Vous êtes sur la page 1sur 15

EFIM10002 Financial Accounting 1

Sue Green, Richard Tutin and Adriana Korczak 1

! 201"

Tutorial Questions

EFIM10002

FINANCIAL ACCOUNTING 1

2013/2014
Tutorial Questions

September 2013

201"!201#$T%&doc'

(age 1 o) 1*

EFIM10002 Financial Accounting 1

Sue Green, Richard Tutin and Adriana Korczak 1

! 201"

EFIM10002 Financial Accounting 1 Academic year 2013/2014 Tutorial Questions

QA01 QA02 QA03 QA04 QA05 QA06 QA07 QA08 QA09 QA10

Mercury Ltd Venus Ltd Earth Ltd Miss Prism Bins plc Polly Ltd

[Statement of Financial Position] [elements of financial statements] [double-entry] [double-entry] [control accounts] [control accounts]

3 4 5 7 8 9 10 12

Prudence Pipe [Statements of Cash Flows] Pulp Ltd Paper Ltd A and B [accounts preparation] [partnerships]

14 15

201"!201#$T%&doc'

(age 2 o) 1*

EFIM10002 Financial Accounting 1

Sue Green, Richard Tutin and Adriana Korczak 1

! 201"

QA01 Mercury Limited [Statement of Financial Position]


(for submission in Tutorial 1, week 2 or 3) (a)
For each of the items listed below, state into which Statement of Financial Position category it would fall (for example, Current assets): i. ii. iii. iv. v. vi. Property, plant and equipment Amounts owed to a business by its customers (debtors or trade receivables) Amounts owed to suppliers for raw materials (creditors or trade payables) Stocks of finished goods (inventories) A bank overdraft Corporation tax owed to HM Revenue and Customs by a company [9 marks]

(b)

Mercury Limited has the following balances at 31st December 2013. Prepare Mercury Limiteds Statement of Financial Position at that date, using (i) (ii) the Common European format the Traditional UK format Amounts owed by the business to its suppliers Lorry Freehold Factory 10 year loan from bank Amount owed to the business by its customers Bank balance Equity Inventories 10,000 5,000 8,000 25,000 25,000 6,000 10,000 29,000

[16 marks] [QA01 ---- 25 marks available in total]

201"!201#$T%&doc'

(age " o) 1*

EFIM10002 Financial Accounting 1

Sue Green, Richard Tutin and Adriana Korczak 1

! 201"

QA02 Venus Limited

[elements of financial statements]

(for submission in Tutorial 1, week 2 or 3)

(a)

Discuss how a motor car would be treated in the Statement of Financial Position of Venus Limited in each of the following circumstances, making your reasons clear.

(i) (ii)

The car is owned by Venus Limited and is used by its employees; Venus Limited is a car trader and the car is one which it intends to sell in the normal course of its business;

(iii)

Venus Limited is a car trader and the car is used in its showroom for display purposes only;

(iv)

Venus Limited is a car trader. The car in question has been purchased by a customer who has agreed to collect it from Venus Limited but has not yet done so. [9 marks]

(b)

For each of the following items, discuss whether the cost described should initially be treated as an asset or an expense in the financial statements of Venus Limited:

(i)

Repairs made to the roof of a newly purchased car showroom necessary to bring it into a condition suitable for use;

(ii)

Repairs made to the roof of a car showroom which Venus Ltd has owned for some time, to keep it in a suitable condition for continued use as before;

(iii)

Costs incurred to extend the roof of the showroom over an outside area where customers can relax on sunny days while waiting for their cars to be serviced;

(iv)

Overtime paid to Venus Ltds staff for working on the development of a new model, the RIQ 4.

(v)

Training costs incurred to teach staff how to use new manufacturing equipment, if the training occurs before the manufacturing equipment is brought into use. [16 marks] [QA02: 25 marks available in total]

201"!201#$T%&doc'

(age # o) 1*

EFIM10002 Financial Accounting 1

Sue Green, Richard Tutin and Adriana Korczak 1

! 201"

QA03 Earth Ltd

[double-entry]

(for submission in Tutorial 2, week 4 or 5)


Earth Ltd has been selling china for several years. Its Statement of Financial Position at 1 January 2014 is shown below:
st

Earth Limited Statement of Financial Position as at 1st January 2014


ASSETS Non-current assets Premises Fixtures and Fittings Vehicle Total non-current assets Current assets Inventories Trade receivables Prepayment of insurance Cash and cash equivalents Total current assets Total assets EQUITY AND LIABILITIES Share capital Retained earnings Total equity Current liabilities Trade and other payables Utilities accrual Total current liabilities Total liabilities Total equity and liabilities NBV 000 320 36 10 366 20 90 1 204 315 681 000 320 261 581

80 20 100 100 681

201"!201#$T%&doc'

(age * o) 1*

EFIM10002 Financial Accounting 1

Sue Green, Richard Tutin and Adriana Korczak 1

! 201"

During 2014 the following transactions occur: 1. 2. 3. 4. 5. sales are made on credit amounting to 2million and there are no cash sales; cash of 1.9million is received from customers; Earth Ltd purchases inventory on credit at a cost of 1.4million; closing inventories at 31 December 2014 is valued at 30,000; analysis of the bank statement reveals the following payments: distribution costs employee costs occupancy costs repairs, renewals and maintenance of fixed assets utilities other administrative expenses insurance premium for the period 01-Jul-2014 to 30-Jun-2015 6.
th st

30,000 180,000 4,000 2,000 24,000 6,000 3,000

the utilities payments shown above settle all bills up to and including 30 September 2014. Since that date, Earth Ltds China Shop has used Electricity Telephone Water 2,000 3,000 1,000

7. 8.

Earth Ltd paid dividends to shareholders of 30,000; the following fixed assets were purchased for cash: Fixtures and fittings Vehicle 9,000 30,000

9.

Earth Ltd pays its creditors cash of 1,450,000.

Required
Draw up the ledger (T accounts) for Earth Ltd for the year ended 31 December 2014, including a Cost of Sales account, posting all transactions. [25 marks]
st

201"!201#$T%&doc'

(age + o) 1*

EFIM10002 Financial Accounting 1

Sue Green, Richard Tutin and Adriana Korczak 1

! 201"

QA04 Miss Prism

[double-entry]

(for submission in Tutorial 2, week 4 or 5)


Miss Prism set up a private kindergarten on 1 September 2013. She hired a hall, to be paid for at 150 per month, brought in a set of desks and other classroom furniture that had cost her 5,840, and stationery and books valued at 470, and paid 500 into a school bank account. At the following 31st August, Miss Prism's account books have these balances (besides her initial capital as indicated above). 210 1,950 470 1,020 3,750 9,280 5,840 15,260 3,690 3,780
st

Cash on hand Rent paid Stationery opening balance purchases Payment for mobile equipment for gymnasium Teachers' salaries paid Desks and equipment Fees tuition (cash received) charges for lunches (cash received) Cost of children's lunches

In addition the bank balance must be inserted. Miss Prism informs you that at 31st August: (1) (2) (3) (4) (5) One month's rent has been paid too soon. Parents owe 760 for tuition fees. She owes 380 to teachers for salaries. Closing stock of stationery is 730. Depreciation on desks & equipment of 740 and on gym equipment of 480 should be charged. Required Prepare an extended trial balance and use this technique to prepare a Statement of Financial Position for Miss Prism as at 31 August 2014 (using the Common European Format) and a Statement of Comprehensive Income for the year then ended. [25 marks]

201"!201#$T%&doc'

(age , o) 1*

EFIM10002 Financial Accounting 1

Sue Green, Richard Tutin and Adriana Korczak 1

! 201"

QA05 Bins plc

[control accounts]

(for submission in Tutorial 3, week 6 or 7)


You have been asked to review the purchase ledger of Bins plc. The ledger was written up by an employee who has now retired from the company. The following balances are extracted from the companys books as at 31 December 2014: Supplier Wonderland Ltd Amazon Ltd Georgia Ltd Other accounts Balance 53,520 34,680 18,700 652,510

Purchase ledger control account 772,340 On further investigation the following additional information is discovered: 1. 2. 3. 4. 5. 6. The purchases day book for December 2014 was overcast by 10,000. A purchase invoice of 1,450 from Amazon Ltd had not been posted to Amazons ledger account from the purchases day book. An invoice for 33,500 from Wonderland Ltd had been posted to the purchase ledger account for Georgia Ltd. An invoice for 2,000 from Wonderland Ltd had been included in the purchases day book twice. A contra entry of 1,000 with the sales ledger for Amazon Ltd had been entered in the purchases control account but omitted from the purchase ledger. An invoice for 17,200 from Georgia Ltd had been entered correctly in the purchases day book, but had been recorded as 14,720 in the purchase ledger account.

Required (a) Carefully explain the process by which transactions are recorded in the purchase ledger and in the Purchase Ledger Control Account, and how we can tell that the employee who has retired must have made at least one error in his purchases accounting. [10 marks] Make the necessary corrections to both the control account and the individual supplier purchase ledger accounts using the information in notes 1 to 6 above. [10 marks] If the net profit of Bins plc was 1,562,400 before the discovery of the above errors, calculate the amended profit figure after the adjustments for notes 1 to 6 have been made. [5 marks] [QA05: 25 marks available in total]

(b)

(c)

201"!201#$T%&doc'

(age - o) 1*

EFIM10002 Financial Accounting 1

Sue Green, Richard Tutin and Adriana Korczak 1

! 201"

QA06 Polly Ltd

[control accounts]

(for submission in Tutorial 3, week 6 or 7)


The assistant accountant of Polly Ltd has prepared a sales ledger control account at 31 March 2014 for you to reconcile with the list of sales ledger balances at that date. The control account balance is 225,165. The list of balances extracted from the sales ledger totals 223,390. On investigation, you discover the following: 1. A sales invoice for 6,400 has been recorded in the sales day book as 4,600. The accounts assistant who enters transactions in the sales ledger has seen a copy of the invoice and it has been correctly recorded in the customer account in the sales ledger. Cash discounts allowed to customers amounted to 840 and cash discounts received by Polly Ltd from their suppliers amounted to 560. The only entry in the sales control account for discounts is a debit for the cash discounts received. A dishonoured cheque from a customer for 450 has been recorded correctly in the control account. In the customers personal account however, the cheque was recorded as a receipt of cash from the customer but no adjustment was made when the cheque was later bounced. A contra entry between the sales and purchases ledgers of 750 has been omitted from the control account. The control account contains receipts from cash sales of 860. No entry has been made in the control account for bad debts written off of 1,835. These have been correctly reflected in the sales ledger.

2.

3.

4.

5. 6.

Required
(a) Explain the types of error that can be detected with the help of a control accounts system. [10 marks] Reconcile the listing of the individual sales ledger balances to the revised Sales Ledger Control Account balance. [15 marks]

(b)

[QA06: 25 marks available in total]

201"!201#$T%&doc'

(age

o) 1*

EFIM10002 Financial Accounting 1

Sue Green, Richard Tutin and Adriana Korczak 1

! 201"

QA07 Prudence Pipe

[Statements of Cash Flows]

(for submission in Tutorial 4, week 8 or 9)


Prudence Pipe runs a business from her home. She sells jewellery and clothes at ladies' parties. Her regular customers make purchases on credit and any other customers pay by cash. Prudence does not keep full accounting records and she has asked you to help her produce some financial statements for the year to 31 March 2014, using the information that you are given below.

Prudence Pipe Statement of Financial Position as at 31st March 2013


ASSETS Non-current assets Car: cost Car: accumulated depreciation Total non-current assets Current assets Inventories Trade receivables Less: provision for irrecoverable debts Cash and cash equivalents Total current assets Total assets EQUITY AND LIABILITIES Capital Retained earnings Total equity Non-current liabilities Long-term borrowings (bank loan) Total non-current liabilities Current liabilities Trade payables Interest liability Total current liabilities Total liabilities Total equity and liabilities Additional information (i) An analysis of the business bank statements for the year to 31 March 2014 shows (): Cash banked from debtors Other cash banked from sales Cash received from sale of car Cash paid for new car Payments to trade creditors Wages Sundry expenses Interest paid on bank loan Drawings Cash at bank at 31st March 2014 (ii) 58,600 67,800 8,500 15,400 91,724 6,200 3,250 1,000 6,500 22,470
st

12,000 (1,500) 10,500 5,500 2,200 (44) 11,644 19,300 29,800 10,000 4,300 14,300

10,000 10,000 4,500 1,000 5,500 15,500 29,800

Prudence sells all of her goods at a 50% mark-up (this means that the amount of gross profit is equal to 50% of the amount of the cost of sales).

201"!201#$T%&doc'

(age 10 o) 1*

EFIM10002 Financial Accounting 1

Sue Green, Richard Tutin and Adriana Korczak 1

! 201"

(iii) (iv)

During the year Prudence took 4,200 from the till and paid it into her personal bank account. The wages shown in note (i) were paid to Prudence's friend, Phillipa, who helps her at the clothes parties. 3,200 had been deducted from the amount paid to Phillipa, representing the amounts of cheques she received directly from customers (i.e. they were made out to Phillipa directly rather than the business). The new car is to be depreciated on a straight-line basis over 4 years, at which time its expected resale value is 5,400. Inventories at 31 March 2014 were valued at 7,000. Prudence is unable to tell you what she owes her trade creditors at 31 March. Prudence's records of her debtors show that payments had not been received in respect of invoices amounting to 3,868 at 31 March 2014. A review of these invoices showed that one for 368 related to a customer who has been declared bankrupt with no chance of any money being repaid. The accounts for Prudence are to include a general provision for irrecoverable debts of 2% of debtors. Interest on the bank loan at 10% p.a. is due for the year to 31 March 2014.
st

(v) (vi) (vii) (viii)

(ix) (x)

Required
(a) Prepare Prudence Pipes Statement of Financial Position as at 31 March 2014, using the Common European Format; [ 10 marks]
st

(b)

Prepare Prudence Pipes Statement of Comprehensive Income for the year then ended; [ 10 marks]

(c)

Prepare Prudence Pipes Statement of Cash Flows (under IAS 7) for the year then ended. In preparing the Statement of Cash Flows you should use the indirect method for calculating the net cash flow from operating activities. [ 5 marks]

[QA07 ---- 25 marks available in total]

201"!201#$T%&doc'

(age 11 o) 1*

EFIM10002 Financial Accounting 1

Sue Green, Richard Tutin and Adriana Korczak 1

! 201"

QA08 Pulp Ltd

(for submission in Tutorial 4, week 8 or 9)

Pulp Ltd prepares its accounts to 31 May each year. You are given the following information: 1. Pulp Limited Statement of Financial Position as at 31 May 2014 2014 000 1,500 1,800 800 300 4,400 1,320 1,560 2,880 7,280 000 500 400 3,520 4,420
st

ASSETS Non-current assets Land and buildings Plant and machinery Office equipment Motor vehicles Total non-current assets Current assets Inventories Trade receivables Total current assets Total assets EQUITY AND LIABILITIES Share capital Share premium Retained earnings Total equity Non-current liabilities Long-term borrowings (bank loan) Total non-current liabilities Current liabilities Trade and other payables Short-term borrowings (bank overdraft) Current portion of long-term borrowings (bank loan) Current tax payable Total current liabilities Total liabilities Total equity and liabilities 2.

650 650 1,060 520 130 500 2,210 2,860 7,280


st

The summarised Statement of Comprehensive Income of Pulp for the year to 31 May 2014 is as follows: 000 Turnover 10,600 Cost of sales (6,200) -------Gross profit 4,400 Overheads (includes depreciation) (2,010) -------Operating profit 2,390 Interest expense (90) ------Profit on ordinary activities before taxation 2,300 Corporation tax (500) -------Profit for the period 1,800

=====
201"!201#$T%&doc' (age 12 o) 1*

EFIM10002 Financial Accounting 1

Sue Green, Richard Tutin and Adriana Korczak 1

! 201"

3. Pulp Ltd st Statement of Changes in equity for the year ended 31 May 2014 Share capital 000 100 800 (800) 1,800 3,520 Retained earnings 000 2,520 Total 000 2,620 800 (800) 1,800 4,420

Balance at start of period Changes in equity during period Issue of share capital Dividends Total comprehensive income for the year Balance at end of period 4.

900

The following extracts are available from the companys Statement of Cash Flows for the year st to 31 May 2014: 000 Increase in inventories 200 Increase in trade payables 300 Decrease in trade receivables 550 Purchase of: Plant and machinery 390 Office equipment 140 Motor vehicle 100 Interest paid 90 Corporation tax paid 400 Proceeds from share issue 800 Dividends paid 800 The company has the following depreciation policies: Land and buildings No depreciation charged Plant and machinery 10% per annum reducing balance Office equipment 20% per annum reducing balance Motor vehicles 25% per annum reducing balance Depreciation on new non-current assets is charged in full in the year of purchase.

5.

6.

Pulp Ltd issued 400,000 ordinary 1 shares at a premium of 1 per share during the year to 31 May 2014. The companys bank loan was originally for 1,300,000, payable over 10 years at the rate of 130,000 per annum plus interest. The terms of the loan have been complied with.

7.

Unfortunately, the companys accounting records were destroyed in a fire, which took place on 31 May 2014.

Required (a) Recreate the opening Statement of Financial Position for the company as at 31 May 2013, using the Common European Format. Show all of your workings. [20 marks] Recreate the companys bank account for the year to reconcile your calculation of the opening overdraft at 31 May 2013.
st st

(b)

[10 marks] [QA08: 30 marks available in total]

201"!201#$T%&doc'

(age 1" o) 1*

EFIM10002 Financial Accounting 1

Sue Green, Richard Tutin and Adriana Korczak 1

! 201"

QA09 Paper Ltd

[accounts preparation]

(for submission in Tutorial 5, week 10 or 11)


Paper Ltd trades as a retail stationer from a rented shop. Its accounts are kept on a computer, but in January 2013 an electrical fault caused the erasure of much of the information. Reference to the available printouts has established the following data: Bank Account: year to 31 December 2014 Sales ledger receipts Cash Sales New shares issued 103,900 97,200 2,500 Balance, 1 January 2014 Purchase ledger payments Wages Rent Administrative expenses New van Directors' salaries Balance, 31 December 2014 8,250 119,400 21,200 11,000 14,700 3,250 20,000 5,800 ---------203,600 ----------

---------203,600 ---------31 Dec 2014 55,800 11,880 9,640 2,530 3,700 1,500 (note 1) (note 1) (note 2) 31 Dec 2013 43,100 9,470 10,560 1,000 1,330 3,700 1,200 3,500 2,100 20,000

Inventories, at cost Sales Ledger Control Account Purchase Ledger Control Account Rent paid in advance Payables relating to administrative expenses Shop fittings original cost - accumulated depreciation Van - original cost - accumulated depreciation Share capital NOTES (1) (2)

New van cost 5,000 less a trade-in allowance of 1,750 on old one. Depreciation is to be provided for 2014, at 20% of the cost of the new van. The company is authorised to issue a maximum of 50,000 ordinary shares with a par value of 1 each. 20,000 shares were issued at par when the company was formed: during 2014, 1,000 new shares were issued to an employee at 2.50 each. Bad debts totalling 1,360 were written off during 2014. Of the 11,880 trade receivables balance at the end of 2014, 240 is considered to be bad and 440 doubtful. All receipts and payments have gone through the bank account: no discounts were allowed or received.

(3) (4)

Required (a) (b) The Statement of Financial Position for Paper Ltd as at 31 December 2013, using the Common European Format. [7 marks] The Statement of Comprehensive Income for the year ended 31 December 2014 and the st Statement of Financial Position at 31 December 2014 for Paper Ltd, using the Common European Format. [18 marks]
st

201"!201#$T%&doc'

(age 1# o) 1*

EFIM10002 Financial Accounting 1

Sue Green, Richard Tutin and Adriana Korczak 1

! 201"

QA10 A and B
(for submission in Tutorial 5, week 10 or 11)

[partnerships]

A and B are in partnership, sharing profits equally. The summarised Statement of Financial Position of their partnership at 30 June 2014 is as follows: 000 30 100 70 000 10 10 40 60 80 200
st

Land Buildings Other current assets

Capital account: Capital account: Current account: Current account: Trade payables

A B A B

200 (i) (ii) (iii) (iv)

The partners agree that with effect from 1 July 2014 profits will be shared in the ratio A3: B2 As at 30 June 2014, the land is valued at 55,000. As at 30 June 2014, the buildings are valued at 65,000. At 30 June 2014, the overall business (i.e. the net assets) is valued at 170,000 with the other assets and trade payables valued at the same figures as shown in the above Statement of Financial Position.
th th th

Required
(a) First scenario: st Prepare a Statement of Financial Position at the commencement of business on 1 July 2014 (using the Common European Format) showing clearly the capital and current account balances for EACH partner, assuming that the overall value of the business at that point in time needs to be fully reflected in the accounts. [4 marks] Second (alternative) scenario: st Prepare a Statement of Financial Position at the commencement of business on 1 July 2014 (using the Common European Format) showing clearly the equity account balances for each partner, assuming that all the assets and liabilities will continue to be measured based on their original amounts except for the buildings which will be shown at their revalued amounts. [16 marks] Comment on your results. [5 marks]

(b)

(c)

[QA10: 25 marks available in total]

201"!201#$T%&doc'

(age 1* o) 1*