FOA Past Year Jan 2011

7/29/2019 FOA Past Year Jan 2011

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Posted into CEL since 21 November 2011

PAST YEARS PAPERS FOR STUDENTS PRACTISE

Question 2 (January 2010/2011)(A)

AB Sdn. Bhd. received the monthly bank statement for the month ended 31 October 2010 and

the balance was RM6,203 at 31 October 2010. The balance of the cash account as at 31

October 2010 was RM6,138. Upon checking the bank statement with the cash book, thefollowing differences were revealed:

1. Bank service charges for October amounted to RM67.2. A cheque for RM650 given to AB Sdn. Bhd. by a customer was dishonoured.3. The bank had incorrectly credited AB Sdn. Bhd.s account with a deposit of RM100

which should have been credited to AA Sdn Bhds account.

4. A cheque deposit of RM160 was made on 30 October and this deposit did not appear inthe bank statement.

5. The following three cheques issued by AB Sdn. Bhd. were not presented for payment asat 31 October 2010:

Cheque Number: RM408 130

410 375

411 355

6. Cheque Number 412 issued to a creditor for RM86 was wrongly recorded as RM68 in the

cash account.

Required:

(a) Based on the above information, prepare the following:(i) Revised bank account; and (6 marks)

(ii) Bank reconciliation statement as at 31 October 2010. (7 marks)

(b) Explain the purpose of preparing the bank reconciliation statement. (2 marks)

Proposed solution:(a) (i)

Bank Account

Bal b/d 6,138 Bank charges 67

Accounts receivables 650

Accounts payables 18

Bal c/d 5,403____________ __________

6,138 6,138

=========== =========

Bal b/d 5,403

6 marks


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ABFA1023 FUNDAMENTALS OF ACCOUNTING

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(a)(ii)

AB Sdn Bhd

Bank Reconciliation Statement

As at 31 October 2010

RM RM

Bal per the bank statement 6,203

Add: Outstanding lodgment 160

6,363

Less: Error by the bank 100

Less: Outstanding cheques

Balance in the Cash Book( bank account)

408

410

411

130

375

355

____ 960

5,403

=====

7 marks

(b) Reasons for preparing bank reconciliation statement:

To detect errors made by either party. To identify items like bank charges to be included in the accounts.

(B)

At the end of its financial year, an imbalance in the list of account balances was revealed in

HL Sdn. Bhd.s trial balance. The total credits was less then the total debits by RM1,040. A

suspense account was temporarily created while the accounts were being investigated. The

following errors were discovered:

1. A sale of goods on credit for RM1,000 was omitted from the sales account.2. Inventory of RM240 has been ignored.3. A purchase of raw material of RM350 had been recorded in the purchases account as

RM850.

4. The purchase return day book includes a sales credit note of RM230 for goods returnedby a customer. This was only recorded in his personal account.

The gross profit, before the correction of errors was RM35,750.

Required:(a) Prepare the suspense account and show the correction of the errors. (4 marks)

(b) Calculate the revised gross profit after the correction of the errors. (6 marks)

[TOTAL: 25 MARKS]


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Proposed solution:

(a) Suspense A/c

Difference 1,040

Sales 1,000

Purchases(850-350) 500 Purchase return 230

Sales return 230

_______ _____

1,500 1,500

====== =====

(b) Calculation of revised gross profit

RM RM

Gross profit 35,750Add: sales omitted 1,000

Cost wrongly charged 240

Purchase overstated 500

1,740

Less: Purchase return 230

Sales return 230

( 460)

Revised gross profit 37,030

=====


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Question 3 (January 2010/2011)Synergy Plus Sdn. Bhd. maintains separate sales ledger and purchase ledger for recording its

individual trade receivables and trade payables accounts. The following information

relates to the year ended 31 December 2010:

Required:(a) Prepare the trade receivables control account and the trade payables control account for

the year ended at 31 December 2010. (23 marks)

(b) Describe TWO (2) advantages for maintaining control accounts. (2 marks)

[TOTAL: 25 MARKS]

Proposed solution:

(a) Trade Receivables Control Account

Bal b/d 66,300 Bal b/d 724

Goods sold on credit 323,614 Cash 299,149

Discount allowed 2,930

Bad debts 3,651

Interest charged o/due 277 eturns inwards 2,805

Trade payablescontra 1,106/

Bal c/d 815 Bal c/d 80,641

_______ ________

391,006 391,006

======= =======

RM

Debit balances on the trade receivables control account as at 1 Jan 2010 66,300

Credit balances on trade payables control account as at 1 Jan 2010 50,600

Sundry credit balances on trade receivables control account as at 1 Jan 2010 724Goods purchased on credit 257,919

Goods sold on credit 323,614

Cash received from trade receivables 299,149

Cash paid to trade payables 210,522

Discounts received 2,663

Discounts allowed 2,930

Cash purchases 3,627Cash sales 5,922

Bad debts written off 3,651

Interest charged on overdue trade receivables accounts 277

Returns outwards 2,926

Returns inwards 2,805

Amount settled by contra between the trade receivables and trade payables

accounts

1,106

Sundry credit balances on trade receivables control accounts as at 31 Dec 2010 815

Sundry debit balances on trade payables control accounts as at 31 Dec 2010 698


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Trade Payables Control Account

Cash 210,522 Bal b/d 50,600

Discounts received 2,663 Purchase 257,919

Returns outwards 2,926 Bal c/d 698

Trade receivables A/c 1,106

Bal c/d 92,000

_______ ________

309,217 309,217

====== ========

(b) Advantages for preparing control accounts

Easy to locate errors in the accounts Reduce the number of entries in the control accounts an independent check on the accuracy of the sales ledger and purchase ledger


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Question 4 (January 2010/2011)The following purchases and sales are made by Trader Sdn. Bhd. during the first two weeks in

January 2010. There was no opening inventory.

Purchases Sales

Month

January

Units Cost per

unit RM

Units Price per unit

RM

1 100 7 10 9

2 20 9

5 50 9

7 75 8

10 20 9

12 50 10

Total unitspurchased

175 Total unitssold

150

At the end of January, there were 25 units in the closing inventory.

Required:(a) Prepare the inventory card for Trader Sdn. Bhd. according to the following valuation

method:

(i) First-in, first-out (FIFO); and (9 marks)(ii) Weighted Average Cost (WAC) (10 marks)

(b) Explain THREE (3) advantages of the FIFO method. (6 marks)

[TOTAL: 25 MARKS]

Proposed solution:

(a)(i) FIFO basis

Date Receipts Issues Balance

Units Price RM Units Price RM Units Price RM

Jan, 1 100 7 700 10 7 70 90 7 630

Jan, 2 - - - 20 7 140 70 7 490

Jan, 5 - - - 50 7 350 20 7 140Jan, 7 75 8 600 - - - 20 7 140

75 8 600

Jan, 10 - - - 20 7 140 75 8 600

Jan, 12 - - - 50 8 400 25 8 200

_____ _____ ____ ____

175 1,300 150 1,100 25 200


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(ii) WAC basisDate Receipts Issues Balance

Units Price RM Units Price RM Units Price RM

Jan, 1 100 7 700 10 7 70 90 7 630

Jan, 2 - - - 20 7 140 70 7 490Jan, 5 - - - 50 7 350 20 7 140

Jan, 7 75 8 600 - - - 95 7.8/ 741

Jan, 10 - - - 20 7.8 156 75 7.8 585

Jan, 12 - - - 50 7.8 390 25 7.8 195

_____ ______ ____ ____

175 1,300 150 1,106 25 195

(b) Advantages

Inventory values are easy to calculate and based on actual price paid. Closing inventories is based on the most recent purchase price that reflects thecurrent market value.

Acceptable by the Inland Revenue Board, Malaysia for tax purpose. Acceptable by the international financial reporting standards.


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Question 2 (April 2010/2011)Encik Ahmad, a small business owner, does not keep a full set of accounts. The following is

a summary of Ahmads bank account for the year ended 31 December 2010:

Summary of Bank Account

RM RM

Balance 1 Jan 2010 4,000 Payments to suppliers 36,000

Receipts from

customers

45,000 Cash purchases 700

Cash sales 650 Rent 1,000

Insurance 500

Other expenses 275

Personal use 10,450

Balance c/d ?

Balance b/d ?

Ahmad had received a cash discount of RM230 for prompt payment from a supplier.

Debts of RM450 had been written off and a discount of RM300 allowed during the year.

Additional information available:

As at 31 December 2009 As at 31 December 2010

RM RM

Inventory 12,000 14,000

Trade payables 5,400 6,500

Trade receivables 10,000 9,650

Rent prepaid 150 200

Insurance owing 50 100Machinery at valuation 3,500 3,250

Required:(a) Calculate total sales for the year ended 31 December 2010. (4 marks)(b) Calculate total purchases for the year ended 31 December 2010. (4 marks)(c) Prepare the Statement of Comprehensive Income for the year ended 31 December 2010.

(9 marks)

(d) Prepare the Statement of Financial Position as at 31 December 2010. (8 marks)[Total: 25 marks]

Proposed solution:


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Question 3 (April 2010/2011)The following Trial Balance is extracted from the books of General Making Sdn Bhd as at 31

December 2010:

Trial Balance as at 31 December 2010 Dr

Cr

RM RM

10% Preference share capital of RM1 each 150,000

Ordinary share capital of RM1 each 70,000

10% debentures (repayable 2015) 30,000

Building at cost 340,500

Equipment at cost 8,000

Motor vehicles at cost 17,200

Provision for depreciation : equipment 1.1.2009 2,400

Provision for depreciation : motors 1.1.2009 5,160

Inventories 22,690Purchases and Sales 63,910 298,200

Carriage inwards 2,620

Salaries 10,240

Directors remuneration 10,300

Motor expenses 6,120

Rates & Insurance 3,930

Stationeries 660

Debenture interest 1,500

Trade Receivables and Trade Payables 158,509 66,270

Cash at Bank 8,390

General reserve 5,000Share premium account 14,000

Interim ordinary dividend paid 3,500

Retained profits: 31.12.2009 17,039

658,069 658,069

The following adjustments are needed:

(i) The directors proposed the following:

a. Final ordinary dividend of 10%

b. The preference share dividend is to be paid in full

c. Transfer RM5,000 to general reserve

(ii) Inventories at 31.12.2010 were RM27,220.(iii) Depreciation of motor vehicles RM3,000 and equipment RM1,200.

(iv) Accrued debenture interest RM1,500.

(i) Authorised share capital is RM400,000 in preference shares and RM300,000 in ordinaryshares.

(ii) Provision for income tax RM5,000.Required:Prepare the Statement of Comprehensive Income and Working Notes on the Appropriation of

Profits for the financial year ended 31 December 2010 and the Statement of Financial

Position as at that date.

[Total: 25 marks]

Proposed solution:


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Question 4 (April 2010/2011)(A)

PA Sdn Bhds cash book showed a debit balance of RM4,880 at the end of October 2010 but

its bank statement showed a credit balance of RM4,580. The following items were the cause

of the difference between the cash book and bank statement:

1. Cheques amounting to RM1,800 received by PA Sdn Bhd had not been credited by thebank.

2. Cheques amounting to RM1,360 issued by PA Sdn Bhd had not been presented forpayment.

3. Bank charges of RM20 were not recorded in the cash book.4. A cheque for RM400 marked refer to drawer had been returned by the bank but it had

not been recorded in the cash book.

5. A credit transfer of RM600 was not recorded in the cash book.6.

A cheque of RM40 drawn by PA Sdn Bhd was omitted from the cash book but appearedon the bank statement.

Required:(a) Prepare a revised cash book as at 31 October 2010. (6

marks)

(b) Prepare a bank reconciliation statement as at 31 October 2010. (5marks)

Proposed solution:

(B)

At the end of GK Sdn. Bhd.s financial year, 30 November 2010, the following information

extracted from the companys books:

RM

Sales 400,000

Cost of Sales 300,000

Other income 80,000

Operating expenses 120,000Closing inventory 30,000

Trade receivables 50,000

Bank overdraft 40,000

Trade payables 20,000

Required:(a) Calculate the following ratios for GK Sdn. Bhd. and briefly comment on each of the

ratios:

(i) Gross profit as a percentage of sales; (2

marks)

(ii) Net profit as a percentage of sales; (2marks)

(iii) Current ratio; and (2marks)


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(iv) Quick ratio. (2marks)

(b) Explain the purpose of the following ratios:

(i) Inventory turnover ratio; (2marks)

(ii) Trade receivable turnover; and (2marks)

(iii) Trade payable turnover. (2marks)

[Total: 25

marks]

Proposed solution:


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Question 2 (August 2011/2012)AA Sdn. Bhd. drawn up its trial balance for the year ended 31 December 2010. However, the

debit exceeds the credit balance by RM2,000. You are required to open a suspense account

for the difference in amount.

During 2011 the following errors made in 2010 were located:

(i) Disposal of an old laptop for RM400 was recorded as AAs sales. (ii)Purchases day book was overcast by RM1,850.(iii)The owner did a private purchase that was wrongly included as business purchases that

amount to RM690.

(iv)A debit advice of RM30 for bank charges was found only in the cash book.(v)A sale of goods to Hermoine amounting to RM790 was correctly entered in the sales day

book however; it was recorded in her personal account as RM970 instead.

Required:(a) Indicate the required journal entries to correct the errors (narratives with working whereappropriate is necessary).

(8 marks)

(b)Write up the suspense account showing the corrections of appropriate errors.(4 marks)

(c)The original net profit before adjusting for errors was RM12,000. Show your calculationof the revised net profit for the period ended 31 December 2010.

(7 marks)

(d)Describe THREE(3) types of errors where the trial balance will still balance.(6 marks)

[Total: 25 marks]

Proposed solution:

(a) Correcting journal entries:

RM RM

(i) Dr Sales 400

Cr Disposal of computer 400

(Correction of errorproceeds from

disposal of computer wrongly enteredinto Sales account)

(ii) Dr Suspense 1,850

Cr Purchases 1,850

(Correction of errorPurchases Day

Book overcast)

(iii) Dr Drawings 690

Cr Purchases 690

(Correction of errorprivate purchase

wrongly entered into Purchases account)

(iv) Dr Bank charges 30

Cr Suspense 30


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(Correction of errorbank charges not

posted)

(v) Dr Suspense 180

Cr Trade Receivable: Hermoine 180

(Correction of errorsales amount

wrongly posted to the personal account)

[970790]

(b)

Suspense Account

RM RM

Purchases 1,850 Balance b/d 2,000

T. Recble: Hermoine

(970790)

180 Bank charges 30

2,030 2,030

Statement of Adjusted Net Profit for the year ended 31 December

2010

RM RM

Net profit (with errors) 12,000

Add: (i) Disposal of laptop 400

(ii) Purchases overcast 1,850

(iii) Private purchase 690 2,940

14,940

Less: (i) Sales overstated 400(iv) Bank charges 30 (430)

Adjusted net profit 14,540

(d)

Any 3 types of errors where trial balance will still balance:

1. Errors of omissionA transaction is completely omitted from the books i.e. there is no debit and credit entry

for the transaction. We must correct this error by making a double-entry to record the

transaction.

2. Errors of commission/postingAn entry is posted to the correct side of the ledger but to the wrong account within the

same class/category. We must correct this error by cancelling out the wrong account and

entering into the correct account.

3. Errors of principleAn item is posted to the wrong class/category of account. We must correct this error by

cancelling out the wrong account and entering into the correct account.

4. Compensating errorsError on one side of the ledger is compensated by the error of the same amount on theother side i.e. the errors cancel out each other.

5. Errors of original entry


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A wrong amount is recorded or omitted in the books of prime entry or the source

document, and subsequently posted to the ledger accounts. The correct double-entry

principle has been observed using the incorrect figure.

6. Complete reversal of entriesThe correct accounts are used but each item is shown on the wrong side of the account i.e.

a debit as a credit and vice versa. The correction of this error requires an amount double

the amount of its original error in order to set the accounts right.


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Question 3 (August 2011/2012)

You are to study the following financial statements for two furniture stores and then answer

the questions which follow:

Statement of comprehensive income for the period ended

Trade All Find All

RM RM RM RM

Sales 473,800 617,800

Less: Cost of goods sold:

Opening inventories 11,950 21,950

Purchases 401,200 502,200

413,150 524,150

Less: Closing inventories (25,000) (388,150) (35,000) (489,150)

Gross profit 85,650 128,650

Less: Expenses:

Depreciation 5,000 10,000Wages & salaries 36,000 65,000

Other expenses 3,700 (44,700) 1,150 (76,150)

Net profit 40,950 52,500

Statement of financial position as

at

Non-current assets

Equipment 80,000 220,000

Current assets

Inventories 25,000 35,000

Trade receivables 36,000 116,000Bank 19,700 31,000

Less: Current liabilities 80,700 182,000

Trade payables (76,500) 4,200 (186,500) (4,500)

84,200 215,500

Financed by:

Opening capital 57,250 177,000

Add: Net profit 40,950 52,500

98,200 229,500

Less: Drawings (14,000) (14,000)84,200 215,500

Required:(a) Write the formulae and calculate the following ratios for each of the above businesses:

(i) Gross profit as a percentage of sales;

(ii) Net profit as a percentage of sales;

(iii) Current ratio;

(iv) Quick ratio;

(v) Inventories turnover (times);

(vi) Trade receivables turnover (days); and

(vii) Trade payables turnover (days).(21 marks)

(b) Explain any TWO (2) categories of ratios, you may use your tabulated results from (a) to

illustrate the selected ratios explained. (4

marks)


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[Total: 25 marks]

Proposed solution:

(a) Trade All Find All(i) Gross profit as a

percentage of sales

GP/Sales

85,650 x 100% 128,650 x 100%

473,800 617,800

= 18% = 21%

(ii) Net profit as a

percentage of sales

NP/Sales

40,950 x 100% 52,500 x 100%

473,800 617,800

= 9% = 8%

(iii) Current ratioCA/CL 80,700 182,00076,500 186,500

= 1.1 times = 0.98 times

(iv) Quick ratio 55,700 147,000

CA-Inv/CL 76,500 186,500

= 0.7 times = 0.8 times

(v) Inventories turnover

times

338,150 489,150

Cost of goods sold 18,475 28,475

Average inventories = 18.3 times = 17.2 times

(vi) Trade receivables

turnover days

TR/Sales x 365

36,000 x 365 116,000 x 365

473,800 617,800

= 28 days = 69 days

(vii) Trade payables

turnover days

TP/Pur x 365

76,500 x 365 186,500 x 365

401,200 502,200

= 70 days = 136 days

(b)

1. Profitability ratios measure the financial performance of the business. Find All seems toindicate better GP margin than Trade All. However, Trade All seems to have better expenses

control than Find All.

2. Liquidity ratios tell us whether the business will be able to pay its creditors, expenses,

loans falling due, etc. at the correct times. Failure to ensure that these payments are covered

could mean that the business would have to be closed down. Both Trade All & Find All

seems to indicate similar ability to manage their assets and liabilities.

3. Efficiency ratios measure how well the business is able to utilise its assets to generate

sales and profits. Both indicate almost similar inventories turnover rate however, Trade All

display better ability to collect money from its customers. An over utilisation of credit period

with suppliers may cause suppliers not wanting to deal with them. Unless, of course, it is an

industry norm to give such credit period.


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Question 4 (August 2011/2012)The following is the trial balance of Triad Bhd. as at 31 December 2010:

Dr

RM

Cr

RM

Inventory as at 1 January 2010 102,994

Debenture interest 1,600

Office Equipment at cost 225,000

Furniture & Fittings at cost 57,200

Bank 4,973

Cash 62

Returns inwards 18,400

Carriage inwards 1,452

Wages and salaries 123,289

Rent, business rates and insurance 16,240

Discounts allowed 3,415Directors remuneration 82,400

Purchases & Sales 419,211 880,426

Trade receivable & trade payable 227,219 54,818

Share capital: authorised and issued 200,000

8% debentures 40,000

General reserve 45,000

Retained profits as at 1 January 2010 12,411

Accumulated depreciation at 1 January 2010

Office Equipment 32,600

Furniture & Fittings 18,200

1,283,455 1,283,455

Additional information:

(i) Inventories as at 31 December 2010 RM111,317.(ii) The share capital consists of 300,000 ordinary shares of RM0.50 each and 50,000 12%

preference shares of RM1 each. The dividend on the preference shares was proposed to

be paid as well as a dividend of 18% on the ordinary shares.

(iii) Accrued: rent RM802; Directors remuneration RM6,000.(iv) Debenture: years interest owing.(v) Depreciation on cost: Office equipment 20%; Furniture & Fittings 25%.(vi) Transfers to general reserves was RM15,000RequiredPrepare the following for Triad Bhd.:

a. Statement of comprehensive income for the year ended 31 December 2010(10 marks)

b. Working notes on the appropriation of profits for the year ended 31 December 2010(4 marks)

c. Statement of financial position as at 31 December 2010.(11 marks)

[Total: 25 marks]


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Proposed solution:

Triad Ltd

Statement of comprehensive income for the year ended 31 December 2010

RM RM RM

Sales 880,426

Less: Returns inwards (18,400) 862,026

Less: Cost of goods sold

Opening inventories 102,994

Purchases 419,211

Add: Carriage inwards 1,452 420,663

523,657

Less: Closing inventories (111,317) (412,340)

Gross profit 449,686Less: Expenditure

Loan note interest (1,600 + 1600) 3,200

Wages and salaries 123,289

Rent, rates & insurance (16,240 +

802)

17,042

Discounts allowed 3,415

Directors remuneration (82,400 +

6,000)

88,400

Depn: Equipment (225,000 x 20%) 45,000

Depn: Motor vehicles (57,200 x

25%)

14,300 (294,646)

Profit for the year 155,040

Triad Ltd

Working notes on the appropriation of profits for the year ended 31 December 2010

RM RM RM

Profit for the year 155,040

Less: Appropriation

Proposed final dividends:

- Ordinary shares (300,000 x RM0.50 x

18%)

27,000

- Preference shares (50,000 x RM1 x

12%)

6,000 33,000

Transfer to general reserve 15,000

(48,000)

107,040

Retained profits b/d 12,411

Retained profits c/d 119,451


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Triad Ltd

Statement of financial position as at 31 December 2010

RM RM RM

Non-current assets

Office Equipment at cost 225,000

Less: Accum. Depreciation

(32,600+45,000)

(77,600) 147,400

Furniture & Fittings at cost 57,200

Less: Accum. Depreciation

(18,200+14,300)

(32,500) 24,700 172,100

Current assets

Inventory 111,317

Trade receivables 227,219

Bank 4,973

Cash 62

343,571Less: Current liabilities

Trade payables 54,818

Dividends payable 33,000

Accrued expenses (802 + 6,000 +

1,600)

8,402 (96,220)

Net current assets 247,351

419,451

Financed by:

Issued capital

300,000 Ordinary shares of RM0.50

each

150,000

50,000 12% Preference shares of RM1

each

50,000

200,000

Reserves

General reserve (45,000 + 15,000) 60,000

Retained profits 119,451 179,451

Non-current liabilities

8% Debentures 40,000

419,451

FOA Past Year Jan 2011

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Transcript of FOA Past Year Jan 2011