TEST CODE 01239020

FORM TP 2014103 MAY/JUNE 2014

CARIBBEAN E XAM I NAT I O N S COUNCIL

CARIBBEAN SECONDARY EDUCATION CERTIFICATE®

EXAMINATION

PRINCIPLES OF ACCOUNTS

Paper 02 – General Proficiency

3 hours

22 MAY 2014 (a.m.)

READ THE FOLLOWING INSTRUCTIONS CAREFULLY.

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

2. Begin EACH answer on a separate page. Each question is worth 20 marks.

3. Keep ALL parts of EACH answer together.

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

5. You are advised to take some time to read through the paper and plan your
answers.

6. Show all working clearly.

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO.

Copyright © 2013 Caribbean Examinations Council

All rights reserved.

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SECTION I

Answer the THREE questions in this section.

1. Swigger and Thirst entered into a business partnership on 01 January 2013. The total amount
of capital contributed through the partnership was $60 000. Swigger contributed $40 000 of the
total capital and Thirst contributed the balance. It is now six months since the partnership was
formed.

Swigger and Thirst agreed to share profits in the ratio of 2:1 respectively. Partners’ drawings for
the six months ended 30 June 2013 were:

Partner Amount ($)

Swigger 8 000

Thirst 600

The following information is available for the first six months ended 30 June 2013:

Profits calculated for the six months $15 380

Other revenues earned, but which were not yet included in profits $620

Interest on capital 10% per annum

Interest on drawings 5% per annum

Annual salary for Thirst $18 000

(a) How much of the capital did Thirst contribute? (1 mark)

(b) Prepare the Appropriation Account of the partnership for the SIX months ended 30 June
2013. (12 marks)

(c) Prepare columnar Current Accounts of the partners for the SIX months ended 30 June
2013. (7 marks)

Total 20 marks

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2. JT Enterprises, whose purchases and sales are all on credit, prepares Control Accounts at the end
of every month.

At the end of April 2014, JT Enterprises provided the following information on its accounts payable
and its accounts receivable.

Accounts Payable
$
Opening balances 5 100 (Cr), $310 (Dr)
Purchases for the month of April 63 720
Purchases returns 620
Payments to suppliers 59 970
Discounts received 1 200
Prepayment by cheque to suppliers 3 450
Late payment charge 45
Closing balance 270 (Dr)

Accounts Receivable

Opening balances 9 360 (Dr), $470 (Cr)

Sales for the month of April 87 890
Sales returns 1 330
Receipts from customers 69 110
Discounts allowed 1 200
Bad debts 1 320
Customer’s cheque returned 970
Closing balance 550 (Cr)

Note: A firm, Escrow Ltd, is a supplier and a customer of JT Enterprises. At 30 April, Escrow
Ltd’s balances in the ledgers of JT Enterprises were as follows:

Purchases Ledger $ 1 050

Sales Ledger $ 375

The firm sets off the appropriate amount through the Control Accounts.

(a) State ONE reason why Control Accounts would be useful to JT Enterprises. (1 mark)

(b) Prepare the following Accounts for JT Enterprises:

(i) Purchases Ledger (Accounts Payable) Control Account (8 marks)

(ii) Sales Ledger (Accounts Receivable) Control Account (11 marks)

Total 20 marks

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3. Jack Rapper, a small business owner, has not kept proper accounts. His son, a trainee accountant,
presented the following details for the year ended 31 December 2013. Study the details carefully
and answer the questions that follow.

Bank Account

$ $
Balance brought forward 14 500 Accounts payable 38 800
Accounts receivable 69 200 Rent 6 000
Utilities 9 100
General office expenses 4 700
Wages 8 600
Motor vehicle 15 000

Additional information

01 January 2013 31 December 2013

$ $
Accounts payable 6 400 5 900
Inventories 8 945 9 800
Accounts receivable 10 200 8 400
Motor vehicles at cost 25 000
Wages owing 750
Utilities prepaid 600
Cash in hand 760 130

Motor vehicles depreciate at a rate of 5% on cost per annum.

All purchases and sales were on credit terms.

Purchases for the year totalled $38 300.

(a) Prepare Jack Rapper’s Statement of Affairs as at 01 January 2013. (6 marks)

(b) Using an account, determine the sales for the year. (4 marks)

(c) Prepare Jack Rapper’s Income Statement for the year ended 31 December 2013.
(10 marks)

Total 20 marks

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SECTION II

Answer any TWO questions in this section.

4. (a) Define EACH of the following accounting terms. Give ONE example in EACH case.

(i) Fixed asset (2 marks)

(ii) Useful life (2 marks)

(iii) Net book value (2 marks)

(b) On 01 May 2013, Farley Caterers owned two depreciable assets consisting of a delivery
van and an industrial stove. The following information was provided.

Cost Price ($) Net Book Value ($)

Delivery van 200 000 140 000

Industrial stove 60 000 38 400

The company charges depreciation on its assets as follows:

• Delivery van at the rate of 30% per annum using the straight line method
• Industrial stove at the rate of 20% per annum using the reducing balance method.

(i) Calculate the depreciation charge on the delivery van for the year ended 30 April
2014 using the straight line method. (Show working clearly.) (3 marks)

(ii) Draw up a balance sheet extract for the van showing cost, accumulated depreciation
and net book value as at 30 April 2014. (4 marks)

(iii) Calculate the depreciation charge on the industrial stove for the year ended 30
April 2014 using the reducing balance method. (Show working clearly.)
(3 marks)

(iv)
Draw up the Provision for Depreciation Account for the industrial stove starting
with the amount of accumulated depreciation as at 01 May 2013 as balance brought
forward. (4 marks)

Total 20 marks

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5. JB Manufacturing Company produces athletics equipment. The following information was provided
for the year ended 31 December 2013. Study the information carefully and answer the questions
that follow.
$ $
Purchases of direct materials 65 000
Rent 6 000
Power 10 000
Carriage inwards on raw materials 2 000
Insurance on factory equipment 3 500
Direct expenses [factory] 1 500
Factory wages 30 000
Indirect materials used 7 000
Depreciation on factory equipment 2 500
Factory manager’s salary 12 000
Janitor’s salary 8 000
Sales 190 000
Property taxes on factory building 800

Additional information

• Inventory valuation
01 January 2013 31 December 2013
$ $
Direct materials 7 500 4 300
Finished goods 21 000 24 200
Work in process 2 900 3 300

• Rent and power are to be shared as follows – 75% to the factory and 25% to administration.

• The janitor spends 80% of his time cleaning the factory.

(a) Prepare a Manufacturing Account for JB Manufacturing Company for the year ended
31 December 2013.

Show clearly:

• Prime cost
• Total factory overheads
• Cost of production (16 marks)

(b) Prepare the Trading Account for the company to determine its gross income. (4 marks)

Total 20 marks

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6. (a) The Young Achievers Credit Union Co-operative was formed on 01 January 2014. There
were 12 000 student members who paid membership fees of $3 EACH. Each member
also bought five shares costing $10 PER SHARE.

Prepare the journal entries, including narrations, to record the above transactions.
(7 marks)

(b) Young Achievers Credit Union Co-operative presented the following Receipts and
Payments Account at the end of March 2014. Study the information carefully and answer
the questions that follow.

Young Achievers Credit Union Co-operative

Receipts and Payments Account
For the Month of March 2014

Particulars Amount Particulars Amount

$ $

Balance brought forward 5 000 Purchases of meats for BBQ 950

Ticket sales from fundraising BBQ 6 840 Purchases of drinks for BBQ 1 200

Interest earned on deposits 4 240 Advertising for BBQ 200

Interest earned from loans to members 3 960 Wages for BBQ 750

Balance carried forward 16 940

20 040 20 040

Balance brought forward 16 940

Note: There was an opening stock of drinks totalling $650 on 01 March.

A fundraising barbecue (BBQ) activity was held in March. At the end of the BBQ,
there was $1 170 worth of drinks still unsold.

(i) Calculate the cost of drinks sold for the BBQ fundraising activity. (4 marks)

(ii) Prepare the Income Statement for the BBQ fundraising activity to show the profit
made from this event. (6 marks)

(iii) Calculate the amount of income for the month of March 2014. (Show working
clearly.) (3 marks)

Total 20 marks

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7. Pets Plus prepares weekly payrolls for two employees hired on the following terms:

Employees Normal rate Normal Time

of pay hours or days Worked

Sales attendant $10 per hour 40 hours 45 hours

Cashier $120 per day 5 days 5 days

(a) List TWO basic source documents used in preparing payrolls. (2 marks)

(b) Distinguish between ‘voluntary deductions’ and ‘statutory deductions’. (2 marks)

(c) Complete the Pets Plus Payroll Sheet, provided as an insert, for the week ended 26 April
2014, considering the following additional information.

Particulars Rate

Overtime 1.5 × normal rate

Social security (tax deductible) 5%

Pension fund (tax deductible) 1%

Income tax 10%

(16 marks)

Total 20 marks

END OF TEST

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

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 TEST CODE 01239020
FORM TP 2014103 MAY/JUNE 2014

CARIBBEAN E XAM I NAT I O N S COUNCIL

CARIBBEAN SECONDARY EDUCATION CERTIFICATE®

EXAMINATION

PRINCIPLES OF ACCOUNTS

Paper 02 – General Proficiency

Question No. 7. (c)

....................... Candidate No. ............................................................

PETS PLUS
Payroll Sheet
For the Week Ended 26 April 2014

Pay Normal Over- Normal Overtime Gross Social Pension Taxable Income Total Net
Employee rate hours or time pay pay pay Security Fund income Tax deductions pay
$ days hours $ $ $ $ $ $ $ $ $

Sales
attendant

Cashier

TOTALS

TO BE ATTACHED TO YOUR ANSWER BOOKLET

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