Financial Accounting 1

Topics: Balance sheet, Income statement, Debt Pages: 7 (805 words) Published: November 26, 2013
UNIVERSITY OF SOUTHAMPTON

MANG1001W1

SEMESTER 1 EXAMINATION 2012-2013
FINANCIAL ACCOUNTING 1
DURATION: 120 MINUTES (2 HOURS)

This paper contains FIVE questions.
Answer Question ONE from Section A [40 marks].
Answer ONE question from Section B [30 marks].
Answer ONE question from Section C [30 marks].
Please take care to allocate your time correctly.
An outline marking scheme is shown in brackets to the right
of each question.
All calculations should be supported by neat workings.
Only University approved calculators may be used.
A foreign language translation dictionary (paper version) is permitted provided it contains no notes, additions or annotations.

Copyright 2013 ©University of Southampton

Page 1 of 7

MANG1001W1
SECTION A
(Question A1 is compulsory)
A1. Levelfield Ltd. is a small business making Agricultural implements. You have been asked to draw up a profit and loss and balance sheet, for the year ending 31.3.12 for use in a loan application. The information given below relates to the transactions for this year.

Sales for the end of the year were £1,300,000.


Stock at 31.3.11 was valued at £27,000 with parts purchased during the year worth £30,000. The closing stock at 31.3.12 was estimated to be £17,000.



Equipment costing £1,000,000 was bought in January 2011
that is estimated to have a life of 10 years. A workshop was acquired in February 2011 year and cost £1,800,000. This is estimated to have a useful life of 20 years. Neither have any residual value and are both depreciated using the straight line method. Depreciation is charged in the year of purchase, but not in the year of disposal.



Credit sales of £230,000 (included in sales figure above) were made during the year. However, one client has gone bankrupt
owing £69,950. A further provision of £120,000 is to be made for doubtful debts. There was no opening provision.



The business has so far generated retained earnings of
£698,825 as of 31.3.11.



The business has £1,100,000 in share capital.



The firm owes £13,000 to suppliers for raw materials and
additional parts used in the manufacturing process.



There is cash at the bank of £14,825.



General expenses came to £35,000.



Energy worth £155,000 was used during this period. In
addition a payment of £10,000 relating to April 2012 was
made.

Copyright 2013 ©University of Southampton

Page 2 of 7

MANG1001W1
Show ALL workings clearly. Marks will be deducted for illegible presentation.
(i)

Prepare the Profit and Loss account for the year to
31.3.2012 and the Balance Sheet as at that date.
[30 Marks]

(ii)

Provide a brief commentary on the performance of the
business. Would you lend to this business? Give reasons for
your decision.
[5 Marks]

(iii)

Provide the correct double entry, Dr or Cr for each
transaction AND the appropriate accounts for the following : (a)
Owner increases capital.
(b)
Stock increased paid in cash.
(c)
Stock increased, purchased on credit.
(d)
Sales on credit. (Ignore Cost of Sales).
(e)
Payment of creditor.
[5 Marks]
[Total: 40 Marks]

TURN OVER

Copyright 2013 ©University of Southampton

Page 3 of 7

MANG1001W1
SECTION B
(Answer ONE question only)
B1. Singma Steelholders provides accounting information to its parent company at the beginning of every calendar year. The distribution center purchased a small crane on 1.1.10 for £500,000.
Depreciation is provided in the year of acquisition but not disposal, and is estimated at £50,000 per year. In 2012 the crane is sold for £425,000.
(i)

Draw up all the T accounts required to record this
transaction.
[15 Marks]

(ii)

Singma Steelholders also pays rent on a workshop in
arrears.
Rent
Date of Invoice
31.3.12
30.6.12
30.9.12
31.12.12

Amount
3,000
3,000
3,000
3,000

Paid
31.3.12
4.7.12
8.10.12
3.1.13

Draw up the T Account for the expense of rent showing any...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Essay on Accounting Basics: History Of Accounting
  • accounting final Essay
  • Accounting Issues: Accounting for Annual Health Insurance Fees Essay
  • International Financial Reporting Standards Essay
  • Conceptual Frame Work of Accounting Essay
  • International Financial Reporting Standards and Leases Essay
  • Essay on Generally Accepted Accounting Principles
  • FINANCIAL ACCOUNTING AND REPORTING 1 Essay

Become a StudyMode Member

Sign Up - It's Free
Slovakia | The Well Paid Receptionist - 2362 Words | Kari Wahlgren