1.

Kaliel Manufacturing produces and retails a single product. The following

balances were extracted from the books at 31 August 2009.
$
Stock at 1 September 2008: Raw materials

see first bullet point below

Work in progress

15000

Finished goods

30500

Purchases of raw materials

see first bullet point below

Production wages

68000

Royalties paid

16000

Salaries:

Factory management

35500

Administrative management

75000

Light heat and power

16800

Building insurance

30000

Plant and machinery:

Premises:

cost

90000

Provision for depreciation

60000

cost

300000

Provision for depreciation

100000

Sales of finished goods

318000

Additional information:

Raw materials are purchased and issued to production on the First in First
out (F.I.F.O) periodic valuation basis. The following information is available
concerning raw materials for the year 1 September 2008 to 31 August
2009:
Stock 1 September 2002

200 @$20
100 @$25

Purchases

Batch 1

500 @$25

Batch 2

1000 @$30

Batch 3

500 @$35
1

Issues to production

Batch 1

800

Batch 2

1200

Light, heat and power is to be apportioned between manufacturing and

administration use on the basis of 75% manufacturing; 25%
administration.

Buildings insurance is to be apportioned on the basis of floor area

occupied. Manufacturing occupies 1000sq m and administration 500sq m.

Depreciation is to be provided annually on plant and machinery at the rate

of 30% using the diminishing balance method.

Depreciation is to be provided annually on premises at the rate of 2% per

annum using the straight line method. Depreciation is apportioned on the
basis of floor area occupied. Manufacturing occupies 1000sq m and
administration 500sq m.

Closing stocks at 31 August 2009 were valued as follows:

$
Raw materials

see first bullet point above

Work in progress

20500

Finished goods

27500

Required:
(a) Prepare the Manufacturing and trading and profit and loss account for the
year ended 31 August 2009.
[20]
(b) Distinguish between capital and revenue expenditure.

[05]

(c) On 30 September 2009, Keliel commences the following works on his

premises. All work will be completes within the year.
i.

An extension to the premises costing $75000 to locate an additional

production line.

ii.

Repairs to the roof of the administration office costing $6000.

Explain how (i) and (ii) above would be recorded in the manufacturing,
trading and profit and loss accounts for the year ended 31 August 2010 and
the balance sheet as at that date.
[05]

[Total Marks 30]

2.

Merstham Sailing Club has been in existence for a number of years. The Clubs
financial year end is 31 March. The following information is available.
Balance as at 1 April 2009:
Buildings

$
150000

Depreciation of buildings

90000

Equipment

65000

Depreciation of equipment

33280

Accumulated fund

97070

Subscriptions owing

1950

Subscriptions in advance

2400

Bar creditors

600

Bar stocks

1530

Bank

4870 Dr

Receipts for the year ended 31 March 2010:

Subscription received for:

2008 /9

1350

2009/10

14400

2010/11

1800

Proceeds from annual raffle trick sales

1200

Proceeds from Christmas dinner dance

2000

Bar sales

Payments for the year ended 31 March 2010:

Equipment repairs

550

Bar purchases

13940

Payments to builder

22000

Raffle prizes
Christmas dinner dance

300
1150

Insurance

800

Buildings maintenance

630

Heat and light

500

Additional information:

The bar achieved a profit margin of 20% in the year ended 31 March 2010.
All bar sales are paid into the bank. There are no bar expenses.

At 31 March 2010, bar stocks were $1420 and bar creditors were $950. Also
at this date insurance had been prepaid by $50 and $200 owed for heat and
light. No accruals or prepayments (other than subscriptions) were brought
forward on 1 April 2009.

No subscriptions remained outstanding for the year ended 31 March 2010.

Subscriptions for 2008/9 still outstanding at 31 March 2010 are to be written
off.

The payments to the builder represent a $20000 extension to the buildings

and $2000 for redecoration of the existing bar.

The Club uses the straight line method of depreciation for buildings.
Buildings are depreciated at a rate of 4% per annum on the balance in the
buildings account at the end of the year. Equipment is depreciated at a rate
of 20% per annum using the reducing balance method. No equipment was
purchased or sold during the year ended 31 March 2010.

Required:
(a) The Bar Trading Account for the year ended 31 March 2010.

[07]

(b) The balance of the Receipts and Payments Account as at 31 March 2010.
[03]
(c) The Subscriptions Account for the year ended 31 March 2010.

[08]

(d) The Income Expenditure Account for the year ended 31 March 2010.

[10]

(e) The value of the Accumulated fund as at 31 March 2010.

[02]

[Total marks30]