Aat Fstp Tutor Qb 2015-16 - As

aat

AQ2013 Level 3

Prepare final accounts for sole traders and partnerships

TUTOR QUESTION BANK ANSWERS

AAT FSTP : PREPARE FINAL ACCOUNTS FOR SOLE TRADERS AND PARTNERSHIPS

24 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

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© Kaplan Financial Limited, 2015

SUPPORT ANSWERS



CHAPTER 1

PREPARATION OF ACCOUNTS FOR A SOLE TRADER

1 NED

£ £

(i) Debit Depreciation expense (980 + 740) 1,720

Credit Accumulated depreciation – fixtures and fittings 980

Accumulated depreciation – motor vehicles 740

(ii) Debit Irrecoverable debts expense (1,600 – 160) (W1) 1,440

Debit Allowance for doubtful debts (W1) 160

Credit Receivables (SLCA) 1,600

(iii) Debit Electricity 200

Credit Accruals 200

Debit Prepayments 40

Credit Advertising 40

(iv) Debit Closing inventory – SOFP (W2) 1,040

Credit Closing inventory – S of P&L 1,040

Workings:

(W1) Doubtful debt allowance required £ (£38,600 – 1,600) × 2% = 740 Opening Allowance 900 –––– Decrease in Allowance 160 ––––

(W2) Closing inventory £ £ Closing inventory at valuation 1,080 Inventory at cost 240 Net realisable value 200 –––– Reduction in inventory value (40) ––––– 1,040 –––––

ANSWERS

KAPLAN PUBLISHING 27

2 STEVE INMAN

Statement of profit or loss for the year ended 31 December 20X2

£ £ Sales revenue 36,191 Purchases 19,320 Less: Closing inventory (2,460) –––––– Cost of sales (16,860) –––––– Gross profit 19,331 Less: Expenses: Depreciation of van (5,040/4) 1,260 Rent and rates 2,556 Insurance 200 General expenses 4,375 Wages 4,994 –––––– (13,385) –––––– Net profit 5,946 ––––––

Statement of financial position as at 31 December 20X2

Cost Depreciation Carrying value Non-current assets: £ £ £ Motor van 5,040 (1,260) 3,780 –––––– –––––– Current assets: Inventory 2,460 Receivables 6,072 Cash at bank 3,154 Cash in hand 40 –––––– 11,726 Less: payables (10,680) –––––– 1,046 –––––– 4,826 –––––– £ Capital 5,000 Profit for the year 5,946 –––––– 10,946 Less: drawings (6,120) –––––– 4,826 ––––––



CHAPTER 2

PARTNERSHIP ACCOUNTS

3 LEN AND FRED

(a) Partnership appropriation account for the year ended 30 September 20X4 £ £ Net profit 38,000 Salary – Fred (6,000) Interest on capital Len (33,000 × 4%) 1,320 Fred (20,000 × 4%) 800 –––––– (2,120) –––––– 29,880 Profit share: Len (29,880 × 2/3) 19,920 Fred (29,880 × 1/3) 9,960 –––––– 29,880 –––––– (b) Current accounts

Len Fred £ £ Balance b/d 500 Drawings 17,000 14,000 Balance c/d 3,740 3,760 –––––– –––––– 21,240 17,760 –––––– ––––––

Len Fred £ £ Balance b/d 1,000 Salary 6,000 Interest on capital 1,320 800 Profit share 19,920 9,960 –––––– –––––– 21,240 17,760 –––––– –––––– Balance b/d 3,740 3,760

ANSWERS


(c) Statement of financial position as at 30 September 20X4

Cost Accumulated Carrying depreciation value £ £ £ Non-current assets: Motor vehicles 40,000 16,000 24,000 Fixtures and fittings 22,000 8,000 14,000 ––––––– ––––––– ––––––– 62,000 24,000 38,000 ––––––– ––––––– ––––––– Current assets: Inventory 16,000 Receivables 32,000 Cash at bank 5,000 Cash in hand 500 ––––––– 53,500 Payables (21,000) ––––––– 32,500 ––––––– 70,500 Loan (10,000) ––––––– 60,500 ––––––– Capital accounts Len 33,000 Fred 20,000 ––––––– 53,000 Current accounts Len 3,740 Fred 3,760 ––––––– 7,500 ––––––– 60,500 –––––––



4 JACK AND JILL

Capital accounts

Jack Jill Ross £ £ £ Goodwill 8,000 8,000 4,000 Balance c/d 62,000 42,000 46,000 –––––– –––––– –––––– 70,000 50,000 50,000 –––––– –––––– ––––––

Jack Jill Ross £ £ £ Balance b/d 60,000 40,000 Cash 50,000 Goodwill 10,000 10,000 –––––– –––––– –––––– 70,000 50,000 50,000 –––––– –––––– –––––– Balance b/d 62,000 42,000 46,000

ANSWERS


5 HARRY AND PHIL

Capital accounts

Harry Phil Jo £ £ £ Goodwill 20,000 10,000 Cash 15,000 Loan 63,200 Balance c/d – 30,000 25,000 –––––– –––––– –––––– 78,200 50,000 35,000 –––––– –––––– ––––––

Harry Phil Jo £ £ £ Balance b/d 60,000 40,000 30,000 Current account 3,200 Goodwill 15,000 10,000 5,000 –––––– –––––– –––––– 78,200 50,000 35,000 –––––– –––––– –––––– Balance b/d 30,000 25,000

Current accounts

Harry Phil Jo £ £ £ Capital account 3,200 Balance c/d 1,600 4,300 –––––– –––––– –––––– 3,200 1,600 4,300 –––––– –––––– ––––––

Harry Phil Jo £ £ £ Balance b/d 3,200 1,600 4,300 –––––– –––––– –––––– 3,200 1,600 4,300 –––––– –––––– ––––––Balance b/d 1,600 4,300



CHAPTER 3

INCOMPLETE RECORDS

6 CAROLE

Drawings = £4,600

Payables (PLC) account

£ Cash payments 58,900Closing balance 8,300 –––––– 67,200 ––––––

£ Opening balance 10,200 Purchases (bal fig) 57,000 –––––– 67,200 ––––––

Trading account £ £ % Sales revenue (bal fig) 75,200 100 Opening inventory 16,500 Purchases 57,000 –––––– 73,500 Less: Closing inventory (17,100) –––––– Cost of sales 56,400 75 –––––– Gross profit 18,800 25 ––––––

Receivables (SLC) account

£ Opening balance 14,200Sales revenue 75,200 –––––– 89,400 ––––––

£ Cash received (bal fig) 73,500 Closing balance 15,900 –––––– 89,400 ––––––

Bank account

£ Opening balance 1,400Cash from sales (receivables a/c) 73,500 –––––– 74,900 ––––––

£ Purchases 58,900 Expenses 10,500 Drawings (bal fig) 4,600 Closing balance 900 –––––– 74,900 ––––––

ANSWERS


7 ADRIAN

Net assets at 31 March 20X3 £ Receivables 15,400 Motor vehicles at carrying value 9,200 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 ––––––– 49,300 Payables (8,300) Accruals (300) Bank loan (2,000) ––––––– Net assets 38,700 ––––––– Increase in net assets = profit – drawings

£38,700 – 28,900 = profit – 12,600

£9,800 = profit – 12,600

Profit = 9,800 + 12,600

Profit = £22,400



8 SUMMARISED CASH BOOK

(a) Receivables (SLC) account £ Opening balance 6,900Sales revenue (bal fig) 42,900 –––––– 49,800 ––––––

£ Cash received 42,600 Closing balance 7,200 –––––– 49,800 ––––––

(b) Payables (PLC) account

£ Cash payments 22,700Closing balance 5,100 –––––– 27,800 ––––––

£ Opening balance 3,800 Purchases (bal fig) 24,000 –––––– 27,800 ––––––

(c)

£ £ Sales revenue 42,900 Opening inventory 7,200 Purchases 24,000 –––––– 31,200 Less: closing inventory (6,300) –––––– Cost of sales (24,900) –––––– Gross profit 18,000 ––––––

(d) £ Gross profit 18,000 Less: Expenses (4,300 – 300 + 700) (4,700) –––––– Net profit 13,300 ––––––

ANSWERS


9 BARNEY

(a) Trial balance at 31 December 20X3 Dr Cr £ £ Fixtures and fittings 6,430 Delivery vans 5,790 Cash at bank 3,720 General expenses 1,450 Receivables (SLCA) 2,760 Payables (PLCA) 3,250 Purchases 10,670 Sales 25,340 Wages 4,550 Drawings 15,000 Lighting and heating 1,250 Rent, rates and insurance 2,070 Capital (balancing figure) 25,100 ––––––– ––––––– 53,690 53,690 ––––––– ––––––– (b) Profit for the year would be reduced by £500. To ensure that wages and drawings were

correctly stated, the following adjustment would be required:

Dr Wages £500

Cr: Drawings £500

(c) Profit for the year would be increased by £1,500. To ensure that sales and capital are correctly stated, the following adjustment would be required:

Dr: Capital £1,500

Cr: Sales £1,500



ADVANCED ANSWERS



CHAPTER 1

PREPARATION OF ACCOUNTS FOR A SOLE TRADER

10 LAURA

Laura – Statement of profit or loss for the year ended 30 April 20X7 £000 £000 Sales revenue 813 Less: Returns inwards (47) ––––– 766 Opening inventory 84 Purchases 516 ––––– 600 Closing inventory (74) ––––– Cost of sales (526) ––––– Gross profit 240 Discount allowed 4 Administration costs (38 – 3) 35 Salaries (44 + 2) 46 Research costs 26 Irrecoverable debts written off 77 Depreciation of plant (£83,000 × 10%) 8 Depreciation of office equipment ((31 + 2 – 8) × 20%) 5 ––––– (201) ––––– Net profit 39 –––––

ANSWERS


Laura – Statement of financial position as at 30 April 20X7 Cost or Accum CV valuation dep’n £000 £000 £000 Non-current assets: Plant 83 21 62 Office equipment (31 + 2) 33 13 20

–––– –––– –––– 116 34 82

–––– –––– Current assets: Inventory 74 Receivables (198 – 23) 175 Loan 25 Prepayment 3 277 –––– Current liabilities: Overdraft 50 Payables 52 Accruals 2 –––– (104) –––– Net current assets 173 –––– 255 –––– Financed by: Capital (228 + 2) 230 Add: Profit 39 Less: Drawings (14) 25 –––– –––– 255 ––––



11 KW ENTERPRISE

Statement of financial position as at 31 October 20X1 Cost Depreciation CV £ £ £ Non-current assets: Motor vehicles 36,000 23,670 12,330 Fixtures and fittings 57,020 43,133 13,887 ––––––– ––––––– ––––––– 93,020 66,803 26,217 ––––––– ––––––– Current assets: Inventory 29,665 Receivables 55,530 Less: Allowance (2,250) ––––––– 53,280 ––––––– 82,945 Current liabilities Bank overdraft 2,700 Payables 33,850 Accruals 3,000 VAT/sales tax 10,100 ––––––– (49,650) ––––––– Net current assets 33,295 ––––––– 59,512 ––––––– Capital 61,280 Net profit 28,232 ––––––– 89,512 Less: drawings 30,000 ––––––– 59,512 –––––––

ANSWERS


KW Enterprise – Statement of profit or loss for the year ending 31 October 20X1 £ £ Sales revenue 486,490 Less: sales returns (8,900) ––––––– 477,590 Less: cost of sales Opening inventory 25,870 Purchases 288,330 Less: purchases returns (650) ––––––– 313,550 Less: closing inventory (29,665) ––––––– (283,885) ––––––– Gross profit 193,705 Less: expenses: Rent 36,000 General expenses 87,700 Motor expenses 28,540 Irrecoverable debts (1,520 – 950) 570 Depreciation 12,663 ––––––– (165,473) ––––––– Net profit 28,232 –––––––



12 SIMPSON

Simpson

Statement of profit or loss for the year ended 30 June 20X8

£ £

Revenue (784, 518 – 5,436) 779,082

Opening inventory 41,211

Purchases (370,215 – 1,447) 368,768

Closing inventory (54,426)

Cost of goods sold (355,553)

Gross profit 423,529

Less:

Payroll expenses 161,326

General expenses 72,900

Motor expenses 14,633

Irrecoverable debts 4,825

Loss on disposal 3,870

Depreciation expense 12,995

Total expenses (270,549)

Profit for the year 152,980

ANSWERS


CHAPTER 2

PARTNERSHIP ACCOUNTS

13 TED, IAN AND JANE

(a) Partnership appropriation account for the year ending 31 March 20X3 £ £ Net profit 96,000 Salary – Jane (10,000) Interest on capital Ted (50,000 × 5%) 2,500 Ian (40,000 × 5%) 2,000 Jane (30,000 × 5%) 1,500 –––––– (6,000) –––––– 80,000 Profit share: Ted (80,000 × 3/6) 40,000 Ian (80,000 × 2/6) 26,667 Jane (80,000 × 1/6) 13,333 –––––– 80,000 ––––––

(b) Capital accounts

Ted Ian Jane £ £ £

Ted Ian Jane £ £ £ Balance b/d 50,000 40,000 30,000

Current accounts

Ted Ian Jane £ £ £ Balance b/d 200Drawings 42,600 28,200 23,100 Balance c/d 900 967 1,533 –––––– –––––– –––––– 43,500 29,167 24,833 –––––– –––––– ––––––

Ted Ian Jane £ £ £ Balance b/d 1,000 500 Salary 10,000 Interest on capital 2,500 2,000 1,500 Profit share 40,000 26,667 13,333 –––––– –––––– –––––– 43,500 29,167 24,833 –––––– –––––– –––––– Balance b/d 900 967 1,533



14 RALPH AND HUGH

(a) Journal adjustments required:

Debit £

Credit £

(i) Dr: Closing inventory (SOFP) 750

Cr: Closing Inventory (SOP&L) 750

(ii) Dr: Wages 1,500

Cr: General expanses 1,500

Ralph and Hugh

Statement of profit or loss for the year ended 30 September 20X7

£ £

Revenue 69,000


Purchases 46,000

Closing inventory (11,750)

Cost of goods sold (44,050)

Gross profit 24,950

Less:


General expenses 14,900

Rent 600

Discount allowed 800

Depreciation expense 1,800

Total expenses (24,600)

Loss for the year (350)

ANSWERS


CHAPTER 3

INCOMPLETE RECORDS

15 MICHAEL

(a) Calculate the total sales for the year ended 31 October 20X8

Account name Amount £

Cash 50,000

Bank 90,000

Total 140,000

(b) Prepare the purchases ledger control account for the year ended 31 October 20X8, showing clearly the credit purchases of materials.

£ £

Payments to payables 30,000 Balance b/d 5,000

Balance c/d 4,000 Credit purchases (bal) 29,000

Total 34,000 Total 34,000

(c) Calculate the total purchases for the year ended 31 October 20X8


Credit purchases (part b) 29,000

Cash 4,000

Bank 11,000

Total 44,000

(d) Depreciation is calculated at 20% per annum on a reducing balance basis. Calculate the revised accumulated depreciation as at 31 October 20X8.


Accumulated depreciation 22,000

Charge in the year (50,000 – 22,000) × 20% 5,600

Total 27,600



(e) Prepare the rent account for the year ended 31 October 20X8, showing clearly the rent expense for the year

£ £

Balance b/d 2,000 P&L expense (bal) 7,500

Bank 6,500 Balance c/d – prepayment 1,000


(f) Prepare the light and heat account for the year ended 31 October 20X8, showing clearly the expense for the year

£ £

Bank 4,000 Balance b/d 700

Balance c/d – accrual 500 P&L expense (bal) 3,800


(g) Prepare the statement of profit or loss for the year ended 31 October 20X8 year

Michael

Statement of profit or loss for the year ended 31 October 20X8.

£ £

Revenue (part(a)) 140,000


Purchases (part (c)) 44,000

Closing inventory 1,500

Cost of goods sold 45,000

Gross profit 95,000

Less:


Light and heat (part (f)) 3,800

Rent (part (e)) 7,500

Advertising 2,000

Depreciation expense (part (d)) 5,600

Administration 4,800

Total expenses 48,700

Loss for the year 46,300

ANSWERS


(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)) 50,000 27,600 22,400

Current assets

Inventory 1,500

Prepayments 1,000

Bank 33,500

Cash 6,750

42,750

Current liabilities

Trade payables 4,000

Accruals 500

4,500

Net current assets 38,250

Net assets 60,650

Financed by

Capital account

Balance brought forward 34,350

Profit for the year (part (f)) 46,300

Drawings 20,000

60,650



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Aat Fstp Tutor Qb 2015-16 - As