Free CXC Principles of Accounts Paper 2 May/June 2006 past paper from 2006. Includes a worked answer key. Open the PDF, take a timed test, and study with AI on Caribbean AI.
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CSEC Principles of Accounts Paper 2 May/June 2006 - Free CXC Past Paper with Answers
Free CXC Principles of Accounts Paper 2 May/June 2006 past paper from 2006. Includes a worked answer key. Open the PDF, take a timed test, and study with AI on Caribbean AI.
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Answer the THREE questions in this section.
Armstrong and Barnett are in partnership, sharing profits in the same proportion as their capital. Interest on the capital is to be paid at the rate of 10 per cent per annum. Armstrong is to receive a salary of $3 000 per annum. No interest is allowed on charged on drawings or current account balances.
The following is the Trial Balance of Armstrong and Barnett as at December 31, 2005.
| $ | $ | |
|---|---|---|
| Capital Account (Armstrong) | 40 000 | |
| Capital Account (Barnett) | 60 000 | |
| Current Account (Armstrong) | 10 000 | |
| Current Account (Barnett) | 7 000 | |
| Drawings (Armstrong) | 12 000 | |
| Drawings (Barnett) | 5 000 | |
| Buildings | 153 000 | |
| Fixtures and Fittings | 30 000 | |
| Motor Vehicles | 80 000 | |
| Gross Profit | 230 000 | |
| Debtors and Creditors | 70 000 |
| 60 000 |
| Operating Expenses | 55 000 |
| Goodwill | 80 000 |
| Provision for Depreciation (Motor Vehicles) | 40 000 |
| Provision for Depreciation (Buildings) | 20 000 |
| Bank Overdraft | 3 000 |
| Loan at 15% | 35 000 |
| 495 000 | 495 000 |
The following information is to be taken into account:
Required:
[20 marks]
Prepare a Profit and Loss and Appropriation Account for the partnership, for the year 2005. (Please note that you are not required to do a Trading Account.)
[9 marks]
Prepare the Current Accounts for the partners.
[5 marks]
Prepare the Balance Sheet as at December 31, 2005. (Do not show details of the current accounts of the partners in the Balance Sheet.)
[6 marks]
The Cash Book of L. Tracey at February 28, 2006, showed a debit balance of $10 030. On comparing the Cash Book with the Bank Statement, the following differences were observed:
Use the information above to:
[20 marks]
Use the information above to: (i) update the Cash Book (ii) prepare a Bank Reconciliation Statement
[11 marks]
update the Cash Book
[6 marks]
prepare a Bank Reconciliation Statement
[5 marks]
M. Martin commences business on January 1, 2002. His debtors at
A provision for bad debts of 5 per cent is to be created on debts at the end of each year.
Use the information above to answer the following questions. (i) Show the Provisions for Bad Debts Account for EACH of the three years. (ii) Show the extracts from the second year's Balance Sheet.
[9 marks]
Show the Provisions for Bad Debts Account for EACH of the three years.
[7 marks]
Show the extracts from the second year's Balance Sheet.
[2 marks]
Prepare the journal entries with appropriate narrations, for EACH of the following situations. The date to be used for each case is December 31, 2005. (i) A receipt of $2 300 from M. Ramadan was recorded in error to the account of M. Ramteet. Show the correction of the error in the journal entry. (ii) Office fixtures costing $1 700 previously bought from Office Fixtures Unlimited were returned to them as the wrong order. (iii) K. Shivnarine's debt of $2 000 was written off as a bad debt six months ago. Recently, the business received a cheque from him for $2 000 with a note attached "in full settlement of debt". (iv) The sale of used computers valued at $40 000 cash was recorded in the Sales Account. Show the correction of the error in the journal entry. (v) Discounts allowed to customers for the total sum of $300 were credited to the Discount Received Account. Show the correction of the error in the journal entry.
[20 marks]
Prepare the journal entries with appropriate narrations, for EACH of the following situations. The date to be used for each case is December 31, 2005. (i) A receipt of $2 300 from M. Ramadan was recorded in error to the account of M. Ramteet. Show the correction of the error in the journal entry. (ii) Office fixtures costing $1 700 previously bought from Office Fixtures Unlimited were returned to them as the wrong order. (iii) K. Shivnarine's debt of $2 000 was written off as a bad debt six months ago. Recently, the business received a cheque from him for $2 000 with a note attached "in full settlement of debt". (iv) The sale of used computers valued at $40 000 cash was recorded in the Sales Account. Show the correction of the error in the journal entry. (v) Discounts allowed to customers for the total sum of $300 were credited to the Discount Received Account. Show the correction of the error in the journal entry.
[11 marks]
A receipt of $2 300 from M. Ramadan was recorded in error to the account of M. Ramteet. Show the correction of the error in the journal entry.
[2 marks]
Office fixtures costing $1 700 previously bought from Office Fixtures Unlimited were returned to them as the wrong order.
[2 marks]
K. Shivnarine's debt of $2 000 was written off as a bad debt six months ago. Recently, the business received a cheque from him for $2 000 with a note attached "in full settlement of debt".
[2 marks]
The sale of used computers valued at $40 000 cash was recorded in the Sales Account. Show the correction of the error in the journal entry.
[2 marks]
Discounts allowed to customers for the total sum of $300 were credited to the Discount Received Account. Show the correction of the error in the journal entry.
[3 marks]
Use the relevant information from the data below to prepare EITHER accounts OR statements to show the amount for total purchases and sales for the period.
| May 30, 2005 | May 30, 2006 | |
|---|---|---|
| $ | $ | |
| Debtors | 3 219 | 3 388 |
| Creditors | 1 842 | 1 891 |
| Cash received from debtors | 24 264 | |
| Cash paid to creditors | 18 624 | |
| Cash purchases | $5 780 | |
| Cash sales | 12 320 |
[9 marks]
SECTION II
Answer any TWO questions in this section.
Sport Art makes frames for pictures of sports events mainly out of wood and metal strips. They employ both wood workers and metal workers. On June 30, 2005, the following information was extracted from its records.
| $ | |
|---|---|
| Purchases: Wood pieces | 16 800 |
| Metal strips | 1 300 |
| Sports pictures | 15 300 |
| Stock at start: Wood pieces | 1 400 |
| Metal strips | 200 |
| Work-in-progress | 800 |
| Finished framed pictures | 6 000 |
| Stock at close: Wood pieces | 1 500 |
| Metal strips | 300 |
| Work-in-progress | 9 000 |
| Finished framed pictures | 9 000 |
| Factory wages – Wood workers | 27 000 |
| Metal workers | 12 000 |
| Rent (Factory 2/3; Office 1/3) | 6 000 |
| Insurance on equipment | 700 |
| Foreman's salary | 10 000 |
| Other factory expenses | 2 100 |
| Sales | 122 200 |
| Selling expenses | 8 000 |
Additional information:
[12 marks]
Using the answer sheet provided as a guide, prepare the Manufacturing Account for Sport Art for the year ended June 30, 2005, to clearly show the following:
[12 marks]
Prepare the Trading and Profit and Loss Account for Sport Art for the year ended June 30, 2005, to clearly show the following:
[8 marks]
The following Balance Sheet of Price Rite Ltd. has several errors in the way it is presented. Redraft the Balance Sheet using the VERTICAL style, ensuring that sections of the Balance Sheet are clearly marked with appropriate headings.
| Assets | $ | $ | Liabilities | $ |
|---|---|---|---|---|
| Stock | 21 500 | Creditors | 25 000 | |
| Land and Buildings | 150 000 | 6% Debentures | 20 000 | |
| Less Depreciation | 30 000 | 120 000 | Proposed Ordinary Dividend | 9 000 |
| Debtors | 54 500 | Authorized Share Capital | ||
| Less Provisions for bad debts | 2 725 | 51 775 | 20 000 7% preference shares of $1 each | 20 000 |
| Cash in hand | 700 | 125 000 ordinary shares of $1 each | 125 000 | |
| Investments | 8 000 | General Reserve | 31 000 | |
| Equipment | 15 000 | Issued Share Capital | ||
| Less Depreciation | 6 000 | 9 000 | 20 000 7% preference shares of $1 each | 20 000 |
| Cash at Bank | 5 500 | 90 000 ordinary shares of $1 each | 90 000 | |
| Motor Vehicles | 7 500 | Proposed Preference Dividend | 700 | |
| Less Depreciation | 3 750 | 3 750 | Profit and Loss Account | 23 925 |
| Debenture Interest Owing | 600 |
[20 marks]
What is the meaning of the "7%" placed in front of Preference Shares and the "6%" placed in front of Debentures?
[1 mark]
The following receipts and payments account for the year ended December 31, 2005, for the Kingstown Domino Club, has been prepared by the club's treasurer.
| $ | $ | ||
|---|---|---|---|
| Opening bank balance | 1 752 | National Domino Tournament: | |
| Refreshment sales | 3 368 | Purchase of tickets | 7 200 |
| National Domino Tournament: | Purchase of refreshments | 3 800 | |
| Ticket sales | 800 | Purchase of domino sets for club | 3 000 |
| Sale of some old tables | 7 600 | Purchase of tables for club | 7 800 |
| Subscriptions received | 14 380 | Fees paid to coach | 2 000 |
| Closing bank balance | 540 | Rental of premises | 1 000 |
| Purchase of magazines | 980 | ||
| Secretarial expenses | 1 880 | ||
| Cleaning expenses | 780 | ||
| 28 440 | 28 440 |
The following additional information is available:
| As at Jan 1, 2005 | As at Dec 31, 2005 | |
|---|---|---|
| Land owned by club | 10 000 | 10 000 |
| Stock of refreshments, at cost | 500 | 1 120 |
| Debtors for tables sold | 800 | |
| Subscriptions received in advance | 480 | 780 |
| Creditors: refreshment supplies | 1 820 | 1 020 |
Tables are to be depreciated at 10 per cent per annum.
[20 marks]
Prepare a Statement of Affairs to show the club's accumulated fund as at January 1, 2005.
[6 marks]
Prepare the club's Refreshment Account.
[3 marks]
Prepare the club's Income and Expenditure Account for the year ended December 31, 2005.
[8 marks]
If a Balance Sheet were prepared for the club as at December 31, 2005, where would the following items be recorded?
(i) Closing bank balance (ii) Subscriptions in advance (iii) Surplus/Deficit
[3 marks]
The following is the summary final accounts of Maxie's, a trader.
| $ | $ | |
|---|---|---|
| Sales | 154 610 | |
| Less cost of sales | ||
| Opening stock | 680 | |
| Purchases | 81 070 | |
| 81 750 | ||
| Closing stock | (810) | 80 940 |
| Gross Profit | 73 670 | |
| Expenses | 37 830 | |
| Depreciation | 3 620 | |
| Provision of bad debts | 1 860 | |
| Interest on loan | 500 | 43 810 |
| Net Profit | 29 860 |
| $ | $ | |
|---|---|---|
| Fixed assets (at cost $22 890) | 10 060 | |
| Current Assets | ||
| Stock | 810 | |
| Debtors | 4 330 | |
| Prepayments | 1 350 | |
| Cash at bank | 8 370 | |
| Cash in hand | 150 | |
| 15 010 | ||
| Less Current liabilities | ||
| Sundry expenses | 200 | |
| Loan interest | 500 | 700 |
| Net current assets | 14 310 | |
| Loan | 22 370 | |
| 10 000 | ||
| Capital (July 1, 2004) | 21 110 | |
| Add profit | 29 860 | |
| 50 970 | ||
| Less drawings | 36 600 | |
| 14 370 |
(a) Use the statements given to calculate the following ratios. (Show your workings.) (i) Current ratio (ii) Acid test (iii) Return on capital invested (iv) Rate of stock turnover (v) Net profit percentage
[20 marks]
Use the statements given to calculate the following ratios. (Show your workings.)
[10 marks]
Current ratio
[2 marks]
Acid test
[2 marks]
Return on capital invested
[2 marks]
Rate of stock turnover
[2 marks]
Net profit percentage
[2 marks]
Use the Trading and Profit and Loss Account and the Balance Sheet where applicable, to answer the following questions: (i) Give another term for "net current assets" as indicated on the Balance Sheet. (ii) Why does loan interest of $500 appear on the Balance Sheet even though it is recorded in the Profit and Loss Account? (iii) What does a "good" current ratio indicate? (iv) What is the term used for the fixed asset amount of $10 060? (v) It can be reasonably assumed that Year 2005 is not the first year depreciation has been charged on fixed assets. Why is this assumption correct?
[10 marks]
Give another term for "net current assets" as indicated on the Balance Sheet.
[2 marks]
Why does loan interest of $500 appear on the Balance Sheet even though it is recorded in the Profit and Loss Account?
[2 marks]
What does a "good" current ratio indicate?
[2 marks]
What is the term used for the fixed asset amount of $10 060?
[2 marks]
It can be reasonably assumed that Year 2005 is not the first year depreciation has been charged on fixed assets. Why is this assumption correct?
[2 marks]
Indicate whether the following statements are True or False: (i) An acid test ratio of 1:5 is good. (ii) A current ratio of 2:4 is not good. (iii) The purchase of fixed assets is a capital expenditure. (iv) Prepayments should be charged against profits for the current period. (v) Bad debts is written off in the Profit and Loss Account, and then subtracted from the debtors amount in the Balance Sheet.
[10 marks]
An acid test ratio of 1:5 is good.
[2 marks]
A current ratio of 2:4 is not good.
[2 marks]
The purchase of fixed assets is a capital expenditure.
[2 marks]
Prepayments should be charged against profits for the current period.
[2 marks]
Bad debts is written off in the Profit and Loss Account, and then subtracted from the debtors amount in the Balance Sheet.
[2 marks]