CIMA CO2 Official Learning System - Fundamentals of Financial Accounting
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PREPARING FOR THE COMPUTER-BASED ASSESSMENTS (CBAs)
REVISION QUESTIONS C2
610
Statement of fi nancial position as at 30 June
Assets 20X5 ($’000) 20X6 ($’000)
Non-current assets at cost 3,000 3,500
Less : Accumulated depreciation (2,100) (2,300)
Carrying amount 900 1,200
Current assets
Inventories 825 1,175
Receivables 5,200 5,065
Bank and cash 2,350 2,160
8,375 8,400
9,275 9,600
Equity and liabilities
Ordinary shares of $1 each 2,800 3,200
Share premium – 400
Retained earnings 1,400 1,570
4,200 5,170
Current liabilities
Payables 5,000 4,350
Dividends 75 80
5,075 4,430
9,275 9,600
During the year ended 30 June 20X6, non-current assets that had cost $230,000 were sold
for $145,000. The loss on this disposal had been included in the trading expenses in the
income statement.
Requirements
(a) Insert the missing items below in order to calculate the loss on disposal of non-current
assets.
$’000
Accumulated depreciation at 30 June 20X5/20X6*
Add/less *: charge for the year 255
Accumulated depreciation at 30 June 20X5/20X6*
Accumulated depreciation relating to disposal
Proceeds 145
Carrying amount
Loss on disposal
(3 marks)
PREPARING FOR THE COMPUTER-BASED ASSESSMENTS (CBAs)
611
FUNDAMENTALS OF FINANCIAL ACCOUNTING
(b) Insert the missing items below to calculate the cash fl ow generated from operations
during the year ended 30 June 20X6.
$’000
Operating profi t
Add/less *: depreciation for year 255
Add/less *: increase in inventories
Add/less *: decrease in receivables
Add/less *: decrease in payables
*Delete as appropriate.
(4 marks)
(c) Insert the missing items below to produce the cash-fl ow statement for the year ended
30 June 20X6.
Note : show fi gures to be deducted in brackets.
Statement of cash fl ows of SH Ltd for year ended 30 June 20X6
$’000 $’000
Cash fl ows from operating activities
Cash fl ow from investing activities
Cash fl ows from fi nancing activities
Net increase/decrease in cash
Cash at beginning of period
Cash at end of period
(5 marks)
PREPARING FOR THE COMPUTER-BASED ASSESSMENTS (CBAs)
REVISION QUESTIONS C2
612
(d) Calculate the current ratio and the liquid (or quick) ratio for each of the 2 years
Current ratio
Formula
:
20X4
:
20X6
:
Liquid (or quick) ratio
Formula
:
20X5
:
20X6
:
(4 marks)
(Total marks 16)
Question 22
From the following information, prepare a statement reconciling the present bank balance
as shown in the cash book with that shown on the bank statement at 16 November 20X6:
Cash book
Date $ Date $
10 Nov. Balance b/fwd 5,327 11 Nov. Purchase ledger 1,406
12 Nov. Sales ledger 2,804 12 Nov. Employees ’ income tax 603
13 Nov. Cash sales 543 14 Nov. Sales tax 435
15 Nov. Sales ledger 1,480 16 Nov. Cheques cashed 1,342
Balance c/fwd 6,368
10,154 10,154
Bank statement
Date Debit ($) Credit ($) Balance ($)
10 Nov. Balance 6,049
11 Nov. Cheque 101204 420 5,629
12 Nov. Cheque 101206 1,406 4,223
13 Nov. Cheque 101205 302
Rent DD 844 3,077
14 Nov. Paid in – cheques 2,804
Paid in – cash 543 6,424
15 Nov. Credit transfer 685
Bank charges 130
Dishonoured cheque 425
Cheque 101207 603 5,951
16 Nov. Cheque 101209 1,342 4,609
PREPARING FOR THE COMPUTER-BASED ASSESSMENTS (CBAs)
613
FUNDAMENTALS OF FINANCIAL ACCOUNTING
Insert the missing items in the schedules below.
Updating the cash book for items found on the bank statement not entered in books
of MTR:
$ $
16/11/X6
7,053
Bank reconciliation statement as at 16 November 20X6
$
Balance as per updated cash book
(8 marks)
Question 23
TYR Ltd produced the following trial balance at 31 October 20X7:
Debit ($’000) Credit ($’000)
Share capital – $1 ordinary shares 1,000
Reserves 425
12% debentures, repayable 2010 250
Land at valuation 495
Premises at cost 350
Acc. depreciation to 1 November 20X6 20
Plant and machinery at cost 220
Acc. depreciation to 1 November 20X6 30
Patents and trademarks 200
Inventories at 1 November 20X6 210
Receivables 875
Cash in hand 12
Payables 318
Bank 85
Administration expenses 264
Selling and distribution expenses 292
Dividends paid 20
Debenture interest 15
Sales 2,569
Purchases 1,745
Carriage inwards 15
Carriage outwards 18
Returns outward 34
4,731 4,731
PREPARING FOR THE COMPUTER-BASED ASSESSMENTS (CBAs)
REVISION QUESTIONS C2
614
The following additional information at 31 October 20X7 is available:
(i) A physical inventories count reveals inventories at cost of $194,000.
(ii) Prepaid administration expenses amount to $12,000 and prepaid selling and delivery
expenses amount to $28,000. Accrued administration expenses amount to $17,000.
(iii) During October 20X7 goods were sold on a ‘ sale or return ’ basis, with the fi nal date
for return being 25 November 20X7. The sale has been recorded as normal in the
sales daybook and receivables ’ account, and the inventories have been excluded from
the inventories count. The goods cost $7,000 and had a selling price of $12,000.
(iv) The land is to be revalued at $550,000. The tax on the gain is estimated at $15,000.
(v) The reserves account consists of share premium of $100,000 and revaluation reserve
of $135,000, with the balance representing retained earnings.
(vi) The premises are to be depreciated at 4 per cent per annum straight line. The plant
and machinery is to be depreciated at 10 per cent per annum straight line.
(vii) Income tax of $40,000 is to be accrued for the year.
Requirements
(a) Insert the missing items in the income statement for the year ended 31 October
20X7.
Income statement of TYR Ltd for the year ended 31 October 20X7
$’000 $’000 $’000
Sales
Cost of sales
Gross profi t
Operating profi t
P r o fi t for the period
Other comprehensive income
Gain on property revaluation before tax
Income tax
Gain on prperty revaluation after tax
Total comprehensive income
(7 marks)
PREPARING FOR THE COMPUTER-BASED ASSESSMENTS (CBAs)
615
FUNDAMENTALS OF FINANCIAL ACCOUNTING
(b) Insert the missing items in the statement of changes in equity for the year ended 31
October 20X7.
Statement of changes in equity of TYR Ltd for the year ended 31 October 20X7
Share
Capital
Share
Premium
Revaluation
Reserve
Retained
Earnings
Total
$’000 $’000 $’000 $’000 $’000
Balance at the start of the
period
Balance at the end of the
period
(3 marks)
(c) Insert the missing items in the statement of fi nancial position at 31 October 20X7.
Statement of fi nancial position of TYR Ltd as at 31 October 20X7
Assets Cost or valuation Acc. Dep’n Carrying Amount
$’000 $’000 $’000
Tangible non-current assets
Intangible non-current assets
Current assets
PREPARING FOR THE COMPUTER-BASED ASSESSMENTS (CBAs)
REVISION QUESTIONS C2
616
Equity and liabilities
Non-current liabilities
Current liabilities
(10 marks)
(c) Calculate the following ratios for the current year.
(i) Gross profi t mark-up
Formula
100 100
(ii) Operating profi t margin
Formula
100 100
(iii) Current ratio:
Formula
: : :
(iv) Acid test ratio
Formula
: : :
(10 marks)
(Total marks 30)
PREPARING FOR THE COMPUTER-BASED ASSESSMENTS (CBAs)
617
FUNDAMENTALS OF FINANCIAL ACCOUNTING
Question 24
At the beginning of September 20X7, GL had the following balances on the accounts of
three of his receivables:
$
A Barton 400
C Sikorski 1,200
F Gray 340
During September, the following sales and returns took place for the above receivables:
Sales
On 3 September to A Barton goods $200 less trade discount of 20%, plus sales tax at 17.5%
On 8 September to C Sikorski goods $800, plus sales tax at 17.5%
On 12 September to C Sikorski goods $360 plus sales tax at 17.5%
Sales returns
On 5 September from A Barton 25% of the goods sold to him on 3 September
On 18 September from C Sikorski 15% of the goods sold to him on 8 September
The balance at the bank was $347 overdrawn on 1 September 20X7.
The following bank transactions took place during September 20X7:
4 Sep. A Barton paid the amount outstanding at 1 September,
less 5% cash discount.
8 Sep. C Sikorski paid the amount outstanding at 1
September, less 2.5% cash discount.
10 Sep. Paid J Swinburn, a payable, for an invoice of $1,200,
less 5% cash discount.
15 Sep. Paid sales tax of $832 to tax authority, re the quarter
ended 31 August 20X7.
17 Sep. Paid P Taylor, a payable, $400 less 5% cash discount.
20 Sep. including $150 annual vehicle licence tax and sales tax
at 17.5%.
22 Sep. C Sikorski paid the invoice of 8 September, less
the credit note of 18 September. There was no cash
discount allowed on this payment.
25 Sep. Received a cheque from F Gray for 50% of his debt;
the remainder is to be written off as a bad debt.
30 Sep. Paid wages to employees, made up as follows:
Gross wages $2,500
Employees ’ social security tax $200
Employer’s social security tax $200
Employees ’ income tax $300
30 Sep. Banked receipts from receivables $10,500
Paid cheques to payables $11,200
GL has a computerised sales ledger system, which produced the following aged receivables ’
printout at 30 September 20X7:
Current month $12,000
30 to 60 days $7,500
60 to 90 days $3,600
over 90 days $1,100
PREPARING FOR THE COMPUTER-BASED ASSESSMENTS (CBAs)
REVISION QUESTIONS C2
618
The balance on the allowance for receivables account at 1 September 20X7 was $450
credit. No further allowance for receivables has been made since that date. You are given
the following additional information:
(i) The ‘ current month ’ total includes $60 for discounts allowed to receivables not
recorded in the sales ledger.
(ii) The ‘ 30 to 60 days ’ total includes a balance of $200 to be taken as a contra entry in
the purchase ledger.
(iii) The ‘ over 90 days ’ total includes a debt of $240 to be written off as bad.
(iv) The company decides to amend the allowance for receivables to the following
amounts:
Over 90 days 20%
60 to 90 days 10%
30 to 60 days 5%
Current month Nil
Requirements
(a) Insert the missing items in the cash book for September 20X7.
Cash book
Date Details Disc $ Date Details Disc $
(7 marks)
(b) Insert the xmissing items in the ledger accounts (in date order) for A Barton, C
Sikorski and F Gray.
A Barton
Date $ Date $
141
PREPARING FOR THE COMPUTER-BASED ASSESSMENTS (CBAs)
619
FUNDAMENTALS OF FINANCIAL ACCOUNTING
C Sikorski
Date $ Date $
F Gray
Date $ Date $
(6 marks)
(c) Insert the missing items in the change in the allowance for receivables.
Calculation of the allowance for receivables on 30 September 20X7
Total receivables
as per schedule
Adjustments Revised
Balances
Allowance
$ $ $ $
Current at 0%
30–60 days at 5%
60–90 days at 10%
9 0 days at 20%
Revised cumulative allowance
The allowance for receivables account will need to be increased by
(4 marks)
(d) Which is the principal accounting convention that governs the allowance for
receivables?
(3 marks)
(Total marks 20)
Question 25
You are required to state, for each of the transactions below whether there will be an
increase , a decrease , or no change to each of: non-current assets, working capital and profi t .
(i) dividends which were accrued in the statement of fi nancial position for the year just
ended have been paid by cheque in the current year;