AAT 2011 (Paper 2, 9) (Incomplete Records)

AAT 2011 (Paper 2, 9) (Incomplete records)

9.Gigi Chan is the owner of a tuck shop and does not keep proper set of books. On 31 March 2010, the following information is available.

She just received profit tax return from the Inland Revenue Department. She is requested to submit the profit and loss account for the year ended 31 March 2010 for tax assessment purpose.

Additional information:

(1)All goods were purchased and sold on credit.

(2)During the year ended 31 March 2010, cheques and cash received from trade receivable amounted to $488,270 and $32,970 respectively. Cash discounts granted to trade receivables for early settlement were $7,700.

(4)Cheques and cash paid to trade payables amounted to $308,060 and $17,870 respectively. Discounts received from trade payables were $5,960.

(5)The gross profit margin was 25% on all sales for the year.

(6)The firm paid $24,770 for general expenses during the year.

REQUIRED:

(a)You are required to prepare the following statements:

(i)Statement to compute sales for the year ended 31 March 2010

(ii)Statement to compute purchases for the year ended 31 March 2010

(iii)Profit and loss account for the year ended 31 March 2010

(b)Compute the ratios of average inventory period (in days), trade receivable collection period and trade payable repayment period. Comment on any liquidity problems faced by Gigi.

HKCEE (2010, 6)(Incomplete records)

The Craze Club is a non-profit making organization which aims at promoting visual arts. Members are required pay an annual membership fee of $1,000. The club operates a small gift shop which sells T-shirts and decorative accessories. A mark-up of 80% on cost was made on all sales of gifts.

The following is a summary of the receipts and payments of Craze Club for the year ended 31 December 2009:

Additional information:

(i)Some of the club’s balance as at 31 December were as follows:

(ii)Sales of gifts for 2009 amounted to $266,400. All purchases of gifts were made in cash while all sales were made on credit. The credit period allowed to average debtors was 2 months.

(iii)A physical stock-taking on 5 January 2010 showed that the value of gift stock on that date was $30,150. During the 5 days from 1 January to 5 January 2010, goods received from a supplier and goods returned outwards had a list price of $4,000 and $200 respectively. A trade discount of 10% had been given by the supplier on these goods.

(iv)On 31 December 2009, some of the gift stock was found missing.

(v)Subscriptions of $3,000 had long been outstanding and therefore the club wrote off the amount in the current year.

(vi)Donations to charities for the year also included some T-shirts at a cost of $2,500.

(vii)It is the club’s policy to depreciate furniture and fittings at 20% per annum using the straight-line method. A full year’s depreciation is to be charged in the year of acquisition.

REQUIRED:

Prepare for Craze Club:

(a)the trading account for the gift shop for the year ended 31 December 2009;

(b)the income and expenditure account for the year ended 31 December 2009; and

(c)the balance sheet as at 31 December 2009.

HKCEE (2009, 6)(Incomplete records)

The following is a summary of the receipts and payments of Fei Fei Dance Club for the year ended 31 December 2008:

Additional information:

(i)A bank statement for December 2008 was received by the club. An examination of the club’s bank account and the bank statement disclosed the following:

(1)Direct deposits of $6,000 for subscriptions had been lodged by members.

(2)An autopay was made by the bank for utilities expenses of $420.

(3)Cheques issued amounting to $2,930 had not been presented to the bank for payment. Among these cheques was one for $223 drawn nine months ago for the payment of bar purchases. The club decided to cancel the cheque on 31 December 2008.

(4)Lodgement of $4,260 from the sale of audio equipment had not yet been recorded by the bank.

(ii)Some of the club’s balances as at 31 December were as follows:

(iii)Net profit ratio of the bar was 10%.

(iv)One-tenth of the wages and salaries was to be allocated to the bar.

(v)Audio equipment sold on 1 January 2008 had a cost of $50,000 and a net book value of $9,000. Additional audio equipment were purchased on 1 May 2008. It is the club’s policy to depreciate audio equipment at 40% per annum using the reducing-balance method on a pro rata basis.

REQUIRED:

(a)Prepare a bank reconciliation statement as at 31 December 2008 commencing with the bank balance of $37,020 and ending with the balance as per bank statement.

(b)Prepare the bar trading account for the year ended 31 December 2008.

(c)Prepare the income and expenditure account for the year ended 31 December 2008.

(d)Prepare the balance sheet as at 31 December 2008.

HKCEE (2009, 7)(Incomplete records)

The annual physical stocktaking of Albert Shop did not take place on the day of the company’s year end, 31 December 2007. However, stock was taken on 13 January 2008 when the business closed for the weekend. All normal sales by the company are made at a gross profit of 20% on sales.

Subsequent investigation revealed the following:

(i)Stock at 13 January 2008 was $78,178.

(ii)During the period from 1 January to 13 January 2008, the company recorded the following:

Included in the purchases was an amount of $300 for carriage inwards which was mistakenly charged by a supplier.

(iii)An item of stock with a normal selling price of $1,000 was purchased in 2005. It was found to be obsolete and could only be sold for $600.

(iv)One of the stock sheets dated 13 January 2008 had been overcast by $1,720.

(v)Included in stock were goods with an invoiced price of $960 which were received on a sale or return basis from a supplier on 28 December 2007. Albert Shop had not notified the supplier of its intention to buy the goods by 13 January 2008.

REQUIRED:

(a)Prepare a statement to calculate the amount of stock as at 31 December 2007.

Albert Shop had the following balances in its debtors and creditors control accounts at 1 January 2008:

$

Debtors control (net of a credit balance of $716)95,426

Creditors control64,178

On 31 December 2008, the correct balances of the debtors and creditors control accounts in the books of Albert Shop were $58,154 and $42,200 respectively.

REQUIRED:

(b)Prepare for Albert Shop the debtors control account and the creditor account for 2008.

(c)Prepare the trading account, showing the amount of closing stock, for Albert Shop for the year ended 31 December 2008.

HKCEE(2008, 3) (Accounting Principles and incomplete)

(B)Due to unexpected circumstances, the year-end physical stocktaking of Mr Wong’s business was delayed from 31 December 2007 to 6 January 2008. The cost of stock as at the close of business on 6 January 2008 was $38,420.

Additional information:

(i)After the physical count, an item costing $100 was found to be worthless. It was damaged by a warehouse worker on 30 December 2007.

(ii)The purchases and sales during the period 1 to 6 January 2008 amounted to $7,230 and $6,880 respectively. During this period, goods at the invoiced price of $5,900 were returned by customers and there were no returns outwards. It is the company’s policy to sell all goods at a 25% mark-up on cost.

(iii)Goods costing $350 was drawn by Mr Wong on 4 January 2008 for his personal use. In addition, goods were sold on 5 January 2008 to company staff for $2,000, being 50% of the normal selling price. Both events had not been recorded in the books.

(iv)Goods costing $720 were sent to a customer on 20 December 2007 for inspection. The customer confirmed his acceptance of the goods on 8 January 2008.

REQUIRED:

Prepare a statement to calculate the closing stock value of Mr Wong’s business as at 31 December 2007.

HKCEE (2007,5)(Incomplete record)

George Ho is a sold trader engaged in the trading of clocks and watches. During a burglary in March 2007, George lost some of the stock as well as most of his accounting records. However, after careful investigations, the following information for the year ended 31 March 2007 was made available:

(i)Account balances at 31 March 2006 were as follows:

(ii)All receipts and payments were made through the bank account. The bank transactions during the year were:

(iii)Based on the sales invoices, the following information relating to sales was available:

(iv)Discounts received and discounts allowed amounted to $16,000 and $21,060 respectively.

(v)In January 2007, George drew stock costing $20,000 for personal use.

(vi)On 1 March 2007, a motor vehicle with a cost of $180,000 was purchased on credit. Depreciation on motor vehicles is to be calculated at 10% per annum on cost.

(vii)The business attained an average stock turnover period of 2 months over the past few years. Stock at 31 March 2007 had been replenished to the normal level and amounted to $212,000 at cost.

(viii)Account balances at 31 March 2007 included the following:

You are required to prepare:

(a)the bank account;

(b)the trading, profit and loss account for the year ended 31 March 2007; and

(c)the balance sheet as at 31 March 2007.

HKCEE (2006, 7)(Incomplete records)

The following is a summary of the receipts and payments of Summit Badminton Club for the year ended 31 March 2006:

Additional information:

(i)Some of the club’s balances as at 31 March are as follows:

(ii)Bar sales were made at a gross profit ratio of 55%. 10% of the bar sales were for cash.

(iii)All bar purchases were on credit and the bar stock turnover rate was 5 times.

(iv)Office equipment which had been sold on 1 April 2005 had a cost of $90,000 and a net book value of $8,000. Additional office equipment was purchased on 1 January 2006.

It is the club’s policy to depreciate office equipment at 25% per annum using the reducing balance method.

(v)10% of the rent and rates was to be allocated to bar.

(vi)The club started selling rackets as from 1 December 2005. All purchases and sales were for cash. The rackets were sold at a profit of $20,500 during the four months.

You are required to prepare:

(a)a bar trading account for the year ended 31 March 2006;

(b)an income and expenditure account for the year ended 31 March 2006; and

(c)a balance sheet as at 31 March 2006.

HKCEE (2005, 7)(Incomplete records)

Dan Tang operates a small business in bed-linen. On 1 April 2004, Dan had the following balances in his books:

Purchases and sales were made for cash and on credit. A mark-up of 80% on cost was made on all sales.

On 31 March 2005, the date of the financial year end, a fire broke out in the business premises and some of the accounting records, stock and cash were destroyed. After investigating all the remaining records, Dan was able to identify the following:

(i)Average cash sales of $21,975 per month were recorded. The credit period allowed to average trade debtors was 1.5 months. The amounts received from trade debtors were all in cash.

(ii)Expenses for the year, after adjustments were as follows:

On 31 March 2005, rates of $1,800 were prepaid and selling and distribution expenses of $490 were accrued.

(iii)A piece of office equipment was sold for cash $30,000 during the year.

(iv)The business banked all receipts after paying for expenses, cash purchases of $10,000 per month and Dan’s drawings of $20,000 for the year.

(v)The following payments were made by cheque during the year:

(vi)Correspondences with the customers, suppliers and bank and counting of the remaining cash and stock revealed the following balances at 31 March 2005:

You are required to:

Prepare statements to show

(a)the amount of cash loss on 31 March 2005; and

(b)the amount of stock loss on 31 March 2005.