M54

Coimisiún na Scrúduithe Stáit

State Examinations Commission
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LEAVING CERTIFICATE EXAMINATION, 2004

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ACCOUNTING - ORDINARY LEVEL

(400 marks)
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THURSDAY, 17th JUNE 2004 – MORNING 9.30am to 12.30pm.

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This paper is divided into 3 Sections:

Section 1: Financial Accounting (120 marks).

This section has 4 questions (Numbers 1- 4). The first question carries 120 marks and the remaining three
questions carry 60 marks each.
Candidates should answer either QUESTION 1 only OR else attempt any TWO of the remaining three
questions in this section.

Section 2: Financial Accounting (200 marks).

This section has three questions (Numbers 5-7). Each question carries 100 marks.
Candidates should answer any TWO questions.

Section 3: Management Accounting (80 marks).

This section has two questions (Numbers 8 and 9). Each question carries 80 marks.
Candidates should answer ONE of these questions.

Calculators

Calculators may be used in answering the questions on this paper: however, it is very
important that workings are shown in the answer-book(s) so that full credit can be given
for correct work.

Page 1 of 8
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 SECTION 1 (120 Marks)
Answer Question 1 OR any TWO other questions

1. Final Accounts of a Company

The following balances were extracted from the books of Baker Ltd., on 31/12/2003.

Share capital € €
Authorised - 750,000 Ordinary shares at €1 each
Issued - 540,000 Ordinary shares at €1 each 540,000
Patents........................................................................................ 90,000
Office equipment ....................................................................... 45,000
Buildings.................................................................................... 660,000
Accumulated depreciation - Office equipment.......................... 10,000
Accumulated depreciation – Buildings...................................... 99,000
Debtors and creditors................................................................. 84,000 76,000
9% Debentures issued on 31/3/2003 ......................................... 120,000
Purchases ................................................................................... 520,000
Sales........................................................................................... 782,000
Salaries ...................................................................................... 122,000
Stocks 1/1/2003
Goods for resale ................................................................ 92,600
Stationery .......................................................................... 700
Profit and loss balance 1/1/2003................................................ 40,600
Returns in................................................................................... 2,000
Stationery................................................................................... 4,800
Provision for bad debts.............................................................. 4,600
Commission ............................................................................... 11,000
Directors fees............................................................................. 42,600
Advertising ................................................................................ 9,600
Light, heat and insurance........................................................... 18,000
VAT........................................................................................... 2,800
Debenture Interest...................................................................... 5,400
Bank........................................................................................... 10,700
1,696,700 1,696,700

You are given the following additional information:

1. Stocks at 31/12/2003:
Goods for resale €102,500
Stationery 800
2. Provision for bad debts to be adjusted to 5% of debtors.
3. Depreciation is to be provided as follows:

Office equipment - 10% of book value.

Buildings - 2% of cost.

4. Provision should be made for debenture interest due.

5. Advertising was for the year ended 31/3/2004.
6. Commission due on 31/12/2003 was €1,500.
7. Provide for corporation tax €12,000.

You are required to prepare a:

(a) Trading and Profit and Loss Account for the year ended 31/12/2003. (80)
(b) Balance Sheet as at 31/12/2003. (40)
(120 marks)

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2. Farm Accounts

The Benson family carry on a mixed farming enterprise, with two main divisions, cattle and sheep. The following
is a summary of the receipts and payments of the farm for the year ended 31/12/2003.

ANALYSED RECEIPTS & PAYMENTS ACCOUNT

RECEIPTS PAYMENTS
Details Cattle Sheep Gov. TOTAL Details Cattle Sheep Sundry TOTAL
& Milk Sales Grants Exps.
Sales

€ €

Balance b/d 1,900 Feeding-sheep 1,100 1,100

Milk 25,000 25,000 General wages 3,500 3,500

Sheep 14,800 14,800 Rent-conacre 2,200 2,200

Beef premium 2,700 2,700 Dairy wages 700 700

Cows 11,000 11,000 Cows 16,000 16,000

Calves 4,000 4,000 Repairs & fuel 4,100 4,100

Ewe premium 4,700 4,700 Sheep 3,300 3,300

Wool 900 900 Light & heat 1,350 1,350

Drawings 9,500 9,500

Fertiliser 2,900 2,900

Contractor costs 3,800 3,800

Feeding-cattle 4,150 4,150

Haulage 650 650

Total Received 40,000 15,700 7,400 65,000 Total Paid 20,150 4,400 28,700 53,250

Balance c/d 11,750

65,000 65,000

Balance b/d 11,750

The following information is also available:

Cattle Sheep
1. Value of livestock at cost on 1/1/2003 was €81,000 €36,000
Value of livestock at cost on 31/12/2003 was €84,000 €38,000
2. Milk used by family during year €720
Lamb used by family during year €365
4. General wages, haulage and rent to be allocated equally between the two divisions. All other expenses to be
treated as general farm expenses.

You are required to:

(a) Prepare Enterprise Analysis Accounts for “Cattle & Milk” and for “Sheep” for the year ended 31/12/2003.
(40)
(b) Prepare a general Profit and loss account for the year ended 31/12/2003. (20)
(60 marks)
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3. Club Accounts

Included in the assets and liabilities of the “Ryder ” Golf club on 1/1/2003 were the following:
Clubhouse and Course €490,000; Equipment € 44,000; Building Society Deposits €22,000; Bar Stock €3,300;
Expenses due €4,300; Subscriptions prepaid €900.

The following is a summary of the club’s receipts and payments for the year ended 31/12/2003:

Receipts € Payments €
Cash in hand - 1/1/2003 2,250 Bar purchases 51,500
Interest 550 Purchase of Equipment 12,000
Subscriptions 44,100 General expenses 52,400
Bar sales 73,000 Competition prizes 1,800
Advertising receipts 16,550 Bar creditors 3,900
______ Cash balance - 31/12/2003 14,850
136,450 136,450

The treasurer also supplied the following information as at 31/12/2003:

(i) Bar stock was €3,600.
(ii) Bar creditors were €500.
(iii) Expenses due were €2,900.
(iv) Subscriptions prepaid were €1,600.
(v) Equipment held on 31/12/2003 is to be depreciated by 20%.
(vi) Depreciate Clubhouse and course at 2% of cost.

You are required to:

(a) Prepare a statement showing the Club’s Accumulated Fund on 1/1/2003. (15)
(b) Prepare the Club’s Income and Expenditure Account for the year ended 31/12/2003. (35)
(c) Explain the differences between an Income and Expenditure Account and a
Receipts and Payments Account. (10)
(60 marks)

4. Depreciation and Revaluation of Fixed Assets

The following details were taken from the books of Barry Ltd:

01/01/2002 Buildings at cost amounted to €350,000.

01/01/2002 The balance in the Provision for Depreciation account was €28,000.
01/04/2002 Purchased buildings for €150,000.
01/04/2002 Sold for €180,000 a building which cost €100,000. The book value of this
building on 1/4/2002 was €88,000.
31/12/2002 The total depreciation for the year ended 31/12/2002 was €8,000.
01/01/2003 The buildings were re-valued at €550,000.
31/12/2003 Provide for depreciation at the rate of 2% of the value of the buildings on 1/1/2003.

You are required to show:

(a) The Buildings Account for the two years 2002 and 2003 (15)
(b) The Provision for Depreciation Account for the two years 2002 and 2003 (20)
(c) The Buildings Disposal Account for the year ended 31/12/2002 (15)
(d) The Revaluation Reserve Account. (10)
(60 marks)

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 SECTION 2 (100 marks)
Answer any TWO questions

5. Interpretation of Accounts

The following information has been taken from the accounts of Brady Ltd for the year ended 31/12/2003.

Trading Profit and Loss Account for year ended 31/12/2003

€ €
Credit sales 590,000
Less cost of sales
Stock 1/1/2003 54,000
Purchases 460,000

Less Stock 31/12/2003 ? ?

Gross profit 142,000
Less Expenses (including interest) 58,000
Net profit for year 84,000
Profit and loss balance 1/1/2003 _22,000
Profit and loss balance 31/12/2003 106,000

Balance Sheet as at 31/12/2003

€ €
Fixed Assets 680,000
Current Assets (including Debtors €45,000) 130,000
Less Creditors: amounts falling due within 1 year. 64,000 66,000
746,000
Financed by
Creditors: amounts falling due after more than 1 year
7% Debentures (2008/2009). 200,000
Capital and reserves
Ordinary shares 440,000
Profit and loss account 106,000
746,000
(a) You are required to:
(i) Calculate the Percentage Mark-up on cost.
(ii) Calculate the Closing Stock.
(iii) Calculate the Period of Credit given to Debtors.
(iv) Calculate the Return on Capital Employed. (40)

(b) Explain the following:

(i) Debentures (2008/2009).
(ii) Intangible Assets.
(iii) Rate of Stock Turnover.
(iv) Capital Employed. (40)

(c) Would the above firm have fared better if it had sold out and invested its money in
a financial institution for the past year? Give reasons for your answer. (10)

(d) If the current ratio and the quick asset ratio for 2002 were 1.3 to 1 and 0.7 to 1,
comment on the liquidity of the firm (10)
(100 marks)

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6. Incomplete Records - Control accounts

B. Burley did not keep a full set of books during the year ending 31/12/2003. The
following is a summary of the cash account for that period:

Cash Receipts € €
Balance - 1/1/2003 1,850
Debtors 33,300
Commission 4,650
Sales 148,800
Rent 9,600 198,200

Cash Payments
Drawings 23,700
Purchases 87,200
Wages and general expenses 36,800
Furniture 7,200
Creditors 42,200 197,100

The following additional information is also available:

1/1/2003 31/12/2003

Premises 420,000 420,000

Delivery vans 41,000 41,000
Expenses due 2,560 3,400
Commission receivable due - 880
Stock 11,600 13,400
Debtors 9,200 10,600
Creditors 14,600 17,400

You are required to:

(a) Calculate Burley's total purchases and total sales using control accounts. (30)
(b) Prepare a Trading and Profit and Loss account for the year ended 31/12/2003. (30)
(c) Prepare a Balance sheet on the 31/12/2003. (40)

(100 marks)

Page 6 of 8
7. Cash Flow Statement

The following information has been extracted from the books of Breeders Ltd.

Profit and Loss Extract for year ended 31/12/2003 €

Operating profit 154,000
Interest paid (15,000)
139,000
Taxation (31,000)
108,000
Proposed dividend (28,000)
Retained profits for year 80,000
Profit and loss balance 1/1/2003 56,000
Profit and loss balance 31/12/2003 136,000

Balance Sheets as a 31/12/2003 31/12/2002

€ € € €
Fixed Assets
Land & buildings 755,000 695,000
Less depreciation provision 140,000 615,000 125,000 570,000
Current Assets
Stock 95,000 71,000
Debtors 61,000 66,000
Cash 7,000 12,000
163,000 149,000
Less Creditors: amounts falling due within 1 year
Creditors 83,000 72,000
Taxation 31,000 22,000
Proposed dividend 28,000 19,000
(142,000) (113,000)
Net Current Assets 21,000 36,000
Total Net Assets 636,000 606,000
Financed by
Creditors: amounts falling due after more than 1 year
10% Debentures 50,000 150,000
Capital and Reserves
Ordinary share capital issued 450,000 400,000
Profit & loss account 136,000 56,000
636,000 606,000

You are required to:

(a) Reconcile the operating profit to net cash inflow from operating activities (30)
(b) Prepare the cash flow statement of Breeders Ltd for the year ended 31/12/2003 using the
following headings: (65)
1. Operating Activities
2. Return on investments and servicing of finance
3. Taxation
4. Capital expenditure and financial investment
5. Equity dividend paid
6. Financing
(c) Reconcile the net Cash flow to movement in net debt (5)
(100 marks)

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 SECTION 3 (80 marks)
Answer any ONE question

8. Marginal Costing

Bunker Ltd, manufactures a product which it sells at €39 per unit. All goods produced are sold so there is
never any stock of product on hand. A costing analysis reveals that:
Variable costs amount to €22 per unit
Fixed costs will be €17,850 for the period.

You are required to:

(a) Calculate the Contribution for each item sold.
(b) Calculate the Break Even Point for this product using the data above.
(c) Prepare a Marginal costing statement to show the Profit/loss at the following production levels:
1. 1,100 units
2. 1,300 units
3. 1,750 units
4. 2,000 units
(d) Calculate the level of production and sales revenue that will yield a profit of €12,500.
(e) Calculate the Margin of safety in units and in sales revenue in (d) above.
(80 marks)

9. Cash Budgeting
P. Bradley had the following Assets, liabilities and capital at 1 January 2004.
Assets €
Fixed assets 440,000
Stock 18,800
Debtors 49,000
Cash 5,500
513,300
Liabilities
Creditors 53,300
Capital 460,000
513,300

The expected sales and purchases for the next 5 months are as follows:

Jan Feb Mar April May Total

Sales €82,000 €86,000 €88,000 €95,000 €99,000 450,000
Purchases €64,000 €68,000 €70,000 €76,500 €80,000 358,500

All sales are on credit and are paid for one month after sale.
All purchases are on credit (except for €22,000 in May) and are paid for one month later.
Bradley rents the premises for €15,000 per annum payable monthly.
Wages to be €6,400 per month.
Equipment was bought in April for €8,000.
Closing stock at 31/5/2004 is expected to be €26,800.
Net profit for 5 months is expected to be €61,250.
You are required to prepare:-
(a) A Cash budget showing Bradley's expected monthly receipts and payments for the
five months January to May.
(b) A Budgeted Balance sheet as at 31/5/2004.
(80 marks)

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