESTION 3
The following Trial Balance was extracted from the books of Broom Golf Club on
31 July 2009:
Dr Cr
Subscriptions 96,250Catering stock at 1 August 2008 14,250Catering staff wages
8,000Catering purchases 52,000Catering sales 110,340Rent and rates 6,500
Golf club secretarys salary
21,250Lighting and heating 8,120Insurance 17,160General expenses 24,750Cash at
bank 40,995Cash in hand 125Accumulated fund 37,310Equipment (at cost)
30,750Fixtures and fittings (at cost) 85,000Provision for depreciation on golf
equipment 15,000Provision for depreciation on fixtures and fittings
...
_50,000308,900 308,900

Additional information:
(1) Depreciation is to be provided for the year ended 31 July 2009 as
follows:Equipment

10% reducing balanceFixtures and fittings

25% straight line.(2) No subscriptions were prepaid or accrued at 1 August

2008.(3) At 31 July 2009:General expenses included a prepayment of 1,000Rent
and rates were accrued 930Subscriptions in arrears amounted to
1,500Subscriptions prepaid totalled 1,200Catering stock was valued at 16,000
at cost.
REQUIRED
Prepare for Broom Golf Club the:(a) Catering Account, showing the profit for the
year ended 31 July 2009.(4 marks)(b) Income and Expenditure Account for the year
ended 31 July 2009.(13 marks)(c) Balance Sheet at 31 July 2009.(8 marks)
(Total 25 marks)
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v Spify
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v
Scibd.&dq;</div><div cl
=" ingl_q wid">&ldq;[Scibd] i
pl
c
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n bw 
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im
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 y
f
ncy&dq;</div><div cl
=" ingl_q npn">&ldq;F l h
n
h pic f bying n nw b

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n w
nd
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n 50,000 b
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cl
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g  b h nx b  hing  licd
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n fini h 
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nd g g
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nh in 
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cl
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d"><h1>R
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cl
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cl
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cl
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ding</h3><p>b
,
dib
, cmic </p></div></div><div
cl
=" _q "><div cl
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="q_bdy"><div
cl
=" ingl_q f
d_in np">&ldq;Mvi lv h
v Nflix, m ic lv
h
v Spify
nd b
lv (whh hy 
d li
y ficin 
b - lling pbil ) nw h
v Scibd.&dq;</div><div cl
=" ingl_q
wid">&ldq;[Scibd] i
pl
c wh y c
n bw 
nd
im
nd 
d
wh
v i
 y f
ncy&dq;</div><div cl
=" ingl_q
npn">&ldq;F l h
n h pic f bying n nw b

mnh ( hwi ), y c
n w
nd hgh m h
n 50,000 b
.&dq;</div><div
cl
=" ingl_q">&ldq;Thi h
g  b h nx b  hing  licd
b
d.  c
n fini h 
ding n b

nd g g
b
nh in 
nly&dq;< p
n
cl
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h">&nd
h; Wndy B
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n cl
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n cl
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n>Di cv nw b
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n cl
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n>R
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d"><h1>R
d hi
nd 80 millin m
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cl
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cl
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h
v Spify
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{{h_p
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NO, THANKS
OK

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d.Myib
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ginBn("#
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ginBn("#
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ginBn("#
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