Prin Of Accnts 2 2007 138x216.

qxd 16/10/08 12:00 Page 1

TEST CODE 01239020

FORM TP 2007120 MAY/JUNE2007

CARIBBEAN EXAMINATIONS COUNCIL

SECONDARY EDUCATION CERTIFICATE
EXAMINATION
PRINCIPLES OF ACCOUNTS
Papel" 02 - Gene.-al P.-oficiency
3 hours

( 22 MAY 2007 (a.m.) )

1. Answer ALL the questions in Section I and TWO questions from Section II.

2. Begin EACH answer on a separate page.

3. Keep ALL parts of EACH answer together.

4. Silent electronic calculators may be used, but ALL necessary working should be clearly
shown.

5. Each question is worth 20 marks.

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO

Copyright © 2006 Caribbean Examinations Council ®.

All rights reserved.
01239020/F 2007
Prin Of Accnts 2 2007 138x216.qxd 16/10/08 12:00 Page 2

-2-

SECTION I
Answer ALL questions in this section.

1. (a) List THREE distinguishing features of a partnership concern. (3marks)

(b) Skerritt and Cymbal are in Partnership sharing profits and losses in the ratio of their capital
balances. The following balances were left over in their books after the preparation of the
Trading and Profit and Loss Account on September 30, 2006.
$
Capital Accounts: Skerritt 30000
Cymbal 40000
Current Accounts Skerritt (300)
Cymbal 1 500
Drawings Skerritt 12 000
Cymbal 5000
Motor Vehicles at cost 43 000
Buildings at cost 232 000
Debtors 23 300
Creditors 17 000
Stock at September 30, 2006 18 000
Cash at bank 27000

Additional information to be taken into consideration:

(1) The net profit for the year ended September 30, 2006 is $250 000.
(2) Each partner earns an annual salary of $60 000.
(3) Interest on capital is to be paid at the rate of 5% per annum.
(4) Interest on drawings is to be charged at the rate of 10% per annum. Skerritt drew
cash on October 31, 2005 and Cymbal drew cash on March 31,2006.
(5) Accumulated depreciation on Motor Vehicles to September 30, 2006 is $8 600.

Required:

(i) Prepare the Profit and Loss Appropriation Account of Skerritt and Cymbal for the
year ended September 30, 2006. ( 6 marks)

(ii) Prepare the Current Accounts of Skerritt and Cymbal on September 30, 2006.
(5 marks)

(iii) Prepare the Balance Sheet of Skerritt and Cymbal as at September 30, 2006,
showing the working capital. (Do not show details of the current accounts in the
Balance Sheet. Transfer only the closing balances from the partners' current
accounts.) ( 6 marks)

GO ON TO THE NEXT PAGE

01239020/F 2007
Prin Of Accnts 2 2007 138x216.qxd 16/10/08 12:00 Page 3

- 3-

2. (a) Write up Mahabeer' s THREE column cash book from the transactions below, and balance
the cash book appropriately.

April Balances brought forward, cash $350; bank overdraft $5 000.

2 Singh who had an account balance of $8 000 paid in full by cheque, after
deducting 5% cash discount.
3 Paid rent by cheque $700.
7 Paid Townsend $970 by cheque, having deducted 3% cash discount.
10 Received a cheque of $3 000 from a friend as a loan.
15 Paid wages in cash $300.
16 Transferred $1700 from bank to cash.
25 Cash sales $450.
27 Cash withdrawn for personal use $150.
28 Paid in full, McBean's outstanding balance of $700, less 5% cash discount.
(10 marks)

(b) In June Mahabecr received his bank statement which showed that he had an over-drawn
balance of $7 225 on his bank account. His cash book showed an overdrawn balance of
$2 000. In checking his cash book with this bank statement balance, Mahabeer made the
following observations:

(1) End of the month bank chargeof$16 entered on the bank statement, is not included
in the cash book.
(2) A cheque made payable to McBean for $798 has been entered correctly in the bank
statement but was entered in the cash book as $789.
(3) A cheque received and entered in the cash book from Singh for $5 700 was returned
by the bank stating "words and figures do not agree". No correction has yet been
made in the cash book.
(4) Depositsof$13 OOOmade to the bankaccountonMareh 28 and recorded in the cash
book, do not appear on the bank statement.
(5) Cheques #22156 for $3 500 and #22158 for $2 000 have not been presented to the
bank for payment.
(6) Dividends of$8 000 paid directly to Mahabeer' s bank account, is shown on the bank
statement but has not been recorded in the cash book.

Required:

(i) Starting with the overdrawn cash book balance of $2 000, write up the bank account
to bring it up to date. (6 marks)

(ii) Prepare Mahabeer's Bank Reconciliation Statement as on 30th June, 2006.

(4 marks)

GO ON TO THE NEXT PAGE

01239020/F 2007
Prin Of Accnts 2 2007 138x216.qxd 16/10/08 12:00 Page 4

-4-

3. (a) State (i) the most appropriate source document and (ii) the book of original entry which
Pinto should use for each of the transactions below. (Write your response in your answer
booklet).

Transaction Source Document Book of Original

Entry

a) Pinto returned some goods

previously purchased. They
were the wrong order.

b) Sent a cheque to S. Morgan

for goods purchased.

c) Sold an old c omputer

(no longer suited for the
business) on credit to
Longsdale Primary School.

d) A customer returned damaged

goods previously bought from
Pinto.

( 4 marks)

(b) On January 1, 2004 the S & S Company had $7 500 balance in its Provision for Bad Debts
account. The company's policy is to provide 5% of debtors as bad debts provision. The
company's year ended December 31.

The debtors for the following 3 years were as follows:

December 31 , 2004 $180 000

December 31 , 2005 $135 000
December 31, 2006 $145 000

Required:

P repare the Provision for Bad Debts Account and the Balance Sheet extracts for the three
years. (16 marks)

GO ON TO THE NEXT PAGE

01 239020/F 2007
Prin Of Accnts 2 2007 138x216.qxd 16/10/08 12:00 Page 5

- 5-

SECTION II
Answer any TWO questions in this section.

4. (a) The Sharks Bay Fishennen' s Cooperative Society has a share capital of $150 000. The
Income and Expenditure Account for the year ending March 31, 2006 shows a surplus of
$36 200. Undistributed surplus brought forward from the previous year is $6 000. The
management committee decided that the surplus should be shared in the following manner:

(i) 18% is to be transferred to a statutory reserve account.

(ii) 15% is to be placed in a scholarship fund for fishennen's children.
(iii) Dividends should be paid to members at the rate of ten cents to the dollar.
(iv) A donationof$10 000 is to be made to members who suffered hurricane damages.

Prepare the Appropriation Account of the Sharks Bay Fishennen's Cooperative Society.
( 7 marks)

(b) The following list of balances was taken from the books of the Teachers' Cooperative
Credit Union on April 30, 2006. Use the information to prepare the Balance Sheet of the
credit union. Suitable headings and grouping of the items must be observed. The
working capital must be shown.
$
Long Term Liability: Loan from D & B Investment Co. 250 000
Bank balance 354 000
Cash in hand 40000
Accounts Payable (Creditors) 175 000
Share Capital 2 054000
Long term Investments 700 000
Statutory Reserve 55 000
Loans to members 1 500 000
Surplus 33 000
Members deposits 27000
(13 marks)

GO ON TO THE NEXT PAGE

01239020/F 2007
Prin Of Accnts 2 2007 138x216.qxd 16/10/08 12:00 Page 6

-6-

5. The following Trial Balance was extracted from the booksofK. Boorasingh on December 30, 2006:

K. Boorasingh
Trial Balance on December 30, 2006

DR CR
$ $

Capital 20600
Drawings 4 550
Stock (January 1, 2006) 2 150
Debtors 4 380
Creditors 6 122
General expenses 9 602
Sales 66 190
Purchases 33 205
Motor Vehicle at cost 15 000
Provision for depreciation on motor vehicles 5 500
Bank 31 620

100 507 98 412

The Trial Balance does not balance. On investigation, the following errors were discovered:

(1) A credit sale to Briggs for $68 had been omitted completely from the books.

(2) A purchase of $160 from Simmonds was entered in Simmonds' account but omitted from
purchases account.

(3) A credit sale to Lee-Chin for $129 was entered in the books as $120.

(4) Drawings of$100 were recorded as $1 000.

(5) A receipt from McBeth for $1 500 being bad debts recovered was entered in the cash book
but not credited to any account.

(6) An invoice of $145 from S. Harricharan was credited in error to both S. Harricharan and
S. Hamilton.

Required:

(a) Record the journal entries necessary to correct each of the errors. Narrations are not
required. (8 marks)

(b) Open the suspense account and enter the difference on the trial balance. Post the relevant
entries and close the account. (4 marks)

(c) Redraft the corrected trial balance. (Smarks)

GO ON TO THE NEXT PAGE

01239020/F 2007
Prin Of Accnts 2 2007 138x216.qxd 16/10/08 12:00 Page 7

- 7-

6. Sally Walker is a sole trader who operates a variety store. Trading started on March I, 2006. The
following transactions in a certain product occurred during the month.

March Purchased 20 units @ $4 each

3 Purchased 30 units @ $5 each
5 Sold 25 units @ $7 each
6 Purchased 60 units @ $5.50 each
7 Sold 40 units @ $8 each
8 Sold 30 units @ $8.20 each

Required:

(a) Complete the stock form provided using the FIFO method of stock valuation to determine
the number of units and cost per unit of stock remaining on March 8. (15 marks)

(b) Calculate the value of the remaining units (stock) using the FIFO Method. ( 1 mark)

(c) Assume that the units sold on March 7 were those bought on March 6:

(i) Calculate the gross profit made on the units sold on March 7. (Show workings.)

(ii) What method of stock valuation is being assumed? (3markli)

(d) Name ONE other method of stock valuation. (1mark)

GO ON TO THE NEXT PAGE

01239020/F 2007
Prin Of Accnts 2 2007 138x216.qxd 16/10/08 12:00 Page 8

- 8 -

7. The Bridgeway Theatre Club is an amateur dramatic club that rents premises in which it has
established a theatre and bar for the use of members. The club's treasurer has produced the
following summary of the club's receipts and payments during the year ended 31 May 2006:

Bridgeway Theatre Club

Receipts and Payments Account
For year ended May 31, 2006

$ $
Cash and Bank balance b/f 2240 Secretarial Expenses 1 100
Members subscriptions 8 920 Rent of Premises 3 980
Donations 1 ()()() Production Expenses 37 600
Bar taldngs 51800 Bar suppliers 29400
Ticket sales 34640 Bar expenses 8 360
Grants and subsidies 27 600 Fees of guest artistes I 800
Stationery and printing 2200
Purchase of Motor Vehicle 30200
Other expenses 9640
Cash and bank balance l 920

126 200 126 200

The following information is also available:

June 1, 2005 May31,2006
$ $
Subscriptions in arrears 700 920
Subscriptions in advance 320 120
Owing to bar suppliers 2600 3 300
Bar Stock 5 340 4660
Production expenses owing 4980 3080
Valuation of theatre equipment 70000 62000

Required:

(a) Prepare the Subscriptions Account for the year ended May 31, 2006. (6marks)

(b) Prepare the Bar Suppliers Account to determine purchases. (3marks)

(c) Prepare the Bar Trading Account for the year ended May 31, 2006, showing clearly profit
or loss made by the bar. (Smarks)

(d) Prepare the Theatre Productions Account showing the surplus or deficit made on produc-
tions for the year ended May 31 , 2006. (6marks)

-
=o
-N

=oo ~
END OF TEST

-
!!!!!!!!!!!!!!!
01239020/F 2007
Prin Of Accnts 2 2007 138x216.qxd 16/10/08 12:00 Page 9

Candidate No:-- - - - - - Ce.o tre No: _ _ _ _ __

Answer Sheet for question 6 (a)

Sally Walker Stock Card

Date Purchases Sales Balance

Unit Price Unit Cost Unit Cost
$ $ $

TO BE ATTACHED TO YOUR ANSWER BOOKLET

01239020/F 2007