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簿记二册课后习题答案

Level 2 Book-keeping & Accounts Solutions Booklet For further

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Industry (LCCI) International Qualifications

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Passport to Success

Level 2 Book-keeping & Accounts Solutions Booklet

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? EDI 2008

First published in 2008.

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CONTENTS

1 Advanced Aspects of Depreciation 1

2 Adjusting for Accruals and Prepayments 5

3 Bade Debts and Provision for Doubtful Debts 9

4 Introduction to Partnership Accounts 12

5 Admission and Retirement of Partners 17

6 Dissolution of a Partnership 21

7 Formation of a Company – Meaning, Purpose and Effect 26

8 Limited Companies – The Profit and Loss Account 28

9 Limited Companies – The Balance Sheet 30

10 Control Accounts 39

11 Incomplete Records 42

12 Stock Valuation 49

13 Manufacturing Accounts 51

14 Non-Trading Organisations 55

15 Non Trading Organisations: Subscriptions Account and Balance Sheet 58

16 Errors and Use of a Suspense Account 63

17 Calculation and Interpretation of Ratios 67

18 Preparing Simple Financial Statements Using Ratios 71

Chapter 1

Advanced Aspects of Depreciation

Answers to ‘Think about it’ Questions

Page 2 – Specific causes of depreciation:

Wear and tear

Depletion (of natural resources)

Technical obsolescence

Inadequacy

Passage of time

Page 5 – Three types of assets and methods to match:

Hand tools – revaluation method

Motor vehicle – reducing balance method

Machinery – machine hours

Page 6 – Effects of the different methods of depreciation:

The reducing balance method had the highest depreciation charge resulting in the

lowest net book value at the end of the first year.

The straight-line method has the lowest depreciation charge resulting in the highest net book value at the end of the first year.

Solutions to Target Practice Questions

Question 1

(a) Depreciation is an accounting adjustment, which measures the fall in value of a fixed

asset.

(b) The charge for deprecation is posted to the debit side of the Depreciation Expense

Account and the credit side of the Provision for Depreciation Account.

Question 2

Machinery Cost

£ £ 01/01/X5 Bank 120 00031/12/X5 Balance c/d 120 000

120 000120 000

01/01/X6 Balance b/d 120 00031/12/X6 Balance c/d 120 000

120 000120 000

Provision for Depreciation of Machinery

£ £ 31/12/X5 Balance c/d 12 00031/12/X5 Depreciation Expense 12 000

12 00012 000

000

b/d 12

01/01/X6

Balance

31/12/X6 Balance c/d 24 00031/12/X6 Depreciation Expense 12 000

000

000 24

24

Motor Vehicles Cost

£ 01/01/X5

Bank 28 00031/12/X5 Balance c/d

28 000

28 000

28 00001/01/X6

Balance b/d 28 00031/12/X6 Balance c/d 28 000

28 000

28 000

Provision for Depreciation of Motor Vehicles

31/12/X5 Balance c/d

7 00031/12/X5 Depreciation Expense 7 000

7 000

7 000

01/01/X6 Balance b/d

7 00031/12/X6 Balance c/d

12 25031/12/X6 Depreciation Expense 5 250 12 250

12 250

Depreciation Expense

£ £ 31/12/X5 PFD Machinery 12 000 31/12/X5 PFD Motor vehicles 7 00031/12/X5Profit and Loss 19 000

19 000 19 00031/12/X6 PFD Machinery 12 000 31/12/X6 PFD Motor vehicles 5 25031/12/X6Profit and Loss 17 250

17 250 17 250 Workings

Machinery

Motor vehicles Purchase cost £ 120 000 £ 28 000Depreciation 31 December 20X5 £120 000 x 10% 12 000£28 000 x 25% 7 000 108 000 21 000Depreciation 31 December 20X6 £120 000 x 10% 12 000£21 000 x 25% 5 250 96 000 15 750

Question 3

Machines: A £ B £ C £ D

Cost 01/01/X7 35 00042 00022 50050 000 Depreciation charge: (£35 000 x 12%) x 10/12 3 500 £42 000 x 12% 5 040 (£22 500 x 12%) x 4/12 900 £50 000 x 12% 6 000 NBV 31 50036 96021 60044 000 Sales proceeds 28 60015 360 Profit/(Loss) (2 900)(6 249)

Machinery Cost

£ £

01/01/X7 Bank 149 50030/04/X7 Disposal Machine C 22 500

31/10/X7 Disposal Machine A 35 000

31/12/X7

Balance

c/d 92

000

149 500149 500

Provision for Depreciation of Machinery

£ £

30/04/X7 Disposals - C 90030/04/X7 Depreciation expense - C 900

31/10/X7 Disposals - A 3 50031/10/X7 Depreciation expense - A 3 500

31/12/X7 Depreciation expense - B 5 040

31/12/X7 Balance c/d 11 04031/12/X7 Depreciation expense - D 6 000

15

44015

440

Depreciation Expense

£ £

30/04/X7 Depreciation expense - C 900

31/10/X7 Depreciation expense - A 3 500

31/12/X7 Depreciation expense - B 5 040

31/12/X7 Depreciation expense - D 6 00031/12/X7Profit and Loss 15 440

15

44015

440

Asset Disposal

£ £

30/04/X7 Machine C Cost 22 50030/04/X7 PFD Machine C 900

31/10/X7 Machine A Cost 35 00030/04/X7 Bank 18 000

31/10/X7 Profit

on Disposal –

Machine A 1 30030/04/X7 Loss on Disposal

Machine C 3 600

31/10/X7 PFD Machine A 3 500

31/10/X7

Bank 32

800

58

80058

800 Question 4

Truck 1

£ Truck 2

Truck 3

Truck 4

Depreciation for year ended 31

March 20X7

6 250 3 750 6 750 10 000

Trucks Cost

£ £

01/04/X6 Balance b/d 131 00030/09/X6 Disposal Truck 2 30 000

31/12/X6 Disposal Truck 3 36 000

31/12/X6

Balance

c/d 65

000

131

000131

000

Provision for Depreciation of Trucks

£ £

b/d 33

750

Balance

01/04/X6

30/09/X6 Disposals – Truck 2 11 25030/09/X6 Depreciation - Truck 2 3 750

31/12/X6 Disposals – Truck 3 15 50031/12/X6 Depreciation – Truck 3 6 750

31/03/X7 Depreciation – Truck 1 6 250

31/03/X7 Balance c/d 33 75031/03/X7 Depreciation – Truck 4 10 000

500

50060

60

Depreciation Expense

£ £ 30/09/X6 Depreciation - Truck 2 3 750

31/12/X6 Depreciation – Truck 3 6 750

31/03/X7 Depreciation – Truck 1 6 250

31/03/X7 Depreciation – Truck 4 10 00031/03/X7 Profit and Loss 26 750

750

75026

26

Asset Disposal

£ £ 30/09/X6 Truck 2 Cost 30 00030/09/X6 PFD Truck 2 11 250

30/09/X6 Profit on disposal – Truck 2 8 75030/09/X6 Bank 27 500

31/12/X6 Truck 3 Cost 36 00031/12/X6 PFD Truck 3 15 500

31/12/X6 Profit on disposal – Truck 3 2 30031/12/X6 Bank 22 800

77 05077 050 Question 5

Asset Disposal

£ £ 01/07/X6 Machine 1 Cost 30 00001/07/X6 Machine 1 Provision for

Depreciation 10 500

01/10/X6 Machine 2 Cost 30 00001/07/X6 Cost of truck (trade-in) 18 000

01/07/X6 Loss on disposal 1 500 on Disposal –

31/10/X6 Profit

Machine 2 5 500

31/10/X6 Machine 2 Provision for

Depreciation 10 500

2

Cost

Machine

31/10/X6

(exchange) 25 000

500

65

50065

Chapter 2

Adjusting for Accruals and Prepayments

Answers to ‘Think about it’ Questions

Page 16 – Why is an expense prepayment an asset on the balance sheet?

As the expense is paid for before it is used, the supplier owes the business the amount until such time when the expense prepayment is used up. Since the expense supplier

owes the business, he is similar to a debtor, which is a current asset.

Page 17 – Why is an expense accrual a liability on the on the balance sheet?

As the expense as been used up but unpaid at the end of the period the business owes the supplier; the supplier is similar to a creditor, therefore a current liability on the balance sheet.

Solutions to Target Practice Questions

Question 1

(a) A prepayment for Heat and Light of £330.

£ £ Dr Prepayments 330

Cr Heat and Light 330

(b) Accrued Motor Expenses of £927.

£ £ Dr Motor expenses 927

Cr Accruals 927

(c) Sales of £2500 invoiced in advance.

£ £ Dr Sales 2 500

500 Cr Accruals and deferred income 2

(d) Rent receivable but not yet collected of £700.

£ £ Dr Prepayments and accrued income 700

Cr Rent receivable 700

Question 2

(a) Telephone accrual: 1/3 x £900 = £300

(b) Insurance prepayment: 7/12 x £420 = £245

(c) Electricity accrual: 2/3 x £840 = £560

(d) Rent prepayment: 1/2 x £8000 = £4000

Question 3

Telephone

£ £

30/06/X1 Accrual 30030/06/X1 Profit and Loss Account 300

300300

Motor Insurance

£ £ 01/02/X1 Bank 42030/06/X1 Prepayment 245

30/06/X1 Profit and Loss Account 175

420420

Electricity

£ £

30/06/X1 Accrual 56030/06/X1 Profit and Loss Account 560

560560

Rent

£ £

01/04/X1 Bank 8 00030/06/X1 Prepayment 4

000

30/06/X1 Profit and Loss Account 4 000

0008

000

8

Accruals

£ £

30/06/X1

Telephone 300

c/d 86030/06/X1 Electricity 560

30/06/X1 Balance

860860

Prepayments

£ £ insurance 245

30/06/X7 Motor

30/06/X7 Rent 4 00030/06/X7 Balance c/d 4 245

245

4

245 4

Question 4

Rent, Rates, Electricity and Gas

£ £

01/10/X6 Balance b/d - Rent 78001/10/X6 Balance b/d - Electricity 275

01/10/X6 Balance b/d - Rates 1 50001/10/X6 Balance b/d - Gas 130

01/04/X7 Bank - Rates 1 700

30/09/X7 Bank - Rent (12 x £800) 9 600

30/09/X7 Bank - Electricity 3 00030/09/X7 Profit and Loss Account 16 778

30/09/X7 Bank - Gas 1 900

30/09/X7 Balance c/d - Electricity 24530/09/X7 Balance c/d – Rent 800

30/09/X7 Balance c/d - Rent 10830/09/X7 Balance c/d – Rates 850

18 83318 833

01/10/X7 Balance b/d – Rent 80001/10/X7 Balance b/d - Electricity 245

01/10/X7 Balance b/d – Rates 85001/10/X7 Balance b/d - Rent 108

Workings:

Rent prepayment: 1 x £800 = £800

Rates prepayment: 6/12 x £1700 = £850

Electricity accrual: £245

Gas accrual: 1/3 x £324 = £108

Question 5

Birch

Trading, Profit and Loss Account for the year ended

31 December 20X3

£ £

750 Sales 113

Cost of Sales

Opening stock 4 025

Purchases (£50 925 + £665) 51 590

615

55

Less: Closing stock 3 765

850

51

Gross profit 61 900

Less: Expenses

500

Wages 23

Rent, rates and insurance (£6125 + £350 - £1312) 5 163

Heat and light (£5525 – £210) 5 315

Motor expenses (£3489 + £300 - £442) 3 347

Telephone and stationery (£1672 + £136 - £95) 1 713

Depreciation 3

938

976

42

Net profit 18 924

Birch

Balance Sheet at 31 December 20X3

Fixed assets

Motor vehicles: cost 15 750

Less Accumulated depreciation 5 907

843 9 Current assets

765

Stock 3

553

Debtors 3

Prepayments (£442 + £1312 + £210 + £95) 2 059

Bank 195

572

9

Current liabilities

290

Creditors 3

Accruals (£300 + £350 + £665 + £136) 1 451

4

741

Net Current Assets 4 831

674 14 Capital account

Balance b/d 13 250

Add: Net profit 18 924

174 32 Less: Drawings 17 500

674 14

Chapter 3

Bad Debts and Provision for Doubtful Debts

Answers to ‘Think about it’ Questions

Page 28 – Why would a business decide to increase or decrease its provision for

doubtful debts?

If the business financial records over a period of time show a trend in an increasing number of bad debts, or if the economy is not doing well, then it is likely that the business would increase the provision to ensure that profits and current assets are not overstated.

If trends shows that the level of bad debts is decreasing then the business may decrease the provision.

Solutions to Target Practice Questions

Question 1

Dr Provision for Doubtful Debts

Cr Profit and Loss Account

Question 2

An increase in the provision for doubtful debts will decrease the net profit for the year and a decrease in the provision for doubtful debts will increase the net profit for the year.

Question 3

Bad debt provision: (£55 400 - £2650) x 4% = 2110

Balance Sheet Extract at 31 December 20X4

Current Assets

Debtors (£55 400 - £2650) 52 750

Less: Provision for Doubtful Debts 2 110

50 640

Question 4

September: 20X5 20X6 20X7

30

Year

ended

£ £ £

Debtors 34 15039 27544 498

Bad debts written off (500)(1 800)(1 926)

Revised debtors 33 65037 47542 572

Less: specific provision (850)(1 475)(1 772)

Balance of debtors 32 80036 00040 800

1% 2% 3%

General provision 328720 1 224

Add: specific provision 850 1 475 1 772

Total provision

Increase in provision

Question 5

Bad Debts

£ £

30/09/X5 Bad debts written off 500

1 17830/09/X5 Profit and Loss Account 1 678

30/09/X5 Increase in provision for bad

debts

678

1

678 1

30/09/X6 Bad debts written off 1 800

1 01730/09/X6 Profit and Loss Account

2 817

30/09/X6 Increase in provision for bad

debts

2

817

817 2

30/09/X7 Bad debts written off 1 926

80130/09/X7 Profit and Loss Account 2 727

30/09/X7 Increase in provision for bad

debts

2

727

727 2

Bad Debts Recovered

£ £ 30/09/X6 Profit and Loss Account 24530/09/X6 Bank 245

245245

30/06/X7 Profit and Loss Account 42330/09/X7 Bank 423

423423

Provision for Doubtful Debts

£ £

30/09/X5 Balance c/d 1 17830/09/X5 Bad debts 1 178

178

178 1

1

178

Balance

b/d 1

01/10/X5

30/09/X6 Balance c/d 2 19530/09/X6 Bad debts 1 017

195

195 2

2

195

b/d 2

01/10/X6

Balance

c/d 2 99630/09/X7 Bad debts 801

30/09/X7 Balance

996

2

996 2

Alice Jones - Profit and Loss Account for the year ended 30 September 20X7

Profit xxx

Gross

Add: Bad debts recovered 423

Expenses£

Increase in provision for doubtful debts 801

Bad debts 1 926

Alice Jones – Balance Sheet at 30 September 20X7

Current Assets

Debtors 42 572

Less: Provision for Doubtful Debts 2 996

576

39

Chapter 4

Introduction to Partnership Accounts

Answers to ‘Think about it’ Questions

Page 33 – What are some of the benefits of a partnership in comparison to a

s ole trader?

More capital available to invest in the business; greater opportunity to expand the

business

Sharing of work load

Access to a wider range of skills and knowledge which contributes to the success of the business

Each partner won’t have bear the loss on their own; losses are shared among partners Page 38 – What do these partner balances on their current account tells you?

Both George and Fred have credit balances on their current accounts; this means that the business owes them money. If the balances were debit then this would

mean that the partners’ owe the business/partnership.

Solutions to Target Practice questions

Question 1

Term Definition

Partnership A partnership is formed when two or more people set up in

business together.

Partnership agreement A written document that sets out the terms of trade with each

partner.

Capital Account Capital is the amount invested by a partner in the business

and this is held in the capital account.

Current Account This is the account that records the balance owed to or from

the partnership by the partners. The balance on this account

will fluctuate as profits are earned and drawings are taken.

Interest on capital This is an annual amount awarded to the partners based on

a percentage of the capital they have invested. It represents

a return on their investment.

Drawings These are the amounts withdrawn from the partnership by

the partners.

Interest on drawings This is interest charged at an agreed percentage to take

account of the timing of drawings and to discourage partners

from drawing from the business.

Salary This is a specified amount due to a partner before the profits

are shared.

Profit share ratio The share or split of the remaining profits or losses between

the partners. This could be expressed as a percentage or as

a ratio e.g. 2:1

Question 2

Debit Credit Share of profit Appropriation Account Partners’ Current

Account

Share of loss Partners’ Current

account

Appropriation Account

Salary Appropriation Account Partners’ Current

Account

Interest on capital Appropriation Account Partners’ Current

Account

Interest on drawings Partners’ Current

Account

Appropriation Account

Interest on loan from partner Profit and Loss Account Partners’ Current

Account or Bank

account

Question 3

Using the accounting equation (Assets = Capital + Liabilities), the capital introduced by each

partner can be calculated:

Exe £ Why

Zed

Total

Plant and equipment 28 000 37 500 15 000 80 500 Motor vehicles 18 700 10 900 29 600 Stock 2 500 1 750 3 250 7 500 Debtors 8 208 6 023 1 615 15 846 Bank 1 115 864 1 234 3 213 Creditors (5 850)(3 600)(885) (10 335)

52 673 42 537 31 114 126 324

Exe, Why and Zed

Balance Sheet at 1 July 20X6

£ £

Fixed assets

Plant and equipment 80 500

Motor vehicles 29 600

100 110 Current assets

500

Stock 7

846

Debtors 15

213

Bank 3

559

26

Current liabilities

Creditors (10

335)

Net Current Assets 16 224

324 126 Represented by:

Capital Accounts Exe 52 673

537

Why 42

114

Zed 31

324 126

Note:

As the assets and liabilities contributed by each partner now become the partnership assets and

liabilities, they are shown as a total figure on the partnership balance sheet.

Question 4

The profit needs to be adjusted to account for the loan interest of

5% x £20 000 = £1000.

The revised profit for appropriation is £39 661 - £1000 = £38 661.

Jake and Misty

Appropriation Account

for the year ended 31 December 20X2

£ £

Revised profit 38 661

Add: Interest on drawings Jake (£16 620 x 5%) 831

Misty (£23 760 x 5%) 1 188

019

2

680

40

Less: Interest on capital Jake (£26 000 x 8%) 2 080

George (£19 500 x 8%) 1 560

640)

(3

Less: Salary Misty (7 800)

240

29

Profit share Jake (75%) 21 930

Misty (25%) 7 310

240

29

Partners’ Current Accounts

Jake £ Misty £ Jake £ Misty

01/01/X2 Balance b/d - 4 42001/01/X2 Balance b/d 2 340-

31/12/X2 Interest on drawings 831 1 18831/12/X2 Interest on capital 2 080 1 560

31/12/X2 Drawings 16 62023 76031/12/X2 Salary - 7 800

31/12/X2 Profit share 21 9307 310

31/12/X2 Balance c/d 8 899- 31/12/X2 Balance c/d - 12 698

26 35029 368 26 35029 368

Question 5

Tiger and Snake

Trading, Profit and Loss Account for the year ended

31 December 20X8

£ £

Sales 120 000

Cost of Sales

Opening stock 2 750 Purchases 45 000

47 750

Less: Closing stock 3 000

44 750

Gross profit

75 250

Less: Expenses

Wages (£24 000 + £800) 24 800

Insurance (£2800 - £400) 2 400

Depreciation: equipment (£40 000 x 10%) 4 000

Depreciation: motor vehicles ((£18 500 - £3700) x 25%) 3 700

Bad debts ((£33 400 x 5%) - £1002) 668

35 568

Net profit

39 682

Tiger and Snake

Appropriation Account for the year ended 31 December 20X8 £ £

Net profit 39 682

Add: Interest on drawings Tiger (£2000 x 5%) 100

Snake (£4000 x 5%) 200

300

39 982

Less: Interest on capital Tiger (£40 000 x 7%) 2 800

Snake (£20 000 x 7%) 1 400

(4 200)

Less: Salary Snake (4 000)

31 782

Profit share Tiger (2/3) 21 188

Snake (1/3) 10 594

31 782

Partners’ Current Accounts

Tiger £ Snake

Tiger

Snake

31/12/X8 Interest on drawings 10020001/01/X8 Balance b/d 11 3009 088

31/12/X8 Drawings 2 000 4 00031/12/X8 Interest on capital 2 800 1 400

31/12/X8

Salary - 4

000

31/12/X8 Balance c/d 33 18820 88231/12/X8 Profit share 21 18810 594

35 28825 08235 28825 082

Tiger and Snake

Balance Sheet at 31 December 20X8

£ £

Fixed assets

Buildings at cost 65 000

Plant and equipment (NBV) (£40 000 - £4000 - £4000) 32 000

Motor vehicles (NBV) (£18 500 - £3700 - £3700) 11 100

108

100 Current assets

Stock 3

000

Debtors (£33 400 - £1670) 31 730

Prepayments 400

35

130

Current liabilities

Bank overdraft 6 400

Creditors 21

960

Accruals 800

29

160

Net Current Assets 5 970

114

070 Represented by:

Capital Accounts Tiger 40 000

Snake 20

000

60

000

Current Accounts Tiger 33 188

Snake 20

882

54

070

114

070

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