Question Answer Marks

1(a) ($21 +$47 + $44 =)(1) – $15(1) = $97 (1)OF 3

1(b)(i) cash book (1) 1

sales journal (1)
sales returns journal (1)
purchases journal (1)
purchases returns journal (1)
journal (1)

Max (1)

1(b)(ii) They are useful for preparing control accounts. (1) 2

They assist in collating and summarising accounting information. (1)
They remove detail from the ledgers. (1)
Bookkeeping can be divided among several people. (1)

Accept other valid points

Max (2)

1(c)(i) 2
Depreciation for the year ended 30/04/22 12 000 x 25% = 3000 )
Depreciation for the year ended 30/04/23 (12 000-3000 =) 9000 x 25% = 2250 )(1)
Accumulated depreciation at 30/04/24 5250 (1)OF

1(c)(ii) 4
Question Answer Marks
Lottie
Disposal of motor vehicle account

Date Details $ Date Details $

2024 2024
Apr 30 Motor vehicles (1) 12 000 Apr 30 Provision for depreciation (1)OF 5 250
Y Limited (1) 6 000
_____ Income statement (loss) (1)OF 750
12 000 12 000

1(d) 4

Item Valuation per unit ($) Number of items Total valuation

$
A (14 + 1 = ) 15 60 900 (1)
B 17 85 1445 (1)
C 22 30 660 (1)
3005 (1)OF

1(e) 4
Lottie
Insurance account
Question Answer Marks

Date Details $ Date Details $

2023 2024
May 1 Balance b/d ( 60 Apr 30 Income statement (1) 360
Aug 1 Bank (1) 360 Balance c/d 60
420 420
2024
May 1 Balance b/d (1)OF 60

+(1) for dates

2(a) 9

Toyah
Manufacturing Account for the year ended 31 January 2024
Question Answer Marks

$ $
Cost of material consumed
Opening inventory of raw material 12 400
Purchases of raw material 143 000
155 400
Less Closing inventory of raw material 11 205
144 195 (1)
Direct wages 51 000 (1)
Prime cost 195 195 (1)OF
Factory overheads
Wages of factory supervisor 19 000
Factory electricity 16 000
Rates and insurance (16 200 x 2/3) 10 800 (1)
General factory expenses (6 155 + 235) 6 390 (1)
Depreciation of factory machinery
(120 000 – 52 500) x 25% 16 875 (1) 69 065
264 260 (1)OF
Add opening work-in-progress 16 970*
281 230
Less closing work-in-progress 17 682 *
Cost of production 263 548 (1)OF

* (1) for both

2(b) Toyah 5
Income statement (trading section) for the year ended 31 January 2024
$ $
Revenue 390 100 (1)
Cost of sales
Question Answer Marks
Opening inventory 14 825 *
Cost of production 263 548 (1)OF
278 373
Closing inventory 13 480 * 264 893 (1)OF
Gross profit 125 207 (1)OF

* (1) for both

2(c) $263 548/6 936 = $38 (1)OF per dolls’ house (rounded up to nearest dollar) 1
2(d) For: 5
She should be able to make a profit on this discounted inventory. (1)
As the inventory is already completed, she may be able to turn the inventory into cash fairly quickly. (1)
Her own inventory has decreased so there may be scope for her to sell additional inventory. (1)
Selling Idir’s inventory may increase Toyah’s customer base. (1)
Accept other valid points
Max (2)
Against:
As she doesn’t have sufficient cash to pay for the inventory, she may incur overdraft interest. (1)
It may cost money to store the additional inventory. (1)
Idir may be ceasing trading because his dolls’ houses are unpopular/of inferior quality, so they may be difficult for
Toyah to sell. (1)
Toyah is already paying a significant amount in salaries to sales staff so may not wish to increase selling costs. (1)
Accept other valid points
Max (2)
Recommendation (1)
3(a)(i) Bank statement (1) 1
3(a)(ii) Error 4 (1) 1
3(b) 7
Akil
Question Answer Marks
Journal
Error Details Debit Credit
number $ $
1 Sales returns 3416 (1)
Sales 3416 (1)

2 Insurance (115 x 2) 230 (1)

Suspense 230 (1)

3 Discount received 47 (1)

Discount allowed 47 (1)
Suspense 94 (1)

3(c)(i) 1
A balance may remain on the suspense account because all the errors have not yet been found/corrected (1)

3(c)(ii) 5
Akil
Question Answer Marks
Suspense account

Date Details $ Date Details $

2024 2024
Feb 29 Trial balance difference (1) 385 Feb 29 Insurance (1) 230
(84 025 – 83 640) Discount received )(1) 47
Purchases (1) 90 Discount allowed ) 47
___ Balance c/d 151
475 475
March 1 Balance b/d (1)OF 151

3(d) $ $ $ 5
+ -
Original draft profit 17 420
Error 4 52 (1)
Error 5 90 (1)
Error 2 (230) (1)
Error 3 (94) (1)
142 (324) (182)
Draft profit after corrections 17 238 (1)OF

Question Answer Marks

Question Answer Marks
4(a) Tadeen and Yadid 8
Income Statement for the year ended 30 April 2024
$ $
Revenue 236 350
Expenses
Salaries (79 800 + 1800) 81 600 (1)
Rates and insurance (17 320 – [10/12 x 1920 =]1600 (1)) 15 720 (1)OF
Advertising 16 730 )
Office expenses 6 150 )(1)
Loan interest 1 200 (1)
Depreciation of equipment and fittings (15% x 70000) 10 500 (1)
Irrecoverable receivables 670 (1) 132 570
Profit for the year 103 780 (1)OF

4(b) Tadeen and Yadid 5

Appropriation account for the year ended 30 April 2024
$ $
Profit for the year 103 780
Add interest on drawings Tadeen (34 300 x 5%) 1 715)
Yadid (46 500 x 5%) 2 325) (1) 4 040
107 820
Less
Interest on capital Tadeen 3 750)
Yadid 2 550)(1)
6 300
Salary Yadid 10 000 (1) 16 300
91 520
Profit share Tadeen (60% x 91 520) 54 912 (1) OF
Yadid (40% x 91 520) 36 608 (1) OF 91 520
Question Answer Marks
4(c)(i) To avoid a debit balance on their current account (1) 1
To keep cash in the business/to benefit the business (1)

Accept other valid points

Max (1)

4(c)(ii) Going concern (1) 1

4(d) For offering Raim a partnership 5

The business will benefit from the skills and experience of Raim (1)
Raim may contribute towards increased revenue and profit (1)
Raim would share workload and responsibilities (1)
They may need to spend less on advertising as Raim is well known in the area (1)
They could ask Raim to introduce capital (1)
Max (3)

Against offering Raim a partnership

The profits would need to be shared with Raim (1)
40% of the current profit is more than the salary paid to the lawyer who was employed (1)
40% is more than one third/ existing partners share of profits combined would be less than two thirds (1)
They would need to take account of Raim’s views/there may be disagreements (1)
They would be liable for the actions of Raim (1)
Max (3)

Accept other valid points

Max (4)

Recommendation (1)
Question Answer Marks

5(a) Gross margin: 11

Cost of sales 5 200 + 51 300 – 6 500 = 50 000 (1)
Gross margin (86 400 + 10 600 = ) 97 000 – 50 000 = 47 000/97 000 x 100 = 48.45% (1)OF

Profit margin:
[(47 000 – 23 750 = ) 23 250/97 000 x 100] (1) = 23.97% (1)OF

Inventory turnover:
50 000 (1) = 8.55 times (1)OF
(5 200 + 6 500)/2 (1)

Trade receivables turnover

[9 550/86 400 x 365] (1) = 41 days (1)OF

Liquid (acid test) ratio

[(9 550 + 1 200)/ 6 000] (1) = 1.79:1 (1)OF
5(b)(i) His purchase price has fallen/he has been allowed trade discount (1) 1
His sales mix has changed (1)
Max (1)

5(b)(ii) Customers may be interested in whether Ajay will be able to continue in business/continue being able to supply 1
them (1)

5(c) Advantages of reducing his selling price 5

Question Answer Marks
Should increase sales volume/reduce inventory (1)
Inventory should turnover quicker (1)
Customers may pay quicker (1)
It may confirm/improve his reputation (1)
The risk of inventory deteriorating/becoming damaged should reduce (1)
Holding less inventory may reduce costs (storage, insurance) (1)
Max (3)

Disadvantages of reducing his selling price

Would reduce gross margin/profit margins (1)
Less cash coming in from each unit sold (1)
It may be better to offer cash discount to reduce trade receivables (1)
Customers may question the quality of the goods/it may damage his reputation (1)
Customers may be unwilling to pay the full price in future (1)
Max (3)

Accept other valid points

Max (4)

Recommendation (1)
5(d) If there is a trend of increasing expenses, the business may make a loss in the future. (1) 2
He may run out of cash if expenses continue to increase. (1)
The business cannot continue indefinitely if this trend continues. (1)

Accept other valid points

Max (2)