Level 3 Accounting, 2012

Transcription

1 SUPERVISOR S Level 3 Accounting, Process financial information for partnerships and companies 9.30 am Monday 26 November 2012 Credits: Three Check that the National Student Number (NSN) on your admission slip is the same as the number at the top of this page. You should attempt ALL the questions in this booklet. Show ALL working. If you need more room for any answer, use the extra space provided at the back of this booklet. Check that this booklet has pages 2 8 in the correct order and that none of these pages is blank. YOU MUST HAND THIS BOOKLET TO THE SUPERVISOR AT THE END OF THE EXAMINATION. Achievement Criteria Achievement Achievement with Merit Achievement with Excellence Prepare and / or explain accounting entries correctly for partnerships and companies. Prepare and / or explain a range of accounting entries correctly for partnerships and companies. Overall level of performance Prepare and explain a wide range of accounting entries correctly for partnerships and companies. New Zealand Qualifications Authority, All rights reserved. No part of this publication may be reproduced by any means without the prior permission of the New Zealand Qualifications Authority.

2 2 You are advised to spend 30 minutes answering the questions in this booklet. QUESTION ONE: PROCESSING FOR COMPANIES (TUMSL), a 24-hour, 7-day emergency medical facility, commenced business on 1 April (a) Show the General Journal entry to record the initial issue of shares at $10 per share, paid in cash. This is not a public issue of shares. General Journal 1 / 4 / 11 (Initial issue of shares at a fair value of $10 per share) (b) Between April and September, TUMSL issued an additional shares to local doctors. On 30 September 2011, an interim dividend for 2012 was declared at 24 cents per share and was paid to shareholders on 15 October Complete the General Ledger account for the interim dividend for 2012, including the closing entry on balance day, 31 March Dates are required. General Ledger Interim Dividend (2012) (c) Explain the TWO components of the solvency test, which the directors of TUMSL must sign off before paying any dividends.

3 (d) On 1 October 2011, TUMSL issued a prospectus offering shares to the public. The offer was managed by Reliable Sharebrokers Limited. By 30 October 2011, all shares on offer had been purchased by the public at a value of $22.50 per share. Reliable Sharebrokers Limited had issued share certificates, and had forwarded the cash received to TUMSL, less a 4 % Reliable Sharebrokers Limited brokerage fee. Complete the Contributed Equity General Ledger entry necessary to record the issue of shares to the public managed by the sharebroker for TUMSL. 3 General Ledger Contributed Equity 30 / 9 / 11 Balance CR 30 / 10 / 11 (e) Profit before tax for the year ended 31 March 2012 amounted to $ The taxation expense for the year is $ Complete the General Journal entries indicated by the narrations in the General Journal below. General Journal (To record taxation expense for the year) (Profit for the year transferred to retained earnings closing journal entry)

4 (f) Use relevant information from (a) to (e) to complete the Retained Earnings ledger account for the year ended 31 March There is no opening balance. 4 General Ledger Retained Earnings (g) On 10 April, the directors of TUMSL declared a final dividend of 40 cents per share for the year ended 31 March 2012, to be paid on 15 May Explain why this final dividend will not be processed in the financial records of TUMSL for the year ended 31 March 2012.

5 5 Question Two begins on page 6.

6 6 QUESTION TWO: PROCESSING FOR PARTNERSHIPS Roger Bunny had a sole proprietor veterinary practice for a number of years. On 1 April 2010, Roger formed a partnership with his brother Peter. The business is now called Bunny Brothers Vets, and commenced on 1 April (a) In Roger Bunny s sole proprietorship financial records, Accounts Receivable were recorded at $ On introduction of this asset to Bunny Brothers Vets partnership financial records on 1 April 2010, it was agreed to value Accounts Receivable at $ Describe how Accounts Receivable would have been recorded in the General Journal entry to account for Roger Bunny s contribution to the partnership. Explain why Accounts Receivable was recorded in the way you have described. The following information relates to Bunny Brothers Vets at 31 March Bunny Brothers Vets Trial Balance (extract) as at 31 March 2012 Current Peter Current Roger Drawings Peter Capital Peter Drawings Roger Capital Roger Additional information: The residual profit for the year ended 31 March 2012 to be shared, after distributions and charges to partners per their partnership agreement, was $ The terms of the partnership agreement between Roger and Peter include: Interest on capital accounts: 5 % per annum on closing balances Interest on current accounts: 10 % charged / credited on closing balances Interest on drawings: 15 % per annum of the amount above an agreed level of drawings for Roger $ and for Peter $ Residual profits and losses are shared by Roger and Peter in a ratio of 2 :1, respectively.

7 (b) Complete the General Journal entries indicated by the narrations in the General Journal below. 7 Bunny Brothers Vets General Journal (To account for Peter s interest on capital at 5% of closing balance) (To close Roger s drawings to his current account) (c) Complete Peter s Current account as at 31 March The opening balance has been entered for you. Bunny Brothers Vets Current account Peter 30 / 9 / 11 Balance Dr (d) Explain why, in their partnership agreement, Roger and Peter have included a clause charging interest on drawings above an agreed level.

8 8 QUESTION NUMBER Extra space if required. Write the question number(s) if applicable