CXC CSEC General Proficiency Past Papers (Principles of Accounts)

CXC CSEC General Proficiency Past Papers (Principles of Accounts)

FORM TP 20I7025                                                                                                                                                                                                                           TEST CODE 01239020

                                                                                                                                                                                                                                                                       JANUARY 2017

CARIBBEAN EXAMINATIONS COUNCIL

CARIBBEAN SECONDARY EDUCATION CERTIFICATE

 EXAMINATION

   PRINCIPLES OF ACCOUNTS

   Paper 02 – General Proficiency

    3 hours.

READ THE FOLLOWING INSTRUCTIONS CAREFULLY

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

2) Write your answers in the spaces provided in this answer booklet.

3) Do NOT write in the margins.

4) Show ALL working clearly.

5) You may use a silent, non-programmable calculator to answer questions.

6) You are advised to take some time to read through the paper and plan your answers

7) lf you need to rewrite any answer and there is not enough space to do so on the original page, you must use the extra lined page(s) provided at the back of this booklet. Remember to draw a line through your original answer.

8) If you use the extra page(s) you MUST write the question number clearly in the box provided at the top of the extra page(s) and, where relevant, include the question part beside the answer.

SECTION 1

Answer the THREE questions in this section.

Write your answers in the spaces provided in this booklet.

1) On 1 March 2015, Chris and Vern decided to form a partnership to make and deliver fresh salads to offices and households. Chris contributed $80 000 cash and a motor vehicle which was valued at $20 000. Vern contributed $45 000 in cash and $25 000 in equipment.

(a) Prepare the journal entry to show the formation of the partnership of Chris and Vern.

(7 marks)

In their first year of operation, Chris and Vern made a net profit of $40 100. The partnership agreement showed that Chris and Vern planned to take salaries of $12 000 each, pay interest on capital at a rate of l0%o and charge for drawings at a rate of 5%o. During the year, Chris withdrew $24 000 in cash. The remainder of profits or losses was to be shared in the ratio 2: I between Chris and Vern, respectively.

  1. b) Prepare the Profit and Loss Appropriation Account for the end of the first year for Chris and Vern.

(9 marks)

  1. c) Prepare the columnar Current Account of Chris and Vern as at 28 February 2016

Total 20 marks

NOTHING HAS BEEN OMITTED.

2) Mhalal and Jack operate a business trading in bicycle tyres. They disagree on the inventory valuation that should be used. Mhalal only knows the FIFO method and he insists that FIFO should be used to determine the value of the ending inventory for the three months ended 3l March 2016.

  1. a) Jack prefers the LIFO method of inventory Explain to Mhalal, in ONE sentence, how LIFO differs from the FIFO method.

(1 mark)

The following information is presented to you by Mhalal and Jack.

  1. b) Complete the inventory form provided on pages 9 and 10, using the FIFO method, and in the space below state the value of inventory as at 3l March 2016.

(11 marks)

  1. c) Using the information from the inventory form, prepare the Trading Account for Mhalal and Jack for the three months ended 3l March 2016.
  1. d) Describe, in ONE sentence, the effect on cost of goods sold and gross profit if Mhalal and Jack had used the LIFO method which gives a lower valuation for closing

Total 20 marks

  1. Stress Ease Enterprises provides a service called “Client Rescue” to its clients by collecting them from locations where their vehicles are stalled and delivering them to their destinations. The firm owns two vehicles worth $210 000 in total.

The following information is provided for Stress Ease for the year ended 3l March 2016.

(i) Forty-three hundred (4 300) clients pay a retainer fee of $ I 00 per year.

(ii) There is a charge of $35 per kilo meter for “Client Rescue”.

Stress Ease Enterprises incurred the following costs during the same year.

Driver’s salaries                         $160 600

Fuel                                           $198 s00

Vehicle usage costs                  $27 430

Depreciation on vehicles            30o1o straight line method

(a) Prepare Stress Ease Enterprises‘ Income Statement for the year ended 31 March 2016

(9 marks)

(b) For the month ended 30 April 2016, Stress Ease Enterprises recorded the following cash and bank transactions.

2016

April

              $
1 Balance at Bank

Cash

3 570

1140

3 Insurance payment made by cheque 2 500
5 Client Rescue fees received in cash of which

$25 000 was sent immediately to the bank

25 690
6 Petty cashier withdraws cash from cash in hand 130
7 Purchases of spare parts paid by cheque 10 470
8 Engine repair paid by cheque 5 000
9 Owner withdrew cash from bank for house rent 8 000
10 Client Rescue fees received in cash 3l ll0
11 Deposited cash in bank 30 000
15 Payment to Creditor – J. Davis by cheque after discount

of l0%

9 900
18 Client Rescue fees paid for by credit card – clients were

refunded $200 in cash

19 200
23 Cleaning materials paid in cash 370
25 Client Rescue fees deposited immediately in bank account 6 840
30 Wages paid by cheque l4 500

Using the form provided on pages 15 and 16, prepare the Cash Book of Stress Ease Enterprises for the month ended 30 April 2016.

(11 marks)

Total20 marks

Date Details Dis

ALL

$

Cash

$

Bank

$

Date Details Dis

Rec

$

Cash

$

Bank

$

 

Date Details Dis

ALL

$

Cash

$

Bank

$

Date Details Dis

Rec

$

Cash

$

Bank

$

 

SECTION II

Answer any TWO questions in this section.

Write your answers in the spaces provided in this booklet.

  1. Warwreck Car Wrecking Company has been in operation for three years using two wrecking

trucks. On 3l August 2016 the end of the third accounting period, the new accountant noticed

that the company had recorded depreciation on its wrecking trucks in the following ways:

First year               Straight-line method

Second year          Reducing balance method on the net book value at the end of Year 1

Based on the above information:

  1. i) Name the TWO financial statements which were affected by the error described above.

(2 marks)

  1.      ii) Name the accounting principle that was NOT being followed by the company

   (1 mark)

To correct the error, the new accountant presents the following information.

  1. ii) Using all the information provided, calculate the balance which had been brought down in error in the Provision for Depreciation Account as at I September 2015.

 

Year Name of Method Depreciation Expense

(Formula and answer)

1
2
Balance b/d

(5 marks)

Warwreck’s owner has agreed that the reducing balance method should be used for the calculation of depreciation on the wrecking trucks.

  1. ii) Using the information on page l7 and the form below, calculate the amount that should appear in the Provision for Depreciation Account as at 3l August  2016.

Depreciation Expense on wrecking Trucks using Reducing Balance Method

Working Column Working Column Working Column
Depreciation Expense – Year 1 Depreciation Expense – Year 2 Depreciation Expense – Year 3

 

 

 

 

 

 

 

 

 

 

(7 marks)

At the end of the second year, the owner of warwreck Car wrecking Company had recorded a balance of $86 900 in his personal account in the general ledger.

 

iii) Prepare the journal entry to correct this balance in Warwreck’s owner’s personal account. (Be sure to label your journal correctly and include the relevant date and a narrative.)

 

DATE DETAILS Debit ($) Credit ($)
 

 

 

 

 

 

 

 

 

 

 

.

 

(5 marks)

Total 20 marks

  1. Authentic Sandals is the manufacturer of sturdy leather and fibre sandals which are popular with tourists. Each pair of sandals is packaged in a unique three-colour string bag, designed and made especially for Authentic Sandals. The following information was taken from the books for the period I June 2015 to 3l May 2016.

 

Leather ($) Fibre ($) Bags ($)
Opening stock l4 600 22300 2 500
Purchases 471 300 47 100 8 000
Closing stock 16 500 11 900 2300

Other costs were as follows:

Bag designer wages                      $5 per bag purchased

Sandals stitchers’ wages                $111 000

Accrued stitchers’ wages               $l11 500

Insurance on factory equipment     $4200

Factory equipment at cost             $34 000

Factory building at cost                 $160 000

Additional information includes the following:

(i) All factory assets are to be depreciated at the rate of 20%o per annum

(ii) Half of the insurance is a prepayment for next year.

(a)             (i) Using the worksheet set out below, prepare a statement to show the cost of raw materials consumed by Authentic Sandals for EACH raw material

Leather ($) Fibre ($)

(7 marks)

(ii) Prepare a statement to show the total direct expenses incurred for bags.

(3 marks)

  1. b) Beginning with the total cost of raw materials consumed, prepare the Manufacturing

Account for Authentic Sandals for the period ending 3l May 2016, showing a separate amount for

  • total direct labour cost
  • total indirect costs
  • total cost of

 

(10 marks)

Total 20 marks

  1. Miracle Charity Group

Miracle Charity Group is a non-trading organization which provides temporary shelter for persons who have lost their homes. On 1 September 2015, the 300 members of Miracle Charity Group owned the following assets and liabilities.

                                           $
Bank overdraft 13 400
Foodstuff inventory 16 375
Shelter furniture 48 555
Government grants owing to the group 23 595
Shelter building 120 000
l5 members with subscriptions ln arears 12 150
Wages owing 15 205
  • Prepare a Classified Balance Sheet of Miracle Charity Group as at I September 2015.

(5 marks)

During the year ended 3l August 2016,Miracle Charity Group recorded the following cash-based activities.

                                                    $
Purchased foodstuff 93 680
Received full subscriptions from 275 members 222 750
Received arrears from 10 members 8 100
Received government grants 83 595
Purchased new furniture 12 445
Added ten rooms to building 98 000
Paid wages 45 865
Paid for painting of old rooms 1 675
  1. b) Prepare a Receipts and Payments Account for Miracle Charity Group for the year ended 31 August 2016.

(6 marks)

At the end of the year, members requested a report on the financial position of the group. Additional information which will affect the report include the following:

(i) Foodstuff in the amount of $17 I l0 on hand as at 30 June.

(ii) Building and furniture owned at the end of the year are depreciated at20%o of original costs plus all capital expenditure costs per year.

  1. c) Prepare part of the report for the members of the Miracle Charity Group for the year ended 31 August 2016 to show the following amounts. (Show all working clearly)
  2. i) The amount of food stuff consumed for the year
  3. ii) The total depreciation expense to be subtracted
    iii) The amount of subscriptions paid per member
  4. iv) The amount of subscriptions outstanding from all members at year end

(9 marks)

Total 20 marks

  1. F and W Company Limited In December 2015, Fern and Willis, who had been thinking about starting a business together, asked you the following questions.
  2. i) List TWO advantages of creating a limited liability company rather than a partnership.

2 marks)

  1. ii) List TWO disadvantages of creating a limited liability company rather than a partnership.

(2 marks)

  1. i) To start up F and W Company Limited, from I January 2016, Fern and Willis paid out $20 000 in registration fees and legal fees and collected money for
  • 100 000 $1 ordinary shares
  • 75 000 $2 l2Yo preference shares
  • 10 000 $5 20Yo debentures.

Using the form below, prepare F and W’s Bank Account to show the balance of receipts and payments as at 1 January 2016.

Bank Account

Date Details  $ Date Details $

(5 marks)

  1. ii) By the end of the first year of operation, F and W Company Limited had $ 191 000 in profit before paying the amount owed to debenture holders. Fern and Willis agreed
  • to keep S100 000 of the profit for asset replacement activities and
  • pay in cash all monies owed in dividends to preference shareholders as well as 30 cents on every ordinary share.

Prepare the detailed Appropriation Account for F and W Company Limited for the year ended 31 December 2016. (Show all working clearly)

9 marks)

(iii) List FOUR items which will appear in the Capital section of F and W’s Statement of Financial Position as at 3l December 2016.

(2 marks)

Total 20 marks

END OF TEST

IF YOU FINISH BEFORE TIME IS CALLED, CHECK YOTIR WORK ON THIS TEST.

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