Accounts p1 doubts here!

[Tohru Kyo Sohma]

ok i have accounting p1 CIE doubts here (counting on u dasith again  )
1.m/j 2005 qns 4,14,15,25 and 28
2.m/j 2006 qns 4,14,16 and 22
3.o/n 2006 qns 817,21,22 and 30
4.m/j 2007 qns.12,14,16 and 29
5.o/n 2007 qns 4,11,17 and 23
6.m/j 2008 qns 27
7.m/j 2003 qns 3,9,15,26 and 29
8.o/n 2003 5,18,23 and 28
9.m/j 2004 qns 6,12,17,27,28,29 ans 30
10.o/n 2004 qns 14
that all......i need explanation on it!

[Tohru Kyo Sohma]

can someone explain bonus a right issue to me....i keep getting confused here?!!!

[Dasith]

ok i have accounting p1 CIE doubts here (counting on u dasith again  )
1.m/j 2005 qns 4,14,15,25 and 28
2.m/j 2006 qns 4,14,16 and 22
3.o/n 2006 qns 817,21,22 and 30
4.m/j 2007 qns.12,14,16 and 29
5.o/n 2007 qns 4,11,17 and 23
6.m/j 2008 qns 27
7.m/j 2003 qns 3,9,15,26 and 29
8.o/n 2003 5,18,23 and 28
9.m/j 2004 qns 6,12,17,27,28,29 ans 30
10.o/n 2004 qns 14
that all......i need explanation on it!

lol big list out there !!

k lets start with the first

1)m/j 2005:

4) Ans is b because , u see they say net debtors & balance sheet always shows the net debtors i.e after deducting both bad & doubtful debts. so it seems that 2003 balnce is with deducting PFDD (provision for doubtful debts) , so in order to obtain PFDD we can get it like this :
Debtors - 0.05 Of Debtors = Net Debtors
i.e

x- 0.05x=17100
0.95x=17100
x=18000

so now we knw that debtors before deducting PFDD was 18000  to get PFDD for 2003 we Deduct the Net debtors from Debtors, i .e  18000-17100
so we get 900 for 2003

& 2004 we take: 19000x5/100 =950 (this is because this is control a/c balance control a/c only includes bad debts not PFDD ! )
ok so u can see provision increased from 900 to 950
difference is 50 & thats your ans !

14) A because
wages of staff for takin goods into saleable condition shuld be in Trading account not P/L , but they hav debited in P/L not trading , so its overstating GP as its not deducted , but as u knw the same GP is taken to NP & deducted from it all other expences including the wages of staff taking goods into saleable condition. so it deducted from GP there , so no effect with NP !

15)HEre u gotta take the Cost / Net realisable value ( sales - other expences in bringing good to saleable condition) u take which ever is lower of the two !


so the lowest in item 1 is cost = 5260
''    ''      ''     item 2 is Net rali.= 2260
total                                   = 7520

25)semi variable is part variable & part Fixed !
so if it was fully variable a decrese in activity would have no effect on unit cost as varable costs vary in same proportion to units produced.But here it has fixed costs so a reduction in activity Dosent reduce the costs because a part of it is fixed , not all the cost is Fixed so it will increse Unit cost by not 20% but less than that because the cost is not fully a fixed cost.! (ans is D)

28)
here u find cost of both items frst i.e sales(in value - profit)
this cost as u knw includes both fixed & variable !
to get the variable costs we get the increase in costs for the given output levels
cost increased from 650 (i.e 750-100 )  to 750 (100-250 )
increase in cost is 100, so now we get increase in sales its 250
Cost has increased by 100 for an sales increase of 250 ! this in crease shows the variable costs as its the only cost which varys with output/ sales.

Increase in cost/ increase in output x 100 % = varable costs as % of sales
i.e 100/250 x 100 % = 40 %
so 40% is varable & the rest is of course contribution(FC + profit as % of sales )
60% is contribution!

[Dasith]

2) m/j 2006

4) A because

stock bought 4 cash recorded @ (list price - Trade discount) in  stock a/c
i.e 1600 as stock !
then cash is used to fund this cash of 1600 - 5% of 1600 = 1520 is used up for buying stock
Debtors of 400 written off so Debtors reduce by 400

Then total Current assets =28000+ 1600 - 1520 -400

14)stock valued @ lower of cost / Net realisable value !
so for each item u take the lowest out of the two
W= 15
x= 19
y= 15 *
z =23
Total = 72


* This is net realisable value , realisable value - selling expences
  17-2 = 15

16)

Mark up is 25 % i.e profit is 25% of cost of sales

soooooo

if cost is 100 ,mark up is 25 & sales = 125
get wat i mean ! ? ?

so here sales is out of 125% to get cost of sales
we 200000/125 x 100 = 160000
& then we need purchases

Op stock -    15
+purchases    x
cl stock       (18)
cost of sal = 160

so u can find x now rite ? 160 = 15+ x -18
x=163 !!
22)
hmm its 80000 shres @ .50 par value
i.e 40000

+ rights issue 1:4 basis
i.e 80000x1/4 x 0.5 = 10000

so total capital is 50,000
(in share capital we only record @ par/nominal value/ price on share certificate not
market value.!!)

[Dasith]

3)oct / nov 2006

8)here 5400 because they ask the purchase price !!
not the stock valued in stock a/c !!

5400 = 6000 x 95/100
or 6000-5% of 6000

17)4400 because u allow intrest on loan of 5% if theres no agreement!! (read the partnership act )
profit = 8850 -50(loan interest)
profit to be shared= 8800 / 2 9since partnership act says to share profit equally in case of no agreement !! )

21)
Net assets= Fixed + Net current assets/ working capital

so 1:4 rights issue means we recieve cash of
500/4 x 2 =250   &
we repay 50% of debentures @ par
we loose cash of 300 x 50/100 = (150)


so our total increase in net current assets/ working capital is 250-150
i.e 100
Net assets + increse =
1200 + 100 = 1300

22) 60 becoz
They ask the cash recieved
100 was the balnce in share capital & it increased to 130
with a bonus issue of 10 i.e (100/10 x 1)

so bonus issue has no effect on cash i.e 100 + 10 increases capital but not cash!
& then rights issue increases capital from 110 to 130
so cash increses by 20 too
Then we chek the share premium, bonus issue cannot add to share premium but has to be financed by either a revenue or appropriate capital reserve here the only reserve is share premium so we deduct 10 from ot

so share premium balance before rights issue is 50-10 i.e 40

now after rights issue it incresed to 80 ! , that means they paid extra 40 , so this adds up with the cash

so 20 + 40 = 60 total  cash recieved


30)

here we take the equivilant units . hope u knw about it , anyway it assumes that 400 50 % complete  goods
is 200 complete units ? get it , i.e 400 x 50/100 ,
so total complete units are 800 (200 + 600)


unit cost is (60000 + 30000 + 10000)/800 = 125

[Dasith]

4) m/j 2007 -

12) justlike i explained before u take the lowest of net realisable or cost & then total it up got it
ans is A

14)
profit to be shared=netprofit - salery - interest on capital

60 - 9 - 0.9 = profit to beshared
=50.1
50.1 is to be shared in ratio  2:1

Mansoor = 1/3 x 50.1 =16.7
                     = 0.5(interest on capital)
so he gets a total of 17.2 out of profits

16)

in trading a/c stock is with profit & adjested in p/L  ,balance sheet its only cost !

93500 includes 10% profit( this is Mark up )
& so does the amount of closing stock in trading a/c

so stock val @ trading = 93500 x 20/100(they say 20% of years production was Closin Stock)
                       = 18,700

val @ balance sheet(without profit)

18700 includes 10% profit so cost is 18700/110 x 100 =17000


29)

OAR is based on Patients per day basis.
out of 25000 patiens each stays @ average of 10 days in hoispital

soooo

total number of days spent by patients = 10 x 25000
                                       =250,000

OH       = 11,500,000
base     =    250,000


11500000/250000= 46$ per patient day!

[Dasith]

5) o/n 2007 -

4.

Many ways of solving this , it all depends on your thinking & hw well u knw
double entry !
Hers hw u do with accounts & stuff !

Fixed assets a/c

Debit :                               Credit:

Balance b/d 460                     Disposal     47
Purchases    92           

                                    balance c/d 505   


Disposal a/c

Debit :                                 Credit:
Fixed asset  47                         Cash 16
                                        Depreciation 31


Depreciation a/c

Debit :                             Credit:

Depreciation 31                    Balance b/d 215 000
                                   profit/loss  53 000

                                         
balance c/d 237 000                   


this is a very detailed meathod once u get the hang of it , u'll knw hw to calculate
with out accounts



11)
Did a similar sum like this before !
you can do a small appropriation a/c  & fnd hw much profit is shared amoung the partners
in this case its equal as partnership agreement dosent provide a sharing ratio/meathod!

so each partner gets 30000 profits

i.e 75 - (10% of 150)
profit to be shred is 60
each gets 30 + intrest on capital they are entitled for

x gets 30 + 6(10% of 60)
y gets 30 + 9(10% of 90)

hope u get it !

17)
we recieve cash of 1500 (500 x 3 ) + 250 from debentures

total is 1750 (increse in cash)
net assets = FA + Working capital

working capital includes cash so its incresed by 1750 my ans is (D)
but marking scheme says 1500 ( thats impossible )
because no liabilities increse , debenture is a long term liability so it has no
effect to working capital or the FA(fixed assets )
i really dont get it , sorry !!


23)

shareholders funds means, share capital + all the reserves including retained profits !

so return here means net profit after tax,

so no tax here but there is interest of 15% of 400 = 60

so 260- 60
=200 (profit after interest)

200/600 x 100%
=33.3333 %

[Dasith]

6) m/j 2008

27)
518400 is actaul overhead , but their predicted or preditermined overheads
were 32400 less than the actaul (underabsorption)
Thir budjeted overhead is therefore 518400-32400
i.e 486 000 , this was calculated using an absorption rate of (4x 5.40 ) per
unit. (4 here is direct labour hours per unit )

so to get the units :
486000/ (4x5.40) = 22500


7)m/j 2003

3.
                PFDD a/c
Debit:                                              Credit:

                                                                balance b/d(provision) = 580
profit & loss                     240       


balance c/d(17800 - 800) x 2/100 =340


as u can see PFDD this month is a credit on Profit & loss i.e an income
not an expence (because we reduce provision not increse)
& they ask the total of both PFDD & Bad debts:

so 800 is bad debts we recover 200
so bad debts are 600 now , but still its an expence shuld be on debit of p/l

so total expence charged to p & L is 600-240
i.e 360 !

9.
 bank reconsiliations u gotta think wat happens to our comany cash balance compared
with bank statement.:

it goes like this ;

Bank statement is overdrawn by                                              10136 O/D

Cheques drawn not presented-
(it means we draw cheques to pay creditiors, but creditors
didnt present em to bank )This causes business cash balance
to be lower than statement balance, so we add it since its an
o/d.                                                                                      4998

cheques paid in, not credited-
Business puts cah in bank but they havent recorded it in
banks a/c yet as it takes time to update thier a/c .
This causes cash balance in business to be higher than statement
since this is an overdraft we deduct it , it reduces o/d                  (5896)

bank interest not recorded in cash book causes cash book
balance to be higher than bank statement so we deduct it              (181)

& wat do we get cash balnce which was originally there                 9057(still over drawn)


but as u knw its not that simple they ask the balance @ balnce seet,
so u knw that when the business gets a bank statement they update cash
balance rite ? so the bank intrest is added to original cash balance since its an overdraft

9057+181 = 9238



   
15) i assume that u can value stock using FIFO !

closing stock is $500(2 units) valued using FIFO
Purchases are   $1350(6 units)
Sales are       $1600(4 units)

i think now u could calculate profit !!;D

its 750 ( 1600 - (1350-500) )

26)
Get difference of two totals of costs i.e
19600-15600 = 4000

get difference of two unit changes for the same costs i.e
90-65= 25

so now we knw that an increse in 25 units cased an increse in costs of 4000
so thats the variable costs for 25 units:
for 1 unit: 4000/25 =160

now get total variable costs for any production level ,(65/90/100)
u can get it by multiplying units with calculated variable costs per unit

i.e 160 x 65 =10400
FC= Take care -VC
5200=15600-10400

29)
hmm all u need to knw here is that @ break even VC + FC = Sales

sales=15000
Fc=    6000
VC=    9000 (15000-6000)

they ask variable cost per unit so:

units are 15000/10 = 1500 units
9000/1500 = $6 per unit

[Tohru Kyo Sohma]

5400 = 6000 x 95/100
or 6000-5% of 6000

the answer is 5700 not 5400 according to 6000 *95/100

[Dasith]

the answer is 5700 not 5400 according to 6000 *95/100

so sorry it shuld be

90/100**
&
the other one
6000 - 10% of 6000 ! ok ?

not 95 or 5% of 6000 lol
i've taken the cash discount , its trade discount which shuld be taken , purchase price is
taken as the price quoted by trader - trade discount because trade discounts are not supposed to be recorded
in accounts , only cash discounts.

[Dasith]

here the next ans:


8.o/n 2003

5,here u gotta make the a/c

FA (netbook value) account

Debit                           Credit:
balance b/d 28000             P&L(dep)     4000
Additions   10000              Disposal     9000
                                     balance c/d  25000





18, k , here 2001 @ balance sheet value of stock is @ cost
so profit here would be
40000 x 20% = 8000

@ 31st december 2002 its the trading a/c which includes the 20% profit they've given
so if u wanna get profit its gonna be

54000 /120 x 20= 9000

factory transfer value is 240000 x 20/100 = 48,000

AS u can see profit of 1000 is unrealised as its not sold yet ! its in closing stock
so we deduct the nrealised profit from factory profit
48000-1000
=47000


23,

current ratio is 2:1

only liability here is creditiors 10,000
if liabilities are 1 current assets are 2(according to ratio)
10000/1 x 2 =20000(current assets )

so if total CA's are 20,000

10000 + 4000 + D- 2000 = 20000
D=8000 //



28,

150/9.5= 15.789(OAR)

9500 x 15.789 =150,000


Actual is 16,000 ;
Budjeted overheads are 150,000

10000 is under absorbed !

[Tohru Kyo Sohma]

17)
we recieve cash of 1500 (500 x 3 ) + 250 from debentures

total is 1750 (increse in cash)
net assets = FA + Working capital

working capital includes cash so its incresed by 1750 my ans is (D)
but marking scheme says 1500 ( thats impossible )
because no liabilities increse , debenture is a long term liability so it has no
effect to working capital or the FA(fixed assets )
i really dont get it , sorry !!

i think its like this;
they receive 1500 from issue of shares
when they issue debentures of 250000 6%
cash is received
there 1500 +250=1750
my theory....guess its right?makes sense to me....how about u?

[Dasith]

yea exactly thats hw i did it but its wrong according to mark scheme !!
marking scheme ans is C!!

[Tohru Kyo Sohma]

THANK U THANK U  THANK U THANK U!!
u actually took all this time to solve my doubts!!!
thank u soooooooooooooooooooooooooooo much!

[Dasith]

THANK U THANK U  THANK U THANK U!!
u actually took all this time to solve my doubts!!!
thank u soooooooooooooooooooooooooooo much!

lol , its revision for me i guesss lol ,
& u r welcome