ACCA F3 (INT) Financial Accounting - 2010 - Study text - Emile Woolf Publishing
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Accounts in the main ledger
Purchases
$ $
Tradepayables 18,000
Tradepayables
$ $
Bank 5,400 Purchases 18,000
Discountsreceived 100
Purchasereturns 2,000
Balancec/f 10,500
18,000 18,000
Balanceb/f 10,500
Purchasereturns
$ $
Tradepayables 2,000
Bank
$ $
Tradepayables 5,400
Discountsreceived
$ $
Tradepayables 100
Exercise 2
Sales
$ $
Receivables 90,000
Purchases
$ $
Payables 40,000
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Salestax
$ $
Payables 4,000 Receivables 9,000
Balancec/f 5,000
9,000 9,000
Balanceb/f 4,000
Receivables
$ $
Sales/salestax 99,000
Payables
$ $
Purchases/salestax 44,000
Exercise 3
Workings
Sales including sales tax = $179,400
Sales tax in sales = $179,400 × (15/115) = $23,400
Sales excluding sales tax = $179,400 × (100/115) = $156,000.
Purchases including sales tax = $95,450
Sales tax in purchases = $95,450 × (15/115) = $12,450
Purchases excluding sales tax = $95,450 × (100/115) = $83,000.
Sales tax on sundry expenses = 15% × $2,000 = $300.
Salesaccount
$ $
Receivables 156,000
Purchasesaccount
$ $
Payables 83,000
Salestaxaccount
$ $
Payables 12,450 Receivables 23,400
Sundryexpenses 300
Balancec/f
(balancingfigure)
10,650
23,400 23,400
Balanceb/f 10,650
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Receivablesaccount
$ $
Sales/salestax 179,400
Payablesaccount
$ $
Purchases/salestax 95,450
Balancec/f 97,750 Sundryexpenses/salestax 2,300
97,750 97,750
Balanceb/f 97,750
Sundryexpensesaccount
$ $
Payables 2,000
Multiple choice questions
1 A
Receivablesaccount
$ $
Balanceb/f 74,500 Bank 96,200
Sales(creditsalesonly) 94,600 Salesreturns 2,400
Discountsallowed 1,800
Balancec/f(balancingfigure) 68,700
169,100 169,100
2 C
3 C
4 A
The withdrawal of cash from the bank reduces the bank account balance (so credit
bank) and increases the petty cash by restoring it to $100, so debit Petty cash with
$70.
5 D
Tradepayables
$ $
Bank(cashpaid) 328,000 Openingbalanceb/f 54,000
Discountsreceived 2,000 Purchases(balancingfigure) 356,000
Contra:Receivables 3,000
Closingbalancec/f 77,000
410,000 410,000
Openingbalanceb/f 77,000
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6 D
Receivables
$ $
Openingbalanceb/f 104,000 Bank(cashreceived) 735,000
Discountsallowed 12,000
Contra:Tradepayables 3,000
Creditsales(balancingfigure) 792,000 Closingbalancec/f 146,000
896,000 896,000
Openingbalanceb/f 146,000
7 C
The amount shown in the invoice should exclude the settlement discount, which is
not accounted for unless the discount is taken. The tax payable is affected by the
discount, however.
$
Listprice 400,000
Less:tradediscount10% (40,000)
–
–––––––
Netprice 360,000
Salestax(seebelow) 51,300
–
–––––––
Totalamountpayable 411,300
–
–––––––
This is the amount due from the supplier for the goods, and this is recorded in the
receivables ledger in the account for Bull.
If the discount is taken, the amount payable is calculated as follows:
$
Netprice 360,000
Less:settlementdiscount(5%×360,000) (18,000)
–
–––––––
342,000
–
–––––––
Salestax(15%×342,000) 51,300
–
–––––––
Chapter 5: Inventory
Exercise 1
Prepp
Incomestatementfortheyearto30JuneYear3
$000 $000
Sales30,000
Openinginventory 2,000
Purchases 14,000
16,000
Less:Closinginventory (1,500)
Costofsales14,500
Grossprofit15,500
Salaries 10,500
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Lightingandheating 500
Rent 2,000
Officeexpenses 1,000
14,000
Netprofit1,500
Prepp
Statementoffinancialpositionasat30JuneYear3
$000 $000
Non‐currentassets
Property,plantand
machinery
17,500
Currentassets
Inventory 1,500
Tradereceivables 10,000
Cash 1,000
12,500
Totalassets30,000
Equityandliabilities
Capitalat1JulyYear227,500
Netprofitfortheyear1,500
29,000
Less:Drawings(3,000)
Capitalat30JuneYear326,000
Currentliabilities
Tradepayables4,000
Totalequityandliabilities30,000
Multiple choice questions
1 B
$
Openinginventory 42,700
Purchases 279,600
322,300
LessPurchasereturns (3,400)
318,900
Less:Closinginventory (48,300)
Costofsales 270,600
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2 D
$
Openinginventory 35,400
Purchases 225,500
260,900
LessDrawingsatcost (8,000)
252,900
Less:Closinginventory (28,700)
Costofsales 224,200
3 B
4 B
Statement 3 refers to the retail method of valuation.
5 D
Using the FIFO method, closing inventory (750 units) consists of 50 units of the
opening inventory plus the units purchased in February and July.
$
50unitsat$120 6,000
300unitsat$130 39,000
400unitsat$140 56,000
Closinginventory 101,000
6 A
Units Totalcost Costperunit
$ $
Openinginventory 200 16,000 80
20Maypurchase 400 33,200 83
600 49,200 82 (=49,200/600)
8Julysale (300) (24,600) 82
300 24,600 82
17Janpurchase 200 17,400 87
500 42,000 84 (=42,000/500)
3Marchsale (200) (16,800) 84
31March(closing) 300 25,200 84
Chapter 6: Non-current assets
Exercise 1
Equipmentaccount
Year1
$ $
Bank 40,000 Closing balancec/f 40,000
Year2
Openingbalanceb/f 40,000 Closingbalancec/f 40,000
Year3
Openingbalanceb/f 40,000
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Accumulateddepreciationofequipmentaccount
$
Year1
$
Closingbalancec/f 8,000 Depreciationaccount 8,000
Year2
Openingbalanceb/f 8,000
Closingbalancec/f 16,000 Depreciationaccount 8,000
16,000 16,000
Year3
Openingbalanceb/f 16,000
Depreciation(expense)account
Year1
$ $
Accumulateddepreciationa/c 8,000 Incomestatement 8,000
Year2
Accumulateddepreciationa/c 8,000 Incomestatement 8,000
The net book value is $32,000 at the end of Year 1 and $24,000 (= $40,000 – $16,000)
at the end of Year 2.
Exercise 2
(a) Annual depreciation = $(126,000 – 24,000)/6 years = $17,000.
After4years:
$
Assetatcost 126,000
Lessaccumulateddepreciation:($17,000×4) 68,000
Netbookvalue 58,000
(b) Initially, the annual depreciation was $(90,000 – 10,000)/10 years = $8,000.
After2years:
$
Assetatcost 90,000
Lessaccumulateddepreciation:($8,000×2) 16,000
Netbookvalue 74,000
Revised annual depreciation from Year 3 onwards = $(74,000 – 8,000)/4 years
= $16,500.
Atendofyear3:
$
Assetatcost 90,000
Lessaccumulateddepreciation:($8,000×2)+$16,500 32,500
Netbookvalue 57,500
(c) Annual depreciation = $(60,000 – 0)/5 years = $12,000.
Depreciation charge in the year of acquisition
= $12,000 × (8 months/12 months) = $8,000.
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(d)
$
Costoftheasset 64,000
Year1depreciation(×25%) (16,000)
NetbookvalueatendofYear1 48,000
Year2depreciation(×25%) (12,000)
NetbookvalueatendofYear2 36,000
Year3depreciation(×25%) (9,000)
NetbookvalueatendofYear3 27,000
(e) Annual depreciation = $(3,000,000 – 0)/50 years = $60,000.
Exercise 3
Annual depreciation = $(96,000 – 16,000)/5 years = $16,000.
$ $
Disposalvaluelessdisposalcosts68,000
Costoftheasset 96,000
Accumulateddepreciationatthetimeofdisposal
(=2years×$16,000) 32,000
Netbookvalueatthedateofdisposal64,000
Gainondisposal4,000
Exercise 4
Annual depreciation = $(216,000 – 24,000)/8 years = $24,000.
$ $
Disposalvalue 163,000
Lessdisposalcosts(1,000)
162,000
Accumulateddepreciationatthetimeofdisposal
Yearto31DecemberYear1:($24,000×7/12) 14,000
Years2and3:($24,000×2years) 48,000
Yearto31DecemberYear4:($24,000×8/12) 16,000
78,000
Costoftheasset 216,000
Netbookvalueatthedateofdisposal138,000
Gainondisposal24,000
Exercise 5
Working:accumulateddepreciation
$ $
Costoftheasset 80,000
Year1depreciation(×25%) (20,000) 20,000
NetbookvalueatendofYear1 60,000
Year2depreciation(×25%) (15,000) 15,000
Accumulateddepreciationatdateofdisposal35,000
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Disposalofassetaccount
$ $
Bank(disposalcosts) 200 Accumulateddepreciation 35,000
Motorvehiclesaccount 80,000 Receivables 41,000
Incomestatement(balancing
figure=lossondisposal)
4,200
80,200 80,200
Motorvehicles
$ $
Openingbalanceb/f 720,000 Disposalofassetaccount 80,000
Closingbalancec/f
(=balancingfigure)
640,000
720,000 720,000
Openingbalanceb/f 640,000
Motorvehiclesaccumulateddepreciationaccount
$ $
Disposalofassetaccount 35,000 Openingbalanceb/f 250,000
Closingbalancec/f
(=balancingfigure)
215,000
250,000 250,000
Openingbalanceb/f 215,000
Bank
$ $
Disposalofassetaccount 41,000 Disposalofassetaccount 200
Incomestatement
$ $
Disposalofassetaccount
(lossondisposal)
4,200
Exercise 6
A company has several motor cars that are accounted for as non-current assets. As
at 1 January Year 2, the cost of the cars was $120,000 and the accumulated
depreciation was $64,000.
During January the company bought a new car costing $31,000 and was given a
part-exchange allowance against an old car that was sold of $8,000. This car being
sold originally cost $28,000 and its accumulated depreciation is $18,000.
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(a) $ $
Saleproceedsondisposal(part‐exchangevalue)8,000
Assetatcost 28,000
Less:Accumulateddepreciation (18,000)
Netbookvalueatdateofdisposal (10,000)
Lossondisposal(2,000)
(b)
Disposalofassetaccount
$
$
Motorvehiclesaccount 28,000 Accumulateddepreciation
account
18,000
Motorvehiclesaccount
(Trade‐invalue) 8,000
Lossondisposal
(incomestatement)
2,000
28,000 28,000
Motorvehiclesaccount
1January
$
$
Openingbalance 120,000 Disposalaccount 28,000
Bank(31,000–8,000) 23,000
Disposalofassetaccount 8,000 Closingbalance 123,000
151,000 151,000
Openingbalance 151,000
Accumulateddepreciationaccount
1January
$
$
Disposalaccount 18,000 Openingbalance 64,000
Closingbalance 46,000
64,000 64,000
Openingbalance 46,000
Bankaccount
$
$
Motorvehiclesaccount 23,000
(Cashpaidfornewcar)