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Answers
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ACCA Certified Accounting Technician Examination Paper T6 (UK) June 2011 Answers
Drafting Financial Statements (UK Stream) and Marking Scheme
Section A
1 C
2 C Phil James
Profit 265,625
Salary 25,750 (25,750)
Interest on capital
(200,000 x 5%) (10,000)
(100,000 x 5% x ) 10,000 2,500
(125,000 x 5% x ) 3,125 (5,625)
Profit share 112,125 112,125 224,250
Total profit share 147,875 117,750
3 D
4 B
5 A
Consideration 8,000,000
Less
Fair value of net assets at acquisition 8,750,000
Group share x 75%
6,562,500
Goodwill 1,437,500
6 A
7 C
8 C
Profit after tax 21,800
Preferred dividend 1,800 (6% of 1 x 30,000)
Profit after tax and preferred dividend 20,000
Ordinary dividend 12,000 (60%)Retained Profit 8,000 (40%)
12,000/100,000 = 12 pence
9 D
10 C
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Section B
Marks Workings 000
1 (a) (i) Bayzell Ltd
Profit and loss account for the year ended 31 May 2011 05
000
Turnover 11,483 10 (11,700 217)
Cost of sales (W1) (7,910) 65
Gross profit 3,573
Distribution costs (W1) (578) 35
Administrative expenses (W1) (1,518) 55
Operating profit 1,477
Interest (30) 05
Profit on ordinary activities before tax 1,447
Tax on profit on ordinary activities (310) 05
Profit on ordinary activities after taxation 1,137
180
(ii) Statement of total recognised gains and losses
Profit for financial year 1,137 05
Unrealised surplus on revaluation of property 90 10 (1,550 1,460)
Total recognised gains and losses relating to the year 1,227 05
20
(iii) Bayzell Ltd
Balance sheet as at 31 May 2011 05
000 000
Fixed assets
Tangible assets (W2) 6,092 40
Intangible asset (W3) 336 10
6,428Current assets
Stock 465 05
Trade debtors 1,819 15 (1,900 95 + 14)
Cash at bank 232 052,516
Creditors: amounts falling due within one year
Trade and other creditors 1,886 15 (1,488 + 310 + 88)
Net current assets 630
Creditors: amounts falling due after more than one year
Debentures (300) 106,758
Capital and reserves
Share capital 4,400 05
Share premium 486 05
Revaluation reserve 90 10
Profit and loss account 1,782 15 (800 + 1,137 155)6,758
140
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Marks
Workings
W1 Cost of Distribution Administrative
Sales Costs Expenses
000 000 000
Opening stock 990 05
Purchases 6,850 05
Wages and salaries (40:30:30) 448 336 336 15
Insurance (108 14) (50:50) 47 47 20
Electricity expenses (542 + 88) (60:20:20) 378 126 126 30
Administrative expenses 500 05
Increase in allowance for debtors 33 10
Discounts received (590) 10
Directors remuneration 430 05
Depreciation plant 136 05
Depreciation buildings (50:30:20) 115 69 46 30
Amortisation of intangible asset 48 05
Closing stock (465) 10 7,910 578 1,518
(65 marks) (35 marks) (55 marks) 155
W2 Fixed assets Total
Property, Plant
Land Buildings Plant & Equipment
000 000 000 000
Cost 1,460 4,600 1,362 7,422
Depreciation b/f (372) (682) (1,054)
Current years depreciation:
Plant (1,362 682) x 20% (136) (136)
Buildings 4,600 x 5% (230) (230)
Revaluation of land 90 90 1,550 3,998 544 6,092
(1 mark) (15 marks) (15 marks) (4 marks)W3 Intangible Assets
000
Cost 384
Amortisation (384/4)*6/12 (48)
Value as at 31 May 2011 336
(b) Accounting ratios
Earnings per shareProfit after tax
=1,137
= 258 pence No. of ordinary shares 4,400
Interest cover
Profit before int and tax
=
1,477
= 492 times Interest charges 30
Acid test (quick) ratioCurrent assets stock
=2,051
= 11:1 Current liabilities 1,886
Payments collection periodTrade accounts payable
x 365 =1,488
x 365 = 793 days Purchases 6,850
Alternative calculation:
Payments collection periodTrade accounts payable
x 365 =1,488
x 365 = 687 days Cost of sales 7,910
Marking scheme: 05 mark for stating the correct formula and 1 mark for calculating the correct ratio.
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Marks
2 (a) Calculation of the profit before tax
Accumulated profit and loss account
000 000
Taxation 20 Bal. at 1 June 2010 50 10
Dividends 35 Profit before tax (Bal. fig) 127 20
Interest 2 10
Bal. at 31 May 2011 120 10 177 177 50
(b) Prepared in accordance with FRS 1
Erley Ltd
Cash flow statement for the year ended 31 May 2011 05
000 000
Net cash inflow from operating activities (Note 1) 183
Returns on investments and servicing of finance
Interest paid (2) 05
Taxation
Tax paid (25) 20
Capital expenditure and financial investment
Payments to acquire tangible fixed assets (W1) (316) 25
Receipts from sale of tangible fixed assets 30 10
(286)
Net cash inflow before financing (130)
Financing
Issues of ordinary share capital 150 15
Redemption of debentures (10) 10
Dividends paid (35) 10
Net cash outflow from financing 105
Increase in cash for the period (25) 05
Notes to the cash flow statement:
1 Reconciliation of operating profit to cash flow from operating activities 000
Operating profit 127 05
Depreciation 96 05
Loss on sale of tangible fixed assets 5 05
Decrease in stocks 10 10
Increase in debtors (50) 10
Decrease in creditors (5) 10
Net cash inflow from operating activities 183
150
Workings
Non-current assets
000 000
Balance b/f 565 Depreciation 96
New fixed assets (bal) 316 Disposals 35
Balance c/f 750 881 881
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Marks
3 (a) C Mars accounts
(i) Revaluation account
Plant and machinery loss 10,500 Goodwill 50,000 10 + 05
Capital account 60,125 Property profit 20,625 0 + 10 70,625 70,625
(ii) Capital account
Balance c/f to new business 186,700 Balance b/f 132,075 05 + 0
Motor vehicle 5,500 Profit on revaluation 60,125 10 + 10 192,200 192,200
J Neptunes accounts
(i) Revaluation account
Stock loss 2,750 Goodwill 40,000 10 + 05
Capital account 37,250 40,000 40,000
(ii) Capital account
Balance c/f to new business 120,550 Balance b/f 83,300 05 + 0
Profit on revaluation 37,250 10 120,550 120,550
80
Marks Workings
(b) PlanetsBalance sheet as at 31 May 2011
Fixed assets
Property 110,000 05
Plant and machinery 91,200 1 (34,000 + 57,200)
Motor vehicle 25,025 05226,225
Current assets
Stock 25,300 1 (11,550 + 13,750)
Trade debtors 8,775 05
Cash at bank 13,475 05
47,550
Creditors: amounts falling due within one yearTrade creditors 46,625 05
Net current assets 925
Creditors: amounts falling due after more than one year
Loan from M Pluto (9,900) 05
Net assets 217,250
Capital accounts
C Mars 126,700 15 W1
J Neptune 90,550 15 W1217,250
80
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Marks
Working 1
Partners Capital accounts
Mars Neptune Mars Neptune
Goodwill written off Balance b/f from
2:1 x 90,000 60,000 30,000 old business 186,700 120,550 05 + 05 + 05 + 05
Balance c/f 126,700 90,550 05 + 05 186,700 120,550 186,700 120,550
(c) Advantages
Within a partnership the business risk is shared with others.
A partnership may find it easier to raise finance from the bank.
A partnership should have a wider pool of business skills and talents.
Marking scheme: 1 mark for each statement up to a max of 2 marks.
Disadvantages
The profits are shared with more people.
A loss of autonomy over business decisions.
There may be disputes between the partners.
Marking scheme: 1 mark for each statement up to a max of 2 marks.
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