Study Period 27 continued 3 Bill, Ben and Ted are in partnership sharing profits in the ratio 2:2:1 after allowing for a salary of $20,000 per annum for Ted.. It is agreed that Harry wil
Trang 1Study Period 27 continued
3 Bill, Ben and Ted are in partnership sharing profits in the ratio 2:2:1 after allowing for a salary of $20,000 per annum for Ted
The partner's capital balances are: Bill $45,000, Ben $25,000, Ted $20,000 Interest is paid
at 10% per annum
On 30 June 20X8 Bill retires, taking out his capital Ben and Ted agree that Ted's salary will
be discontinued and they will now share profits equally Profits for the year ended 31 December 20X8 is $130,000 This accrues evenly throughout the year
What is Ben's total share of profit for the year?
A $51,575
B $54,075
C $40,400
D $42,900
4 On 1 April 20X9 Ben and Ted take on a new partner, Harry, who contributes $20,000 capital Ted contributes an additional $5,000 capital on the same day It is agreed that Harry will receive a salary of $25,000 per annum and the new profit sharing ratio will be 2:2:1 (Ben, Ted, Harry)
Profit for the year ended 31 December 20X9 is $170,000 What is Ben's total share of the profit for the year?
A $72,437.50
B $62,087.50
C $64,587.50
D $72,087.50
Trang 2Study Period 27 continued
5 The following is an extract from the financial statements of Tornado Co at 31 December 19X9
Balance sheet as at 31 December 19X9
Called up share capital
$'000 Ordinary shares of $1 each 400
8% preferred shares of $1 each 50
450 Retained earnings 80
530
Income statement for the year ended 31 December 19X9
$'000 Profit on ordinary activities after taxation 45
Dividends
40 Retained profit for the year 5
What is the return on equity capital employed?
A 9.0%
B 10.0%
C 8.5%
D 11.3%
6 The following balances were extracted from a limited liability company's balance sheet at successive year ends
Year 1 Year 2
$ $ Income tax payable 354 216
Dividends payable 56 39
The tax charge in the income statement was $301,000 Dividends of $70,000 were declared before the year end
Trang 3Study Period 27 continued
7 Which of the items below would not appear on a cash flow statement?
A The nominal value of loan stock redeemed at par during the year
B The dividends paid to equity shareholders during the year
C The income statement charge for taxation for the year
D The purchase of non-current asset investments
Data for Questions 8 & 9
Extracts from a limited liability company's balance sheets show the following non-current assets
at net book value:
Intangible assets
Development expenditure 60,000 95,000
Property, plant and equipment
Freehold 750,000 1,230,000
Plant and machinery 320,000 370,000
Fixtures and fittings 105,000 90,000
The expenditure for the year on development projects had been $55,000 The depreciation
charge for property, plant and equipment was $100,000
8 What is the amortisation charge that should be included in the reconciliation of profit before
tax to net cash inflows from operating activities?
A $20,000
B $60,000
C $95,000
D $115,000
9 What is the additions figure for property, plant and equipment included under investing
activities?
A $615,000
B $515,000
C $415,000
D $100,000
Trang 4Study Period 27 continued
10 Which of the following must be shown on the face of the income statement rather than in the notes to the financial statements?
A Depreciation
B Dividends
C Operating profit
D Revenue
You will find the solutions to this test at the end of this Study Programme If you answer more than 5 questions correctly, your performance is satisfactory; if you answer more than 7 correctly, you are doing very well
You are now ready to attempt the second course exam These exams are designed to give you some question practice at an early stage in your studies to enable you to obtain feedback on exam technique Don’t worry too much if you have to revert to the material when answering questions Obviously it will be beneficial to attempt them without reference to your Study Text and notes, but it is the technique in producing answers that
is the valuable element at this stage
Once you have completed your attempt send your solutions, together with the front sheet, to:
Marking Department
BPP Professional Education
Aldine House
Aldine Place
142 – 144 Uxbridge Road
Shepherds Bush Green
London W12 8AW
Trang 5Answers to Progress Test 1
1 D
2 D
3 B
4 C The accounting equation is good check on this answer
Assets = Capital + Liabilities Opening capital 5,000 5,000
Non current assets 1,500 (1,500) Inventory 4,400
(4,400) Sales (2,200)
$200 per month (1,200) (1,200) Goods from inventory (150) (150)
7,500 = 4,500 + 3,000
5 A
$ Non current assets 12,000
3,000 Current assets
Receivables 2,100 Prepayment 500
2,600 Current liabilities
Overdraft 75 Payables 1,600 Tax payable 350
(2,025)
6 C (2/3 x 798.0) + 898.80 + 814.80 + 840.0 + (1/3 x 966.0)
Trang 6Answers to Progress Test 1 continued
7 A
$'000
Depreciation charge for the year (4) NBV @ 31 December 19X9 456
∴ Revaluation reserve 294
8 B 1.1.X5 cost $70,000
Depreciation charge =
7
$7,000
$70,000−
= $9,000
⇒ NBV after two years 31.12.91 = $52,000 Useful life revised to three years
⇒ Depreciation =
7
$7,000
$52,000−
= $15,000
⇒ NBV 31.12.X8 = $52,000 – $30,000 = $22,000
$
9 B
$
Decrease in receivables’ allowance (2,240 – 2% x 72,400) (792)
10 C
$ Balance per trial balance 50,000 Less bad debt written off (2,500) Add bad debt recovered 1,800
49,300
Trang 7Answers to Progress Test 2
1 C
$ Bank balance per bank statement (3,204) OD Unpresented cheques (780) Outstanding lodgements 370
∴ per balance sheet (3,614)
2 B
$ $ b/f 65,000 SDB overcast 300
Contra 1,500 ∴ c/f 63,200 65,000 65,000
3 B Receivables ledger
$ List of balances 63,620 Credit balance treated as a debit (2 × 210) (420)
63,200
4 B
$ FIFO 400 @ $6.20 2,480
300 @ $6.60 1,980
4,460
1,000 @ $5 5,000 1,200 @ $4.83 5,800
800 @ $6.20 4,960
300 @ $6.60 1,980
5 A
6 C
Trang 8Answers to Progress Test 2 continued
8 B
$
6c x 160,000 = 9,600
12,800
9 C
$ Cost of sales ($300,000 ×
125
100 )
240,000 Less decrease in inventory (14,000)
226,000
10 B
$ Purchases:
11,000 Cost of sales:
Opening inventory 6,000
17,000 Closing inventory (7,000)
10,000
Sales:
100
110 × 10,000 11,000
Cash received from receivables:
Receivables b/f 12,000
Receivables c/f (14,000)
9,000
∴ Cash introduced/withdrawn:
Received from receivables 9,000
Trang 9Answers to Progress Test 3
1 D
$ Turnover (80,000 + 10,000) 90,000 Gross profit (20,000 + 10,000 – 5,000) 25,000 90,000
25,000 = 27.8%
2 A
$
Short term investments 6,000
28,000
Income tax payable 7,000
20,000 20,000
28,000 = 1.4
3 B (a) January to June 20X8
$ Profit (130,000 × 6/12) 65,000 Less salary (20,000 × 6/12) (10,000) Less interest on capital:
Bill (45,000 × 10% × 6/12) 2,250 Ben (25,000 × 10% × 6/12) 1,250
Ted (20,000 × 10% × 6/12) 1,000 (4,500) 50,500
PSR Bill 20,200
Ben 20,200
Ted 10,100 (50,500)
–
(b) July to December 20X8
$ Profit (130,000 × 6/12) 65,000 Less interest on capital:
Ben (25,000 × 10% × 6/12) 1,250 Ted (20,000 × 10% × 6/12) 1,000 (2,250) 62,750
PSR Ben 31,375
Ted 31,375 (62,750)
–
Ben's total profit share:
Trang 104 C (a) January to March 20X9
$ Profit (170,000 × 3/12) 42,500 Less interest on capital:
Ben (25,000 × 10% × 3
Ted (20,000 × 10% × 3/12) 500 (1,125) 41,375
PSR Ben 20,687.50
Ted 20,687.50 (41,375)
–
(b) April to December 20X9
$ Profit (170,000 × 9/12) 127,500 Less interest on capital:
Ben (25,000 × 10% × 9/12) 1,875 Ted (25,000 × 10% × 9/12) 1,875 Harry (20,000 × 10% × 9/12) 1,500 (5,250) Less salary (25,000 × 9/12) (18,750) 103,500
PSR Ben 41,400
Ted 41,400
Harry 20,700 (103,500)
–
Ben's total profit share:
Interest on capital (625 + 1,875) 2,500.00 Profit share (20,687.50 + 41,400) 62,087.50
64,587.50
5 C
reserves and
capital share
Ordinary
dividend preferred
after Profit
=
80) (400
4) (45 +
− = 8.5%
6 C
Trang 11Answers to Progress Test 3 continued
7 C
8 A
INTANGIBLE NON-CURRENT ASSETS
$ $ B/f 60,000 ∴ Amortisation 20,000 Expenditure 55,000 c/d 95,000
115,000 115,000
9 A
PROPERTY, PLANT AND EQUIPMENT
$ $ b/f 750,000 Depreciation 100,000
320,000 c/d 1,230,000 105,000 370,000
∴ Additions 615,000 90,000
1,790,000 1,790,000
10 D