Accounting ACCN2 January 24th 2013

Help - desparate for answers to June 2012 ACCN2 - does anyone have a mark scheme?

I have the mark scheme in paper not the link. Don't know how to post it unless I take pictures of it all. Send me your email if you're happy with pictures of the scheme.

I just can't get the balance sheet for Shazad to balance - there are only 10 figures on it so you would think it would be easy!

Before the issue 242795 afterwards + 195000 (I assumed the revaluation reserve should be positive ie £20000).

Does anyone have any predictions on what will come up?
Income statement, computerised systems, types of business/companies? Does anyone think gearing and budgets will come up again?

Does anyone have any predictions on what will come up?
Income statement, computerised systems, types of business/companies? Does anyone think gearing and budgets will come up again?

Sole trader income statement with adjustments, business organisations, ratios and something to with statement of changes in equity

Here's the questions (without data, sorry) and my answers which apart from little tweaks I'm sure are roughly right, I thought it was a really easy exam personally too, but I might be wrong!

1)a) Work out the current ratio - 1.5:1
1)b) Work out the acid test ratio - 1:1 (or 0.997:1)
1)c) Stock turnover - 10times (or 36.5 or 37days)
1)d) Was he efficient with his net current assets? Basically, yes. He was turning stock over faster and holding it for shorter periods before he was selling it, etc.

2) Income statement
Notes:
1 - Decrease revenue by 8400 (the sale hasn't been made yet)
- Increase closing stock by 4200 (THIS IS MY ONLY MARK FOR CONCERN. Do you add the stock back on? It didn't say whether the stock had been reduced or not. It just said the 8400 had a 100% mark up, so the cost of the stock was 8400/2=4200)
2 - Closing stock reduced by 380 (damaged goods)
3 - Drawings of stock, reduce purchases by 588
4 - Interest accrued, due for this period, so add 120 onto interest (480+120=600)
5 - Bad debts received, add as an income of 530
6 - Depreciation of 6000. (27000-9000= NRV of 18000. 18000 x 33% = 6000)
7 - New provision = 5% x 18 800 = 940. Old provision = 680. 940-680= Net increase in provision of 260

Income statement for X for year ending 30th November 2012

Revenue 200 500
Opening Stock 12780
Purchases 100212
Closing Stock (13380)
Cost of Sales (99612)
GROSS PROFIT 100888

Interest 600
Bad Debts Received 530

EXPENSES:
Wages (67895)
General Exp (23000)
Depreciation (6000)
Net Increase in provision (260)

NET PROFIT 4863


3) There's more capital, profits will rise, someone else to share losses with, she has relevant managerial experience, she has more flexibility for herself (she could take a holiday and someone else can run the business). Also the capital ratios of 5:6 would mean that Lorraine gets 6/11% of all the profits, which although they increase, they don't increase by 5/11% so she actually will recieve a smaller salary and less drawings (should Carol want drawings and a salary too)

BUT decision making could be slower, she could argue with carol's points of view, this could slow decision making and the business could miss opportunities

OVERALL my judgement was that they should go through with the partnership because Carol could improve the business greatly, as pointed out by the forecasts (Remember this is my opinion and as long as it's justified you're right if you say they shouldn't go through with it)

4)a) 1250/20p = 6250<(shares in existence)
6250 x £1.50 = £9375

4)b) 6250x50=312500<(bonus shares issued)
312500 x 20p = £62500<(value of the bonus share issue)

4)c) 51x6250= 318750<(shares in existence)

4)d) Headings: Ordinary Shares Share Premium Revaluation Reserve Retained Earnings
1250 25000 0 851725
- - - (9375) (Dividends paid)
- - 150000 - (Revaluation of assets +150k)
62500 (25000) (37500) - (Bonus Shares Issue)
- - - (95625) (More dividends paid)
- - - 285472 (Retained profit for year)
TOTALS: 63750 0 112500 1032197

**The 285472 comes from the year's profits - the tax provision (I can't remember the exact figures)

That's it! If anyone wants to contest my answers please do, I hope this helps

Here's the questions (without data, sorry) and my answers which apart from little tweaks I'm sure are roughly right, I thought it was a really easy exam personally too, but I might be wrong!

1)a) Work out the current ratio - 1.5:1
1)b) Work out the acid test ratio - 1:1 (or 0.997:1)
1)c) Stock turnover - 10times (or 36.5 or 37days)
1)d) Was he efficient with his net current assets? Basically, yes. He was turning stock over faster and holding it for shorter periods before he was selling it, etc.

2) Income statement
Notes:
1 - Decrease revenue by 8400 (the sale hasn't been made yet)
- Increase closing stock by 4200 (THIS IS MY ONLY MARK FOR CONCERN. Do you add the stock back on? It didn't say whether the stock had been reduced or not. It just said the 8400 had a 100% mark up, so the cost of the stock was 8400/2=4200)
2 - Closing stock reduced by 380 (damaged goods)
3 - Drawings of stock, reduce purchases by 588
4 - Interest accrued, due for this period, so add 120 onto interest (480+120=600)
5 - Bad debts received, add as an income of 530
6 - Depreciation of 6000. (27000-9000= NRV of 18000. 18000 x 33% = 6000)
7 - New provision = 5% x 18 800 = 940. Old provision = 680. 940-680= Net increase in provision of 260

Income statement for X for year ending 30th November 2012

Revenue 200 500
Opening Stock 12780
Purchases 100212
Closing Stock (13380)
Cost of Sales (99612)
GROSS PROFIT 100888

Interest 600
Bad Debts Received 530

EXPENSES:
Wages (67895)
General Exp (23000)
Depreciation (6000)
Net Increase in provision (260)

NET PROFIT 4863


3) There's more capital, profits will rise, someone else to share losses with, she has relevant managerial experience, she has more flexibility for herself (she could take a holiday and someone else can run the business). Also the capital ratios of 5:6 would mean that Lorraine gets 6/11% of all the profits, which although they increase, they don't increase by 5/11% so she actually will recieve a smaller salary and less drawings (should Carol want drawings and a salary too)

BUT decision making could be slower, she could argue with carol's points of view, this could slow decision making and the business could miss opportunities

OVERALL my judgement was that they should go through with the partnership because Carol could improve the business greatly, as pointed out by the forecasts (Remember this is my opinion and as long as it's justified you're right if you say they shouldn't go through with it)

4)a) 1250/20p = 6250<(shares in existence)
6250 x £1.50 = £9375

4)b) 6250x50=312500<(bonus shares issued)
312500 x 20p = £62500<(value of the bonus share issue)

4)c) 51x6250= 318750<(shares in existence)

4)d) Headings: Ordinary Shares Share Premium Revaluation Reserve Retained Earnings
1250 25000 0 851725
- - - (9375) (Dividends paid)
- - 150000 - (Revaluation of assets +150k)
62500 (25000) (37500) - (Bonus Shares Issue)
- - - (95625) (More dividends paid)
- - - 285472 (Retained profit for year)
TOTALS: 63750 0 112500 1032197

**The 285472 comes from the year's profits - the tax provision (I can't remember the exact figures)

That's it! If anyone wants to contest my answers please do, I hope this helps