TEST CODE 001092

FORM TP 23123 May/June 2003

CARIBBEAN EXAMINATIONS COUNCIL

SECONDARY EDUCATION CERTIFICATE

EXAMINATION

PRINCIPLES OF ACCOUNTS

Paper 02 - General Proficiency

3 hours

07 MAY 2003 (a.m.)

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

2. Begin EACH answer on a separate page.

3k. 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 © 2002 Caribbean Examinations Council.
All rights reserved.
001092/F 2003
 -2-

SECTION I

Answer all THREE questions in this section.

1. (a) The following transactions were identified during the month of March, 2002 at William
Skills' Enterprise but they were NOT recorded in his books as he was uncertain about
the appropriate book in which to record each transaction.
(i) March 3 Sold goods on credit to George Martin $ 6 000
(ii) March 4 Purchased supplies from C. Khan for cash $ 2 000
(iii) March 7 Bought motor van on credit from Van Sales $60 000
(iv) March 10 Bought goods for cash from Catburry Ltd $11 000
(v) March 14 Sold goods to C. Martin for cash $ 6 700
(vi) March 17 Bought goods on credit from P. Wisdom $10000
(vii) March 20 Returned goods to P. Wisdom (wrong size) $ 1 000
(viii) March 22 Sold goods on credit to V. Tate $ 3 000
(ix) March 25 V. Tate returned goods (damaged) $ 200
(x) March 28 Bought fixtures on credit from Y. Taylor $16000
Select the appropriate books of original entry on the form provided and record EACH
transaction for the month of March. (8 marks)

(b) Olga Lewis keeps her petty cash on the Imprest System. Her imprest amount for the
month of June 2001 is $600. Her petty cash transactions were as follows:
$
2001 May 31 Petty cash in hand 18
June 1 Petty cash restored to the imprest
June 4 Stamps bought 60
June 7 Stationery 36
June 8 Janitor's wages 45
June 14 Bought stamps 60
June 18 Stationery 84
June 19 Janitor's wages 45
June 29 Taxi fare 48
Stationery 30
June 30 Minor repairs 60
Electricity 45
Telephone 78
On the form provided, you are required to:
(i) Restore the imprest amount at June 1.
(ii) Enter the petty cash transactions in the Petty Cash Book.
(iii) Balance the Petty Cash Book for the month of June.
(iv) Reimburse the petty cash with the imprest amount. (12 marks)
001092/F 2003 GO ON TO THE NEXT PAGE
 -3-

2. Cain and Able are in partnership sharing profits and losses in proportion to their capital
account balances. At September 30, 2001 the balances on their capital and current accounts
were:
Cain Able
Capital a/c $60 000 $90 000
Current a/c 420 Dr. 3 450 Cr.

On October 1, 2001 they admitted Bratt into the partnership. Bratt brought in $20 000 cash and
a motor van valued at $10 000, as capital. The three partners agreed to share profit and losses
in proportion to their capital accounts. In the new partnership, each partner is to receive 5%
interest on capital and Cain will receive a salary equivalent to 10% of profits.
During the first year of operation Cain withdrew $6 000, Able withdrew $15 000 and Bratt
withdrew $4 000 cash. Interest on drawings is charged at 5% for a full year. At the end of the
year, the records showed:

Cain's drawings for a period of 9 months

Abie's drawings for a period of 6 months
Bratt's drawings for a period of 3 months

The profit for the year ending September 30, 2002 amounted to $90 000.

Prepare the following:

(a) The Journal entry to record the admission of Bratt. (4 marks)

(b) The Partnership's Appropriation of Profit Account for the year ending September 30,
2002 (Use full headings). (8 marks)

(c) The Current Account of EACH partner to show their closing balances.
(8 marks)

GO ON TO THE NEXT PAGE

001092/F 2003
 -4-
3. (a) During the month of September 2001, Batco Stores recorded the following receipts
and issues of bottled jams from its stores:
September
1 Balance in store 5 cases at $50 per case
4 Received 10 cases at $52 per case
10 Issued 6 cases
16 Received 10 cases at $55 per case
26 Issued 8 cases

On the form provided record the receipts and issues and determine the value of closing
stock of bottled jams at the end of September 2001. (Batco Stores uses the FIFO
method of stock valuation.) (10 marks)

(b) Fishing Sales Enterprise has prepared their simplified Final Accounts for the - year
ending October 30, 2001.

Fishing Sales Enterprise

Trading & Profit & Loss Account
Year ended October 30, 2001

$ $
Opening Stock 1000 Sales 20000
Add: Purchases 11 200
12200
Less closing stock 800
Cost of goods sold 11400

Gross profit c/d 8600

20000 20000

Wages and Salaries 3000 Gross profit b/d 8600

Utilities 500 Rent received 4000
Insurance owing 200
Other expenses 1300
Net profit 7600 _____
12600 12600

GO ON TO THE NEXT PAGE

001092/F 2003
 -5-

3. (b) cont'd

Fishing Sales Enterprise

Balance Sheet
as at October 30,2001
$ • $
Fixed assets total (net) 16000 Capital including net profit 10000
Current assets total 12 000 Long-term liability 8 000
_____ Current liabilities 10000
28 000 28 000

Calculate the following for Fishing Sales Ltd:

(i) Average stock

(ii) Gross profit percentage

(iii) Net profit percentage

(iv) Rate of return on investments in fixed assets

(v) \Rate of turnover

(vi) Current ratio

(vii) Working capital

(viii) The new net profit percentage if NO rent was received

(ix) Acid test ratio

(x) The effect on net profit if closing stock was $1 600

(10 marks)

GO ON TO THE NEXT PAGE

001092/F2003
 -6-

SECTION II

Answer any TWO questions in this section.

4. The following Trial Balance for Halliday Company Ltd relates to the year ending December
31,2001.
. $ $
Sales 185000
Purchases 9400
Salaries 19 600
Insurance 8 400
Electricity 3500
Telephone 4 200
Auditor's fees 900
Director's remuneration 3100
Interest on debentures 1 600
Interest on bank overdraft 700
Miscellaneous expenses 2 400
Ordinary dividend paid 3 000
Building at cost 109400
Accumulated depreciation on building 4 100
Machinery at cost 19300
Accumulated depreciation on machinery 2 300
Debtors 27 300
Cash 1 800
Creditors 13 700
Bank overdraft 8 600
8% debenture 20 000
Ordinary share capital 20 000 at 50 cents 10 000
Profit and Loss a/c at Jan. 1, 2001 73 000
Opening stock January 1,2001 17500 _____
316700 316700

Other Information

- Depreciation for the year - building $1 100 and machinery $1 600

- Closing stock December 31, 2001 $ 15 400
- Dividend proposed $5 000

Prepare the company's Trading and Profit and Loss and Appropriation Account for the year
ending December 31, 2001 and a Balance Sheet as at December 31, 2001. (Use complete
headings on your statements.) (20 marks)

GO ON TO THE NEXT PAGE

001092/F2003
 -7-
5. George Giscombe does NOT maintain a complete set of accounting records. However, he
provided you with the following information:

George Giscombe
Summarised Bank Account for the year ending Dec. 31, 2001

2001 $ $
Jan 1 Bal b/f 20000 Wages and salaries 35000
Receipts from debtors 190 000 Drawings 4650
Electricity 12000
Insurance 6000

Bank charges 900

Payment to creditors 92500
General expenses 15000
Telephone 8000
Balc/d 35950
210000 210000

Dec. 31, 2001 Dec. 31,2000

$ $
Creditors 24000 28000
Prepaid telephone 1000 1400
Debtors 18000 21000
Insurance owing 5000 8000
Stock 16000 27000
General expenses owing 1800 3000
Motor van at cost 35000 35000

Provision for Depreciation on motor van is to be based on 10% on the straight line method.

Prepare for George Giscombe the following:

(a) Trading and Profit and Loss Account for the year ending December 31, 2001.
(12 marks)

(b) Balance Sheet as at December 31, 2001. (8 marks)

(Use full headings on your statements.)
 GO ON TO THE NEXT PAGE
001092/F 2003
-8-
6. (a) Give a brief definition of EACH of the following:

(i) Bank charges

(ii) Bank statement

(iii) Credit transfer

(iv) Unpresented cheques

(v) Standing order

(vi) Dishonoured cheques

(vii) Uncredited cheques (5 marks)

(b) The bank transactions of Ruby Brown for the month of July 2001 were recorded in her
Cash Book as shown below. The Bank Statement for the month of July, 2001 is also
shown on page 9.
Cash Book
Date Particulars Bank Date Particulars Cheque # Bank
2001 $ 2001 $

July 1 Balance b/d 1000 July 5 V. Enterprise 671 400

10 Cash 250 7 Water Works 672 200

17 G. Thompson 75 19 Y. Gillbert 673 50

22 G. Coombs 75 23 C. Camper 674 125

27 Y. Davis 110 25 General Stores 675 100

29 E. Ellis 65 27 Gents Supplies 676 175

29 Gas Supplies 677 205

31 Balance c/d 320

1575
Aug. 1 Balance b/d 320 1575
 GO ON TO THE NEXT PAGE
001092/F 2003
-9-

6. (b) cont'd
Bank Statement of Ruby Brown
Date Description Cheque Debit Credit Balance

2001 # $ $ $

July l Balance
1000 CR
10
1250 CR
17 250
1325 CR
19 75
673 50 1275 CR
23
674 125 1150 CR
25
675 100 1050 CR
27
676 175 875 CR
28 Credit transfer: Y. Seaton
1075 CR
29 Standing Order: P.IRE 200
100 975 CR
30 Bank charges
50 925 CR

0) Update the Cash Book of Ruby Brown. (5 marks)

(ii) Prepare the Bank Reconciliation Statement starting with the Bank Statement
Balance and ending with the updated Cash Book Balance. (8 marks)

(iii) What Bank Balance would appear on the Balance Sheet of Ruby Brown as at
July 31,2001? (8 mark)

(iv) What is the change in Ruby Brown's bank balance between July 1 and July 31,
2001 ? (8 mark)

GO ON TO THE NEXT PAGE

001092/F2003
-10-

7. Environment Enterprises was contracted by the Local Government Authority to manufacture

wooden benches. For the six-month period ending June 30, 2002 the enterprise produced
500 benches. The following information relates to the manufacturing operations for the period:

Stock at January 1, 2002

Raw material 2 000
Work in progress 5 000

Stock at June 30, 2002

Raw material 1 800
Work in progress 2 000

Purchase of raw material 60 000

Carriage on raw material 3 000
Factory wages 24 000
Salary of factory manager 15000
Direct expenses 5 000
Factory insurance 2 000
Factory power 3 800
General factory expenses 4 000
Annual depreciation on plant and machinery 12 000

All other non-factory/administration expenses $45 per unit.

(a) Prepare Environment Enterprises' Manufacturing Account for the six-month period
ending June 30, 2002. Show clearly:

- Cost of material available

- Cost of material consumed
- Prime cost
- Factory overheads
- Cost of production (14 marks)

(b) Calculate the production cost per unit. ( 1 mark)

(c) Calculate the total cost per unit. ( 1 mark)

(d) Show the total revenue from benches if the local authority pays $400 per bench.
( 1 mark)

(e) What is the six month profit on the production of benches? ( 1 mark)

(f) Distinguish between direct cost and indirect cost. ( 2 marks)

END OF TEST
001092/F2003