Complete Accounting Solutions

johnnyq

Hi Folks,

I was really shocked looking at ye're posts about this years accounting being really hard so, being involved in the whole accounting game myself, I had a look at the paper for myself.

I did the leaving a few years back so the predictions were rife then too (but our predictions were right:pac:)

I'm sick today so to pass the time I did the paper and I might as well share my answers with ye to cheer ye up. Really though, if ye have wrote anything they will give ye marks for it so don't give up all hope of A's yet!

All in all, yes some of the theory was a bit cat but the Q's themselves weren't as much hard but long.

I did Q1,Q6,Q7,Q8.

See Theory Page 2

jhn_noln

did u forget to put up the link???

johnnyq

P&L Account

Sales ....................................................................729000
Cost of Sales
Op Stock............................................65600
Purchases....................................485600
........................................................551200
Less Cl Stock.................................(79800)
..................................................................... (471400)
Gross Profit.............................................................257600

Expenses
Admin
Salaries.............................................85000
Rent...................................................9000
Insurance............................................6100
Dep: Buildings.....................................11600
Amt: Patent........................................11000
...................................................................122700
Selling
Comm..................................................4200
Depc: Vans.........................................13425
Loss on Sale.........................................8750
Discount...............................................1700
......................................................................28075 (150775)
........................................................................................106825
Add B/d Recovered.............................................................1000
Operating Profit....................................................................107825
Add Investment Income.............................................................7800
Less Mortgage Interest........................................................(6600)
Retained Earnings...........................................................109025

Balance Sheet
Int: Patent.............................................44000
Tangibles: Buildings................................800000
Tangibles: Van.........................................76825
Financial: Investments.......................130000
........................................................................1,050,825
Current Assets
Cl Stock...................................79800
Investment Inc Due......................5200
Debtors......................40400
Less Provision.............(1200) 39200
............................................... 124200

Current Liabilities
VAT...............................4100
PRSI..............................3900
Creditors......................113800
Mort. Int. Due...................6750
Bank...............................15300.. (143850)
Working Capital...........................................(19650)
Total Net Assets.......................................1,031,175

Financed By:
Creditors: Mortgage...................................................150000
Capital & Reserves
Capital..................................485000
Net Profit...............................109025
Revaluation Reserve..............326600
..............................................920625
Less Drawings:....................(39450)
.........................................................................881175
Capital Employed ...........................................1,031,175

johnnyq

Question 6: Cash Flow

(a) (i)
Operating Profit...........................................169000
Less: Interest...............................................17000
Profit Before Tax.........................................152000
Taxation......................................................60000
Profit After Tax.............................................92000
Dividends.....................................................54000
Retained Earnings for Year..............................38000
Retained Earnings 1/1...................................452000
Retained Earnings 31/12................................490000

(ii) Reconciliation of Op Profit to Net Cash Inflow
Operating Profit....................169
Adjustments
Depc. Charge.......................+150
Profit on Sale of Asset.............-10
Inc. In Stocks......................-108
Inc. In Debtors......................-60
Dec. In Creditors...................-33
Net Cash Inflow from OA.........+108

Cash Flow Statement
NCI from OA.........................+108

ROI and Servicing of Finance
Interest Paid.........................-17

Taxation
Tax Paid...............................-51

Capital Expenditure
Payments to Acquire TFA..-190
Receipts from Sale TFA......+40
Receipts from Investment..+100..-50

Equity Dividends
Dividends Paid........................-54
Net Cash Outflow Before Financing.......-64

Management of Liquid Resources
Purchase of Gov. Securities................-70
..........................................................-134

Financing
Purchase of Debentures................+50
Issue of 60K Shares at 30C premium +78...+128
Decrease in Cash......................................-6

Reconciliation of Net Cash Flow to Movements in Net Debt
Decrease in Cash...............................-6
Cash for Gov Securities.......................+70
Cash from Debentures.........................-50
Change in Net Debt.............................+14
Net Debt 1/1 ....................................-84
Net Debt 31/12..................................-70

johnnyq

Question 7: Suspense Accounts

(i) Journal Entries

(i)
Dr: Suspense 800
Cr: Bank 800

(ii)
Dr: Sales 2800
Cr: Capital 2800

(iii)
Dr: Debtor 600
Cr: Bank 550
Dr: Discount 50

Dr: Bad Debt 600
Cr: Debtor 600

(iv)
Dr: Suspense 8000
Cr: Cash 8000

Dr: Vehicles 12000
Dr: Drawings 8000
Cr: Capital 20000

(v)
Dr: Vehicles 260
Dr: Repairs 160
Dr: Drawings 100
Cr: Suspense 520

(b)
Suspense Account:
Dr: Bank 800
Dr: Cash 8000
Cr: Vehicles 520
Balance Cr: 8280

(c)
Correct Net Profit
Profit as Per Accounts...........15000
Add: Discount Disallowed............50
.........................................15050
Less:Sales..............2800
.......Bad Debt...........600
.......Repairs.............160........(3560)
Corrected Net Profit..............11490

(d)
Corrected Balance Sheet
Fixed Assets
Premises.....................400000
Motor Vehicles...............32260
Furniture......................16000
Total....................................448260

Current Assets
Stock.................17000
Debtors...............5600
Cash...................(4800)
.........................17800

Current Liabilities
Creditors......3920
Bank............6950.(10870)
Working capital.........................6930
............................................455190

Financed By:
Capital/.....................463800
Corrected Net Profit..... 11490
...............................475290
Drawings....................(20100)
............................................455190

johnnyq

Question 8: Marginal Costing

The observant Slashman X has spotted a stupid mistake I made:
Corrections
FC = 122500
VC = 339500
VCPU = 24.25
Contribution PU = 40 - 24.25 = 15.75
All corrected now


(a) Marginal Costing Statement
Sales P.U. 40
VC....P.U. 24.25
Con...P.U. 15.75

(i) BEP = 122500/15.75 = 7778 units

MOS = 14000 - 7778 = 6222 units

(ii)
Sales - VC - FC = Profit
34000(38) - 34000(24.25) - 122500 = P
P = €345,000

(iii)
Sales - VC - FC = Profit
36n - 24.25n - 122500 = 20%(36n)
36n - 24.25n - 7.2n = 122500
n = 26924 units

(iv)
Increase in SPU = +2
=> Increase in VCPU = 5%(2) = 0.1

New VCPU = 24.25 + 0.1 + 1 (Packaging) = 25.35

Sales - VC - FC = Profit
42(19000) - 25.35(19000) - 122500 = 193,850

(v) Contribution Sales Ratio used for breakeven analysis

(b)
(i) Using Hi-Lo
Variable Cost of 8000 units is 48000 => VCPU = 6

=> Fixed Cost using 90% output = 114000 - 18000(6) = 6000

(ii)Using Hi-Lo
Variable Cost of 8000 units is 42000 => VCPU = 5.25

=> Fixed Cost using 90% output = 99000 - 18000(5.25) = 4500

(iii)
flexible Budget
Sales 19000 units............785000......41.32 PU
Less VC.........................631750......33.25 PU
Contribution...................153330........8.07 PU
Fixed Costs.....................35500
Net Profit......................117830

Where SPU found by:
Sales - VC - FC = Profit
19000S - 631750 - 35500 = 15%(19000S)
S = 41.32

johnnyq

Well Folks that's all I have for ye.

If ye've questions or you want a break down of where the numbers came from fire away or PM me

postalservice

Haha
These answers look familiar enough!( as in some )
Thanks

drunknmunky_69

aw sweet...i was really unsure about the first suspense working.i actually got it right.Thanks for the solutions

Slashman X

How did you get 62500 for the Fixed Costs in Marginal?

I think you forgot to add the 60,000 from the factory overheads

johnnyq

Slashman X wrote: »

How did you get 62500 for the Fixed Costs in Marginal?

I think you forgot to add the 60,000 from the factory overheads

Arrrrrrrrrrrhhh

I guess we can't always get things perfect.

Fixed Costs in Marginal is of course the 62500 I said earlier and a 2 thirds of the Factory Overheads = 60000

=> Total Fixed Costs = 62500 + 60000 = 122500

=>VC = 339500...... => VCPU = 339500/14000 = 24.25

This of course has knock on effects on all the other answers but there's no way i'm doing it again (I already got my A1 )

Edit: Ok, though I swore I wouldn't I've corrected the answers anyway. I did it quickly so there still may be some errors left, but just ignore those, it's the method that counts

Slashman X

BEP is 7777 or something like that I believe

alan4cult

Slashman X wrote: »

BEP is 7777 or something like that I believe

Oh thank God. I was sh**tin it.

johnnyq

Slashman X wrote: »

BEP is 7777 or something like that I believe

I hope you rounded the units up to 7778 (our teacher used to correct and went nuts at a fella once for not doing this, apparently you lose a mark if you round down, so I was told anyway!)

Slashman X

johnnyq wrote: »

I hope you rounded the units up to 7778 (our teacher used to correct and went nuts at a fella once for not doing this, apparently you lose a mark if you round down, so I was told anyway!)

Of course I did

I just remembered the 7777.7777 on the calculator

alan4cult

I did too!

johnnyq

Just a quick look at some of the theory. :eek:;)

Q2:Adv of Control Accounts
1) Check on Accuracy
2) More speedily check and detect errors
3) used for incomplete records
4) can find totals of creditors/debtors quickly.

Q3: Use of special purpose P&L
- used to localise profit/loss making activities to enable better managment and control of different profit centres.

Q4: Contingent Liability:
NOt recorded in the accounts but included in the notes

Regulations: Companies Acts, EU directives, Stock Market regulations, Professional Standards.

Q6: Cash Flows
Profit vs Cash: Credit Sales/Purchases
Withdrawing Capital
Purchase A Fixed Asset
Depreciation/Timing Differences

Accounting Standards board: (I'd say this one really caught ye!)
-Part of the Financial Reporting Council with sole responsibility for setting accounting standards.
-Issues FRS's on differnent aspects of accounting practice to enable greater reliability and comparability between accounts.
-It has influenced the preparation of Cash Flow statements through FRS 1 (revised) which has introduced standard headings and methods for preparing such statements.

Q7: Suspense
Commission: Correct Side of the Wrong Account: e.g. Debtor A.Allen instead of B.Allen
Principle: Correct side of the wrond class of Account. e.g. Revenue Expenses e.g. Repairs recorded instead in an asset account.

Q8: Done already

Q9: Budgeting
Capital Budget used for making investment decisions. Aids the planning, decision making, and controlling of such investments. e.g. whether to start a new production line

Principal Budget Factor:
Availability of Raw Materials
Cash.


I'd say most of the theory will be worth very little to keep the grades in line with previous years. I bet those of you who think you've lost your A1's will still find yourselves with them in August.

nerd3000

Cheers johnnyg!

Any chance of throwing up the Published and Club 60s!?

muffinman

johnnyq wrote: »

Q4: Contingent Liability:
NOt recorded in the accounts but included in the notes

That's hardly a definition... Plus contingent liabilities can be included in the accounts if they're likely to be incurred by the firm...

johnnyq

muffinman wrote: »

That's hardly a definition... Plus contingent liabilities can be included in the accounts if they're likely to be incurred by the firm...

Question states:
State how the company would deal with a Contingent Liabilility which is possible but unlikely.
Note I was taking a shortcut when I titled it 'contingent liability' just so that you'd get the gist.

No definition required.

There's nothing wrong with what you said but the question said unlikely. Hence it is just included in the notes. I can quote you the standard if you wish.

Edit: Woo 600th Post!

muffinman

johnnyq wrote: »

Question states:
State how the company would deal with a Contingent Liabilility which is possible but unlikely.

No definition required.

There's nothing wrong with what you said but the question said unlikely. Hence it is just included in the notes. I can quote you the standard if you wish.

oops sorry I stand corrected.. I didn't do that question.. ignore me

SimpleLogic

nerd3000 wrote: »

Cheers johnnyg!

Any chance of throwing up the Published and Club 60s!?

+1

johnnyq

Right so back at work today so I did Q3,4 and 9 out quickly so there may be some mistakes, correct me by all means.

Question 3 Club Accounts

(a) Accumulated Fund
Assets
Clubhouse…………………………750000
Bar Stock……………………………..7000
Equipment…………………….…….26000
Bar Debtors……………………..……..535
Investment Interest Due….…..400
Bank…………………………...……14000
Investment……………………..……24000
Levy Due………………………..……2500……….824435

Liabilities
Life Membership…………………….40000
Bar Creditors…………………….……6000
Levy Reserve Fund……………..……50000
Wages Due…………………………….2500
Subs Prepaid…………………...………1600
Loan…………………………..………30000
Loan Interest Due………………………2600….…132700

Accumulated Fund…………………………………691735

(b) Income & Expenditure A/c
Income
Bar Profit……………35980
Entrance Fees………..15000
Catering Profit………..6000
Annual Sponsorship…25000
Investment Interest……1200
Subscriptions……….194500
Life Membership w/o....4200…………281880

Expenditure
Sundries……………183900
Lessons………………4600
Loan Interest…………1000
Depr: Equipment…....14200
Depr: Clubhouse…….15000…………218700

Excess Income………………………….63180

johnnyq

Question 4: Published Accounts

Profit And Loss A/c
Turnover…….......1990
Cost of Sales…….(1103)
Gross Profit……...…887
Distribution……..(302.6)
Admin……….…...(236.4)
………………….........348
Add Op Inc……....….71
………………….........419
Invest Inc………....…13
Profit on Land……...70
……….......…………..502
Less Interest…..…(24)
Profit B4 Tax........478
Less Tax…....………(85)
Profit After Tax.....393
Less Dividend.......(43)
Retained Profit…....350
Bal b/f 1/1……........50
Bal c/f 31/12…...….400

Balance Sheet
Intangible Assets…….40
Tangible Assets…….922
Financial Assets…….260…….....1222

Current Assets
Stocks…………..222
Debtors…………257
Bank……………..77......…566

Creditors
Trade Creditors..197
Taxation……….155
Other Creditors…72….(424)
Net Current Assets………….....…132
Total Assets – Current Liab…..1354

Creditors
8% Debentures…………....…………..300

Capital & Reserves
Called Up Share Capital…450
Revaluation Reserve……..204
P&L b/f 31/12………....……400……1054
Capital Employed…………….....……1354

johnnyq

Question 9 – Budgeting

(a) Production Budget
Super = 9880 units
Supreme = 4110 units

(b) Raw Material Purchases
Material X = €266130
Material Y = €457800

(c) Cost of Manufacture
Direct Materials = 725930
Direct Labour = 1326520
Variable O/H = 408160
Fixed O/H = 204080
Total Production Cost = 2664690

(d) Trading Account
Sales………………….....…..3292000
Opening Stock…135000
Manufacture…..2664690
………………........2799690
Closing Stock….(162000)
……………………….......…..(2637690)
Gross Profit…………....…….654310



Again if ye've any q's just ask:)

SimpleLogic

how did you get Investment……………………..……24000
for club account?

johnnyq

Grand,

There is no investment amount listed in the starting list but yet we have investment interest due there at the start, so we have to figure out what the investment is to include in the accumulated fund.

The €400 investment interest due refers to last year's interest and in total we were paid interest of €1600.

Since there is no interest outstanding at the end of the year we take it that the €1600 is the combination of the €400 at the start of the year and the interest payable in this year. i.e. €1200

If €1200 if the amount of interest we're due this year from the 5% return investment then €1200 = 5%
=> €24000 = 100%.

Slashman X

From Memory:

5% = 1600 (Interest)
100% = 24000

Those figures are probably wrong btw

SimpleLogic

alright kewl missed that 400 due bummer...

armbruster

Fair play to you for doing out all these accounts. Thanks, you've put my mind at rest concerning the published accounts!
I'm guessing your doing accounting/business in college?

JJPW89

johnnyq wrote: »

Question 7: Suspense Accounts

(d)
Corrected Balance Sheet
Fixed Assets
Premises.....................400000
Motor Vehicles...............32260
Furniture......................16000
Total....................................448260

Current Assets
Stock.................17000
Debtors...............5600
Cash...................(4800)
.........................17800

Current Liabilities
Creditors......3920
Bank............6950.(10870)
Working capital.........................6930
............................................455190

Financed By:
Capital/.....................463800
Corrected Net Profit..... 11490
...............................475290
Drawings....................(20100)
............................................455190

I didn't think it was possible to have a negative cash figure??????

Stin

dont suppose theres any chance of you putting up the creditors control a/c? please

nerd3000

thanks for all that man,
two questions:

The life m'ship of 2400 in the I & E?

and

Admin Expenses
-Depr on Build
- Admin
- Auditors
-Directors
and ??????

armbruster

nerd3000 wrote: »

thanks for all that man,
two questions:

The life m'ship of 2400 in the I & E?

and

Admin Expenses
-Depr on Build
- Admin
- Auditors
-Directors
and ??????

patent royalty.

Dont ask me, I just know it goes in under admin expenses and again as income in the P+L, that's the way it was on the 2005 100 marker.

college2008

was the P/L figure for the published account exactly 400,000


Please say yes................

Stin

college2008 wrote: »

was the P/L figure for the published account exactly 400,000


Please say yes................

i got that too! Shame published didnt come up as a 100 marker, thats the only question i really had "down"

college2008

Stin wrote: »

i got that too! Shame published didnt come up as a 100 marker, thats the only question i really had "down"

i originally had 397000 as the end figure, so when i looked back and saw 3000 for unquoted investment, i just threw it in to make a nice round 400,000.

nice


still.....accounting sucked

Stin

sure did, it dropped me down like 30 points

johnnyq

Stin wrote: »

dont suppose theres any chance of you putting up the creditors control a/c? please

No bother!

Creditor's Control A/c

Debit Side
Bal b/d................630
Invoice Err (i)........60
Credit Note (ii).....120
Bal c/d.............17585
........................18395

Credit Side
Bal b/d.............17550
Interest (iii)...........50
Charge (v).............11
Error (v)................90
Discount Dis (vi).....64
Bal c/d................630
.......................18395

Schedule of Creditors
Balance as per List.................16480
Add
Invoice (i).......................510
Cash Purchases (iv)..........140
Discount Dis (vi)................64....714
..........................................17194
Less
Credit Note (ii)................222
Interest (iii).....................17.....239

Balance as per Control A/c.......16955

johnnyq

nerd3000 wrote: »

thanks for all that man,
two questions:

The life m'ship of 2400 in the I & E?

I had 4200 rather than 2400, but yep that's the amount of life m written off to income this year

Life memberships are like deferred income. They're written into the accounts as a reserve and the club draws down on them each year for 10 years. It's similar to depreciation for assets.

4200 * 10 = 42000 which is made up of the 40000 we had at the start of the year and an extra 2000 for the new life membership we had in subs.

nerd3000 wrote:

Admin Expenses
-Depr on Build
- Admin
- Auditors
-Directors
and ??????

The four you listed were the only ones to go under Admin Expenses. You had to take patent royalties out of Admin first though.

JJPW89 wrote:

I didn't think it was possible to have a negative cash figure??????

Yep, this either points to cash that is unrecorded in the accounts or I could have bundled it under bank o/d, but just to keep to the format in the q I left cash as a negative figure.

johnnyq

armbruster wrote: »

Fair play to you for doing out all these accounts. Thanks, you've put my mind at rest concerning the published accounts!
I'm guessing your doing accounting/business in college?

Yep, on work placement atm! Very little to do except bookkeeping and looking at boards.ie, but i'm not complaining!

Overall have the answers helped people? Does everyone still think they're dropping from A's to C's?

Sure, I remember panicing about not getting my course too but sure it all worked out in the end.