2014 accounting written · pdf fileon cost and reports on a monthly basis. ... onemax...

ACCOUNTINGWritten examination

Monday 10 November 2014 Reading time: 11.45 am to 12.00 noon (15 minutes) Writing time: 12.00 noon to 2.00 pm (2 hours)

QUESTION BOOK

Structure of bookNumber of questions

Number of questions to be answered

Number of marks

12 12 100

• Studentsarepermittedtobringintotheexaminationroom:pens,pencils,highlighters,erasers,sharpeners,rulersandonescientificcalculator.

• StudentsareNOTpermittedtobringintotheexaminationroom:blanksheetsofpaperand/orwhiteoutliquid/tape.

Materials supplied• Questionbookof11pages.• Answerbookof17pages.

Instructions• Writeyourstudent numberinthespaceprovidedonthefrontcoveroftheanswerbook.• Answerallquestionsintheanswerbook.

• AllwrittenresponsesmustbeinEnglish.

At the end of the examination• Youmaykeepthisquestionbook.

Students are NOT permitted to bring mobile phones and/or any other unauthorised electronic devices into the examination room.

©VICTORIANCURRICULUMANDASSESSMENTAUTHORITY2014

Victorian Certificate of Education 2014

2014ACCOUNTINGEXAMQB 2

Question 1–continued

Question 1(14marks)OceanBluesellsarangeofboatfittings.Stockispurchasedoncreditandsoldforbothcashandcreditwitha100%mark-uponcost.ThefollowinginformationrelatestoFebruary2014.

Debtorsbalancesat1February2014were:JBennett $2500DEdger $3400TWilson $4300 $10200

Sales Journal

Date 2014

Debtor Invoice Number

Cost of Sales

Sales GST Debtors Control

2Feb. JBennett 324 1 600 3200 320 3520

6Feb. DEdger 325 1 200 2400 240 2640

15Feb. JBennett 326 500 1 000 100 1 100

17Feb. TWilson 327 1550 3100 310 3410

23Feb. FSmith 328 1250 2500 250 2750

28Feb. Totals – 6 100 12 200 1 220 13 420

Cash Receipts Journal

Date 2014

Details Rec. No.

Bank Disc. Exp.

Debtors Control

Cost of Sales

Sales Sundries GST

1Feb. CashSales 610 14300 6500 13000 1300

4Feb. JBennett 611 1650 50 1700

6Feb. CashSales 612 10450 4750 9500 950

7Feb. DEdger 613 2 000 50 2050

16Feb. Loan–XYZBank

614 10 000 10 000

19Feb. TWilson 615 1 000 1 000

24Feb. CashSales 616 13640 6 200 12400 1240

28Feb. Totals – 53 040 100 4 750 17 450 34 900 10 000 3 490

Additional information16February DEdgerreceivedacreditof$660(includingGST)forstockreturnedfromthesaleon

6February(CreditNote21).27February TWilsonhasbeendeclaredbankruptandwillnotbeabletopaytheoutstanding

balance(Memo58).

3 2014ACCOUNTINGEXAMQB

TURN OVER

a. RecordtheadditionalinformationintheGeneralJournalprovided. Narrationsarenotrequired. 5marks

b. Withreferencetooneaccountingprinciple,explainwhytheentryon27February2014needstobemade. 3marks

c. CompleteDEdger’saccountintheDebtorsSubsidiaryledgerforFebruary2014andpreparethisaccountforthenextreportingperiod. 3marks

d. PrepareaScheduleofDebtorsasat28February2014. 3marks

Question 2 (5marks)TheStockControlledgeraccountforVHGlassworksisshownbelow.Thebusinessusesamark-upof100%oncostandreportsonamonthlybasis.Thebusinessbuysandsellsstockonacreditbasisonly.

Stock Control

Date 2014

Cross-reference Amount Date 2014

Cross-reference Amount

1March Balance 13500 31March CostofSales 12 000

31March CreditorsControl 4650 CreditorsControl 500

CostofSales 1300 Balance 6950

19450 19450

1April Balance 6950

ShowhowtheCostofSalesentryonthedebitsideoftheaccountwouldaffectitemsintheIncomeStatementforthemonthended31March2014andtheBalanceSheetat31March2014.

Question 3 (7marks)InJanuary2014,theownerofMetroCosmeticswasprovidedwiththefollowinginformation.

2013 (Actual) 2014 (Budget)

StockTurnover 90days 80days

CreditorsTurnover 28days 37days

a. TheownerbelievesthatimprovingStockTurnovershouldleadtoanincreaseingrossprofit.

Doyouagreewiththeowner?Explain. 3marks

b. SuggesttwostrategiesthebusinessmayemploytoimproveStockTurnover. 2marks

c. IdentifyonepositiveandonenegativeeffectthattheincreaseinCreditorsTurnovercouldhaveonMetroCosmetics. 2marks


Question 4 (8marks)ChrisStoneestablishedasmallbusiness,WillowTerrace,toselloutdoorfurniture.Thebusinesswillusecontrolaccountsandsubsidiaryledgersforbothdebtorsandcreditors.Thebusinessofficiallycommencedon1June2014withthefollowingtransactionsandinformation:• Achequefor$40000fromChrisStonewaspaidintothebusinessbankaccount(Rec.1).• Abusinessloanof$20000wasreceivedfromANYBank(Rec.2).Theloanisrepayableinequal

monthlyinstalmentsover24months.Anoverdraftof$15000wasalsoarranged.• Athree-yearrentalagreementwassigned.Rentof$5000waspaidforthethreemonthsto31August

(Cheque001).WillowTerracepaidasecuritybondof$4000(Cheque002).ThesecuritybondwillberefundedtoWillowTerraceattheendoftherentalagreementprovidedthatthepremisesareinsatisfactorycondition.

• Chris’sownmotorvehicle,valuedat$24000,wasalsocontributedtothebusiness.Itoriginallycost$52000plusGST(Memo1).

• Shopfittingsthatcost$30000plusGSTwerepurchasedoncreditfromBFit(Invoice386).Adepositof$4000waspaid(Cheque003).

• Stockthatcost$38000plusGSTwaspurchasedoncreditfromExoticGardensLtd(Invoice65).• Stockwasorderedfor$15000plusGSTfromFarEastTradersinSingapore(Memo2).Deliveryis

scheduledfor25June.

PreparetheclassifiedBalanceSheetforWillowTerraceasat1June2014.

5 2014 ACCOUNTING EXAM QB

TURN OVER

Question 5 (10 marks)AX Electronics specialises in portable multimedia equipment. It uses the First In, First Out (FIFO) cost assignment method for stock and prepares reports monthly. All stock is marked up by 100% on cost.The Portable DVD Player Model XV9 was the only stock item held by the business in July 2014. No stock was withdrawn for personal use during the month.The Stock Card for the Portable DVD Player Model XV9 for July is shown below.

Product: Portable DVD Player Model XV9 Cost Assignment Method: FIFO

Date 2014

Details IN OUT BALANCEQty Cost Total Qty Cost Total Qty Cost Total

1 July Balance 46 90 4 140

3 July Inv. 414 14 90 1 260 32 90 2 880

4 July Memo 87 5 85 425 325

9085 3 305

5 July Rec. 490 13 90 1 170 195

9085 2 135

9 July Inv. 415 12 90 1 080 75

9085 1 055

14 July CrN. 425 2 90 180 55

9085 875

18 July Inv. 1212 25 92 2 300 55

25

908592 3 175

22 July Memo 88 3 90 270 25

25

908592 2 905

25 July Rec. 491 23

9085 435

225

8592 2 470

27 July CrN. 230 1 85 85 325

8592 2 555

31 July Memo 89 1 85 85 225

8592 2 470

a. Identify the transaction that occurred on each of the following dates:• 4July• 14July• 22July 3 marks

b. Memo 89 refers to an expense – stock loss.

Explainhowastocklossmeetsthedefinitionofanexpense. 3 marks

c. Prepare an extract of the Income Statement for the month ended 31 July 2014, up to and includingAdjustedGrossProfit. 4 marks


Question 6 (3marks)ThefollowingisanextractoftheGeneralJournalforRusticTimberon30June2014.Thebusinesspreparesreportsmonthly.

General Journal

Date 2014

Details General Ledger Subsidiary Ledger

Debit Credit Debit Credit

30June Sales 76000

ProfitandLossSummary 76000

(closingentry)

30June ProfitandLossSummary 78300

CostofSales 52000

Depreciation–Van 5300

RentExpense 3000

Wages 18000

(closingentry)

Additional information• TheCapitalaccountbalanceon1June2014was$51200andat30June2014was$50350.• Theownercontributed$1250cashandacomputervaluedat$1000on30June2014.• Theownertookcashdrawingsduringthemonth.

CompletetheCapitalaccountinpreparationforthenextreportingperiod.

Question 7 (6marks)MarvPetroleumisanAustralianoilcompany.In2014,itagreedtorunatelevisionadvertisingcampaignduringtheupcomingcricketseason.Thebusinesswillprovideanewcartooneluckyviewerateachoffiveone-daycricketgamesthatwillbetelecastliveinMelbourne.On5October2014,MarvPetroleumpaidMGHMotors$330000includingGSTforfiveidenticalsportscars.OnecaristobedeliveredbyMGHMotorsandawardedtotheluckyviewerduringthetelecastofthegameoneachofthefollowingdates:17October,24October,7November,14Novemberand6December2014.BothMarvPetroleumandMGHMotorsreportonamonthlybasis.

a. PreparetheGeneralJournalentrytorecordthebalancedayadjustmentrequiredbyMarvPetroleumon31October2014.

Anarrationisnotrequired. 2marks

b. PreparetheGeneralJournalentrytorecordthebalancedayadjustmentrequiredbyMGHMotorson31October2014.

Anarrationisnotrequired. 2marks

c. PreparethePrepaidAdvertisingExpenseledgeraccountforMarvPetroleumat31October2014.

Youarenotrequiredtobalancetheaccount. 2marks


TURN OVER

Question 8 (6marks)OnemaxLogisticsreportsannuallyon30Juneeachyear.On1July2013,thebusinesspurchasedanewcomputersystemwithanexpectedusefullifeoffiveyears.Theaccountantdecidedtodepreciatethecomputersystemusingthereducingbalancemethod.Thefollowinggraphwaspreparedtodemonstratetheasset’scarryingvalueoveritsusefullife.

0 1 2 3years

4 5

10000

20000

30000

carrying value($)

40000

50000 $50000

$30000

$18000

$10800

$6480

$3888

Computer system – Carrying value

a. Fromthegraph,determine:• thedepreciationexpenseforYear2• theestimatedresidualvalueofthecomputersystem. 2marks

b. Justifythedecisiontousethereducingbalancemethodofdepreciationforthecomputersysteminsteadofthestraightlinemethodofdepreciation. 2marks

c. ExplainhowtheIncomeStatementwoulddifferinYear5ifthestraightlinemethodofdepreciationhadbeenusedeachyearinsteadofthereducingbalancemethodofdepreciation. 2marks



Question 9 (21marks)Lou’sLightingreportsandbudgetsonamonthlybasis.ThebusinesshasbeenpreparingitsbudgetsforJuly2014andhascompletedtheBudgetedBalanceSheetandBudgetedIncomeStatement.Lou’sLightingnowwishestoprepareaBudgetedCashFlowStatementforJuly2014.Thefollowinginformationisprovided.

Lou’s Lighting

Balance Sheet Actual30 June 2014

Budgeted31 July 2014

Current Assets

CashatBank 27320 –

DebtorsControl 32700 40000

PrepaidAdvertising – 3000

StockControl 72000 90 000

GSTClearing 2 000 –

Non-Current Assets

Equipment 37000 42000

LessAccumulatedDepreciation–Equipment (19000) (7000)

Total Assets 152 020 168 000

Current Liabilities

CashatBank(O/D) – 8995

AccruedWages 2500 1500

Loan–ABVBank 3750 3750

GSTClearing – 185

Non-Current Liabilities

Loan–ABVBank 22500 18750

Total Liabilities 28 750 33 180

Owner’s Equity

Capital(startofmonth) 112270 123270

Additionalcapitalcontributed 3000 –

NetProfit 52000 43550

Drawings (44000) (32000)

Capital(endofmonth) 123 270 134 820

Total Equities 152 020 168 000

9 2014 ACCOUNTING EXAM QB

TURN OVER

Budgeted Income Statement items for the month ending 31 July 2014

$Sales 202 000Profit on Disposal of Equipment 3 700Sales Returns 1 500Cost of Sales 100 250Stock Write-Down 2 000Wages 27 000Advertising 9 300Depreciation – Equipment 3 200Discount Expense 1 500Interest Expense 1 100Bad Debts 2 200Other Expenses 14 100Budgeted Net Profit 43 550

Additional information• All sales are on credit and all purchases of stock are made on a cash basis. Cost of Sales is 50% of sales.• Equipment costing $25 000 and with a carrying value of $9 800 will be sold for cash. New equipment

will be purchased for cash.• There will be no capital contributions during July and drawings by the owner will include $3 000 stock.• The loan requires one repayment on 14 July each year.• The budgeted GST Clearing account for July has been prepared and is shown below. No payments

to, or refunds from, the taxation office are expected in July.

GST Clearing (budgeted)

Date 2014



1 July Balance 2 000 31 July Debtors Control 20 200

31 July Debtors Control 150

Bank 17 865

Balance 185

20 200 20 200

1 Aug. Balance 185

a. Reconstruct the following General Ledger accounts:• Debtors Control – to determine cash to be received from debtors• Stock Control – to determine cash to be paid for stock• Disposal of Equipment – to determine cash to be received from the sale of equipment 8 marks

b. Prepare a Budgeted Cash Flow Statement for the month ending 31 July 2014. 9 marks

c. Explain, giving two examples other than the loan repayment and drawings, how the business can budget for a Net Profit of $43 550 yet have its budgeted bank balance fall. 4 marks


Question 10 (11marks)BTKTraderssellsthreemodelsofcoffeemachinesonlinethroughtheirwebsite.Sellingpricesareregularlyadjustedtomatchitscompetitors.Followingastocktakeon30June2014,theaccountantprovidedthefollowingdetails.

Stock Item Model

Quantity at Stocktake

Quantity on Stock

Card

Cost Price per unit

($)

Estimated Selling Price range

per unit ($)

Delivery In per unit

($)

Delivery Out per unit

($)

TheQueen 45 45 440 550–620 10 20

ThePrince 30 32 180 250–290 10 15

TheWiz 60 60 95 70–90 5 10

Additional information• AllcostsareshownonaperunitbasisanddonotincludeGST.• CostPriceisthesuppliers’invoicedpricebeforedeliverycharges.• DeliveryOutispaidforbythecustomer.• TheWizmodelhasbeensupersededandthesellingpricehasbeenreducedtoclearstocks.• Apacketofcoffeepods(cost$10plusGST)isincludedwitheverycoffeemachinesold.

a. CalculatethevalueatwhichstockshouldbereportedintheBalanceSheetat30June2014. 3marks

b. Explain,withreferencetotherelevantstockvaluationruleandanaccountingprinciple, yourtreatmentofTheWizcoffeemachines. 4marks

c. PreparethetwoGeneralJournalentriesrequiredasaresultoftheaboveinformation. Narrationsarenotrequired. 4marks

Question 11 (6marks)Abusinesshadsetagoalofincreasingsalesby20%during2014.Attheendoftheyear,theaccountantinformedmanagementthat,whilethisgoalwasachieved,otherareasofperformancealsoneedtobeconsidered.Theaccountanthasprovidedthefollowinginformation.

2013 2014

Sales $800000 $960000

NetProfitMargin 40% 30%

AssetTurnover 0.5times 0.6times

ReturnonAssets 20% 17%

Managementhasaskedwhytheimprovementinsaleshasnotbeenreflectedintheotherkeyindicatorsprovided.

Usingtheinformationfromthetableandthequestionfrommanagement,discusstheprofitabilityofthebusiness.


Question 12 (3marks)Thefollowingratioshavebeencalculatedforabusinessforthelasttwoyears.Totalassetshaveremainedunchangedoverthisperiod.

2013 2014

DebtRatio 42% 48%

ReturnonOwner’sInvestment 21% 26%

ExplaintherelationshipbetweentheincreaseintheDebtRatioandtheincreaseintheReturnonOwner’sInvestment.

END OF QUESTION BOOK

Instructions

• Aquestionbookisprovidedwiththisanswerbook.• Answerallquestionsinthespacesprovidedinthisbook.• Writeyourstudent numberinthespaceprovidedaboveonthispage.• RefertoInstructionsonthefrontcoverofthequestionbook.

Students are NOT permitted to bring mobile phones and/or any other unauthorised electronic devices into the examination room.

©VICTORIANCURRICULUMANDASSESSMENTAUTHORITY2014

ACCOUNTINGWritten examination

Monday 10 November 2014 Reading time: 11.45 am to 12.00 noon (15 minutes) Writing time: 12.00 noon to 2.00 pm (2 hours)

ANSWER BOOK

SUPERVISOR TO ATTACH PROCESSING LABEL HEREVictorian Certificate of Education 2014

STUDENT NUMBER

Letter

2014ACCOUNTINGEXAMAB 2

THIS PAGE IS BLANK

3 2014ACCOUNTINGEXAMAB

TURN OVER

THIS PAGE IS BLANK



Question 1 (14marks)a. 5marks

Working space

General Journal

Date 2014



b. 3marks

Accounting principle

Explanation


TURN OVER

c. 3marksDebtor – D Edger

Date 2014



d. 3marks

Working space

Ocean Blue Schedule of Debtors as at 28 February 2014

$


Question 2 (5marks)

Item(s) Increase/Decrease/ No Change

Amount(s)

Income Statement

Balance Sheet


b. 2marks

Strategy 1

Strategy 2



TURN OVER

c. 2marks

Positive effect

Negative effect

Question 4 (8marks)

Working space

Willow TerraceBalance Sheet as at 1 June 2014

$ $ $ $



4 July

14 July

22 July

b. 3marks

Explanation



TURN OVER

c. 4marks

Working space

AX ElectronicsIncome Statement (extract) for the month ended 31 July 2014

$ $


Question 6 (3marks)Capital

Date 2014



1June Balance 51200


TURN OVER

Question 7 (6marks)a. 2marksMarv PetroleumGeneral Journal

Date 2014



b. 2marksMGH MotorsGeneral Journal

Date 2014



c. 2marksMarv Petroleum

Prepaid Advertising Expense

Date 2014



2014 ACCOUNTING EXAM AB 12

Question 8 (6 marks)a. 2 marks

Depreciation expense for Year 2 $

Estimated residual value of the computer system $

b. 2 marks

Justification

c. 2 marks

Explanation


Question 9–continuedTURN OVER


Debtors Control

Date 2014



1July Balance 32700

Stock Control

Date 2014



1July Balance 72000

Disposal of Equipment

Date 2014





b. 9marks

Working space

Lou’s LightingBudgeted Cash Flow Statement for the month ending 31 July 2014

$ $


TURN OVER

c. 4marks

Explanation

Example 1

Example 2



Working space

Value of stock in the Balance Sheet at 30 June $

b. 4marks

Stock valuation rule

Accounting principle

Explanation

c. 4marksGeneral Journal

Date 2014




Question 11 (6marks)

Discussion

Question 12 (3marks)

Explanation

END OF ANSWER BOOK

2014 accounting written · pdf fileon cost and reports on a monthly basis. ... onemax...

Documents