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accounting a level and as level

Accounting A Level And AS Level 1st Edition Harold Randall - Solutions

The administration expenses of a business amount to $30 000. They are apportioned to three departments as follows: department A 3/2, department B 2/6, department C 1/6. It has been decided to close department C but there will not be any reduction in administration costs. How will the
The following balances have been extracted from the books of Spinners & Co. at 31 December 2003.Further information 1. Stocks at 31 December 2003:2. Expenses owing at 31 December 2003:3. Expenses prepaid at 31 December 2003:4. Plant and machinery are to be depreciated at the rate of 10% on
The Fabricating Company carries on a manufacturing business. Information extracted from its trial balance at 31 March 2004 is as follows.The following further information is given.Completed production is transferred to the warehouse at a mark-up on factory cost of 20%. Required Prepare a
A manager is paid a commission of 5% based on net profit after charging the commission. The profit before commission is $157 500. How much commission is paid to the manager? A. $1500 B. $1658 C. $7500 D. $7875
Goods are transferred from the Manufacturing Account to the Trading Account at factory cost of production plus a mark-up of 20%. The transfer prices of the closing stocks of finished goods were as follows.What was the provision for unrealised profit charged against the profit for Year
The following balances have been extracted from the books of the Uggle Box Manufacturing Company at 30 April 2004.Further information 1. Stocks at 30 April 2004:2. Finished goods are transferred to the Trading Account at factory cost plus a mark-up of 20%. 3. Depreciation is to be
Goods are transferred from the factory to the warehouse at a mark-up of 33 1/3 %. At 1 April 2003, the balance on the Provision for Unrealised Profit was $17000. At 31 March 2004, the closing stock of finished goods was $60 000. What was the effect on profit of the entry in the Provision for
The following balances have been extracted from Yendor's books at 31 March 2004.Further information 1. Stocks at 31 March 2004 were as follows (in $000s): raw materials $440; work in progress $562; finished goods $594. 2. Carriage inwards relates wholly to the purchase of raw
A manufacturing company adds a factory profit of 25% to its cost of production. The following information is available:How much will be credited as factory profit in the Profit and Loss Account for the year ended 31 March 2004?A. $67 500 B. $69 000 C. $70 500 D. $71 500 Stock of
The following items appear in the accounts of a manufacturing company: (i) Carriage inwards. (ii) Carriage outwards (iii) Depreciation of warehouse machinery (iv) Provision for unrealised profit. Which items will be included in the Manufacturing Account? A. (i) and
At 30 September Fiford Ltd had a stock of 100 kg of fifolium, which had cost $5 per kilogram. In October, it made the following purchases and sales of fifolium.Required Calculate the quantity and value of the stock of fifolium at 31 October using the FIFO method. 6 2091 mati to
Janice Jersey's first 6 months of trading showed the following purchases and sales of stock.Calculate Janice's profit for the 6 months ended 30 June 1990 using the following methods of stock valuation: (a) FIFO (First In First Out) (b) LIFO (Last In First Out) (c) AVCO (Weighted
How should stock be valued in a balance sheet?A. At the lower of net realisable value and selling price B. At the lower of replacement cost and net realisable value C. At lower of cost and replacement cost D. At lower of cost and net realisable value
At 31 July, L.I. Fortune Ltd had a stock of 40 litres of lifoxium, which had cost $1.50 per litre. The purchases and sales of lifoxium in August were as follows.Required Calculate L.I. Fortune Ltd's stock of lifoxium at 31 August in quantity and value using the LIFO method. August
A company bought and sold goods as follows.What is the value of the stock at 6 March based on FIFO? A. $44 B. $45 C. $65 D. $66 March 1 3 5 6. Bought Units 20 100 10 20 Unit price ($) 2.00 In de 2.50 3900 3.00 Sold So Units 12 16
Discuss how the concept of prudence might be relevant when considering the valuation of Stock in Trade.
A.V. Co. had a stock of 200 digital hammers at 31 May. The hammers were valued at $5 each. Transactions in digital hammers in the month of June were as follows.Required Calculate the closing stock of digital hammers at 30 June showing quantity and total value based on weighted average
Because of illness, Achmed's annual stocktaking, which should have taken place on 31 March 2001, was not completed until 7 April 2001, and was undertaken by an inexperienced member of the staff. Achmed felt that the stock figure of $92050 was too low and ordered an investigation. It was discovered
A company had the following stock transactions in June.What is the value of stock at 30 June based on AVCO? A. $4.292 B. $4.437 C. $4.50 D. $5.00 June 1 Purchased 50 units of stock at $3 per unit 14 Purchased 100 units at $4.50 per unit 23 Sold 70 units 30 Purchased 62 units at
A trader has valued his opening and closing stocks using LIFO. He has now heard that LIFO is not acceptable under current accounting standards and has amended his accounts to value the stocks on FIFO. His stocks valued at FIFO and LIFO are as follows.What effect will this amendment make to the
Tee and Leef are trading in partnership. Their trial balance at 31 March 2004 is as follows.Further information 1. Stock at 31 March 2004: $20 000. 2. Selling expenses prepaid at 31 March 2004: $6000. 3. Administration expenses accrued at 31 March 2004: $4000.4. Depreciation is to be
The following trial balance has been extracted from the books of Bell and Binn at 30 April 2004.Further information 1. Stock at 30 April 2004 is valued at $27 000. 2. Bell is to be credited with interest on the loan at a rate of 10% per annum. 3. The bank reconciliation shows that
Cue and Rest are partners sharing profits and losses in the ratio of 2:1. They are allowed interest at 10% per annum on capitals and loans to the partnership. Other information is as follows.The partnership has made a net profit for the year of $40 000. How much is Cue's total share of
The facts are as in exercise 1, but Tee and Leaf have a partnership agreement which includes the following terms. 1. Leef is to be credited with interest on his loan to the partnership at the rate of 10% per annum. 2. The partners are allowed interest at 10% per annum on capitals and are
Mill has been a second-hand car dealer for some years. His Trading and Profit and Loss Account for the year ended 31 December 2003 was as follows.Mill's net profits for the previous two years were as follows.Mill's friend, Grist, has also been trading for some years repairing and servicing motor
Stump and Bail are in partnership. Stump has lent the partnership $10 000 on which he is entitled to interest at 10%. He is also entitled to a salary of $12 000 per annum. Profits and losses are shared equally. The partnership has made a net loss of $25 000. How much is Stump's share of the
Dellow and Coucom are in partnership in a business which has three retail departments, Television, Computing and Telephones. The following balances. were extracted from the business accounts at 30 April 2002.Notes The following must now be taken into consideration. Stocks at 30 April
Senter and Harf have prepared their draft Balance Sheet as at 30 June 2004 as follows.It has now been discovered that the following errors and omissions have been made. 1. Some fixtures and fittings were sold for $3500 in January 2004. These items had cost $15 000 and their net book value at
Tom and Tilly shared profits and losses equally until I September 2004 when they agreed that Tilly would be entitled to a salary of $10 000 per annum from that date. Profits and losses would continue to be shared equally. The partnership Balance Sheet at 31 March 2004 was as follows.The
Gohl and Poast are partners sharing profits and losses equally. Gohl has lent the partnership $8000 on which he is entitled to interest at 10% per annum. The partners are entitled to annual salaries as follows: Gohl $6000; Poast $4000. The partnership has made a profit of $5000. How much is Gohl's
Wilson, Keppel and Betty were in partnership and shared profits and losses equally. They did not operate Current accounts and on 30 April 1998 their Capital accounts showed the following balances.(a) Keppel retired from the partnership on 1 May 1998. and at that time Goodwill was valued at $24 000.
The summarised Balance Sheet for F and G in partnership is given.F and G have previously shared profits and losses in the ratio of 2 : 1 but have now decided to change the ratio to 3 : 2. Goodwill is to be revalued and shown in the Balance Sheet at 30 000. What is the new balance on F's
Vera and Ken are partners who have shared profits and losses equally. On 1 July 2005 they decide to change the profit-sharing ratio to: Vera 3/5 and Ken 2/5. The partnership assets and liabilities at book values at 1 July 2005 are as follows.The partners have been informed that the value of the
J and K are partners sharing profits and losses equally. They do not record Goodwill in the firm's books. L joins the partnership, paying $24 000 for his share of the Goodwill. Profits and losses are to be shared equally between J, K and L. Which of the following shows the increases in
L and M are in partnership sharing profits and losses in the ratio of 3 : 2. They admit N as a partner on 1 January. On the same date the partnership net assets are revalued and show a loss on revaluation of $40 000. The new profit/loss-sharing ratio is: L 2/5, M 2/5, N1/5. How will the
Bell and Booker have been partners for some years, making up their accounts annually to 31 December. The partnership agreement contained the following provisions. Interest was allowed on capitals at 10% per annum. Booker was entitled to a salary of $15 000 per annum. Profits and
Hook, Line and Sinker have shared profits and losses in the ratio 3 : 2 : 1 for a number of years. On 1 July 2004, the partners agreed that, from that date, 1. Hook will be entitled to a salary of $6000 per annum 2. profits and losses will be shared equally. Information extracted
Punch and Judy have shared profits and losses in the ratio of 2: 1. On 1 October 2004 they agree to share profits and losses as follows in future: Punch 3/5, Judy 2/5. Goodwill is valued at $18 000. The balances on their Capital accounts before the change in the profit/loss-sharing ratio are: Punch
P, Q and R were partners, sharing profits and losses equally. P retired and Q and R continued in partnership sharing profits and losses equally. Goodwill was valued at $60 000 but was not shown in the books. Which entries will record the adjustments for P's retirement in the books?
Wilfrid, Hide and Wyte were partners sharing profits and losses in the ratio of 3 : 2 : 1 after charging interest on capitals at 10% per annum. Their Capital and Current account balances at 1 July 2003 were as follows.Wilfrid decided to retire on 31 December 2003. He left $75 000 of the balance on
S and I are partners sharing profits and losses in the ratio of 1 : 2. They admit V as a partner and revise the profit-sharing ratio to: S 2/5; T 2/5: V 1/5. Goodwill is valued at $60 000 but no Goodwill is to be recorded in the books. Which entries will be made in the partners' Capital
The following is the summarised Balance Sheet of Bracket & Racket Ltd, a limited company wholly owned by its two shareholders, Bracket and Racket.The company accountant resigned at the beginning of April 2002 and proper records were not kept for the six-month period 1 April to 30 September
Seesaw Ltd's share capital consists of 60000 10% preference shares of $1 and 100 000 ordinary shares of $1. Profits for six years were as follows: 1998 $10 000; 1999 $5000; 2000 $7000; 2001 $4000; 2002 $7000; 2003 $12 000. Required Prepare tables showing the dividends payable to the
A company has an authorised share capital of 100 000 ordinary shares of $0.05. It has issued 70 000 shares. The directors recommend a dividend of 6%. What will be the amount of the dividend? A. $2100 B. $3000 C. $4200 D. $6000
Pecnut Ltd's trial balance at 31 March 2004 was as follows.Further information 1. Stock at 31 March 2004: $105 000. 2. The freehold buildings are to be revalued to $2 000 000 at 31 March 2004. 3. The motor vehicles are to be depreciated at the rate of 25% using the reducing balance
The directors of Premium Shares Ltd offered 100 000 10% preference shares of $1 at $1.20 per share. All the shares were subscribed and paid for. Required Prepare journal entries to record the issue of the preference shares.
A company with an authorised share capital of $200 000 has issued 100 000 ordinary shares of $1. It has also issued $100 000 6% debentures. Operating profit is $20 000. A transfer of $10 000 is to be made to the General Reserve. What is the maximum dividend that can be paid on the ordinary
Freehold premises are shown in the Balance Sheet of a company as follows: Cost $60000, Net Book Value $42 000. It has been decided to revalue the premises in the books of the company at $80 000. RequiredPrepare the journal entry for the revaluation of the premises in the company's books.
The following is an extract from the Balance Sheet of Gracenote Ltd.Required Calculate the Balance Sheet value of 100 ordinary shares. Share capital and reserves 200 000 ordinary shares of $1 150 000 8% preference shares of $1 Share Premium account General Reserve Profit and Loss Account 5 200
Cox Ltd's Balance Sheet at 30 September 2004 is as follows.Further information relevant to the year ended 30 September 2004: 1. Plant and machinery which had cost $180 000 was sold for $20.000. 2. Motor vehicles which had cost $72 000 were sold for $11.000. 3. The freehold premises
On 6 April 2004 a company paid a final dividend of $7000 in respect of its financial year ended 31 December 2003. On 1 October it paid an interim dividend of $5000 in respect of the year ending 31 December 2004. The Balance Sheet at 31 December 2004 included a current liability of $10 000 for
The following is a company's summarised Balance Sheet.What is the Balance Sheet value of each ordinary share? A. $0.75 B. $1.50C. $0.83 D. $1.67 Share capital and reserves 1 200 000 ordinary shares of $0.50 100 000 7% preference shares of $1 Share premium General Reserve Retained
The following are extracts from a company's Balance Sheet.It has been decided to revalue the freehold premises to $500 000. What will be the Balance Sheet value of the ordinary shares after the revaluation? A. $1.44 B. $1.64 C. $1.76 D. $1.96 Fixed asset: Freehold premises
Molly Coddle Ltd's trial balance at 30 April 2004 was as follows.Further information 1. Stock at 30 April 2004 was valued at $31 000. 2. Depreciation for the year is to be provided as follows. Warehouse machinery $8000; office machinery $10 000 3. $10 000 is to be transferred to the
The trial balance of Shillyshally Ltd at 30 June 2004 is as follows.Further information 1. Stock at 30 June 2004 was valued at $38 000. 2. Account is to be taken of the following at 30 June 2004.Accrued expenses: delivery vehicle expenses $2000 office expenses $3000 Prepaid expense:
Ali holds 500 ordinary shares of $0.50 in Riski Ltd. He has paid in full the amount of $0.35 called up on each share. The company is unable to pay its creditors. What is the maximum amount that Ali can now be required to pay on his shares? A. $75 B. $250 C. $325 D. $500
Which of the following will not be shown as share capital and reserves in a company's Balance Sheet? A. Debentures B. Retained profit C. Revaluation reserve D. Share premium
Which is the safest form of investment in a limited company? A. Long-term debentures B. Ordinary shares C. Preference shares D. Short-term debentures
A shareholder sold 1000 ordinary shares of $1 for $1500. What effect will this have on the share capital of the company? A. It will decrease by $1000. B. It will decrease by $1500. C. It will increase by $1500. D. It will remain unchanged.
You have received the following financial statements of Pie Ltd for the year ended 30 April 2003, but you do not have the company's Balance Sheet for the previous year.Further information relevant to the year ended 30 April 2003: 1. Motor vehicles which had cost $35 000 were sold for
Contraflo Ltd's Balance Sheets at 31 December 2003 and 2004, and an extract from its Profit and Loss Account for the year ended 31 December 2004, were as follows.Further information During the year ended 31 December 2004 the following transactions took place. 1. Freehold buildings which
Horsa Ltd's Balance Sheet at 31 July 2003 was as follows.An extract from Horsa Ltd's Profit and Loss Account for the year ended 31 July 2004 and the cash flow statement for that year are as follows.Required Prepare Horsa Ltd's Balance Sheet at 31 July 2004 in as much detail as possible.
The following is Prophile plc's Balance Sheet at 31 October 2002.The company's accountant has prepared a budgeted Profit and Loss Account and a budgeted cash flow statement for the year ending 31 October 2003.The plant and machinery had cost $110 000. RequiredPrepare Prophile plc's budgeted
The following information is extracted from the accounts of a company.What was the operating profit for the year ended 31 December 2003? A. $194 000 B. $239 000 C. $244.000D. $289 000 Retained profit at 31 December Dividends paid and proposed Transferred to General
A company has an authorised share capital of $1 000 000. The company has issued 800 000 ordinary shares of $1 at $1.20 per share. It pays $48 000 as dividend on the ordinary shares. What was the rate of the dividend? A. 4% B. 4.8% C. 5% D. 6%
The following information is extracted from the accounts of a company.How much was the cash inflow from operating activities in the year ended 30 June 2004? A. $67 000 B. $75 000 C. $125 000 D. $133 000 Operating profit Loss on disposal of fixed
The following is the summarised Balance Sheet of Otago (Bonus Offers) Ltd.The directors have decided to make a bonus issue of three new shares for every four already held. They wish to leave the reserves in the most flexible form. RequiredRedraft Otago (Bonus Offers) Ltd's Balance Sheet to
A company acquired an asset worth $5000. In full settlement of the price, the company issued 5000 ordinary shares of $1 as fully paid-up shares to the vendor. Under which heading in the cash flow statement will this transaction be shown? A. Acquisitions B. Capital expenditure C.
A company redeems 60 000 $1 redeemable preference shares at a premium of $0.25 per share. The shares were originally issued at par. No new issue of shares was made to finance the redemption. What effect does the redemption have on the Profit and Loss Account and the Capital Redemption Reserve?
A company purchased a motor vehicle for $25000. Settlement was made by a payment of $22000 and the part exchange of one of the company's own vehicles for $3000. The vehicle given in part exchange had a written down value of $7000, but had a re-sale value of $2000. Which amount should be shown
The summarised Balance Sheet of Omicron Ltd at 31 December 2002 was as follows.On 1 January 2003 before any other transactions had taken place the following had occurred: 1. redemption of all the debentures at a premium of 5% 2. redemption of all the preference shares at $1.25 per
The summarised Balance Sheet of Bonarite Ltd at 30 June 2004 was as follows.On 1 July 2004, before any other transactions had taken place, the company made a bonus issue of shares on the basis of four new shares for every five already held. The directors wished to leave the reserves in the most
Istaimy plc's summarised Balance Sheet at 30 April 2001 was as follows.On 1 May 2001, before any further transactions had taken place, it was decided to redeem all the preference shares at a premium of $0.30. The shares had originally been issued at $1.20 per share. In order to provide funds for
A company issues bonus shares. How does this affect the cash flow statement? A. It will increase the management of liquid resources. B. It will increase financing. C. It will increase cash flow from operating activities. D. It will not appear in the cash flow statement.
Choppers Ltd's summarised Balance Sheet is as follows.The company has decided to redeem the preference shares out of the proceeds of a new issue of 150 000 ordinary shares of $1 at a price of $2.00. Required (a) Prepare Choppers Ltd's Balance Sheet immediately after the redemption of the
The following is the Balance Sheet of Joloss plc at 30 April 2002.Over the past few years Joloss plc has traded at a loss and no dividends have been paid to the shareholders during that time. The directors are of the opinion that Goodwill is now valueless. The tangible fixed assets are
A company has issued 300 000 ordinary shares of $0.50 each. It makes a bonus issue of two shares for every three already held. It follows that with a rights issue of one share for every two already held at $0.75 per share. The rights issue was fully taken up. What was the increase in the Share
The summarised Balance Sheet of Twist Ltd is as follows.The preference shares had been issued at a premium of $0.20 per share. The preference shares are to be redeemed at $1.20 per share. No new issue of shares is to be made for the purpose of the redemption. Required (a) Show how
The following is the Balance Sheet of the Erchetai partnership at 30 April 2002.On 30 April 2002, Istaimy plc acquired the business of the Erchetai partnership. The following matters were taken into consideration in fixing the terms of the acquisition. 1. No depreciation had been provided on
A company redeems its debentures at a premium. How may the company treat the premium on the redemption? A. Debit Bank account B. Debit Capital Redemption Reserve C. Debit Share Capital account D. Debit Share Premium account
A company, which has already issued ordinary shares of $1 each, issues 200 000 bonus shares and follows this with a rights issue of 100 000 ordinary shares at $1.50 per share. What is the increase in the share capital and reserves of the company after these transactions? A. $100
On 1 April 2004 Joel Ltd acquired the partnership business of Kay and Ola. The partnership Balance Sheet at 31 March 2004 was as follows.Further information 1. The assets (including the bank account) and current liabilities were taken over at the following valuations.2. Kay received sufficient
Carol has lent $60 000 at 5% interest per annum to the firm in which she is a partner. A company has offered to buy the partnership business. Part of the purchase price consists of a debenture to be issued to Carol to ensure that she continues to receive the same amount of interest annually as she
A company paid $1.8 million to acquire the business of a sole trader. The sole trader's assets and liabilities were valued as follows.How much was paid for Goodwill? A. $650 000 B. $750 000 C. $850 000 D. $950 000 Fixed assets Current assets Current liabilities Long-term
Spaid and Shuvell are partners in a business and their Balance Sheet at 31 December 2004 is as follows.The partners have accepted an offer from Digger Ltd to purchase the business for $118 000. The company will take over all the assets and liabilities of the partnership except the bank account. The
The Balance Sheet of a sole trader is as follows.A company purchased the business, paying for the tangible fixed assets and the net current assets at the valuations shown above. The company settled the purchase price by issuing 200 000 ordinary shares of $1 at $1.50 per share. How much did the
FRS 18 (Accounting policies) lists four accounting principles. Which of the following is stated by the standard to be a desirable principle? A. Accruals B. Consistency C. Going concern D. Historical cost
Explain what is meant by an adjusting event. Describe the action that needs to be taken when one occurs and explain why the action is necessary.
SSAP 25 (Segmental reporting) requires companies to give separate figures for certain items for each segment. For which of the following are separate figures not required? A. Cost of sales B. Net assets employed C. Profit before taxation D. Turnover
On which amount are earnings per share calculated? A. Profit after interest, tax and preference dividend B. Profit after interest, tax, preference dividend and transfer to general reserve C. Profit before interest, tax and preference dividend D. Profit before interest, tax,
Which of the following is required by FRS 4 (Capital instruments) to be disclosed by way of a note to the accounts? A. Exceptional items B. The basis on which depreciation has been calculated C. The number of shares held by directors D. The reason for any issue of shares during
Najim wants to analyse the results of his trading for the year ended 31 December 2005 and has prepared his Trading and Profit and Loss Account and Balance Sheet. He compares these with the final accounts for the previous year. The Trading and Profit and Loss Accounts and Balance Sheets for the two
What should be disclosed by way of a note to the Balance Sheet regarding depreciation of fixed assets? A. Date of acquisition B. Estimated proceeds of disposal C. Estimated net residual value D. Useful economic lives of the assets
Information about a business is given in the following table.Which of the following is true in year 2? Turnover Cost of sales Operating expenses Profit before interest and taxation Fixed assets Net current assets Long-term loans year 1 $ 200 000 125 000 75 000 32 000 43 000 140 000 60 000 (80
On 1 October 2001 Manny Kyoor and his wife formed a limited company, Kyoor Ltd, to run a beautician's business, and each paid in $37 500 as share capital. The bank loaned the company a further $80 000 at 9% interest per annum. At 30 September 2002 the business's final accounts were drawn up as
Which of the following, occurring after the Balance Sheet date, is an adjusting event?A. A capital reconstruction B. A debtor at the Balance Sheet date subsequently becoming bankrupt C. An issue of shares D. Loss of stock in a fire
The following information summarises the latest set of final accounts of Worky Tout & Co., a partnership.(a) Prepare, in as much detail as possible, the Trading and Profit and Loss Account of Worky Tout & Co. for the year ended 30 April 2001 and a Balance Sheet as at that date. (All
A financial consultant has been asked by his client for advice on the relative performance of two companies, Dunedin Ltd and Wellington Ltd. Extracts from the Profit and Loss Accounts for the year ended 31 December 2004 and the Balance Sheets at that date of the two companies are as follows.The
An extract from Oitar ple's Profit and Loss Account for the year ended 30 April 2002 was as follows.Oitar ple's issued share capital and reserves at 30 April 2002 consisted of:The market price of the ordinary shares at 30 April 2002 was $30. Required (a) Calculate the following ratios for
Extracts from the Profit and Loss Accounts for two years for a business are given in this table:What might explain the change in the gross profit margin in year 2?A. An increase in sales B. An increase in the sales price C. A reduction in stock D. Suppliers offering higher cash

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