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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
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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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AAT FSTP : PREPARE FINAL ACCOUNTS FOR SOLE TRADERS AND PARTNERSHIPS
iv KAPLAN PUBLISHING
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SUPPORT QUESTIONS
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AAT FSTP : PREPARE FINAL ACCOUNTS FOR SOLE TRADERS AND PARTNERSHIPS
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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AAT FSTP : PREPARE FINAL ACCOUNTS FOR SOLE TRADERS AND PARTNERSHIPS
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
Payables (PLCA) 21,000
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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AAT FSTP : PREPARE FINAL ACCOUNTS FOR SOLE TRADERS AND PARTNERSHIPS
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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AAT FSTP : PREPARE FINAL ACCOUNTS FOR SOLE TRADERS AND PARTNERSHIPS
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.
Receivables (SLCA) 15,400
Payables (PLCA) 8,300
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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AAT FSTP : PREPARE FINAL ACCOUNTS FOR SOLE TRADERS AND PARTNERSHIPS
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
General expenses 1,450
Receivables (SLCA) 2,760
Payables (PLCA) 3,250
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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AAT FSTP : PREPARE FINAL ACCOUNTS FOR SOLE TRADERS AND PARTNERSHIPS
12 KAPLAN PUBLISHING
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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AAT FSTP : PREPARE FINAL ACCOUNTS FOR SOLE TRADERS AND PARTNERSHIPS
14 KAPLAN PUBLISHING
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
General expenses 72,900
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
KAPLAN PUBLISHING 15
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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AAT FSTP : PREPARE FINAL ACCOUNTS FOR SOLE TRADERS AND PARTNERSHIPS
16 KAPLAN PUBLISHING
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
KAPLAN PUBLISHING 17
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
General expenses 16,400
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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AAT FSTP : PREPARE FINAL ACCOUNTS FOR SOLE TRADERS AND PARTNERSHIPS
18 KAPLAN PUBLISHING
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
KAPLAN PUBLISHING 19
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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AAT FSTP : PREPARE FINAL ACCOUNTS FOR SOLE TRADERS AND PARTNERSHIPS
20 KAPLAN PUBLISHING
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
KAPLAN PUBLISHING 21
(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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AAT FSTP : PREPARE FINAL ACCOUNTS FOR SOLE TRADERS AND PARTNERSHIPS
(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