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LCCI International Qualifications

Book-keeping Level 1

Model Answers Series 4 2009 (1017)

For further information contact us:

Tel. +44 (0) 8707 202909 Email. [email protected] www.lcci.org.uk

Book- Keeping Level 1 Series 4 2009

How to use this booklet Model Answers have been developed by EDI to offer additional information and guidance to Centres, teachers and candidates as they prepare for LCCI International Qualifications. The contents of this booklet are divided into 3 elements: (1)

Questions

– reproduced from the printed examination paper

(2)

Model Answers

– summary of the main points that the Chief Examiner expected to see in the answers to each question in the examination paper, plus a fully worked example or sample answer (where applicable)

(3)

Helpful Hints

– where appropriate, additional guidance relating to individual questions or to examination technique

Teachers and candidates should find this booklet an invaluable teaching tool and an aid to success. EDI provides Model Answers to help candidates gain a general understanding of the standard required. The general standard of model answers is one that would achieve a Distinction grade. EDI accepts that candidates may offer other answers that could be equally valid.

© Education Development International plc 2009 All rights reserved; no part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise without prior written permission of the Publisher. The book may not be lent, resold, hired out or otherwise disposed of by way of trade in any form of binding or cover, other than that in which it is published, without the prior consent of the Publisher.

Page 1 of 11

QUESTION 1 Jason Booth extracted the following list of balances from his books at 31 March 2009:

£ 1,800 17,700 36,000 325,500 235,800 7,800 21,000 10,200 80,400 157,200 15,600 4,800 71,200 4,600 15,000 22,000 2,800 ?

Bad debts Drawings 4% loan Sales Purchases Discounts allowed Wages Discounts received Creditors Debtors Bank – overdrawn Cash Stock at 1 April 2008 Insurance Rent Fixtures and fittings Returns outwards Capital

REQUIRED (a) Prepare the Trial Balance at 31 March 2009. (19 marks) (b) State the six types of error which do not affect the agreement of the Trial Balance. (6 marks) (Total 25 marks)

1017/4/09/MA

Page 2 of 11

MODEL ANSWER TO QUESTION 1 (a)

Bad debts Drawings 4% loan Sales Purchases Discount allowed Wages Discount received Creditors Debtors Bank Cash Stock at 1 April 2008 Insurance Rent Fixtures and fittings Returns outwards Capital

Trial Balance at 31 March 2009 Dr £ 1,800 17,700

36,000 325,500 235,800 7,800 21,000 10,200 80,400 157,200 15,600 4,800 71,200 4,600 15,000 22,000 ……….. 558,900

(b) Omission Commission Original Entry Compensating Reversal Principle

1017/4/09/MA

Cr £

Page 3 of 11

2,800 88,400 558,900

QUESTION 2 Trudy Purcell maintains a Petty Cash Book on the imprest system, the imprest being £200. On Monday 1 June 2009 the balance of petty cash was £23.40. The imprest is restored each Monday at the start of business. The following payments were made: 2009 June 2 June 2 June 3 June 3 June 4 June 5 June 5

Details Creditor – K Cole Stationery Postage Cleaning Stationery Postage Creditor – M Lee

£ 25.60 28.90 12.60 35.80 12.36 13.24 18.39

The last Petty Cash Book voucher to be used on 29 May 2009 was number 1037. The analysis columns used are: Stationery Postage Cleaning Ledger

REQUIRED (a) (i) (ii)

Prepare the Petty Cash Book for the week ended Friday 5 June 2009 Balance the Petty Cash and bring the balance down to the week commencing Monday 8 June 2009. (Remove and use the sheet(s) on page 7 to present your answer) (15 marks)

Dan Bosworth purchased a machine at a cost of £10,200 from Green Equipment on 1 April 2007. He paid a deposit of £1,100 by cheque and agreed to pay the balance on 1 May 2007. The machine is expected to have a useful life of four years and disposal value of £600. Equal amounts of depreciation will be charged each year.

REQUIRED Prepare for the financial years ended 31 March 2008 and 2009 the: (b) Machinery Account (4 marks) (c) Provision for Depreciation on Machinery Account. (6 marks) (Total 25 marks)

1017/4/09/MA

Page 4 of 11

Balance c/d

Balance b/d Cash/Bank

June 5

June 8 June 8

Balance b/d Cash/Bank K Cole Stationery Postage Cleaning Stationery Postage M Lee

……… 200.00 53.11 146.89

Details

Date 2009 June 1 June 1 June 2 June 2 June 3 June 3 June 4 June 5 June 5

Receipts £ 23.40 176.60

(i) and (ii)

1017/4/09/MA

(a)

MODEL ANSWER TO QUESTION 2

1038 1039 1040 1041 1042 1043 1044

25.60 28.90 12.60 35.80 12.36 13.24 18.39 146.89 53.11 200.00 13.24 …….. 25.84

12.60

Postage £

Page 5 of 11

…….. 41.26

12.36

28.90

Voucher Payments Stationery Number £ £

Petty Cash Book

…….. 35.80

35.80

Cleaning £

18.39 43.99

25.60

Ledger £

MODEL ANSWER TO QUESTION 2 (b)

2007 April 1 April 1 2008 April 1 2009 April 1

Balance b/d

Machinery Account £ 2008 1,100 March 31 Balance c/d 9,100 10,200 2009 10,200 March 31 Balance c/d

Balance b/d

10,200

Bank Green Equipment

£ 10,200 ……… 10,200 10,200

(c) Depreciation = 10,200 – 600 = 2,400 per annum 4

2008 March 31

2009 March 31

Provision for Depreciation – Machinery Account £ 2008 Balance c/d 2,400 March 31 Profit & Loss/Depreciation 2008 April 1 Balance b/d 2009 Balance c/d 4,800 March 31 Profit & Loss/Depreciation 4,800 2009 April 1 Balance b/d

.

1017/4/09/MA

Page 6 of 11

£ 2,400 2,400 2,400 4,800 4,800

QUESTION 3 On 30 April 2009, the Cash Book of Amy Clark showed a balance at the bank of £2,140 (Dr). The bank statement received on 30 April 2009 revealed the following: (1) A cheque, £360, paid to D Ford, a creditor, was entered in the Cash Book as £630. (2) Bank charges not recorded in the Cash Book, £57. (3) On 12 April 2009 a cheque was received from L Bloor, a debtor, for £523. The cheque was dishonoured on 15 April 2009. No entry for the dishonour has been made in the Cash Book. (4) A Direct Debit payment for electricity, £213, had not been entered in the Cash Book. (5) On 29 April a cheque for £427 received from J Marshall, a debtor, was paid into the bank. The bank did not credit this until 2 May 2009. (6) The following cheques had not been presented to the bank for payment: Cheque Number 12031 12034 12035 12038

Payee M Butler M Swift S Jukes C Harris

Amount £ 310 125 236 149

REQUIRED (a) Starting with the balance of £2,140 (Dr), bring the bank column of the Cash Book up to date at 30 April 2009. (9 marks) (b) Prepare the Bank Reconciliation Statement at 30 April 2009. (11 marks) On 30 January 2009, J Durrant received a cheque from D Lay for £627. This represented a debt, which had been written off as a bad debt on 1 January 2008. J Durrant’s financial year ends on 31 March 2009.

REQUIRED (c) Prepare Journal entries to record the recovery of the debt. Narratives are not required. (5 marks) (Total 25 marks)

1017/4/09/MA

Page 7 of 11

MODEL ANSWER TO QUESTION 3 (a) 2009 April 30 April 30

May 1

Balance b/d D Ford

£ 2,140 270

Balance b/d

…….. 2,410 1,617

Cash Book (Bank Columns) 2009 April 30 Bank charges April 30 L Bloor April 30 Electricity (light and heat) April 30 Balance c/d

(b) Amy Clark Bank Reconciliation Statement at 30 April 2009 £ £ Balance as per Cash Book 1,617 Add: Unpresented cheques 12031 12034 12035 12038

M Butler M Swift S Jukes C Harris

310 125 236 149

Less: Cheques not credited J Marshall

427 ……. 2010

Balance as per Bank Statement

(c)

2009 Jan 30

Bank D Lay D Lay Bad Debts Recovered

1017/4/09/MA

820 2,437

Dr £ 627

Cr £ 627

627 627

Page 8 of 11

£ 57 523 213 1,617 2,410

QUESTION 4 On 1 October 2009 Benny Xu had the following Purchases Ledger Account balances:

P Wang M Gao T Hong

£ 6,120 12,400 5,200

Credit purchases during October 2009: Date

Supplier

Oct 1 Oct 8 Oct 15 Oct 22

C Nassif P Wang M Gao T Hong

List Price £ 7,400 5,340 12,600 22,940

Trade Discount 15% 10% 20% 25%

Returns outwards during October 2009: Date

Supplier

Oct 14 Oct 28

P Wang T Hong

List Price £ 660 2,200

REQUIRED Prepare for October 2009 the: (a) (i) (ii)

Purchases Day Book Returns Outwards Day Book. (8 marks)

On 29 October Benny Xu paid cheques to his creditors in full settlement of the amounts owing on 1 October 2009. M Gao allowed a discount of 2½% and T Hong allowed a discount of 1½%. P Wang allowed no discount on his balance.

REQUIRED (b) Prepare the ledger accounts of P Wang, M Gao and T Hong for October 2009. (c) Balance the ledger accounts in (b) above and bring the balances down to 1 November 2009. (17 marks) (Total 25 marks)

1017/4/09/MA

Page 9 of 11

MODEL ANSWER TO QUESTION 4 (a) (i) Purchases Day Book Date 2009 Oct 1 Oct 8 Oct 15 Oct 22

Supplier C Nassif P Wang M Gao T Hong

£

(7,400 – 1,110) (5,340 – 534) (12,600 –2,520) (22,940 – 5,735)

6,290 4,806 10,080 17,205 38,381

(ii) Returns Outwards Day Book Date 2009 Oct 14 Oct 28

Supplier P Wang T Hong

£

(660 – 66) (2,200 – 550)

594 1,650 2,244

(b) and (c)

2009 Oct 14 Oct 29 Oct 29

Returns Bank Balance c/d

£ 594 6,120 4,212 10,926

P Wang account 2009 Oct 1 Oct 8

Nov 1

2009 Oct 29 Oct 29 Oct 29

Bank Discount Balance c/d

£ 12,090 310 10,080 22,480

M Gao account 2009 Oct 1 Oct 15

Nov 1

2009 Oct 28 Oct 29 Oct 29 Oct 29

Returns Bank Discount Balance c/d

£ 1,650 5,122 78 15,555 22,405

T Hong account 2009 Oct 1 Oct 22

Nov 1

1017/4/09/MA

Balance b/d Purchases

Balance b/d

Balance b/d Purchases/PDB

Balance b/d

£ 6,120 4,806 ……… 10,926 4,212

£ 12,400 10,080 ……… 22,480 10,080

Balance b/d Purchases/PDB

£ 5,200 17,205

Balance b/d

……… 22,405 15,555

Page 10 of 11

Please staple the completed sheet into your answer book

1017/4/09/MA

£

Receipts

For Question 2 (a)

Date

Details

Voucher number

Page 11 of 11

£

£

Petty Cash Book

Total

£

£

£

© Education Development International plc 2009

£

Analysis Columns

Candidate No:……………………….. Centre No:……………………………

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© Education Development International Plc 2009. All rights reserved. This publication in its entirety is the copyright of Education Development International Plc. Reproduction either in whole or in part is forbidden without the written permission from Education Development International Plc.