a)

Dr Maryam account Cr
Date Details Amount Date Details Amount
01-Apr-18 Balance b/d 2600 07-Apr-18 Return inwards 464 (1)
05-Apr-18 Sales 2400 (1) 18-Apr-18 Bank/cash 2548 (1)
18-Apr-18 Discount allowed 52 (1)
30-Apr-18 balance c/d 1936
5000 5000
01-May-18 Balance b/d 1936 (1) of
(5)
b) (2)
Date Document
05-Apr Ambani sold goods on credit to Maryam Sales invoice (1)

07-Apr Maryam returned goods to Ambani purchased on the 5 April Credit note (1)
18-Apr Ambani issues a summary of Maryam’s account for the month of Statement of account (1)
(3)
c) i)
Record of purchases or sale
Amount of invoice are posted in purchases and sales journal (2)
ii)
Trade receivable is reduced or credited with the amount of return of goods
Amount on credit note to be posted in sales return journal or sales ledger (2)

(Any answer that is appropriate)

d)
(i) Provision for doubtful debts account
Date Details Amount Date Details Amount
2018 2018
31-Dec-18 Income statement 265 (1) Bal b/d 3050
(1)
31-Dec-18 Bal c/d 2785 (1)

3050 3050
31-Dec-18 balance b/d
(3)
1 (e)
Dr Cr
e) (i) Bank/Cash 10500 (1)
Bad debts 1500 (1)
Simpson 12000 (1)
(3)
(ii)
A doubtful debt is an account receivable that might become a bad debt at some point in the future.

(1) × 2 points (2)

(20)
Q2
(a) The estimate of the loss in value (1) of a non-current asset over its expected working
life (1) (2)

b) Wear and tear.

Obsolete (2)

( C) Profit on the sale (1) for state profit

14 000 – 5040 – $9500 = $540 profit (1)
(2)
(d) Cost of Accumulated NBV of asset Depreciation for the year
asset Dept of asset 31 March 2011

At 31 March 2018 30000 10800

Sale of asset -14000 -5040
16000 5760 (1) 10240 2048
Addition 18000 0 18000 3600
Balance c/d 34000 5760 28240 5648
(1) (1) of
[3]
(i) Debit Credit
$ $
Suspenses (1)
Rent payable 4900 (1)
Rent receivable 4900 (1)

Suspenses 900 (1)

General expenses 900 (1)

Purchases 3400 (1)

Suspenses 3400 (1)
[7]
(ii) Suspenses Account
Details $ Details $
Rent payable 4900
(1)
Rent receivable 4900 Original difference 7300 (1) of
General expenses 900 (1) Purchases 3400 (1)

10700 10700

[4]
[20]
Q3
(a) Statement of Changes in Equity for the year ended 30 September 2018
Share capital General reserve Retained earnings Total
$ $ $ $
Balance at 30 September 2018 70000 40000 92000 202000
Share issue 30000 (1)
Profit for the year 75000 (1)
Transfer to general reserve 80000 (1) -80000 (1)
Dividend paid (interim) -7000 (1)
Dividend paid (final) -20000 (1)
Balance at 30 September 2018 100000 (1) 120000 60000 202000 (1)
[8]
b) Extract from Statement of Financial Position at 30 September 2018

Equity and reserves

Ordinary shares 100000 (1)
reserves
General reserve 120000 (1) of
Retained profit 60000 (1) of
180000
Shareholder's fund 280000 (1) of
Non-current liabilities
Debentures 500000 (1)
780000 (1) of
[6]
(c) Retains
Retainscash
cashininthe
thebusiness/maintains
business/maintainsliquidity
liquidity(1)
(1)
Improves working capital (1)
Funds retained for major expenditure such as purchasing non-current assets/expansion of
business. (1)
Profits ‘ploughed back’ for business to grow. (1)
Used for future dividends/maintains dividends in times of loss/when profits are low (1)
For use in emergencies/contingencies/if company has financial difficulties (1)
(Accept any other reasonable points) Max [2]

(d) Retains
Ordinarycash
shares
in the business/maintains liquidity (1) Debentures
Shareholders are the owners of the Debenture holders make a non-current loan of
business(1) capital to the business/ are creditors (1)
Receive dividend (1) Receive interest/interest is fixed (1)
Dividend is not guaranteed/dividend is variable (not Interest on the loan must be paid (1)
fixed) (1)
Dividend is an appropriation of profit (1) Interest recorded in income statement as an
expense (1)
In liquidation paid after debentures (1) In liquidation paid before ordinary shares (1)
have voting rights (1) Do not have voting rights (1)
Can attend AGM (1) Cannot attend AGM (1) Max [4]
[20]
Q4
(a) (i) Revenue
60000 X 120 = 360000 (1)
20
(1)

(ii) Profit
Profitfor
forthe
theyear
year (2)

Profit = 60 000 – (25 000 + 8 000)(1) = 27 000 (1) (2)

(iii) Working capital

Working capital = (60 000 + 15 000) (1) – (32 000 + 25 000) = 18 000 (1) (2)

(b) Calculate the following ratios correct to two decimal places.

(6)
4(c) The quick ratio compares the assets which are in the form of money, or which will convert
into money quickly, with the liabilities which are due for repayment in the near future. (1)
It excludes inventory as this is not regarded as a liquid asset as this is two stages away
from being money. (1) (2)

4(d) At 0.26:1 Juan’s liquidity is low (1) OF and not really sufficient against a benchmark of 1:1. (1)
He has an existing overdraft therefore no funds available to pay this. (1)
(3)
4(e) Introduce more personal capital in cash
Obtain a bank loan
Reduce drawings
Reduce expenses
Sell non-current assets for cash
Accept other valid points
(1) × 3 points (3)
Income Statement and Appropriation Account for the year ended 30 April 2019
$$
Revenue 627,800 (1)
Returns inwards (15,750) (1)
612,050
Less Cost of sale
Inventory at 1 May 2018 52,600
Add Purchases 295,000
347,600
return outward (4,850)
342,750
Inventory at 30 April 2018 (57,900)
Cost of sales (284,850) (1)of
Gross profit 327,200 (1)of

Less Expenses
Wages and salaries 153,000
Less salary error (13,000) 140,000 (1)
Administration expenses 16,800
Less prepaid (250) 16,550 (1)
General expenses 27,500
Marketing expenses 41,000
Add due 1,100 42,100 (1)
Bank loan interest 6,000 (1)
Heat and light 5,300
Bad debt 4,000 (1)
Increase in provision for doubtful debts 1,400 (1)
Provisions for depreciation –
Buildings 2,000 (1)
Equipment 12,000 (1)
Office fixtures 6,000 (1)
(262,850)
Profit for the year 64,350
Interest on drawings: Himesh 1,500 (1)
Ram 900 2,400 (1)
66,750
Interest on capital: Himesh 2,000 (1) for both
Ram 2,000 4,000 interest

Himesh 8,000 (1) for both

Partner’s salary: Ram 5,000 salary
17,000
49,750

Share of profit: Himesh 29,850 (1)of

Ram 19,900 (1)of
49,750
(19)
 Himesh Ram Himesh Ram
Date Details $ $ Date Details $ $
2019 2019
Balance b/d Balance b/d 4,300 2,900
Interest on
Drawings 15000 9000 (1) capital 2,000 2,000
Salary paid 8,000 5,000 (1) Salary 8,000 5,000
Int’t on draw’g 1,500 900 (1) Profit share 29,850 19,900 (1)OF

Balance c/d 19,650 14,900

44150 29800 44150 29,800
Balance b/d 19,650 14,900 (1)OF
(5)
Statement of Financial Position at 30 April 2019
Non Current assets Cost Acc Depreciation NBV
Land and buildings 200,000 24,000 176,000 (1)
Computer equipment 60,000 32,000 28,000 (1)
Office fixtures (1) 30,000 13,000 17,000 (1)
290,000 69,000 221,000
Current assets
Inventory 57,900 (1)
Trade Receivables
(69 200 + 2 800 (1) – 4 000 (1)) 68,000 (1)
Less Provision for doubtful debts (3,400) (1)
64,600 (1)OF
Other receivables 250 122,750 (1)
343,750

Financed by
Capital: Himesh 50,000
Ram 50,000 100,000 (1)

Current accounts: Himesh 19,650

Ram 14,900 34,550 (1)of

Non-current liabilities
5% Bank loan repayable 2021 120,000 (1)

Less current liabilities

Trade Payables 62,500 (1)
Other payables (1 100 (1) + 2 000 (1)) 3,100
Bank overdraft 23,600 89,200 (1)
Total Capital and Liabilities 343,750
- (16)
total (40)