Year 10 Accounting Assessment Nov 2020

IGCSE ACCOUNTING ASSESSMENT YEAR 10 – NOVEMBER 2020

PAPER 2 - Structured Written Paper (75 Marks)

ANSWER ALL QUESTIONS

1. (a) Explain what is meant by

(i) Bad Debts

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(ii) provision for doubtful debts

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Umtali sells goods on credit and his terms are for settlement within 30 days.

At 31 March 2010 the total of his trade receivables (debtors) was $12 600 and included the following:

Date Customer Amount

$
10 January 2010 Veeku 300.00
31 January 2010 Wlanda 550.00

At 31 March 2010 Umtali decided to:

1 write off the balances owed by Veeka and Wlanda as bad debts.

2 set up a provision for doubtful debts of 4% of the remaining balance of trade receivables
(debtors). He had not previously made such a provision.
REQUIRED

(b) Show the journal entry to write off the bad debts. A narrative is not required. [3]
Date Dr. Cr.
$ $

1
(c) Calculate the amount of the provision for doubtful debts at 31 March 2010.

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(d) Show the journal entry to create the provision for doubtful debts. A narrative is not required.

Date Dr. Cr.

$ $

[4]

(e) Assuming that the journal entry in part (d) above are posted, write up the bad debts account
and the provision for doubtful debts account in Umtali’s ledger for the year ended 31 march
2010.

Show the transfer to the income statement (profit and loss account) any bring down any
balances at 1 April 2010.

(i) Umtali
Bad Debts Account

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 (ii) Umtali
Provision for Doubtful Debts Account

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(f) On 15 April 2010, Veeku paid the outstanding amount on his account in full.

Write the bad debts recovered account for the month of April 2010.

Umtali
Bad Debts Recovered Account

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[Total: 20]
2. Martina started a business on 1 October 2008 printing designs on T-shirts and bought a printing
machine for $3200.

She decided to depreciate the printing machine on the straight line basis over 5 years and
expected the machine to have a scrap value of $700 after that time.

REQUIRED

(a) State one reason for charging depreciation on non-current (fixed) assets in an income
statement (profit and loss account).

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(b) Calculate the depreciation charged in Martina’s income statement (profit and loss
account) for each of the two years ended 30 September 2009 and 2010.

Show all your workings.

(i) year ended 30 September 2009

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(ii) year ended 30 September 2010

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(c) Complete the following extract from Martina’s balance sheet at 30 September 2010.

Martina
Extract from Balance Sheet at 30 September 2010

Non-current(fixed) assets Cost Provision for Net book value

Depreciation
$ $ $

[4]
A new and quicker method of electronic T-shirt printing became available on 1 October 2010 using a
machine costing only $1500.

Martina bought the new machine on 15 October 2010 and sold the existing machine for scrap for $400.

REQUIRED

(d) Prepare the Disposal of non-current (fixed) assets account in Martina’s ledger to show the
scrapping of the old machine and the amount to be transferred to the income statement (profit
and loss account).

Disposal of Machinery Account

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Martina expects the new machine to have a useful life of five years and to have no scrap value after that
time. However, she does not wish to show a loss on disposal if she has to scrap the machine after three
years.

REQUIRED

(e) Suggest which method and rate of depreciation Martina should use to depreciate the
new machine.

Give reasons for your answer.

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[Total: 20]
3. Riaz is a trader in clothing. The following balances were taken from his books of account at
1 January 2012.
$
Rent 6000 Dr.
Commission payable 1700 Cr.
Stationery 120 Dr.

He made the following payments.

2012 $
February 28 rent for six months to 31 August 2012 18 000
September 1 rent for six months to 28 February 2013 19 800
Total payments to the salesmen for commission 18 100
Total payments for stationery 1 880

Other information is as follows.

1 Commission due on 31 December 2012 amounted to $1150.

2 The charge for stationery in the income statement for the year ended 31 December
2012 was $1910.

REQUIRED

(a) Prepare the following ledger accounts for the year ended 31 December 2012.
Balance the account and bring the balances on 1 January 2013.

Rent Account

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[6]
 Commission Payable Account

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Stationery Account

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(b) Complete the table below. The first item has been completed as an example.

Ledger account Balance sheet

Heading Item
Rent Current assets Other receivables
Commission payable
Stationery
[4]

[Total: 20]
4. The following trial balance was extracted from the books of Robbie McDonald at 30 September
2010.
Dr Cr
$ $
Capital 85 000
Drawings 5 100
Premises at cast 58 000
Motor vehicles at cost 6 000
Equipment at valuation 3 000
Provision for depreciation of motor vehicle 1 200
Provision for doubtful debts 372
Trade receivables (debtors) 17 600
Bad debts recovered 160
Trade payables (creditors) 16 250
Bank overdraft 7 728
Inventory (stock) 1 October 2009 19 500
Revenue (sales) 216 000
Purchases 176 000
Wages 28 200
Property tax and insurance 8 900
Administration expenses 4 410

326 710 326 710

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Additional information

1 Inventory (stock) on 30 September 2010 was valued at $20 800.

2 During the year ended 30 September 2010 Robbie took goods costing $1900 for his
own use. No entries have been made in the accounting records.

3 The motor vehicle is being depreciated at 20% per annum using the reducing balance
method.

4 Equipment was valued at $2340 on 30 September 2010. There were no sales

or purchases of equipment during the year.

5 The provision for doubtful debts is to be maintained at 2% of the trade receivables

(debtors).

6 Bank interest of $1550 for year ended 30 September 2010 has not been recorded for.

7 The property tax and insurance includes $2400 for insurance of the premises. This
represents insurance cover for the sixteen months to 31 January 2011.
REQUIRED
Prepare the income statement (trading and profit and loss account) of Robbie for the year ended 30
September 2010.
 Robbie McDonald
Income statement (trading and profit and loss account) for the year ended 30 September 2010

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