Junior Certificate Business Studies for Households and Enterprises TEXTBOOK TEACHER’S MANUAL

JC Business TM Contents for textbook and workbook

Chapter Textbook Workbook 1 Communications 1 182 2 Communications in Action 2 182 3 Introduction to Record Keeping 5 183 4 Household Accounts 7 185 5 Income 9 186 6 Expenditure 11 189 7 The Budget 12 192 8 The Good Consumer 13 230 9 Protecting the Consumer 13 230 10 Making a complaint 14 232 11 Money and Banking I No exercises 233 12 Money and Banking II 16 234 13 Money and Banking III No exercises 234 14 Bank Accounts 16 238 15 Personal Borrowing 18 246 16 Insurance 19 249 17 Premium Calculation and Estimating 20 252 Compensation 18 Economic Framework 20 256 19 Budgeting - the National Budget 21 258 20 Foreign Trade 23 260 21 Forms of Ownership 24 263 22 Private Limited Company No exercises 264 23 Chain of Production 26 267 24 People at Work 26 267 25 Being an Employer 27 269 26 Industrial Relations 29 275 27 Finance for Business 30 276 28 Preparation of a Business Plan 32 277 29 Business Loan Applications 32 283 30 Banking for Business 32 287 31 Business Insurance 34 287 32 Delivery Systems 35 290 33 Marketing 36 295 34 Financial Recording and Filing 38 297 35 Business Documents I 38 302 36 Business Documents II No exercises 305 37 Recording Credit Transactions 40 310 38 Continuous Balancing Ledgers and No exercises 317 Statements 39 Analysed Cash Books I 71 324 40 Analysed Cash Books II Monitoring 80 325 Overheads 41 General Journal 84 329 42 Combined Books of First Entry and 91 331 Ledger Questions 43 Control Accounts 109 333 44 Trading Account 109 334 45 Profit and Loss Account 111 336 46 Profit and Loss Appropriation Account 114 337 47 Balance Sheet 118 338 48 Adjustments to Final Accounts 127 339 49 Final Accounts and Balance Sheet with 132 341 Adjustments 50 Assessing a Business 148 342 51 Club Accounts 152 346 52 Club Accounts with Adjustments 161 347 53 Farm Accounts 166 348 54 Service Firms 173 348 55 Information Technology 177 348

Matt Hynes

ISBN 1-84131-703-9 Folens Publishers, Hibernian Industrial Estate, Greenhills Road, Tallaght, Dublin 24.

Editor: Fiona Dunne Design and Layout: Compuscript Produced in Ireland by Folens Publishers

The publisher reserves the right to change, without notice, at any time the specification of this product.

FOLENS Junior Certificate Business Studies Textbook Teacher’s Manual

Chapter 1 Communications

1. Factors Explanation Destination Is communication within Ireland or worldwide? Cost How do the different methods compare on price? Speed How urgent is the information to be communicated? Record Is it necessary to keep the information?

2. Internal communication

Method Explanation A space that employees will look at to keep them up-to-date with Notice board what is happening Meetings Bring employees together to discuss topics face-to-face

External communication

Method Explanation Letters Written communication from one person to another sent in the post Newspapers Written communication printed on local or national newspapers

3. Oral communication Method Explanation Telephone Use of landline or wire-free device to contact someone else Meetings Bring employees together to discuss topics face-to-face

Written communication

Method Explanation Letters Written communication from one person to another sent by post A space that employees will look at to keep them up-to-date with Notice board what is happening

Visual communication

Method Explanation Used to provide detailed information in lines or easy-to-understand Charts pictures Television Used to show people actually communicating in real-life situations

4. See chart at bottom of p4 in the textbook.

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Chapter 2 Communications in Action

Letter Writing The answers to letters should follow the nine-point plan. It’s good discipline for the students to put in the numbers beside the text when doing the exercises, to ensure that they complete the letter fully. The address of the sender and date of the letter can also be placed on the left- hand side of the page. 1. 1. Top View Road, Sligo. (087) 4325676.

2. 3. Ms News Agent, Corner Grove, Sligo.

4. Dear Ms News Agent, 5. I wish to enquire about a new magazine called Predict Your Future. 6. Can you obtain this magazine for me? How much will it cost? How many issues are there? 7. Please let me know as soon as possible. 8. Yours sincerely,

9. Patrick Kerns.

2. 1. Harmony Street, Carlow. (086) 85341245.

2. 3. Edge Music Store, Piano Row, Waterford.

4. Dear Mr Edge, 5. I wish to order a new CD called How to Make A Snowman Melt. 6. When can you have it in stock? 7. Please phone or text me when it’s in. 8. Yours faithfully,

9. Nora Jones.

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1. Students Union, St. Mark’s Community School, Celbridge, Co. Kildare.

3. Finbar Keenan, Main Street, Maynooth, Co. Kildare.

4. Dear Finbar, 5. I was delighted to hear that you are coming to our school in September. 6. As you will be in Second Year, I would like to set out the ten subjects you will study. Six subjects are compulsory:

For the other four you can choose from:

7. Please contact me if you want details about these subjects. 8. Yours faithfully,

9. Monica Grey. President Students’ Union.

Report Writing The answers to reports should follow the nine-point plan. It’s good discipline for the students to put in the numbers beside the text when doing the exercises, to ensure that they complete the report fully. 4. 1. Siobhán Gallagher, Class 1, Vocational School, Letterkenny, Co. Donegal. 2. Best Value In Mobile Phone Credit

4. Class 1, Vocational School, Letterkenny, Co. Donegal. 5. I was asked by you to prepare a report on where the best value in mobile phone credit can be obtained. I checked out all the providers. My findings are set out below. 6. Providers O2 Vodafone Meteor Price per call per minute cent cent cent Price per text cent cent cent

I recommend

7. I am available to discuss my findings if required.

8. Siobhán Gallagher. 9. Mobile Phone Consultant.

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1. Ilona Donnelly, Class D, Mercy Convent.

2. Best Fast-Food Outlets in

4. Class D, Mercy Convent. 5. I was asked by you to prepare a report on the best fast-food outlets in . I visited all the outlets and sampled the food. My findings are set out below. The providers are rated out of 10. 6. Providers Mighty Sams Mini Macks Burger Queen Price 7 6 9 Quality 8 8 5 Service 9 7 8 I recommend Mighty Sams.

7. I am available to discuss my findings if required.

8. Ilona Donnelly. 9. Fast Food Consultant.

6. 1. Máire McGrath, Class A, Ard Scoile.

2. Main Sources of Income for Students in Class A

4. I was asked by you to prepare a report on the main sources of income for students in Class A. I surveyed all twenty-six students. My findings are set out below. 5. Income Pocket money Part-time Work Other Percentage of income earned 60% 30% 10% 6. The main source is pocket money.

7. I am available to discuss my findings if required.

8. Máire McGrath. 9. Financial Consultant.

7. Notice is given that a meeting of the Business Studies Students Club will take place in Room 5 at 12.30 pm on Monday 3 October 2005. All members please attend.

8. AGM Agenda for the Business Studies Student Club. 1. Minutes of previous meeting 2. Matters arising from the minutes 3. Correspondence received by club officers 4. Treasurer’s report 5. Club tour to AIB headquarters 6. Membership fees 7. Any Other Business for the next meeting

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Charts and Graphs 9. Bar chart showing sales of shoes for period 2000–2005.

10. Line graph showing rate of inflation for period 1999–2004.

11. Pie chart showing breakdown of sales for the four seasons 2005.

Chapter 3 Introduction to Record Keeping

The solutions to exercises 1 to 5 show the accounts balanced. You may wish your students to do likewise depending on their progress. 1.

Date Details Total Date Details Total 2005 € 2005 € 1/1 Prize money 100 8/1 Sports gear 30 6/1 Pocket money 10 10/1 Lunch 5 10/1 Balance c/d 75 110 110 11/1 Balance b/d 75

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Date Details Total Date Details Total 2005 € 2005 € 1/2 Pocket money 12 6/2 New books 20 4/2 Sale of books 55 8/2 Video 4 10/2 Magazines 6 10/2 Balance c/d 37 67 67 11/2 Balance b/d 37

3. Date Details Total Date Details Total 2006 € 2006 € 1/3 Interest 28 8/3 School books 40 4/3 Wages 32 12/3 Sweets 6 6/3 Pocket money 8 12/3 Balance c/d 22 68 68 13/3 Balance b/d 22

4. Date Details Total Date Details Total 2007 € 2007 € 1/1 Parents 100 2/1 School books 90 5/1 Pocket money 12 3/1 Lunch 8 7/1 Interest 38 9/1 Magazine 24 9/1 Balance c/d 28 150 150 10/1 Balance b/d 28

5. Date Details Total Date Details Total 2008 € 2008 € 1/4 Aunt 20 6/4 Hair styles 5 4/4 Parents 80 8/4 Music lessons 75 10/4 Wages 45 18/4 School tour 60 18/4 Balance c/d 5 145 145 19/4 Balance b/d 5

6. Date Details Total Date Details Total 2008 € 2008 € 1/5 Birthday 75 2/5 CD 18 9/5 Sale of CD 30 5/5 Magazine 15 13/5 Uncle 10 13/5 Clothes 45 13/5 Balance c/d 37 115 115 14/5 Balance b/d 37

6 Junior Certificate Business Studies Textbook Teacher’s Manual Chapter 4 Household Accounts

1. Analysed Cash Book Date Details Total Date Details Total HK L&H Other 2005 € 2005 € € € € 1/3 Balance b/d 200 5/3 Groceries 120 120 3/3 Wages 600 6/3 Fuel 220 220 7/3 Petrol 40 40 8/3 Electricity 80 80 10/3 Groceries 145 145 12/3 Window clean 60 60 665 265 300 100 12/3 Balance c/d 135 800 800 13/3 Balance b/d 135

2. Analysed Cash Book Date Details Total Date Details Total HK Car Other 2005 € 2005 € € € € 1/4 Balance b/d 500 2/4 Groceries 300 300 6/4 Wages 850 4/4 Petrol 45 45 5/4 Electricity 100 100 8/4 Car service 155 155 11/4 Groceries 185 185 13/4 School books 35 35 820 485 200 135 13/4 Balance c/d 530 1,350 1,350 14/4 Balance b/d 530

3. Analysed Cash Book Date Details Total Total Date Details Ch. Total Total HK Car Mort- Cash Bank no. Cash Bank gage

2007 € € 2007 € € € € € 1/2 Balance b/d 180 320 2/2 Car service 1 85 85 3/2 Child Benefit 120 6/2 Groceries 60 60 4/2 Wages 650 7/2 Insurance 2 150 150 9/2 Petrol 25 25 10/2 Mortgage 3 320 320 12/2 Meat bill 4 100 100 85 655 310 110 320 12/2 Balance c/d 215 315 300 970 300 970 13/3 Balance b/d 215 315

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4. Analysed Cash Book Date Details Total Total Date Details Ch. Total Total HK Per L&H Cash Bank no. Cash Bank 2007 € € 2007 € € € € € 1/3 Balance b/d 50 230 4/3 Heating oil 1 380 380 3/3 Child Benefit 120 5/3 Milk bill 2 38 38 12/3 Wages 450 6/3 Groceries 82 82 8/3 Hair cut 3 50 50 10/3 Doctor 4 31 31 12/3 Electricity 5 100 100 82 599 120 81 480 12/3 Balance c/d 88 81 170 680 170 680 13/3 Balance b/d 88 81

5. Analysed Cash Book Date Details Total Total Date Details Ch. Total Total HK Mort- Other Cash Bank no. Cash Bank gage 2008 € € 2008 € € € € € 1/4 Balance b/d 100 1/4 Balance b/d 250 5/4 Child Benefit 120 7/4 Groceries 95 95 6/4 Wages 500 8/4 Mortgage 1 355 355 9/4 Insurance 2 380 380 11/4 Milk bill 3 65 65 12/4 Electricity 4 75 75 13/4 School fees 55 55 150 160 355 510 13/4 Balance c/d 625 13/4 Balance c/d 70 220 1,125 220 1,125 14/4 Balance b/d 70 14/4 Balance b/d 625

6. Analysed Cash Book Date Details Total Total Date Details Ch. Total Total HK L&H Other Cash Bank no. Cash Bank 2008 € € 2008 € € € € € 1/6 Balance b/d 320 1/6 Balance b/d 250 2/6 Child Benefit 120 3/6 Groceries 80 80 8/6 Wages 860 5/6 Insurance 1 500 500 6/6 Electricity 2 55 55 10/6 Milk bill 3 50 50 12/6 Holiday 4 50 50 80 130 55 550 12/6 Balance c/d 45 12/6 Balance c/d 320 440 905 440 905 13/6 Balance b/d 320 13/6 Balance b/d 45

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Analysed Cash Book Date Details Total Total Date Details Ch. Total Total L& School Other Cash Bank no. Cash Bank H 2008 € € 2008 € € € € € 1/2 Balance 40 120 3/2 Cash C 100 2/2 Wages 850 4/2 Groceries 50 50 School 3/2 Bank C 100 5/2 1 150 150 uniform 10/2 Child Benefit 80 6/2 Electricity 2 105 105 7/2 Petrol 38 38 Central 11/2 3 440 440 Heating 88 795 545 150 88 12/8 Balance c/d 132 175 220 970 220 970 13/8 Balance b/d 312 175

Chapter 5 Income

1. (a) Tom’s gross wage = €400 (40 hours @ €10. Basic = €400. No overtime.) (b) Anne’s gross wage = €648 (40 hours @ €12. Basic = €480 + overtime €168.) (c) Jim’s gross wage = €624 (40 hours @ €8. Basic = €320 + overtime €304.)

2. (a) Pat’s gross wage = €531 (38 hours @ €9. Basic = €342 + overtime €135 + €54.) (b) Irene’s gross wage = €440 (38 hours @ €8. Basic = €304 + overtime €120 + €16.)

3. Deductions Explanation Example Statutory Compulsory payments by employees to the Income Tax, PRSI government taken from the gross wage Non-statutory Voluntary amounts taken from an employee’s gross Pension, Savings, VHI, wage at the request of the employee Union Fee Difference Statutory payments are compulsory whereas non statutory are voluntary

4. Employee Gross Wage Tax before deducting tax credit Tax Credit Tax Due (a) Shelia €320 €64 €25 €39 (b) Paul €320 €64 €35 €29 (c) Breda €450 €90 €50 €40 (d) Conor €500 €100 €60 €40

5. Employee Gross Wage Tax before deducting tax credit Tax Credit Tax Due PRSI Net Wage (a) Martin €350 €70 €50 €20 €17.50 €312.50 (b) Louise €650 €273 €65 €208 €32.50 €409.50

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6. (a) Gerard € Tax Due € Total Deductions € Gross pay 30,000 First €21,586 @ 20% 21,586 4,317.20 Remainder @ 42% 8,414 3,533.88 Tax before deducting tax credits 7,858.64 Less tax credits 1,592 Tax due 6,259.08 Add PRSI due 1,500 7,759.08 Net pay = Gross pay less deductions: €30,000 – €7,759.08 = €22,240.92

(b) Monica € Tax Due € Total Deductions € Gross pay 42,000 First €21,586 @ 20% 21,586 4,317.20 Remainder @ 42% 20,414 8,573.88 Tax before deducting tax credits 12,891.08 Less tax credits 2,400 Tax due 10,491.08 Add PRSI due 2,100 12,591.08 Net pay = Gross pay less deductions: €42,000 – €12,591.08 = €29,408.92

(c) Adrian € Tax Due € Total Deductions € Gross pay 55,000 First €21,586 @ 20% 21,586 4,317.20 Remainder @ 42% 33,414 14,033.88 Tax before deducting tax credits 18,351.08 Less tax credits 2,700 Tax due 15,651.08 Add PRSI due 2,750 18,401.08 Net pay = Gross pay less deductions: €55,000 – €18,401.08 = €36,598.92

(d) Josephine € Tax Due € Total Deductions € Gross pay 37,000 First €21,586 @ 20% 21,586 4,317.20 Remainder @ 42% 15,414 6,473.08 Tax before deducting tax credits 10,791.08 Less tax credits 1,850 Tax due 8,941.08 Add PRSI due 1,850 10,791.08 Net pay = Gross pay less deductions: €37,000 – €10,623.08 = €26,208.92

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Chapter 6 Expenditure

1. ‘Our income is limited’ = We have not got enough income to buy all the things we would like to buy. 2. The financial cost = The actual price of the item purchased. The opportunity cost = What is given up when you decide to purchase one item instead of another. 3. (a) The financial cost is €30. (b) The opportunity cost of buying the shirt is not being able to go to the football match. 4. (i) Make a list and stick to it. (ii) Only bring enough money with you to buy necessities. 5. Type of Expenditure Examples Fixed House insurance, mortgage Irregular Electricity, telephone Discretionary Birthday presents, entertainment

6. Capital expenditure is spending on things that will last for more than one year e.g. cars, houses. Current expenditure is spending on things that are used up within one year e.g. petrol for the car, groceries. 7. Number of units used Cost of electricity (i) 636 (8,516 – 7,880) €44.52 (ii) 622 (9,202 – 8,580) €43.54 (iii) 714 (5,493 – 4,779) €49.98 (iv) 1,052 (3,393 – 2,341) €73.64

8. Cost of electricity Standing charge VAT@ 13.5% Total Cost (i) €44.52 €9 €7.23 (13.5% of €53.52) €60.75 (ii) €43.54 €9 €7.09 €59.63 (iii) €49.98 €9 €7.96 €66.94 (iv) €73.64 €9 €11.16 €93.8

9. Lynch King Highest Bill Units used 723 737 Cost €68.69 €70.02 Standing charge €9 €9 VAT €10.49 €10.67 Total cost €88.18 €89.87 King

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10. Households usually receive a telephone bill every two months for a landline and once a month for a mobile phone bill. Butler Lennon Number of calls 1,432 689 Cost €71.60 €34.45 Rental charge €40.00 €40.00 VAT €23.44 €15.64 Total cost €135.04 €90.09

Chapter 7 The Budget

1. (a) Employee Monthly wage 5% Increase Future Income Monica €780 €39 €819.00 Oliver €920 €46 €966.00 Pat €535 €26.75 €561.75

(b) Saver Deposit 3% Interest Pat €1,230 €36.90 Mike €740 €22.20 Kate €335 €10.10 Mary €1,940 €58.20

2. Expenditure Present Cost 3% Increase Future Cost Mortgage €260 €7.80 €267.80 Housekeeping €140 €4.20 €144.20 Telephone €90 €2.70 €92.70 Car Tax €290 €8.70 €298.70

3. People save because: (i) They want to earn interest; (ii) They want to go on a holiday; (iii) They want to buy a car; (iv) They want to have money in case of an emergency. It is important to plan savings because otherwise the money will be unwisely spent before one thinks about it.

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Chapter 8 The Good Consumer

1. 1. Handlebar Street, Roscommon. (086) 8732258. 2.

3. KM Cycles Ltd, Main Street, Longford.

4. Dear Mr. Martin, 5/6. I wish to order one of the new racing bicycles which you advertised on Shannonside Northern Sound on 15/4/2006 at a price of €140. 7. Can you ring me if one is available?

8. Yours faithfully,

9. Mary Farrell.

Chapter 9 Protecting the Consumer

1. Consumers need protection because of: (i) Unsafe goods; (ii) Overcharging by retailers; (iii) Misleading advertisements.

2. (a) Laura is entitled to a full refund or replacement shoes. She does not have to accept a credit note. (b) Pat is entitled to a replacement suit unless he was clearly warned in advance by the drycleaner that the suit might shrink. (c) Sheila is entitled to have her engine repaired or replaced and also any damage repaired. (d) Maura can refuse to take the ham in case it is out-of-date.

3. Sign 1: This sign is legal because the shop does not have to sell on credit. Sign 2: This sign is not legal because the shop has to refund money if the good sold is faulty. Sign 3: This sign is not legal because the shop has to refund money if the good sold is faulty.

4. (a) The Small Claims Court helps consumers who cannot get a retailer to make good any loss due to faulty goods, but who do not want to go to the District Court or employ a solicitor. The largest amount they can claim is €1,270. The Office of the Ombudsman can help consumers who have difficulty getting satisfaction from government bodies and departments. (b) Trade Associations are made up of members of similar types of business to protect their interests and provide them with assistance when required, e.g. Irish Travel Agents Association. The Office of the Director of Consumer Affairs is responsible for enforcing the Consumer Information Act 1978. It educates consumers on their rights.

5. (a) The Consumer Association of Ireland. (b) Consumer Choice Magazine.

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6. (i) Goods should be of merchantable quality; (ii) Good should be fit for their purpose; (iii) Goods should be as described; (iv) Goods should correspond to sample shown; (v) The suppliers of services must be qualified.

Chapter 10 Making a complaint

1. Consumers complain because: the seller gives misleading information; they are unhappy with the quality of goods or service; they are overcharged; goods are not as ordered. 2. The steps a consumer should take when a product is unsatisfactory will depend on the problem. If it is a normal good then the consumer should: Identify the problem; obtain proof of purchase; contact the seller and ask for a refund or replacement; put the complaint in writing; contact the seller’s trade association if available; bring the seller to the Small Claims Court. 3. (a)

1. 6 Bridge Street, Granard, Longford.

2. 8/9/2006

3. Ms Susan Tarpey, Manager, S&S Arkin Ltd, Dublin Road, Longford.

4. Dear Ms Tarpey,

5. I am writing to you concerning a new colour television set SAMO Model P107, which I bought in your shop on 7/9/2006. 6. The sound does not work. 7. I require a replacement or a refund of my money €399. Please let me know your response by return of post.

8. Yours faithfully,

9. Tom Murphy.

(b) Mr Murphy could contact the seller’s trade association or contact the registrar of the Small Claims Court.

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4. (a) 1. 16 Castle Street, Ennis, Co. Clare.

2. 15/4/2006

3. Mr. Frank Clarke, Manager, The Bike Shop Ltd, Nenagh Road, Limerick.

4. Dear Mr Clarke,

5. I am writing about a new bicycle Model RB 25, which I bought in your shop on 11/4/2006. Within a few days the bicycle has given me trouble. The chain slips off every time I meet a 6. hill. I am very disappointed with it. I require a replacement or a refund of my money €179. Please let me know your response 7. by return of post.

8. Yours faithfully,

9. Peter Cooney.

(b) Mr Cooney could contact the local media or the registrar of the Small Claims Court. 5. (a) 1. Rioscarraig, Ardara, Co. Donegal.

2. 3/3/2006

3. The Sales Manager, Allbrite Ltd, Church Street, Letterkenny, Co. Donegal.

4. Dear Sir/Madam, 5. I am writing to you concerning a new, fitted aluminium patio door from your firm. I enclose a copy of the contract. 6. After a month, it did not seal properly and allowed in the wind and rain. Spots of rust have developed on it. 7. I'm very dissatisfied with the door and demand an immediate replacement or a full refund of my money €698. Please let me know your response by return of post.

8. Yours faithfully,

9. Maeve O'Sullivan.

(b) The Sale of Goods and Supply of Services Act 1980. The goods were not fit for the purpose and the fitter was not properly qualified. (c) The receipt; credit card statement; the door itself, copy of contract signed by Allbrite Ltd.

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6. A credit note is a document given by a seller to a customer that states that the amount owing or paid has been reduced. It is only acceptable if the customer agrees to it. This is usually when there is nothing wrong with the goods but the customer changes his/her mind on the colour etc. Chapter 11 Money and Banking I

There are no exercises in the textbook. Chapter 12 Money and Banking II

1. Method Cost Safety Record Cheque Expensive Could be forged Yes in stub Bank draft Most expensive 100% safe Yes in a receipt Standing order Fixed charge 100% safe Yes in statement Direct debit Fixed charge 100% safe Yes in statement Credit transfer Least expensive 100% safe Yes in statement

2. A standing order is an instruction by a bank current account holder to pay a fixed sum of money on a fixed date to a named person/organisation. A direct debit is where a named person/organisation obtains permission from a current account holder to take a varying amount out of their account on a date to be decided by the person/organisation. 3. (a) €75 (b) €600 (c) €1,197 4. (a) €78.81 (b) €702 (c) €1,481.19 5. (a) €40 (b) €160 (c) €100 (d) €144 (e) € 288 (f) €319.20

Chapter 13 Money and Banking III

There are no exercises in the textbook.

Chapter 14 Bank Accounts

Date Details Total Date Details Cheque/ATM Total 2005 € 2005 € Bank A/C 1/4 Balance b/d 950 8/4 Cash ATM 100 5/4 Wages 600 15/4 Insurance 7 600 30/4 Wages 800 19/4 Groceries 8 250 23/4 Car repairs 9 200 28/4 Cash ATM 200 30/4 Balance c/d 1,000 2,350 2,350 1/5 Balance b/d 1,000

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2. Date Details Total Date Details Cheque/ATM Total 2006 € 2006 € Bank A/C 1/5 Balance b/d 1,200 11/5 Cash ATM 200 8/5 Wages 950 13/5 Milk bill 4 230 31/5 Wages 950 22/5 Grocery bill 5 170 26/5 Mortgage 6 600 29/6 Cash ATM 300 31/5 Balance c/d 1,600 3,100 3,100 1/6 Balance b/d 1,600

3. Date Details Total Date Details Total 2006 € 2006 € Bank A/C 31/5 Balance b/d 210 SO 480 CT 700 DD 200 Interest/charges 105 Balance c/d 125 910 910 1/6 Balance b/d 125

Bank Reconciliation Statement as on 31/5/2006 Balance as per Bank Statement €1,925 Add lodgements not credited €1,100 €3,025 Less cheques not cashed €2,900 Balance as per Updated Bank Account €125

4. (a) The statement was issued on 30 March 2006. (b) Michael Lynch had money in his bank account. (c) People do not cash cheques in the order they are issued. Some people keep them for up to six months. (d) Current account fees could include: cost of standing orders; cost of direct debits; cheque book. (e) A direct debit differs from a standing order in the following ways: The amounts can vary in direct debits but are fixed in standing orders; the date the money is taken from the account is decided by the receiver when a direct debit is used and by the account holder when a standing order is used.

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(f) Date Details Total Date Details Total 2006 € 2006 € Updated Bank A/C 31/3 Balance b/d 683 Fees 6 CT 100 Balance c/d 777 783 783 1/6 Balance b/d 777

Bank Reconciliation Statement as 31/5/2006 Balance as per Bank Statement €497 Add lodgements not credited €355 €852 Less cheques not cashed € 75 Balance as per Updated Bank Account €777 Chapter 15 Personal Borrowing

1. The lender will require the following information: Name and address of applicant; where the person is employed; the amount earned; the amount required; the purpose of the loan; security available.

2. Renting is suitable for obtaining something that is only needed on a once-off basis. It is cheaper than most other methods in that you only have to pay for it when you need it.

3. (a) Hire purchase has two stages. The first stage involves a person hiring the item by making a number of instalments. The second stage involves the person taking ownership of the item by paying a final instalment. (b) Hire purchase can be used for obtaining cars; furniture; household equipment such as washing machines, refrigerators, TVs etc.

4. (a) Cost €600 (b) Cost €1,255 (c) Cost €780 (d) Cost €1,330

5. Two rights of the borrower are: To be shown the APR; To know the cash price. Two responsibilities of the borrower are: To provide true and accurate information about him/herself; To repay the amount owing on time.

6. It is important to budget for the cost of borrowing because if a person does not allow for the cost of repaying a loan, then that person may not be able to repay the amount owing on time.

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7. (a) The extra cost of buying the cooker by Easy Pay is €487.10. (b) The ESB might offer this form of repayment because borrowers can make their repayments when they are paying their electricity bills. The cost is spread over five years. (c) Yes, the Lee household will keep within their budget by saving €6 per week because they only need to repay €40.87 per two months and they are saving €48 per two months. (d) A five-year loan of €739 at 15% flat rate would cost them €1,293.25 in total. They should take the ESB Easy Pay offer and save €67.15.

Options Cost of each option workings Option 1 Bank Loan €9,000 + interest €2,970 = €11,970 Option 2 Hire Purchase €500 + instalments €9,720 = €10,220 Option 3 Bank Loan €9,000 + interest €2,700 = €11,700

Option 3 is the best value. Chapter 16 Insurance

1. People need insurance because they are afraid of risks occurring which would make them worse off and they may not be able to recover from these losses, e.g. fire burning down their house, car crashing into someone else.

2. Insurance operates as follows. People who fear possible losses can share these fears with others by paying premiums to an insurer, who in turn agrees to pay compensations should these losses occur.

3. (a) Ann Smyth might purchase any or all of the following: Flat and contents insurance; motor insurance; health insurance; salary protection insurance; travel insurance. (b) The Mulligan family might purchase any or all of the following: House and contents insurance; motor insurance; health insurance; boat insurance; travel insurance.

4. (a) With insurance there is only a possibility that some loss will occur, but with life assurance there is a certainty that the loss will occur. Insurance is purchased on an annual basis whereas life assurance has to be purchased for a number of years. (b) With whole life assurance the insurer will pay out when the insured dies but with endowment assurance the insurer will pay out on death or the insured reaching a certain age, whichever comes first. 5. Car insurance is required by law because a motorist is driving on public roads, which are built by the government, and may injure another party (third party). 6. One starts with finding out what cover is required. A proposal form is then completed. On being accepted, a premium is paid and an insurance policy or certificate is given by the insurer to the insured. 7. The two principles of insurance that apply to purchasing insurance are: Insurable Interest – you can only insure something that you benefit from or from whose loss you will suffer. Utmost Good Faith – when completing an insurance proposal form all questions must be answered truthfully and accurately.

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Chapter 17 Premium Calculation and Estimating Compensation

1. Patrick Kiernan Basic Premium €1,000 Add loadings Working abroad €100 Dangerous hobby €100 €200 Basic plus loadings €1,200 Less loadings Non-smoker €60 Total Premium €1,140

2. Geraldine Lally Basic Premium €1,200 Add loadings Medical condition €180 Living abroad €180 Dangerous hobby €180 €540 Basic plus loadings €1,740 Less loadings Non-drinker €87 Non-smoker €87 €174 Total Premium €1,566

3. Inform the Gardaí and the insurer of the loss; obtain estimates for the loss; complete a claims form; an insurance assessor estimates damage; compensation is paid if necessary.

4. (a) (i) Shane should complete a claims form. (ii) €7,900 (€8,000 – €100). (b) (i) Annual Cost= €146 (Building €100 + Contents €36 + Loading premium €10). (ii) Renewal date – the date when the premium is due for payment. Proposal form – A form completed by the person seeking insurance. Loading – An additional premium charged when the risk is higher. Premium – The fee paid by the insured to the insurer when purchasing insurance. (iii) Yes because: (a) The broker is independent of any insurance company, (b) The broker is arranging better cover than the agent. (iv) An insurance agent sells the policies of only one insurance company. An insurance broker on the other hand, being independent, can select from a number of insurance companies. Chapter 18 Economic Framework

1. People have to make choices because their income is limited, but they want to obtain the most satisfaction possible from their available income. 2. Choices made by student:

Reasons for choices included: 3. (a) The financial cost is €20 (b) The opportunity cost is a CD and a football

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4. (a) The four factors of production are: Land – anything provided by nature used in the production of goods/services. Labour – the human effort used in the production of goods/services. Capital – money and man-made goods used in the production of goods/services. Enterprise – the taking of a risk in bringing the other factors together for a profit. (b) Combinations of these factors are needed because no factor can operate on its own, e.g. land without labour will produce nothing. 5. (a) The purpose of an economic system is to decide: What goods and services will be produced; how production will take place; who will receive the goods and services produced; how fast the economy will grow. (b) Ireland has a mixed economy. 6. (a) Economic growth is 40% (b) Economic growth is 2.27% (c) Economic growth is 1.79% 7. (a) Rate of inflation is 8% (b) Rate of inflation is 4% (d) Rate of inflation is 1% Chapter 19 Budgeting – The National Budget

1. Certain services require a level of investment that only the government can provide. Some services are non profit-making and will therefore not be provided by the private sector. Certain services are too important to leave to private individuals e.g. an Garda Síochána, the Army. 2. The main services provided by the government are education; healthcare; transport; postal services; electricity. 3. National government lays down guidelines on how the country as a whole should be run – it is responsible for trains, electricity, postal services etc. Local government is responsible for services and decisions on a county or big town-basis. It is responsible for local roads, water, housing, sewage etc. 4. The government provides services through government departments e.g. Department of Education and Science; Department of Health and Children; semi state bodies e.g. An Post, ESB; local government agencies e.g. County Councils and Urban Councils. 5. National Budget Income € millions Expenditure € millions Income Tax 3,500 Social welfare 3,500 VAT 2,800 National debt 2,900 Customs and excise duty 2,100 Security 880 Corporation tax 350 Education 1,400 Capital tax 150 Health 1,550 EU and other receipts 3,200 Agriculture 340 Deficit 770 Other 2,300 12,870 12,870

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6. National Budget Income € millions Expenditure € millions Income Tax 3,100 Education 1,550 VAT 2,750 Agriculture 570 Customs duties 2,900 Health 1,950 Capital tax 240 Social welfare 2,800 EU receipts 3,800 Security 670 Surplus 5,250 12,790 12,790

(a) The biggest source of income is EU receipts, the biggest source of expenditure is Social Welfare. (b) The percentage of total expenditure spent on social welfare is 37.14%. (c) Capital tax is 1.88% of total income. (d) Revised National Budget Income € millions Expenditure € millions Income Tax 3,100 Education 1,627.50 VAT 2,475 Agriculture 602.49 Customs duties 2,900 Health 2,047.50 Capital tax 240 Social welfare 3,220 EU receipts 3,800 Security 703.50 Surplus 4,314.01 12,515 12,515

7. (a) National Budget 2001 Income € millions Expenditure € millions Income Tax 3,200 Security 800 EU and other receipts 2,100 Social welfare 3,000 VAT 2,100 Education 1,368 Customs and excise 1,900 Health 1,400 Corporation tax 500 Agriculture 400 Capital tax 100 Debit services 2,432 Other receipts 1,000 Miscellaneous 2,000 Deficit 500 11,400 11,400

(b) This budget was a deficit of €500m. (i) The main source of government income was income tax. (ii) The percentage spent on education was 12%. (iii) Gardaí, Army. (c) Increase corporation tax by €150m. Reason: the employees are paying too much tax and the businesses are paying too little. Decrease Miscellaneous by €350m. Reason: savings could be found in each department to ensure that there would be a balanced budget.

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(d) Total expenditure would be up by €570 (5% of €11,400) to €11,970. Total income would be down by €210 (10% of VAT €2,100) to €10,690. The overall budget deficit would be €1,280m. (e) An increase in the level of unemployment would increase the social welfare payments and decrease the income tax receipts. Chapter 20 Foreign Trade

1. Ireland engages in foreign trade for the following reasons: The Irish market is too small; creation of more employment by selling to larger markets; Ireland does not possess certain raw materials; Irish people like to have a greater choice of goods. 2. (a) Cars (b) Newspapers (c) Oil (d) Coal (e) Shoes (f) Bananas Germany England USA Poland Italy Israel

3. (a) Butter (b) Cattle (c) Computer parts (d) Irish Water (e) CDs England Egypt USA Spain Japan

4. Enterprise Ireland. It provides information about foreign markets and introduces Irish businesses to foreign buyers. 5. Amount in € millions Surplus/Deficit a 15 Surplus b 70 Surplus c 25 Deficit d 30 Deficit e 120 Surplus f 10 Deficit

6. Balance of trade is a surplus of €100m. (€400m–€300m). 7. (a) Balance of trade deficit is €20m. Balance of payments deficit is €230m. (b) Balance of trade surplus is €140m. Balance of payments is in balance, i.e. receipts are equal to expenditure. 8. (a and b) EU Country Language Currency Belgium Flemish/French Euro Denmark Danish Krone France French Euro Hungary Hungarian Forint Italy Italian Euro Poland Polish Zloty

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9. (a and b) Country UK Sweden Denmark Currency Pound Sterling Krona Krone Note: any of the ten new countries would also be correct answers.

10. (a) £280 (£1 = €1.56 is equal to €1 = £0.64. £0.64 × 450 = £280) (b) €703.13 (£1 = €1.56 is equal to €1 = £0.64. £450 ÷ 0.64 = £703.125) 11. (a) £122,400 (b) €5 (c) €694.44 (d) €820.90 (e) $65,000 Chapter 21 Forms of Ownership

1. Form of Ownership Characteristic 1 Characteristic 2 Characteristic 3 Sole Trader One person puts up the One person makes all One person takes all investment the decisions the profit or suffers all the loss Private Limited Owed by between 1 Control over who can Must have the word Company and 50 shareholders buy the shares ‘limited’ after its name Co-operative Owed by eight or more Each member has only Each member has an members one vote equal say in the running of the co-operative

State-owned business Owned by the Government makes Profits are reinvested government top management or taken by the appointments government

2. Form of Ownership Advantage 1 Advantage 2 Disadvantage 1 Disadvantage 2 Sole Trader Easy to set up Takes all the Unlimited liability Lacks continuity profits Private Limited Limited liability Can have up to 50 A lot of legalities Costly to set up Company shareholders when setting up Co-operative Limited liability Together everyone One vote per Often too small to achieves more member develop success (TEAMS)

State-owned busi- Provides extra Provides Losses have to be Too dependent on ness revenue if employment borne by the tax government for profitable payer capital

3. Form of Ownership Ownership Liability Profitability Sole Trader 1 Unlimited Owner takes all Private Limited Shared between 1–50 Limited Company shareholders Shared between Co-operatives 8 plus Limited members Reinvested or taken by State-owned business Government Unlimited government

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4. (a)

(b) State ownership has been used in Ireland because no one invests in non profit-making businesses. Employment had to be created. Co-operatives were used to process the milk produced by farmers. Some workers formed co-operatives, to give themselves employment when their businesses closed down. 5. (a) A state-owned or semi-state company is a business owned by the government. (b) A sole trader is a business owned and run by one person. (c) A co-operative is a business owned and controlled by the workers or members. (d) A private limited company is a business owned by between 1 and 50 people and managed by a board of directors. (e) The owners of a private limited company have limited liability and are called shareholders. 6. (a) (a) Sentences written out correctly: (a) The VHI provides insurance for people's health. (b) RTE provides a television service for the country. (c) Bord Fáilte promotes the tourist industry in Ireland. (d) An Post delivers letters every morning. (e) Aer Lingus provides an air transport service. (f) The ESB provides power for light and heat. (g) The ACC Bank provides finance for farmers. (h) Iarnród Éireann runs the railways in Ireland. (i) Bord na Móna provides turf and briquettes. (j) Telecom Éireann provides telephone and fax services. Note: Bord Fáilte, Telecom Éireann and ACC have changed since this Q7 was asked in 1995. Bord Fáilte is now Fáilte Ireland and Telecom and ACC are no longer state-owned companies. (b) FÁS provides training for unemployed people. Bus Éireann provides a national road transport service. Chapter 22 Private Limited Company

There are no exercises in the textbook.

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Chapter 23 Chain of Production

1. (a) The channels of distribution are the means by which goods and services are passed from the producers to the final consumers. (b) 1. Manufacturer → Consumer Example: Shipbuilding 2. Manufacturer → Retailer → Consumer Example: Groceries (e.g. Tesco) 3. Manufacturer → Wholesaler → Retailer → Consumer Example: Bread, Milk 2. For the manufacturer, the wholesaler pays cash immediately and stores the goods. For the retailer, the wholesaler provides a variety of goods and sells in small quantities. 3. To sell goods and services in convenient locations; to sell wide variety of goods; to provide advice for consumers. 4. In-store banking; growth in international retailers; greater use of technology e.g. bar code scanners; buying and selling via the internet. 5. Unit shops: independent shops convenient to customers. Voluntary groups: independent shops which come together to buy in bulk. Shopping centres: one-stop shopping areas containing a wide variety of shops with car parking. Vending machines: use of machines to provide 24-hour sale of selected goods. Multiple shops: shops, owned by one owner, with a similar look and design. 6. (a) Sentences written out correctly: • Primary Production is where raw materials are produced. • Secondary Production is where raw materials are turned into finished goods. • The Services Industry is where teachers, nurses and hairdressers are employed. • The Wholesaler is a person who buys in bulk (large amounts) from the Manufacturer. • A Department Store is one shop divided into many sections. • A Shopping Centre is a covered area where there are many shops. • A Chain Store is a retailer with branches around the country. • A Vending Machine is a slot machine where you can buy cans of orange. • A Travel Agency is a shop that sells airline tickets. • A Newsagent is a shop that sells newspapers. (b) Supermarkets sell groceries on a self-service basis. Greengrocers sell fruit and vegetables. Chapter 24 People at Work

1. Three rights: An employee is entitled to receive a minimum wage; have a safe and healthy workplace; be treated in an equal way. Three responsibilities: An employee is responsible for doing an honest day’s work; protecting their employer’s property; providing honest information when applying for a job.

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2. Two reasons for unemployment include businesses downsizing and increase in numbers doing part-time work. 3. Products used in Ireland Yes/No Motor cars No Clothes Ye s Petrol No Coal No

4. Two rewards of being self-employed include: Making one’s own decisions; keeping all the profit made. Two risks of being self-employed include: Losing everything if the business fails; using up all one’s savings to start up business. 5.

6. (a and b) Department Work Skills required Finance Recording income and expenditure Bookkeeping, accuracy Production Designing and making goods Creative, engineering Marketing Researching the market; advertising and selling goods Good communication skills

Chapter 25 Being an Employer

1. Three rights of employers include: Set up a business; select suitable staff; dismiss dishonest staff. Three responsibilities of an employer include: Provide safe working conditions; pay the agreed wage; keep proper employment records. 2. The procedure for employing staff includes: Finding out what staff is required; Preparing job descriptions; Advertising the job; Short-listing applicants; Interviewing and appointing applicants.

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3. Caretaker required for St Veronica’s College, Cork Qualifications: FÁS certificate in caretaker studies Experience: Four years Hours of work: 48-hour week, flexi-work Rate of pay: €25 per hour Holidays: 34 days per year

Apply to Chairperson, BOM, St Veronica’s College, Cork Closing date for applications 25 August 2008 St Veronica’s College is an equal opportunities employer

4. Basic week 40 hours @ €8 = €320 Overtime 9 hours @ €12 = €108 Gross wage €428 5. Basic wage 40 hours @ €10 €400 Overtime 10 hours @ €15 per hour €150 6 hours @ €20 per hour €120 €270 Gross wage €670 6. Basic wage 10 rolls @ €7 per roll €70 Bonus 5 rolls @ €8 per roll €40 Gross wage €110 7. Basic wage €125 Commission 6 policies @ €350 €2,100 Gross wage €2,225 8. Basic wage €15 Commission 250 copies @ €1 €250 47 copies @ €1.50 €70.50 €320.50 Gross wage €335.50 9. Gross income €43,000 First €29,400 @ 20% €5,880 Remainder €13,600 @ 42% €5,712 Gross tax due €11,592 Less tax credits (€1,580 + €1,270) €2,850 Actual tax due €8,742 PRSI Calculation 7.5% of €43,000 €3,225 Net Wage: Gross Wage (€43,000) – PAYE (€8,742) – PRSI (€3,225) = €31,033

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10. Gross income €63,000 First €29,400 @ 20% €5,880 Remainder €33,600 @ 42% €14,114 Gross tax due €19,992 Less tax credits (€1,580 + €1,270) €2,850 Actual tax due €17,140 PRSI: Calculation 7.5% of €63,000 €4,725 Net Wage Gross Wage (€63,000) – PAYE (€17,140) – PRSI (€4,725) = €41,135 11. Gross income €62,000 First €29,400 @ 20% €5,880 Remainder €32,600 @ 42% €13,440 Gross tax due €19,320 Less tax credits (€1,580 + €1,270) €2,850 Actual tax due €16,470 PRSI: Calculation 7.5% of €62,000 €4,650 Net Wage: Gross Wage (€62,000) – PAYE (€16,470) – PRSI (€4,650) – BUPA (€600) – Union Fee (€1,350) = €38,930

Chapter 26 Industrial Relations

1. Good industrial relations are important because disputes over wages, working conditions etc., can be settled without a strike taking place. 2. Trade unions: Negotiate wage increases for their members; Protect their members against unfair dismissal; Represent their members in discussions with employers and government on matters such as taxation and employment. 3. Union Type Explanation Example Craft Union Represents workers who have served an apprenticeship NUJ White Collar Union Represents workers who have professional qualification ASTI Industrial Union Represents workers who work in the same industry INO General Union Represents workers who are not in any of the other three unions SIPTU

4. Industrial disputes arise when: Working conditions are dangerous; Pay should be increased because of extra work done. 5. Industrial disputes can be settled by: Workers discussing the problem with their supervisor; The shop steward discussing the problem with the manager; An acceptable third party bringing the two sides in dispute together.

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6. (a) (i) Line graph showing number of strikes for the period 1990–1994

(ii) 44.2 strikes. (iii) 1992 and 1994. (b) (i) Breach of agreement on the employment of temporary staff. (ii) Department of Agriculture and members of the CPSU. (iii) Ban on overtime, refusal to perform duties of higher grades, ban on telephone and public enquiries. (iv) Both sides going to conciliation or arbitration. 7. (a) Strikes take place because: Workers are seeking higher wages; Poor working conditions; Demarcation disputes over who does what work. (b) (i) Suspension by An Post of staff at its Dublin mail centre in Clondalkin. (ii) An Post and the CWU (postal workers). (iii) Reinstatement of suspended staff and the restoration of the postal service. An Post wanted the union to deliver work changes that had already been paid for. (iv) Members of the public who could not get any post; charities, e.g. Concern, who would not get donations that were sent in the post. (v) The Labour Relations Commission (LRC). Chapter 27 Finance for Business

1. It is important to distinguish between short-, medium- and long-term needs because each one has a different time period and will require a different type of finance. E.g. a long-term need would require a source of finance to be paid back after at least five years.

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2. Short-Term Source Explanation Creditors This is where a business buys goods from a supplier and pays for them at a later date. Expenses due This where certain expenses are incurred and paid for later, e.g. electricity and telephone. Bank overdraft This where a person has a current account and has permission from the bank to take out more money than is in the account.

3. External Source Explanation Hire Purchase This is a source of finance where the business that requires the three vans, pays a number of instalments and becomes the eventual owner when the last instalment is paid. Leasing This is a source of finance where the business that wants the use but not ownership of the three vans, pays a finance company for the use of them.

4. Long-Term Source Explanation Reserves This an internal source of finance that is available to a profitable business that has set some of its profit aside for use at a later stage. Grants This is an external source of finance, which is obtained from the EU or government, to start or expand a business, if certain conditions are met.

Long-term loan This is an external source of finance that is obtained from a financial institu- tion for the purchase of land, buildings and machinery.The business must be creditworthy, be able to repay the loan and have security.

5. Killoe, Co. Longford. Title: Suitable Sources of Finance for Kennedy Ltd. Date:______Kennedy Ltd, College Park, Longford. I was asked by you to advise on suitable sources of finance for your business. As your needs are both long and medium term, I advise the following: Extension of the factory should be financed by investing extra capital in the business and using up the available reserves. The purchase of suitable equipment should be financed by a four-year bank loan. I am available to discuss this report if necessary. Thomas Mahon. Financial Consultant.

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Chapter 28 Preparation of a Business Plan

1. (i) The business background giving details of the owners and a history of the business; (ii) A description of the product or service; (iii) Market research details of customers and competitors; (iv) How the product or service will be promoted; (v) The sources of finance that will be used, both internal and external. 2. Total cost of project (€60,000 + €30,000 + €18,000 + €14,000) = €122,000 Less Finance Available (€56,000 + €30,000) = €86,000 Finance Required: €36,000 3. Total cost of project (€80,000 + €40,000 + €60,000 + €20,000 + €10,000) = €210,000 Less Finance Available (€62,500 + €35,000) = €97,500 Finance Required: €112,500

Chapter 29 Business Loan Applications

1. The business history; purpose of the loan; amount of the loan; time period of the loan; proof of ability to repay the loan; details of security available in case the loan is not paid back. 2. Total cost of project (€150,000 + €140,000) = €290,000 Less finance available (€80,000 + €50,000) = €130,000 Loan required: €160,000

Chapter 30 Banking for Business

1. Service Explanation Money transmission This involves moving money from one business to another e.g. cheques, credit transfers etc Lending Banks provide loans for different periods as well as overdrafts Night-safe facilities Banks provide a safe place to keep business money overnight Paypath Banks will transfer money to an employee’s account International services Banks will make payments to foreign businesses on behalf of their account holders

2. A private limited company must provide memorandum of association; articles of association; written agreement of directors to open an account; signatures of persons permitted to sign cheques.

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3. The directors of the company, having completed an application form and provided necessary details, open the account; Money is lodged to the account using lodgement slips, credit transfers, standing orders etc; Payments are made from the account by way of cheques signed by authorised people, by standing orders, direct debits, credit transfers etc; The account is checked against the bank statement. 4. Adjusted Bank Account Date Details Debit Credit Balance 2005 € € € 31/7 Balance b/d 17,000 Credit transfer 3,000 20,000 Standing order 2,400 17,600 Direct debit 4,500 13,100 Bank charges 350 12,750

Bank Reconciliation Statement as on 31/7/2005 Balance as per bank statement €12,750 Add lodgements not credited €10,600 €23,350 Less cheques not yet presented (4,600 + 6,000) €10,600 Balance as per adjusted bank account €12,750 5. Adjusted Bank Account Date Details Total Date Details Total 2007 € 2007 € 31/5 Balance b/d 12,900 31/5 Standing order 1,300 Credit transfer 2,400 Bank charges 40 Balance c/d 13,960 15,300 15,300

Balance b/d 13,960

Bank Reconciliation Statement as on 31/5/2007 Balance as per bank statement €9,810 Add lodgements not credited €7,500 €17,310 Less cheques not yet presented (1,300 + 600 + 1,450) €3,350 Balance as per adjusted bank account €13,960 6. Adjusted bank account Date Details Total Date Details Total 2007 € 2007 € 31/3 Balance b/d 16,740 31/3 Direct debit 1,790 Credit transfer 2,780 Bank charges 100 Balance c/d 17,630 19,520 19,520

Balance b/d 17,630

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Bank Reconciliation Statement as on 31/3/2007 Balance as per bank statement €14,890 Add lodgements not credited €11,600 €26,490 Less cheques not yet presented (950 + 4,360 + 3,550) €8,860 Balance as per adjusted bank account €17,630

7. (a) Bank Account Date Details Total Date Details Ch. no./ATM Total 2004 € 2004 € 1/5 Balance b/d 1,500 7/5 Martin Ltd 1 1,700 3/5 Lodgement 3,500 10/5 Bruton Ltd 2 4,500 31/5 Lodgement 12,400 14/5 Cash withdrawal ATM 600 19/5 Kenny Ltd 3 2,780 27/5 Harney Ltd 4 1,900 31/5 Balance c/d 5,920 17,400 17,400

1/6 Balance b/d 5,920

(b) Adjusted Bank Account Date Details Total Date Details Total 2004 € 2004 € 31/5 Balance b/d 5,920 Direct debit 3,400 Credit transfer 10,000 Bank fees 175 Balance c/d 12,345 15,920 15,920

12,345

(c) Bank Reconciliation Statement as on 31/5/2004 Balance as per bank statement €6,345 Add lodgements not credited €12,400 €18,745 Less cheques not yet presented (4,500 + 1,900) €6,400 Balance as per adjusted bank account €12,345

Chapter 31 Business Insurance

1. Types of Insurance Explanation Third party motor insurance Required by law in case damage is caused by its motor vehicles Theft insurance In case goods or equipment is stolen Cash in transit In case money is stolen on the way to the bank Employer’s liability In case workers get injured at work Product liability In case consumers get injured using the product

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2. (a) Hayes Ltd is required by law to have third party motor insurance, and to pay its share of PRSI. (b) Hayes Ltd should also take out: Fire insurance in case fire causes damage to furniture, premises or equipment; Theft insurance in case furniture or equipment is stolen; Employer’s liability in case any of its five workers are injured at work. (c) Hayes Ltd may be unable to insure against losses due to bad management or furniture going out of date. (d) Hayes Ltd should have adequate insurance so that all possible risks are insured for the correct amounts. (e) Hayes Ltd should consult an insurance broker because the broker will be independent and experienced.

Chapter 32 Delivery Systems

1. An efficient delivery system is important in the chain of distribution because: Raw materials have to be transported to manufacturers; Finished goods have to be transported to retailers; Workers have to be transported to their places of work; Consumers have to be transported to the retailers. 2. Cost – the cost of transport adds to the cost of the goods so it must be as low as possible. Reliability – the system must be punctual and meet deadlines. Speed – speed is very important for delivery of many goods e.g. fish, fruit etc. Convenience – the system should be available as and when required. 3. Road transport is very popular and is suitable for fast deliveries of non-bulky goods. Air transport is very quick and is suitable for transporting people and high-value non-bulky goods. 4. Delivery Speed Cost Reliability Good transported System Road Fast over short Expensive Very reliable Non-bulky distances Rail Very fast Cheaper than road Very reliable Bulky Dependent on Sea Slow Cheaper than air Bulky weather Dependent on Air Very fast Very expensive Non-bulky weather

5. Dublin Port Tunnel, which allows trucks to bypass Dublin city on the way to Dublin Port. 6. A business can transport goods as and when it needs to and is not tied to timetables. It can also advertise its goods on the side of its trucks. 7. (a) 178 km (b) 206 km (c) 188 km (d) 164 km 8. (a) 325 km (b) 326 km 9. (a) 10.14 am (b) 11.30 am 10. (a) 5.55 am (b) 5.36 am

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11. (a) Cost of diesel: 168 = 6.72 litres @ €0.60 = €4.03 25 Driver wages: €100 Annual costs: €1,500 + €600 + €1,100 = €10 320 Total costs: €114.03

(b) Cost of diesel: 168 = 6.72 litres @ €0.60 = €4.03 25 Driver wages: €120 Annual costs: €1,350 + €750 + €1,200 = €11 300 Total costs: €135.03 12. (a) Cost of diesel: 472 = 18.88 litres @ €0.60 = €11.33 25 Driver wages: 11@ €8 + 11 @ €3 = €121 Annual costs: €900 + €520 + €3,000 = €14.98 295 Total costs: €147.31 (b) 1.46%. 13. Cost of diesel: 460 = 28,75 litres @ €0.60 = €17.25 16 Driver wages: €98 Annual costs: €580 + €1,500 + €750 = €10 283 Total costs: €125.25

Chapter 33 Marketing

1. ‘Market’ means the exchange of goods or services for payment. Examples include: market for labour; transport; money; education. 2. Carrying out market research; Production of a product or service; Deciding on a place to sell the product or service; Deciding on the price at which to sell the product or service; Deciding on how to promote the product or service; Carry out further market research to get customer feedback. 3. Product/Service Conrad Hotel Farmer’s Sky Sports Business Doc Martens Journal Studies Books boots Target Market Business people Farmers Sports Junior Teenagers Certificate Students

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4. Sample layout Four P’s Product chosen: school bag Product Available in ten colours and five sizes Price Range from €12.50 to €28.60 Promotion Send fliers to schools. Television advertisements in August Place Available in all sports and school bookshops

5. Market research is important because it provides details of customers and competitors. This helps identify the target market. 6. A business would first use desk research, which involves studying existing information on the market. It would then use field studies to get additional information that is not available from desk research. This involves using questionnaires, interviews etc. 7. A business advertises to inform customers about its products or services, to persuade customers to buy only its products or services and also to highlight the difference between its products or services and those of its competitors. 8. Who is the target market; The type of product or service; The cost. 9. Be careful with the number of words used because that determines the price of newspaper advertisements. Example: ‘Don’t dry up, Quench your thirst with ‘Irish Rain’. Available NOW in retail stores nationwide!’ 10. To launch a new Finance and Consumer TV Show. Example: ‘You’ve seen the rest Now watch the best Get it all off your chest With the new Finance and Consumer test.’ 11. Students to suggest answer. 12. Product/Service Smarties Swimwear Festival Circus Bank Media Television Colour magazine Posters Fliers Radio

13. Students to suggest answers. 14. ‘Must have’, ‘Can’t live without it’, ‘Be ahead of the pack’.

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Chapter 34 Financial Recording and Filing

1. To know how much you have; To know how much you owe; To know how much you are owed; To know if you are making a profit or a loss. 2. Complete documents; Record data in Books of First Entry; Post data to the Ledger; Extract a Trial Balance; Prepare Final Accounts and Balance Sheet. 3. Double entry bookkeeping is the recording of the giving and the receiving aspects of a transaction. 4. Debtors Ledger is used to record the names of people who owe the business money. Creditors Ledger is used to record the names of people to whom the business owes money. General Ledger is used to record all transactions that cannot be recorded in the Debtors or Creditors Ledgers.

Chapter 35 Business Documents I

1. ‘Effective purchasing’ means purchasing the right quantity and quality of goods at the right price and time. 2. Letter, phone or e-mail. 3. Quality; price; method of payment; delivery; discounts. 4.

Providers Hardware Stores Ltd, Cavan. (049) 23246. VAT Reg. No. 6311141H ______

The Sales Department, Crown Paints Ltd, Dublin.

Dear Sir/Madam,

Please send me the best terms and conditions under which you can supply me with the following: 50 10 litre drums of white emulsion; 30 5 litre tins of cream paint; 60 5 litre tins of white ceiling paint; 15 1 litre tins of brown gloss paint for exterior use.

Yours faithfully,

______

Purchasing Manager.

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All Sports Ltd, Cork Rd., Dublin. (01) 7734218. VAT Reg. No. 4812641S ______

Connolly Sportswear Manufacturers Ltd, Tuam Rd., Galway.

Dear Sir/Madam,

Please send me the best terms and conditions under which you can supply me with the following: 4 Sets of Leitrim Jerseys (Senior size); 60 Hurling Helmets varying sizes; 30 Tracksuits with Leitrim crest; 120 Hurleys varying sizes.

Yours faithfully, ______

Purchasing Manager.

6. C €556.20 (A = €565.25 B = €580.30 C = €556.20) 7. Term Explanation CWO Cash must be sent with the order Price does not include delivery. If goods have to be delivered they Ex Works will cost more Retailers will receive a 30% reduction in the price to encourage Trade Discount 30% them to sell the goods If payment is made within 10 days of receiving the goods a further 5% in 10 days otherwise net reduction of 5% will be given, otherwise the normal price applies Value Added Tax at 21% has to be added to the price of the Subject to VAT @21% goods

8. A business can check the credit ratings of a customer by: Checking the existing records to see if the customer paid up in the past; Asking for a bank reference to see if the bank would recommend the customer; Asking for a trade reference to see if another business would recommend the customer.

1 9. (a) Gross Profit €200 (b) Mark up % = 50%. Margin % = 33 3 % 10. (a) 20% (b) 16.67% 11. (a) €50 (b) 40% 12. 25%

Chapter 36 Business Documents II

There are no exercises in the textbook.

39 Junior Certificate Business Studies Textbook Teacher’s Manual

Chapter 37 Recording Credit Transactions

1. Sales Book (p1) Date Details Inv. no. F Net VAT Total 2006 € € € 11/10 Coyne Ltd 54 DL 32,000 4,320 36,320 13/10 Hynes Ltd 55 DL 28,000 3,780 31,780 15/10 Lyons Ltd 56 DL 16,000 2,160 18,160 76,000 10,260 86,260

Debtors Ledger Date Details F Total Date Details F Total 2006 € 2006 € Coyne Ltd A/C 11/10 Sales SB 36,320

Hynes Ltd A/C 13/10 Sales SB 31,780

Lyons Ltd A/C 15/10 Sales SB 18,160

General Ledger Sales A/C 15/10 Total debtors SB 76,000

Vat A/C 15/10 Credit sales SB 10,260

Trial Balance as on 15/10/2006 Coyne Ltd 36,320 Hynes Ltd 31,780 Lyons Ltd 18,160 Sales 76,000 VAT 10,260 86,260 86,260

2. Sales Book (p1) Date Details Inv. no. F Net VAT Total 2006 € € € 17/4 Foley Ltd 34 DL 11,000 1,485 12,485 18/4 Roley Ltd 35 DL 19,000 2,565 21,565 20/4 Poley Ltd 36 DL 52,000 7,020 59,020 82,000 11,070 93,070

40 Junior Certificate Business Studies Textbook Teacher’s Manual

Debtors Ledger Date Details F Total Date Details F Total 2006 € 2006 € Foley Ltd A/C 17/4 Sales SB 12,485

Roley Ltd A/C 18/4 Sales SB 21,565

Poley Ltd A/C 20/4 Sales SB 59,020

General Ledger Sales A/C 20/4 Total debtors SB 82,000

VAT A/C 20/4 Credit sales SB 11,070

Trial Balance as on 20/4/2006 Foley Ltd 12,485 Roley Ltd 21,565 Poley Ltd 59,020 Sales 82,000 VAT 11,070 93,070 93,070

3. Sales Book (p1) Date Details Inv. no. F Net VAT Total 2007 € € € 12/5 Mark Ltd 67 DL 27,000 3,645 30,645 14/5 Dark Ltd 68 DL 10,400 1,404 11,804 15/5 Park Ltd 69 DL 38,400 5,184 43,584 75,800 10,233 86,033

41 Junior Certificate Business Studies Textbook Teacher’s Manual

Debtors Ledger Date Details F Total Date Details F Total 2007 € 2007 € Mark Ltd A/C 12/5 Sales SB 30,645

Dark Ltd A/C 14/5 Sales SB 11,804

Park Ltd A/C 15/5 Sales SB 43,584

General Ledger Sales A/C 15/5 Total debtors SB 75,800

VAT A/C 15/5 Credit sales SB 10,233

Trial Balance as on 15/5/2007 Mark Ltd 30,645 Dark Ltd 11,804 Park Ltd 43,584 Sales 75,800 VAT 10,233 86,033 86,033

4. Sales Book (p1) Date Details Inv. no. F Net VAT Total 2007 € € € 23/9 Brown Ltd 45 DL 21,000 4,410 25,410 24/9 White Ltd 46 DL 50,000 10,500 60,500 26/9 Green Ltd 47 DL 16,000 3,360 19,360 87,000 18,270 105,270

42 Junior Certificate Business Studies Textbook Teacher’s Manual

Debtors Ledger Date Details F Total Date Details F Total 2007 € 2007 € Brown Ltd A/C 23/9 Sales SB 25,410

White Ltd A/C 24/9 Sales SB 60,500

Green Ltd A/C 26/9 Sales SB 19,360

General Ledger Sales A/C 26/9 Total debtors SB 87,000

VAT A/C 26/9 Credit sales SB 18,270

Trial Balance as on 26/9/2007 Brown Ltd 25,410 White Ltd 60,500 Green Ltd 19,360 Sales 87,000 VAT 18,270 105,270 105,270

5. Purchases Book (p1) Date Details Inv. no. F Net VAT Total 2007 € € € 3/4 PM Ltd 4 CL 18,000 3,780 21,780 5/4 ET Ltd 2 CL 8,000 1,680 9,680 8/4 AA Ltd 1 CL 12,000 2,520 14,520 38,000 7,980 45,980

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Creditors Ledger Date Details F Total Date Details F Total 2007 € 2007 € PM Ltd A/C 3/4 Purchases PB 21,780

ET Ltd A/C 5/4 Purchases PB 9,680

AA Ltd A/C 8/4 Purchases PB 14,520

General Ledger Purchases A/C 8/4 Total creditors PB 38,000

VAT A/C 8/4 Credit purchases PB 7,890

Trial Balance as on 8/4/2007 PM Ltd 21,780 ET Ltd 9,680 AA Ltd 14,520 Purchases 38,000 VAT 7,890 45,790 45,790

6. Purchases Book (p1) Date Details Inv. no. F Net VAT Total 2007 € € € 17/9 BC Ltd 7 CL 36,000 7,560 43,560 19/9 MP Ltd 5 CL 4,000 840 4,840 23/9 CC Ltd 3 CL 54,000 11,340 65,340 94,000 19,740 113,740

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Creditors Ledger Date Details F Total Date Details F Total 2007 € 2007 € BC Ltd A/C 17/9 Purchases PB 43,560

MP Ltd A/C 19/9 Purchases PB 4,840

CC Ltd A/C 23/9 Purchases PB 65,340

General Ledger Purchases A/C 23/9 Total purchases PB 94,000

VAT A/C 23/9 Credit purchases PB 19,740

Trial Balance as on 23/9/2007 BC Ltd 43,560 MP Ltd 4,840 CC Ltd 65,340 Purchases 94,000 VAT 19,740 113,740 113,740

7. Purchases Book (p1) Date Details Inv. no. F Net VAT Total 2007 € € € 29/5 PP Ltd 9 CL 64,000 8,640 72,640 30/5 DJ Ltd 8 CL 48,000 6,480 54,480 31/5 FI Ltd 7 CL 96,000 12,960 108,960 208,000 28,080 236,080

45 Junior Certificate Business Studies Textbook Teacher’s Manual

Creditors Ledger Date Details F Total Date Details F Total 2007 € 2007 € PP Ltd A/C 29/5 Purchases PB 72,640

DJ Ltd A/C 30/5 Purchases PB 54,480

FI Ltd A/C 31/5 Purchases PB 108,960

General Ledger Purchases A/C 31/5 Total creditors PB 208,000

VAT A/C 31/5 Credit purchases PB 28,080

Trial Balance as on 31/5/2007 PP Ltd 72,640 DJ Ltd 54,480 FI Ltd 108,960 Purchases 208,000 VAT 28,080 236,080 236,080

8. Purchases Book (p1) Date Details Inv. no. F Net VAT Total 2007 € € € 14/7 PJ Ltd 7 CL 16,000 2,160 18,160 16/7 SM Ltd 2 CL 44,000 5,940 49,940 18/7 JC 4 CL 36,000 4,860 40,860 96,000 12,960 108,960

46 Junior Certificate Business Studies Textbook Teacher’s Manual

Creditors Ledger Date Details F Total Date Details F Total 2007 € 2007 € PJ Ltd A/C 14/7 Purchases PB 18,160

SM Ltd A/C 16/7 Purchases PB 49,940

JC Ltd A/C 18/7 Purchases PB 40,860

General Ledger Purchases A/C 18/7 Total creditors PB 96,000

VAT A/C 18/7 Credit purchases PB 12,960

Trial Balance as on 18/7/2007 PJ Ltd 18,160 SM Ltd 49,940 JC Ltd 40,860 Purchases 96,000 VAT 12,960 108,960 108,960

9. Sales Returns Book (p1) Date Details Credit note no. F Net VAT Total 2006 € € € 20/4 Bun Ltd 67 DL 1,300 273 1,573 23/4 Gun Ltd 68 DL 600 126 726 1,900 399 2,299

47 Junior Certificate Business Studies Textbook Teacher’s Manual

Debtors Ledger Date Details F Total Date Details F Total 2006 € 2006 € Bun Ltd A/C 20/4 Sales returns SRB 1,573

Gun Ltd A/C 23/4 Sales returns SRB 726

General Ledger

Sales Returns A/C 20/4 Total debtors SRB 1,900

VAT A/C 20/4 Sales returns SRB 399

Trial Balance as on 20/4/2007 Bun Ltd 1,573 Gun Ltd 726 Sales returns 1,900 VAT 399 2,299 2,299

10. Sales Returns Book (p1) Date Details Credit note no. F Net VAT Total 2006 € € € 12/1 Bob Ltd 45 DL 3,000 405 3,405 14/1 Rob Ltd 46 DL 1,600 216 1,816 4,600 621 5,221

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Debtors Ledger Date Details F Total Date Details F Total 2006 € 2006 € Bob Ltd A/C 12/1 Sales returns SRB 3,405

Rob Ltd A/C 14/1 Sales returns SRB 1,816

General Ledger Sales Returns A/C 14/1 Total debtors SRB 4,600

VAT A/C 14/1 Sales returns SRB 621

Trial Balance as on 14/1/2006 Bob Ltd 3,405 Rob Ltd 1,816 Sales returns 4,600 VAT 621 5,221 5,221

11. Sales Returns Book (p1) Date Details Credit note no. F Net VAT Total 2006 € € € 24/9 Joe Ltd 78 DL 2,400 324 2,724 26/9 Coe Ltd 79 DL 5,600 756 6,356 8,000 1,080 9,080

Debtors Ledger Date Details F Total Date Details F Total 2006 € 2006 € Joe Ltd A/C 24/9 Sales returns SRB 2,724

Coe Ltd A/C 26/9 Sales returns SRB 6,356

General Ledger Sales Returns A/C 26/9 Total debtors SRB 8,000

VAT A/C 26/9 Sales returns SRB 1,080

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Trial Balance as on 26/9/2006 Joe Ltd 2,724 Coe Ltd 6,356 Sales returns 8,000 VAT 1,080 9,080 9,080

12. Purchases Returns Book (p1) Date Details Credit note no. F Net VAT Total 2007 € € € 7/3 Mike Ltd 56 CL 3,600 486 4,086 8/3 Alma Ltd 12 CL 1,400 189 1,589 5,000 675 5,675

Creditors Ledger Date Details F Total Date Details F Total 2007 € 2007 € Mike Ltd A/C 7/3 Purchases returns PRB 4,086

Alma Ltd A/C 8/3 Purchases returns PRB 1,589

Purchases Returns A/C 8/3 Total creditors PRB 5,000

VAT A/C 8/3 Purchases returns PRB 675

Trial Balance as on 8/3/2007 Mike Ltd 4,086 Alma Ltd 1,589 Purchases returns 5,000 VAT 675 5,675 5,675

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13. Purchases Returns Book (p1) Date Details Credit note no. F Net VAT Total 2007 € € € 23/1 Vicki Ltd 34 CL 2,800 378 3,178 25/1 Steve Ltd 5 CL 800 108 908 3,600 486 4,086

Creditors Ledger Date Details F Total Date Details F Total 2007 € 2007 € Vickie Ltd A/C 23/1 Purchases returns PRB 3,178

Steve Ltd A/C 25/1 Purchases returns PRB 908

General Ledger Purchases Returns A/C 25/1 Total creditors PRB 3,600

VAT A/C 25/1 Purchases returns PRB 486

Trial Balance as on 25/1/2007 Vickie Ltd 3,178 Steve Ltd 908 Purchase returns 3,600 VAT 486 4,086 4,086

14. Purchases Returns Book (p1) Date Details Credit note no. F Net VAT Total 2007 € € € 16/2 Vera Ltd 14 CL 3,400 714 4,114 18/2 Jack Ltd 67 CL 2,800 588 3,388 6,200 1,302 7,502

51 Junior Certificate Business Studies Textbook Teacher’s Manual

Creditors Ledger Date Details F Total Date Details F Total 2007 € 2007 € Vera Ltd A/C 16/2 Purchases returns PRB 4,114

Jack Ltd A/C 18/2 Purchases returns PRB 3,388

General Ledger Purchases Returns A/C 18/2 Total creditors PRB 6,200

VAT A/C 18/2 Purchase returns PRB 1,302

Trial Balance as on 18/2/2007 Vera Ltd 4,114 Jack Ltd 3,388 Purchase returns 6,200 VAT 1,302 7,502 7,502

15. Sales Book (p1) Date Details Invoice no. F Net VAT Total 2008 € € € 3/4 Smyth Ltd 43 DL 20,000 4,200 24,200 5/4 Smart Ltd 44 DL 15,500 3,255 18,755 35,500 7,455 42,955

Sales Returns Book (p1) Date Details Credit note no. F Net VAT Total 2008 € € € 8/4 Smyth Ltd 12 DL 4,500 945 5,445 9/4 Smart Ltd 13 DL 3,200 672 3,872 7,700 1,617 9,317

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Debtors Ledger Date Details F Total Date Details F Total 2008 € 2008 € Smyth Ltd A/C 3/4 Sales SB 24,200 8/4 Sales returns SRB 5,445 9/4 Balance c/d 18,755 24,200 24,200 10/4 Balance b/d 18,755 Smart Ltd A/C 5/4 Sales SB 18,755 9/4 Sales returns SRB 3,872 9/4 Balance c/d 14,883 18,755 18,755 10/2 Balance b/d 14,883 General Ledger Sales A/C 9/4 Total debtors SB 35,500

Sales Returns A/C 9/4 Total debtors SRB 7,700

VAT A/C 9/4 Sales returns SRB 1,617 9/4 Credit sales SB 7,455 9/4 Balance c/d 5,838 7,455 7,455 10/4 Balance b/d 5,838

Trial Balance as on 9/4/2008 Smyth Ltd 18,755 Smart Ltd 14,883 Sales 35,500 Sales returns 7,700 VAT 5,838 41,338 41,338

16. Sales Book (p1) Date Details Invoice no. F Net VAT Total 2008 € € € 13/2 Harry Ltd 67 DL 35,000 4,725 39,725 14/2 Helen Ltd 68 DL 24,000 3,240 27,240 59,000 7,965 66,965

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Sales Returns Book (p1) Date Details Credit note no. F Net VAT Total 2008 € € € 16/2 Harry Ltd 56 DL 6,000 810 6,810 18/2 Helen Ltd 57 DL 2,400 324 2,724 8,400 1,134 9,534

Debtors Ledger Date Details F Total Date Details F Total 2008 € 2008 € Harry Ltd A/C 13/2 Sales SB 39,725 16/2 Sales returns SRB 6,810 18/2 Balance c/d 32,915 39,725 39,725 19/2 Balance b/d 32,915 Helen Ltd A/C 14/2 Sales SB 27,240 18/2 Sales returns SRB 2,724 Balance c/d 24,516 27,240 27,240 19/2 Balance b/d 24,516 General Ledger Sales A/C 18/2 Total debtors SB 59,000

Sales Returns A/C 18/2 Total debtors SRB 8,400

VAT A/C 18/2 Sales returns SRB 1,134 18/2 Credit sales SB 7,965 18/2 Balance c/d 6,831 7,965 7,965 19/2 Balance b/d 6,831

Trial Balance as on 18/2/2008 Harry Ltd 32,915 Helen Ltd 24,516 Sales 59,000 Sales returns 8,400 VAT 6,831 65,831 65,831

54 Junior Certificate Business Studies Textbook Teacher’s Manual

17. Sales Book (p1) Date Details Invoice no. F Net VAT Total 2008 € € € 25/6 Glass Ltd 78 DL 45,000 9,450 54,450 26/6 Task Ltd 79 DL 78,000 16,380 94,380 123,000 25,830 148,830

Sales Returns Book (p1) Date Details Credit note no. F Net VAT Total 2008 € € € 27/6 Glass Ltd 32 DL 7,600 1,596 9,196

Debtors Ledger Date Details F Total Date Details F Total 2008 € 2008 € Glass Ltd A/C 25/6 Sales SB 54,450 27/6 Sales returns SRB 9,196 27/6 Balance c/d 45,254 54,450 54,450 28/6 Balance b/d 45,254 Task Ltd A/C 26/6 Sales SB 94,380 General Ledger Sales A/C 27/6 Total debtors SB 123,000

Sales Returns A/C 27/6 Total debtors SRB 7,600

VAT A/C 27/6 Sales returns SRB 1,596 27/6 Credit sales SB 25,830 27/6 Balance c/d 24,234 25,830 25,830 28/6 Balance b/d 24,234

Trial Balance as on 27/6/2008 Glass Ltd 45,254 Task Ltd 94,380 Sales 123,000 Sales returns 7,600 VAT 24,234 147,234 147,234

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18. Purchases Book (p1) Date Details Invoice no. F Net VAT Total 2006 € € € 10/4 Dinny Ltd 32 CL 39,400 8,274 47,674 12/4 Tesie Ltd 56 CL 76,900 16,149 93,049 116,300 24,423 140,723

Purchases Returns Book (p1) Date Details Credit note no. F Net VAT Total 2006 € € € 14/4 Dinny Ltd 21 CL 6,400 1,344 7,744 16/4 Tesie Ltd 89 CL 3,500 735 4,235 9,900 2,079 11,979

Creditors Ledger Date Details F Total Date Details F Total 2006 € 2006 € Dinny Ltd A/C 14/4 Purchase returns PRB 7,744 10/4 Purchases PB 47,674 16/4 Balance c/d 39,930 47,674 47,674 17/4 Balance b/d 39,930 Tesie Ltd A/C 16/4 Purchases returns PRB 4,235 12/4 Purchases PB 93,049 16/4 Balance c/d 88,814 93,049 93,049 17/4 Balance b/d 88,814 General Ledger Purchases A/C 16/4 Total creditors PB 116,300

Purchase Returns A/C 16/4 Total creditor PRB 9,900

VAT A/C 16/4 Credit purchases PB 24,423 16/4 Purchases ret. 2,079 16/4 Balance c/d 22,344 24,423 24,423 17/4 Balance b/d 22,344

Trial Balance as on 16/4/2008 Dinny Ltd 39,930 Tesie Ltd 88,814 Purchases 116,300 Purchases returns 9,900 VAT 22,344 138,644 138,644

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19. Purchases Book (p1) Date Details Invoice no. F Net VAT Total 2006 € € € 13/5 Miley Ltd 43 CL 76,000 10,260 86,260 25/5 Biddy 12 CL 56,600 7,641 64,241 132,600 17,901 150,501

Purchases Returns Book (p1) Date Details Credit note no. F Net VAT Total 2006 € € € 26/5 Miley Ltd 34 CL 7,200 972 8,172 28/5 Biddy Ltd 56 CL 3,600 486 4,086 10,800 1,458 12,258

Creditors Ledger Date Details F Total Date Details F Total 2006 € 2006 € Miley Ltd A/C 26/5 Purchases returns PRB 8,172 13/5 Purchases PB 86,260 27/5 Balance c/d 78,088 86,260 86,260 28/5 Balance b/d 78,088 Biddy Ltd A/C 28/5 Purchases returns PRB 4,086 25/5 Purchases PB 64,241 28/5 Balance c/d 60,155 64,241 64,241 29/5 Balance b/d 60,155 General Ledger Purchases A/C 28/5 Total creditors PB 132,600

Purchases Returns A/C 28/5 Total creditors PRB 10,800

VAT A/C 28/5 Credit purchases PB 17,901 28/5 Purchases ret. PRB 1,458 28/5 Balance c/d 16,443 17,901 17,901 29/5 Balance b/d 16,443

Trial Balance as on 28/5/2006 Miley Ltd 78,088 Biddy Ltd 60,155 Purchases 132,600 Purchases returns 10,800 VAT 16,443 149,043 149,043

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20. Purchases Book (p1) Date Details Invoice no. F Net VAT Total 2006 € € € 17/8 Nora Ltd 13 CL 46,400 6,264 52,664 19/8 Brian Ltd 92 CL 56,600 7,641 64,241 103,000 13,905 116,905

Purchases Returns Book (p1) Date Details Credit note no. F Net VAT Total 2006 € € € 20/8 Nora Ltd 14 CL 2,200 297 2,497 22/8 Brian Ltd 86 CL 2,600 351 2,951 4,800 648 5,448

Creditors Ledger Date Details F Total Date Details F Total 2006 € 2006 € Nora Ltd A/C 20/8 Purchases returns PRB 2,497 17/8 Purchases PB 52,664 22/8 Balance c/d 50,167 52,664 52,664 23/8 Balance b/d 50,167 Brian Ltd A/C 22/8 Purchase returns PRB 2,951 19/8 Purchases PB 64,241 22/8 Balance c/d 61,290 64,241 64,241 23/8 Balance b/d 61,290 General Ledger Purchases A/C 22/8 Total creditors PB 103,000

Purchases Returns A/C 22/8 Total creditors PRB 4,800

VAT A/C 22/8 Credit purchases PB 13,905 22/8 Purchases ret. PRB 648 22/8 Balance c/d 13,257 13,905 13,905 23/8 Balance b/d 13,257

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Trial Balance as on 22/8/2006 Nora Ltd 50,167 Brian Ltd 61,290 Purchases 103,000 Purchases returns 4,800 VAT 13,257 116,257 116,257

21. Purchases Book (p1) Date Details Invoice no. F Net € VAT € Total € 1/7/2006 Fagan Ltd 6 CL 14,000 1,890 15,890

Purchases Returns Book (p1) Date Details Credit note no. F Net € VAT € Total € 6/7/2006 Fagan Ltd 61 CL 2,400 324 2,724

Sales Book (p1) Date Details Invoice no. F Net € VAT € Total € 4/7/2006 Turner Ltd 17 DL 4,800 648 5,448

Sales Returns Book (p1) Date Details Credit note no. F Net € VAT € Total € 8/7/2006 Turner Ltd 42 DL 1,600 216 1,816

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Creditors Ledger Date Details F Total Date Details F Total 2006 € 2006 € Fagan Ltd A/C 6/7 Purchases returns PRB 2,724 1/7 Purchases PB 15,890 8/7 Balance c/d 13,166 15,890 15,890 9/7 Balance b/d 13,166

Debtors Ledger Turner Ltd 4/7 Sales SB 5,448 8/7 Sales returns SRB 1,816 8/7 Balance c/d 3,632 5,448 5,448 9/7 Balance b/d 3,632

General Ledger Purchases A/C 8/7 Total creditors PB 14,000

Purchases Returns A/C 8/7 Total creditors PRB 2,400

Sales A/C 8/7 Total debtors SB 4,800

Sales Returns A/C 8/7 Total debtors SRB 1,600

VAT A/C 8/7 Credit purchases PB 1,890 8/7 Credit sales SB 648 8/7 Sales returns SRB 216 8/7 Purchases returns PRB 324 8/7 Balance c/d 1,134 2,106 2,106 9/7 Balance b/d 1,134

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Trial Balance as on 9/7/2006 Fagan Ltd 13,166 Turner Ltd 3,632 Purchases 14,000 Purchases returns 2,400 Sales 4,800 Sales returns 1,600 VAT 1,134 20,366 20,366

22. Purchases Book (p1) Date Details Invoice no. F Net € VAT € Total € 1/4/2006 CB Ltd 50 CL 36,000 7,560 43,560

Purchases Returns Book (p1) Date Details Credit note no. F Net € VAT € Total € 4/4/2006 CB Ltd 16 CL 10,000 2,100 12,100

Sales Book (p1) Date Details Invoice no. F Net € VAT € Total € 5/4/2006 Rice Ltd 92 DL 56,000 11,760 67,760

Sales Returns Book (p1) Date Details Credit note no. F Net € VAT € Total € 8/4/2006 Rice Ltd 71 DL 8,600 1,806 10,406

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Creditors Ledger Date Details F Total Date Details F Total 2006 € 2006 € CB Ltd 5/4 Purchases returns PRB 12,100 1/4 Purchases PB 43,560 8/4 Balance c/d 31,460 43,560 43,560 9/4 Balance b/d 31,460

Debtors Ledger Rice Ltd A/C 5/4 Sales SB 67,760 8/4 Sales returns SRB 10,406 8/4 Balance c/d 57,354 67,760 67,760 9/4 57,354

General Ledger Purchases A/C 8/4 Total creditors PB 36,000

Purchases Returns A/C 8/4 Total creditors PRB 10,000

Sales A/C 8/4 Total debtors SB 56,000

Sales Returns A/C 8/4 Total debtors SRB 8,600

VAT A/C 8/4 Credit purchases PB 7,560 8/4 Credit sales SB 11,760 8/4 Sales returns SRB 1,806 8/4 Purchases returns 2,100 8/4 Balance c/d 4,494 13,860 13,860 9/4 Balance b/d 4,494

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Trial Balance as on 9/4/2006 CB Ltd 31,460 Rice Ltd 57,354 Purchases 36,000 Purchases returns 10,000 Sales 56,000 Sales returns 8,600 VAT 4,494 101,954 101,954

23. Purchases Book (p1) Date Details Invoice no. F Net € VAT € Total € 6/1/2007 FX Ltd 23 CL 28,000 5,880 33,880

Purchases Returns Book (p1) Date Details Credit note no. F Net € VAT € Total € 9/1/2007 FX Ltd 40 CL 3,400 714 4,114

Sales Book (p1) Date Details Invoice no. F Net € VAT € Total € 1/1/2007 Dolan Ltd 78 DL 72,000 15,120 87,120

Sales Returns Book (p1) Date Details Credit note no. F Net € VAT € Total € 4/1/2007 Dolan Ltd 9 DL 4,000 840 4,840

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Creditors Ledger Date Details F Total Date Details F Total 2007 € 2007 € FX Ltd A/C 9/1 Purchases returns PRB 4,114 6/1 Purchases PB 33,880 9/1 Balance c/d 29,766 33,880 33,880 10/1 Balance b/d 29,766

Debtors Ledger Dolan Ltd A/C 1/1 Sales SB 87,120 4/1 Sales returns SRB 4,840 9/1 Balance c/d 82,280 87,120 87,120 10/1 Balance b/d 82,280

General Ledger Purchases A/C 9/1 Total creditors PB 28,000

Purchases Returns A/C 9/1 Total creditors PRB 3,400

Sales A/C 9/1 Total debtors SB 72,000

Sales Returns A/C 9/1 Total debtors SRB 4,000

VAT A/C 9/1 Credit purchases PB 5,880 9/1 Credit sales SB 15,120 9/1 Sales returns SRB 840 9/1 Purchases returns PRB 714 9/1 Balance c/d 9,114 15,834 15,834 10/1 Balance b/d 9,114

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Trial Balance as on 9/1/2007 FX Ltd 29,766 Dolan Ltd 82,280 Purchases 28,000 Purchases returns 3,400 Sales 72,000 Sales returns 4,000 VAT 9,114 114,280 114,280

24. Purchases Book (p1) Date Details Invoice no. F Net € VAT € Total € 6/11/2007 DL Ltd 6 CL 38,000 5,130 43,130

Purchases Returns Book (p1) Date Details Credit note no. F Net € VAT € Total € 9/11/2007 DL Ltd 18 CL 5,400 729 6,129

Sales Book (p1) Date Details Invoice no. F Net € VAT € Total € 1/11/2007 Glynn Ltd 3 DL 16,000 2,160 18,160

Sales Returns Book (p1) Date Details Credit note no. F Net € VAT € Total € 7/11/2007 Glynn Ltd 8 DL 1,400 189 1,589

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Creditors Ledger Date Details F Total Date Details F Total 2007 € 2007 € DL Ltd A/C 9/11 Purchases returns PRB 6,129 6/11 Purchases PB 43,130 9/11 Balance c/d 37,001 43,130 43,130 10/11 Balance b/d 37,001

Debtors Ledger Glynn Ltd A/C 1/11 Sales SB 18,160 7/11 Sales returns SRB 1,589 9/11 Balance c/d 16,571 18,160 18,160 10/11 16,571

General Ledger Purchases A/C 9/11 Total creditors PB 38,000

Purchases Returns A/C 9/11 Total creditors PRB 5,400

Sales A/C 9/11 Total debtors SB 16,000

Sales Returns A/C 9/11 Total debtors SRB 1,400

VAT A/C 9/11 Credit purchases PB 5,130 9/11 Credit sales SB 2,160 9/11 Sales returns SRB 189 9/11 Purchases returns PRB 729 9/11 Balance c/d 2,430 5,319 5,319 10/11 Balance b/d 2,430

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Trial Balance as on 9/11/07 DL Ltd 37,001 Glynn Ltd 16,571 Purchases 38,000 Purchases returns 5,400 Sales 16,000 Sales returns 1,400 VAT 2,430 58,401 58,401

25. Purchases Book (p1) Date Details Invoice no. F Net € VAT € Total € 3/6/2007 KC Ltd 94 CL 35,000 4,725 39,725

Purchases Returns Book (p1) Date Details Credit note no. F Net € VAT € Total € 8/6/2007 KC Ltd 17 CL 5,000 675 5,675

Sales Book (p1) Date Details Invoice no. F Net € VAT € Total € 1/6/2007 Adams Ltd 4 DL 46,000 6,210 52,210

Sales Returns Book (p1) Date Details Credit note no. F Net € VAT € Total € 9/6/2007 Adams Ltd 38 DL 12,000 1,620 13,620

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Creditors Ledger Date Details F Total Date Details F Total 2007 € 2007 € KC Ltd A/C 8/6 Purchases returns PRB 5,675 3/6 Purchases PB 39,725 9/6 Balance c/d 34,050 39,725 39,725 10/6 Balance b/d 34,050

Debtors Ledger Adams Ltd A/C 1/6 Sales SB 52,210 9/6 Sales returns SRB 13,620 9/6 Balance c/d 38,590 52,210 52,210 10/6 Balance b/d 38,590

General Ledger Purchases A/C 9/6 Total creditors PB 35,000

Purchases Returns A/C 9/6 Total creditors PRB 5,000

Sales A/C 9/6 Total debtors SB 46,000

Sales Returns A/C 9/6 Total debtors SRB 12,000

VAT A/C 9/6 Credit purchases PB 4,725 9/6 Credit sales SB 6,210 9/6 Sales returns SRB 1,620 9/6 Purchases returns PRB 675 9/6 Balance c/d 540 6,885 6,885 10/6 Balance b/d 540

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Trial Balance as on 9/6/2007 KC Ltd 34,050 Adams Ltd 38,590 Purchases 35,000 Purchases returns 5,000 Sales 46,000 Sales returns 12,000 VAT 540 85,590 85,590

26. Purchases Book (p1) Date Details Invoice no. F Net € VAT € Total € 3/3/2007 MG Ltd 64 CL 14,000 2,940 16,940

Purchases Returns Book (p1) Date Details Credit note no. F Net € VAT € Total € 8/3/2007 MG Ltd 15 CL 1,200 252 1,452

Sales Book (p1) Date Details Invoice no. F Net € VAT € Total € 1/3/2007 Keenan Ltd 10 DL 34,000 7,140 41,140

Sales Returns Book (p1) Date Details Credit note no. F Net € VAT € Total € 9/3/2007 Keenan Ltd 57 DL 1,400 294 1,694

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Creditors Ledger Date Details F Total Date Details F Total 2007 € 2007 € MG Ltd A/C 8/3 Purchases returns PRB 1,452 3/3 Purchases PB 16,940 9/3 Balance c/d 15,488 16,940 16,940 10/3 Balance c/d 15,488

Debtors Ledger Keenan Ltd A/C 1/3 Sales SB 41,140 9/3 Sales returns SRB 1,694 9/3 Balance c/d 39,446 41,140 41,140 10/3 Balance b/d 39,446

General Ledger Purchases A/C 9/3 Total creditors PB 14,000

Purchases Returns A/C 9/3 Total creditors PRB 1,200

Sales A/C 9/3 Total debtors SB 34,000

Sales Returns A/C 9/3 Total debtors SRB 1,400

VAT A/C 9/3 Credit purchases PB 2,940 9/3 Credit sales SB 7,140 9/3 Sales returns SRB 294 9/3 Purchases returns PRB 252 9/3 Balance c/d 4,158 7,392 7,392 10/3 Balance b/d 4,158

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Trial Balance as on 9/3/2007 MG Ltd 15,488 Keenan Ltd 39,446 Purchases 14,000 Purchases returns 1,200 Sales 34,000 Sales returns 1,400 VAT 4,158 54,846 54,846

Chapter 38 Continuous Balancing Ledgers and Statements

There are no exercises in the textbook. Chapter 39 Analysed Cash Books I

1. Analysed Cash Book (Debit Side) p1 Date Details Rec. no. F Total Bank Sales VAT Other 2006 € € € €

1/1 Sales GL 20,430 18,000 2,430 4/1 Sales GL 63,560 56,000 7,560 6/1 Shareholders GL 50,000 50,000 133,990 74,000 9,990 50,000 8/1 Balance b/d 95,468

Analysed Cash Book (Credit Side) p1 Date Details Cheque no. F Total Bank Purchases VAT Other 2006 € € € € 2/1 Purchases 1 GL 13,620 12,000 1,620 3/1 Advertising 2 GL 3,200 3,200 4/1 Insurance 3 GL 2,750 2,750 5/1 Purchases 4 17,252 15,200 2,052 7/1 Carriage 5 GL 1,700 1,700 7/1 Balance c/d 95,468 133,990 27,200 3,672 7,650

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General Ledger Date Details F Total Date Details F Total 2006 € 2006 € Sales A/C 7/1 Bank ACB 74,000

Purchases A/C 7/1 Bank ACB 27,200

VAT A/C 7/1 Purchases ACB 3,672 7/1 Sales ACB 9,990 7/1 Balance c/d 6,318 9,990 9,990 6,318

Share Capital A/C 6/1 Bank ACB 50,000

Advertising A/C 3/1 Bank ACB 3,200

Insurance A/C 4/1 Bank ACB 2,750

Carriage A/C 7/1 Bank ACB 1,700

Trial Balance as on 7/1/2006 Sales 74,000 Purchases 27,200 VAT 6,318 Share capital 50,000 Advertising 3,200 Insurance 2,750 Carriage 1,700 Bank 95,468 130,318 130,318

2. Analysed Cash Book (Debit Side) p1 Date Details Rec. no. F Total Bank Sales VAT Other 2006 € € € € 1/2 Sales GL 38,720 32,000 6,720 4/2 Sales GL 58,080 48,000 10,080 6/2 Shareholders GL 175,000 175,000 271,800 80,000 16,800 175,000 10/2 Balance b/d 190,206

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Analysed Cash Book (Credit Side) p1 Date Details Cheque no. F Total Bank Purchases VAT Other 2006 € € € € 2/2 Purchases 21 GL 21,780 18,000 3,780 3/2 Rent 22 GL 2,200 2,200 4/2 Wages 23 GL 6,400 6,400 5/2 Purchases 24 GL 16,214 13,400 2,814 9/2 Machinery 25 GL 35,000 35,000 9/2 Balance c/d 190,206 271,800 31,400 6,594 43,600

General Ledger Date Details F Total Date Details F Total 2006 € 2006 € Sales A/C 9/2 Bank ACB 80,000

Purchases A/C 9/2 Bank ACB 31,400

VAT A/C 9/2 Purchases ACB 6,594 9/2 Sales ACB 16,800 9/2 Balance c/d 10,206 16,800 16,800 10/2 Balance b/d 10,206

Share Capital A/C 6/2 Bank ACB 175,000

Rent A/C 3/2 Bank ACB 2,200

Wages A/C 4/2 Bank ACB 6,400

Machinery A/C 9/2 Bank ACB 35,000

Trial Balance as on 9/2/2006 Sales 80,000 Purchases 31,400 VAT 10,206 Share capital 175,000 Rent 2,200 Wages 6,400 Machinery 35,000 Bank 190,206 265,206 265,206

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3. Analysed Cash Book (Debit Side) p1 Date Details Rec. no. F Total Bank Sales VAT Other 2007 € € € € 1/4 Sales GL 87,120 72,000 15,120 6/4 Shareholders GL 110,000 110,000 6/4 Sales GL 72,600 60,000 12,600 269,720 132,000 27,720 110,000 9/4 Balance b/d 194,866

Analysed Cash Book (Credit Side) p1 Date Details Cheque no. F Total Bank Purchases VAT Other 2007 € € € € 3/4 Light and heat 34 GL 900 900 3/4 Purchases 35 GL 15,004 12,400 2,604 4/4 Equipment 36 GL 20,000 20,000 7/4 Purchases 37 GL 30,250 25,000 5,250 8/4 Repairs 38 GL 8,700 8,700 8/4 Balance c/d 194,866 269,720 37,400 7,854 29,600

General Ledger Date Details F Total Date Details F Total 2007 € 2007 € Sales A/C 8/4 Bank ACB 132,000

Purchases A/C 8/4 Bank ACB 37,400

VAT A/C 8/4 Purchases ACB 7,854 8/4 Sales ACB 27,720 8/4 Balance c/d 19,866 27,720 27,720 9/4 Balance b/d 19,866

Share Capital A/C 6/4 Bank ACB 110,000

Light and Heat A/C 3/4 Bank ACB 900

Equipment A/C 4/4 Bank ACB 20,000

Repairs A/C 8/4 Bank ACB 8,700

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Trial Balance as on 8/4/2007 Sales 132,000 Purchases 37,400 VAT 19,866 Share capital 110,000 Light and heat 900 Equipment 20,000 Repairs 8,700 Bank 194,866 261,866 261,866

4. Analysed Cash Book (Debit Side) p1 Date Details Rec. no. F Total Bank Sales VAT Other 2006 € € € € 12/5 Sales GL 54,480 48,000 6,480 16/5 Shareholders GL 80,000 80,000 19/5 Sales GL 36,320 32,000 4,320 19/5 Balance c/d 22,270 193,070 80,000 10,800 80,000

Analysed Cash Book (Credit Side) p1 Date Details Cheque no. F Total Bank Purchases VAT Other 2007 € € € € 13/5 Purchases 78 GL 40,860 36,000 4,860 14/5 Insurance 79 GL 2,400 2,400 17/5 Equipment 80 GL 95,000 95,000 18/5 Purchases 81 GL 52,210 46,000 6,210 19/5 Advertising 82 GL 2,600 2,600 193,070 82,000 11,070 100,000 20/5 Balance b/d 22,270

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General Ledger Date Details F Total Date Details F Total 2007 € 2007 € Sales A/C 19/5 Bank ACB 80,000

Purchases A/C 19/5 Bank ACB 82,000

VAT A/C 19/5 Purchases ACB 11,070 19/5 Sales ACB 10,800 19/5 Balance c/d 270 11,070 11,070 20/5 Balance c/d 270

Shareholders A/C 16/5 Bank ACB 80,000

Insurance A/C 14/5 Bank ACB 2,400

Equipment A/C 17/5 Bank ACB 95,000

Advertising A/C 19/5 Bank ACB 2,600

Trial Balance as on 19/5/2007 Sales 80,000 Purchases 82,000 VAT 270 Shareholders 80,000 Insurance 2,400 Equipment 95,000 Advertising 2,600 Bank 22,270 182,270 182,270

5. Analysed Cash Book (Debit Side) p1 Date Details Rec. no. F Total Bank Sales VAT Debtors Other 2007 € € € € € 1/3 Balance b/d 2,400 1/3 Sales GL 72,640 64,000 8,640 4/3 Sales GL 90,800 80,000 10,800 4/3 Fahey Ltd DL 4,500 4,500 170,340 144,000 19,440 4,500 7/3 Balance b/d 76,680

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Analysed Cash Book (Credit Side) p1 Date Details Cheque no. F Total Bank Purchases VAT Creditors Other 2007 € € € € € 2/3 Purchases 6 GL 63,560 56,000 7,560 3/3 Insurance 7 GL 4,200 4,200 4/3 Motor vehicle 8 GL 21,000 21,000 6/3 Duffy Ltd 9 CL 4,900 4,900 6/3 Balance c/d 76,680 170,340 56,000 7,560 4,900 25,200

General Ledger Date Details F Total Date Details F Total 2007 € 2007 € Sales A/C 6/3 Bank ACB 144,00

Purchases A/C 6/3 Bank ACB 56,000

VAT A/C 6/3 Purchases ACB 7,560 6/3 Sales ACB 19,440 6/3 Balance c/d 11,880 19,440 19,440 7/3 Balance c/d 11,880

InsuranceInsurance A/C A/C 3/3 Bank ACB 4,200

MotorMotor VehiclesVehicles A/CA/C 4/3 Bank ACB 21,000

DebtorsDebtors Ledger Ledger Fahey Ltd A/C 1/3 Balance b/d 4,500 4/3 Bank ACB 4,500

CreditorsCreditors Ledger Ledger DuffyDuffy LtdLtd A/CA/C 6/3 Bank ACB 4,900 1/3 Balance b/d 6,900 6/3 Balance c/d 2,000 6,900 6,900 7/3 Balance b/d 2,000

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Trial Balance as on 7/3/2007 Sales 144,000 Purchases 56,000 VAT 11,880 Insurance 4,200 Motor vehicle 21,000 Duffy Ltd 2,000 Bank 76,680 157,880 157,880

6. Analysed Cash Book (Debit Side) p1 Date Details Rec. no. F Total Bank Sales VAT Debtors Other 2008 € € € € € 1/6 Sales GL 67,760 56,000 11,760 2/6 Fallon Ltd 34 DL 10,000 10,000 6/6 Shareholders GL 45,000 45,000 122,760 56,000 11,760 10,000 45,000

8/6 Balance b/d 25,680

Analysed Cash Book (Credit Side) p1 Date Details Cheque F Total Bank Purchases VAT Creditors Other no. 2008 € € € € € 1/6 Balance b/d 4,500 3/6 Purchases 23 GL 27,830 23,000 4,830 4/6 Rent 24 GL 2,800 2,800 5/6 Hayden Ltd 25 CL 7,500 7,500 7/6 Purchases 26 GL 54,450 45,000 9,450 7/6 Balance c/d 25,680 122,760 68,000 14,280 7,500 2,800

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General Ledger Date Details F Total Date Details F Total 2007 € 2007 € SalesSales A/C A/C 7/6 Bank ACB 56,000

PurchasesPurchases A/CA/C 7/6 Bank ACB 68,000

VATVAT A/CA/C 7/6 Purchases ACB 14,280 7/6 Bank ACB 11,760 7/6 Balance c/d 2,520 14,280 14,280 8/6 Balance b/d 2,520

ShareholdersShareholders A/CA/C 6/6 Bank ACB 45,000

Rent A/C 4/6 Bank ACB 2,800

DebtorsDebtors Ledger Ledger Fallon Ltd A/C 1/6 Balance c/d 12,000 2/6 Bank ACB 10,000 7/6 Balance c/d 2,000 12,000 12,000 8/6 Balance b/d 2,000

CreditorsCreditors Ledger Ledger Hayden Ltd A/C 5/6 Bank ACB 7,500 1/6 Balance b/d 7,500

Trial Balance as on 7/6/2007 Sales 56,000 Purchases 68,000 VAT 2,520 Shareholders 45,000 Rent 2,800 Fallon Ltd 2,000 Bank 25,680 101,000 101,000

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Chapter 40 Analysed Cash Book II Monitoring Overheads

1. Petty Cash Book (p1) Date Details Total Date Details V. no. Total Post Clean. Stat. Travel Other 2005 € 2005 € € € € € € 1/4 Bank 60 1/4 Cleaning 23 5 5 2/4 Taxi 24 6 6 2/4 Stamps 25 4 4 3/4 Disks 26 8 8 3/4 Raffle 27 7 7 4/4 Parcel 28 5 5 5/4 Cleaning 29 7 7 6/4 Tippex 30 3 3 6/4 Bus fare 31 8 8 53 9 12 11 14 7 6/4 Balance c/d 7 60 60 7/4 Balance 7 7/4 Bank 53 60

General Ledger Date Details F Total Date Details F Total 2005 € 2005 € Postage A/C 6/4 Petty cash PC 9

Cleaning A/C 6/4 Petty cash PC 12

StationeryStationery A/CA/C 6/4 Petty cash PC 11

Travel A/C 6/4 Petty cash PC 14

OtherOther A/CA/C 6/4 Petty cash PC 7

Bank A/C 7/4 Petty cash PC 53

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2. Petty Cash Book (p1) Date Details Total Date Details V. no. Total Post Clean. Stat. Travel Other 2005 € 2005 € € € € € € 1/6 Bank 70 1/6 Stamps 12 7 7 2/6 Flower 13 6 6 3/6 Cleaning 14 8 8 3/6 Pens 15 3 3 4/6 Taxi 17 12 12 5/6 Disks 18 10 10 6/6 Parcel 19 11 11 57 18 8 13 6 12 6/6 Balance c/d 13 70 70 7/6 Balance 13 7/6 Bank 57 70

General Ledger Date Details F Total Date Details F Total 2005 € 2005 € Postage A/C 7/6 Petty cash PC 18

Cleaning A/C 7/6 Petty cash PC 8

StationeryStationery A/CA/C 7/6 Petty cash PC 13

Office A/C 7/6 Petty cash PC 6

OtherOther A/CA/C 7/6 Petty cash PC 12

Bank A/C 7/6 Petty cash PC 57

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3. Petty Cash Book (p1) Date Details Total Date Details V. no. Total Post Repairs Stat. Travel Other 2005 € 2005 € € € € € € 1/7 Bank 60 1/7 Stamps 2 9 9 2/7 Taxi 3 6 6 3/7 Tippex 4 4 4 4/7 Repairs 5 11 11 5/7 Donation 6 10 10 6/7 M/B 7 3 3 6/7 Cleaning 8 6 6 6/7 Parcel 9 7 7 56 16 11 4 6 19

6/7 Balance c/d 4

60 60 7/7 Balance 4 7/7 Bank 54 60

General Ledger Date Details F Total Date Details F Total 2005 € 2005 € PostagePostage A/CA/C 6/7 Petty cash PC 16

Repairs A/C 6/7 Petty cash PC 11

StationeryStationery A/CA/C 6/7 Petty cash PC 4

Travel A/C 6/7 Petty cash PC 6

OtherOther A/CA/C 6/7 Petty cash PC 19

Bank A/C 6/7 Petty cash PC 54

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4. Petty Cash Book (p1) Date Details Total Date Details V. no. Total Post Clean. Stat. Travel Other 2005 € 2005 € € € € € € 1/8 Bank 85 1/8 Bus fare 33 8 8 2/8 Cleaning 34 10 10 3/8 Stamps 35 14 14 4/8 Folders 36 13 13 4/8 T/S/M 37 7 7 5/8 Raffle 38 10 10 6/8 Taxi 39 9 9 7/8 Parcel 40 14 14 85 28 10 13 17 17

7/8 Balance c/d 00

85 85 7/8 Balance 00 7/8 Bank 85 85

General Ledger Date Details F Total Date Details F Total 2005 € 2005 € Postage A/C 7/8 Petty cash PC 28

CleaningCleaning A/CA/C 7/8 Petty cash PC 10

StationeryStationery A/CA/C 7/8 Petty cash PC 13

Travel A/C 7/8 Petty cash PC 17

OtherOther A/CA/C 7/8 Petty cash PC 17

Bank A/C 7/8 Petty cash PC 85

5. (a) Wages; light and heat; telephone; electricity; advertising. (b) Overheads can be monitored by preparing overhead budgets; checking all invoices/ statements before payment is made.

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(c) (i) and (ii) Greater than Less than Possible reason for difference budgeted figures budgeted figures Insurance Increase in risks leading to increased premiums Advertising Incorrect estimates in budgeted figures Repairs Employees were more careful with equipment etc Carriage Outwards Less deliveries had to be made

Chapter 41 General Journal

1. General Journal (p1) Date Details F DR CR 2005 € € 1/5 Machinery GL 45,000 Stock GL 11,000 Bank overdraft ACB 1,000 King Ltd CL 15,000 Ordinary share capital 40,000 Assets, liabilities of company on 1/5/2005 56,000 56,000

General Ledger Date Details F Total Date Details F Total 2005 € 2005 € Machinery A/C 1/5 Balance GJ 45,000

Stock A/C 1/5 Balance GJ

BankBank A/CA/C 1/5 Balance GJ 1,000

OrdinaryOrdinary Share Share Capital Capital A/C A/C 1/5 Balance GJ 40,000

CreditorsCreditors Ledger Ledger A/C King Ltd A/C 1/5 Balance GJ 15,000

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2. General Journal (p1) Date Details F DR CR 2005 € € 1/6 Buildings GL 60,000 Stock GL 6,000 Debtors: Toolin Ltd DL 12,000 Kelly Ltd CL 17,000 Bank loan GL 30,000 Ordinary share capital 31,000 Assets, liabilities of company on 1/6/2005 78,000 78,000

General Ledger Date Details F Total Date Details F Total 2005 € 2005 € Buildings A/C 1/6 Balance GJ 60,000

Stock A/C 1/6 Balance GJ 6,000

BankBank LoanLoan A/CA/C 1/6 Balance GJ 30,000

OrdinaryOrdinary Share Share Capital Capital A/C A/C 1/6 Balance GJ 31,000

CreditorsCreditors Ledger Ledger A/C Kelly Ltd A/C 1/6 Balance GJ 17,000

DebtorsDebtors Ledger Ledger A/C ToolinToolin LtdLtd A/CA/C 1/6 Balance GK 12,000

3. General Journal (p1) Date Details F DR CR 2006 € € 1/7 Premises GL 90,000 Machinery GL 40,000 Bank ACB 4,000 Debtors: Reynolds Ltd DL 20,000 Creditors: Farrell Ltd CL 16,000 Giles Ltd CL 24,000 Ordinary share capital 114,000 Assets, liabilities of company on 1/7/2006 154,000 154,000

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General Ledger Date Details F Total Date Details F Total 2006 € 2006 € Premises A/C 1/7 Balance GJ 90,000

Machinery A/C 1/7 Balance GJ 40,000

Bank A/C 1/7 Balance GJ 4,000

OrdinaryOrdinary Share Share Capital Capital A/C A/C 1/7 Balance GJ 114,000

Creditors Ledger GilesGiles LtdLtd A/CA/C 1/7 Balance GJ 24,000

Farrell Ltd A/C 1/7 Balance GJ 16,000

DebtorsDebtors LedgerLedger ReynoldsReynolds Ltd Ltd A/C A/C 1/7 Balance GJ 20,000

4. General Journal (p1) Date Details F DR CR 2006 € € 1/8 Land GL 75,000 Buildings GL 55,000 Bank ACB 3,500 Stock GL 2,000 Debtors: Prunty Ltd DL 6,000 Creditors: Mitchell Ltd CL 14,000 Long-term loan GL 90,000 Ordinary share capital GL 37,500 Assets, liabilities of company on 1/8/2006 141,500 141,500

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General Ledger Date Details F Total Date Details F Total 2006 € 2006 € Land A/C 1/8 Balance GJ 75,000

Stock A/C 1/8 Balance GJ 2,000

BuildingsBuildings A/CA/C 1/8 Balance GJ 55,000

BankBank A/CA/C 1/8 Balance GJ 3,500

Long-TermLong-Term Loan Loan A/C A/C 1/8 Balance GJ 90,000

OrdinaryOrdinary Share Share Capital Capital A/C A/C 1/8 Balance GJ 37,500

Creditors Ledger Mitchell Ltd A/C 1/8 Balance GJ 14,000

DebtorsDebtors Ledger Ledger Prunty Ltd A/C 1/8 Balance GJ 6,000

5. General Journal (p1) of Pat the Baker Ltd Date Details F DR CR 2005 € € 23/7 A. Murphy DL 9,000 Van GL 9,000 Sale of second-hand van on credit

General Ledger Date Details F Total Date Details F Total 2005 € 2005 € Van A/C 23/7 A. Murphy GJ 9,000

Debtors Ledger (p1) A.A. Murphy Murphy A/CA/C 23/7 Van GJ 9,000

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6. General Journal (p1) of Oak Ltd Furniture Manufacturers Date Details F DR CR 2005 € € 6/10 Butler Ltd DL 18,000 Electric saw GL 18,000 Sale of electric saw on credit

General Ledger Date Details F Total Date Details F Total 2005 € 2005 € ElectricElectric SawSaw A/CA/C 6/10 Butler Ltd GJ 18,000

Debtors Ledger 6/10 Electric saw GJ 18,000

7. General Journal (p1) of Mels Ltd Educational Consultants Date Details F DR CR 2006 € € 1/6 Computer system GL 600,000 Info Tec Ltd CL 600,000 Purchase of computer system on credit

General Ledger Date Details F Total Date Details F Total 2006 € € ComputerComputer System System A/C A/C 1/6 Info Tec Ltd GJ 600,000

Creditors Ledger InfoInfo TecTec LtdLtd A/CA/C 1/6 Computer system GJ 600,000

8. General Journal (p1) of John Joe Ltd Painting Specialists Date Details F DR CR 2006 € € 7/8 Van GL 35,000 Tom Cunningham Ltd CL 35,000 Purchase of van on credit

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General Ledger Date Details F Total Date Details F Total 2006 € 2006 € VanVan A/C A/C 7/8 Tom Cunningham Ltd GJ 35,000

Creditors Ledger 7/8 Van GJ 35,000

9. General Journal (p1) Date Details F DR CR 2005 € € 4/11 Bad debts GL 4,000 Donlon Ltd DL 4,000 Donlon Ltd was written off as a bad debt

General Ledger Date Details F Total Date Details F Total 2005 € 2005 € Bad Debtsdebts A/C 4/11 Donlon Ltd GJ 4,000

Debtors Ledger Donlon Ltd A/C 4/11 Balance b/d 4,000 4/11 Bad Debts GJ 4,000

10. General Journal (p1) Date Details F DR CR 2005 € € 7/5 Cash GL 1,250 Bad debts GL 3,750 Tully Ltd DL 5,000 Tully Ltd goes bankrupt, pays 25 cent in the €1

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General Ledger Date Details F Total Date Details F Total 2005 € 2005 € CashCash A/C A/C 7/5 Tully Ltd GJ 1,250

BadBad Debts Debts A/C A/C 7/5 Tully Ltd GJ 3,750 Debtors Ledger Tully Ltd A/C 7/5 Balance b/d 5,000 7/5 Cash GJ 1,250 7/5 Bad debts GJ 3,750 5,000 5,000

11. General Journal (p1) Date Details F DR CR 2006 € € 9/4 Cash GL 10,000 Bad debts GL 10,000 Kilbride Ltd DL 20,000 Kilbride Ltd goes bankrupt, pays 50 cent in the €1

General Ledger Date Details F Total Date Details F Total 2006 € 2006 € CashCash A/C A/C 9/4 Kilbride Ltd GJ 10,000

BadBad Debts Debts A/C A/C 9/4 Kilbride Ltd GJ 10,000 Debtors Ledger 9/4 Balance b/d 20,000 9/4 Cash GJ 10,000 9/4 Bad debts GJ 10,000 20,000 20,000

12. General Journal (p1) Date Details F DR CR 2006 € € 6/6 Cash GL 24,000 Bad debts GL 8,000 Gallagher Ltd DL 32,000 Gallagher Ltd goes bankrupt, pays 75 cent in the €1

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General Ledger Date Details F Total Date Details F Total 2006 € 2006 € CashCash A/C A/C 6/6 Gallagher Ltd GJ 24,000

BadBad Debts Debts A/C A/C 6/6 Gallagher Ltd GJ 8,000

Debtors Ledger GallagherGallagher LtdLtd 6/6 Balance b/d 32,000 6/6 Cash GJ 24,000 6/6 Bad debts GJ 8,000 32,000 32,000

Chapter 42 Combined Books of First Entry and Ledger Questions 1. Purchases Book (p1) Date Details Inv. no. F Net VAT Total 2005 € € € 12/3 McGrath Ltd 10 CL 24,000 5,040 29,040 13/3 Smyth Ltd 34 CL 20,000 4,200 24,200 44,000 9,240 53,240

Sales Book (p1) Date Details Inv. no. F Net VAT Total 2005 € € € 16/3 Murray Ltd 2 DL 50,000 10,500 60,500

Analysed Cash Book (Debit Side) p1 Date Details Rec. no. F Total Bank Sales VAT Debtors 2005 € € € € 1/3 Sales GL 31,460 26,000 5,460 28/3 Murray Ltd 23 DL 60,500 60,500 91,960 26,000 5,460 60,500 29/3 Balance b/d 45,630

Analysed Cash Book (Credit Side) p1 Date Details Cheque F Total Purchases VAT Creditors Other no. Bank 2005 € € € € € 3/3 McGrath 3 CL 15,000 15,000 5/3 Purchases 4 GL 27,830 23,000 4,830 16/3 Insurance 5 GL 3,500 3,500 28/3 Balance c/d 45,630 91,960 23,000 4,830 15,000 3,500

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General Ledger Date Details F Total Date Details F Total 2005 € 2005 € SalesSales A/C A/C 28/3 Total debtors SB 50,000 28/3 Bank ACB 26,000 76,000 PurchasesPurchases A/C A/C 28/3 Total creditors PB 44,000 28/3 Bank ACB 23,000 67,000

VAT A/C 28/3 Credit purchases PB 9,240 28/3 Credit sales SB 10,500 28/3 Cash purchases ACB 4,830 28/3 Cash sales ACB 5,460 28/3 Balance c/d 1,890 15,960 15,960 29/3 Balance b/d 1,890

InsuranceInsurance A/CA/C 16/3 Bank ACB 3,500

Debtors Ledger MurrayMurray LtdLtd A/CA/C 16/3 Sales SB 60,500 28/3 Bank ACB 60,500

CreditorsCreditors LedgerLedger McGrath Ltd A/C 3/3 Bank ACB 15,000 1/3 Purchases PB 29,040 28/3 Balance c/d 14,040 29,040 29,040 29/3 Balance b/d 14,040

SmythSmyth Ltd Ltd A/C A/C 13/3 Purchases PB 24,200

Trial Balance as on 28/3/2005 Sales 76,000 Purchases 67,000 VAT 1,890 Insurance 3,500 McGrath Ltd 14,040 Smyth Ltd 24,200 Bank 45,630 116,130 116,130

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2. Purchases Book (p1) Date Details Inv. no. F Net VAT Total 2005 € € € 2/5 Mona Ltd 56 CL 32,000 4,320 36,320 6/5 Ton Ltd 67 CL 46,000 6,210 52,210 78,000 10,530 88,530

Sales Book (p1) Date Details Inv. no. F Net VAT Total 2005 € € € 4/5 Maloney Ltd 23 DL 40,000 5,400 45,400

Analysed Cash Book (Debit Side) p1 Date Details Rec. no. F Total Bank Sales VAT Debtors 2005 € € € € 8/5 Sales GL 63,560 56,000 7,560 9/5 Maloney Ltd 4 DL 40,000 40,000 103,560 56,000 7,560 40,000 9/5 Balance b/d 45,080

Analysed Cash Book (Credit Side) p1 Date Details Cheque F Total Purchases VAT Creditors Other no. Bank 2005 € € € € € 3/5 Wages 45 GL 1,700 1,700 4/5 Purchases 46 GL 31,780 28,000 3,780 6/5 Mona Ltd 47 CL 25,000 25,000 9/5 Balance c/d 45,080 103,560 28,000 3,780 25,000 1,700

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General Ledger Date Details F Total Date Details F Total 2005 € 2005 € SalesSales A/C A/C 9/5 Total debtors SB 40,000 9/5 Bank ACB 56,000 96,000

PurchasesPurchases A/C A/C 9/5 Total creditors PB 78,000 4/5 Bank ACB 28,000 106,000 VAT A/C 9/5 Credit purchases PB 10,530 9/5 Credit sales SB 5,400 9/5 Cash purchases ACB 3,780 9/5 Cash sales ACB 7,560 9/5 Balance c/d 1,350 14,310 14,310 1,350

Wages A/C 3/5 Bank ACB 1,700

Debtors Ledger MaloneyMaloney LtdLtd A/CA/C 4/5 Sales SB 45,400 9/5 Bank ACB 40,000 9/5 Balance c/d 5,400 45,400 45,400 10/5 Balance b/d 5,400 CreditorsCreditors LedgerLedger MonaMona LtdLtd A/CA/C 6/5 Bank ACB 25,000 2/5 Purchases PB 36,320 9/5 Balance c/d 11,320 36,320 36,320 10/5 Balance b/d 11,320

TonTon LtdLtd A/CA/C 6/5 Purchases PB 52,210

Trial Balance as on 9/5/2005 Sales 96,000 Purchases 106,000 VAT 1,350 Wages 1,700 Maloney Ltd 5,400 Mona Ltd 11,320 Ton Ltd 52,210 Bank 45,080 159,530 159,530

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3. Purchases Book (p1) Date Details Inv. no. F Net VAT Total 2006 € € € 4/7 Tony Ltd 3 CL 32,000 6,720 38,720 5/7 Pony Ltd 9 CL 13,000 2,730 15,730 45,000 9,450 54,450

Purchases Returns Book (p1) Date Details Credit note no. F Net VAT Total 2006 € € € 7/7 Tony Ltd 23 CL 7,500 1,575 9,075

Analysed Cash Book (Debit Side) p1 Date Details Rec. no. F Total Bank Sales VAT 2006 € € € 2/7 Sales GL 62,920 52,000 10,920 7/7 Sales GL 58,080 48,000 10,080 121,000 100,000 21,000 8/7 Balance c/d 93,520

Analysed Cash Book (Credit Side) p1 Date Details Cheque F Total Purchases VAT Creditors Other no. Bank 2006 € € € € € 3/7 Purchases 23 GL 21,780 18,000 3,780 5/7 Electricity 24 GL 700 700 8/7 Pony Ltd 25 CL 5,000 5,000 8/7 Balance c/d 93,520 121,000 18,000 3,780 5,000 700

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General Ledger Date Details F Total Date Details F Total 2006 € 2006 € SalesSales A/C A/C 8/7 Bank ACB 100,000

PurchasesPurchases A/C A/C 8/7 Credit purchases PB 45,000 8/7 Cash purchases ACB 18,000 63,000

PurchasesPurchases Returns Returns A/C A/C 8/7 Total creditors PRB 7,500

VATVAT A/C A/C 8/7 Credit purchases PB 9,450 8/7 Cash sales ACB 21,000 8/7 Cash purchases ACB 3,780 8/7 Purchases returned PRB 1,575 8/7 Balance c/d 9,345 22,575 22,575 9/7 Balance b/d 9,345

ElectricityElectricity A/C A/C 5/7 Bank ACB 700

CreditorsCreditors Ledger Ledger Tony Ltd A/C 7/7 Purchases returns PRB 9,075 4/7 Purchases PB 38,720 8/7 Balance c/d 29,645 38,720 38,720 9/7 Balance b/d 29,645

PonyPony Ltd Ltd A/C A/C 8/7 Bank ACB 5,000 5/7 Purchases PB 15,730 8/7 Balance c/d 10,730 15,730 15,730 9/7 Balance b/d 10,730

Trial Balance as on 8/7/2006 Sales 100,000 Purchases 63,000 Purchases returns 7,500 VAT 9,345 Electricity 700 Pony Ltd 10,730 Tony Ltd 29,645 Bank 93,520 157,220 157,220

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Purchases Book (p1) Date Details Inv. no. F Net VAT Total 2005 € € € 2/9 Norm Ltd 12 CL 36,000 4,860 40,860 6/9 Form Ltd 57 CL 44,000 5,940 49,940 80,000 10,800 90,800

Purchases Returns Book (p1) Date Details Credit F Net VAT Total note no. 2005 € € € 7/9 Norm Ltd 67 CL 10,000 1,350 11,350

Analysed Cash Book (Debit Side p1) Date Details Rec. no. F Total Bank Sales VAT 2005 € € € 3/9 Sales GL 36,320 32,000 4,320 9/9 Balance c/d 24,930 61,250 32,000 4,320

Analysed Cash Book (Credit Side p1) Date Details Cheque F Total Purchases VAT Creditors Other no. Bank 2006 € € € € € 2/9 Insurance 34 GL 1,500 1,500 8/9 Purchases 35 GL 27,240 24,000 3,240 9/9 Rent 36 GL 3,000 3,000 9/9 Norm Ltd 37 CL 29,510 29,510

61,250 24,000 3,240 29,510 4,500 10/9 Balance b/d 24,930

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General Ledger Date Details F Total Date Details F Total 2006 € 2006 € SalesSales A/C A/C 9/9 Bank ACB 32,000

PurchasesPurchases A/C A/C 9/9 Total creditors PB 80,000 9/9 Bank ACB 24,000 104,000

PurchasesPurchases Returns Returns A/C A/C 9/9 Total creditors PRB 10,000

VAT A/C 9/9 Credit purchases PB 10,800 9/9 Cash sales ACB 4,320 9/9 Cash purchases ACB 3,240 9/9 Purchases returns PRB 1,350 9/9 Balance c/d 8,370 14,040 14,040 10/9 Balance b/d 8,370

InsuranceInsurance A/C A/C 2/9 Bank ACB 1,500

RentRent A/CA/C 9/9 Bank ACB 3,000

CreditorsCreditors Ledger Ledger Form Ltd A/C 6/9 Purchases PB 49,940

NormNorm Ltd Ltd A/C A/C 7/9 Purchases returns PRB 11,350 2/9 Purchases PB 40,860 9/9 Bank ACB 29,510 40,860 40,860

Trial Balance as on 9/9/2006 Sales 32,000 Purchases 104,000 Purchases returns 10,000 VAT 8,370 Insurance 1,500 Rent 3,000 Form Ltd 49,940 Bank 24,930 116,870 116,870

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5. Purchases Book (p1) Date Details Inv. no. F Net VAT Total 2006 € € € 12/1 Mel Ltd 3 CL 25,000 5,250 30,250 14/1 Del Ltd 26 CL 34,000 7,140 41,140 59,000 12,390 71,390

Purchases Returns Book (p1) Date Details Credit F Net VAT Total note no. 2006 € € € 17/1 Del Ltd 97 CL 4,800 1,008 5,808

Analysed Cash Book (Debit Side) p1 Date Details Rec. no. F Total Bank Sales VAT 2006 € € € 10/1 Sales GL 72,600 60,000 12,600 21/1 Sales GL 70,180 58,000 12,180 142,780 118,000 24,780 22/1 Balance b/d 87,950

Analysed Cash Book (Credit Side) p1 Date Details Cheque F Total Purchases VAT Creditors Other no. Bank 2006 € € € € € 13/1 Wages 45 GL 7,000 7,000 15/1 Purchases 46 GL 27,830 23,000 4,830 18/1 Mel Ltd 47 CL 20,000 20,000 21/1 Balance c/d 87,950

142,780 23,000 4,630 20,000 7,000

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General Ledger Date Details F Total Date Details F Total 2006 € 2006 € SalesSales A/C A/C 21/1 Bank ACB 118,000

PurchasesPurchases A/C A/C 21/1 Total creditors PB 59,000 21/1 Bank ACB 23,000 82,000

PurchasesPurchases Returns Returns A/C A/C 21/1 Total creditors PRB 4,800

VAT A/C 21/1 Credit purchases PB 12,390 21/1 Cash sales ACB 24,780 21/1 Cash purchases ACB 4,830 21/1 Purchases returns PRB 1,008 21/1 Balance c/d 8,568 25,788 25,788 21/1 Balance b/d 8,768

WagesWages A/CA/C 13/1 Bank ACB 7,000

CreditorsCreditors Ledger Ledger MelMel Ltd Ltd A/C A/C 18/1 Bank ACB 20,000 12/1 Purchases PB 30,250 21/1 Balance c/d 10,250 30,250 30,250 22/1 Balance b/d 10,250

Del Ltd A/C 17/1 Purchases returns PRB 5,808 14/1 Purchases PB 41,140 21/1 Balance c/d 35,332 41,140 41,140 22/1 Balance b/d 35,332

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Trial Balance as on 21/1/2006 Sales 118,000 Purchases 82,000 Purchases returns 4,800 VAT 8,568 Wages 7,000 Mel Ltd 10,250 Del Ltd 35,332 Bank 87,950 176,950 176,950

Analysed Cash Book (Debit Side) p1 Date Details Rec. no. F Total Bank Sales VAT Other 2006 € € € € 1/4 Balance b/d 14,000 2/4 Sales GL 56,750 50,000 6,750 9/4 Share capital GL 50,000 50,000 120,750 50,000 6,750 50,000 10/4 Balance b/d 81,374

Analysed Cash Book (Credit Side) p1 Date Details Cheque F Total Purchases VAT Creditors Other no. Bank 2006 € € € € € 4/4 Purchases 1 GL 21,565 19,000 2,565 6/4 Insurance 2 GL 3,000 3,000 7/4 Morrissey Ltd 3 CL 14,755 14,755 9/4 Balance c/d 81,374 120,750 19,000 2,565 14,755 3,000

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General Ledger Date Details F Total Date Details F Total 2006 € 2006 € BuildingsBuildings A/C A/C 1/4 Balance GJ 60,000

OrdinaryOrdinary ShareShare CapitalCapital A/CA/C 1/4 Balance GJ 74,000 9/4 Bank ACB 50,000 124,000

PurchasesPurchases A/C A/C 19/4 Total creditors PB 34,000 19/4 Bank ACB 19,000 53,000

PurchasesPurchases Returns Returns A/C A/C 19/4 Total creditors PRB 3,000

SalesSales A/CA/C 19/4 Bank ACB 50,000

VAT A/C 19/4 Credit purchases PB 4,590 19/4 Cash sales SB 6,750 19/4 Cash purchases ACB 2,565 19/4 Purchases returns PRB 405 7,155 7,155

InsuranceInsurance A/C A/C 6/4 Bank ACB 3,000

CreditorsCreditors Ledger Ledger MorrisseyMorrissey Ltd Ltd A/C A/C 9/4 Purchases PRB 3,405 3/4 Purchases PB 18,160 9/4 Bank ACB 14,755 18,160 18,160

ShanleyShanley Ltd Ltd A/C A/C 5/4 Purchases PB 20,430

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Trial Balance as on 9/4/2006 Buildings 60,000 Ordinary share capital 124,000 Purchases 53,000 Purchases returns 3,000 Sales 50,000 Insurance 3,000 Shanley Ltd 20,430 Bank 81,430 197,430 197,430

7. Analysed Cash Book (Debit Side) p1 Date Details Rec. no. F Total Bank Sales VAT Other 2006 € € € € 1/5 Balance b/d 13,500 2/5 Sales GL 60,500 50,000 10,500 17/5 Murtagh Ltd 8 DL 27,830 27,830 101,830 50,000 10,500 27,830 19/5 Balance b/d 49,830

Analysed Cash Book (Credit Side) p1 Date Details Cheque F Total Purchases VAT Other no. Bank 2006 € € € € 4/5 Purchases 1 GL 22,990 19,000 3,990 6/5 Wages 2 GL 4,000 4,000 9/5 Machinery 3 GL 25,000 25,000 9/5 Balance c/d 49,840 101,830 19,000 3,990 29,000

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General Ledger Date Details F Total Date Details F Total 2006 € 2006 € MachineryMachinery A/C A/C 1/5 Balance GJ 40,500 9/5 Bank ACB 25,000 65,500

OrdinaryOrdinary ShareShare CapitalCapital A/CA/C 1/5 Balance GJ 54,000

SalesSales A/CA/C 19/5 Total debtors SB 64,000 19/5 Bank ACB 50,000 114,000

SalesSales ReturnsReturns A/CA/C 19/5 Total debtors PRB 3,000

PurchasesPurchases A/C A/C 19/5 Bank ACB 19,000

WagesWages A/CA/C 6/5 Bank ACB 4,000

VAT A/C 19/5 Cash purchases ACB 3,990 19/5 Credit sales SB 13,400 19/5 Sales returns SRB 630 19/5 Cash sales ACB 10,500 19/5 Balance c/d 19,230 23,900 23,900 20/5 Balance b/d 19,230

Debtors Ledger MurtaghMurtagh LtdLtd A/CA/C 2/5 Sales SB 31,460 9/5 Sales returns SRB 3,630 17/5 Bank ACB 27,830 31,460 31,460

LyonsLyons Ltd Ltd A/C A/C 3/5 Sales SB 45,980

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Trial Balance as on 19/5/2006 Machinery 65,500 Ordinary share capital 54,000 Sales 114,000 Sales returns 3,000 Purchases 19,000 Wages 4,000 VAT 19,320 Lyons Ltd 45,980 Bank 49,840 187,320 187,320

8. General Journal Date Details F DR € CR € 1/6/2006 Buildings GL 45,000 Bank ACB 23,000 Ordinary share capital GL 68,000 Assets and share capital of company 68,000 68,000

Analysed Cash Book (Debit Side) p1 Date Details Rec. no. F Total Bank Sales VAT Other 2006 € € € € 1/6 Balance GJ 23,000 3/6 Sales GL 63,560 56,000 7,560 8/6 Carey Ltd 45 DL 54,480 54,480 141,040 56,000 7,560 54,480 10/6 Balance b/d 35,460

Analysed Cash Book (Credit Side) p1 Date Details Cheque F Total Purchases VAT Creditors Other no. Bank 2006 € € € € € 4/6 Brennan Ltd 3 CL 25,000 25,000 6/6 Purchases 4 GL 31,780 28,000 3,780 7/6 Advertising 5 GL 3,400 3,400 9/6 Neary Ltd 6 CL 45,400 45,400 9/6 Balance c/d 35,460 141,040 28,000 3,780 25,000 48,800

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General Ledger Date Details F Total Date Details F Total 2006 € 2006 € BuildingsBuildings A/C A/C 1/6 Balance GJ 45,000

OrdinaryOrdinary ShareShare CapitalCapital A/CA/C 1/6 Balance GJ 68,000

SalesSales A/C A/C 9/6 Total debtors SB 48,000 9/6 Bank ACB 56,000 104,000

PurchasesPurchases A/C A/C 9/6 Total creditors PB 72,000 9/6 Bank ACB 28,000 100,000

AdvertisingAdvertising A/C A/C 7/6 Bank ACB 3,400

VAT A/C 9/6 Credit purchases PB 9,720 9/6 Credit sales SB 6,480 9/6 Cash purchases ACB 3,780 9/6 Cash sales ACB 7,560 9/6 Balance c/d 540 14,040 14,040 10/6 Balance b/d 540

Debtors Ledger CareyCarey Ltd Ltd A/C A/C 2/6 Sales SB 54,480 8/6 Bank ACB 54,480

CreditorsCreditors Ledger Ledger NearyNeary LtdLtd A/CA/C 9/6 Bank ACB 45,400 1/6 Purchases PB 45,400

BrennanBrennan Ltd Ltd A/C A/C 4/6 Bank ACB 25,000 3/6 Purchases PB 36,320 9/6 Balance c/d 11,320 36,320 36,320 10/6 Balance b/d 11,320

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Trial Balance as on 9/6/2006 Buildings 45,000 Ordinary share capital 68,000 Sales 104,000 Purchases 100,000 VAT 540 Advertising 3,400 Brennan Ltd 11,320 Bank 35,460 183,860 183,860

9. General Journal Date Details F DR € CR € 1/9/2006 Machinery GL 39,000 Stock GL 13,000 Ordinary share capital GL 52,000 Assets, ordinary share capital of the company 52,000 52,000

Analysed Cash Book (Debit Side) p1 Date Details Rec. no. F Total Bank Sales VAT Other 2006 € € € € 2/9 Sales GL 101,640 84,000 17,640 8/9 Dardis Ltd 35 DL 26,862 26,862 9/9 Tobin Ltd 36 DL 33,000 33,000 161,502 84,000 17,640 59,862 10/9 Balance b/d 109,502

Date Details Cheque F Total Purchases VAT Other no. Bank 2006 € € € € 6/9 Insurance 1 GL 5,000 5,000 7/9 Purchases 2 GL 38,720 32,000 6,720 7/9 Rent 3 GL 8,400 8,400 9/9 Balance c/d 109,382 161,502 32,000 6,720 13,400

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General Ledger Date Details F Total Date Details F Total 2006 € 2006 € MachineryMachinery A/C A/C 1/9 Balance GJ 39,000

Stock A/C 1/9 Balance GJ 13,000

OrdinaryOrdinary ShareShare CapitalCapital A/CA/C 1/9 Balance GJ 52,000

SalesSales A/C A/C 1/9 Total debtors SB 60,000 9/9 Bank ACB 84,000 144,000

PurchasesPurchases A/C A/C 9/9 Bank ACB 32,000

SalesSales ReturnsReturns A/CA/C 9/9 Total debtors SRB 4,800

VAT A/C 9/9 Cash purchases ACB 6,720 9/9 Credit sales SB 12,600 9/9 Sales returns SRB 1,008 9/9 Cash sales ACB 17,640 9/9 Balance c/d 22,512 30,240 30,240 10.90 Balance b/d 22,512

InsuranceInsurance A/C A/C 6/9 Bank ACB 5,000

RentRent A/CA/C 7/9 Bank ACB 8,400

Debtors Ledger DardisDardis LtdLtd A/CA/C 1/9 Sales SB 32,670 2/9 Sales returns SRB 5,808 8/9 Bank ACB 26,862 32,670 32,670

TobinTobin Ltd Ltd A/C A/C 3/9 Sales SB 39,930 9/9 Bank ACB 33,000 9/9 Balance c/d 6,930 39,930 39,930 10/9 Balance b/d 6,930

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Trial Balance as on 9/9/2006 Machinery 39,000 Stock 13,000 Ordinary share capital 52,000 Sales 144,000 Sales returns 4,800 Purchases 32,000 VAT 22,512 Insurance 5,000 Rent 8,400 Tobin Ltd 6,930 Bank 109,382 218,512 218,512

Chapter 43 Control Accounts

1. Main control procedures used by a business Control Procedure Explanation Trial balance This checks that the double entry process has been followed correctly Bank reconciliation statement This checks the accuracy of the bank account and the bank statement Control accounts These check the accuracy of the debtors and creditors ledger accounts

Chapter 44 Trading Account

1. Trading period ends on: (a) 31 December 2006 (b) 29 February 2007 (c) 6 May 2008 (d) 8 October 2008 (e) 22 April 2008 2. Cost of sales €57,000 (60,000 – 15,000 + 12,000) 3. Cost of sales €52,000 (70,000 – 17,000 + 10,000 + 4,000 – 15,000) 4. Cost of sales €94,000 (16,000 + 96,000 – 16,000 + 11,000 + 5,500 – 18,500) 5. Trading Account for year ending 31/5/2006 2006 € € Sales 300,000 Less cost of sales Purchases 160,000 Less closing stock 30,000 Cost of actual sales 130,000 Gross profit 170,000

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6. Trading Account for year ending 31/5/2005 2005 € € Sales 270,000 Less cost of sales Purchases 145,000 Less purchases returns 85,000 Cost of actual sales 60,000 Gross profit 210,000

7. Trading Account for year ending 31/12/2006 2006 € € € Sales 72,000 Less sales returns 8,000 64,000 Less cost of sales Purchases 70,000 Less purchases returns 17,000 53,000 Add carriage inwards 10,000 Cost of goods available for sale 63,000 Less closing stock 15,000 Cost of actual sales 48,000 Gross profit 16,000

8. Trading Account for year ending 20/6/2005 2005 € € € Sales 180,000 Less sales returns 20,000 160,000 Less cost of sales Opening stock 16,000 Purchases 96,000 Less purchases returns 16,000 80,000 Import duty 5,500 Cost of goods available for sale 101,500 Less closing stock 18,500 Cost of actual sales 83,000 Gross profit 77,000

9. Trading Account for year ending 31/3/2007 2007 € € € Sales 270,000 Less sales returns 30,000 240,000 Less cost of sales Opening stock 36,000 Purchases 200,000 Less purchases returns 10,000 190,000 Add carriage inwards 19,000 Add import duty 12,000 Cost of goods available for sale 257,000 Less closing stock 7,000 Cost of actual sales 250,000 Gross loss (10,000)

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10. (a) To see if the stock records are correct (have any goods been stolen); to find closing stock; to identify slow moving or damaged stock. (b) Place stock in its correct place. Use two-person teams. One person counts while the other records. Identify slow-moving or damaged goods. Complete stock sheets and prepare a stock report. 11. Students to do this in class. Chapter 45 Profit and Loss Account

1. Profit and Loss Account for the year ending 31/5/2005 € € Gross profit 65.000 Add gains Rent receivable 15,000 80,000 Less expenses Wages 24,000 Insurance 8,000 Light and heat 9,000 Advertising 6,500 Interest paid 8,000 55,500 Net profit 24,500

2. Profit and Loss Account for the year ending 31/5/2006 € € Gross profit 120,000 Add gains Rent receivable 12,000 Interest receivable 9,000 21,000 141,000 Less expenses Wages 34,000 Insurance 6,000 Bad debts 8,000 Advertising 8,500 56,500 Net profit 84,500

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3. Profit and Loss Account for the year ending 1/5/2006 € € Gross profit 230,000 Add gains Commission receivable 20,000 Rent receivable 14,500 34,500 195,500 Less expenses Wages 75,000 Advertising 11,000 Bad debts 16,700 Interest paid 8,000 110,700 Net profit 84,800

Trading, Profit and Loss Account for year ending 31/5/2006 € € Sales 220,000 Less sales returns 23,000 197,000 Less cost of sales Opening stock 17,000 Purchases 56,000 Carriage inwards 3,000 Cost of goods available for sale 76,000 Less closing stock 23,000 Cost of actual sales 53,000 Gross profit 144,000 Add gains Rent receivable 19,000 163,000 Less expenses Wages 45,000 Advertising 13,900 Bad debts 9,000 67,900 Net profit 95,100

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5. Trading, Profit and Loss Account for year ending 31/7/2005 € € Sales 250,000 Less sales returns 12,000 238,000 Less cost of sales Opening stock 45,000 Purchases 67,000 Import duty 4,000 Cost of goods available for sale 116,000 Less closing stock 32,000 Cost of actual sales 84,000 Gross profit 154,000 Add gains Interest receivable 6,000 160,000 Less expenses Wages 56,000 Carriage outwards 8,000 Light and heat 5,400 69,400 Net profit 90,600

6. Trading, Profit and Loss Account for year ending 31/5/2005 € € € Sales 340,000 Less cost of sales Opening stock 27,000 Purchases 96,000 Less purchases returns 14,000 82,000 Carriage inwards 7,000 Cost of goods available for sale 116,000 Less closing stock 23,000 Cost of actual sales 93,000 Gross profit 247,000 Add gains Commission receivable 25,000 272,000 Less expenses Wages 75,000 Advertising 15,300 Rent paid 17,000 107,300 Net profit 164,700

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7. Trading, Profit and Loss Account for year ending 31/5/2005 € € € Sales 460,000 Less cost of sales Opening stock 65,000 Purchases 85,000 Less purchases returns 22,000 63,000 Import duty 5,000 Cost of goods available for sale 133,000 Less closing stock 32,000 Cost of actual sales 101,000 Gross profit 359,000 Add gains Rent receivable 12,000 347,000 Less expenses Wages 93,000 Carriage outwards 6,000 Bad debts 12,500 111,500 Net profit 235,500

8. (a) Net profit × 100% €21,000 × 100% = 15% Net sales €140,000

(b) Net profit × 100% €24,050 × 100% = 13% Net sales €185,000

1. Directors face three choices: to retain all the profit; to give all the profit out in dividends; to retain some profit and give out some profit in dividends.

2. Dividends are calculated as a percentage of issued share capital, i.e. if the issued share is €200,000 and the directors declare a 20% dividend, then the dividends are €40,000.

3. (a) €20,000 (¼ of €80,000) (b) €4,000 (¼ of €16,000)

4. (a) 25% (€30,000 is ¼ of €120,000) (b) €70,000 (€40,000 + €30,000)

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5. Erratum. Year ended 30 November, not 31 November. Profit and Loss Appropriation Account for year ended 30/11/ 2006 € Net profit 95,000 Less dividends 30,000 Reserves 65,000

6. Profit and Loss Appropriation Account for year ended 30/8/2006 € Net profit 105,000 Less dividends 75,000 Reserves 30,000

7. Profit and Loss Appropriation Account for year ended 31/3/2006 € Net profit 140,000 Less dividends 75,000 Reserves 65,000

8. Profit and Loss Appropriation Account for year ended 30/5/2006 € Net profit 180,000 Less dividends 60,000 120,000 Add opening balance 50,000 Reserves 170,000

9. Profit and Loss Appropriation Account for year ended 31/5/2006 € Net profit 95,000 Less dividends 60,000 Reserves 35,000

Date Details F Total Date Details F Total 2006 € 2006 € DividendsDividends A/CA/C 30/5 Profit and loss app. 60,000

ReservesReserves A/CA/C 30/5 Profit and loss app. 35,000

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10. (a) €2,500. (b) The company retains some of the profit for use in future expansion.

______

______Ms Mary Furey, Main St, Cavan. Dear Ms Furey, I refer to your questions re (i) the amount of dividends you will receive and (ii) why the company retains some of its profits. (i) You will receive €2,500 in dividends, i.e. 20% of what you invested in shares (20% of €12,000). (ii) The company retains some of its profits for future expansion, e.g. purchase of new equipment, buildings etc. I attach a pie chart showing how the profit is divided. If I can be of any further help please contact me. Yours faithfully, ______Financial Consultant.

11.

Trading, Profit and Loss Appropriation Account for year ended 31/5/2006 € € € Sales 290,000 Less cost of sales 1/6/05 Opening stock 37,000 Purchases 76,000 Less purchases returns 19,000 57,000 Carriage inwards 7,000 Cost of goods available for sale 101,000 Less closing stock 28,000 Cost of actual sales 73,000 Gross profit 217,000 Add gains Commission receivable 28,000 245,000 Less expenses Wages 75,000 Advertising 13,300 88,300 Net profit 156,700 Less dividends 30,000 Reserves 126,700

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12. Trading, Profit and Loss Appropriation Account for year ended 31/5/2006 € € € Sales 560,000 Less cost of sales 1/6/2005 Opening stock 65,000 Purchases 95,000 Less purchases returns 20,000 75,000 Import duty 15,000 Cost of goods available for sale 155,000 Less closing stock 44,000 Cost of actual sales 111,000 Gross profit 449,000 Add gains Interest receivable 16,000 465,000 Less expenses Wages 73,000 Bad debts 15,500 88,500 Net profit 376,500 Less dividends 45,000 Reserves 331,500

13. Trading, Profit and Loss Appropriation Account for year ended 31/5/2006 € € Sales 390,000 Less sales returns 34,000 356,000 Less cost of sales 1/6/2005 Opening stock 29,000 Purchases 107,000 Import duty 8,000 Cost of goods available for sale 144,000 Less closing stock 34,000 Cost of actual sales 110,000 Gross profit 246,000 Add gains Rent receivable 19,000 265,000 Less expenses Wages 65,000 Insurance 14,600 79,600 Net profit 185,400 Less dividends 18,000 167,400 Add opening balance 10,000 Reserves 177,400

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14. Trading, Profit and Loss Appropriation Account for year ended 31/5/2006 € € Sales 450,000 Less sales returns 29,000 421,000 Less cost of sales Opening stock 59,000 Purchases 120,000 Carriage inwards 9,000 Cost of goods available for sale 188,000 Less closing stock 9,000 Cost of actual sales 179,000 Gross profit 242,000 Add gains Interest receivable 6,000 248,000 Less expenses Wages 86,000 Carriage outwards 8,000 94,000 Net profit 154,000 Less dividends 50,000 104,000 Add opening balance 24,000 Reserves 128,000

Chapter 47 Balance Sheet

1. Balance Sheet as on 31/5/2005 € € € Fixed Assets Cost Depreciation NBV Buildings 150,000 150,000 Machinery 60,000 60,000 Total fixed assets 210,000 210,000 Current assets Closing stock 12,000 Debtors 10,000 Cash 2,000 24,000 Less current liabilities Creditors 39,000 Bank overdraft 5,000 44,000 Working capital (20,000) Total net assets 190,000 Financed by Authorised Issued 200,000 €1 ordinary shares 200,000 180,000 Reserves 10,000 Capital employed 190,000

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2. Balance Sheet as on 31/5/2005 € € € Fixed Assets Cost Depreciation NBV Land 150,000 150,000 Equipment 72,000 72,000 Total fixed assets 222,000 222,000 Current assets Closing stock 24,000 Debtors 35,000 Bank 13,000 72,000 Less current liabilities Creditors 19,000 Dividends due 30,000 49,000 Working capital 23,000 Total net assets 245,000 Financed by Authorised Issued 300,000 €1 ordinary shares 300,000 200,000 Reserves 45,000 Capital employed 245,000

3. Balance Sheet as on 31/5/2006 € € € Fixed Assets Cost Depreciation NBV Buildings 150,000 150,000 Motor vehicles 40,000 40,000 Total fixed assets 190,000 190,000 Current assets Closing stock 12,000 Debtors 40,000 Cash 7,000 59,000 Less current liabilities Creditors 16,000 Dividends due 20,000 Bank overdraft 5,000 41,000 Working capital 18,000 Total net assets 208,000 Financed by Authorised Issued 400,000 €1 ordinary shares 400,000 200,000 Reserves 8,000 Capital employed 208,000

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4. Balance Sheet as on 31/5/2006 € € € Fixed Assets Cost Depreciation NBV Land 150,000 150,000 Machinery 58,000 58,000 Total fixed assets 208,000 208,000 Current assets Closing stock 16,000 Debtors 27,000 Bank 9,000 52,000 Less current liabilities Creditors 19,000 Dividends due 16,000 35,000 Working capital 17,000 Total net assets 225,000 Financed by Authorised Issued 250,000 €1 ordinary share capital 250,000 160,000 Reserves 15,000 175,000 Long-term liabilities 10-year loan 50,000 Capital employed 225,000

5. Balance Sheet as on 31/5/2006 € € € Fixed Assets Cost Depreciation NBV Buildings 150,000 150,000 Machinery 40,000 40,000 Total fixed assets 190,000 190,000 Current assets Closing stock 8,000 Debtors 20,000 Cash 2,000 30,000 Less current liabilities Creditors 20,000 Dividends due 35,000 Bank overdraft 5,000 60,000 Working capital (30,000) Total net assets 160,000 Financed by Authorised Issued 300,000 €1 ordinary shares 300,000 100,000 Long-term liabilities 20-year loan 60,000 Capital employed 160,000

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6. Balance Sheet as on 31/5/2006 € € € Fixed Assets Cost Depreciation NBV Land 170,000 170,000 Equipment 52,000 52,000 Total fixed assets 222,000 222,000 Current assets Closing stock 15,000 Debtors 15,000 Cash 4,000 34,000 Less current liabilities Creditors 39,000 Dividends due 10,000 Bank overdraft 17,000 66,000 Working capital (32,000) Total net assets 190,000 Financed by Authorised Issued 450,000 €1 ordinary shares 450,000 100,000 Long-term liabilities 12-year loan 90,000 Capital employed 190,000

7. (a) Trading, Profit and Loss Appropriation Account for year ending 31/5/2005 € € € Sales 260,000 Less sales returns 5,000 255,000 Less cost of sales Opening stock 1/6/2004 14,000 Purchases 130,000 Carriage inwards 3,000 Cost of goods available for sale 147,000 Less closing stock 25,000 Cost of actual sales 122,000 Gross profit 133,000 Add gains Commission receivable 16,000 149,000 Less expenses Wages 25,000 Light and heat 6,000 Advertising 8,000 Carriage outwards 6,000 Bad debts 10,000 55,000 94,000 Less dividends 18,400 Reserves 75,600

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Balance Sheet as on 31/5/2005 € € € Fixed Assets Cost Depreciation NBV Buildings 100,000 100,000 Machinery 120,000 120,000 Total fixed assets 220,000 220,000 Current assets Closing stock 25,000 Debtors 40,000 Bank 12,000 Cash 1,000 78,000 Less current liabilities Creditors 20,000 Dividends due 18,400 38,400 Working capital 39,600 Total net assets 259,600 Financed by Authorised Issued 250,000 €1 ordinary shares 250,000 184,000 Reserves 75,600 Capital employed 259,600

(b) Goods are faulty; goods are not as ordered. 8. (a) Trading, Profit and Loss Appropriation Account for year ending 31/5/2006 € € € Sales 300,000 Less sales returns 5,000 295,000 Less cost of sales Opening stock 1/6/2005 34,000 Purchases 140,000 Import duty 12,000 Cost of goods available for sale 186,000 Less closing stock 30,000 Cost of actual sales 156,000 Gross profit 139,000 Add gains Interest receivable 20,000 159,000 Less expenses Wages 40,000 Light and heat 7,000 Advertising 8,000 Carriage outwards 9,000 Bad debts 13,000 77,000 Net profit 82,000 Less dividends 33,000 Reserves 49,000

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Balance Sheet as on 31/5/2006 € € € Fixed Assets Cost Depreciation NBV Buildings 110,000 110,000 Machinery 115,000 115,000 225,000 225,000 Current assets Closing stock 30,000 Debtors 47,000 Bank 10,000 Cash 7,000 94,000 Less current liabilities Creditors 17,000 Dividends due 33,000 50,000 Working capital 44,000 Total net assets 269,000 Financed by Authorised Issued 450,000 €1 ordinary shares 450,000 220,000 Reserves 49,000 Capital employed 269,000

(b). Radio; television; newspapers. 9. (a) Trading, Profit and Loss Appropriation Account for year ending 31/3/2006 € € € Sales 410,000 Less cost of sales Opening stock 1/4/2005 14,000 Purchases 200,000 Less purchases returns 15,000 185,000 Carriage inwards 3,000 Cost of goods available for sale 202,000 Less closing stock 22,000 Cost of actual sales 180,000 Gross profit 230,000 Add gains Commission receivable 4,000 234,000 Less expenses Wages 10,000 Light and heat 6,000 Insurance 10,000 Carriage outwards 8,000 Rent 10,000 44,000 Net profit 190,000 Less dividends 17,500 Reserves 172,500

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Balance Sheet as on 31/3/2006 € € € Fixed Assets Cost Depreciation NBV Land and buildings 200,000 200,000 Machinery 123,000 123,000 Total fixed assets 323,000 323,000 Current assets Closing stock 22,000 Debtors 55,000 Cash 3,000 80,000 Less current liabilities Creditors 30,000 Bank overdraft 8,000 Dividends due 17,500 55,500 Working capital 24,500 Total net assets 348,500 Financed by Authorised Issued 500,000 €1 ordinary shares 500,000 175,000 Reserves 172,500 Capital employed 347,500

(b) Hourly rate and piece rate 10. (a) Erratum. Date should be 31/5/2006 not 29/5/2006

Trading, Profit and Loss Appropriation Account for year ending 31/5/2006 € € € Sales 370,000 Less sales returns 5,000 365,000 Less cost of sales Opening stock 1/6/2005 34,000 Purchases 160,000 Carriage inwards 6,000 Cost of goods available for sale 200,000 Less closing stock 25,000 Cost of goods actually sold 175,000 Gross profit 190,000 Add gains Rent receivable 19,000 209,000 Less expenses Wages 55,000 Insurance 9,000 Advertising 21,000 85,000 Net profit 124,000 Less dividends 19,000 Reserves 105,000

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Balance Sheet as on 31/5/2006 € € € Fixed Assets Cost Depreciation NBV Equipment 120,000 120,000 Buildings 180,000 180,000 Total fixed assets 300,000 300,000 Current assets Closing stock 25,000 Debtors 40,000 Bank 19,000 Cash 1,000 85,000 Less current liabilities Creditors 10,000 Working capital 75,000 Total net assets 375,000 Financed by Authorised Issued 320,000 €1 ordinary shares 320,000 190,000 Reserves 105,000 295,000 Long-term liabilities 10-year loan 80,000 Capital employed 375,000

(b) Motor insurance; fire and theft; employer’s liability. 11. Trading, Profit and Loss Appropriation Account for year ending 30/4/2007 € € € Sales 190,000 Less sales returns 1,000 189,000 Less cost of sales Opening stock 1/5/2006 11,000 Purchases 100,000 Carriage inwards 2,000 Cost of goods available for sale 113,000 Less closing stock 45,000 Cost of actual sales 68,000 Gross profit 121,000 Add gains Rent receivable 10,000 131,000 Less expenses Wages 21,000 Light and heat 4,000 Advertising 4,000 Carriage outwards 7,000 Repairs 7,000 43,000 Net profit 88,000 Less dividends 20,000 Reserves 68,000

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Balance Sheet as on 30/4/2007 € € € Fixed Assets Cost Depreciation NBV Buildings 112,000 112,000 Equipment 76,000 76,000 Total fixed assets 188,000 188,000 Current assets Closing stock 45,000 Debtors 20,000 Bank 10,000 Cash 1,000 76,000 Less current liabilities Creditors 16,000 Dividends due 20,000 36,000 Working capital 40,000 Total net assets 228,000 Financed by Authorised Issued 450,000 €1 ordinary shares 450,000 160,000 Reserves 68,000 Capital employed 228,000

(b) Monark Ltd could raise a further €290,000 by issuing shares. 12. (a) Trading, Profit and Loss Appropriation Account for year ending 30/4/2007 € € € Sales 390,000 Less sales returns 13,000 377,000 Less cost of sales Opening stock 1/6/2006 14,000 Purchases 210,000 Less purchases returns 15,000 195,000 Cost of goods available for sale 209,000 Less closing stock 42,000 Cost of actual sales 167,000 Gross profit 210,000 Add gains Commission receivable 12,000 222,000 Less expenses Advertising 8,000 Wages 55,000 Light and heat 6,000 Bank interest 10,000 79,000 Net profit 143,000 Less dividends 37,500 Reserves 105,500

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Balance Sheet as on 30/4/2007 € € € Fixed Assets Cost Depreciation NBV Buildings 200,000 200,000 Motor vehicles 180,000 180,000 Total fixed assets 380,000 380,000 Current assets Closing stock 42,000 Debtors 44,500 Cash 4,000 90,500 Less current liabilities Creditors 20,000 Bank overdraft 45,000 65,000 Working capital 25,500 Total net assets 405,500 Financed by Authorised Issued 500,000 €1 ordinary shares 500,000 300,000 Reserves 105,500 Capital employed 405,500

(b) Rate of dividend paid is 12½%. Chapter 48 Adjustments to Final Accounts 1. General Ledger Date Details F Total Date Details F Total 2006 € 2006 € InsuranceInsurance A/C A/C 1/6 Bank ACB 1,200 31/12 Profit and loss 600 31/12 Balance c/d 600 1,200 1,200 1/1 Balance b/d 600

Profit and Loss Account for year ending 31/12/2006 Less expenses € Insurance (1,200 – 600) 600

Balance Sheet as on 31/12/2006 Current assets € Insurance prepaid 600

2. Date Details F Total Date Details F Total 2006 € 2006 € Rent A/C 1/4 Bank ACB 3,200 31/12 Profit and loss 2,400 31/12 Balance c/d 800 3,200 3,200 1/5 Balance b/d 800

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Profit and Loss Account for year ending 31/12/2006 Less expenses € Rent (3,200 – 800) 2,400

Balance Sheet as on 31/12/2006 Current assets € Rent prepaid 800

3. General Ledger Date Details F Total Date Details F Total 2006 € 2006 € StationeryStatioery A/C 31/5 Bank ACB 1,900 31/5 Profit and loss 1,450 31/5 Balance c/d 450 1,900 1,900 1/6 Balance b/d 450

Profit and Loss Account for year ending 31/5/2006 Less expenses € Stationery (1,900 – 450) 1,450

Profit and Loss Account for year ending 31/5/2006 Current assets € Stationery on hand 450

4. General Ledger Date Details F Total Date Details F Total € € WagesWages A/C A/C Bank ACB 27,000 31/12/2006 Profit and loss 29,500 31/12/2006 Balance c/d 2,500 29,500 29,500 1/1/2007 2,500

Profit and Loss Account for year ending 31/12/2006 Less expenses € Wages (27,000 + 2,500) 29,500

Balance Sheet as on 31/12/2006 Current liabilities € Wages due 2,500

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5. General Ledger Date Details F Total Date Details F Total € € Electricity A/C Bank ACB 6,000 31/12/2005 Profit and loss 7,500 31/12/2005 Balance c/d 1,500 7,500 7,500 1/1/2006 Balance b/d 1,500

Profit and Loss Account for year ending 31/12/2005 Less expenses € Electricity (6,000+1,500) 7,500

Balance Sheet as on 31/12/2005 Current liabilities € Electricity due 1,500

6. General Ledger Date Details F Total Date Details F Total € € InterestInterest receivable receivable A/C A/C 31/12/2006 Profit and loss 1,800 31/12/2006 Balance c/d 1,800 1/1/2007 Balance b/d 1,800

Profit and Loss Account for year ending 31/12/2006 Add gains € Interest receivable 1,800

Balance Sheet as on 31/12/2006 Current assets € Interest receivable due 1,800

7. General Ledger Date Details F Total Date Details F Total 2006 € 2006 € MachineryMachinery A/C A/C 1/1 Bank ACB 12,000

BankBank A/C A/C 1/1 Machinery ACB 12,000

ProvisionProvision for for depreciation depreciation A/C A/C 31/12 Profit and loss 1,200

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Profit and Loss Account for year ending 31/12/2006 Less expenses € Depreciation: Machinery 1,200

Balance Sheet as on 31/12/2006 Fixed Assets Cost Depreciation NBV € € € Machinery 12,000 1,200 10,800

8. General Ledger Date Details F Total Date Details F Total € € Motor Vans A/C 1/1/2005 Bank ACB 60,000

Bank A/C 1/1/2005 Motor vans ACB 60,000

Provision for depreciation A/C 31/12/2005 Balance c/d 12,000 31/12/2005 Profit and loss 12,000 1/1/2006 Balance b/d 12,000 31/12/2006 Balance c/d 24,000 31/12/2006 Profit and loss 12,000 24,000 24,000 1/1/2007 Balance b/d

Profit and Loss Account for year ending 31/12/2005 Less expenses € Depreciation: Motor vans 12,000

Profit and Loss Account for year ending 31/12/2006 Less expenses € Depreciation: Motor vans 12,000

Balance Sheet as on 31/12/2005 Fixed Assets Cost Depreciation NBV € € € Motor vans 60,000 12,000 48,000

Balance Sheet as on 31/12/2006 Fixed Assets Cost Depreciation NBV € € € Motor vans 60,000 24,000 36,000

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9. General Ledger Date Details F Total Date Details F Total € € Equipment A/C 1/1/2005 Bank ACB 30,000

Bank A/C 1/1/2005 Equipment ACB 30,000

Provision for depreciation A/C 31/12/2005 Balance c/d 4,400 31/12/2005 Profit and loss 4,400 1/1/2006 Balance b/d 4,400 31/12/2006 Balance c/d 8,800 31/12/2006 Profit and loss 4,400 8,800 8,800 1/1/2007 Balance b/d 8,800

Profit and Loss Account for year ending 31/12/2005 Less expenses € Depreciation: Equipment 8,800

Profit and Loss Account for year ending 31/12/2006 Less expenses € Depreciation: Equipment 8,800

Balance Sheet as on 31/12/2005 Fixed Assets Cost Depreciation NBV € € € Equipment 30,000 4,400 25,600

Balance Sheet as on 31/12/2005 Fixed Assets Cost Depreciation NBV € € € Equipment 30,000 8,800 21,200 10. General Ledger Date Details F Total Date Details F Total € € Motor Vans A/C 1/9/2006 Bank ACB 40,000

Bank A/C 1/1/2006 Machinery ACB 40,000

Provision for depreciation A/C 31/12/2006 Balance c/d 8,000 31/12/2006 Profit and loss 8,000 1/1/2007 Balance b/d 8,000 31/12/2007 Balance c/d 16,000 31/12/2007 Profit and loss 8,000 16,000 16,000 31/12/2007 Balance b/d 16,000

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Profit and Loss Account for year ending 31/12/2006 Less expenses € Depreciation: Motor vans 8,000

Balance Sheet as on 31/12/2005 Fixed Assets Cost Depreciation NBV € € € Motor vans 40,000 8,000 32,000

Profit and Loss Account for year ending 31/12/2007 Less expenses € Depreciation: Motor vans 8,000

Balance Sheet as on 31/12/2007 Fixed Assets Cost Depreciation NBV € € € Motor vans 40,000 16,000 24,000

Chapter 49 Final Accounts and Balance Sheet with Adjustments

1. (a)

Trading, Profit and Loss Appropriation Account of Niall Ltd for year ending 31/5/2005 € € € Sales (365,000 – 24,000) 341,000 Less cost of sales Opening stock 1/6/2004 37,000 Purchases 210,000 Import duty 11,000 Cost of goods available for sale 258,000 Less closing stock 30,000 Cost of actual sales 228,000 Gross profit 113,000 Add gains Commission receivable (25,000 + 2,500) 25,000 27,500 140,500 Less expenses Insurances 9,870 Wages (56,000 + 4,600) 60,600 Light and heat 13,400 Depreciation: Motor vehicles 12,300 Buildings 3,600 15,900 99,770 Net profit 40,730 Less dividends 30,000 10,730 Add opening balance 24,000 Reserves 34,730

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Balance Sheet of Niall Ltd as on 31/5/2005 € € € Fixed assets Cost Depreciation NBV Buildings 180,000 3,600 176,400 Motor vehicles 123,000 12,300 110,700 Total fixed assets 303,000 15,900 287,100 Current assets Closing stock 30,000 Debtors 78,000 Commission receivable 2,500 Cash 2,330 112,830 Less current liabilities Creditors 63,000 Bank overdraft 17,600 Wages due 4,600 Dividends due 30,000 115,200 Working capital (2,370) Total net assets 284,730 Financed by Authorised Issued 360,000 €1 ordinary shares 360,000 250,000 Reserves 34,730 284,730

(b) Profit is retained for future expansion or losses. 2. (a)

Trading, Profit and Loss Appropriation Account of Adrian Ltd for year ending 31/5/2005 € € € Sales (275,000 – 19,000) 256,000 Less cost of sales Opening stock 1/6/2004 13,000 Purchases (165,000 – 2,000) 163,000 Carriage inwards 6,800 Cost of goods available for sale 182,800 Less closing stock 20,000 Cost of actual sales 162,800 Gross profit 93,200 Add gains Interest receivable (18,000 + 6,000) 24,000 117,200 Less expenses Insurance 8,600 Bad debts 10,900 Repairs (16,000 + 2,900) 18,900 Advertising 6,600 Depreciation: Delivery van 27,312 Machinery 11,600 38,912 83,912 Net profit 33,288 Less dividends 12,750 Reserves 20,538

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Balance Sheet of Adrian Ltd as on 31/5/2005 € € € Fixed assets Cost Depreciation NBV Delivery vans 170,700 27,312 143,388 Machinery 145,000 11,600 133,400 Total fixed assets 315,700 38,912 276,788 Current assets Closing stock 20,000 Debtors 34,000 Bank 10,000 Interest receivable due 6,000 70,000 Less current liabilities Creditors 15,600 Repairs due 2,900 Dividends due 12,750 31,250 Working capital 38,750 Total net assets 315,538 Financed by Authorised Issued 500,000 €1 ordinary shares 500,000 255,000 Reserves 20,538 275,538 Long-term liabilities 12-year loan 40,000 Capital employed 315,538 (b) Bad debts constitute one third of the debtors. This means that one third of credit sales will not be paid for. 3. (a) Trading, Profit and Loss Appropriation Account of Richard Ltd for year ending 31/7/2005 € € € Sales (312,000 – 8,000) 304,000 Less cost of sales Opening stock 1/8/2004 17,000 Purchases 120,000 Import duty 11,600 Cost of goods available for sale 148,600 Less closing stock 27,000 Cost of actual sales 121,600 Gross profit 182,400 Add gains None 000000 182,400 Less expenses Light and heat (18,000 + 2,500) 20,500 Insurances (8,900 – 600) 8,300 Wages and salaries 38,600 Depreciation: Premises 5,500 Machinery 11,200 16,700 84,100 Net profit 98,300 Less dividends 17,100 81,200 Add opening balance 25,000 Reserves 106,200

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Balance Sheet of Richard Ltd as on 31/7/2005 € € € Fixed assets Cost Depreciation NBV Premises 220,000 5,500 214,500 Machinery 80,000 11,200 68,800 Total fixed assets 300,000 16,700 283,300 Current assets Closing stock 27,000 Debtors 34,000 Insurance prepaid 600 Cash 5,200 66,800 Less current liabilities Creditors 45,000 Bank overdraft 6,400 Light and heat due 2,500 53,900 Working capital 12,900 Total net assets 296,200 Financed by Authorised Issued 600,000 €1 ordinary shares 600,000 190,000 Reserves 106,200 Capital employed 296,000

(b) Goods sold can be returned because they are not as ordered or are faulty. 4. (a) Trading, Profit and Loss Appropriation Account of Darra Ltd for the year ending 30/4/2005 € € € Sales (298,000 – 18,000) 280,000 Less cost of sales Opening stock 1/5/2004 17,000 Purchases (140,000 – 6,000) 134,000 Cost of goods available for sales 151,000 Less closing stock 40,000 Cost of goods actually sold 111,000 Gross profit 169,000 Add gains Rent receivable (24,900 – 5,500) 19,400 188,400 Less expenses Advertising (25,000 + 860) 25,860 Petty cash expenses 4,000 Loan interest 2,800 Depreciation: Motor vehicles 21,120 53,780 Net profit 134,620 Less dividends 36,000 98,620 Add opening balance 25,000 Reserves 123,620

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Balance Sheet of Darra Ltd as on 30/4/2005 € € € Fixed assets Cost Depreciation NBV Motor vehicles 132,000 21,120 110,880 Land 196,000 196,000 Total fixed assets 328,000 21,120 306,880 Current assets Closing stock 40,000 Debtors 64,000 Bank 14,100 Cash 2,000 120,100 Less current liabilities Creditors 46,000 Interest receivable prepaid 5,500 Advertising due 860 Dividends due 36,000 88,360 Working capital 31,740 Total net assets 338,620 Financed by Authorised Issued 200,000 €1 ordinary shares 200,000 180,000 Reserves 123,620 303,620 Long-term liability 7-year loan 35,000 Capital employed 338,620 (b) The source document for purchases returns is a credit note received and for petty cash expenses is a petty cash voucher. 5. (a) Trading, Profit and Loss Appropriation Account of James Ltd for the year ending 30/6/2005 € € € Sales (272,000 – 18,000) 254,000 Less cost of sales Opening stock 1/7/2004 23,000 Purchases 120,000 Import duty 7,000 Cost of goods available for sale 150,000 Less closing stock 27,900 Cost of actual sales 122,100 Gross profit 131,900 Add gains Commission receivable (35,000 + 4,750) 39,750 171,650 Less expenses Insurance 13,700 Carriage outwards 17,500 Repairs (13,400 + 2,600) 16,000 Depreciation: Motor vehicles 16,548 Equipment 26,950 43,498 90,698 Net profit 80,952 Less dividends 39,000 41,952 Add opening balance 20,000 Reserves 61,952

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Balance Sheet of James Ltd as on 30/6/2005 € € € Fixed assets Cost Depreciation NBV Equipment 245,000 26,950 218,050 Motor vehicles 118,200 16,548 101,652 363,200 43,498 319,702 Current assets Closing stock 27,900 Debtors 34,000 Commission receivable due 4,750 Cash 2,100 68,750 Less current liabilities Creditors 12,000 Repairs due 2,600 Bank overdraft 12,900 Dividends due 39,000 66,500 Working capital 2,250 Total net assets 321,952 Financed by Authorised Issued 400,000 €1 ordinary shares 400,000 260,000 Reserves 61,952 Capital employed 31,952

(b) James Ltd can raise a further 140,000 ordinary shares. 6. (a)

Trading, Profit and Loss Appropriation Account of Conor Ltd for year ending 31/5/2005 € € € Sales 214,000 Less cost of sales Opening stock 1/6/2004 31,000 Purchases (120,000 – 12,000) 108,000 Cost of goods available for sale 139,000 Less closing stock 30,000 Cost of actual sales 109,000 Gross profit 105,000 Add gains Rent receivable (25,000 + 2,500) 27,500 132,500 Less expenses Wages 56,000 Insurance (3,800 – 600) 3,200 Bad debts 5,700 Advertising 11,800 Depreciation: Motor vehicles 7,760 Machinery 15,840 23,600 100,300 Net profit 32,200 Less dividends 28,000 4,200 Add opening balance 45,000 Reserves 49,200

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Balance Sheet of Conor Ltd as on 31/5/2005 € € € Fixed assets Cost Depreciation NBV Motor vehicles 97,000 7,760 89,240 Machinery 132,000 15,840 116,160 229,000 23,600 205,400 Current assets Closing stock 30,000 Debtors 33,000 Rent receivable 2,500 Insurance prepaid 600 Cash 300 Bank 1,400 67,800 Less current liabilities Creditors 56,000 Dividends due 28,000 84,000 Working capital (16,200) Total net assets 189,200 Financed by Authorised Issued 200,000 €1 ordinary shares 200,000 140,000 Reserves 49,200 Capital employed 189,200

(b) Closing stock should be valued at the lower price of: cost price, market price or replacement cost. 7. (a)

Trading, Profit and Loss Appropriation Account of Enda Ltd for year ending 31/3/2005 € € € Sales (230,000 – 5,000) 225,000 Less cost of sales Opening stock 13,000 Purchases (89,000 – 1,200) 87,800 Import duty 4,450 Cost of goods available for sale 105,250 Less closing stock 17,000 Cost of actual sales 88,250 Gross profit 136,750 Add gains Interest receivable (13,750 – 4,500) 18,250 155,000 Less expenses Advertising (8,000 – 1,370) 6,630 Insurance 4,600 Repairs 6,900 Depreciation: Premises 4,000 Machinery 21,120 25,120 43,250 Net profit 111,750 Less dividends 14,000 Reserves 97,350

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Balance Sheet of Enda Ltd as on 31/3/2005 € € € Fixed assets Cost Depreciation NBV Premises 200,000 4,000 196,000 Machinery 132,000 21,120 110,880 Total fixed assets 332,000 25,120 306,880 Current assets Closing stock 17,000 Debtors 24,000 Cash 3,000 Advertising prepaid 1,370 Interest receivable due 4,500 49,870 Current liabilities Creditors 14,000 Bank overdraft 6,000 Dividends due 14,400 34,400 Working capital 15,470 322,350 Financed by Authorised Issued 400,000 €1 ordinary shares 400,000 180,000 Reserves 97,350 277,350 Long-term liabilities 20-year loan 45,000 Capital employed 322,350

(b) TV, cinema, colour magazines. 8. (a)

Trading, Profit and Loss Appropriation Account of Andrew Ltd for year ending 30/4/2006 € € € Sales (460,000 – 13,000) 447,000 Less cost of sales Opening stock 1/5/2005 17,000 Purchases (290,000 – 3,600) 286,400 Cost of goods available for sale 303,400 Less closing stock 21,000 Cost of actual sales 282,400 Gross profit 164,600 Add gains Rent receivable (19,700 + 2,500) 22,200 186,800 Less expenses Loan interest 8,000 Insurance (14,800 – 900) 13,900 Bad debts 10,000 Carriage outwards (4,300 + 3,500) 7,800 Depreciation: Motor vehicles 11,040 Machinery 49,000 60,040 99,740 Net profit 87,060 Less dividends 39,100 Reserves 47,960

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Balance Sheet of Andrew Ltd as on 30/4/2006 € € € Fixed assets Cost Depreciation NBV Motor vehicles 110,400 11,040 99,360 Machinery 245,000 49,000 196,000 Total fixed assets 355,400 60,040 295,360 Current assets Closing stock 21,000 Debtors 29,700 Insurance prepaid 900 Rent receivable due 2,500 Cash 19,000 73,100 Less current liabilities Creditors 47,000 Carriage outwards due 3,500 50,500 Working capital 22,600 Total net assets 317,960 Financed by Authorised Issued 400,000 €1 ordinary shares 400,000 230,000 Reserves 47,960 277,960 Long-term liabilities 10-year loan 40,000 Capital employed 317,960 (b) 17% (Dividend ÷ Issued shares × 100%) 9. (a) Trading, Profit and Loss Appropriation Account of Burns Ltd for year ending 31/5/2005 € € € Sales 200,000 Less cost of sales Opening stock 1/6/2004 42,000 Purchases (110,000 – 15,000) 95,000 Carriage inwards 8,000 Cost of goods available for sale 145,000 Less closing stock 68,000 Cost of actual sales 77,000 Gross profit 123,000 Add gains Interest receivable (12,000 + 8,000) 20,000 143,000 Less expenses Light and heat 7,500 Wages (47,500 + 2,500) 50,000 Bad debts 6,700 Depreciation: Machinery 30,000 Delivery van 12,000 42,000 106,200 Net profit 36,800 Less dividends 34,800 2,000 Add opening balance 22,000 Reserves 24,000

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Balance Sheet of Burns Ltd as on 31/5/2005 € € € Fixed assets Cost Depreciation NBV Machinery 200,000 30,000 170,000 Delivery vans 120,000 12,000 108,000 Total fixed assets 320,000 42,000 278,000 Current assets Closing stock 68,000 Debtors 54,000 Cash 4,300 Interest receivable due 8,000 134,300 Less current liabilities Creditors 13,000 Bank overdraft 13,000 Wages due 2,500 Dividends due 34,800 63,300 Working capital 71,000 Total net assets 349,000 Financed by Authorised Issued 350,000 €1 ordinary shares 350,000 290,000 Reserves 24,000 314,000 Long-term liabilities 15-year loan 35,000 Capital employed 349,000 (b) €55,000 (€42,000 + €68,000 ÷ 2) 10.(a) Trading, Profit and Loss Appropriation Account of Balfe Ltd for year ending 31/3/2006 € € € Sales (270,000 – 7,500) 262,500 Less cost of sales Opening stock 1/4/2005 23,000 Purchases 130,000 Import duty 11,800 Cost of goods available for sale 164,800 Less closing stock 40,000 Cost of actual sales 124,800 Gross profit 137,700 Add gains Commission receivable (16,000 + 4,000) 20,000 Interest receivable 8,000 165,700 Less expenses Advertising (14,000 – 3,000) 11,000 Wages 32,000 Depreciation: Equipment 25,600 Delivery vans 22,000 47,600 90,600 Net profit 75,100 Less dividends 30,000 45,100 Add opening balance 68,000 Reserves 113,100

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Balance Sheet of Balfe Ltd as on 31/3/2006 € € € Fixed assets Cost Depreciation NBV Buildings 200,000 200,000 Equipment 160,000 25,600 134,400 Delivery vans 110,000 22,000 88,000 Total fixed assets 270,000 47,600 422,400 Current assets Closing stock 40,000 Debtors 28,000 Advertising prepaid 3,000 Commission receivable due 4,000 Cash 2,700 77,700 Less current liabilities Creditors 43,000 Bank overdraft 14,000 Dividends due 30,000 87,000 Working capital (9,300) Total net assets 413,100 Financed by Authorised Issued 400,000 €1 ordinary shares 400,000 300,000 Reserves 113,100 Capital employed 413,100 (b) 3.96 times (124,800 ÷ 31,500) 11.(a) Trading, Profit and Loss Appropriation Account of Carr Ltd for year ending 31/5/2007 € € € Sales 270,000 Less cost of sales Opening stock 23,000 Purchases (160,000 – 13,000) 147,000 Carriage inwards 5,600 Cost of goods available for sale 175,600 Less closing stock 22,000 Cost of actual sales 153,600 Gross profit 116,400 Add gains Rent receivable (8,600 + 4,400) 13,000 129,400 Less expenses Insurance (7,800 – 1,200) 6,600 Wages 32,800 Bad debts 5,600 Depreciation: Machinery 10,400 Delivery vans 23,400 33,800 78,800 Net profit 50,600 Less dividends 26,000 24,600 Add opening balance 15,000 Reserves 39,600

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Balance Sheet of Carr Ltd as on 31/5/2007 € € € Fixed assets Cost Depreciation NBV Machinery 130,000 10,400 119,600 Delivery vans 195,000 23,400 171,600 Total fixed assets 325,000 33,800 291,200 Current assets Closing stock 22,000 Debtors 49,500 Rent receivable due 4,400 Cash 1,300 Insurance prepaid 1,200 Bank 11,000 89,400 Less current liabilities Creditors 30,000 Dividends due 26,000 56,000 Working capital 33,400 Total net assets 324,600 Financed by Authorised Issued 300,000 €1 ordinary shares 300,000 260,000 Reserves 39,600 299,600 Long-term liability 12-year loan 25,000 Capital employed 324,600

(b) Carr Ltd should have motor insurance; employers liability insurance; product liability and should pay its share of PRSI. 12.(a) Trading, Profit and Loss Appropriation Account of Keogh Ltd for year ending 31/5/2008 € € € Sales (310,000 – 12,000) 298,000 Less cost of sales Opening stock (1/6/2007) 20,000 Purchases 168,000 Import duty 4,600 Cost of goods available for sale 192,600 Less closing stock 18,000 Cost of goods actually sold 174,600 Gross profit 123,400 Add gains Interest receivable 3,500 126,900 Less expenses Rent (8,800 – 1,200) 7,600 Wages (40,000 + 6,000) 46,000 Depreciation: Machinery 9,600 Delivery vans 18,000 27,600 81,200 Net profit 45,700 Less dividends 36,000 9,700 Add balances 16,700 Reserves 26,400

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Balance Sheet for Keogh Ltd as on 31/5/2008 € € € Fixed assets Cost Depreciation NBV Buildings 200,000 200,000 Machinery 160,000 9,600 150,400 Delivery vans 150,000 18,000 132,000 Total fixed assets 510,000 27,600 482,400 Current assets Closing stock 18,000 Debtors 32,000 Cash 3,400 Rent prepaid 1,200 54,600 Less current liabilities Creditors 21,000 Bank overdraft 15,600 Dividends due 36,000 Wages due 6,000 78,600 Working capital (24,000) Total net assets 458,400 Financed by Authorised Issued 500,000 €1 ordinary shares 500,000 400,000 Reserves 26,400 426,400 Long-term liabilities 10-year loan 32,000 Capital employed 458,400 (b) Keogh Ltd can raise €100,000 from issuing the remaining shares. 13.(a) Trading, Profit and Loss Appropriation Account of Kirby Ltd for year ending 31/3/2008 € € € Sales 340,000 Less cost of sales Opening stock (1/4/2007) 12,000 Purchases 125,000 Carriage inwards 8,000 Cost of goods available for sale 145,000 Less closing stock 14,000 Cost of actual sales 131,000 Gross profit 209,000 Add gains Rent receivable (5,600 – 1,800) 3,800 212,800 Less expenses Loan interest due (2,500 + 500) 3,000 Wages (57,000 + 3,000) 60,000 Bad debts 2,400 Depreciation: Equipment 21,600 Delivery vans 15,000 36,600 102,000 Net profit 110,800 Less dividends 34,000 76,800 Add opening balance 32,000 Reserves 108,800

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Balance Sheet of Kirby Ltd as on 31/3/2008 € € € Fixed assets Cost Depreciation NBV Equipment 180,000 21,600 158,400 Delivery van 150,000 15,000 135,000 Total fixed assets 330,000 36,600 293,400 Current assets Closing stock 14,000 Debtors 54,000 Cash 2,100 Bank 5,600 75,700 Less current liabilities Creditors 40,000 Rent receivable prepaid 1,800 Wages due 3,000 Loan interest due 500 45,300 Working capital 30,400 Total net assets 323,800 Financed by Authorised Issued 300,000 €1 ordinary shares 300,000 200,000 Reserves 108,800 308,800 Long-term liabilities 6-year loan 15,000 Capital employed 323,800

(b) Kirby Ltd can reduce its bad debts by not selling on credit, checking the credit worthiness of its debtors and giving incentives for prompt payment. 14.(a) Trading, Profit and Loss Appropriation Account of Moore Ltd for year ending 31/5/2007 € € € Sales 330,000 Less cost of sales Opening stock (1/6/2006) 15,000 Purchases 145,000 Import duty 3,400 Cost of goods available for sale 163,400 Less closing stock 18,000 Cost of actual sales 145,400 Gross profit 184,600 Add gains Commission receivable (12,400 + 1,600) 14,000 Rent receivable 12,000 210,600 Less expenses Wages (28,400 + 600) 29,000 Carriage outwards (6,600 + 2,200) 8,800 Depreciation: Machinery 24,000 Delivery vans 26,000 50,000 87,800 Net profit 122,800 Less dividends 32,000 90,800 Add opening balance 35,000 Reserves 125,800

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Balance Sheet of Moore Ltd as on 31/5/2007 € € € Fixed assets Cost Depreciation NBV Machinery 200,000 24,000 176,000 Delivery vans 190,000 26,000 164,000 Total fixed assets 390,000 50,000 340,000 Current assets Closing stock 18,000 Debtors 80,000 Cash 2,000 Bank 20,000 Commission receivable due 1,600 121,600 Less current liabilities Creditors 13,000 Wages due 600 Carriage outwards due 2,200 15,800 Working capital 105,800 Total net assets 445,800 Financed by Authorised Issued 350,000 €1 ordinary shares 350,000 280,000 Reserves 125,800 405,800 Long-term liabilities 20-year loan 40,000 Capital employed 445,800

(b) 11.43% 15.(a) Trading, Profit and Loss Appropriation Account of Joyce Ltd for year ending 31/5/2007 € € € Sales 320,000 Less cost of sales Opening stock (1/6/2006) 22,000 Purchases (140,000 – 4,000) 136,000 Import duty 8,000 Cost of goods available for sale 166,000 Less closing stock 16,000 Cost of actual sales 150,000 Gross profit 170,000 Add gains Interest receivable (10,000 + 4,000) 14,000 184,000 Less expenses Carriage outwards 5,600 Wages (48,400 + 1,600) 50,000 Bad debts 4,000 Depreciation: Machinery 12,000 Delivery vans 12,900 24,900 84,500 Net profit 99,500 Less dividends 30,000 69,500 Add opening balance 26,000 Reserves 95,500

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Balance Sheet of Joyce Ltd as on 31/5/2007 € € € Fixed assets Cost Depreciation NBV Buildings 200,000 200,000 Machinery 120,000 12,000 108,000 Delivery vans 86,000 12,900 73,100 Total fixed assets 406,000 24,900 381,100 Current assets Closing stock 16,000 Debtors 30,000 Cash 2,300 Bank 5,700 Interest receivable due 4,000 58,000 Less current liabilities Creditors 12,000 Dividends due 30,000 Wages due 1,600 43,600 14,400 Total net assets 395,500 Financed by Authorised Issued 400,000 €1 ordinary shares 400,000 300,000 Reserves 95,500 Capital employed 395,500 (b) 1.33 : 1 (58,000 : 43,600) 16. (a) Trading, Profit and Loss Appropriation Account of Nevin Ltd for year ending 31/5/2008 € € € Sales 390,000 Less cost of sales Opening stock (1/6/2007) 14,500 Purchases (175,000 – 5,000) 170,000 Carriage inwards 5,500 Cost of goods available for sale 190,000 Less closing stock 22,000 Cost of actual sales 168,000 Gross profit 222,000 Add gains Commission receivable (6,600 + 1,800) 8,400 230,400 Less expenses Insurance (4,800 – 900) 3,900 Wages 32,200 Bad debts 8,000 Depreciation: Equipment 18,720 Delivery vans 8,450 27,170 71,270 Net profit 159,130 Less dividends 25,600 133,530 Add opening balance 34,400 Reserves 167,930

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Balance Sheet of Nevin Ltd as on 31/5/2008 € € € Fixed assets Cost Depreciation NBV Buildings 300,000 300,000 Equipment 156,000 18,720 137,280 Delivery vans 65,000 8,450 56,550 Total fixed assets 521,000 27,170 493,830 Current assets Closing stock 22,000 Debtors 28,000 Cash 2,000 Insurance prepaid 900 Commission receivable due 1,800 54,700 Less current liabilities Creditors 20,000 Dividends due 25,600 Bank overdraft 15,000 60,600 Working capital (5,900) Total net assets 487,930 Financed by Authorised Issued 400,000 €1 ordinary shares 400,000 320,000 Reserves 167,930 Capital employed 487,930

(b) 56.92% (€222,000 × 100%) €390,000 Chapter 50 Assessing a Business

1. They only measure things that can be expressed in monetary terms; They only provide information for a given year or day; They do not take into account factors such as good industrial relations, staff morale etc. 2. Name of Formula Formula Workings Answer Gross profit × 100% €25,000 x 100% Gross profit margin 25% Sales €100,000 Gross profit × 100% €30,000 x 100% Gross profit margin 25% Sales €120,000 Gross profit × 100% €24,000 x 100% Gross profit margin 25% Sales €96,000 Gross profit × 100% €15,000 x 100% Gross profit margin 23.08% Sales €65,000

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3. Name of Formula Formula Workings Answer Net profit × 100% €10,000 x 100% Net profit margin 10% Sales €100,000 Net profit × 100% €15,000 x 100% Net profit margin 12.5% Sales €120,000 Net profit × 100% €12,000 x 100% Net profit margin 12.5% Sales €96,000 Net profit × 100% €5,000 x 100% Net profit margin 7.69% Sales €65,000

4. Name of Formula Formula Workings Answer Return on capital Net profit × 100% €10,000 x 100% 3.33% employed Capital employed €300,000 Return on capital Net profit × 100% €15,000 x 100% 3.33% employed Capital employed €450,000 Return on capital Net profit × 100% €12,000 x 100% 3.33% employed Capital employed €360,000 Return on capital Net profit × 100% €5,000 x 100% 2% employed Capital employed €250,000

5. Ratio 2005 2006 2007 2008 Gross profit % 30% 40% 35% 29.5% Net profit % 20% 12% 17% 20.49% Return on capital employed 6.67% 12% 6.89% 12.18%

Burns Ltd got the highest overall returns in 2008. 6. (a) Stock turnover is 4 times (€120,000 ÷ €30,000) (b) Stock turnover is 10 times (€150,000 ÷ €12,000 + €18,000) 2 7. Ratio A B C Rate of stock turnover 15 times 16 times 7.38

8. Name of Ratio Formula Workings Answer Current Ratio Current Assets: Current Liabilities €50,000 : €25,000 2 : 1 Current Ratio Current Assets: Current Liabilities €54,000 : €32,000 1.69 : 1 Current Ratio Current Assets: Current Liabilities €35,000 : €45,000 0.78 : 1 Current Ratio Current Assets: Current Liabilities €38,000 : €56,000 0.68 : 1

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9. Name of Ratio Formula Workings Answer Current Assets – Closing stock: Acid Test Ratio €50,000 – €15,000 : €25,000 1.4 : 1 Current Liabilities Current Assets – Closing stock: Acid Test Ratio €54,000 – €17,000 : €32,000 1.16 : 1 Current Liabilities Current Assets – Closing stock: Acid Test Ratio €35,000 – €15,000 : €45,000 0.44 : 1 Current Liabilities Current Assets – Closing stock: Acid Test Ratio €38,000 – €12,000 : €56,000 0.46 : 1 Current Liabilities

10. Workings for report Ratio Hilary Ltd Louise Ltd Helen Ltd Aisling Ltd Current Ratio 1.25 : 1 0.50 : 1 2.06 : 1 1.98 : 1 Acid Test Ratio 0.88 : 1 0.37 : 1 1.37 : 1 1.69 : 1

Louise Ltd has the greatest liquidity problem.

1. Liquidity Consultants Ltd, Anytown, Longford.

2. Liquidity problems of Louise Ltd

3. ______4. The Directors of Louise Ltd, Anytown, Longford.

5. I was asked by the directors to examine the liquidity situation of the company and make recommendations. I used both the Current and Acid Test ratios in my examination. My findings are set out below.

6. Louise Ltd has a Current ratio of 0.5 : 1. This is below the recommended ratio of 2 : 1. The Acid Test ratio is 0.37 : 1. This is below the recommended ratio of 1 : 1. I recommend the following: Louise Ltd must obtain extra finance to pay off its liabilities. It must also reduce its liabilities by buying less on credit, by keeping the bank overdraft down to a minimum or by paying less in dividends.

7. I am available to discuss this report if required.

8. Patricia Cooney.

9. Liquidity Consultant.

11. A company is solvent if Total Assets are greater than External Debts and vice versa. Cork Bus Ltd has Total Assets of €204,000 and External Liabilities of €54,000. It is therefore solvent. Workings for report

Assets Buildings €80,000 + Buses €74,000 + Equipment €40,000 + Debtors €8,000 + Cash €2,000 External Liabilities Wages due €5,000m + Creditors €2,000 + Bank overdraft €7,000 + 15-year loan €40,000

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1. Financial Consultants Ltd, Cork. 2. Solvency of Cork Bus Ltd 3. ______4. The Shareholders of Cork Bus Ltd, Cork. 5. I was asked by the shareholders to examine the solvency position of the company. I deducted the Total External Liabilities of the company from the Total Assets. My findings are as follows.

6. Cork Bus Ltd is solvent as its Total Assets of €204,000 exceeds its Total External Liabilities of €54,000. 7. I am available to discuss this report if required. 8. Mary Smyth. 9. Financial Consultant.

12.(a) (i) Overtrading means that a business is over-relying on current liabilities instead of obtaining additional capital. (ii) Solvent means having more assets than external liabilities. (b) Workings for report

Ratios Answers 2004 2005 Gross profit % 41.67% 54.90% Net profit % 20.83% 35.29% Return on capital employed % 19.23% 31.03% Acid test ratio 2 : 1 0.95 : 1

1. Management Consultants Ltd, Suspense Street, Waterford. 2. Report on the Performance of Bridge Ltd for years 2004 and 2005 3. ______4. The Directors of Bridge Ltd, Main Street, Cork.

5. I was asked by the shareholders to examine the performance of the company. I used a number of ratios. My findings are as follows.

6. On the profitability side, 2005 has been an improvement on 2004. Gross Profit % increased from 41.67% to 54.90%, which is an increase of 13.23%. Net Profit % increased from 20.83% to 35.29%, which is an increase of 14.46%. Return on Capital Employed increased from 19.23% to 31.03%, which is an increase of 11.8%. The Acid Test ratio however fell from 2 : 1 to 0.95 : 1. Although the company is very profitable, the liquidity position must be monitored. 7. I am available to discuss this report if required. 8. Kevin Scully. 9. Management Consultant.

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13.(a) A company would compare the interest paid on a long term loan with the return of Capital Employed because there is no point in paying more interest on a loan than the company is making from using the loan. If the loan cost 12% per year and the Return on Capital is 7%, then the company is paying 5% more on the loan than it is able to make from using the loan. (b) Workings for report

Ratios Answers 2005 2006 Gross profit % 48.48% 42.62% Net profit % 21.21% 14.75% Return on capital employed % 24.14% 12.86% Current ratio 2.6 : 1 1.35 : 1

1. Management Consultants Ltd, News Road, Wicklow. 2. Report on the Performance of Chess Ltd 3. ______4. The Directors of Chess Ltd, Main Street, Cork

5. I was asked by the directors to examine the performance of the company. I used a number of ratios. My findings are as follows. 6. There is a decrease in the level of profitability and liquidity in 2006. Gross Profit % fell from 48.48% to 42.62%, which is a decrease of 5.86%. Net Profit % decreased from 21.21% to 14.75%, which is a decrease of 6.46%. Return on Capital Employed decreased from 24.1% to 12.8%, a decrease of 11.29. Return is now less than the cost of the loan at 15%, which means the company is losing 2.15% on the loan. The Current Ratio decreased from 2.6 : 1 (greater than the recommended ratio of 2:1) to 1.35 : 1. This trend is worrying. 7. I am available to discuss this report if required. 8. George Lee. 9. Management Consultant.

Chapter 51 Club Accounts

Functions of Treasurer Explanation Collect membership Issue receipts and record membership received Make all club payments Write cheques and pay all club expenses Prepare accounts Prepare Income and Expenditure and Balance Sheet for club Report on clubs finances at AGM Inform members of the club's finances at the AGM

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2. Analysed Cash Book Date Details Total Subs Disco Lotto Date Details Total Rent Disco Lotto 2005 € € € € 2005 € € € € Balance Lotto 7/1 460 12/1 100 100 c/d prizes Subscrip- 8/1 65 65 14/1 Rent 55 55 tions Lotto Disco 9/1 170 170 15/1 20 20 tickets posters Disco Lotto 11/1 250 250 19/1 80 80 receipts prizes Subscrip- Lotto 13/1 85 85 26/1 150 150 tions prizes Lotto 17/1 135 135 27/1 DJ 120 120 tickets Lotto 24/1 190 190 28/1 Rent 55 55 tickets Disco 25/1 300 300 31/1 Balance 1,075 receipts

1,655 150 550 495 1,655 110 140 330

Balance 1/2 1,075 b/d

Analysed Cash Book Date Details Total Subs Disco Com. Date Details Total Wage Disco Com. 2005 € € € € 2005 € € € € Balance Competi- 1/5 225 5/5 25 25 b/d tion prizes Subscrip- 2/5 40 40 12/5 DJ 30 30 tions Competi- Caretak- 6/5 35 35 15/5 100 100 tion fees er’s wages Subscrip- Disco 14/5 65 65 16/5 10 10 tions posters Competi- 20/5 60 60 19/5 Prizes 45 45 tion fees Disco Caretak- 26/5 160 160 29/5 100 100 receipts er’s wages Balance 29/5 275 c/d 585 105 160 95 585 200 40 70 Balance 30/5 275 b/d

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Analysed Cash Book De- Total De- Ch. Total Dan- Date Subs. Bar Oth. Date Bar Trvl. Oth. tails Bank tails no Bank ce 2006 € € € € 2006 € € € € € Insur- 3/3 Grant 6,000 6,000 13/3 6 350 350 ance Bar Purch- 7/3 2,700 2,700 17/3 7 2,100 2,100 sales ases Loan Clean- 10/3 receiv- 10,000 10,000 23/3 8 130 130 ing ed

Sub- 19/3 scrip- 3,500 3,500 28/3 Travel 9 870 870 tions Bar Dance 26/3 1,780 1,780 31/3 10 320 320 sales exp. Dance Balan- 31/3 receip- 1,790 1,790 31/3 22,000 ce c/d ts 25,770 3,500 4,480 17,790 25,770 2,230 870 320 350 Balan- 1/4 22,000 ce b/d

5. Analysed Cash Book De- Total Ch. Total Dan- Date Subs. Bar Oth. Date Details Bar Trvl. Oth. tails Bank no Bank ce 2006 € € € € 2006 € € € € € Sub- Bar 8/4 scrip- 2,400 2,400 5/4 purch- 1 4,600 4,600 tions ases Dance Dance 10/4 recei- 3,750 3,750 14/4 exp- 2 750 750 pts enses Grant Adver- 26/4 receiv- 3,000 3,000 18/4 3 500 500 tising ed Bar Bar 29/4 2,100 2,100 21/4 expen- 4 980 980 sales ses Affilia- 28/4 5 450 450 tion 30/4 Travel 6 400 400 Clean- 30/4 7 100 100 ing Balan- 30/4 3,470 ce c/d 11,250 2,400 2,100 6,750 11,250 5,580 400 750 1,050 Balan- 1/5 3,470 ce c/d

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6. Analysed Cash Book Total Ch. Total Dan- Date Details Subs. Dance Oth. Date Details Ins. Oth. bank no. Bank ce

2006 € € € € 2006 € € € €

Balance Equip- 1/5 1,400 5/5 1 2,600 2,600 b/d ment Subscri- 3/5 3,800 3,800 7/5 Drinks 2 285 285 ptions Dance Loan 9/5 12,000 12,000 17/5 expen- 3 1,455 1,455 received ses Sale of Insur- 11/5 30,000 30,000 19/5 4 675 675 land ance Dance Affilia- 15/5 4,300 4,300 24/5 5 2,200 2,200 receipts tion Grant 31/5 7,000 7,000 27/5 ESB 6 430 430 received

50,855

Balan- 58,500 3,800 4,300 49,000 31/5 58,500 675 1,455 5,515 ce b/d Balance 1/6 50,855 b/d

7. Analysed Cash Book Detai- Total Dan- Ch. Total Dan- Date Subs. Oth. Date Details Ins. Oth. ls bank ce no. Bank ce 2006 € € € € 2006 € € € € Dance Balance 5/6 receip- 4,600 4,600 1/6 2,000 b/d ts Grant 8/6 receiv- 10,000 10,000 3/6 ESB 2 300 300 ed Sub- 10/6 scrip- 3,655 3,655 14/6 Minibus 3 11,300 11,300 tions

Lotto Dance 23/6 15,000 15,000 16/6 4 1,325 1,325 win expences

Spon- Equip- 29/6 sored 5,500 5,500 18/6 5 4,660 4,660 ment walk 26/6 Affiliation 6 1,700 1,700 30/6 Insurance 7 675 675 Balance 30/6 16,795 c/d

38,755 3,655 4,600 30,050 38,755 675 1,325 17,960

Balan- 1/7 16,795 ce b/d

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8. Receipts and Payments Account for year ended 30/4/2005 Date Details Total Bank Date Details Total Bank 2005 € 2005 € 1/5/04 Balance b/d 3,200 Raffle expenses 650 Subscriptions 4,500 Equipment 3,500 Grant 2,500 Insurance 1,440 Raffle receipts 1,565 Postage and stationery 1,565 Competition receipts 6,455 Rent 855 30/4 Balance c/d 10,210 18,220 18,220 1/5 Balance b/d 10,210

Income and Expenditure Account for year ended 30/4/2005 Income € € Subscriptions 4,500 Raffle profit (1,565 – 650) 915 Competition receipts 6,455 11,870 Less expenses Insurance 1,440 Postage and telephone 1,565 Rent 855 3,860 Surplus (excess income over expenditure) 8,010

9. Receipts and Payment Account for year ended 30/6/2006 Date Details Total Bank Date Details Total Bank 2005 € 2005 € Subscriptions 12,400 1/7 Balance 500 Dance receipts 3,500 Dance expenses 1,155 Sale of refreshments 6,895 Light and heat 1,890 Loan received 15,000 Travel 2,345 Loan repayment 5,000 Purchase of refreshments 2,565 30/6 Balance c/d 24,340 37,795 37,795 1/7 Balance b/d 24,340

Income and Expenditure Account for year ended 30/6/2005 Income € € Subscriptions 12,400 Profit on dance (3,500 – 1,155) 2,345 Profit on refreshments (6,895 – 2,565) 4,330 19,075 Less expenses Light and heat 1,890 Travel 2,345 4,235 Surplus (excess income over expenditure) 14,840

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Note to teachers: loan repayments are not revenue expenditure and are therefore not treated as an expense. If the exercise stated ‘loan interest’, then this would be treated as an expense. 10. Receipts and Payment Account for year ended 30/4/2006 Date Details Total Bank Date Details Total Bank 2005 € 2005 € 1/5 Balance b/d 1,400 Dance expenses 1,950 Dance receipts 5,605 Purchases of machinery 12,450 Membership fees 4,550 Insurance 2,450 Lotto win 50,000 Purchase of minibus 17,800 Sale of machinery 6,895 Light and heat 2,455 30/4 Balance c/d 28,545 67,050 67,050 1/5 Balance b/d 28,545

Income and Expenditure Account for year ended 30/4/2005 Income € € Profit on dance (5,605 – 1,950) 3,655 Membership fees 4,550 8,205 Less expenses Insurance 2,450 Light and heat 2,455 4,905 Surplus (excess income over expenditure) 3,300

11. Receipts and Payment Account for year ended 31/7/2005 Date Details Total Bank Date Details Total Bank 2005 € 2005 € 1/7 Balance b/d 650 Competition expenses 125 Subscriptions 26,865 Light and heat 1,670 Competition receipts 670 Caretaker's wages 10,900 Green fees 12,900 Purchase of roller 2,565 Rent of club car park 3,600 Telephone 4,500 30/6 Balance c/d 24,925 44,685 44,685 1/7 Balance b/d 24,925

Income and Expenditure Account for year ended 31/7/2005 Income € € Subscriptions 26,865 Profit on competition (670 – 125) 545 Green fees 12,900 Rent of club car park 3,600 43,910 Less expenses Light and heat 1,670 Caretakers wages 10,900 Telephone 4,500 17,070 Surplus (excess income over expenditure) 26,840

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12. Accumulated Fund Statement as on 1/1/2006 Assets € € Cash 300 Bank 2,000 Stock bar supplies 700 Clubhouse 80,000 83,000 Less liabilities Bank loan 40,000 Accumulated fund 43,000

13. Accumulated Fund Statement as on 1/1/2006 Assets € € Buildings 200,000 Equipment 75,000 Cash 900 275,900 Less liabilities Bank overdraft 2,600 Bank loan 60,000 62,600 Accumulated fund 213,300

14.

Balance Sheet as on 31/8/2006 € € € Fixed assets Cost NBV Premises and track 90,000 90,000 Equipment 4,500 4,500 Minibus 18,300 18,300 Total fixed assets 112,800 112,800 Current assets Cash 200 Less current liabilities Bank overdraft 2,000 Working capital (1,800) Total net assets 111,000 Financed by Accumulated fund 65,000 Long-term liabilities Bank loan 46,000 Capital employed 111,000

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15. Balance Sheet of Athenry Gun Club as on 31/12/2005 € € € Fixed assets Cost NBV Buildings 50,000 50,000 Equipment 3,200 3,200 Total fixed assets 53,200 53,200 Current assets Cash 25 Bank 1,700 Stock of rain gear 400 2,125 Less current liabilities 0000 Working capital 2,125 Total net assets 55,325 Financed by Accumulated fund 33,325 Long-term liabilities Bank loan 22,000 Capital employed 55,325

16.

1. Financial Consultants Ltd, Euro Avenue, Cavan. 2. Report on ways of raising finance for new den 3. ______4. The Members of Cavan Girl Guides, Main Street, Cavan.

5. I was asked by the members for advice on methods of raising €70,000 for a new den. I researched different methods. My findings are as follows.

6. €70,000 is a substantial amount of money to raise and will require a number of methods. Here are some suggestions: • Apply to the government for Lotto funds; • Look for local sponsorship; • Organise a Ms and Mr Cavan Festival; • Organise a Cavan mini-marathon with the help of Caterina McKiernan; • Organise some discos or other social events. 7. I am available to discuss this report if required. 8. Margaret Murray. 9. Financial Consultant.

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17.

1. Disco Consultants Ltd, Roscrea, Co. Tipperary. 2. Report on the organisation of a disco 3. ______4. The Members of Roscrea Youth Club, Roscrea, Co. Tipperary. 5. I was asked by the members to outline how to organise a disco to raise club funds. I contacted a number of clubs and I outline my findings below. 6. Organising a disco is time-consuming and requires many helpers. The following factors have to be considered: • Selection of a venue; • Have adults available to assist; • Purchase insurance; • Hire a DJ and bouncers; • Advertise the disco; • Get tickets printed. The following are some of the expenses that the club may have: • Wages of bouncers; • Insurance premium; • Hire of hall; • Cost of tickets; • Cost of DJ; • Cost of advertising. The entrance fee will depend on the number that might attend, the costs involved and the profit you want to make. E.g. if the attendance will be 400, charge between €8 and €10. 7. I am available to discuss this report if required. 8. John Murphy. 9. Disco Consultant.

18.(a)

Analysed Cash Book (Debit Side) Date Details Total Bank Membership Fees Games Receipts Collection 2001 € € € € 15/2 Membership fees 1,500 1,500 19/3 Gate receipts 516 516 21/6 Church collection 2,347 2,347 15/8 Membership fees 500 500 19/10 Gate receipts 1,200 1,200 10/12 Flag day 849 849 6,912 2,000 1,716 3,196

1/1/02 Balance b/d 888

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Analysed Cash Book (Credit Side) Date Details Ch. no. Total Bank Travel Insurance Equipment Wages 2001 € € € € € 1/1 Balance b/d 781 8/1 Calidonian Ltd 70 1,648 1,648 7/3 Sportswear Ltd 71 700 700 13/4 Caretaker 72 240 240 9/3 Bus Éireann 73 325 325 4/7 Hurleys 74 470 470 3/9 Cleaner 75 160 160 6/11 Bus Éireann 76 1,700 1,700 31/12 Balance c/d 888 6,912 2,025 1,648 1,170 400

(b)

Receipts and Payment Account for year ended 31/12/2001 Date Details Date Details 2001 € 2001 € Membership fees 2,000 1/1 Balance b/d 781 Game receipts 1,716 Travel 2,025 Collection 3,196 Insurance 1,658 Equipment 1,170 Wages 400 31/12 Balance c/d 888 2002 6,912 6,912 1/1 Balance b/d 888

(c) (i) Treasurer. (ii) Receipts and Payments Account; Income and Expenditure Account; Balance Sheet. Chapter 52 Club Accounts with Adjustments

Bar Trading Account for year ending 31/12/2006 € € Bar sales 58,000 Less cost of sales Opening stock 1/1/2006 6,000 Bar purchases 16,000 22,000 Less closing stock 4,000 18,000 Gross profit 40,000 Less bar wages 7,000 Bar net profit (add to income in the I & E account) 33,000

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2. Canteen Trading Account for year ending 30/6/2006 € € Sales 42,000 Less cost of sales Opening stock 1/7/05 2,000 Canteen purchases 20,000 22,000 Less closing stock 3,000 19,000 Gross profit 23,000 Less canteen wages 17,000 Add wages due 2,000 19,000 Canteen net profit (add to income in I & E account) 4,000 3. Disco Account for year ending 31/12/2006 € € € Disco receipts 700 Less expenses Hire of hall 200 DJ 250 Add due to DJ 50 300 Tickets 100 Insurance 140 Less prepaid 50 90 Advertising 120 Add advertising due 40 160 850 Loss on disco (add to expenditure in I & E account) (150) 4. (a) Accumulated Fund Statement as on 1/3/2005 Assets € € Clubhouse 70,000 Equipment 5,000 Bank 1,700 76,700 Less liabilities 000000 Accumulated fund 76,700

Income and Expenditure Account for year ending 28/2/2006 Income € € Subscriptions (1,900 + 1,700) 3,600 Profit on dinner dance (3,400 – 2,500) 900 4,500 Less expenses Loss on light and heat (4,300 – 2,400) 1,900 Cleaner’s wages 4,500 Travel 950 Insurance (1,700 – 300) 1,400 Playing gear 400 Prizes 600 Depreciation of equipment 600 10,350 Deficit (excess expenditure over income) (5,850)

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Balance Sheet as on 28/2/2006 € € € Fixed assets Cost Depreciation NBV Clubhouse 70,000 70,000 Equipment 5,000 600 4,400 Total fixed assets 75,000 600 74,400 Current assets Bank (receipts + opening bank balance – payments) 450 Insurance prepaid 300 Subscriptions due 1,700 2,450 Less current liabilities 0000 Working capital 2,450 Total net assets 76,850 Financed by Accumulated fund 76,700 Less deficit (5,850) 70,850 Add Lottery grant 6,000 Capital employed 76,850

(b) 1. Membership Consultant, Mullingar, Co. Westmeath. 2. Report on members not paying membership 3. ______4. Members of Leinster Ladies Squash Club, Mullingar, Co. Westmeath. 5. I was asked by the members to report on the problem of members not paying their subscriptions. I contacted different clubs to see how they deal with this situation. My findings are as follows. 6. The club can do one or other of the following to improve the situation: • Impose a levy on members; • Ban members who are behind in membership payments, from playing; • Set clear deadlines for payment each year; • Non-paid up members have no vote at meetings; • Appoint a new treasurer. 7. I am available to discuss this report if required. 8. Sarah Walshe. 9. Membership Consultant.

5. (i) Accumulated Fund Statement as on 1/5/2004 Assets € € Land and buildings 140,000 Equipment 1,600 Bar stock 3,000 Bank 4,000 148,600 Less liabilities Bank loan 50,000 Accumulated fund 98,600

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(ii) Bar Trading Account for year ending 30/4/2005 € € Bar sales 57,000 Less cost of sales Opening stock 1/5/2004 3,000 Bar purchases 29,000 32,000 Less closing stock 9,000 23,000 Gross profit 34,000 Less expenses Bar wages (5,500 + 500) 6,000 Bar net profit (add to income in I & E account) 28,000

(iii) Income and Expenditure for year ending 30/4/2005 Income € € Bar net profit 28,000 Subscriptions (6,000 + 300 – 900) 5,400 Profit on disco (17,000 – 9,000) 8,000 41,400 Less expenditure Insurance 1,800 Travel 3,600 5,400 Surplus (excess income over expenditure) 36,000

(iv)

Balance Sheet as on 30/4/2005 € € € Fixed assets Cost Depreciation NBV Land and buildings 140,000 140,000 Equipment 1,600 1,600 Total fixed assets 141,600 141,600 Current assets Bank 35,100 Bar closing stock 9,000 Subscriptions due 300 44,400 Less current liabilities Subscriptions prepaid 900 Wages due 500 1,400 Working capital 43,000 Total net assets 184,600 Financed by Accumulated fund 98,600 Add surplus 36,000 134,600 Long-term liabilities Long-term loan 50,000 Capital employed 185,600

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6. Income and Expenditure Account for year ending 30/11/2004 Income € € € Subscriptions (17,000 + 6,000 – 100) 22,900 Dance profits 6,000 28,900 Less expenditure Insurance 950 Rent 3,000 Light and heat (2,800 + 250) 3,050 Stationery (1,500 – 300) 1,200 Depreciation: Equipment 2,160 Minibus 2,700 4,860 13,060 Surplus (excess of income over expenditure) 15,840

Balance Sheet as on 30/11/2004 € € € Fixed assets Cost Depreciation NBV Equipment 18,000 2,160 15,840 Minibus 18,000 2,700 15,300 Total net assets 36,000 4,860 31,140 Current assets Cash 200 Subscriptions due 6,000 Stationery 300 6,500 Less current liabilities Subscriptions prepaid 100 Light and heat due 250 Bank overdraft 2,500 2,850 Working capital 3,650 Total net assets 34,790 Financed by Accumulated fund 18,950 Add surplus 15,840 Capital employed 34,790

7. Income and Expenditure Account for year ended 31/12/2005 Income € € € Raffle income 7,198 Subscriptions (9,300 – 800) 8,500 Dance income (6,430 + 860) 7,290 22,988 Less expenditure Wages 12,500 Telephone (635 + 147) 782 Catering 2,466 Insurance 2,700 Light 1,597 Depreciation: Premises 800 20,845 Surplus (excess of income over expenditure) 2,143

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Chapter 53 Farm Accounts

1. Analysed Cash Book (Debit Side) p1 Date Details Total Bank Milk Cattle Other 2006 € € € € 1/5 Balance b/d 750 3/5 Milk receipts 900 900 8/5 Cattle sales 1,900 1,900 16/5 EU grant 7,000 7,000 10,550 900 1,900 7,000 1/6 Balance b/d 2,200

Analysed Cash Book (Credit Side) p1 Date Details Ch. Total Electr. Fertilisers Tractor Livest. Other no. Bank 2006 € € € € € € 5/5 Electricity 4 250 250 7/5 Tractor diesel 5 400 400 9/5 Wages 6 200 200 14/5 Fertiliser 7 600 600 18/5 Builder 8 5,000 5,000 24/5 IFA membership 9 80 80 29/5 Calves 10 1,200 1,200 29/5 Seeds 11 300 300 30/5 Wages 12 200 200 31/5 Tractor repairs 13 120 120 31/5 Balance c/d 2,200 10,550 250 600 520 1,200 5,780

2. Analysed Cash Book (Debit Side) p1 Date Details Total Bank Livestock Grants/Loans Other 2006 € € € € 1/9 Balance b/d 1,300 1/9 Sale of cattle 1,600 1,600 7/9 Sale of hay 300 300 15/9 Loan 12,000 12,000 19/9 EU grant 8,000 8,000 30/9 Balance c/d 1,530 24,730 1,600 20,000 300

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Analysed Cash Book (Credit Side) p1 Ch. Total Date Details Electricity Feeds Drawings Livestock Other no. Bank 2006 € € € € € € 1/9 Purchase of calves 16 800 800 5/9 Feedstuff 17 280 280 5/9 Fertiliser 17 550 550 7/9 Silage contractor 18 800 800 9/9 Electricity 19 180 180 9/9 Telephone 20 240 240 15/9 Fencing 21 140 140 19/9 Land reclamation 22 20,000 20,000 22/9 Drawings 700 700 22/9 Insurance 23 500 500 26/9 Vet 24 70 70 26/9 Diesel 25 320 320 26/9 Interest on loan 150 150 24,730 180 280 700 800 22,770 30/9 Balance b/d 1,530

3. Ordinary Level Income and Expenditure Account of Farmer Conway for year ended 31/12/2005 Income € € Milk 45,000 Cattle 25,000 Sheep 9,000 79,000 Less expenditure Wages 14,500 Light and heat 3,500 Rent 2,750 Tractor repairs 1,950 Fertiliser and seed 2,670 Silage contractor 6,500 Insurance 1,750 33,620 Surplus (excess of income over expenditure) 45,380

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Higher Level Income and Expenditure Account of Farmer Conway for year ended 31/12/2005 Income € € Milk 45,000 Cattle 25,000 Sheep 9,000 79,000 Less expenditure Wages 14,500 Light and heat (3,500 + 500) 4,000 Rent 2,750 Tractor repairs 1,950 Fertiliser and seed (2,670 – 230) 2,440 Silage contractor 6,500 Insurance 1,750 Depreciation: Tractor 3,200 37,090 Surplus (excess of income over expenditure) 41,910

4. Ordinary Level Income and Expenditure Account of Farmer Campbell for year ended 31/12/2005 Income € € Cattle 38,500 Crops 17,500 Pigs 8,500 64,500 Less expenditure Fertiliser and seed 7,400 Repairs to machinery 3,100 Wages 17,400 Vet fees 1,950 Bank interest 1,900 Light and telephone 4,200 Insurance 2,400 38,350 Surplus (excess of income over expenditure) 26,150

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Higher Level Income and Expenditure Account of Farmer Campbell for year ended 31/12/2005 Income € € Cattle 38,500 Crops 17,500 Pigs 8,500 64,500 Less expenditure Fertiliser and seed 7,400 Repairs to machinery 3,100 Wages (17,400 + 1,600) 19,000 Vet fees 1,950 Bank interest 1,900 Light and telephone 4,200 Insurance (2,400 – 600) 1,800 Depreciation: Equipment 1,500 40,850 Surplus (excess of income over expenditure) 23,650

5. Ordinary Level Income and Expenditure Account of Farmer Ward for year ended 31/5/2006 Income € € Crops 36,800 Interest on deposit account 2,500 Poultry 13,900 53,200 Less expenditure Repairs 3,400 Wages 14,600 Fertiliser 2,785 Telephone 1,895 Packaging 5,675 28,355 Surplus (excess of income over expenditure) 24,845

Higher Level Income and Expenditure Account of Farmer Ward for year ended 31/5/2006 Income € € Crops 36,800 Interest on deposit account 2,500 Poultry 13,900 53,200 Less expenditure Repairs 3,400 Wages (14,600 + 1,400) 16,000 Fertiliser 2,785 Telephone 1,895 Packaging (5,675 – 900) 4,775 Depreciation: Equipment 1,400 30,255 Surplus (excess of income over expenditure) 22,945

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6. Ordinary Level Income and Expenditure Account of Farmer Slevin for year ended 31/5/2006 Income € € Cattle 45,000 Milk 29,000 Sheep 13,455 87,455 Less expenditure Loan interest 5,000 Feed 3,900 Transport 6,500 Insurance 2,765 Light and heat 4,300 22,465 Surplus (excess of income over expenditure) 64,990

Higher Level Income and Expenditure Account of Farmer Slevin for year ended 31/5/2006 Income € € Cattle 45,000 Milk 29,000 Sheep 13,455 87,455 Less expenditure Loan interest (5,000 + 700) 5,700 Feed 3,900 Transport 6,500 Insurance (2,765 – 500) 3,265 Light and heat 4,300 Depreciation: Tractor 1,900 25,565 Surplus (excess of income over expenditure) 61,890

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Note: EU grant is treated as annual income. 7.

Income and Expenditure Account of Farmer J. Flood for year ending 31/12/2006 Ordinary Level Higher Level Income € € Income € € Sale of cattle 45,600 Sale of cattle 45,600 Sale of milk 67,800 Sale of milk 67,800 EU grant 20,000 EU grant 20,000 133,400 133,400 Less expenditure Less expenditure Wages 13,400 Wages 13,400 Light and heat 3,600 Light and heat 3,600 Feed 7,800 Feed (7,800 – 2,200) 5,600 Loan interest 4,500 Loan interest (4,500 + 1,000) 5,500 Repairs 3,200 32,500 Repairs 3,200 Depreciation: Machinery 6,576 37,876 Surplus (excess of Surplus (excess of income 100,900 95,524 income over expenditure) over expenditure)

Balance Sheet of Farmer J. Flood as on 31/12/2006 Ordinary Level Higher Level Fixed assets Cost € NBV € Fixed assets Cost € Depr. € NBV € Land and buildings 185,000 185,000 Land and buildings 185,000 ------185,000 Machinery 54,800 54,800 Machinery 54,800 6,576 48,224 239,800 239,800 239,800 6,576 233,224 Current assets Current assets Cash 1,200 Cash 1,200 Stock of feed on hand 2,200 3,400 Less current liabilities ------Less current liabilities Loan interest due 1,000 Working capital 1,200 Working capital 2,400 Total net assets 241,000 Total net assets 235,624 Financed by Financed by Capital 85,100 Capital 85,100 Add surplus 100,900 186,000 Add surplus 95,524 180,624 Long-term liabilities Long-term liabilities 20-year loan 55,000 20-year loan 55,000 Capital employed 241,000 Capital employed 235,624

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8. Income and Expenditure Account of Farmer J. Flood for year ending 31/12/2006 Ordinary Level Higher Level Income € € Income € € Sale of sheep 14,500 Sale of sheep 14,500 Sale of cattle 67,900 Sale of cattle 67,900 REP grant 10,000 REP grant 10,000 92,400 92,400 Less expenditure Less expenditure Contractors fees 6,500 Contractors fees 6,500 Wages 14,300 Wages (14,300 + 700) 15,000 Loan interest 3,600 Loan interest 3,600 Insurance 3,200 Insurance (3,200 – 400) 2,800 Feed and fertiliser 13,300 40,900 Feed and fertiliser 13,300 Depreciation 3,450 44,650 Surplus (excess of Surplus (excess of 51,500 47,750 income over expenditure income over expenditure)

Balance Sheet of Farmer B. Hay as on 31/12/2006 Ordinary Level Higher Level Fixed assets Cost € NBV € Fixed assets Cost € Depr. € NBV € Land and buildings 245,000 245,000 Land and buildings 245,000 245,000 Tractor 23,000 23,000 Tractor 23,000 3,450 19,550 268,000 268,000 268,000 3,450 264,550 Current assets Current assets Bank 12,000 Bank 12,000 Insurance prepaid 400 12,400 Less current liabilities ------Less current liabilities Wages due 700 Working capital 12,000 Working capital 11,700 Total net assets 280,000 Total net assets 276,250 Financed by Financed by Capital 188,500 Capital 188,500 Add surplus 51,500 240,000 Add surplus 47,750 236,250 Long-term liabilities Long-term liabilities 10-year loan 40,000 10 year loan 40,000 Capital employed 280,000 Capital employed 276,250

172 Junior Certificate Business Studies Textbook Teacher’s Manual Chapter 54 Service Firms

1. Analysed Cash Book of Quinn’s Travel (Debit Side) p1 Date Details F Rec. no. Total Ireland EU Rest of Bank world 2006 € € € € 1/5 Balance 20 2/5 Holidays in France GL 1 1,600 1,600 4/5 Holidays in Russia GL 2 3,000 3,000 12/5 Holiday in Kerry GL 3 700 700 16/5 Holidays in USA GL 4 2,800 2,800 24/5 Holidays in Greece GL 5 2,000 2,000 10,120 700 3,600 5,800 31/5 Balance b/d 8,525 Analysed Cash Book of Quinn’s Travel (Credit Side) p1 Date Details F Ch. Total Wages L&H Teleph. Advert. Other no. Bank 2006 € € € € € € 7/5 Advertising GL 75 300 300 18/5 Electricity GL 76 180 180 21/5 Telephone GL 77 600 600 28/5 Wages GL 78 500 500 30/5 Window cleaner GL 79 15 15 30/5 Balance c/d 8,525 10,120 500 180 600 300 15

Analysed Cash Book of Insure all (Debit Side) p1 Date Details F Rec. Total Life Car House Business no. Bank 2006 € € € € € 4/6 House insurance GL 5 140 140 6/6 Car insurance GL 6 500 500 9/6 Bar insurance GL 7 550 550 16/6 House insurance GL 8 160 160 22/6 Life assurance GL 9 50 50 26/6 Life assurance GL 10 300 300 1,700 350 500 300 550 27/6 Balance b/d 1,035

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Analysed Cash Book of Insure all (Credit Side) p1 Date Details F Ch. Total Wages Rent Telepho Station- no. Bank ne ery 2006 € € € € € 3/6 Rent GL 50 160 160 6/6 Wages GL 51 200 200 12/6 Eircom GL 52 230 230 18/6 Office stationery GL 53 75 75 26/6 Balance c/d 1,035 1,700 200 160 230 75

3. Analysed Cash Book of Spring Cleaners (Debit Side) p1 Date Details F Rec. no. Total Bank Households Business 2007 € € € 1/7 Balance b/d 50 4/7 Window cleaning DL 1 160 160 5/7 Butler Ltd DL 2 120 120 11/7 Willis Oil Ltd DL 3 350 350 24/7 Dunnes Stores DL 4 400 400 27/7 Mrs Kane DL 5 60 60 1,140 320 870 28/7 Balance b/d 40

Analysed Cash Book of Spring Cleaners (Credit Side) p1 Date Details F Ch. no. Total Wages Equipment Transport Bank 2007 € € € € 6/7 Petrol GL 89 40 40 10/7 Ladders GL 90 240 240 14/7 Wages GL 91 180 180 18/7 Vacuum cleaner GL 92 280 280 21/7 Car insurance GL 93 360 360 27/7 Balance c/d 40 1,140 180 520 400

4. Analysed Cash Book of ‘Big T’Taxi (Debit Side) p1 Date Details F Rec. no. Total Bank Routine Weddings HSE 2008 € € € € 1/4 Routine hire GL 1 700 700 3/4 Routine hire GL 2 580 580 4/4 Wedding hire GL 3 420 420 9/4 HSE GL 4 400 400 16/4 HSE GL 5 600 600 29/4 Wedding hire GL 6 340 340 3,040 1,280 760 1,000 1/5 Balance b/d 740

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Analysed Cash Book of ‘Big T’Taxi (Credit Side) p1 Date Details F Ch. no. Total Bank Wages Transport 2008 € € € 7/4 Wages GL 60 600 600 12/4 Car taxes GL 61 900 900 18/4 Car service GL 62 200 200 30/4 Wages GL 63 600 600 30/4 Balance c/d 740 3,040 1,200 1,100

5. Income and Expenditure Account for year ended 31/5/2006 Income Sales income 65,000 Less expenditure Wages 13,400 Telephone 4,500 17,900 Surplus (net profit) 47,100

Balance Sheet as on 31/5/2006 Fixed assets Cost € Depreciation € NBV € Buildings 98,000 ------98,000 Machinery 45,000 ------45,000 Total fixed assets 143,000 ------143,000 Current assets Cash 3,600 Debtors 14,600 18,200 Less current liabilities Bank overdraft 5,600 Working capital 12,600 Total net assets 155,600 Financed by Share capital 83,500 Add surplus 47,100 130,600 Long-term liabilities 15-year loan 25,000 Capital employed 155,600

6. Income and Expenditure Account for year ended 31/7/2006 Income € € Fees earned 75,900 Commission receivable 12,500 88,400 Less expenditure Insurance 4,300 Rent 6,600 10,900 Surplus (net profit) 77,500

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Balance Sheet as on 31/7/2006 Fixed assets Cost € Depreciation € NBV € Equipment 34,500 ------34,500 Vans 84,500 ------84,500 Total fixed assets 119,000 ------119,000 Current assets Cash 2,940 Less current liabilities Bank overdraft 3,300 Creditors 11,340 14,640 Working capital (11,700) Total net assets 107,300 Financed by Share capital 29,800 Add surplus 77,500 Capital employed 107,300

7. Income and Expenditure Account for year ended 31/12/2006 Income Income from fees 55,000 Commissionable receivable 21,000 76,000 Less expenditure Wages 17,500 Rent 12,000 Insurance 2,400 31,900 Surplus (net profit) 44,100

Balance Sheet as on 31/12/2006 Fixed assets Cost € Depreciation € NBV € Delivery vans 65,000 ------65,000 Total fixed assets 65,000 ------65,000 Current assets Cash 3,400 Bank 34,500 Debtors 14,500 52,400 Less current liabilities ------Working capital 52,400 Total net assets 117,400 Financed by Share capital 43,300 Add surplus 44,100 87,400 Long-term liabilities 10-year loan 30,000 Capital employed 117,400

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8. Income and Expenditure Account for year ended 31/5/2006 Income € € Sale of services 98,600 Interest receivable 3,400 102,000 Less expenditure Wages 23,400 Advertising 6,500 Light and heat 6,700 36,600 Surplus (net profit) 65,400

Balance Sheet as on 31/5/2006 Fixed assets Cost € Depreciation € NBV € Buildings 120,000 ------120,000 Machinery 68,000 ------68,000 Total fixed assets 188,000 ------188,000 Current assets Bank 12,400 Debtors 13,500 25,900 Less current liabilities Creditors 19,000 Working capital 6,900 Total net assets 194,900 Financed by Share capital 129,500 Add surplus 65,400 194,900

Chapter 55 Information Technology

1. Software Programs Explanation This program allows the user to type letter/reports, make corrections on Word processing screen before printing them or sending them by email. This program allows the user perform mathematical calculations, keep Spreadsheet financial records and prepare budgets. This is a computerised filing system. It allows the user keep computerised Database records, which can be sorted and linked to letters. Computer Aided This program allows the user produce drawings and plans for designing Design houses, equipment clothes etc.

2. Computers are used in the home to: Send messages via the internet; purchase items like travel tickets via the internet; keep files on education results and medical records, prepare CVs; operate alarms. Computers are used in business to: Send messages to customers and suppliers; advertise via the internet; monitor and order stock; keep employee records; prepare accounts and cash budgets; operate alarms and machinery; design and manufacture goods.

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3. Computers are used in banks to: Send messages to customers; lodge and withdraw money; prepare statements of banking records; keep customer files; prepare accounts and cash budgets; advertise. Computers are used in communications to: Enable people/businesses to contact each other via the internet; provide up-to-the- minute information on what is happening around the world, by publishing news bulletins on the internet. 4. Some factors to be considered when purchasing a computer system for a household/ business are: Is it necessary? What is the intended use of the computer? Is the size of memory important? How much does it cost? Is it complicated to use? Additional points for businesses include: Do the workers need training to use the new system? Will workers be replaced by the computer?

5. General Ledger Date Details F Total Date Details F Total 2006 € 2006 € Computer A/C (p1) 1/2 Bank ACB 8,500

Bank A/C (p2) 1/2 Computer GL 8,500

6. General Ledger Date Details F Total Date Details F Total 2006 € 2006 € Computer A/C (p1) 1/7 Bank ACB 7,700

Bank A/C ( p2) 1/7 Computer GL 7,700

7. General Journal (p1) Date Details F Dr Cr 2006 € € 1/9 Computer GL 11,400 MBI Ltd CL 11,400 Purchase of computer on credit

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Date Details F Total Date Details F Total 2006 € 2006 € General Ledger Computer A/C (p1) 1/9 MBI Ltd GJ 11,400

Creditors Ledger MBI LTD A/C (p2) 1/9 Computer GJ 11,400

8. (a) P = Monitor (VDU); Q = Scanner; R = Keyboard; S = Mouse; T = Central Processing Unit (CPU). (b) (i) Hard disk = a permanent internal storage disk in the computer. (ii) Modem = a device which enables one computer communicate with another computer via the telephone line. (iii) Hard copy = a computer printout on paper. (iv) Networking = linking computers within an organisation together. (c) (i) Will she have use for it; will her staff require training; size of RAM (memory); is it upgradeable. (ii) The purpose of the loan; capacity to repay the loan; security available in the event that the loan is not repaid; credit-worthiness of the borrower. 9. (a) (i) Prepare accounts for their business, keep control of stock, design notices for their discos. (ii) Philip can do research, download notes from his lecturers, type his assignments. (iii) Send messages via the internet; purchase items like travel tickets via the internet; keep files on education results and medical records, prepare CVs; operate alarms etc. (b) Monitor: This displays the work of the computer to the user. Megabytes: The size of the computer memory is stated in megabytes. The greater the number of megabytes, the bigger the memory. Keyboard: This is an input device that allows the user enter (type in) instructions into the computer. Mouse: This is a hand-operated electronic device that controls the movement of the cursor (pointer) on the computer screen. Word processing: This is a computer program which allows the user type letter/reports, make corrections on screen before printing them or sending them by email. Database: This is a computer program which acts as a computerised filing system. It allows the user keep computerised records, which can be sorted and linked to letters.

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Junior Certificate Business Studies for Households and Enterprises WORKBOOK TEACHER’S MANUAL

Matt Hynes

ISBN 1-84131-703-9 Folens Publishers, Hibernian Industrial Estate, Greenhills Road, Tallaght, Dublin 24.

Editor: Fiona Dunne Design and Layout: Compuscript Produced in Ireland by Folens Publishers

The publisher reserves the right to change, without notice, at any time the specification of this product.

FOLENS Junior Certificate Business Studies Workbook Teacher’s Manual

Chapter 1 Communication 1. Tick the most appropriate box to show which of the following methods of communication are internal or external means of communication. Methods of Communication Internal External Letter Memo Notice Board Staff Meeting

2. Complete the sentences below showing which of the following methods of communication are oral, written or visual. (i) A memo is a form of written communication. (ii) The intercom is a form of oral communication. (iii) An e-mail is a form of written communication. (iv) A chart is a form of visual communication. (v) A report is a form of written communication. (vi) A notice board is a form of written communication. (vii) A committee meeting is a form of oral communication. Chapter 2 Communications in Action 1. Place the following customers’ names in alphabetical order: Malcolm Reilly; Mary Roche; Graham Reilly; Peggy Rafter. (a) Peggy Rafter (b) Graham Reilly (c) Malcolm Reilly (d) Mary Roche 2. Place the following customers’ names in alphabetical order: Stephen Kelly; Sean Kirwan; Shane Victory; James Mulligan. (a) Stephen Kelly (b) Sean Kirwan (c) James Mulligan (d) Shane Victory 3. Place the following customers’ names in alphabetical order: Mary Mahon; Mona Campbell; Nora Kennedy; Deirdre Warde. (a) Mona Campbell (b) Nora Kennedy (c) Mary Mahon (d) Deirdre Warde 4. (a) Complete the memo, dated 2 September 2005, sent by the PE teacher Ms V. Fit to your Business Studies teacher Mr Money to remind his class that athletics trials will take place in the sports field at 12.30 pm on 10 September 2005. Assume you are Ms V. Fit. Memo To: Mr Money, Business Studies Teacher From: Ms V Fit, PE Teacher Date: 2 September 2005 Subject: Athletic Trials Message: Trials will take place in the sports field at 12.30 pm on 10 September 2005

Signed: V. Fit

(b) A memo is a form of written communication.

182 Junior Certificate Business Studies Workbook Teacher’s Manual 5. Complete the memo, on today’s date, that your IT teacher might send to your Business Studies teacher regarding the use of the computer room at lunchtime. The computer room is available to the Business Studies class from 12.30 pm to 1 pm on Monday and Wednesday. Memo To: Ms Fiona Dunne, Business Studies Teacher From: Mr William Web, IT Teacher Date: Subject: Use of Computer Room Message: The computer room is available to the Business Studies class from 12.30 pm to 1 pm on Monday and Wednesday Signed: William Web

Additional memo for practice. Memo To: From: Date: Subject: Message:

Signed:

6. Complete the notice of meeting for the Mullingar Golf Club AGM which will be held in the clubhouse at 3.30 pm on 20 November 2006.

Notice of Meeting Notice is hereby given that the AGM of Mullingar Golf Club , will take place in the club house , at 3.30 pm on the 20 November 2006 . All members are welcome to attend.

Chapter 3 Introduction to Record Keeping In questions 1 to 4 you are required to complete the sentences by inserting the correct words. 1. Money received is entered on the ______debit side of the Cash Account. 2. Money paid out is entered on the ______credit side of the Cash Account. 3. The details column shows who gave you the money or who you gave the money to. 4. The date column should show the ______day , ______month and year. 5. Group the words below under Left Hand Side or Right Hand Side of the Cash Account: In; Out; Give; Receive; Debit Side; Balance; Credit Side. One word does not belong. Cash Account Left Hand Side Right Hand Side 1. In 1. Out 2. Receive 2. Give 3. Debit side 3. Credit side

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6. Balance the following Cash Account and bring down the balance to the next day. Cash Account Date Details Total Date Details Total € € 2006 2006 1/1/ Balance b/d 230 2/1/ New bicycle 212 3/1/ Pocket money 65 5/1/ Mobile phone credit 30 5/1/ Balance c/d 53 295 295

6/1/ Balance b/d 53 7. Balance the following Cash Account and bring down the balance to the next day. Cash Account Date Details Total Date Details Total € € 2007 2007 1/4/ Balance b/d 195 3/4/ CDs 45 6/4/ Part-time work 120 9/4/ New shoes 97 9/4/ Balance c/d 173 315 315 10/4/ Balance b/d 173

8. Balance the following Cash Account and bring down the balance to the next day. Cash Account Date Details Total Date Details Total € € 2008 2008 1/7/ Balance b/d 13 1/7/ Mobile phone credit 10 7/7/ Pocket money 142 8/7/ New clothes 143 8/7/ Balance c/d 2 155 155 9/7/ Balance b/d 2

9. (a) Record the following details in the blank Cash Account below: 2006 € 1/1/ Received pocket money 25 6/1/ Won raffle prize 200 7/1/ Paid for new trainers 70 8/1/ Paid for lunch 8 (b)Balance the Cash Account on 8 January 2006. Cash Account Date Details Total Date Details Total € € 2006 2006 1/1/ Pocket money 25 7/1/ Trainers 70 Raffle prize 200 8/1/ Lunch 8 8/1/ Balance c/d 147 225 225 9/1/ Balance b/d 147

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10. (a) Record the following details in the blank Cash Account below: 2007 € 1/4/ Received pocket money 10 2/4/ Received wages from part-time job 60 4/4/ Paid for school trip 30 7/4/ Paid for cinema 12 (b)Balance the Cash Account on 7 April 2007. Cash Account Date Details Total Date Details Total € € 2007 2007 1/4/ Pocket money 10 4/4/ School trip 30 2/4/ Wages 60 7/4/ Cinema 12 7/4/ Balance c/d 28 70 70 8/4/ Balance b/d 28 11. (a) Record the following details in the blank Cash Account below: 2008 € 1/5/ Cash on hand (balance) 45 3/5/ Received wages from part-time job 100 5/5/ Paid for cosmetics 34 9/5/ Paid hairdresser 43 (b)Balance the Cash Account on 9 May 2008. Cash Account Date Details Total Date Details Total € € 2008 2008 1/5/ Balance b/d 45 5/5/ Cosmetics 34 3/5/ Wages 100 9/5/ Hairdresser 43 9/5/ Balance c/d 68 145 145 10/5/ Balance b/d 68

Chapter 4 Household Accounts 1. Total the Analysed Columns and balance the Cash and Bank columns and bring down the balances on 8 January 2006. Analysed Cash Book Date Details Cash Bank Date Details Cash Bank HK L & H Other 2006 2006 1/1/ Balance b/d 20 200 3/1/ ESB 300 300 5/1/ Child Ben. 260 5/1/ Groceries 160 160 8/1/ Wages 700 8/1/ Car tax 450 450

8/1/ Balance c/d 120 150 280 900 280 900 160 300 450 9/1/ Balance b/d 120 150

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3. Total the Analysed Columns and balance the Cash and Bank columns and bring down the balances on 7 February 2007. Analysed Cash Book Date Details Cash Bank Date Details Cash Bank HK Car 2007 2007 1/2/ Balance b/d 90 1/2/ Balance b/d 200 2/2/ Child Ben. 390 2/2/ Groceries 190 190 7/2/ Wages 1,900 5/2/ Car Insurance 600 600 7/2/ New tyres 300 300 190 1,100 190 900 7/2/ Balance c/d 290 800 480 1,900 480 1,900

8/2/ Balance b/d 290 800

4. Total the Analysed Columns and balance the Cash and Bank columns and bring down the balances on 7 April 2008. Analysed Cash Book Date Details Cash Bank Date Details Cash Bank HK School 2008 2008 1/4/ Balance b/d 240 1/4/ Balance b/d 90 4/4/ Child Ben. 260 3/4/ Groceries 220 220 7/4/ Wages 1,200 6/4/ School trip 700 700 6/4/ Exam fee 240 240 220 1,030 220 940 7/4/ Balance c/d 280 170 500 1,200 500 1,200

8/4/ Balance b/d 280 170

Chapter 5 Income 1. Only one statement in each group of three statements set out below is correct. Tick the correct statement. (a) In relation to household income, regular income consists of: Statement Tick i Basic wage, bank interest, overtime wages ii Basic wage and child benefit iii Basic wage, child benefit, bank interest and lotto win

(b)In a wage slip the net wage is calculated by: Statement Tick i Adding deductions to gross wage ii Subtracting VIVAS payments and PRSI from gross wage iii Subtracting all deductions from gross wage

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2. Column 1 is a list of income terms. Column 2 is a list of possible explanations for those terms. Match the two lists by placing the number of the explanation beside the relevant term. One explanation does not match a term. E.g. Explanation no. 4 matches PRSI. Column 1 Terms Insert Number No. Column 2 Explanations PRSI 4 1. Amount paid for working a normal week Gross Wage 8 2. Contributions paid towards pension Net Wage 7 3. Tax on income paid to government Superannuation 2 4. Pay-related social insurance in case of unemployment Statutory Deductions 5 5. Compulsory deductions paid to government Basic Wage 1 6. Payment given for working more than normal hours Overtime payment 6 7. Amount of wages after all deductions are paid 8. Amount of wages before deductions are made

3. Column 1 is a list of people. Column 2 is a list of different sources of income. Match the two lists by placing the number of the income beside the relevant person. One source of income does not match. Column 1 People Insert Number No. Column 2 Source of Income Employee 4 1. Pension Student 3 2. PAYE Unemployed person 5 3. Pocket money Retired person 1 4. Wages 5. Social welfare assistances

4. (a) Calculate the net wage for Sean Kirwin, employee No. 246 for week No. 1, who supplied the following information: Basic wage €200; overtime €160; PAYE €60; PRSI €14; BUPA €12; Pension €15. (b) Complete the wage slip below. Wage Slip Sean Kirwin Employee No: 246 Net Week Gross Wage Deductions Wage No. Basic Overtime Total PAYE PRSI BUPA Pension Total 1 200 160 360 60 14 12 15 101 259

5. (a) Calculate the net wage for Jamie Mulligan, employee No. 135 for week No. 6, who supplied the following information: Jamie worked 60 hours, basic week 48 hours at €10 per hour, overtime at time and half for all additional hours worked. Tax credit €50; Rate of tax 40%; PRSI 5% of gross wage; VHI €20; Pension €15; Union €10. (b) Complete the wage slip below. Wage Slip Jamie Mulligan Employee No: Net Week Gross Wage Deductions Wage No. Basic Overtime Total PAYE PRSI Union VHI Pension Total 6 480 180 660 214 33 10 20 15 292 368

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6. (a) Calculate the net wage for Marie Dowler, employee No. 78 for week No. 10, who supplied the following information: Marie worked 56 hours, basic week 39 hours at €12 per hour, overtime at time and half for the first ten hours of overtime and double time thereafter. Tax credit €48; Rate of tax 40%; PRSI 5% of gross wage; VHI €20; Savings €20; Union €10. (b) Complete the wage slip below. Wage Slip Marie Dowler Employee No: 78 Net Week Gross Wage Deductions Wage No. Basic Overtime Total PAYE PRSI Union VHI Savings Total 10 468 348 816 278.40 40.80 10 20 20 369.20 446.80

7. (a) Calculate the net wage for Cathal Maher, employee No. 188 for week No. 4, who supplied the following information: Cathal worked 66 hours, basic week 48 hours at €10 per hour, overtime at time and half for the first ten hours of overtime and double time thereafter. Tax credit €64; Rate of tax 40%; PRSI 5% of gross wage; VIVAS €23; Savings €30; Pension €12. (b) Complete the wage slip below. Wage Slip Cathal Maher Employee No: 188 Net Week Gross Wage Deductions Wage No. Basic Overtime Total PAYE PRSI VIVAS Savings Pension Total 4 480 310 790 252 39.50 23 30 12 356.50 433.50

8. (a) Calculate the net wage for Thomas Madden, employee No. 13 for week No. 30, who supplied the following information: Thomas worked 57 hours, basic week 39 hours at €14 per hour, overtime time and half for the first ten hours of overtime and double time thereafter. Tax credit €65; Rate of tax 40%; PRSI 5% of gross wage; BUPA €25, Savings €30, Union €8. (b) Complete the wage slip below. Wage Slip Thomas Madden Employee No: 13 Net Week Gross Wage Deductions Wage No. Basic Overtime Total PAYE PRSI BUPA Savings Union Total 30 546 434 980 327 49 25 30 8 439 541

9. Complete the six-month income record below from the following information: Net basic wage €1,200 per month; Net overtime February €300 and May €500; Child Benefit €399 per month; Interest of bank deposit account €100 in March. Jan Feb March April May June Total Income € € € € € € € Net Basic Wage 1,200 1,200 1,200 1,200 1,200 1,200 7,200 Net Overtime – 300 – – 500 – 800 Child Benefit 399 399 399 399 399 399 2,394 Bank Interest – – 100 – – – 100 Total Income 1,599 1,899 1,699 1,599 2,099 1,599 10,494

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10. Complete the six-month income record below from the following information: Net basic wage €1,450 per month; Net overtime August €450 and December €800; Child Benefit €133 per month; Sale of table in November €350. July Aug Sept Oct Nov Dec Total Income € € € € € € € Net Basic Wage 1,450 1,450 1,450 1,450 1,450 1,450 8,700 Net Overtime - 450 - - - 800 1,250 Child Benefit 133 133 133 133 133 133 798 Sale of table - - - - 350 - 350 Total Income 1,583 2,033 1,583 1,583 1,933 2,383 11,098

Chapter 6 Expenditure 1. Write brief notes on: (a) Opportunity Cost: The decision to give up something and choose something else is referred to as the opportunity cost of the things chosen. (b) Priorities: These are things that are most important or most needed, e.g. food, clothing etc. (c) Impulse Buying: Buying things on the spur of the moment, i.e things that are not planned for. 2. Sindy has €1 to spend. She would love to buy a bar of chocolate or a can of orange, but they both cost €1. She decides to buy the bar of chocolate. (a) What is the financial cost of buying the bar of chocolate? € 1 (b) The opportunity cost of buying the bar of chocolate is: (tick the correct answer) Tick €1 paid for the bar of chocolate The can of orange she did not buy The energy she used up in going to the shop The bar of chocolate she bought

3. Classify the following household expenses under the following headings: Fixed; Irregular; Discretionary. Expenditure: Car insurance; Entertainment; Telephone; Church donation; School fees; Holiday in Greece; House mortgage; Petrol. Fixed Irregular Discretionary Car insurance Telephone Entertainment House mortgage Petrol Church donation School fees Holiday in Greece

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4. (a) Complete the six-month expenditure record below from the following data: January: Mortgage €280; groceries €180; entertainment €60; car tax €240; petrol €40; electricity €85. February: Mortgage €280; groceries €165; entertainment €60; telephone €170; clothes €300. March: Mortgage €280; groceries €170; entertainment €40; car insurance €450; petrol €30; electricity €65. April: Mortgage €280; groceries €190; entertainment €50; car repairs €110; petrol €25; telephone €190. May: Mortgage €320; groceries €180; entertainment €50; birthday €90; petrol €25; electricity €60. June: Mortgage €320; groceries €200; entertainment €60; house insurance €120; holiday €800. (b) Calculate the total cost of the car for the six months and insert your answer in the space provided. (Note: annual costs should be divided evenly over the whole year.) (a)

Household Expenditure Record for Six Months Jan Feb March April May June Total for Jan to June Expenditure Fixed Mortgage 280 280 280 280 320 320 1,760 Car Tax 240 240 Car Insurance 450 450 House Insurance 120 120

Subtotal 520 280 730 280 320 440 2,570

Irregular Housekeeping 180 165 170 190 180 200 1,085 Petrol 40 30 25 25 - 120 Electricity 85 65 60 210 Telephone 170 190 360 Clothes 300 300 Car Repairs 110 110

Subtotal 305 635 265 515 265 200 2,185

Discretionary Entertainment 60 60 40 50 50 60 320 Birthday 90 90 Holidays 800 800

Subtotal 60 60 40 50 140 860 1,210

Total Expenditure 885 975 1,035 845 725 1,500 5,965

(b) Cost of the car for six months is: € 575

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5. (a) Complete the four-month expenditure record below from the following data: January: Mortgage €340; housekeeping €190; life assurance €80; petrol €40; birthday €70; electricity €100; heating oil €300. February: Mortgage €340; housekeeping €210; life assurance €80; petrol €30; telephone €210; Car tax €240; church €80. March: Mortgage €340; housekeeping €180; life assurance €80; petrol €35; electricity €65; television licence €62; clothes €120. April: Mortgage €340; housekeeping €200; life assurance €80; petrol €45; telephone €220; house decoration €700. (b) If the household wished to save €100 per month how much income would it need to receive each month to meet its expenses and saving? (a)

Household Expenditure Record for Four Months Total for Jan Feb March April Jan to April Expenditure Fixed Mortgage 340 340 340 340 1,360 Car Tax 240 240 Life Insurance 80 80 80 80 320 TV Licence 62

Subtotal 420 660 482 420 1,982

Irregular Housekeeping 190 210 180 200 780 Petrol 40 30 35 45 150 Electricity 100 65 165 Telephone 210 220 430 Clothes 120 120 Heating Oil 300 300

Subtotal 630 450 400 465 1,945

Discretionary House Decoration 700 700 Birthday 70 70 Church 80 80

Subtotal 70 80 – 700 850

Total Expenditure 1,120 1,190 882 1,585 4,777

Amount of income 1,220 1,290 982 1,685 required

191 Junior Certificate Business Studies Workbook Teacher’s Manual Chapter 7 The Budget

1. Column 1 is a list of budgeting terms. Column 2 is a list of possible explanations. Match the two lists by placing the letter of the correct explanation under the relevant number in the table below. One explanation does refer to any term.

Column 1 Terms Column 2 Explanations 1. Savings A. Income equals to expenditure 2. Net Cash B. Goods and services that can be done without 3. Closing Cash C. Income greater than expenditure 4. Discretionary Expenditure D. Not spending income until sometime in the future E. Net cash plus opening cash

1. 2. 3. 4. D C E B

2. Complete the budget statement below. Show the Net Cash position for each month and for the total. Jan Feb March April May June Total € € € € € € € Income 700 700 900 900 960 960 5,120 Expenditure 600 650 850 1,100 960 960 5,120 Net Cash 100 50 50 (200) – – –

3. Complete the budget statement below. Show the Net Cash position for each month and for the total. Jan Feb March April May June Total € € € € € € € Income 1,000 1,200 1,400 1,300 1,550 1,900 8,350 Expenditure 1,400 1,100 950 1,000 1,150 1,200 6,800 Net Cash (400) 100 450 300 400 700 1,550

4. Complete the budget statement below. Jan Feb March April May June Total € € € € € € € Income 1,700 1,800 2,000 2,900 1,800 1,900 12,100 Expenditure 1,400 1,900 3,200 2,000 1,400 1,500 11,400 Net Cash 300 (100) (1,200) 900 400 400 700 Opening Cash 30 330 230 (970) (70) 330 30 Closing Cash 330 230 (970) (70) 330 730 730

5. Complete the budget statement below. Jan Feb March April May June Total € € € € € € € Income 2,200 2,100 3,220 2,850 2,150 2,700 15,220 Expenditure 1,800 2,300 2,850 2,700 1,950 2,400 14,000 Net Cash 400 (200) 370 150 200 300 1,220 Opening Cash 100 500 300 670 820 1,020 100 Closing Cash 500 300 670 820 1,020 1,320 1,320

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6. Complete the budget statement below. Jan Feb March April May June Total € € € € € € € Income 1,550 1,550 1,760 1,850 2,230 2,140 11,080 Expenditure 1,980 890 1,150 1,220 1,650 3,400 10,290 Net Cash (430) 660 610 630 580 (1,260) 790 Opening Cash (150) (580) 80 690 1,320 1,900 (150) Closing Cash (580) 80 690 1,320 1,900 640 640

7. Complete the budget statement below. Jan Feb March April May June Total € € € € € € € Income 2,200 2,100 3,220 2,850 2,150 2,700 15,220 Expenditure 1,800 2,300 2,850 2,700 1,950 2,400 14,000 Savings 300 300 400 400 500 500 2,400 Total Expenditure 2,100 2,600 3,250 3,100 2,450 2,900 16,400 and Savings Net Cash 100 (500) (30) (250) (300) (200) (1,180) Opening Cash 100 200 (300) (330) (580) (880) 100 Closing Cash 200 (300) (330) (580) (880) (1,080) (1,080)

8. Complete the budget statement below. Jan Feb March April May June Total € € € € € € € Income 2,200 2,100 3,220 2,850 2,150 2,700 15,220 Expenditure 1,800 2,300 2,850 2,700 1,950 2,400 14,000 Savings 150 150 200 200 300 300 1,300 Total Expenditure 1,950 2,450 3,050 2,900 2,250 2,700 15,300 and Savings Net Cash 250 (350) 170 (50) (100) – (80) Opening Cash 100 350 – 170 120 20 100 Closing Cash 350 – 170 120 20 20 20

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9. Opposite is a budget for the Dowd household for four months, January, February, March and April: opening cash in hand was €80. Planned Income • Mr Dowd earns €1,000 net per month. • Mrs Dowd earns €900 net per month. • Child benefit is €40 per month. Expenditure • House mortgage is €300 per month. • House insurance is €100, payable in April. • School fees are €90 in January and €150 in March. • Electricity bills are €100 in February and €80 in April. • Annual car tax of €250 and car insurance of €550 are paid in March. • Life assurance costs €120 per month.

The Dowds spend €400 per month on household expenses and they spend €40 per month on entertainment. The Dowds spend €40 per month on diesel. In April they will spend €700 on painting the house. Complete fully the blank household budget form (opposite) using all the above figures.

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Dowd Household Jan Feb March April Total € € € € €

Planned Income

Mr Dowd – Salary 1,000 1,000 1,000 1,000 4,000

Mrs Dowd – Salary 900 900 900 900 3,600

Child Benefit 40 40 40 40 160

Total Income A. 1,940 1,940 1,940 1,940 7,760

Planned Expenditure

Fixed

Mortgage 300 300 300 300 1,200

Car Tax 250 250

Car Insurance 550 550

Life Assurance 120 120 120 120 480

House Insurance 100 100

Subtotal 420 420 1,220 520 2,580

Irregular

Household Expenses 400 400 400 400 1,600

Diesel 40 40 40 40 160

School Fees 90 150 240

Electricity 100 80 180

Subtotal 530 540 590 520 2,180

Discretionary

Entertainment 40 40 40 40 160

House Decoration 700 700

Subtotal 40 40 40 740 860

Total Expenditure B. 990 1,000 1,850 1,780 5,620

Net Cash (A – B) 950 940 90 160 2,140

Opening Cash 80 1,030 1,970 2,060 80

Closing Cash 1,030 1,970 2,060 2,220 2,220

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10. Opposite is a budget for the Lynch household for four months, January, February, March and April: opening cash in hand was €80. Planned Income • R. Lynch earns €800 net per month. • M. Lynch earns €650 net per month. • Child benefit is €30 per month. Planned Expenditure • House mortgage will be €300 per month. • Annual car tax €140 due in February. • Repayments on car loan (to be fully paid by end of March) will cost €230 per month until then. • Annual car insurance €400, due for payment in March. • House insurance premium amounts to €120 per year payable monthly from January. • Household expenses are usually €450 per month. • Car running costs are expected to be €90 per month except in March when the annual garage service to the car will cost an extra €70. • Electricity bills for light and heat are expected to amount to €180 in January and €230 in March. • Birthdays will cost €90 in February and €50 in April. • Entertainment will cost €70 each month. (a) Complete fully the blank household budget form (opposite) using all the above figures. (b) How much will the Lynch household have saved in the four months? (Junior Certificate Ordinary Level 1992 amended for euro)

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(a)

Lynch Household Jan Feb March April Total € € € € €

Planned Income

R. Lynch – Salary 800 800 800 800 3,200

M. Lynch – Salary 650 650 650 650 2,600

Child Benefit 30 30 30 30 120

Total Income A. 1,480 1,480 1,480 1,480 5,920

Planned Expenditure

Fixed

Mortgage 300 300 300 300 1,200

Annual Car Tax 140 140

Car Loan 230 230 230 – 690

Annual Car Insurance 400 400

House Insurance 10 10 10 10 40

Subtotal 540 680 940 310 2,470

Irregular

Household 450 450 450 450 1,800

Car Running Costs 90 90 160 90 430

Electricity 180 230 410

Subtotal 720 540 840 540 2,640

Discretionary

Birthdays 90 50 140

Entertainment 70 70 70 70 280

Subtotal 70 160 70 120 420

Total Expenditure B. 1,330 1,380 1,850 970 5,530

Net Cash (A – B) 150 100 (370) 510 390

Opening Cash 80 230 330 (40) 80

Closing Cash 230 330 (40) 470 470

(b)Saved in four months: € 390

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11. Opposite is a budget for the Mullins household for four months, May, June, July and August: opening cash in hand was €240. Planned Income • John Mullins earns €1,225 net per month. • Brenda Mullins earns €1,250 net per month and expects to receive an increase of €50 in August. • Child benefit is €150 per month. Planned Expenditure • House mortgage will be €340 per month. • House insurance premium, €480 per year, is payable monthly from May. • John’s annual car insurance €450. Brenda’s annual car insurance is €375. Both are payable in June. • Household expenses are usually €550 per month except in July, when they are €250 less. • Car running costs are expected to be €100 per month for John and €125 a month for Brenda. • Irish college for the children will cost €550 in June. • Electricity bills for light and heat are expected to amount to €110 in May and €80 in July. • The Mullins family has a home telephone and a mobile phone. The home telephone is expected to be €165 in June and €150 in August. The mobile phone bill is expected to be €30 per month. • A birthday party will cost €350 in August. • The family expects to spend €2,500 on a holiday in July. • Entertainment will cost €200 each month except July, when it will cost nothing as the family is on holiday. Complete fully the blank household budget form (opposite) using all the above figures.

(Junior Certificate Ordinary Level 1998 Section(B) Q1 amended for euro)

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Mullins Household May June July Aug Total

Planned Income € € € € €

John Mullins – Salary 1,225 1,225 1,225 1,225 4,900

Brenda Mullins – Salary 1,250 1,250 1,250 1,300 5,050

Child Benefit 150 150 150 150 600

Total Income A. 2,625 2,625 2,625 2,675 10,550

Planned Expenditure

Fixed

Mortgage 340 340 340 340 1,360

House Insurance 40 40 40 40 160

Car Insurance 825 825

Subtotal 380 1,205 380 380 2,345

Irregular

Household Expenses 550 550 300 550 1,950

Car Running Costs 225 225 225 225 900

Irish College 550 550

Light and Heat 110 80 190

Telephone Costs 30 195 30 180 435

Subtotal 915 1,520 635 955 4,025

Discretionary

Birthday Parties 350 350

Holidays 2,500 2,500

Entertainment 200 200 200 600

Subtotal 200 200 2,500 550 3,450

Total Expenditure B. 1,495 2,925 3,515 1,885 9,820

Net Cash (A – B) 1,130 (300) (890) 790 730

Opening Cash 240 1,370 1,070 180 240

Closing Cash 1,370 1,070 180 970 970

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12. Opposite is a budget for the Hughes household for January, February, March and April: opening cash in hand was €150. Planned Income • Aidan Hughes earns €825 net per month. • Fiona Hughes earns €650 net per month and expects to receive an increase of €40 in April. • Child benefit is €120 per month. Planned Expenditure • House rental is €400 per month but will increase by €50 per month from the beginning of March. • House contents insurance premium, €120 per year, is payable monthly from January. • The Hughes family pay health insurance of €55 per month to the VHI. This will increase to €60 per month from the beginning of March. • Groceries are usually €350 per month. • Aidan pays €50 a month and Fiona pays €55 a month on bus and train fares to travel to work. • The family expects to spend €600 on clothes in the January sales. • Electricity bills for light and heat are expected to amount to €95 in January and €80 in March. • A fill of heating oil, costing €220, will be needed in February. • A birthday will cost €100 in February. • Entertainment will cost €120 each month except March, when it will be €300 extra due to a wedding. • The Hughes family hope to buy a new television and video recorder costing €700 in April. Complete fully the blank household budget form (opposite) using all the above figures.

(Junior Certificate Ordinary Level 1997 Section (B)QI amended for euro)

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Hughes Family January February March April Total

Planned Income € € € € €

Aidan Hughes – Salary 825 825 825 825 3,300

Fiona Hughes – Salary 650 650 650 690 2,640

Child Benefit 120 120 120 120 480

Total Income A. 1,595 1,595 1,595 1,635 6,420

Planned Expenditure

Fixed

House Rental 400 400 450 450 1,700

Contents Insurance 10 10 10 10 40

Health Insurance 55 55 60 60 230

Subtotal 465 465 520 520 1,970

Irregular

Groceries 350 350 350 350 1,400

Travel Costs 105 105 105 105 420

Clothes 600 600

Light and Heat 95 220 80 395

Subtotal 1,150 675 535 455 2,815

Discretionary

Birthdays 100 100

Entertainment 120 120 420 120 780

TV and Video 700 700

Subtotal 120 220 420 820 1,580

Total Expenditure B. 1,735 1,360 1,475 1,795 6,365

Net Cash (A – B) (140) 355 120 (160) 55

Opening Cash 150 10 245 365 150

Closing Cash 10 245 365 205 205

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13. Opposite is the budget for the Keane household for the last four months of 2004: opening cash in hand was €880. Planned Income • Brian Keane earns €2,500 net per month and expects to receive a bonus of €2,000 net in April. • Mary Keane earns €1,950 net per month and expects to receive an Easter bonus of €700 net in April. • The family expect to receive interest €900 on a deposit account in March. Planned Expenditure • House Mortgage of €950 per month will increase by €50 per month from March 2004. • House insurance premium, €720 per year, is payable monthly from January. • Repayments on the car loan (to be paid off in full in March) are €240 per month. • Household expenses are usually €1,600 per month except March, when they are €300 less. • Car running costs will be €295 per month. • Mary’s driving lessons, costing €140 per month, will end in March. • ESB bills for light and heat are expected to amount to €640 in January and €570 in March, while gas, costing €300, will be needed in February. • Telephone bills for the home are expected to be €350 in February and April. • Presents for parents’ fiftieth wedding anniversary will cost €1,000 in March. • Entertainment will cost €600 each month except in April, when it will cost €300 less.

(a) Complete fully the blank household budget form (opposite) using all the above figures. (b) Explain what House Insurance means. This is where the owner of a house pays a premium to an insurance company in return for a promise of compensation should damage be done to the house.

(c) State whether tickets for a Britney Spears concert is fixed, irregular or discretionary expenditure. Britney Spears tickets are discretionary.

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(a)

Keane Family Jan Feb March April Total

Planned Income € € € € €

Brian Keane – Salary 2,500 2,500 2,500 4,500 12,000

Mary Keane – Salary 1,950 1,950 1,950 2,650 8,500

Deposit Interest 900 900

Total Income A. 4,450 4,450 5,350 7,150 21,400

Planned Expenditure

Fixed

House Mortgage 950 950 1,000 1,000 3,900

House Insurance 60 60 60 60 240

Car Loan 240 240 240 – 720

Subtotal 1,250 1,250 1,300 1,060 4,860

Irregular

Household Expenses 1,600 1,600 1,300 1,600 6,100

Car Running Costs 295 295 295 295 1,180

Driving Lessons 140 140 140 – 420

Light and Heat 640 300 570 – 1,510

Telephone Costs – 350 – 350 700

Subtotal 2,675 2,685 2,305 2,245 9,910

Discretionary

Presents 1,000 1,000

Entertainment 600 600 600 300 2,100

Subtotal 600 600 1,600 300 3,100

Total Expenditure B. 4,525 4,535 5,205 3,605 17,870

Net Cash (A – B) (75) (85) 145 3,545 3,530

Opening Cash 880 805 720 865 880

Closing Cash 805 720 865 4,410 4,410

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14. Opposite is the budget for the Kelly household for the last four months of 2005: opening cash in hand was €460. Planned Income • Noel Kelly earns €1,800 net per month. • Nora Kelly earns €1,750 net per month and expects to receive an increase of €200 starting in July. • Child Benefit is €280 net per month. Planned Expenditure • House Mortgage of €750 per month will decrease by €70 per month from 1 August 2005. • House insurance premium, €720 per year, is payable monthly from May. • Noel’s annual car insurance is €480. Nora’s annual car insurance is €550. Both are payable in June. • Household expenses are usually €1,200 per month except in August, when they are €1,000 extra. • Car running costs will be €310 per month for Noel and €195 per month for Nora. • Irish College fees in July €675. • ESB bills for light and heat are expected to amount to €480 in May and €370 in July. • Telephone bills for the home are expected to be €250 in June and August, while bills for mobile phones for all the family will be €245 per month. • Presents for birthday parties will cost €900 in July. • The family will take a holiday in July costing €3,800.

(a) Complete fully the blank household budget form (opposite) using all the above figures. (b) Name three examples of car running costs. 1. Petrol 2. Repairs 3. Replacement parts e.g. tyres (c) Name three ways of paying the telephone bill. 1. By direct debit 2. By cheque 3. By credit card

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(a)

Kelly Family May June July August Total

Planned Income € € € € €

Noel Kelly – Salary 1,800 1,800 1,800 1,800 7,200

Nora Kelly – Salary 1,750 1,750 1,950 1,950 7,400

Child Benefit 280 280 280 280 1,120

Total Income A. 3,830 3,830 4,030 4,030 15,720

Planned Expenditure

Fixed

House Mortgage 750 750 750 680 2,930

House Insurance 60 60 60 60 240

Car Insurance 1,030 1,030

Subtotal 810 1,840 810 740 4,200

Irregular

Household Expenses 1,200 1,200 1,200 2,200 5,800

Car Running Costs 505 505 505 505 2,020

Irish College Fees 675 675

Light and Heat 480 370 850

Telephone Costs 245 495 245 495 1,480

Subtotal 2,430 2,200 2,995 3,200 10,825

Discretionary

Presents 900 900

Holidays 3,800 3,800

Subtotal 4,700 4,700

Total Expenditure B. 3,240 4,040 8,505 3,940 19,725

Net Cash (A – B) 590 (210) (4,475) 90 (4,005)

Opening Cash 460 1,050 840 (3,635) 460

Closing Cash 1,050 840 (3,635) (3,545) (3,545)

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15. Opposite is the budget for the Diffley household for the last four months of 2006: opening cash in hand was €5,000. Planned Income • Murt Diffley earns €3,600 net per month and expects to go on half pay from October onwards. • Agnes Diffley earns €2,450 net per month and expects an increase in salary of €800 net in November. • Dividends on shares €5,000 are expected in November. Planned Expenditure • House Mortgage of €1,200 per month will increase by €120 per month from 1 October 2006. • House insurance premium, €840 per year, is payable monthly from September. • Murt’s annual car insurance is €685. Agnes’s annual car insurance is €580. Both are payable in December. • Household expenses are usually €1,500 per month except in December, when they are €200 extra. • Car running costs will be €350 per month for Murt and €450 per month for Agnes. • Clothes are expected to cost €1,800 in October. • ESB bills for light and heat are expected to amount to €640 in September and €870 in November, while a fill of heating oil, costing €1,200, will be needed in November. • Telephone bills for the home are expected to be €450 in September and November, while the bill for Agnes’s mobile phone will be €125 per month. • Presents for birthday parties will cost €700 in October and €500 in October. • Medical bills for the family are expected to cost €2,500 in October and €3,000 in October. • Entertainment will cost €400 each month except in November, when it will reduce by half. (a) Complete fully the blank household budget form (opposite) using all the above figures. (b) Advise the Diffleys on ways to cover their medical bills.

Join VHI, BUPA or VIVAS;

Join the Saturday Hospital Fund;

Claim under PRSI.

(c) Give three examples of discretionary expenditure other than those given in the budget above. 1. Holidays2. Decorations 3. Church donations

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(a)

Diffley Family Sept Oct Nov Dec Total

Planned Income €€€€ €

Murt Diffley – Salary 3,600 1,800 1,800 1,800 9,000

Agnes Diffley – Salary 2,450 2,450 3,250 3,250 11,400

Share Dividend 5,000 5,000

Total Income A. 6,050 4,250 10,050 5,050 25,400

Planned Expenditure

Fixed

House Mortgage 1,200 1,320 1,320 1,320 5,160

House Insurance 70 70 70 70 280

Car Insurance 1,265 1,265

Subtotal 1,270 1,390 1,390 2,655 6,705

Irregular

Household Expenses 1,500 1,500 1,500 1,700 6,200

Car Running Costs 800 800 800 800 3,200

Clothes 1,800 1,800

Medical Bills 5,500 5,500

Light and Heat 640 2,070 2,710

Telephone Costs 575 125 575 125 1,400

Subtotal 3,515 9,725 4,945 2,625 20,810

Discretionary

Presents 1,200 1,200

Entertainment 400 400 200 400 1,400

Subtotal 400 1,600 200 400 2,600

Total Expenditure B. 5,185 12,715 6,535 5,680 30,115

Net Cash (A – B) 865 (8,465) 3,515 (630) (4,715)

Opening Cash 5,000 5,865 (2,600) 915 5,000

Closing Cash 5,865 (2,600) 915 285 285

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Questions on Estimating Budgets 16. Complete the partially completed budget form opposite for the Lynch family by filling in the figures for the ‘Estimate June-December’ column and the ‘Total for Year’ column. The following information should be taken into account. • T. Lynch will be moving to a new section and is promised a salary increase of 4% from 1 August 2004. • P. Lynch is due a salary increase of 6% from 1 June 2004. • Child benefit will continue as for other months of 2004. • Dividends from investments amounting to €250 are expected in July. • The mortgage will be reduced by €50 per month from 1 November 2004. • The car loan will be fully repaid by end of June 2004. • House insurance per month will continue as for other months of 2004. • Housekeeping costs per month are expected to remain the same as for first five months except for December when they will be €580. • Car running costs will cost €80 per month until the end of 2004. New tyres will be needed in November, costing €90. • The total cost of both electricity and telephone charges for the whole of 2004 are expected to be €1,040 and €780 respectively. • Birthdays will cost €80 in November. • Entertainment is expected to cost a total of €900 for the whole year 2004.

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Lynch Household Jan Feb March April May Total Estimate Total Jan-May Jun-Dec for year

Planned Income €€ € €€ € € €

T. Lynch – Salary 1,000 1,000 1,000 1,000 1,000 5,000 7,200 12,200

P. Lynch – Salary 800 800 800 800 800 4,000 5,936 9,936

Child Benefit 45 45 45 45 45 225 315 540

Dividends 250 250

Total Income A. 1,845 1,845 1,845 1,845 1,845 9,225 13,701 22,926

Planned Expenditure

Fixed

Mortgage 450 450 450 450 450 2,250 3,050 5,300

House Insurance 25 25 25 25 25 125 175 300

Car Loan 310 310 310 310 310 1,550 310 1,860

Annual Car Tax 250 – – – – 250 – 250

Annual Car Insurance – 600 – – – 600 – 600

Subtotal 1,035 1,385 785 785 785 4,775 3,535 8,310

Irregular

Housekeeping Costs 360 360 360 360 360 1,800 2,740 4,540

Car Running Costs 80 80 80 180 80 500 650 1,150

Telephone – 90 – 100 – 190 850 1,040

Electricity 205 – 190 – 170 565 215 780

Subtotal 645 530 630 640 610 3,055 4,455 7,510

Discretionary

Birthdays 35 – – 30 – 65 80 145

Entertainment 60 50 40 50 50 250 585 835

Subtotal 95 50 40 80 50 315 665 980

Total Expenditure B. 1,775 1,965 1,455 1,505 1,445 8,145 8,655 16,800

Net Cash (A – B) 70 –120 390 340 400 1,080 4,046 6,126

Opening Cash 30 100 –20 370 710 30 1,110 30

Closing Cash 100 –20 370 710 1,100 1,110 6,156 6,156

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17. Complete the personal budget form (opposite) for the Reidy family by filling in the figures for the ‘Estimate April to December’ column. The following information should be taken into account.

• John Reidy is due a salary increase of 5% from 1 July. • Mary Reidy expects a special bonus of €320 in December. • Child benefit will continue each month as for the first three months of the year. • House mortgage is expected to increase by €40 a month from 1 August. • House insurance, per month, will continue as for the first three months of the year. • Household costs, per month, are expected to remain the same for each month until September and to increase by €30 a month beginning in October. • Car running costs are expected to remain at €80 a month with an additional car service cost of €90 in September. • Electricity for the 12 months (January-December) is estimated at €1,150. • Christmas presents are expected to cost €200 in December. • Entertainment is expected to cost €600 for the twelve months (January-December). • The family holiday in July is expected to cost €1,400.

(Junior Certificate Higher Level 1993 amended for euro)

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Total Estimate Total Reidy Family Jan Feb Mar Jan-Mar Apr-Dec for year Jan-Dec

Planned Income €€ € € € €

John Reidy – Salary 660 660 660 1,980 6,138 8,118

Mary Reidy – Salary 700 700 700 2,100 6,620 8,720

Child Benefit 30 30 30 90 270 360

Total Income A. 1,390 1,390 1,390 4,170 13,028 17,198

Planned Expenditure

Fixed

Mortgage 280 280 280 840 2,720 3,560

Annual Car Tax 240 – – 240 – 240

Annual Car Insurance – – 650 650 – 650

House Insurance 18 18 18 54 162 216

Subtotal 538 298 948 1,784 2,882 4,666

Irregular

Household Costs 490 490 490 1,470 4,500 5,970

Car Running Costs 80 80 80 240 810 1,050

Electricity 190 – 160 350 800 1,150

Subtotal 760 570 730 2,060 6,110 8,170

Discretionary

Presents – – 40 – 40 200 240

Entertainment 45 60 55 160 440 600

Holidays – – – – – 1,400 1,400

Subtotal 45 100 55 200 2,040 2,240

Total Expenditure B. 1,343 968 1,733 4,044 11,032 15,076

Net Cash (A – B) 47 422 –343 126 1,996 2,122

Opening Cash 75 122 544 75 201 75

Closing Cash 122 544 201 201 2,197 2,197

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18. (a) Opposite is a partially completed personal budget form for the Keane family for 2004. You are required to complete this form by filling in the figures for the ‘Estimate April to December’ column, and the ‘Total for year’ column. The following information should be taken in account.

• Martin expects to get promotion in September which will increase his salary by 30%. • Norah is doing overtime from 1 October and this will result in a 10% increase in her salary from that date. • Child benefit will increase to €120 per month from 1 July 2004. • The house mortgage will be paid off in full following the August payment. • Car insurance is payable quarterly. • Household expenses will remain at the same level until the end of September and will increase by 20% beginning in October 2004. • Car running costs are expected to remain at €90 a month with an additional cost of €280 in June for new tyres and a car service cost €200 in October 2004. • ESB for the 12 months Jan-Dec 2004 is estimated at €840. • The telephone is paid every second month and it is estimated that the cost will remain at the same level as at the beginning of the year. • A wedding present in June is expected to cost €400. • Entertainment will average at €160 per month for the remaining 9 months of the year. • A family holiday in July is expected to cost €1,500. • House insurance payable monthly will continue as for the first three months of the year. (b) (i) When the mortgage is paid off in August, what would you suggest that the Keane family would do with the €600 per month that they no longer have to pay?

______The Keane family should save it in an index-linked saving scheme in An Post, ______where fixed amounts are paid in. ______

(ii) Name a suitable method that the Keane family could save for their holiday and give a reason for your answer.

______The Keane family could save €215 per month in a deposit account. ______In seven months they will have saved €1,500. ______

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(a) Total Estimate Total Keane Household Jan Feb Mar Jan-Mar Apr-Dec for year Jan-Dec

Planned Income €€ € € € €

Martin Keane – Salary 1,000 1,000 1,000 3,000 10,200 13,200

Norah Keane – Salary 1,100 1,100 1,100 3,300 10,230 13,530

Child Benefit 100 100 100 300 1,020 1,320

Total Income A. 2,200 2,200 2,200 6,600 21,450 28,050

Planned Expenditure

Fixed

House Mortgage 600 600 600 1,800 3,000 4,800

Car Insurance 120 120 360 480

Annual Car Tax 400 400 – 400

House Insurance 30 30 30 90 270 360

Subtotal 750 630 1,030 2,410 3,630 6,040

Irregular

Household Expenses 650 650 650 1,950 6,060 8,010

Car Running Costs 100 100 100 300 1,290 1,590

Light and Heat Costs 160 140 300 540 840

Telephone 160 160 320 640 960

Subtotal 1,070 750 1,050 2,870 8,530 11,400

Discretionary

Presents 400 400

Entertainment 150 150 150 450 1,440 1,890

Holidays 1,500 1,500

Subtotal 150 150 150 450 3,340 3,790

Total Expenditure B. 1,970 1,530 2,230 5,730 15,500 21,230

Net Cash (A – B) 230 670 (30) 870 5,950 6,820

Opening Cash 10 240 910 10 880 10

Closing Cash 240 910 880 880 6,830 6,830

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19. (a) Opposite is a partially completed personal budget form for the Lyons family for 2005. You are required to complete this form by filling in the figures for the ‘Estimate April to December’ column, and the ‘Total for year’ column. The following information should be taken in to account.

• Andrew expects to go on a two-week month from August which will reduce his salary by half. • Ilona will take up a second job from 1 July which will earn her an extra €600 per month. • The house mortgage will be increased by €150 per month to pay for an extension. • Household expenses will remain at the same level until the end of October and will increase by 15% beginning in November 2005. • Car running costs are expected to remain at €110 a month with an additional cost of €700 in July for new tyres and a car respray. • ESB for the 12 months Jan-Dec 2005 is estimated at €770. • The telephone is paid every second month and it is estimated that the cost will remain at the same level as at the beginning of the year. • Christmas presents will cost €780 in December. • Entertainment will average at €200 per month for the remaining 9 months of the year. • The Lyons family plan to save €250 per month starting in July. • Car tax payable quarterly will continue as before.

(b) (i) Name two examples of car running costs. (a) Petrol (b) Repairs

(ii) Why might Andrew have to go on a two-week month?

______The sales in his job might be slowing down and there is less work available. ______

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(a) Total Estimate Total Lyons Household Jan Feb Mar Jan-Mar Apr-Dec for year Jan-Dec

Planned Income €€€€ € €

Andrew – Salary 1,600 1,600 1,600 4,800 10,400 15,200

Ilona – Salary 1,000 1,000 1,000 3,000 12,600 15,600

Deposit Interest 400 400 – 400

Total Income A. 2,600 2,600 3,000 8,200 23,000 31,200

Planned Expenditure

Fixed

House Mortgage 800 800 800 2,400 8,550 10,950

Car Insurance 700 700 – 700

Annual Car Tax 115 115 345 460

House Insurance 550 550 – 550

Subtotal 800 2,165 800 3,765 8,895 12,660

Irregular

Household Expenses 960 960 960 2,880 8,928 11,808

Car Running Costs 110 110 110 330 1,690 2,020

Light and Heat Costs 150 150 620 770

Telephone 140 140 280 560 840

Subtotal 1,210 1,220 1,210 3,640 11,798 15,438

Discretionary

Presents 200 200 780 980

Entertainment 180 180 180 540 1,800 2,340

Savings 1,500 1,500

Subtotal 180 380 180 740 4,080 4,820

Total Expenditure B. 2,190 3,765 2,190 8,145 24,773 32,918

Net Cash (A–B) 410 (1,165) 810 55 1,714 1,718

Opening Cash 300 710 (455) 300 355 300

Closing Cash 710 (455) 355 355 1,418 1,418

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20. The Egan household have to change their budget because M. Egan has to take a 15% cut in salary. School fees of €200 to be paid in March; house insurance of €20 per month was omitted; bank interest of €400 to be paid to the Egans in March was also omitted. The Egans decided to provide for these changes by cutting entertainment down to €80 per month and reducing decoration costs to €600. All other figures were to remain unchanged.

(a) Complete the revised budget form opposite for January-March taking the above into account.

(b) Will these reductions in expenditure be enough to cover the changes above? Yes No

Reason for Answer The net cash will be €385 and the total expenditure will reduce by €100.

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Budget Revised Budget

Egan Household Jan Feb Mar Total Jan Feb Mar Total

Planned Income €€ € € € € € €

M. Egan – Salary 900 900 900 2,700 765 765 765 2,295

N. Egan – Salary 700 700 700 2,100 700 700 700 2,100

Child Benefit 60 60 60 180 60 60 60 180

Bank Interest 400 400

Total Income A. 1,660 1,660 1,660 4,980 1,525 1,525 1,925 4,975

Planned Expenditure

Fixed

House Mortgage 320 320 320 960 320 320 320 960

Car Tax 280 280 280 280

Car Insurance – – –

House Insurance – – – 20 20 20 60

Subtotal 320 600 320 1,240 340 620 340 1,300

Irregular

Housekeeping 380 380 380 1,140 380 380 380 1,140

Car Expenses 60 60 60 180 60 60 60 180

Telephone 160 180 340 160 180 340

School Fees 200 200

Subtotal 600 440 620 1,660 600 440 820 1,860

Discretionary

Entertainment 100 100 100 300 80 80 80 240

House Decorations 900 – 900 – 600 600

Birthday 60 80 140 60 80 140

Subtotal 160 1,000 180 1,340 140 680 160 980

Savings 150 150 150 450 150 150 150 450

Total Expenditure B. 1,230 2,190 1,270 4,690 1,230 1,890 1,470 4,590

Net Cash (A – B) 430 –530 390 290 295 (365) 455 385

Opening Cash 20 450 –80 20 20 315 (50) 20

Closing Cash 450 –80 310 310 315 (50) 405 405

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21. Opposite is a completed budget and a revised budget form for the O’Mara family from April to June. After preparing the budget for April-June the O’Mara family were informed that Mr O’Mara was to go on a three-day week in his employment. This would result in a substantial drop in the family’s income. The O’Maras decided to revise their budget in view of the changed circumstances. (a) Complete the revised budget form opposite taking the following into account: • Mr O’Mara’s wages to be reduced by 40%. • They decided to install Cablelink television and rent a video at a monthly cost of €30 to occupy his spare time. • Car running costs to be reduced by €20 per month. • Telephone expenses to be reduced to €100 per bill. • It is decided to omit holiday expenses. • Savings plan to be abandoned. • All other income and expenses are to remain the same.

(b) (i) If Mr O’Mara had not suffered a drop in income, would you consider the original budget a good one? Yes ______ No ______(ii) Give two reasons for your answer.

1. ______There was an overall net cash of €20 2.______They were able to save each month

(c) What other actions could be considered? Mr O’Mara could look for a part-time job. The O’Maras could pay the car tax quarterly and the car insurance monthly.

(Junior Certificate Higher Level 1996 amended for euro)

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(a)

Budget Revised Budget

Income Apr May Jun Total Apr May Jun Total

Planned Income € € € € € € € €

Mr O’Mara – Wage 900 900 900 2,700 540 540 540 1,620

Mrs O’Mara – Wage 595 595 595 1,785 595 595 595 1,785

Child Benefit 25 25 25 75 25 25 25 75

Total Income A. 1,520 1,520 1,520 4,560 1,160 1,160 1,160 3,480

Planned Expenditure

Fixed

Car Loan 240 240 240 720 240 240 240 720

Car Insurance 205 205 205 205

Car Tax 220 220 220 220

House Insurance 75 75 75 75

Video/T.V. 30 30 30 90

Subtotal 460 315 445 1,220 490 345 475 1,310

Irregular

Housekeeping 600 600 600 1,800 600 600 600 1,800

Car Running Costs 125 125 125 375 105 105 105 315

Electricity 105 85 190 105 85 190

Telephone 130 130 130 130

Subtotal 830 855 810 2,495 810 805 790 2,405

Discretionary

Holidays 75 75 75 225

Entertainment 60 60 60 180 60 60 60 180

Birthdays/Presents 60 60 60 60

Subtotal 135 195 135 465 60 120 60 240

Savings 120 120 120 360

Total Expenditure B. 1,545 1,485 1,510 4,540 1,360 1,270 1,325 3,955

Net Cash (A – B) –25 35 10 20 (200) (110) (165) (475)

Opening Cash 180 155 190 180 180 (20) (130) 180

Closing Cash 155 190 200 200 (20) (130) (295) (295)

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22. After preparing the budget for January-March Mrs Byrne, who had qualified as an accountant, secured employment. This would result in a substantial increase in the family’s income starting in February. The Byrnes decided to revise their budget in view of the changed circumstances. (a) Complete the revised budget form opposite, taking the following into account: • Mrs Byrne’s annual salary will be €24,000. • Mr & Mrs Byrne decided to buy a holiday mobile home by getting a loan. The total cost of the loan including interest will be €36,000 repayable monthly over 4 years beginning in January. • The insurance on the mobile home is €480 per annum payable on 1 January. • Baby sitting costs will increase by 50%. • It is estimated that entertainment will increase by €200 per month. • All other income and expenses are to remain the same.

(b) (i) Comment on the Byrnes’ finances before February.

______The income was less than expenditure. ______(ii) If the Byrnes family had not received an increase in income would you consider the original budget a good one? Give reasons for your answer.

______No. They had a net cash deficit in January and February

______(iii) Is their revised budget a good one in their new circumstances? Give reasons for your answer.

______No. The car insurance should be paid quarterly and the house insurance

______and the mobile home insurance should be paid monthly.

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Budget Revised Budget

Income Jan Feb March Total Jan Feb March Total

Planned Income € € € € € € € €

Mr Byrne – Salary 1,800 1,800 1,800 5,400 1,800 1,800 1,800 5,400

Mrs Byrne – Salary – 2,000 2,000 4,000

Child Benefit 120 120 120 360 120 120 120 360

Total Income A. 1,920 1,920 1,920 5,760 1,920 3,920 3,920 9,760

Planned Expenditure

Fixed

House Mortgage 560 560 560 1,680 560 560 560 1,680

Mobile Home Loan 750 750 750 2,250

Car Insurance 950 950 950 950

Car Tax 80 80 80 80

House Insurance 140 140 140 140

Mobile Home Insurance 480 480

Subtotal 640 1,650 560 2,850 1,870 2,400 1,310 5,580

Irregular

House Keeping 460 460 460 1,380 460 460 460 1,380

Car Running Costs 100 100 100 300 100 100 100 300

Tel. & ESB 200 90 80 370 200 90 80 370

Baby Sitting 480 480 480 1,440 720 720 720 2,160

Subtotal 1,240 1,130 1,120 3,490 1,480 1,370 1,360 4,210

Discretionary

Entertainment 100 100 100 300 300 300 300 900

Birthdays 45 100 145 45 100 145

Subtotal 145 100 200 445 345 300 400 1,045

Total Expenditure B. 2,025 2,880 1,880 6,785 3,695 4,070 3,070 10,835

Net Cash (A – B) (105) (960) 40 (1,025) (1,775) (150) 850 (1,075)

Opening Cash 500 395 565 500 500 (1,275) (1,425) 500

Closing Cash 395 (565) (525) (525) (1,275) (1,425) (575) (575)

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23. After preparing the budget for May-July the Lynch family were informed that Mr Lynch was to go on a three-day week. Mrs Lynch who qualified as a nurse, secured employment. This would result in a change in the family’s income starting in May. The Lynchs decided to revise their budget in view of the changed circumstances. (a) Complete the revised budget form, taking the following into account: • Mr Lynch’s wages to be reduced by 30%. • Mrs Lynch’s annual salary will be €30,000. • They decided to enrol their son Patrick in a private school. Deposit of €3,000 is payable in July. • A new car was bought by getting a loan. The total cost of the loan including interest will be €24,000, repayable monthly over 4 years beginning in June. • Road tax for new car is €360 payable quarterly from May. • Car running costs will increase by 40%. • The insurance on the new car is €600 per annum payable monthly starting on 1 June. • Baby sitting costs will increase by 20%. • The planned holiday was cancelled. • They reduced savings by 50%. • All other income and expenses are to remain the same. (b) (i) Comment on the Lynchs’ finances before May. Their finances were poor because there was a net cash deficit each month and all their savings were used up.

(ii) If the Lynch family had not had a change in circumstances would you consider the original budget a good one? Yes ______No ______

Give reasons for your answer. They were intending to live beyond their means by planning a holiday even

though they could not afford it. (iii) Is their revised budget a good one in their new circumstances? Yes ______ No ______

Give reasons for your answer. They have a net cash surplus in May and June and their closing cash has increased.

222 Junior Certificate Business Studies Workbook Teacher’s Manual

(a)

Original Budget Revised Budget

Income May June July Total May June July Total

Planned Income € € € € € € € €

Mr. Lynch – Salary 1,800 1,800 1,800 5,400 1,260 1,260 1,260 3,780

Mrs. Lynch – Salary – – – – 2,500 2,500 2,500 7,500

Child Benefit 140 140 140 420 140 140 140 420

Total Income A. 1,940 1,940 1,940 5,820 3,900 3,900 3,900 11,700

Planned Expenditure

Fixed

House Mortgage 800 800 800 2,400 800 800 800 2,400

New Car Loan 500 500 1,000

Car Insurance 560 560 50 50 100

Car Tax – – – – 90 90

House Insurance 40 40 40 120 40 40 40 120

School Fees – – – – 3,000 3,000

Subtotal 840 1,400 840 3,080 930 1,390 4,390 6,710

Irregular

House keeping 400 400 400 1,200 400 400 400 1,200

Car Running Costs 100 100 100 300 140 140 140 420

Telephone & ESB 120 140 120 380 120 140 120 380

Baby Sitting 400 400 400 1,200 480 480 480 1,440

Subtotal 1,020 1,040 1,020 3,080 1,140 1,160 1,140 3,440

Discretionary

Holiday 1,500 1,500 – – – –

Entertainment 100 100 100 300 100 100 100 300

Subtotal 100 1,600 100 1,800 100 100 100 300

Savings 500 500 500 1,500 250 250 250 750

Total Expenditure B. 2,460 4,540 2,460 9,460 2,320 2,800 5,780 10,900

Net Cash (A – B) (520) (2,600) (520) (3,640) 1,580 1,100 (1,880) 800

Opening Cash 2,600 2,080 (520) 2,600 2,600 4,180 5,280 2,600

Closing Cash 2,080 (520) (1,040) (1,040) 4,180 5,280 3,400 3,400

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Comparing the Budget with Actual 24. Study the budgeted and actual figures for March given below. (a) Calculate and enter the differences, if any, between budgeted and actual figures, in the differences column. (b) What are the main reasons for the difference? Wages are less by €90. There was a lotto prize of €500. Most of the expenses were greater than budgeted for. (c) What action should be taken to deal with the differences? Rework the budget, cut back on clothes by €80 and entertainment by €40. Shop around for food and save €20.

Budget Actual Difference

Planned Income € € €

Wages 950 860 –90

Child Benefit 60 60 –

Deposit Interest 160 120 –40

Lotto Prize 500 +500

Total Income A. 1,170 1,540 +370

Planned Expenditure

Fixed

Mortgage 310 375 +65

Car Insurance 360 450 +90

House Insurance – 180 +180

Subtotal 670 1,005 +335

Irregular

Food 240 280 +40

Petrol 70 55 –15

Clothes 100 180 +80

Pocket Money 20 20 –

Subtotal 430 535 +105

Discretionary

Entertainment 40 80 +40

Church 10 – –10

Subtotal 50 80 +30

Savings 10 – –10

Total Expenditure B. 1,160 1,620 +460

Net Cash (A – B) 10 –80 –70

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25. The O’Brien family keeps a record of all financial transactions in an analysed cash book (bank columns only). On 1 May 2003 they had €110 in the bank. During May they had the following bank transactions.

2003 Transaction € May 2 Paid for shoes by cheque (No. 14) 35 May 4 Withdrew cash by ATM for groceries 93 May 5 Paid electricity bill by cheque (No. 15) 87 May 8 Paid for petrol by cheque (No. 16) 26 May 11 Paid for heating oil by cheque (No. 17) 100 May 15 Paid for car repairs by cheque (No. 18) 65 May 19 Paid for coat by cheque (No. 19) 73 May 23 Withdrew cash by ATM for groceries 102 May 26 Lodged wages cheque €860 plus child benefit €30 (No. 20) 890 May 27 Paid hospital expenses by cheque (No. 21) 415 May 28 Lodged cash from sale of old furniture 125

(a) Enter the above transactions in the analysed cash book (blank columns only) in your copybook, using the following money column headings: Debit (Receipts) side: Total; wages; child benefit; other. Credit (Payments) side: Total; groceries; light and heat; shoes and clothes; car; other.

Analysed Cash Book Debit side (Summary) Total Wages Child Benefit Other 1,125 860 30 125

Analysed Cash Book Credit side (Summary) Total Groceries L&H Shoe/clothes Car Other 996 195 187 108 91 415

(b) Using the Budget Comparison Statement provided enter the appropriate figures, from the analysed cash book you have prepared, into the ‘Actual’ column. Then show the differences between the ‘actual’ and ‘budget’ figures, by completing the column marked ‘Difference’. Use a plus + or minus – sign in front of each figure in that column. Budget Comparison Statement of the O’Brien Family

Budget Actual Difference Planned Income € € € Wages 840 860 +20 Child Benefit 30 30 – Other – 125 +125 Total Income A. 870 1,015 +145 Expenditure – – – Groceries 195 195 – Light and Heat 200 187 –13 Shoes and Clothes 130 108 –22 Car 50 91 +41 Other – 415 +415 Total Expenditure B. 575 996 +421 Net Cash (A – B) 295 +19 –276 Junior Certificate Business Studies Workbook Teacher’s Manual

(c) (i) How much money had the O’Briens intended to save in May? €295 (ii) By how much did the O’Briens’ actual income exceed their actual expenditure in May? €19 (iii) By how much did the O’Briens’ actual expenditure exceed their budgeted expenditure in May? €421

(iv) How much money did the O’Briens have in their bank account at the end of May? €129 (€1,125 – €996) (Junior Certificate Higher Level 1995 amended for euro) 26. The following information has been obtained from the analysed cash book of the O’Reilly family for the month of May 2005. Total Receipts: Wages €2,000; child benefit €300; deposit interest €250. Total Payments: Housekeeping €712; car €900; personal €350; other €220. (a) Enter the figures above in the Actual Column in the Budget Comparison Sheet provided and show the difference in the Difference column (place a plus + or a minus – in front of each figure in that column). Budget Comparison Sheet of the O’Reilly Family for May 2005 Planned Income Budget Actual Difference € € € Wages 1,500 2,000 +500 Child Benefit 250 300 +50 Deposit Interest 300 250 –50 Total Income A. 2,050 2,550 +500 Expenditure Housekeeping 650 712 +62 Personal 500 350 –150 Car 390 900 +510 Other 120 220 +100 Total Expenditure B. 1,660 2,182 +522 Net Cash (A – B) 390 368 –22

(b) (i) Suggest one reason why the actual figures are not as budgeted. Additional wages from overtime. Increase in child benefit. Repairs to car that were not planned.

(ii) What advice would you give to the O’Reilly family when preparing their budget for June 2005 and onwards? When planning the budget, don’t leave out any possible income, such as overtime. Don’t leave out possible expenses, such as car repairs. (iii) Should the annual deposit interest be included in the June budget? Yes __ No __ Give a reason for your answer. The interest is payable in May so it can only be included in the May budget.

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27. The Crilly family keeps a record of all financial transactions in an analysed cash book. On 1 May 2004 they had €300 in the bank. During the month of May 2004 they had the following transactions.

2004 Transaction € 1 May Purchased groceries by cheque (No. 1) 80 3 May Lodged wages in bank 1,800 5 May Paid for repairs to car cheque (No. 2) 300 7 May Lodged child benefit 240 9 May Paid for school trip cheque (No. 3) 400 13 May Paid meat bill cheque (No. 4) 130 15 May Paid BUPA membership cheque (No. 5) 800 18 May Paid for petrol cheque (No. 6) 70 23 May Lodged Lotto win 5,000 27 May Withdrew cash by ATM for clothes 700 30 May Paid for new school uniform cheque (No. 7) 120

(a) Record the above transactions in the analysed cash book in your copybook using the following money column headings: Debit (Receipts) Side: Bank; wages; child benefit; other. Credit (Payments) Side: Bank; groceries; school; car; other.

Analysed Cash Book (Debit Side) Summary Bank Wages Child Benefit Other 7,340 1,800 240 5,000

Analysed Cash Book (Credit Side) Summary Bank Geoceries School Car Other 2,600 210 520 370 1,500

(b) Enter the appropriate figures from the above analysed cash book in the Actual column in the Budget Comparison Sheet below and show the difference in the Difference column (place a plus + or minus – sign in front of each figure in that column). Budget Comparison Sheet of the Crilly Family for May 2004 Planned Income Budget Actual Difference € € € Wages 1,600 1,800 +200 Child Benefit 240 240 – Other – 5,000 +5,000 Total Income A. 1,840 7,040 +5,200 Expenditure Groceries 180 210 +30 School 400 520 +120 Car 450 370 –80 Other 800 1,500 +700 Total Expenditure B. 1,830 2,600 +770 Net Cash (A – B) 10 4,440 +4430

(c) (i) How much money did the Crilly family hope to have at the end of May? € 10 (ii) How much money did the Crilly family have in the bank at the end of May? € 4,740 (€7,340 + €2,600)

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(iii) Was the Crillys’ family budget a good one? Yes_____ No ____ Give a reason for your answer: They planned to have a surplus budget.

28. When the Doyle family checked their analysed cash book at the end of December 2000, they found that their actual income and expenditure for the 12 months January to December differed from the budgeted figures (contained in the Budget Comparison Statement opposite) due to the following: • Their salaries had increased by 10% from 1 July. • Child benefit had increased by €10 per month from 1 April for each of the two children in the family. • The actual interest received was €37 less than budgeted. • They had won a prize of a holiday in the USA which they did not wish to use and sold it for €1,200. • The mortgage had increased by €55 per month from 1 March and by another €25 per month from 1 November. • They had lost their No Claims Bonus of €240 on their car insurance due to a car crash during the year. • House insurance costs were 20% higher than budgeted. • Household costs were 12½% less than budgeted. • The cost of shoes and clothes amounted to €1,635. • They had changed their car so that car costs had increased by €4,270 over those budgeted. • A saving of 8% had been made in the light and heat budget. • The only medical expense for the year had resulted from monthly medication costs of €25 for the last three months of the year. • Entertainment costs had averaged €60 per month. • Gifts were €20 less than budgeted. (Junior Certificate Higher Level 2001 Paper I(B) Q1 amended) (a) Using the Budget Comparison Statement provided opposite enter the appropriate figures into the Actual column. Then show the difference between the actual and the budget figures by completing the column marked difference. Place a plus + or minus – sign in front of each figure in that column. Note: Use plus sign if the actual is GREATER than the budget figure. Use minus sign if the actual is LESS than the budget figure. Example Budget Actual Difference 430 480 +50 780 710 –70 Total 1,210 1,190 –20

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(a) Budget Comparison Statement for the Doyle Family for the year 2000

Budget Actual Difference Jan-Dec Jan-Dec € € €

Income Salaries 18,000 18,900 +900 Child Benefit 960 1,140 +180 Interest 150 113 –37 Other – 1,200 +1,200 Total Income A. 19,110 21,353 +2,243 Expenditure Fixed Mortgage 4,320 4,920 +600 Car Insurance 397 637 +240 House Insurance 170 204 +34 Subtotal 4,887 5,761 +874 Irregular Household Costs 7,504 6,566 –938 Shoes and Clothes 1,740 1,635 –105 Car Costs 1,800 6,070 +4,270 Medical Expenses 200 75 –125 Subtotal 11,244 14,346 3,102 Discretionary Entertainment 1,000 720 –280 Gifts 200 180 –20 Subtotal 1,200 900 –300 Total Expenditure B. 17,331 21,007 +3,676 Net Cash (A – B) 1,779 +346 1,433

(b) (i) Did the Doyle family have a surplus or deficit at the end of the year? Surplus What was this figure? € 346

(ii) How much money had the Doyles intended to save during the year? € 1,779

(iii) By how much did they exceed their budgeted expenditure? € 3,676 (iv) If the Doyles had an opening cash balance of €2,000 on 1 January 2000, what was their actual closing cash balance at the end of the year? € 2,346

229 Junior Certificate Business Studies Workbook Teacher’s Manual Chapter 8 The Good Consumer

1. Complete the following sentences. (a) A consumer is a person who buys goods and services. (b) An informed consumer is a person who chooses goods and services wisely. 2. Complete the receipt below from the following data: Received €240 by cheque from Mary Mulligan, Mohill, Co. Leitrim on today’s date. Assume you are Andrea Flynn.

RECEIPT No: 20 Flynn’s Furniture Stores Ltd, Sligo Date:

RECEIVED FROM: Mary Mulligan,

Mohill, Co Leitrim € 240 THE SUM OF: Two hundred and forty euro

With Thanks Signed: Andrea Flynn (Accounts Department)

3. Complete the receipt below from the following data: Received €500 cash from Francis King, Oranmore, Co. Galway on today’s date. Assume you are Darren Walsh.

RECEIPT No: 475 Walsh Concrete, Oranmore, Co. Galway Date:

RECEIVED FROM: Francis King,

Oranmore, Co. Galway € 500 THE SUM OF: Five hundred euro

With Thanks Signed: Darren Walsh (Accounts Department)

Chapter 9 Protecting the Consumer

1. The following sign was displayed in a shop.

No Cheques Accepted Under Any Circumstances

Is this sign legal? Yes . Give a reason for your answer. Cheques are not regarded as legal tender and do not have to be accepted.

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2. Complete the following sentences by choosing the appropriate term below. One term does not fit. (a) Ingredients on a label must be stated in descending order. (b) Giving misleading information breaks the Consumer Information Act. (c) The Ombudsman investigates complaints against state agencies. (d) A contract exists when goods or services are bought by a consumer. (e) A receipt is written proof of payment for goods or services.

Contract, Ombudsman, Consumer Information, Descending, Small Claims, Receipt

3. Crunchy Corn Flakes can be purchased in two packet sizes, each a different weight and price.

Size Weight Price Small 500 grams €0.93 Large 1,000 grams €1.90

Which size is the best value? Show your workings. The best value is: Workings Small Two small 500 grams cost only €1.86

4. Bubbles Washing Up Liquid comes in two sizes.

Size Price 100ml €0.25 280ml €0.89 Which size is the best value? Show your workings. The best value is: Workings Per ml 100 ml 100 = €0.00250 280 = €0.00318 5. Munch Cereal comes in three sizes.

Size Price 450 grams €1.26 528 grams €1.52 600 grams €2.03

Which size is the best value? Show your workings. The best value is: Workings Per gram 450 grams 450 = €0.0028 528 = €0.00289 600 = €0.00338

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Chapter 10 Making a Complaint

1. Complete the Credit Note below from the following data: Issue credit note to Joan Morris, Mill Street, Cork, for return of five boxes of unused tiles at €50 per box. Use today’s date and assume you are Mary Black. CREDIT NOTE No. 490 Cork Tiles Ltd, Marble Arch, Cork Tel No: 021-2213345 To: _Joan ______Morris e-mail: [email protected] ______Mill Street VAT Reg. IE234345 ______Cork Date ______

Quantity Description Unit Price Total € € 250 5 Tiles 50 Reason Unused Signed Total 250 ______Mary Black Manager

2. Complete the Credit Note below from the following data: Issue credit note to Bernard Cronin, Maynooth, Co. Kildare for return of two microwaves received as unwanted wedding present, value €150 each. Use today’s date and assume you are Siobhan O’Farrell. CREDIT NOTE No. 371 Murphy’s Stores, Nass, Co. Kildare Tel No: 045-777503 To: ______Bernard Cronin e-mail: [email protected] ______Maynooth VAT Reg. IE786543 ______Co. Kildare Date ______

Quantity Description Unit Price Total € € 300 2 Microwaves 150 Reason Unwanted wedding present Signed Total 300 ______Siobhan O’Farrell Manager

3. Complete the Credit Note provided from the following data: Issue credit note to Michael Daly, Cork Street, Carlow, for return of five cans of unopened paint at €45 per tin. Use today’s date and assume you are Patricia Cooney.

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CREDIT NOTE No. 124 McGraths Paints Ltd, High St, Carlow Tel No: 0503-12543 To: ______Michael Daly e-mail: [email protected] ______Cork Street VAT Reg. IE234345 ______Carlow Date ______

Quantity Description Unit Price Total € € 225 5 Paint 45 Reason Unopened paint Signed Total 225 ______Patricia Cooney Manager

Chapter 11 Money and Banking I

1. Column 1 is a list of money and banking terms. Column 2 is a list of possible explanations. Match the two lists by placing the letter of the correct explanation under the relevant number in the table below. (One explanation does not refer to any term.) Column 1 Terms Column 2 Explanations

1. Money (a) Financial co-operatives owned and run by members 2. Barter (b) A clock in a bank which gives the time of a bank 3. Twenty-four hours banking transaction 4. Credit Union (c) Exchanging goods for other goods (d) Accepted by people in exchange for goods or services (e) Carrying out bank transactions with an ATM card

1. 2. 3. 4. d c e a

2. State what the following initials stand for. ATM ______Automated Teller Machine PIN ______Personal Identity Number AIB ______Allied Irish Bank EBS ______Educational Building Society ACC ______Agricultural Credit Corporation

3. Name four banks operating in Ireland. 1. Bank of Ireland 2. ______Allied Irish Bank 3. ______Ulster Bank 4. ______Permanent TSB

233 Junior Certificate Business Studies Workbook Teacher’s Manual Chapter 12 Money and Banking II

1. Indicate with a tick which of the following are true or false. State a reason for your answer.

True False (a) Only banks lend money (b) It is safe to send cash in the post (c) A person can pay some bills with an ATM card (d) Standing Orders are for once-off payments (e) DIRT is only paid by businesses 2. You wish to pay your club membership by twelve equal monthly payments. Indicate the most suitable method, from the list below, by placing a tick in the box.

(a) Standing Order (b) Credit Card (c) Bank Overdraft (d) Direct Debit

3. Apart from banks, name two other financial agencies where people can save their money. 1. ______Credit Union 2. ______An Post

4. Assume you are Mary Hannifin, Aherne Lane, Dublin 4. Make a credit transfer of €230 cash to BUPA which has an account no. 99876723 in the Bank of Ireland, Abbey Street, Dublin. Complete the blank Credit Transfer form below on today’s date.

Chapter 13 Money and Banking III

1. John Monaghan paid a cheque to Olive Heslin. Answer the following question by selecting the correct term from the following list: Drawer; Drawee; Payee. Olive is known as the ______payee of that cheque. (Write the answer in the space provided.)

234 Junior Certificate Business Studies Workbook Teacher’s Manual 2. Complete the following sentences: (a) Endorsing a cheque means ______the payee passes on the cheque by signing it on the back. (b) A dishonourable cheque is ______a cheque that the bank refuses to accept.

3. List four methods by which a current account holder can make payments from a current account. (a) ______Withdrawal slip (b) _Cheque______(c) ______ATM (d) _Standing______order

4. You make a lodgment to your personal account in your local bank. The bank official gives you back the counterfoil of the lodgment slip. What does the bank official do to this counterfoil before handing it back to you? Explain your answer. The bank official stamps it and intials it. This is proof of the lodgment.

5. The following information is given on the counterfoil of current account lodgment slips. Cheques are accepted subject to examination and verification and are transmitted for collection at the customer’s risk. Though credited when paid in, they should not be drawn against until clear.

Explain its significance to the current account holder. The cheques lodged by the account holder have to be cleared before the account holder can withdraw money.

6. Column 1 is a list of cheque terms. Column 2 is a list of possible explanations. Match the two lists by placing the letter of the correct explanation under the relevant number in the table below. (One explanation does not refer to any term.) Column 1 Terms Column 2 Explanations 1. Endorsed cheque (a) A cheque which the drawer informs the bank not to honour 2. Stopped cheque (b) A cheque with two parallel lines on the face of it 3. Open cheque (c) A cheque which is signed on the back by the payee 4. Blank cheque (d) A cheque which is not crossed (e) A cheque with some of the details missing

1. 2. 3. 4. c a d e

7. Assume you are Kerry Holmes, Olympic Avenue, Greek Road, Carlow. Your date of birth is 7 September 1974 and you work as a fitness coach in the Glen Eagle Hotel, Killarney, Co. Kerry. Your gross pay is €4,400 per month. (a) Complete the partially completed application form supplied on 12 September 2006. (b) Lodge €850 (Cheques €690, Notes €133 and Coin €27) to your current account 15008004, on 16 September 2006, using the lodgment form supplied.

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(a)

CURRENT ACCOUNT APPLICATION FORM

Personal Details

Mr/Mrs/Miss/Ms Surname Holmes Forename Kerry

Address ...... Olympic Avenue, Greek Road, Carlow ......

Tel. Home: 066 740211 Work: 066 74852

Date of Birth7/9/1974 Status: Single Married Other

Dependant Children No. 0 Ages

Are You Homeowner: Tenant With Parents

Employment Details:

Occupation Fitness Coach Gross Pay €4,400 per month

Employer’s Name: ...... Glen Eagle Hotel Address: ...... Killarney ...... Co, Kerry

Bank/Other/Details ......

If account elsewhere Yes No Name of Agency An Post

Signature: ...... Kerry Holmes Date: ...... 12/9/2006

(b)

236 Junior Certificate Business Studies Workbook Teacher’s Manual 8. Complete the following cheques and counterfoils supplied from the following data. Make the cheques as safe as possible.

(a) Pauline Murphy paid Ryanair €250 on 14 November 2005.

SPECIMEN

A/C payee only

(b) Richie Ryan paid ESB €240 on 10 December 2006.

SPECIMEN

A/C payee only

SPECIMEN

A/C payee only

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(d) Jack Burns paid Trinity College €4,500 on 5 October 2006.

SPECIMEN

A/C payee only

Chapter 14 Bank Accounts

1. The following initials can appear in a bank statement. Write them out in full below. (i) OD Over Drawn (ii) SO Standing Order (iii) DD Direct Debit (iv) CT Credit Transfer

2. Compare the balance in Ann Hannon’s bank account below with that of the bank statement and update it as necessary. Prepare a Bank Reconciliation Statement in your copybook as on 31 May 2005. Date Details Amount Date Details Cheque No./ATM Amount 2005 Bank A/C 2005 1/5/ Balance 1,680 2/5/ Eircom 20 300 31/5/ Lodgment 820 4/5/ Rent 21 340 7/5/ Dr O’Rourke 22 300 11/5/ ESB 23 310 22/5/ Cash ATM 320 31/5/ Balance C/D 930 2,500 2,500

31/5/ Balance B/D 930

Current Account Bank Statement NO. 11 Date Details Debit Credit Balance € € € 2006 1/5/ Balance 1,680 2/5/ Cheque (No. 20) 300 1,380 4/5/ Cheque (No. 21) 340 1,040 11/5/ Credit Transfer 600 1,640 17/5/ Cheque (No. 23) 310 1,330 19/5/ Standing Order 600 730 22/5/ ATM Withdrawal 320 410 24/5/ Direct Debit 200 210 30/5/ Current Account Fees 50 160

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Updated Bank A/C 31/5/05 Balance b/d 930 SO 600 C/T 600 OD 200 Fees 50 Balance c/d 680 1,530 1,530 Balance b/d 680

Bank Reconciliation Statement Balance as per bank statement 160 Add lodgments not credited 820 980 Less cheques not yet cashed 300 Balance as per updated Bank A/C 680

3. Compare the balance in Andrew Lyons’ bank account with that of the bank statement and update it as necessary. Prepare a Bank Reconciliation Statement in your copybook as on 31 May 2006. Date Details Amount Date Details Cheque No./ATM Amount 2006 Bank A/C 2006 1/5/ Balance B/D 1,000 1/5/ Insurance 1 700 6/5/ Lodgment 900 5/5/ Cash ATM 400 21/5/ Lodgment 2,000 9/5/ Car Tax 2 540 31/5/ Lodgment 1,100 12/5/ Cash ATM 250 17/5/ Carpet 3 700 21/5/ Furniture 4 2,200 31/5/ Balance C/D 210 5,000 5,000 31/5/ Balance B/D 210

Current Account Bank Statement NO. 50 Debit Credit Balance Date Details € € € 2006 1/5/ Balance 1,000 4/5/ Cheque (No. 1) 700 300 5/5/ ATM Cash Withdrawal 400 100 OD 6/5/ Lodgment 900 800 12/5/ ATM Cash Withdrawal 250 550 16/5/ Cheque (No. 2) 540 10 18/5/ Credit Transfer 700 710 21/5/ Standing Order 480 230 22/5/ Lodgment 2,000 2,230 26/5/ Direct Debit 200 2,030 31/5/ Bank Interest and Charges 105 1,925 OD = Overdrawn

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Updated Bank A/C 31/5/05 Balance b/d 210 DD 200 C/T 700 SO 480 Charges 105 Balance c/d 125 910 910 Balance b/d 125

Bank Reconciliation Statement Balance as per bank statement 1,925 Add lodgments not credited 1,100 3,025 Less cheques not cashed 2,900 Balance as per updated Bank A/C 125

4. Compare the balance in Donal Clarke’s bank account with that of the bank statement and update it as necessary. Prepare a Bank Reconciliation Statement in your copybook as on 31 May 2006. Date Details Amount Date Details Cheque No./ATM Amount 2006 Bank A/C 2006 5/9/ Lodgment 650 1/5/ Balance 200 31/5/ Lodgment 200 2/5/ Groceries 1 40 7/5/ Petrol 2 25 9/5/ Clothes 3 70 17/5/ Cash ATM 30 24/5/ Clothes 4 200 31/5/ Balance C/D 285 850 850 31/5/ Balance B/D 285

Current Account Bank Statement NO. 32 Date Details Debit Credit Balance € € € 2006 1/5/ Balance 200 OD 5/5/ Lodgment 650 450 9/5/ Cheque (No. 1) 40 410 10/5/ Standing Order 150 260 13/5/ Credit Transfer 300 560 16/5/ Cheque (No. 3) 70 490 17/5 ATM Withdrawal 30 460 21/5/ Direct Debit 600 140 OD 31/5/ Bank Charges and Interest 85 225 OD 31/5/ Bank Interest 45 270 OD OD = Overdrawn

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Updated Bank A/C 31/5/05 Balance b/d 285 SO 150 C/T 300 DD 600 Charges 85 Interest 45 Balance c/d 295 880 880 Balance B/D 295

Bank Reconciliation Statement Balance as per bank statement 270 OD Add lodgments not credited 200 70 OD Less cheques not cashed 225 Balance as per updated Bank A/C 295 OD

5. Compare the balance in Duffy Ltd’s bank account with that of the bank statement and update it as necessary. Prepare a Bank Reconciliation Statement in your copybook as on 31 May 2005. Date Details Amount Date Details Cheque No./ATM Amount 2005 Bank A/C 2005 1/5/ Balance B/D 700 2/5/ Suppliers 1 550 16/5/ Sales 1,600 6/5/ Purchases 2 360 28/5/ Lodgment 1,700 9/5/ ESB 3 140 31/5/ Sales 1,450 11/5/ Insurance 4 120 19/5/ Jones Ltd 5 1,900 30/5/ Eircom 6 320 31/5/ Balance C/D 2,060 5,450 5,450 31/5/ Balance B/D 2,060

Current Account Bank Statement NO. 23 Date Details Debit Credit Balance € € € 2005 1/5/ Balance 700 5/5/ Cheque (No. 1) 550 150 10/5/ Cheque (No. 3) 140 10 14/5/ Cheque (No. 4) 120 110 OD 16/5/ Lodgment 1,600 1,490 18/5/ Cheque (No. 2) 360 1,130 24/5/ Standing Order 400 730 26/5/ Credit Transfer 550 1,280 28/5/ Lodgment 1,700 2,980 30/5/ Current Account fees 25 2,955 OD = Overdrawn

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Updated Bank A/C 31/5/05 Balance b/d 2,060 SO 400 C/T 550 Fees 25

Balance c/d 2,185 2,610 2,610 Balance b/d 2,185

Bank Reconciliation Statement Balance as per bank statement 2,955 Add lodgments not credited 1,450 4,405 Less cheques not cashed 2,220 Balance as per updated Bank A/C 2,185

6. Compare the balance in Carey Ltd’s bank account with that of the bank statement and update it as necessary. Prepare a Bank Reconciliation Statement in your copybook as on 31 May 2005. Date Details Amount Date Details Cheque No./ATM Amount 2005 Bank A/C 2005 1/6/ Balance B/D 12,450 4/6/ Butter Ltd 1 550 12/6/ Lodgment 12,000 4/6/ Jam Ltd 2 2,500 31/6/ Lodgment 8,000 17/6/ Honey Ltd 3 3,600 23/6/ Flora Ltd 4 4,000 30/6/ Marg Ltd 5 5,000 30/6/ Balance C/D 16,800 32,450 32,450 30/6/ Balance B/d 16,800

Current Account Bank Statement NO. 17 Date Details Debit Credit Balance € € € 2005 1/6/ Balance 12,450 8/6/ Cheque (No. 2) 2,500 9,950 12/6/ Lodgment 12,000 21,950 14/6/ Standing Order 2,200 19,750 17/6/ Cheque (No. 1) 550 19,200 21/6/ Credit Transfer 5,500 24,700 24/6/ Direct Debit 3,800 20,900 27/6/ Cheque (No. 4) 4,000 16,900 30/6/ Bank Interest and Charges 270 16,630

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Updated Bank A/C 30/6/05 Balance b/d 16,800 SO 2,200 C/T 5,500 DD 3,800 Charges 270 Balance c/d 16,030 22,300 22,300 Balance b/d 16,030

Bank Reconciliation Statement Balance as per bank statement 16,630 Add lodgments not credited 8,000 24,630 Less cheques not cashed 8,600 Balance as per updated Bank A/C 16,030

7. Prepare Murphy Ltd’s bank account and calculate the closing bank balance from the data supplied. Compare the balance in Murphy Ltd’s bank account with that of the bank statement and update it as necessary. Prepare a Bank Reconciliation Statement in your copybook as on 31 May 2005.

2005 Transactions € 1/5/ Balance in bank 1,200 2/5/ Lodged to bank 3,200 6/5/ Paid Lynam Ltd cheque (No. 1) 1,400 11/5/ Paid Dolan Ltd cheque (No. 2) 4,200 15/5/ ATM withdrawal 300 18/5/ Paid Lynch Ltd cheque (No. 3) 2,480 26/5/ Paid Tobin Ltd cheque (No. 4) 1,000 31/5/ Lodged to bank 12,100

Date Details Amount Date Details Cheque No./ATM Amount 2005 Bank A/C 2005 1/5/ Balance b/d 1,200 6/5/ Lynam Ltd 1 1,400 2/5/ Lodgment 3,200 11/5/ Dolan Ltd 2 4,200 31/5/ Lodgment 12,100 15/5 Cash ATM 300 18/5/ Lynch Ltd 3 2,480 26/5/ Tobin Ltd 4 1,000 31/5/ Balance c/d 7,120 16,500 16,500 31/5/ Balance b/d 7,120

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Current Account Bank Statement NO. 14 Date Details Debit Credit Balance € € € 2005 1/5/ Balance 1,200 2/5/ Lodgment 3,200 4,400 10/5/ Cheque (No. 1) 1,400 3,000 13/5/ Direct Debit 4,000 1,000 OD 15/5/ ATM withdrawal 300 1,300 OD 18/5/ Credit Transfer 12,000 10,700 26/5/ Cheque (No. 3) 2,480 8,220 31/5/ Bank Interest and Charges 150 8,070 OD = Overdrawn

Updated Bank A/C 31/5/05 Balance b/d 7,120 DD 4,000 C/T 12,000 Charges 150

Balance c/d 14,970 19,120 19,120 Balance b/d 14,970

Bank Reconciliation Statement Balance as per bank statement 8,070 Add lodgments not credited 12,100 20,170 Less cheques not cashed 5,200 Balance as per updated Bank A/C 14,970

8. Prepare Bannon Ltd’s bank account and calculate the closing bank balance from the data supplied. Compare the balance in Bannon Ltd’s bank account with that of the bank statement and update it as necessary. Prepare a Bank Reconciliation Statement in your copybook as on 31 May 2006.

2006 Transactions € 1/5/ Balance in bank 1,900 OD 3/5/ Paid Mitchell Ltd cheque (No. 1) 4,100 5/5/ Paid Glennon Ltd cheque (No. 2) 2,350 11/5/ Lodged to bank 3,100 15/5/ Paid Nolan Ltd cheque (No. 3) 2,950 20/5/ ATM withdrawal 850 24/5/ Paid Barry Ltd cheque (No. 4) 5,200 31/5/ Lodged to bank 9,600

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Date Details Amount Date Details Cheque No./ATM Amount 2006 Bank A/C 2005 11/05 Lodgment 3,100 1/5/ Balance b/d 1,900 31/05 Lodgment 9,600 3/5/ Mitchell Ltd 1 4,100 5/5/ Glennon Ltd 2 2,350 15/5/ Nolan Ltd 3 2,950 20/5/ Cash ATM 850 31/5/ Balance c/d 4,650 24/5/ Barry Ltd 4 5,200 17,350 17,350 Balance b/d 4,650

Current Account Bank Statement NO. 12 Date Details Debit Credit Balance € € € 2006 1/5/ Balance 1,900 OD 3/5/ Standing Order 900 2,800 OD 8/5/ Cheque (No. 1) 4,100 6,900 OD 11/5/ Lodgment 3,100 3,800 OD 14/5/ Direct Debit 1,700 5,500 OD 19/5/ Credit Transfer 12,700 7,200 20/5/ ATM Withdrawal 850 6,350 25/5/ Cheque (No. 3) 2,950 3,400 31/5/ Bank Interest and Charges 340 3,060 OD = Overdrawn

Updated Bank A/C 31/5/06 C/T 12,700 Balance b/d 4,650 SD 900 DD 1,700 Charges 340 Balance c/d 5,110 12,700 12,700 Balance b/d 5,110

Bank Reconcilation Statement Balance as per bank statement 3,060 Add lodgments not credited 9,600 12,660 Less cheques not cashed 7,550 Balance as per updated Bank A/C 5,110

245 Junior Certificate Business Studies Workbook Teacher’s Manual Chapter 15 Personal Borrowing 1. Explain how the following methods of purchasing goods operate: (a) Credit purchase The seller gives the buyer a period of time to pay, e.g. Eircom gives customers two months’ credit.

(b) Hire purchase The customer obtains immediate use by paying installments and owns the item on paying the last installment.

2. Complete the following sentences: (a) Being creditworthy means being trusted to pay all money owing on time.

(b) Collateral means some form of security which the lender can take if the loan is not paid back. (c) A person is declared bankrupt when a court declares that money owed cannot be paid back.

3. Select suitable forms of borrowing for each of the following:

(a) House purchase of €250,000 Long-term loan (mortgage) (b) Payment of two monthly ESB bills Overdraft (c) Payment of annual car tax Budget account (d) Payment of annual school fees of €5,000 Budget account (e) Purchase of TV €780 Hire purchase (f) Purchase of a new car €23,500 Term loan

4. Cheap finance available only 12% per annum

(a) Comment on the legality of this advertisement: This advertisement is illegal because it does not show the APR, the cash price, the number of instalments or the total credit price.

Easy Credit €120 deposit plus €25 monthly for three years

(b) Comment on the legality of this advertisement: This advertisement is illegal because it does not show the APR, the cash price or the total credit price.

246 Junior Certificate Business Studies Workbook Teacher’s Manual 5. Complete the partially completed National Irish Bank Loan Application supplied for Nora Jones, Piano Keys, Waterford on today’s date. Nora requires a loan of €13,000 for five years to buy a new piano. She owns her own house valued at €350,000. She works as a concert pianist with RTE, Dublin 4 and earns €3,500 gross per month. She has €25,000 saved in the National Irish Bank and €5,000 in An Post. Her current account number is 23233232.

PERSONAL LOAN APPLICATION FORM National Irish Bank

Name(s) ______Nora Jones LOAN REQUIRED

Mr, Mrs, Ms ______Ms Amount €______13,000

Address(es) ______Piano Keys Purpose ______Purchase______of piano

______Waterford How long do you want the loan for? ______5 years

______

______BANK DETAILS (for existing customers)

Number of years at this address 7 years Time with bank 8 years______

Owned or Rented ______Owned Current Account Yes No

Telephone 051-3456651______Account No. ______23233232

Date of Birth 3/1/1980______

Mortgage amount (if any) €200,000______Details of savings

Annual repayments on mortgage €8,600____ Bank/Other ______Yes

Mortgage borrowed from EBS______

EMPLOYMENT DETAILS ______

Occupation ______Pianist Name ______NIB and An Post

Employer’s Name & Address ______RTE _ Amount

______Dublin 4 € ______25,000

______€ ______5,000

Gross pay per month €______3,500 ___ SIGNATURE ______Nora Jones No. of years in your present employment 6 years DATE ______

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6. Rhona King lives at 56 Banks Road, Cork, in a house which she purchased in 1995 with the help of a mortgage of €59,000 from the Startup Building Society and to whom she repays €250 per month. She is single. Her telephone number is 021-134567. Rhonda is employed as a legal secretary with Smart & Keane, Solicitors, Airport Road, Cork, where she started work in 1991. She earns a Gross Salary of €2,400 per month, out of which she pays income tax and PRSI totalling €826. Rhonda wishes to buy a new car for her next birthday. She will be 35 years old on 14 August 2005. In order to buy the car, she needs to borrow €12,500 which she hopes to repay in monthly instalments of €290 over the next four years. She is already paying the Cork Credit Union €64 per month for a loan which she obtained in 2004. She gets a Loan Application Form from her local branch of AIB. (a) Complete Rhona’s Loan Application Form supplied, on today’s date.

PERSONAL LOAN APPLICATION FORM AIB

Name(s) ______Rhona King LOAN REQUIRED Mr, Mrs, Ms ______Ms Amount € ______12,500 Address(es) ______56 Banks Road Purpose ______Purchase of car ______Cork __ How long do you want the loan for? ______4 years ______How much can you repay each month?

______€ ______290 Number of years at this address ______10 years

Owned or Rented ______Owned Details of existing loans Telephone ______021-134567 Lender ______Cork Credit Union Date of Birth ______14/8/1970 ______€ Mortgage amount (if any) ______59,000 Amount € Annual repayments on mortgage ______3,000 € ______64 per month Mortgage borrowed from ______Startup Building Annual repayments Society € ______768 EMPLOYMENT DETAILS ______Occupation ______Legal secretary Employer’s Name & Address______Smart and Keane Solicitors, ______Airport Road, Cork Net pay per month €______1,574 No. of years in your present employment

14 SIGNATURE ______Rhona King DATE ______

(b) If the bank grants Rhona the loan for the car at €290 per month, how much interest will she have paid after four years? €______1,420 Show your workings in the space provided.

Total repaid €13,920 less loan €12,500 = €1,420

248 Junior Certificate Business Studies Workbook Teacher’s Manual (c) Explain the following terms: (i) Mortgage This is a long-term loan which is used to purchase or build a house.

(ii) Debtor This is a person who owes money to another person.

(iii) Bankruptcy This is where the court declares publicly that a person cannot pay money owing. Chapter 16 Insurance

1. (a) Explain the following insurance terms: (i) Premium This is payment made to an insurance company when insurance is purchased.

(ii) Adequate Insurance This insures all possible risks for the correct amount.

(iii) All Risks Insurance This covers any accidental loss or damage to selected household items anywhere in Ireland or Europe.

(iv) Proposal Form This is an application form that has to be completed when purchasing insurance.

(b) What conditions must be present before a risk is insurable? (i) There must be an insurable risk (ii) There must be a large number of similar risks insured (iii) All losses must be accidental (iv) It must be possible to calculate the risk of a loss occuring

2. Indicate with a tick which of the following are true or false. True False (a) A premium is paid by the insurer to the insured (b) The principle of Utmost Good Faith applies to the completion of a proposal form (c) Comprehensive car insurance is required by law (d) The VHI is an example of an insurance company (e) Endowment assurance is the same as whole life assurance

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3. Name and explain the two principles of insurance that apply to the purchasing of insurance/ assurance. 1. Name: Insurable interest Explanation: The insured must gain from the existence of the item insured and suffer from its loss. 2. Name: Utmost Good Faith Explanation: All questions asked must be answered truthfully.

4. Martin Keane, aged 27 and single, of 12 Roy Lane, Waterford, is a carpenter. He wishes to purchase an endowment policy of €100,000 on his life. He likes to go mountain climbing and is hoping to get his helicopter licence next year. Martin does not drink or smoke and is in good health. He will pay his monthly premium by standing order. Assume that you are Martin Keane, complete the partially completed life assurance proposal form below on today’s date. EUROLIFE INSURANCE LTD Life Assurance Proposal Form Please answer all questions fully to the best of your knowledge. Failure to do so may result in all or part of the benefits under this policy being cancelled. Please use BLOCK CAPITALS. 1. Name MARTIN KEANE Please tick Address 12, ROY LANE, WATERFORD Single Married

Age Next Birthday 28 Occupation CARPENTER 2. Type of Policy ENDOWMENT Sum to be insured € 100,000 Premiums to be paid monthly Method of Payment STANDING ORDER 3. Have you ever had Life Assurance Please tick Yes No 4. Are you likely to: (a) Fly other than as a fare paying passenger Please tick Yes No If Yes give details HELICOPTER PILOT

(b) Engage in a hazardous occupation or Please tick Yes No hobby If Yes give details MOUNTAIN CLIMBING 5. Are you in good health Please tick Yes No If No give details

6. Do you smoke Please tick Yes No If Yes state how many 7. Do you consume alcohol Please tick Yes No If Yes state average daily consumption Declaration I declare that the above statements are true and complete, and I agree that these statements, together with the statements to be made to a doctor, if required, shall form the basis of the contract between me and the Insurance Company. Date Signature of Proposer Martin Keane

250 Junior Certificate Business Studies Workbook Teacher’s Manual 5. Why might a person purchase comprehensive insurance for their new car? Comprehensive insurance will give third party, fire and theft cover as well as covering accidental damage to the insured’s own car.

6. Mary Mulligan, born in 13 May 1981 and single, lives in MBNA View, Carrick-on-Shannon, Co. Leitrim. Mary works as an accountant in a local credit card company and wishes to purchase comprehensive insurance on her car, a Nissan Micra Reg. No. 05LM612, valued at €19,600. Mary obtained a full licence in 2004 and has no driving convictions. This is her first insurance. Complete the partially completed car insurance proposal form from the following details.

XA INSURANCE LTD CAR INSURANCE PROPOSAL FORM Please answer all questions fully to the best of your knowledge. Failure to do so may result in all or part of the benefits under this policy being cancelled. Please use BLOCK CAPITALS. THE PROPOSER Name and Address MARY MULLIGAN MBNA VIEW, CARRICK-ON-SHANNON, CO. LEITRIM Date of Birth 13/5/1981

Address where car is usually kept AT THE ABOVE ADDRESS

Occupation ACCOUNTANT

THE CAR Make and Model NISSAN MICRA

Engine Type 1400cc

Year of Manufacture 2005

Registration No. 05 LM 612

Value € 19,600

COVER Type of policy required Please tick Use of car Comprehensive Third Part Fire and Theft Pleasure Business

OTHER INFORMATION Have you passed your driving test Please tick Yes No Will the car be driven by anyone Please tick Yes No under twenty-five If Yes state when BY MYSELF Have you had any accidents in the Please tick Yes No last four years Have you or anyone who will drive Please tick Yes No this car had any driving convictions in the last five years DECLARATION I declare that I am the owner of the vehicle, that the above statements or any other written statements by me are true and that they and this proposal shall be the basis of the contract between me and the Insurance Company.

Date / / Proposer’s Signature Mary Mulligan

251 Junior Certificate Business Studies Workbook Teacher’s Manual Chapter 17 Premium Calculation and Estimating Compensation

1. Column 1 is a list of insurance terms. Column 2 is a list of possible explanations. Match the two lists by placing the letter of the correct explanation under the relevant number in the table below. (One explanation does not refer to any term.) Column 1 Terms Column 2 Explanations 1. Underinsurance (a) Calculates the amount of the premium 2. Loadings (b) Applies in cases where something is insured by more than one insurer 3. Actuary (c) Additional premiums charged due to higher risks 4. Principle of Contribution (d) Calculates the amount of compensation to be paid out (e) Applies in cases of partial loss

1. 2. 3. 4. e c a b

2. The Mahon family wish to insure their house for €300,000 and their contents for €100,000. They have a burglar alarm and are members of the Killoe Neighbourhood Watch scheme. They were given the following quotation: House insurance €2.5 per €1,000 and contents €7.5 per €1,000. They will receive deductions on contents insurance of 10% for having an alarm and being a member of a neighbour watch scheme. (a) Calculate their total premium. (b) Assume you are Theresa Mahon, complete the cheque No. 102, payable to Ross Insurers, on 1/5/2006. (a) Details Calculations Premium House €300,000 2.5 per €1,000 €750 Contents 100,000 7.5 per €1,000 €750 Less deductions Alarm system 10% of €750 Neighbour watch scheme 10% of €750 €50 €600 Total Premium €1,350

(b)

SPECIMEN

1/5/06

1/5/2006 Ross Insurers 1,350 Thirteen hundred and fifty euro

Ross Insurers 1,350 Theresa Mahon

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3. The Slevin family wish to insure their house for €200,000 and their contents for €50,000. They are members of the Newtown Neighbourhood Watch scheme and have an approved alarm system. They carry on the family business from their house. The Slevins were given the following quotation: House insurance €2 per €1,000 and contents €8 per €1,000. There will be a loading of 20% on both house and contents for carrying on the business from home. They will receive deductions on contents insurance of 10% of basic plus loadings for having an alarm and being a member of a neighbour watch scheme. (a) Calculate their total premium. (b) Assume you are Geraldine Slevin, complete the cheque No. 678, payable to Conway Insurers, on 1/5/2007. (a) Details Calculations Premium House €200,000 2 per €1,000 €400 Contents €50,000 8 per €1,000 €400 €800 € € Add loadings 20% of 800 160 €960 € € Less deductions 20% of 480 96 Total Premium €864

(b)

SPECIMEN

4. Complete the partially completed claims form provided from the following details. On 25 May 2005 at 22.45 pm Maura Smith, 15 Downs Avenue, Mullingar, Co. Westmeath returned home to find her house broken into. Missing were her new Dell Laptop which she had purchased ten days earlier for €1,400 and a Cannon camera purchased in 2003 for €600. She reported the theft to her local garda station. She estimated that her camera was worth €500.

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EAT INSURERS LTD LOSS / DAMAGE CLAIMS FORM Name Maura Smith Address 15, Downs Avenue, Mullingar, Co. Westmeath Policy No. P 2312 Occupation Bus Éireann driver Details of Loss / Damage Time: 22.45 pm Date 25 May 2005 Reported at Garda Station Name: Mullingar Garda: Joan Kelly Description of Items Deduction for Date of Purchase Cost Price Amount Claimed Lost / Damaged Use / Wear/ Tear Dell Laptop 15/5/2005 €1,400 0 €1,400 Cannon camera 2003 €600 €100 €500 I declare that the above statements are true to the best of my knowledge Signed Maura______Smith Date: ______26 May 2005

5. Complete the partially completed claims form provided from the following details. On 5 May 2006 at 02.30 am Paddy Neary, 46 Doran Road, Waterford had his 2005 Micra 05 WD 796 stolen from outside his house. He had purchased the car in March 2005 for €19,500 and he estimated that it was worth €16,000. He reported the theft to his local garda station. His policy number was P1167L.

WAT INSURERS LTD LOSS / DAMAGE CLAIMS FORM Name Paddy Neary Address 46, Doran Road, Waterford Policy No. P 1167L Occupation Factory Worker Details of Loss/Damage Time:2.30 am Date 5 May 2006 Reported at Garda Station Name: Ballybricken Garda: J.P. Rock Description of Items Deduction for Date of Purchase Cost Price Amount Claimed Lost / Damaged Use / Wear / Tear Micra 05 WD 796 March 2005 €19,500 €3,500 €16,000

I declare that the above statements are true to the best of my knowledge Signed Paddy Neary Date: 6 May 2006

6. A house was fully insured for €100,000. Fire caused €20,000. How much compensation should be paid?

€ 20,000

254 Junior Certificate Business Studies Workbook Teacher’s Manual 7. A house was insured for €300,000 with A Ltd and for €300,000 with B Ltd. The house was burned. How much compensation can the insured expect to receive? Give a reason for your answer. Calculations €150,000 from A Ltd and €150,000 from B Answer € 300,000 Reason: The Principle of Contribution Applies - cannot gain

8. A person who had his car stolen was compensated fully by an insurance company. The thief who stole the car was eventually caught. Who has the right to sue the thief? The insurer, as the principle of subrogation applies.

9. A house with a market value of €250,000 was insured for €200,000. Fire caused €50,000 damage. How much compensation should be paid? Give a reason for your answer. Calculations 4/5 of €50,000 Answer € 40,000 Reason: The house was underinsured by 1/5 of its value

10. Contents valued €40,000 were insured for €30,000. A thief stole €20,000 worth. How much compensation should be paid? Give a reason for your answer. Calculations 3/4 of €20,000 Answer € 15,000 Reason: The contents were underinsured by 1/4 of their value

11. Martin’s car insurance policy had an excess clause of €500. An accident caused €1,400 damage. How much compensation can he expect to receive? Give a reason for your answer. Calculations €1,400 less €500 Answer € 900 Reason: Martin had agreed to pay the first €500 of a loss

12. Name and explain the three insurance principles that apply to the estimation and payment of compensation.

Name Explanation

1. Indemnity This states that the insured cannot gain from insurance

2. Contribution When two or more insurers insure some item, they share

the compensation

3. Subrogation When an insurer pays compensation, it takes over the

legal rights of the insured

255 Junior Certificate Business Studies Workbook Teacher’s Manual Chapter 18 Economic framework

1. Complete the following sentences: (a) Enterprise is the factor of production that brings together land, labour and capital. (b) Resources are things that are used in the production of goods and services. (c) The term GNP means Gross National Production.

2. To which factors of production do the following refer? Lorries, lorry drivers, engineers, trees, machinery, shopkeeper, bank loan, farmer, hairdresser, rivers. Land Labour Capital Enterprise Trees Lorry drivers Lorries Shopkeeper Rivers Engineers Machinery Farmer Hairdresser Bank loan

3. To a teenager in Ireland, which of the following are needs and which are wants? Place a tick in the appropriate box in each case and give a brief explanation for your answer. Items Wants Needs Explanation Clothes You need to wear clothes Computer games You can do without computer games Food You need food to survive School Books You need books to be educated

4. Seán has €20. He can buy one CD, a football or a school tie. He chooses to buy a school tie. (i) What is the financial cost of buying the school tie? € 20 (ii) What is the opportunity cost of his decision? A CD and a football

5. Rose has €30. She can buy cosmetics, a mobile phone credit or join the supporters club of her favourite football team. She joins the supporters club. (i) What is the financial cost of joining the supporters club? € 30 (ii) What is the opportunity cost of her decision? Cosmetics and mobile phone credit

6. Complete the following chart naming the four factors of production and giving two examples of each. Factors of Production Example 1 Example 2 1. Land Fields Mines 2. Labour Engineer Block layer 3. Capital Buildings Loans 4. Enterprise Denis O’Brien Michael O’Leary

7. Answer the following questions on employment and unemployment. (a) The labour force consists of: people who are able and available to work. (b) The implications for the government of high unemployment are: less income from taxation and more social welfare payments.

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8. Calculate the rate of economic growth from the following information. (i) Production of goods and services in Year 1 €23,000 and Year 2 €24,610 (ii) Production of goods and services in Year 3 €28,000 and Year 4 €29,400 (iii) Production of goods and services in Year 5 €32,000 and Year 6 €33,600 (iv) Production of goods and services in Year 7 €36,000 and Year 8 €38,880

Formula Workings Answer Difference × 100 1,610 × 100 (i) 7% Original amount 23,000 Difference × 100 1,400 × 100 (ii) 5% Original amount 28,000 Difference × 100 1,600 × 100 (iii) 5% Original amount 32,000 Difference × 100 2,880 × 100 (iv) 8% Original amount 36,000

9. Calculate the rate of inflation from the following information. (i) Cost of living in Year 1 €2,000 and Year 2 €2,120 (ii) Cost of living in Year 3 €1,800 and Year 4 €1,872 (iii) Cost of living in Year 3 €1,950 and Year 4 €2,028 (iv) Cost of living in Year 3 €3,500 and Year 4 €3,745

Formula Workings Answer Difference × 100 120 × 100 (i) 6% Original amount 2,000 Difference × 100 72 × 100 (ii) 4% Original amount 1,800 Difference × 100 78 × 100 (iii) 4% Original amount 1,950 Difference × 100 245 × 100 (iv) 7% Original amount 3,500

10. (a) Explain the term economic growth This is the increase in the production of goods and services from one year to the next. (b) Name two consequences of economic growth Higher standard of living. More money to create employment. (c) Name two consequences of high inflation Workers will look for more wages. Irish goods and services will be too expensive.

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Chapter 19 Budgeting: The National Budget

1. Indicate with a tick which of the following are true or false. True False (a) A budget deficit is where income is greater than expenditure (b) FÁS is an example of a government department (c) The national debt is money owed to the government (d) Roads and school buildings are examples of capital expenditure (e) The Minister for Education and Science presents the budget to Dáil Éireann in December each year

2. Complete the following sentences:

(a) Current expenditure includes spending on wages of teachers and nurses as well as supplies for hospitals. (b) An increase in unemployment can effect the budget in two ways: There will be less income tax received and more social welfare payments to be made.

3. Tick the correct answer. When government–planned expenditure is greater than planned spending the budget is a: (a) Surplus Budget (b) Balanced Budget (c) Deficit Budget

4. Tick the correct answer. An increase in government income without any changes in spending will: (a) Decrease the budget deficit (b) Increase the budget deficit (c) Have no effect on the budget deficit

5. List four examples of spending on social welfare by the Minister of Social, Community and Family Affairs. (a) Old age pension (b) Unemployment assistance (c) Free school books (d) Disability payments

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6. The following figures were produced by a Minister of Finance on Budget Day as projections for the year 2003.

Main Item of Revenue and Expenditure Estimated figures in millions € Health and Children 350 PAYE 600 Education and Science 335 Excise Duty 80 VRT 25 Environment 268 VAT 385 Debt Servicing 195 Justice and Law Reform 157 Corporation Tax 198 Social, Family and Community Affairs 366

(a) From the above information, draft the National Budget for 2003 in your copybook.

National Budget Income € millions Expenditure € millions PAYE 600 Health and Children 350 Excise 80 Education and Science 335 VRT 25 Environment 268 VAT 385 Debt Servicing 195 Corporation Tax 198 Justice and Law Reform 157 Balance (Deficit) 383 Social, Family 366 1,671 1,671

(b) Is this budget a surplus or deficit budget? Deficit budget of €383m Give one example of current expenditure by: (i) the Department of Justice and Law Reform Wages of judges (ii) the Department of Social, Family and Community Affairs Old age pension

(c) Suggest one effect each of the following would have on a National Budget: (i) an increase in VAT: Increase income / Decrease deficit (ii) an increase in the number of Gardaí: Increase expenditure / Increase deficit

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7. The following figures were provided by the Minister of Finance on Budget Day as his prediction for the year ahead.

Main Item of Revenue and Expenditure Estimated figures in millions € Contributions to EU 1,400 Social, Family and Community Affairs 10,300 Corporation Tax 5,100 Education and Science 5,300 Income Tax 9,300 Debt Servicing 2,500 VAT 9,800 Health and Children 8,600 Excise 4,900 Security 2,500 Stamp Duty 2,000 Industry, Farming and Tourism 2,900

(a) From the above information, draft the National Budget for the year ahead in your copybook. Show clearly the total income and total expenditure and balance the budget.

National Budget Income € millions Expenditure € millions Corporation Tax 5,100 Contributions to EU 1,400 Income Tax 9,300 Social, Family 10,300 VAT 9,800 Education and Science 5,300 Excise 4,900 Debt Servicing 2,500 Stamp duty 2,000 Health and Children 8,600 Balance (Deficit) 2,400 Security 2,500 Industry, Farming, Tourism 2,900 33,500 33,500

(b) (i) Is this budget a surplus or deficit budget? Deficit of € 2,400 million (ii) Suggest two courses of action which the government can take to rectify a budget deficit. 1. Increase taxation / VAT, Income Tax 2. Reduce spending / Reduce Civil Service (c) What effect, if any, has a budget surplus on the National Debt of a country? It could be used to reduce the debt. (d) From 2007 Ireland will pay more to the EU than it receives. What effect will this have on the Irish Government’s finances? The government will have to find more income from taxes and reduce spending.

Chapter 20 Foreign Trade

1. Which of the following are in the European Union. Tick to indicate membership. The Netherlands Estonia Bulgaria Austria Norway Tur key Russia

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2. As far as Ireland is concerned, two of the following are invisible imports. Tick 0 which are invisible. Irish fans going to Germany for the World Cup finals 0 Irish lamb sold to France English rugby fans coming to Ireland for a rugby match Robbie Keane being paid a match fee to play for Ireland 0

3. Complete the following sentences: (a) Import substitution means replacing foreign goods with Irish goods.

(b) Examples of invisible exports include foreign tourists in Ireland, money earned by U2 and the Corrs.

4. Tick 0 which of the following are imports or exports. Exports Imports 0 (a) Britney Spears on tour in Ireland 0 (b) Irish mushrooms sold to France 0 (c) Irish tourists in Greece 0 (d) Purchase of clothes on the internet from New York fashions 0 (e) Ryanair flying passengers from Rome to Berlin (f) Purchase of Toyota cars from Japan 0 (g) U2 on a worldwide tour 0

5. In the spaces provided, write the names of the currencies of the following countries:

Country Currency United Kingdom Pound Sterling Sweden Krona Italy Euro Japan Ye n United States US Dollar

6. Complete the chart below and state whether the balance of trade is a surplus or deficit in each year.

Year 1 €m Year 2 €m Visible Exports 17,300 Visible Exports 23,400 Visible Imports 17,680 Visible Imports 21,980 Balance of Trade – 380 Balance of Trade 1,420

The balance of trade is a ______deficit in Year 1 and a surplus in Year 2. 7. Complete the chart below and state whether the balance of trade is a surplus or deficit in each year.

Year 3 €m Year 4 €m Visible Exports 18,900 Visible Exports 27,900 Visible Imports 18,880 Visible Imports 29,670 Balance of Trade 20 Balance of Trade – 1,770

The balance of trade is a ______surplus in Year 3 and a deficit in Year 4.

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8. Complete the chart below and state whether the balance of payments is a surplus or a deficit in each year.

Year 1 €m Year 2 €m Total monies coming into Ireland 76,500 Total monies coming into Ireland 87,760 Total monies going out of Ireland 77,540 Total monies going out of Ireland 86,670 Balance of Payments –1,040 Balance of Payments 1,090

The balance of payments is a ______deficit in Year 1 and a surplus in Year 2.

9. Prepare the balance of payments of a country from the following details, and state whether the balance of payments is a surplus or a deficit: Visible exports €23,000; other monies coming in €15,000; other monies going out €6,000; visible imports €42,000. Complete the blank Balance of Payments Statement below.

Year 1 €m Total monies coming into Ireland 38,000 Total monies going out of Ireland 48,000 Balance of payments –10,000

The balance of payments is a ______deficit.

10. Calculate the Balance of Trade and Balance of Payments from the following details and complete the blank statements below and state if the balance of trade is a surplus or a deficit: Visible imports €34,000; other monies coming in €13,200; visible exports €37,430; other monies going out €16,780. Balance of Trade Statement

Year 1 €m Visible exports 37,430 Visible imports 34,000 Balance of trade 3,430

The balance of trade is a ______surplus. Balance of Payments Statement

Year 1 €m Total monies coming into Ireland 50,630 Total monies going out of Ireland 50,780 Balance of payments –150

262 Junior Certificate Business Studies Workbook Teacher’s Manual 11. (a) If the rate of exchange is €1 = $1.16, how much would you receive if you converted $1,340 to euro? Answer € Workings 1,155.17 1340 1.16

(b) If the rate of exchange is €1 = £0.66, how much would you receive if you converted £1,250 to euro? Answer € Workings 1,893.94 1250 0.66

(c) If the rate of exchange is €1 = £0.66, how much would you receive if you converted €2,500 to sterling? Answer € 1,650 Workings 2500 × 0.66

Chapter 21 Forms of Ownership

1. Tick 0 the most appropriate answer below. A private company is (a) A business run by one person (b) A business owned by the state (c) A business owned by between one and fifty people 0

2. Tick 0 the most appropriate answer below. Which of the following state companies is involved in production? (a) An Post (b) An Bord Bia (c) Bord na Móna 0 (d) Fáilte Ireland

3. Explain: (a) Limited Liability Shareholders in a company can only lose what they invested in the company.

(b) Dividend This is a share of the profits made by a company in a given year, paid to the shareholders.

4. Indicate with a tick 0 which of the following are true or false. True False (a) Private limited companies have unlimited liability 0 (b) RTE is an example of a co-operative 0 (c) State businesses do not charge for their services 0 (d) A shareholder in a co-operative has only one vote 0 (e) A sole trader can keep half of the profits made 0

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5. The maximum number of shareholders a private limited company can have is 50 shares. 6. Compare Sole Traders, Co-operatives and Private Limited Companies under these headings: Control, Profits and Number of Owners.

Forms of Ownerships Control Profits Number of Owners Sole traders Total control Keeps all 1 Co-operatives Shared Shared 8+ Private Limited Company Shared Shared 1–50

7. Name and explain five different types of state-owned companies.

1. Name: Bord na Móna Explanation: Produces peat

2. Name: ESB Explanation: Produces electricity

3. Name: Fáilte Ireland Explanation: Encourages people to holiday in Ireland

4. Name: An Post Explanation: Provides a postal delivery service

5. Name: Bus Éireann Explanation: Provides bus transport throughout Ireland

Chapter 22 Private Limited Company 1. Indicate the correct answer to (a) and (b) with a tick 0. (a) A private limited company has the following letters after its name. PLC LTD 0 STD CPU (b) The document that deals with the internal running of a company is: (i) Memorandum of association (ii) Articles of association 0 2. Indicate the correct answer to the following statement with a tick 0. The document which shows that a company is a legal entity is called: (a) A share certificate (b) Articles of association (c) A certificate of incorporation 0

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3. On 1 July 2006, Tom and Marie Kelly of Hill Top Road, Galway decided to set up a private limited company called Kelly Insurers Ltd. The object of the company was to sell household, personal and business insurance. Their nominal share capital was 200,000 €1 ordinary shares (€200,000). They each purchased 15,000 €1 ordinary shares. They lodged the money invested in shares, in the company bank account. (a) Complete the memorandum of association below.

MEMORANDUM OF ASSOCIATION 1. The name of the Company is: Kelly Insurers Ltd 2. The Objects of the Company are: Sale of household, personal and business insurance 3. The Liability of the shareholders is Limited. 4. The Share Capital of the Company is € 200,000 divided into 200,000 €1 Ordinary Shares. We the several persons whose names, addresses and descriptions are subscribed wish to be formed into a Company in pursuance of the Memorandum of Association and we agree to take the number of shares in the Capital, of the Company set opposite our names.

Name, Address of each Subscriber Number of shares taken by each Subscriber

Tom Kelly Hill Top Road 15,000 Galway

Marie Kelly Hill Top Road 15,000 Galway

Date 1 July 2000 Signed: Tom Kelly, Marie Kelly Witness to the above signatures: Martin Jones

(b) Record the issue of shares in the bank and ordinary share capital accounts below.

General Ledger Date Details F Total Date Details F Total Bank A/C 1/7/06 Share cap. 30,000 Share Capital A/C 1/7/06 Bank 30,000

4. On 1 October 2007, Nora Martin, Ballsbridge, Dublin and Philip Keogh, Dart View, Skerries, Co. Dublin, formed a private limited company called NK Ltd. They completed all the necessary documents and sent them to the Registrar of Companies. The objects of the company are to produce and sell business books and teaching aids. The authorised share capital of NK Ltd is 250,000 €1 ordinary shares. On 20 October 2007 Nora and Philip purchased 25,000 €1 ordinary shares. The money received from the issue of shares was lodged to the company bank account.

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(a) Complete the memorandum of association below.

MEMORANDUM OF ASSOCIATION 1. The name of the Company is: NK Ltd 2. The Objects of the Company are: Produce and sell business books and teaching aids 3. The Liability of the shareholders is Limited. 4. The Share Capital of the Company is € 250,000 divided into 250,000 €1 Ordinary Shares. We the several persons whose names, addresses and descriptions are subscribed wish to be formed into a Company in pursuance of the Memorandum of Association and we agree to take the number of shares in the Capital, of the Company set opposite our names.

Name, Address of each Subscriber Number of shares taken by each Subscriber Nora Martin 25,000 Ballsbridge Dublin

Philip Keogh 25,000 Dart View Skerries Co, Dublin

Date 20/10/2007 Signed: Nora Martin, Philip Keogh Witness to the above signatures: Fiona Hyde

(b) (i) Record the issue of shares in the bank and ordinary share capital accounts below. (ii) Show the opening Balance Sheet of NP Ltd on 20 October 2007. (i) General Ledger Date Details F Total Date Details F Total Bank A/C 20/10/07 Share cap. 50,000 Share Capital A/C 20/10/07 Bank 50,000

(ii) Balance Sheet of NK Ltd as on 20 October 2007 Current Assets Bank 50,000 Financed By Authorised Issued 250,000 € 1 ordinary shares 250,000 50,000 50,000

(c) Name the document that the Registrar of Companies would send to NK Ltd when the company was formed: ______Certificate of Incorporation

266 Junior Certificate Business Studies Workbook Teacher’s Manual Chapter 23 Chain of Production

1. Explain the term Primary Production. Primary production is the extraction of raw materials from land, sea and air.

Two examples of primary production include: (a) Fishing (b) Mining

2. Indicate with a tick 0 which of the following are examples of primary, secondary and tertiary production.

Good/Service Primary Secondary Tertiary Shoe manufacturer 0 Advertising manufacturer 0 Fisherman 0 Coal mining 0 Credit Union 0 Builder 0

3. Column 1 is a list of people in the chain of production. Column 2 is a list of possible explanations of the work which they do. Match the two lists by placing the letter of the correct explanation under the relevant number in the table below. One explanation does not refer to any of the people mentioned. (Junior Certificate Ordinary Level 1999 amended for euro)

Column 1 Terms Column 2 Explanations 1. Wholesaler (a) Makes goods for the public 2. Consumer (b) Sells goods to the shops for resale 3. Retailer (c) Sells goods for private use (d) Buys goods for private use

1. 2. 3. b d c

4. Fill in the blank spaces in the two channels of distribution below:

1. 2. (a) Manufacturer (a) Wholesaler (b) Wholesaler (b) Retailer (c) Retailer (c) Consumer

Chapter 24 People at Work

1. Write brief notes on: (a) The live register measures the level of unemployment, i.e. those who are able and willing to work

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(b) Self-employed These are people who work for themselves for payment.

(c) Managing Director The M.D. is appointed by the Board of Directors and is responsible for the day-to-day running of the company.

2. Indicate with a tick 0 which of the following are true or false. True False (a) Job sharing means dividing one job between two workers 0 (b) A teacher is an example of a self-employed person 0 (c) An entrepreneur can never make a loss 0 (d) The purchasing department deals with the hiring of workers 0 (e) An employer has rights and responsibilities 0

3. Show, with four examples, the difference between work and employment.

Example Work Employment Note taking Student taking notes in class Reporter taking notes for newspaper 1. Cooking a meal Parents making dinner Chef preparing dinners 2. Preparing accounts Student doing accounts Accountant doing accounts 3. Training a team Teacher training a school team Sir Alex training Man Utd 4. Painting Jack painting a house Jack B. Yeats painting a portrait

4. Complete the sentences below by filling the blank spaces from the following list of terms. One term does not match. Labour Force, Responsibilities, Work, Risks, Shareholders, Unemployed, Rewards, Rights, Employment, Managing Director (a) The difference between work and employment is payment. (b) Those who are available for work are referred to as the labour force . (c) People who want to work but can not find a job are called unemployed . (d) There are risks and rewards involved in being self employed. (e) The Board of Directors appoint the Managing Director . (f) Employees have certain rights and responsibilities .

268 Junior Certificate Business Studies Workbook Teacher’s Manual Chapter 25 Being an Employer

1. Match the following methods of calculating the gross wage for the different type of workers: Hourly rate; Commission; Piece rate.

Workers Method of calculating Gross Wage Car sales person Commission Blocker layer Piece rate Office worker Hourly rate Garda Hourly rate Insurance sales person Commission Strawberry picker Piece rate

2. Complete the following sentences below by inserting a suitable terms. (a) Equal opportunity employers employ both male and female workers. (b) A contract sets out the work to be done and the qualifications required. (c) Workers on flexitime can start and finish work at different times. (d) The total cost of employing workers is made up of employer’s share of PRSI plus gross wage .

3. Study the job advertisement and explain the terms in bold.

MORGAN INSURANCE BROKERS Ltd General Insurance Clerk required Computer knowledge and bookkeeping skills an advantage Basic Wage €390 gross for a 39 hour week Overtime also a possibility Subsidized canteen and travel Apply in writing to The Human Resources Manager MORGAN INSURANCE BROKERS Ltd, Indemnity Road, Sligo

MORGAN INSURANCE BROKERS Ltd is an equal opportunities employer

Basic Wage: This is payment for working normal hours, e.g. a 39-hour week.

Overtime: This is additional payment for working more than 39 hours.

Subsidized canteen and travel: These are known as Benefits in Kind and are an extra type of payment. Human Resources Manager: The person responsible for employing staff.

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4. Study the Contract of Employment given below and answer the questions that follow.

Contract of Employment Employer: Finn Harps Monthly Journal Employee: Máire McGee Hours of work per week: 38 hours flexi-time Job Description: Assistant editor Rates of Pay:

Basic: €45,600 Bonus: 1% of sales over 25,000 copies Date of commencing work: 1/5/2006 Holidays: Four weeks Pension: Non-contributory Company Car: Nissan Micra Health Insurance: Vivas premium paid in half

Signed: Máire McGee Fergus Healy Date: 30 April 2006

(a) Who is being employed? ______Máire McGee (b) What job has the employee obtained? ______Assistant Editor (c) What is the basic weekly wage? € ______876.92 (d) What additional benefits will the employee receive? Company______car; non-contributory pension (e) Why is it important to have a contract of employment? ______To show your rights

5. Tina Clarke is paid €320 for a 40-hour week. This week she works 48 hours. Overtime is paid at the rate of €12 per hour. Her tax credits are €30 per week. Her tax rate is 20%. PRSI is 10% of gross. Other deductions are Union fee €12 and VHI €18. Calculate her Net Wage and complete the wage slip below.

Wage Slip Tina Clarke Employee No. 1221 Gross Wage Deductions Basic O/Time Total PAYE PRSI VHI Union Total Net Wage 320 96 416 53.20 41.60 18 12 124.80 291.20

6. Andrew Conway earns €890 per week. His standard cut-off point is €565.38 and he has tax credits of €49.23 His tax rates are 20% on the first €565.38 and 42% on the remainder of his income. He pays per week 7.5% PRSI, BUPA €25, Savings €12. (a) Calculate his income tax due, his PRSI due and his Net Wage for week No. 3. (i) Income Tax € 200.19 (ii) PRSI € 63.75 (iii) Net Wage € 589.06

270 Junior Certificate Business Studies Workbook Teacher’s Manual (b) Complete Andrew Conway’s wage slip.

Wage Slip Andrew Conway Employee No. 1335 Gross Wage Deductions Week no. Total PAYE PRSI BUPA Savings Total Net Wage 3 890 200.19 63.75 25 12 300.94 589.06

7. Sonia Stone earns €1,300 per week. Her standard cut-off point is €565.38 and she has tax credits, Personal Credit €1,520 and Employee Credit of €1,040. Her tax rates are 20% on the first €565.38 and 42% on the remainder of her income. She pays per week 7.5% PRSI, VHI €15, Union €10. (a) Calculate her income tax due, her PRSI due and her Net Wage for week No. 9. (i) Income Tax €372.39 (ii) PRSI €97.50 (iii) Net Wage €806.37

(b) Complete Sonia Stone’s wage slip below.

Wage Slip Sonia Stone Employee No. 5678 Gross Wage Deductions Week no. Total PAYE PRSI VHI Union Total Net Wage 9 1,300 372.39 97.50 15 10 494.89 805.11

8. (a) Name two rights and responsibilities of an employer.

(i) ______Select suitable staff (ii) ______Dismiss dishonest staff

(b) Assume you are the principal of St. Mark’s Secondary School. Draft a suitable job description in your copybook for the position of PE Teacher. The job description should contain four important pieces of information.

(c) St. Mark’s Secondary School has three non-teaching employees who are paid on a weekly basis. William Kenny pays €71 income tax, Bríd Moore pays €63 income tax, and Philip Farrell pays €47 income tax. Each employee pays PRSI at the rate of 8%. The employer’s rate of PRSI is 12%. (i) Complete the Wages Book, for the month of May, 2005, using the partially completed Wages Book provided. (ii) Calculate the total cost of wages for the month of May, 2005.

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(i) Date Name Gross Wages Deductions Net Wages Employers PAYE PRSI Total PRSI € € € € € € 31/5/2005 William Kenny 600 71 48 119 481 72 31/5/2005 Bríd Moore 560 63 44.80 107.80 452.20 67.20 31/5/2005 Philip Farrell 400 47 32 79 321 48 Total 1,560 181 124.80 305.80 1,254.20 187.20 (ii) Total cost of wages: € ______1747.20 (d) Record the total cost of wages for the month of May 2005 in the Wages Account and Analysed Cash Book of St. Mark’s Secondary School provided.

General Ledger Date Details F Total Date Details F Total Wages A/C May 2005 Bank 1,747.20

Analysed Cash Book (p1) Date Details F Bank Wages May 2005 Wages GL 1 1,747.20 1,747.20

9. (a) Complete the wages book on the 27 February 2005 below from the following data. (b) Calculate the total cost of employing the workers, assuming employers PRSI is 10% of gross wage. Ryan Martin: Gross wage €360; PAYE €90; PRSI 5% of gross; Union €10; VHI €10; Pension €8. Jackie Mulligan: Gross wage €280; PAYE €72; PRSI 5% of gross; Union €10; VHI €15; Pension €6. Jenny Yorke: Gross wage €450; PAYE €110; PRSI 5% of gross; Union €10; VHI €20; Pension €16. (a) Gross Deductions Net Employer’ Date Name Wage PAYE PRSI Pension VHI Union Total Wage s PRSI € € € € € € € € 27/2/05 R. Martin 360 90 18 8 10 10 136 224 36 27/2/05 J. Mulligan 280 72 14 6 15 10 117 163 28 27/2/05 J. Yorke 450 110 22.50 16 20 10 178.50 271.50 45 27/2/05 Total 1,090 272 54.50 30 35 30 431.50 658.50 109

(b) Total cost of wages: €______1,199

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10. Answer (a) and (b) below from the following data. Polly Dunne: Gross wage €570; PAYE €190; PRSI 5% of gross; Union €15; Savings €30; Pension €13. Mini McGrath: Gross wage €680; PAYE €230; PRSI 5% of gross; Union €15; Savings €40; Pension €19. Mark Kelly: Gross wage €380; PAYE €90; PRSI 5% of gross; Union €15; Savings €10; Pension €10. (a) Complete the wages book on the 15 March 2006. (b) Calculate the total cost of employing the workers, assuming employers PRSI is 10% of gross wage. (a) Date Name Gross Deductions Net Employer’ Wage PAYE PRSI Pension Savings Union Total Wage s PRSI 15/5/06 € € € € € € € € 15/5/06 P. Dunne 570 190 28.50 13 30 15 276.50 293.50 57 15/5/06 M. McGrath 680 230 34 19 40 15 338 342 68 15/5/06 M. Kelly 380 90 19 10 10 15 144 236 38 15/5/06 Total 1,630 510 81.50 42 80 45 758.50 871.50 163 (b) Total cost of wages: € 1,793

11. Answer (a) and (b) below from the following data. Total cost of employing ten workers €15,000 plus employer PRSI €1,500. (a) Total cost of wages: € 16,500 (b) Show the entries in the Wages Account and Analysed Cash Book and the extract in the Profit and Loss Account below on 31 March 2006.

General Ledger Date Details F Total Date Details F Total Wages A/C 31/3/06 Bank ACB 16,500

Analysed Cash Book (Credit Side) Date Details Bank Wages 31/3/06 Wages 16,500 16,500

Profit and Loss Account for year ended 31 March 2006 Less Expenses Wages 16,500

12. Answer (a) and (b) below from the following data. Total cost of employing workers €16,000 plus employer’s share of PRSI 10%. (a) Total cost of wages: € 17,600 (b) Show the entries in the Wages Account and Analysed Cash Book and the extract in the Profit and Loss Account below on 30 September 2007.

General Ledger Date Details F Total Date Details F Total Wages A/C 30/9/07 Bank ACB 17,600

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Analysed Cash Book (Credit Side) Date Details Bank Wages 30/9/07 Wages 17,600 17,600

Profit and Loss Account for year ended 30 September 2007 Less Expenses Wages 17,600

13. Answer (a) and (b) below from the following data. Total cost of employing ten workers € 32,000. (a) Total cost of wages: € 32,000 (b) Show the entries in the Wages Account and the Analysed Cash Book and the extract in the Profit and Loss Account below on 31 July 2008.

General Ledger Date Details F Total Date Details F Total Wages A/C 31/7/08 Bank ACB 32,000

Analysed Cash Book (Credit Side) Date Details Bank Wages 31/7/08 Wages 32,000 32,000

Profit and Loss Account for year ended 31 July 2008 Less Expenses Wages 32,000

14. (a) List two rights and responsibilities of an employer: Two rights are: 1. Set up business 2. Decide on aims Two responsibilities are: 1. Pay agreed wage 2. Keep proper records (b) State two methods of calculating gross wages. 1. Hourly rate2. Piece rate (c) Oidar Ltd has three employees who are paid on a monthly basis. Each employee pays income tax (PAYE) at the rate of 30% of gross wages. The employer’s share of PRSI is 12% of gross wages.

274 Junior Certificate Business Studies Workbook Teacher’s Manual (i) Complete the Wages book for the month of May 2006.

Gross Deductions Net Employer’s Date Name Wages PAYE PRSI Pension Total Wages PRSI € € € € € € € 31/5/2006 R. Kenny 1,600 480 112 80 672 928 192 31/5/2006 L. Dunne 1,400 420 98 70 588 812 168 31/5/2006 T. Doyle 1,200 360 84 60 504 696 144 Total 4,200 1,260 294 210 1,764 2,436 504

(ii) Total cost of wages for May 2006: € ______4,704

(d) Record the total cost of wages for the month of May 2006 in the Wages Account and the Analysed Cash Book of Oidar Ltd.

General Ledger Date Details F Total Date Details F Total Bank A/C 31/5/06 Wages ACB 4,704 Wages A/C 31/5/06 ACB 4,704

Analysed Cash Book (p 1) Date Details F Bank Wages 31/5/06 Wages GL 4,704 4,704 (Junior Certificate Higher Level 1995 Q5 amended for euro)

Chapter 26 Industrial Relations

1. Complete the following sentences. (a) The ASTI and TUI are examples of white collar unions. (b) Unions help their members obtain higher wages. (c) A Shop Steward is the local union representative. (d) The Labour Court is an example of a Third Party . (e) The use of a third party to end a dispute is called conciliation .

2. Column 1 is a list of industrial relations terms. Column 2 is a list of possible explanations of the work which they do. Match the two lists by placing the letter of the correct explanation under the relevant number in the table below. One explanation does not apply.

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Column 1 Terms Column 2 Explanations 1. Craft Union (a) An organisation which represents employers 2. Arbitration (b) Represents workers in a particular industry 3. IBEC (c) Use of a third party to settle a dispute 4. Demarcation Dispute (d) Represents workers who have served an apprenticeship (e) A disagreement over who does what work

1. 2. 3. 4. d c a e

3. Explain:

(a) Work to rule: Only doing exact work as laid out in the contract.

(b) Conciliation: This is where a third party helps both sides in dispute to settle their differences.

Chapter 27 Finance for Business

1. Select a suitable source of finance for each of the following needs of a garage from this list of sources of finance. Creditors, Bank Overdraft, Hire Purchase, Leasing, Term Loan, Share Capital, Reserves, Long Term Loan.

Need Suitable Source of Finance Cars Term loan Office Equipment Leasing Extension to Garage Reserves Light and Heat Creditors Breakdown Truck Long-term loan Petrol for Resale Creditors

2. Indicate with a tick 0 in the table below which of the following needs of a hairdressing business are short, medium or long term. Suggest a suitable source of finance for each need.

Need Short Medium Long Suitable Source of Finance Mirrors and Chairs 0 Bank term - loan Wages of Staff 0 Bank overdraft Buildings 0 Capital Light and Heat 0 Expenses due Cash Register 0 Hire purchase Advertising 0 Creditors Computerised Hairdryer 0 Leasing Shampoo 0 Creditors

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3. Indicate with a tick 0 which of the following statements are true or false. True False (a) Term loans are usually repaid in full at the end of the term 0 (b) Leasing is a useful source of long-term finance 0 (c) Creditors are only available to business who buy and sell 0 goods (d) With hire purchase a person will never become the owner 0 of the goods (e) Reserves are only available to profitable businesses 0

Chapter 28 Preparation of a Business Plan

1. Explain:

(a) Business Plan: This sets out what a business wants to do in the future.

(b) Cash Flow Forecast: This is a statement setting out future income and expenditure. (c) Net Cash: This is the difference between expected income and expected expenditure.

2. List four examples of business receipts and four examples of business payments.

Business Receipts Business Payments 1. Cash sales 1. Cash purchases 2. Payment by debtors 2. Payments to creditors 3. Loans 3. Repayment of loans 4. Owner’s capital 4. Taxation

3. Indicate with a tick 0 which of the following statements are true or false. True False (a) A business plan should include details of the market 0 (b) Fixed costs vary with production 0 (c) Collateral is another name for security 0 (d) Net Cash is cash received less cash paid out 0 0 (e) Cash flow forecasts are similar to household budgets

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4. Complete the blank business plan provided from the following data: Niall Quinn and Monica McCarthy plan to set up a new painting business catering for private customers. They named their company Picture That Ltd. It is located in Centre Forward Drive, Naas, Co. Kildare. Niall is the managing director. Their bank is the permanent TSB. Their market research showed that there were 15,000 potential customers each year. There are five competitors. The average price for painting a house is €3,200. Total costs are €150,000. They have savings of €70,000 and hope to receive a loan of €80,000. They will promote their business by advertising in local radio and newspapers.

BUSINESS PLAN

COMPANY DETAILS Name of Company Picture That Ltd Address of Company Centre Forward Drive Naas Co, Kildare

Shareholders/Owners Niall Quinn Monica McCarthy Managing Director Niall Quinn Company Bank Permanent TSB

PRODUCT Description of Product Painting of private houses

MARKET RESEARCH Size of Market 15,000 potential customers Competition Five competitors Price per house € 3,200

SALES PROMOTION Methods Advertisements in local radio and newspapers

FINANCE Total Required € 150,000 Amount Available € 70,000 Amount Required € 80,000 SIGNED (i) Niall Quinn (ii) Monica McCarthy DATE

278 Junior Certificate Business Studies Workbook Teacher’s Manual 5. Paul Hughes and Emma Daly hope to set up a secretarial services business called H&D ICT Ltd. The company will be located in Keyboard Avenue, Carrick-on-Shannon, Co. Leitrim. Emma is the managing director. Their market research showed that there was only one other competitor and that there were over 2000 potential private and business customers. The price per A4 sheet printed is €3. Their estimated costs are: Lease of buildings €38,000; purchase of equipment €27,000; day to day running expenses and wages for first two months €18,000. They have savings of €17,500. They will advertise on local radio and in local papers. (a) Calculate the amount of finance they will need to raise to set up the business. H&D ICT will need € ______65,500 Workings Costs: 38,000 + 27,000 + 18,000 = 83,000 83,000 – 17,500 = 65,500 (b) Complete the blank business plan provided.

BUSINESS PLAN

COMPANY DETAILS Name of Company H&D ICT Ltd Address of Company Keyboard Avenue Carrick-on-Shannon Co. Leitrim

Shareholders/Directors Paul Hughes Emma Daly Managing Director Emma Daly Company Bank AIB

PRODUCT Description of Product Secretarial Services

MARKET RESEARCH Size of Market 2,000 potential customers Competition 1 competitor Price per A4 Sheet € 3 per A4 printed sheet

SALES PROMOTION Methods Advertise on local radio and in local papers

FINANCE Total Required € 83,000 Amount Available € 17,5000 Amount Required € 65,500 SIGNED (i) Paul Hughes (ii) Emma Daly DATE

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6. HM Ltd is located at Hit Parade Avenue, Kiltamagh, Co. Mayo. It produces and distributes musical t-shirts for the Irish and European market. Its shareholders are Samanta Harte and Michael Joseph Mumba. The managing director is Louise Walshe. HM Ltd has its bank account in the Permanent TSB. It promotes its t-shirts on the internet and in pop magazines and offers a mail order service.

Its market research has provided the following information: There are 20 million potential customers; there are five main competitors but none of them offer a mail order service. HM Ltd offers the following financial information for the year ending 31/5/2004: Sales (30,000 t-shirts) €600,000; HM Ltd wishes to expand its company at a total cost of €2,000,000. It has reserves of €300,000 and will receive a grant of €500,000. It hopes to raise the remaining finance by issuing shares to friends of the company. (a) Calculate how much finance it will need to raise through issuing shares. (Show workings clearly.) HM Ltd will need to raise € ______1,200,000 Workings 2,000,000 – 300,000 – 500,000 = 1,200,000

(b) Complete the Business Plan below, using today’s date. (Junior Certificate Higher level 2004 Q5 amended)

BUSINESS PLAN

COMPANY DETAILS Name of Company HM Ltd Address of Company Hit Parade Avenue Kiltamagh Co, Mayo. Shareholders/Directors Samanta Harte Michael Joseph Mumba Managing Director Louise Walshe Company Bank Permanent TSB PRODUCT Description of Product Musical T-shirts for the Irish and European Markets MARKET RESEARCH Size of Market 20 million potential customers Competitors 5 main competitors Price per t-shirt € 20 SALES PROMOTION Methods Internet; pop magazines FINANCE Total Required € 2,000,000 Amount Available € 800,000 Share Investment Required € 1,200,000 SIGNED (i) Samanta Harte (ii) Michael Joseph Mumba DATE

280 Junior Certificate Business Studies Workbook Teacher’s Manual 7. Complete the partially completed cash flow forecast for Queen Ltd.

Cash Flow Forecast of Queen Ltd for the period January to June 2005 Jan Feb March April Total € € € € € A. Total receipts 16,000 18,000 19,000 22,000 75,000 B. Total payments 13,000 24,000 20,000 19,000 76,000 C. Net Cash (A–B) 3,000 (6,000) (1,000) 3,000 (1,000) D. Opening Cash 2,000 5,000 (1,000) (2,000) 2,000 Closing Cash (C+D) 5,000 (1,000) (2,000) 1,000 1,000

8. Complete the cash flow forecast for MAC Ltd, for the period January to June of 2006 from the following data. Opening Cash €1,000 Receipts Jan, Feb, March, Cash Sales €16,000 per month. April, May, June Cash Sales €19,000 per month. Ordinary Share Capital €15,000 invested in March. Payments Wages €1,350 per month. Advertising €700 per month. Electricity €180 in February, €160 in April and €140 in June. Telephone €300 in January, €280 in March and €290 in May. Purchase of equipment in April €40,000. Purchased stock in January €3,000 and February €10,000, March €5,000, April €4,000, May €6,000 and June €7,000.

Cash Flow Forecast of MAC Ltd for the period January to June 2006 Jan Feb March April May June Total for Jan-June € € € € € € € Receipts Sales 16,000 16,000 16,000 19,000 19,000 19,000 105,000 Share Capital 15,000 15,000

A. Total Receipts 16,000 16,000 31,000 19,000 19,000 19,000 120,000

Payments

Purchases 3,000 10,000 5,000 4,000 6,000 7,000 35,000

Advertising 700 700 700 700 700 700 4,200

Telephone 300 280 290 870

Electricity 180 160 140 480

Wages 1,350 1,350 1,350 1,350 1,350 1,350 8,100

Equipment 40,000 40,000

B. Total Payments 5,350 12,230 7,330 46,210 8,340 9,190 88,650

C. Net Cash (A–B) 10,650 3,770 23,670 (–27,210) 10,660 9810 31,350

D. Opening Cash 1,000 11,650 15,420 39,090 11,880 22,540 1,000

Closing Cash (C+D) 11,650 15,420 39,090 11,880 22,540 32,350 32,350

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9. Complete the partially completed cash flow forecast for King Ltd, from the following data for the months of April, May and June. Sales to increase by 15% beginning in April; bank loan to be obtained in April €20,000; Wages to increase by 5%; Equipment to be purchased in April €50,000; Light and heat expenses to decrease by 12% in June; Loan repayments to begin in May €500 per month; All other payments to remain the same.

Cash Flow Forecast of King Ltd for the period January to June 2006 Jan Feb March April May June Total for Jan-June € € € € € € € Receipts Sales 25,000 25,000 25,000 28,750 28,750 28,750 161,250 Bank Loan 20,000 20,000

A. Total Receipts 25,000 25,000 25,000 48,750 28,750 28,750 181,250

Payments

Purchases 9,000 9,000 9,000 9,000 9,000 9,000 54,000

Advertising 500 500 500 500 500 500 3,000

Loan Repayment — — — 500 500 1,000

Light and Heat 1,600 1,600 1,504 4,704

Wages 8,000 8,000 8,000 8,400 8,400 8,400 49,200

Equipment — — — 50,000 — — 50,000

B. Total Payments 19,100 17,500 19,100 67,900 18,400 19,904 161,904

C. Net Cash (A–B) 5,900 7,500 5,900 (19,150) 10,350 8,846 19,346

D. Opening Cash 100 6,000 13,500 13,500 250 10,600 100

Closing Cash (C+D) 6,000 13,500 19,400 250 10,600 19,446 19,446

10. (a) With what should a business compare its cash flow forecast at the end of the year? The cash flow forecast should be compared with the actual figures from the cash book. (b) Complete the partially completed Cash Flow Forecast of YAM Ltd that follows for the months of March, April, May and June, as well as the total columns. The following information should be taken into account: Monthly sales are expected to increase by 20% beginning in May. The shareholders are expected to invest an additional €40,000 in April. Buildings are expected to be sold in June for €100,000. An EU Grant of €100,000 is expected in May. Monthly purchases are expected to increase by 30% in May. Wages and transport costs are expected to remain the same every month. Light and heat expenses are expected to decrease by 25% in the months March and May. New buildings are expected to be purchased in May for €250,000. Shareholders are expected to be paid a dividend of €20,000 in June.

282 Junior Certificate Business Studies Workbook Teacher’s Manual (c) YAM Ltd forgot to allow for the purchase of new machinery of €30,000 during this period. Show the new closing cash figure for June in the box provided. (Junior Certificate Higher Level 2003 Paper II Q6 amended for euro) (b) Cash Flow Forecast of Yam Ltd for the Period January to June 2007 Jan Feb March April May June Total for Jan-June € € € € € € € Receipts Sales 60,000 60,000 60,000 60,000 72,000 72,000 384,000 Share Capital 40,000 40,000 Buildings 100,000 100,000 EU Grant 100,000 A. Total Receipts 60,000 60,000 60,000 100,000 172,000 172,000 624,000 Payments Purchases 24,000 24,000 24,000 24,000 31,200 31,200 158,400 Wages 7,000 7,000 7,000 7,000 7,000 7,000 42,000 Transport Costs 4,500 4,500 4,500 4,500 4,500 4,500 2,700 Light and Heat 3,600 — 2,700 2,700 9,000 Delivery Vans 42,000 42,000 Equipment 250,000 250,000 Dividend 20,000 20,000 B. Total Payments 39,100 77,500 38,200 35,500 295,400 67,200 548,400

C. Net Cash (A–B) 20,900 –17,500 21,800 64,500 (123,400) 109,300 75,600 D. Opening Cash 2,500 23,400 5,900 27,700 92,200 (31,200) 2,500 Closing Cash (C+D) 23,400 5,900 27,700 92,200 (31,200) 78,100 78,100

Chapter 29 Business Loan Applications

1. Explain (a) Collateral: ______This is security that is put up in case a loan cannot be repaid. ______(b) Auditor: ______This is an independent accountant who checks the accuracy and truthfulness ______of accounts on behalf of the owners.

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2. Complete the loan application form provided from the following data, on today’s date. Doreen and John Clarke, directors of Auto Service Ltd, 10 Park Road, Lisdoonvarna, Co. Clare, have been in business for five years, Their garage business has been very profitable, and recently they obtained the agency for Nissan Cars. They are both qualified mechanics. Dooreen also has a business diploma. Their business current account is in the AIB Account No. 56787665. They wish to extend their garage at a cost of €250,000. They have retained earnings of €85,000 on deposit with the AIB, and require a loan for the remainder repayable over ten years. They will put their garage, valued at €650,000, up as collateral. The average profit is €60,000 per year.

(a) Calculate the amount of a loan they require. €______165,000 (250,000 – 85,000) (b) Complete the blank Loan Application Form provided on today’s date.

AIB Loan Application Form

PERSONAL Name of Business: Auto Service Ltd Name of Directors: 1. Doreen Clarke 2. John Clarke Address: 10, Park Road Lisdoonvarna Co. Clare

BUSINESS HISTORY In business for 5 years Very profitable Recently obtained agency for Nissan Cars

QUALIFICATIONS AND EXPERIENCE OF OWNERS 1. 2. Dooreen is a qualified mechanic with John is a qualified mechanic a business diploma

FINANCIAL INFORMATION Bank Accounts Current Account AIB No. 56787665

LOAN DETAILS Purpose of Loan: Garage extension Total Cost of Project: € 250,000 Amount of Loan Required: € 165,000 Term of Loan: 10 years plus Ability to Repay Loan: Average profit €60,000 per year Security Available: Garage valued at €650,000

Signed: 1. Doreen Clarke 2. John Clarke

Date:

284 Junior Certificate Business Studies Workbook Teacher’s Manual 3. Dessie and Joan Monaghan, directors of Thermo Glaze, 12 Main Street, Ballina, Co. Mayo, have been in business for twelve years. Dessie has a marketing degree from GMIT and Joan is a qualified glazier. The glazing industry has been very profitable over the last few years due to the boom in the building industry. They wish to expand their factory at a cost of €320,000 and purchase two new pickup trucks costing €34,000 each. They have reserves of €95,000 and will receive a grant of 20% of the total cost. They require a 12 year loan for the remainder. They supply the following additional information: Average profit over the last five years was €75,000 per year. They will put their existing premises valued at €450,000 up as collateral. They have a Current Account in the NIB No. 23456784. (a) Calculate the amount of the loan required. € 215,400 (388,000 – 95,000 – 77,600) (b) Complete the Loan Application Form provided on today’s date.

National Irish Bank Loan Application Form

PERSONAL Name of Business: Thermo Glaze Name of Directors: 1. Dessie Monaghan 2. Joan Monaghan Address: 12 Main Street Ballina Co. Mayo

BUSINESS HISTORY In business for 12 years Very profitable

QUALIFICATIONS AND EXPERIENCE OF OWNERS

1. Dessie has a marketing degree for GMIT 2. Joan is a qualified glazier

FINANCIAL INFORMATION Bank Accounts Current Account NIB No. 23456784

LOAN DETAILS Purpose of Loan: Expansion of factory Total Cost of Project: € 388,000 Amount of Loan Required: € 215,400 Term of Loan: 12 years Ability to Repay Loan: Average profit €75,000 per year Security Available: Premises valued €450,000

Signed: 1. Dessie Monaghan 2. Joan Monaghan

Date:

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4. Finnan Ltd received a loan of €50,000 on 23 March 2007. Record the receipt of this loan in the Bank Account and in the Bank of Ireland Loan Account Finnan Ltd ledger below.

General Ledger of Finnan Ltd Date Details F Amount Date Details F Amount € € Bank of Ireland Loan A/C 23/3/07 Bank ACB 50,000 Bank A/C 23/3/07 B of I loan GL 50,000

5. Gear Ltd is a sportswear manufacturer operating from Back Four Street, Drogheda, Co. Louth. It has two directors, Ian Harte and Garry Kelly. It owns premises worth €550,000 and has machinery and delivery vans valued €120,000. Gear Ltd has a weekly income of €20,000 and feels that this can be increased to €30,000 by building an extension to the factory costing €100,000 and purchasing new machinery costing €50,000. Gear Ltd has reserves of €45,000 and is eligible for a €30,000 grant. On 1 May 2000 it applied for a seven-year loan, from Ulster Bank, for the remainder. The loan was granted on 10 May 2000. You are required to: (a) Calculate the amount of the loan required. € 75,000 (150,000 – 45,000 – 30,000) (b) Complete the Loan Application Form below. (c) Record the receipt of the loan in the Ulster Bank loan and Bank accounts below. (Junior Certificate Higher Level 2000 Paper II Q5 amended) (b) Ulster Bank Loan Application Form Company Details Name: Gear Ltd Address: Back Four Street Drogheda Co. Louth Names of Directors: Garry Kelly Ian Harte Name of Business: Gear Ltd Annual Income: € 1,040,000 Amount of loan required € 75,000 Purpose of Loan: Factory extension and purchase of new machinery

Length Required For: 7 years Security Available : Premises worth €550,000 Signatures of Directors: ______Garry Kelly Ian Harte Date: ______1/5/2000

(c) Amount Amount Date Details F Date Details F € € Ulster Bank Loan A/C 10/5/00 Bank ACB 75,000 Bank A/C 10/5/00 U.B. Loan GL 75,000

286 Junior Certificate Business Studies Workbook Teacher’s Manual Chapter 30 Banking for Business

1. Explain (a) ATM cash withdrawal ______This is a means of taking money from an account ______using a special card and a PIN. (b) Bank overdraft ______This is where a current account holder takes more money out of their ______current account than they have in it. (c) Bank charges ______These are the fees which bank customers have to pay when making ______transactions i.e. lodging and withdrawing money.

2. State two reasons for preparing a bank reconciliation statement.

1. ______To make sure that the bank did not make a mistake in their records. ______2. ______To identify any mistakes in the customer records in the bank records. ______Chapter 31 – Business Insurance

1. Match the following types of insurance cover in Column 1 to the different types of business risks in Column 2. One risk does not match. Match the types of cover to the risks by placing the correct number or letter under the relevant number in the table below.

Column 1 Types of Insurance Cover Column 2 Types of Business Risks 1 Fidelity insurance A. Injury to employees at work 2 Public liability B. Theft of money being transferred 3 Employers’ liability C. Theft by employees 4 Cash in transit D. Death of owner E. Injury to customers visiting premises

1 2 3 4 C E A B

2. Complete the following sentence. The payment of an insurance premium by cheque is debited in the ______insurance account and credited in the ______bank account.

3. Indicate with a tick 0 which of the following amounts of compensation are correct. State a reason for your answer. (a) Burke Ltd insured its premises valued at €240,000 for €180,000. Fire caused €60,000 damage. (i) €240,000___ (ii) €180,000___ (iii) €60,000___ (iv) €45,000___.0 The reason for my answer is: ______The premises is only insured for 3/4 of its value, therefore Burke Ltd is only entitled to ______3/4 of the damage caused by the fire. ______

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(b) Martin Ltd insured its buildings valued at €400,000 for €450,000. Fire caused €90,000 damage. Tick 0 the correct answer. (i) €450,000 __(ii) €90,000 __0 (iii) €80,000 __. The reason for my answer is: ______The damage was €90,000 and the buildings were over-insured. 4. Jordan Ltd requested an insurance quotation, from Sword Insurers Ltd for the following assets: Buildings €230,000; Equipment €95,000; Four Delivery Vans valued at €30,000 each; Stock €15,000 and Cash in the Office €3,500. Sword Insurers Ltd supplied the following quotation for one years insurance: Insurance for Buildings and Machinery €7 per €1,000 value; Stock Insurance €11 per €1,000 value; Delivery Van comprehensive cover €1,650 per van; Cash insurance €16 per €500. A new business introductory offer 12% off total premium is available. Jordan Ltd accepted the quotation and took out insurance on everything at replacement cost (as stated above) except Equipment which they insured for €60,000. Jordan Ltd paid the premium by cheque on 1 May 2004. (a) Calculate the amount of premium paid by Jordan Ltd on 1 May 2004. (Show workings clearly.)

Answer € 7,838.16 Workings B EDVSC 1,610 + 420 + 6,600 +165 + 112 = 8,907. 8,907 – 1,068.84 = 7,838.16 (b) Assume you are Peter Andrews, complete the cheque No. 100 paid to Sword Insurers Ltd.

SPECIMEN

1/5/2004

Sword Insurance Ltd

Seven thousand, eight hundred and thirty eight euro and 7,838.16

sixteen cent

Sword Insurances Ltd Insurances Sword

7,838.16 1/5/04 Peter Andrews

General Ledger of Jordan Ltd Date Details F Amount Date Details F Amount Insurance A/C (p1) 1/5/04 Bank ACB 7,838.16

Analysed Cash Book of Jordan Ltd Date Details Cheque No. F Bank Insurance 1/5/04 Insurance 100 GL 7,838.16 1,061.84

288 Junior Certificate Business Studies Workbook Teacher’s Manual 5. Kerry Ltd requested an insurance quotation, from West Insurers Ltd for the following assets: Premises €410,000; Machinery €105,000; Two Motor Vehicles valued at €45,000 each; Stock €13,000 and Cash in the Office €6,000. Kerry Ltd has twenty-four security and CCTV cameras. West Insurers Ltd supplied the following quotation for one year’s insurance: Insurance for Buildings and Machinery €9 per €1,000 value; Stock Insurance €14 per €1,000 value; Motor Vehicles comprehensive cover €1,650 per vehicle; Cash insurance €11 per €1,200. A reduction of 16% off total premium is available for having good security. Kerry Ltd accepted the quotation and took out insurance on everything at replacement cost (as stated above) except Buildings which they insured for €380,000 and Machinery which they insured for 100,000. Kerry Ltd paid the premium by cheque on 1 May 2005 (a) Calculate the amount of premium paid by Kerry Ltd on 1 May 2005. (Show workings clearly.) € 6,599.88 Answer Workings P M MV S C 3,420 + 900 + 3,300 +182 + 55 = 7,857. 7,857 – 1,257.12 = 6,599.88 (b) Assume you are Louise McFadden, complete the cheque No. 675 paid to West Insurers Ltd.

SPECIMEN

1/5/2005

West Insurers Ltd

Six thousand, five hundred and ninety nine euro and 6,599.88

eighty eight cent

West Insurers Ltd West 6,599.88 1/5/2005 Louise McFadden

General Ledger of Kerry Ltd Date Details F Amount Date Details F Amount Insurance A/C (p1) 1/5/05 Bank ACB 6,599.88

Analysed Cash Book of Kerry Ltd Date Details Cheque No. F Bank Insurance 1/5/05 Insurance 675 GL 6,599.88 6,637.68

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Chapter 32 Delivery Systems 1. What main form of transport would be most likely to be used to transport the following:

Goods to be transported Form of transport A. Fresh salmon from Rossaveal (Galway) to Paris Air B. Industrial diamonds from Limerick to Antwerp Air C. Bananas from South America Sea D. Coal from Poland to Waterford Sea E. Milk from farm to local creamery Road

2. Using the distance table below calculate the distance from: Sligo to Ennis 195 kms Wexford to Galway 254 kms Limerick to Donegal 296 kms Belfast to Mullingar 180 kms 3. Using the distance table below calculate the distance of a return journey from: Waterford to Donegal 712 kms Cavan to Ennis 400 kms Sligo to Carlow 460 kms Tralee to Carlow 504 kms

Distance Table (km)

Athlone

225 Belfast

115 250 Carlow

85 140 172 Cavan

220 425 188 300 Cork

185 180 296 110 400 Donegal

125 167 84 112 260 222 Dublin

145 85 172 82 325 158 85 Dundalk

110 340 178 200 142 260 232 256 Ennis

87 305 178 166 210 205 216 238 70 Galway

120 325 142 206 105 296 198 240 37 105 Limerick

48 180 100 64 236 172 82 92 164 144 148 Mullingar

210 330 98 275 208 390 164 246 246 274 210 204 Rosslare

118 245 230 126 336 66 216 168 195 138 232 135 326 Sligo

188 430 252 312 120 350 303 346 94 162 105 254 290 288 Tralee

175 332 74 235 126 356 158 242 164 220 130 170 82 292 210 Waterford

190 310 76 256 188 372 142 228 228 254 190 185 19 306 275 62 Wexford

4. Calculate the cost of diesel (show workings) for one day from the following details provided by Joe Ltd.

The diesel van can travel 25km per litre. Workings The distance travelled in one day is 600km. 600 km = 24 litres The cost of diesel is 75 cent per litre. 25 24 litres @75 cent Answer € ______18

290 Junior Certificate Business Studies Workbook Teacher’s Manual 5. Calculate the cost of diesel (show workings) for one day from the following details provided by Pat Ltd.

The diesel van can travel 30km per litre. Workings The distance travelled in one day is 500km. 500 km = 16.67 litres The cost of diesel is 75 cent per litre. 30 16.67 litres @75 cent Answer € ______12.50

6. Calculate the cost of diesel (show workings) for one day from the following details provided by May Ltd.

The diesel van can travel 30km per litre. Workings The distance travelled in one day is 450km. 450 km = 15 litres The cost of diesel is 75 cent per litre. 30 15 litres @75 cent Answer € ______11.25

7. Joan Ltd supplies the following information on its annual costs. Calculate the annual costs (show workings).

Joan Ltd operates 340 days of the year. Workings Annual motor tax €800. Annual insurance €1,600. €800 + €1,600 + €1,200 Repairs and maintenance €1,200. 340

Answer € ______10.59

8. Emer Ltd supplies the following information on its annual costs. Calculate the annual costs (show workings).

Emer Ltd operates 290 days of the year. Workings Annual motor tax €700. Annual insurance €3,400. €700 + €3,400 + €2,800 Repairs and maintenance €2,800. 290

Answer € ______29.79

9. Nora Ltd supplies the following information on its annual costs. Calculate the annual costs (show workings). Nora Ltd operates 312 days of the year. Workings Annual motor tax €600. Annual insurance €2,200. €600 + €2,200 + €1,800 Repairs and maintenance €1,800. 312

Answer € ______14.74

10. On 1 June 2005 O’Brien Ltd purchased a delivery van by cheque No. 51 €42,000. Show how this purchase would be recorded in the Analysed Cash Book and the Delivery Van Account of O’Brien Ltd below.

Analysed Cash Book of O’Brien Ltd (p1) Date Details Cheque No. F Bank Delivery Van € € 1/6/05 Delivery van 51 GL 42,000 42,000

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General Ledger of O’Brien Ltd Date Details F Total Date Details F Total € € 2005 2005 Delivery Van A/C (p1) 1/6/05 Bank ACB 42,000

11. On 1 June 2005 Keenan Ltd purchased a delivery van by cheque No. 1 €30,000. Show how this purchase would be recorded in the Analysed Cash Book and the Delivery Van Account of Keenan Ltd below. Analysed Cash Book of Keenan Ltd (p1) Date Details Cheque No. F Bank Delivary Van € € 1/6/05 D.van 1 GL 30,000 30,000

General Ledger of Keenan Ltd Date Details F Total Date Details F Total € € 2005 2005 Delivery Van A/C (p1) 1/6/05 Bank ACB 30,000

12. On 1 June 2006 Waldron Ltd purchased a delivery van on credit from Shannon Motors Ltd for €37,000. Show how this purchase would be recorded in the General Journal, Delivery Van and Shannon Motors Ltd Accounts of Waldron Ltd below.

General Journal of Waldron Ltd (p1) Date Details F DR CR € € 1/6/05 Delivery van GL 37,000 1/6/05 Shannon Motors Ltd GL 37,000 Purchase of van on credit

General Ledger of Waldron Ltd Date Details F Total Date Details F Total € € 2005 2005 Delivery Van A/C (p1) 1/6/05 S. Motors Ltd GL 37,000

Shannon Motors Ltd (p2) 1/6/ D. van GL 37,000

292 Junior Certificate Business Studies Workbook Teacher’s Manual 13. On 1 June 2006 Davis Ltd purchased a delivery van on credit from Duffy Motors Ltd for €37,000. Show how this purchase would be recorded in the General Journal, Delivery Van and Duffy Motors Ltd Accounts of Davis Ltd below.

General Journal of Davis Ltd (p1) Date Details F Dr CR € € 1/5/06 Delivery van GL 37,000 1/5/06 Duffy Motors Ltd GL Purchase of van on credit 37,000

General Ledger of Davis Ltd Date Details F Total Date Details F Total € € 2006 2006 Delivery Van A/C (p1) 1/5/06 Duffy Motors GJ 37,000

Duffy Motors Ltd (p2) 1/5/06 GJ 37,000

14. (a) State four factors to be considered when a business is choosing a delivery system. 1. Cost 2. Speed 3. Reliability 4. Convenience (b) Why should a driver take into account the permitted drop-off time when planning a journey? ______If the driver arrives too late they will not be allowed to unload. (c) Calculate the cost of transport (show workings) for one day from the following details provided by CD Ltd: CD Ltd operates 290 working days in the year. The diesel van can travel 25km per litre. The distance travelled in one day is 500km. The cost of diesel is 75 cent per litre. The journey takes 12 hours. The van driver’s wages are €20 per hour. The van driver’s helper’s wages are €8 per hour. The Annual Motor Tax is €560. The Annual Motor Insurance is €1,600. The Annual Repairs are €1,100. € Answer ______362.24 Workings Diesel 20 litre @75c = €15 wages €240 + €96 = €336 Annual lists = €11.24 Total costs = €362.24

(d) On 1 May 2006 CD Ltd purchased a new delivery van by cheque for €42,000. Record the purchase of this delivery van in the Analysed Cash Book and the Delivery Van Account provided.

Analysed Cash Book of CD Ltd (p1) Date Details Cheque No. F Bank Delivery Van € € 1/5/06 Delivery van GL 42,000 42,000

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General Ledger of CD Ltd Date Details F Total Date Details F Total € € 2006 2006 Delivery Van A/C (p1) 1/5/ Bank ACB 42,000

15. (a) Explain the importance of delivery systems in the chain of distribution. ______Transports raw materials to the manufacturer; transports finished goods to ______wholesaler/retailer; transports workers to their jobs. (b) State where the costs of collecting and delivering goods are entered in the Final Accounts of a business. Costs______of collecting is in trading account; costs of delivery in profit/loss account. (c) Calculate the cost of transport (show workings) for one day (round trip) from Athlone to Waterford and back from the following details provided by MU Ltd: MU Ltd operates 310 working days in the year. The distance from Athlone to Waterford is 175 km. The diesel van can travel 30km per litre. The cost of diesel is 75 cent per litre. The journey takes 9 hours. The van driver’s wages are €25 per hour. The van driver’s helper’s wages are €10 per hour. The Annual Motor Tax is €6300. The Annual Motor Insurance is €2,200. The Annual Repairs are €1,900. Answer € ______357.30 Workings Diesel €8.75 Wages €315.00 Annual costs €33.55 Total costs €357.30

(d) On 1 May 2006 MU Ltd purchased a new delivery van on credit from PK Motors Ltd for €42,000. Record the purchase of this delivery van in the General Journal and the Delivery Van and PK Motors Ltd Accounts of CD Ltd below.

General Journal of MU Ltd (p1) Date Details F Dr CR € € 1/5/06 Delivery van GL 42,000 1/5/06 PK Motors Ltd GL 42,000 Purchase of van on credit

General Ledger of MU Ltd Date Details F Total Date Details F Total € € 2006 s2006 Delivery Van A/C (p1) 1/5/06 PK Motors GJ 42,000

PK Motors Ltd (p2) 1/5/ D. van GJ 42,000

294 Junior Certificate Business Studies Workbook Teacher’s Manual Chapter 33 Marketing

1. A firm wishes to launch a new product. From the following list of activities to be undertaken, indicate by means of a tick 0 which of the following sequences below is the correct one. 1. Sales Promotion (a) 3142 2. Retail Sales (b) 4213 3. Product Development (c) 3421 4. Market Research (d) 4132 0 (Junior Certificate Higher Level Paper I 1998 Section (A))

2. Complete the following sentences by filling in the blanks from this list of marketing terms. One word does not match.

Field Product Special Market Desk Target Research Development Offers Research Market

Kelly Ltd was interested in expanding into the EU ______.market It first did some ______desk research but later found that it needed to do some ______asfield research well. It decided to choose the French market as its ______.target market It launched its goods by using ______.special offers

3. Column 1 is a list of marketing terms. Column 2 is a list of possible explanations of these terms. Match the two lists by placing the letter of the correct explanation under the relevant number below. (One explanations does not apply.)

Column 1 Marketing Terms Column 2 Explanation 1. Marketing A. Responsible for ensuring a business has a good public image. 2. Advertising B. Studying existing information to find out more about a market. 3. Public relations Officer C. Researching the market through surveys and questionnaires. 4. Desk Research D. Production of goods and services wanted by customers. E. Informing potential customers about a product or service.

1 2 3 4 D E A B

4. Write brief notes on: (a) Product development ______Bringing in new products to meet the changing needs and ______habits of customers. (b) Branding ______Use of a logo or name to distinguish one product from another. ______

5. Name the four Ps of marketing.

(i) Product (ii) Price

(iii) Promotion (iv) Place

295 Junior Certificate Business Studies Workbook Teacher’s Manual

6. Suggest target markets for the following products or services. Complete the chart below.

Product/Service Possible Target Markets Mobile Phones Teenagers Irish Times Business people Farmers’ Journal Farmers Business Studies Texts Business studies students

7. Complete the marketing mix chart for a pair of trainers of your choice.

Four Ps of Marketing Name of Product Product Trendy trainers – all leather Price Ranges from €17.99 to €65.99 Promotion T. V. advertisements Place All leading shoe shops

8. Complete the marketing mix chart for a product or service of your choice.

Four Ps of Marketing Name of Product Product Price Promotion Place

9. Complete the chart below by giving examples of products or services using each type of advertising.

Type of Advertising Examples of products or services that use this type Informative Bus Éireann bus times Generic Fáilte Ireland – holiday in Ireland Persuasive Cosmetic companies Competitive Car manufacturers

10. The following chart sets out different methods of advertising products and services. Complete the chart below by giving an example of a product or service using this method and state a reason for your choice.

Methods of Advertising Chart Method Used to Advertise Reason for choice Radio Pop songs Can play the song Television Food Can see colour in the food Cinema Drink Encourages audience to drink Billboards McDonalds To attract passing motorists On delivery vans Bread Pat the Baker is nationwide Internet Computer upgrades Dedicated audience Newspapers Airlines Wide circulation Magazines Clothes Use of colours

296 Junior Certificate Business Studies Workbook Teacher’s Manual 11. Complete the chart below by giving your own examples of products or services that use the promotional methods.

Method Example Sales Promotion Mobile phone companies – free credit Branding Levis; Toyota Sponsorship Flancare – Longford Town Merchandising Supermarkets – new product displays Public Relations GAA; Irish Racing Board

12. Murray Ltd paid €23,000 by cheque No. 11, on 12 May 2005, for advertising its services. Show how this expense is recorded in the analysed cash book and advertisement account of Murray Ltd.

Analysed Cash Book (Credit Side) of Murray Ltd (p1) Date Details Cheque No. F Bank Advertising 12/5/05 Advertising 11 GL 23,000 23,000

General Ledger of Murray Ltd Date Details F Total Date Details F Total € € 2005 2005 Advertising A/C (p1) 12/5/ Bank ACB 23,000

13. Bannon Ltd paid €23,000 by cheque No. 11, on 12 May 2005, for advertising its services. Show how this expense is recorded in the analysed cash book and advertisement account of Bannon Ltd.

Analysed Cash Book (Credit Side) of Bannon Ltd (p1) Date Details Cheque No. F Bank Advertising 12/5/05 Advertising 11 GL 23,000 23,000

General Ledger of Bannon Ltd Date Details F Total Date Details F Total € € 2005 2005 Advertising A/C (p1) 12/5/ Bank ACB 23,000

Chapter 34 Financial Recording and Filing 1. Complete the following document sequence charts by inserting the correct document in spaces A and B. Letter of Enquiry →

A. Quotation →

B. Order →

Invoice

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2. Indicate with a tick 0 which of the following documents would be sent by a seller to a customer who made a complaint.

Invoice Credit Note 0 Receipt

3. Column 1 is a list of Books of First Entry. Column 2 is a list of possible source documents. Match the lists by placing the letter of the correct document under the number of the relevant book of first entry. (One source document does not apply.)

Column 1 Books of First Entry Column 2 Source Documents 1. Analysed Cash Book A. Copy of Invoice sent 2. Sales Returns Book B. Copy of Credit Note sent 3. Purchase Book C. Receipt 4. Sales Book D. Credit Note received E. Invoice received

1 2 3 4 C B E A

4. Indicate with a tick 0 the correct answer to the following: (a) Credit notes received are the source documents for writing up the: Purchases Returns Book0 Sales Returns Book Purchases Book

(b) Receipts are the source documents for writing up the: Sales Book Cash Book0 Purchases Book

(c) Cheques issued are the source document for writing up the: General Journal Purchases Book Analysed Cash Book 0 (d) Invoices received are the source document for writing up the: Purchases Book0 Sales Book Purchases Returns Book

5. State which accounts are involved in the following transactions by a garage:

Transactions Accounts Purchased land by cheque €500,000 Land and Bank Sold motor van for cash €9,000 Cash and Motor van Put €3,000 into the bank Bank and Capital Purchases car parts from Nissan Ltd Purchases and Nissan Ltd

6. State which account is receiving and which account is giving in the following transactions of a grocer.

Transactions Receiving Account Giving Account Paid an employee €500 by cheque Wages Bank Norah purchased a van on credit from Fast Motors Ltd Van Fast Motors Ltd Sold goods to Carey for €65 cash Cash Sales Took out €100 cash from the bank Cash Bank

298 Junior Certificate Business Studies Workbook Teacher’s Manual 7. Record the following transaction in the ledger accounts of John below and extract a Trial Balance as on 1/3/2005: 1/3/2005 John gave Mary €500 cash.

Ledger of John Date Details F Total Date Details F Total € € 2005 2005 Cash A/C 1/3/05 Mary GL 500 Mary A/C 1/3/ Cash GL 500

Trial Balance as on ______1/3/2005 Debit (DR) Credit (CR) Cash 500 Mary 500 500 500

8. Record the following transaction in the ledger accounts of Bernadette below and extract a Trial Balance as on 14/8/2006: 14/8/2006 Bernadette gave Patrick €1,500 cash.

Ledger of Bernadette Date Details F Total Date Details F Total € € 2006 2006 Cash A/C 14/8/06 Patrick GL 1,500 Patrick A/C 14/8/ Cash GL 1,500

Trial Balance as on ______14/8/2006 Debit (DR) Credit (CR) Cash 1,500 Patrick 1,500 1,500 1,500

9. Record the following transaction in the ledger accounts of Josephine below and extract a Trial Balance as on 14/8/2006: 14/8/2006 Martin gave Josephine €3,100 cash.

Ledger of Josephine Date Details F Total Date Details F Total € € 2006 2006 Cash A/C 14/8/ Martin GL 3,100 Martin A/C 14/8/06 Cash GL 3,100

299 Junior Certificate Business Studies Workbook Teacher’s Manual

Trial Balance as on ______14/8/2006 Debit (DR) Credit (CR) Cash 3,100 Martin 3,100 3,100 3,100

10. Record the following transaction in the ledger accounts of Philip below and extract a Trial Balance as on 7/7/2007: 7/7/2007 Emily gave Philip €1,750 cash.

Ledger of Philip Date Details F Total Date Details F Total € € 2007 2007 Cash A/C 7/7/ Emily GL 1,750 Emily A/C 7/7/ Cash GL 1,750

Trial Balance as on ______7/7/2007 Debit (DR) Credit (CR) Cash 1,750 Emily 1,750 1,750 1,750

11. Record the following transaction in the ledger accounts of Claire below and extract a Trial Balance as on 16/2/2007: 16/2/2007 Graham gave Claire €4,300 cash.

Ledger of Claire Date Details F Total Date Details F Total € € 2007 2007 Cash A/C 16/2/ Graham GL 4,300 Graham A/C 16/2/ Cash GL 4,300

Trial Balance as on ______16/2/2007 Debit (DR) Credit (CR) Cash 4,300 Graham 4,300 4,300 4,300

300 Junior Certificate Business Studies Workbook Teacher’s Manual 12. Balance the following cash account.

Date Details F Total Date Details F Total 2006 € 2006 € Cash A/C 1/6/ Sales 700 2/6/ Expenses 660 3/8/ Owner 1,200 6/6/ Purchases 800 9/6/ Sales 1,800 9/6/ Balance c/d 2,240 3,700 3,700

10/6/ Balance b/d 2,240

13. Balance the following cash account.

Date Details F Total Date Details F Total 2007 € 2007 € Cash A/C 1/8/ Owner 2,500 2/8/ Purchases 2,400 3/8/ Sales 1,320 4/8/ Insurance 760 6/8/ Sales 890 8/8/ Purchases 1,100 8/8/ Balance c/d 450 4,710 4,710

9/8/ Balance b/d 450

14. Balance the following cash account.

Date Details F Total Date Details F Total 2007 € 2007 € Cash A/C 1/10/ Balance c/d 500 4/10/ Purchases 1,000 3/10/ Owner 3,200 7/10/ Machinery 5,200 7/10/ Sales 4,444 12/10/ Expenses 700 12/10/ Balance c/d 1,244 8,144 8,144

13/10/ Balance b/d 1,244

301 Junior Certificate Business Studies Workbook Teacher’s Manual

Chapter 35 Business Documents I

Order Completion 1. Assume you are Larry Lambe, purchasing manager, of Lambe Footwear Ltd, Drogheda, Co. Louth. Complete the following order form, which he sent to Dubarry Ltd, Ballinasloe, Co. Galway on 1/7/2005. 30 pairs of boots @ €12 a pair. 20 pairs of AV8’s @ €32 a pair.

ORDER Order No. 70 Lambe Footware LTD Drogheda, Co. Louth Tel: (041) 232343 Fax: (041) 232 344 e-mail: [email protected] VAT Reg. IE218450 To: Dubarry Ltd Date: 1/7/2005 Ballinasloe Co. Galway

Please supply the following goods as per quotation no. 468 the following:

QUANTITY DESCRIPTION UNIT PRICE €

30 Pairs of boots €12 20 AV8’s €32

Goods to be delivered to the above address within 10 days. Signature Larry Lambe Position Purchasing Manager

2. Assume you are Siobhan Kelly, purchasing manager, of Tee Shirts For All Ltd, Ennis, Co. Clare. Complete the order form below, which she sent to Balwin Designs, Coronation Drive, Roscommon. 60 large multi-colour t-shirts @13 each. 100 small training tops @12 each.

ORDER Order No. 45 Tee Shirts For All LTD Ennis, Co. Clare Tel: (065) 20066 Fax: (065) 20067 e-mail: [email protected] VAT Reg. IE765672 To: Balwin Designs Date: 1/10/2006 Coronation Drive Roscommon

Please supply the following goods as per quotation no. 281

QUANTITY DESCRIPTION UNIT PRICE €

60 Multicolour t-shirts €13 100 Small training tops €12

Goods to be delivered to the above address within 10 days. Signature Siobhan Kelly Position Purchasing Manager

302 Junior Certificate Business Studies Workbook Teacher’s Manual 3. Winters Stationery Ltd, Lismore, Co. Waterford, ordered the following goods from Leaves Ltd, Branch Avenue, Kildare on 14 May 2007. 200 sets of Business Studies record books @ 1.50 per set. 750 10 pack sets of 42 page copies @ 3.40 per set. Assume you are Kathleen Winters, purchasing manager. Complete the order form below.

ORDER Order No. 13 Winters Stationary LTD Lismore, Co. Waterford Tel: (051) 543217 Fax: (051) 543718 e-mail: [email protected] VAT Reg. IE888653 To: Leaves Ltd Date: 14/5/2007 Branch Avenue, Kildare Please supply the following goods as per quotation no. 127

QUANTITY DESCRIPTION UNIT PRICE

200 Business studies record books €1.50

750 42-page copies €3.40

Goods to be delivered to the above address within 10 days. Signature Kathleen Winters Position Purchasing Manager

Ordinary Level 4. Maura Burke is the purchasing manager of Maura’s Alcohol-Free Drinks Ltd, Ballyjamesduff, Co. Cavan. On 28 March 2007 she orders the following goods from the manager of Soft Drink Wholesaler Ltd, Corrib Industrial Park, Galway. 150 bottles of Cidona @ €.0.80 per bottle. 300 bottles of Coco Cola @ €0.45 per bottle. 400 bottles of Fanta Orange @ €0.34 per bottle. Complete the Order no. 345. ORDER No. 345

Tel: (049) 37625 VAT Reg. IE7326825 Fax: (049) 37666 e-mail: [email protected]

MAURA’S ALCOHOL FREE DRINKS Ltd. Ballyjamesduff, Co. Cavan Date : 28/5/2007 To: Soft Drink Wholesaler Ltd Corrib Industrial Park Galway

Please supply the following goods: QUANTITY DESCRIPTION UNIT PRICE 150 Bottles of Cidona 80 cent 300 Bottles of Coco Cola 45 cent 400 Bottles of Fanta 34 cent

Signature Maura Burke Position Purchasing Manager

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Delivery Docket Completion

5. Crown Paints Ltd sold the following goods to JJ Paints Ltd, Newtownforbes, Longford: 300 litres white emulsion. 120 litres exterior varnish. Complete the Delivery Docket below sent by Crown Paints Ltd. Assume you are Stephen Brennan the person who signs the Delivery Docket on behalf of JJ Paints Ltd.

Crown Paints Ltd. Athlone, Co. Westmeath DELIVERY DOCKET No. 2 Order No. 45 VAT Reg. IE12367821 To: J.J Paints Ltd Tel: (090) 6452779 Newtown Forbes Fax: (090) 6452779 Longford e-mail: [email protected] Date: Quantity Description

300 Litres white emulsion 120 Litres exterior varnish

Received the above goods in good condition.

Signed Stephen Brennan (For Purchaser)

6. Connolly Sports Ltd sold the following goods to the Kerry County Board, Fitzgerald Stadium, Killarney, Co. Kerry. 300 hurleys. 250 helmets. Complete the Delivery Docket below sent by Connolly Sports Manufacturers Ltd. Assume you are Cooper Quilter, the person who signs the Delivery Docket on behalf of the Kerry County Board.

Connolly Sports Ltd. Oranmore, Co, Galway DELIVERY DOCKET No. 7 Order No. 67 VAT Reg. IE12367821G To: Kerry County Board Tel: (091) 4563721 Fitzgerald Stadium Fax: (091) 4563722 Killarney, Co. Kerry e-mail: [email protected] Date :

Quantity Description 300 Hurleys 250 Helmets

Received the above goods in good condition.

Signed Cooper Quilter (For Purchaser)

304 Junior Certificate Business Studies Workbook Teacher’s Manual Chapter 36 Business Documents II

Ordinary Level 1. Techno Supplies Ltd, The Curragh Industrial Estate, Kildare, received an order No. 54 from Digicomp Ltd, Retailers of Computer Equipment, Astral Shopping Centre, Naas, Co. Kildare on 14 May 2006 for the following goods: 30 Clarity Scanners Model SC22 @ €125 each. 20 Viscount VDUs Model VT @ €245 each. 75 Soft Touch Keyboards Model KB48 @ €62 each. Techno Supplies Ltd issued an invoice No. 7621 to Digicomp Ltd on 16 May 2006. Complete the blank invoice provided. Please note that Trade Discount is 10% and VAT is 20% on all goods. (Junior Certificate Ordinary Level 2001 Q5 amended)

Techno Supplies Ltd. The Curragh Industrial Estate, Kildare INVOICE No. 7621 Tel: 045-4399221 To: Digicomp Ltd Fax: 045-4399762 e-mail: [email protected] Retailers of Computer Equipment VAT Reg. No. IE139868W Astral Shopping Centre Date: 16/5/2006 Naas, Co. Kildare

Order No: 54

Quantity Description Model No. Unit Price € Total € 30 Clarity Scanners SC22 125 3,750 20 Viscount VDUs VT 245 4,900 75 Soft Touch keyboards KB48 62 4,650 Total (Excluding VAT) 13,300 Trade Discount 1,330 Subtotal 11,970 VAT 2,394 E & OE Total (Including VAT) 14,364

2. Hardwood Furniture, Forest Lane, Cork, received an order No. 231 from Yorke Home Supplies, Carrick-on-Shannon, Co. Leitrim, on 25 June 2007 for the following goods: 12 Kitchen Tables Model HF2 @ €230 each. 130 Bedroom Lockers Model HF7 @ €20 each. 60 Computer Desks Model HF9 @ €40 each. Hardwood Furniture Ltd issued an invoice No. 3445 to Yorke Home Supplies Ltd on 29 June 2007. Complete the following blank invoice. Please note that Trade Discount is 20% and VAT is 10% on all goods.

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Hardwood Furniture Ltd Forest Lane, Cork INVOICE No. 3445 Tel: 021-821687 To: Yorke Home Supplies Fax: 021-821688 Carrick-on-Shannon e-mail: [email protected] VAT Reg. No. IE145673C Co, Leitrim Date: 25/6/2007

Order No: 231

Quantity Description Model No. Unit Price € Total € 12 Kitchen tables HF2 230 2,760 130 Bedroom lockers HF7 20 2,600 60 Computer desks HF9 40 2,400 Total (Excluding VAT) 7,760 Trade Discount 1,552 Subtotal 6,208 VAT 620.80 E & OE Total (Including VAT) 6,828.80

3. Indicate with a tick which of the following statements are true or false.

True False (a) VAT is added before trade discount is deducted in an invoice (b) E & OE on an invoice allows mistakes to be corrected (c) The seller sends the buyer a letter of complaint when goods are not right 4. List three procedures used by the seller when issuing invoices. (a) Check the name and address (b) Check the calculations (c) File a copy 5. List three procedures used by the buyer on receiving credit notes. (a) Check the calculations (b) Record in the Purchases Returns Book (c) File the credit note 6. Complete the following sentences. On receiving an order the seller sends the buyer a delivery docket and an invoice. . The seller records the invoice sent in the Sales Book. When the buyer sends a letter of complaint the seller issues a credit note. The buyer records the credit note received in the Purchases Returns Book .

306 Junior Certificate Business Studies Workbook Teacher’s Manual 7. On 1 May 2006, Mayo Paints Ltd issued an invoice to DIY Ltd, Dungarvan, Co. Waterford, who ordered (Order No. 23) the following goods: 20 5 litre tins of gloss paint @ €50 per tin (excluding VAT). 50 2 litre tins of varnish @ €10 per tin (excluding VAT). Trade discount was 20% and VAT was 21%. Complete the following blank invoice. Mayo Paints Ltd. Forest Lane, Cork INVOICE No. 411 Tel: 021-537281 To: DIY Ltd Fax: 021-537284 e-mail: [email protected] Dungarvan VAT Reg. No. IE678321 Co, Waterford Date: 1/5/2006

Order No: 23

Quantity Description Unit Price € Total(Ex VAT) € 20 5 litre tins of gloss paint 50 1,000 50 2 litre tins of varnish 10 500 Total (Excluding VAT) 1,500 Trade Discount 300 Subtotal 1,200 VAT 252 E & OE Total Due 1,452

8. On 20 March 2007, Crossan Electric Ltd issued an invoice to Power Electric Ltd, Waterford, who ordered (Order No. 47) the following goods: 10 Solara flat screen televisions @ €550 per set (excluding VAT). 5 Sony DVD players recorders @ €600 per player (excluding VAT). Trade discount was 20% and VAT was 21%. Complete the following blank invoice.

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Crossan Electric Ltd. Longford INVOICE No. 47 Tel: 043-43218 To: Power Electric Ltd Fax: 043-43219 e-mail: [email protected] Waterford VAT Reg. No. IE654453 Date: 20/3/2007

Order No: 47

Quantity Description Unit Price € Total(Ex VAT) € 10 Solara Flat TVs 550 5,500 5 Sony DVD Players 600 3,000 Total (Excluding VAT) 8,500 Trade Discount 1,700 Subtotal 6,800 VAT 1,428 E & OE Total Due 8,228

9. On 10 August 2007, Daly Car Parts Ltd issued an invoice to Quilter Service Station, Tralee, Co. Kerry who ordered (Order No. 93) the following goods: 8 HP35 Batteries @ €50 per battery (excluding VAT). 10 ICRX Batteries @ €60 per battery (excluding VAT). Trade discount was 30% and VAT was 21%. Complete the following blank invoice. Daly Car Parts Ltd. Carlow INVOICE No. 312 Tel: 0503-81789 To: Quilter Service Station Fax: 0503-81788 e-mail: [email protected] Tralee VAT Reg. No. IE678321 Co, Kerry Date: 10/8/2007

Order No: 93

Quantity Description Unit Price € Total(Ex VAT) € 8 HP35 Batteries 50 400 10 ICRX Batteries 60 600 Total (Excluding VAT) 1,000 Trade Discount 300 Subtotal 700 VAT 147 E & OE Total Due 553

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10. On 23 May 2006 Jones Ltd, Dublin Road, Galway issued a credit note No. 23 to Sparks Ltd, Longford, because six faulty TV aerials, unit price €60, were returned. Trade discount is 25% and VAT was 21%. Complete the Credit Note No. 23 provided. Jones Ltd. Dublin Road, Galway CREDIT NOTE No. 23 Tel: 091-21355 To: Sparks Ltd Fax: 091-2136 Longford e-mail: [email protected] VAT Reg. No. IE790023 Date: 23/5/2006

Order No:32

Quantity Description Unit Price € Total(Ex VAT) € 6 TV Aerials 60 360 Faulty Total (Excluding VAT) 360 Trade Discount 90 Subtotal 270 VAT 56.70 E & OE Total Due 326.70

11. On 17 May 2006 Barry Ltd, Sea Road, Sligo issued a credit note No. 67 to Cavan Stores Ltd, Cavan, because ten broken chairs, unit price €12, were returned. Trade discount is 25% and VAT was 21%. Complete the Credit Note No. 67 provided. Barry Ltd. Sea Road, Sligo CREDIT NOTE No. 67 Tel: 073-32217 To: Cavan Stores Ltd Fax: 073-32218 e-mail: [email protected] Cavan VAT Reg. No. IE325467 Date: 17/5/2006

Order No:32

Quantity Description Unit Price € Total(Ex VAT) € 10 Chairs 12 120 Broken Total (Excluding VAT) 120 Trade Discount 30 Subtotal 90 VAT 18.90 E & OE Total Due 108.90

309 Junior Certificate Business Studies Workbook Teacher’s Manual 12. On 16 February 2007 Brooks Ltd, Castlebar, Co. Mayo issued a credit note No. 45 to BK Ltd, Cork, because five unordered bicycles, unit price €75, were returned. Trade discount is 25% and VAT was 21%. Complete the Credit Note No. 45 provided. Brooks Ltd. Castlebar Co. Mayo CREDIT NOTE No. 45 Tel: 094-26686 To: BK Ltd Fax: 094-26785 e-mail: [email protected] Cork VAT Reg. No. IE325467 Date: 16/2/2007

Order No:19

Quantity Description Unit Price € Total(Ex VAT) € 5 Bicycles 75 375 Unordered Total (Excluding VAT) 375 Trade Discount 93.75 Subtotal 281.25 VAT 59.06 E & OE Total Due 340.31

Chapter 37 Recording Credit Transactions

1. Match the following books of first entry to the source documents. Books of First Entry: Purchases book; General Journal; Sales returns book; Sales book; Purchases returns book. One book does not match. Source Document Book of First Entry Invoice sent Sales Book Credit Note received Purchases Returns Book Invoice received Purchases Book Credit Note sent Sales Returns Book

2. Write out the following abbreviations in full: (i) DR Debit (v) CR Credit

(ii) DL Debtors Ledger (vi) GL General Ledger

(iii) CL Creditors Ledger (vii) B/D Brought Down

(iv) C/D Carry Down

310 Junior Certificate Business Studies Workbook Teacher’s Manual Integrated Invoice Exercises

3. On 16 June 2005, Walshe Ltd, Mallow, Co. Cork sent an Order No. 7 to Morris Electric Ltd, Main Street, Cork, for the following goods: 50 Sony Walkmans @ €110 each excluding VAT. 10 Nut DVDs @ €100 each excluding VAT. The goods ordered are in stock and on 18 June 2005 are delivered by Morris Electric Ltd. An Invoice No. 31 accompanies the goods. Trade discount is 20% and the furniture is subject to VAT at 21%. (a) Outline how Walshe Ltd should treat outgoing orders. (b) From the details provided complete the Invoice No. 31. (c) Record the invoice issued in the sales book of Morris Electric Ltd. (a) Check the name and address; Check stock and credit rating of buyer; File copy of order.

(b) Morris Electric Ltd. Main Street, Cork INVOICE No. 31 Tel: 021-826178 To: Walshe Ltd Fax: 021-826188 e-mail: [email protected] Mallow VAT Reg. No. IE333568 Co. Cork Date: 18/6/2005

Order No: 7

Quantity Description Unit Price € Total(Ex VAT) € 50 Sony Walkmans 110 5,500 10 Nut DVDs 100 1,000 Total (Excluding VAT) 6,500 Trade Discount 1,300 Subtotal 5,200 VAT 1,092 E & OE Total Due 6,292

4. On 25 May 2006, Nolan Ltd, Station Road, Kildare, Co. Kildare sent an Order No. 65 to Kelly Tiles Ltd, Cross Street, Carlow, for the following goods: 30 boxes of Ceramic Tiles @ €50 per box excluding VAT. 20 boxes of Floor Tiles @ €100 per box excluding VAT. The tiles ordered are in stock and on 28 May 2006 are delivered by Kelly Tiles Ltd. An Invoice No. 78 accompanies the goods.

311 Junior Certificate Business Studies Workbook Teacher’s Manual Trade discount is 20% and the tiles are subject to VAT at 13½%. (a) Outline how Kelly Tiles Ltd should treat outgoing orders. (b) From the above details complete the Invoice No. 78. (c) Record the invoice received in the purchases book of Nolan Ltd. (a) Check the name and address; Check stock levels and credit rating of buyer; File copy of order.

(b) Kelly Tiles Ltd. Cross Street, Carlow INVOICE No. 78 Tel: 0503-41658 To: Nolan Ltd Fax: 0503-41659 e-mail: [email protected] Station Road VAT Reg. No. IE678321 Kildare Date: 28/5/2006 Co. Kildare

Order No: 65

Quantity Description Unit Price € Total(Ex VAT) € 30 Ceramic Tiles 50 1,500 20 Floor Tiles 100 2,000 Total (Excluding VAT) 3,500 Trade Discount 700 Subtotal 2,800 VAT 378 E & OE Total Due 3,178

5. On 13 March 2007, Daly Ltd, Howth, Co. Dublin sent an Order No. 24 to Cronin Paints Ltd, Naas, Co. Kildare, for the following goods: 100 tins of white emulsion @ €20 per tin excluding VAT. 40 tins of wood gloss @ €50 per tin excluding VAT. The paints ordered are in stock and on 15 March 2007 are delivered by Cronin Paints Ltd. An Invoice No. 57 accompanies the goods. Trade discount is 30% and the furniture is subject to VAT at 13½%. (a) Outline how Daly Ltd should treat incoming invoices. (b) From the above details complete the Invoice No. 57. (c) Record the invoice issued in the Sales Book of Cronin Paints Ltd. (a) Check the name and address; Check the calculations; Record in Purchases Book.

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(b) Cronin Paints Ltd. Naas, Co. Kildare INVOICE No. 57 Tel: 045-826178 To: Daly Ltd Fax: 045-826179 e-mail: [email protected] Howth VAT Reg. No. IE333568 Co. Dublin Date: 15/3/2007

Order No: 24

Quantity Description Unit Price € Total(Ex VAT) € 100 White emulsion 20 2,000 40 Wood gloss 50 2,000 Total (Excluding VAT) 4,000 Trade Discount 1,200 Subtotal 2,800 VAT 378 E & OE Total Due 3,178

6. On 28 January 2005, Burke Ltd, Ballina, Co. Mayo sent an Order No. 3 to Shine Jeans Ltd, Centre Street, Sligo, for the following goods: 50 pairs of Levi mens’ jeans @ €45 per pair excluding VAT. 70 pairs of Kearns mens’ jeans @ €60 per pair excluding VAT. The jeans ordered are in stock and on 3 February 2005 are delivered by Shine Jeans Ltd. An Invoice No. 87 accompanies the goods. Trade discount is 25% and the jeans are subject to VAT at 21%. (a) Outline how Shine Jeans Ltd should treat outgoing invoices. (b) From the above details complete the Invoice No. 87. (c) Record the invoice received in the purchases book of Burke Ltd. (a) Check the name and address; Check the calculations; Record the invoice in the Sales Book.

313 Junior Certificate Business Studies Workbook Teacher’s Manual (b) Shine Jeans Ltd. Centre Street, Sligo INVOICE No. 87 Tel: 071-44032 To: Burke Ltd Fax: 071-9144033 e-mail: [email protected] Ballina VAT Reg. No. IE545678 Co. Mayo Date: 28/1/2005

Order No: 3

Quantity Description Unit Price € Total(Ex VAT) € 50 Levi men’s jeans 45 2,250 70 Kearns men’s jeans 60 4,200 Total (Excluding VAT) 6,450 Trade Discount 1,612.50 Subtotal 4,837.50 VAT 1,015.90 E & OE Total Due 5,853.40

(c) PURCHASES BOOK (p1) Date Details Invoice No F Net € VAT € Total € 28/1/05 Shine Jeans Ltd 87 CL 4,837.50 1,015.90 5,853.40

Integrated Credit Note Exercises 7. On 12 June 2004, East Ltd, Wexford, a computer manufacturer, received a letter of complaint from a customer, Young Ltd, Gate Street, Navan, Co. Meath. In the letter from Young Ltd, it was stated that four printers, which had been delivered, were black instead of coloured. The price per printer was €100 excluding VAT. East Ltd issued a Credit Note, No. 45 on 23 June 2004. Trade Discount was 25% and VAT was 21%. (a) Assume you are Sheila Young, Purchasing Manager for Young Ltd. Write a letter of complaint in your copybook to the Sales Manager of East Ltd stating why you are not satisfied with the printers you received and requesting a reduction in the amount owed.

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(b) Complete the credit note on the blank document sheet provided. (c) Record the credit note received in the purchases returns book of Young Ltd. (a)

Young Ltd, Gate Street, Navan, Co. Meath. 12 June 2004. East Ltd, Wexford.

Dear Sales Manager,

My company recently purchased a number of printers from you. Unfortunately, I found that four of the printers were black instead of coloured. As these printers are not as ordered, I would like you to collect them and reduce the amount owing.

Yours faithfully, Sheila Young. Purchasing Manager (b) East Ltd. Wexford. CREDIT NOTE No. 45 Tel: 053-2213345 To: Young Ltd Fax: 053-2213346 e-mail: [email protected] Gate Street VAT Reg. No. IE234345 Navan Date: 23 June 2004 Co. Meath

Order No: 76

Quantity Description Unit Price € Total(Ex VAT) € 4 Computer printers 100 400 Black instead of colour Total (Excluding VAT) 400 Trade Discount 100 Subtotal 300 VAT 63 E & OE Total Due 363

8. On 17 May 2004, South Ltd, Waterford, a shoe manufacturer, received a letter of complaint from one of their customers, Foot Ltd, Toe Street, Kinsale, Co. Cork. In the letter from Foot Ltd, it was stated that fifteen pairs of shoes, which had been delivered, were scratched. The price per pair was €50 excluding VAT. South Ltd issued a Credit Note, No. 67 on 23 June 2004. Trade Discount was 20% and VAT was 21%. (a) Set out the procedure, in your copybook, for dealing with credit notes issued. (b) Complete the credit note on the blank document sheet provided. (c) Record the credit note issued in the Sales Returns Book of South Ltd.

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(a) • Check the name and address • Check that the details of the complaint are true • Check calculations • Record in Sales Returns Book

(b) South Ltd. Waterford CREDIT NOTE No. 67 Tel: 051-460383 To: Foot Ltd Fax: 051-460385 e-mail: [email protected] Toe Street VAT Reg. No. IE768545 Kinsale Date: 23/6/2004 Co. Cork

Order No: 100

Quantity Description Unit Price € Total(Ex VAT) € 15 Pairs of shoes 50 750 Shoes scratched Total (Excluding VAT) 750 Trade Discount 150 Subtotal 600 VAT 126 E & OE Total Due 726

9. On 20 June 2004, North Ltd, Donegal, a shirt manufacturer, received a letter of complaint from one of their customers, Back Ltd, Arm Street, Thurles, Co. Tipperary. In the letter from Back Ltd, it was stated that thirty shirts, which had been delivered, were missing buttons. The price per shirt was €40 excluding VAT. North Ltd issued a Credit Note, No. 45 on 23 June 2004. Trade Discount was 25% and VAT was 21%. (a) Set out the procedure, in your copybook, for dealing with incoming credit notes. (b) Complete the credit note on the blank document sheet provided. (c) Record the credit note received in the Purchases Returns Book of Back Ltd.

(a) • Check the name and address • Check the calculations • Record in Purchase Returns Book • File credit note

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(b) North Ltd. Donegal. CREDIT NOTE No. 45 Tel: 074-567891 To: Back Ltd Fax: 074-567892 e-mail: [email protected] Arm Street VAT Reg. No. IE990764 Thurles Date: 23/6/2004 Co. Tipperary

Order No: 101

Quantity Description Unit Price € Total(Ex VAT) € 30 Shirts 40 1,200 Missing buttons Total (Excluding VAT) 1,200 Trade Discount 300 Subtotal 900 VAT 189 E & OE Total Due 1,089

Chapter 38 Continuous Balancing Ledgers and Statements

In Q1-Q6, record the following information using the T Ledger formats and Continuous Balancing Ledger formats provided. Debtors Ledgers 1. Quinn Ltd Account 1/3/2005 Balance (dr) €12,000 4/3/2005 Sales €65,000 6/3/2005 Sales returns €11,500 8/3/2005 Sales €23,500 T Ledger format Date Details F Total Date Details F Total 2005 2005 Quinn Ltd A/C 1/3/ Balance b/d 12,000 6/3/ Sales returns SRB 11,500 4/3/ Sales SB 65,000 8/3/ Balance c/d 89,000 8/3/ Sales SB 23,500 100,500 100,500 9/3/ Balance b/d 89,000

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Continuous Balancing Ledger format Quinn Ltd A/C Date Details F Dr debit Cr credit Balance 2005 1/3/ Balance b/d 12,000 4/3/ Sales SB 65,000 77,000 6/3/ Sales returns SRB 11,500 65,500 8/3/ Sales SB 23,500 89,000

2. Aldemero Ltd Account 1/7/2006 Balance (dr) €17,300 6/7/2006 Sales €35,000 8/7/2006 Sales returns €10,700 10/7/2006 Sales €54,000 T Ledger format Date Details F Total Date Details F Total 2006 2006 Aldemero Ltd A/C 1/7/ Balance b/d 17,300 8/7/ Sales returns SRB 10,700 6/7/ Sales SB 35,000 10/7/ Balance c/d 95,600 10/7/ Sales SB 54,000 106,300 106,300 11/7/ Balance b/d 95,600

Continuous Balancing Ledger format Aldemero Ltd A/C Date Details F Dr debit Cr credit Balance 2006 1/7/ Balance b/d 17,300 6/7/ Sales SB 35,000 52,300 8/7/ Sales returns SRB 10,700 41,600 10/7/ Sales SB 54,000 95,600

Creditors Ledgers 3. Agusto Ltd Account 1/3/2006 Balance (cr) € 6,000 7/3/2006 Purchases €47,000 9/3/2006 Purchases returns € 9,500 16/3/2006 Purchases €38,200 T Ledger format Date Details F Total Date Details F Total 2006 2006 Agusto Ltd A/C 9/3/ Purchase returns SRB 9,500 1/3/ Balance b/d 6,000 7/3/ Purchases PB 47,000 16/3/ Balance c/d 81,700 16/3/ Purchases PB 38,200 91,200 91,200 17/3/ Balance b/d 81,700

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Continuous Balancing Ledger format Agusto Ltd A/C Date Details F Dr debit Cr credit Balance 2006 1/3/ Balance b/d 6,000 7/3/ Purchases PB 47,000 53,000 9/3/ Purchases returns PRB 9,500 43,500 16/3/ Purchases PB 38,200 81,700

4. Ryan Ltd Account 1/11/2007 Balance (cr) €17,000 6/11/2007 Purchases €52,000 19/11/2007 Purchases returns €9,500 27/11/2007 Purchases €34,800 T Ledger format Date Details F Total Date Details F Total 2007 2007 Ryan Ltd A/C 19/11/ Purchases returns PRB 9,500 1/11/ Balance b/d 17,000 6/11/ Purchases PB 52,000 27/11/ Balance c/d 94,300 27/11/ Purchases PB 34,800 103,800 103,800 28/11/ Balance b/d 94,300

Continuous Balancing Ledger format Ryan Ltd A/C Date Details F Dr debit Cr credit Balance 2007 1/11/ Balance b/d 17,000 6/11/ Purchases PB 52,000 69,000 19/11/ Purchases returns PRB 9,500 59,500 27/11/ Purchases PB 34,800 94,300

5. Yorke Ltd Account 1/8/2007 Balance (cr) € 83,600 11/8/2007 Purchases returns €52,000 16/8/2007 Purchases € 24,900 23/8/2007 Purchases returns € 7,600 T Ledger format Date Details F Total Date Details F Total 2007 2007 Yorke Ltd A/C 11/8/ Purchases returns PRB 52,000 1/8/ Balance b/d 83,600 23/8/ Purchases returns PRB 7,600 16/8/ Purchases PB 24,900 23/8/ Balance c/d 48,900 108,500 108,500 24/8/ Balance b/d 48,900

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Continuous Balancing Ledger format Yorke Ltd A/C Date Details F Dr debit Cr credit Balance 2007 1/8/ Balance b/d 83,600 11/8/ Purchases returns PRB 52,000 31,600 16/8/ Purchases PB 24,900 56,500 23/8/ Purchases returns PRB 7,600 48,900

Statement Completion 6. Complete the statement given below which was sent by Darren Ltd to Farrell Ltd, Reynolds Avenue, Waterford on 31 May 2006. Use the following information. 2006 € 1/5/ Balance (dr) 12,300 5/5/ Invoice No. 5 issued to Farrell Ltd 45,000 8/5/ Credit note No. 34 issued to Farrell Ltd 11,400 14/5/ Invoice No. 19 issued to Farrell Ltd 33,880 31/5/ Credit Note No. 89 issued to Farrell Ltd 5,600

STATEMENT No. 45 Darren Ltd, Athlone Road, Wexford

To : Farrell Ltd Tel : 053-421234 Reynolds Avenue Fax : 053-421235 Waterford VAT No. IE768652 Account No. 23 Date: 31/5/2006

Date Details Debit € Credit € Balance € 1/5/2006 Balance b/d 12,300 5/5/ Invoice no. 5 45,000 57,300 8/5/ Credit note no. 34 11,400 45,900 14/5/ Invoice no. 19 33,880 79,780 31/5/ Credit note no. 89 5,600 74,180

7. Complete the statement provided which was sent by Aaron Ltd to Daly Ltd, Cassidy Drive, Sligo on 31 May 2007. 2007 € 1/5/ Balance (dr) 7,600 8/5/ Invoice No. 5 issued to Farrell Ltd 78,000 12/5/ Credit note No. 34 issued to Farrell Ltd 24,100 19/5/ Invoice No. 19 issued to Farrell Ltd 67,920 31/5/ Credit Note No. 89 issued to Farrell Ltd 24,800

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STATEMENT No. 22 Aaron Ltd, The Square, Donegal

To : Daly Ltd Tel : 074-421234 Cassidy Drive Fax : 074-421233 Sligo VAT No. IE332214 Account No. 23 Date: 31/5/2007

Date Details Debit € Credit € Balance € 1/5/2007 Balance b/d 7,600 8/5/ Invoice no. 5 78,000 85,600 12/5/ Credit note no. 34 24,100 61,500 19/5/ Invoice no. 19 67,920 129,420 31/5/ Credit note no. 89 24,800 104,620

8. The following details refer to the sale of goods on credit by Murphy Ltd to McCarthy Ltd, 9 Centre Street, Dublin for the month of May 2006. On 1 May 2006 there was a balance of €376 in McCarthy’s account in the Debtors Ledger of Murphy Ltd. 4/5/2006 Murphy Ltd sent an invoice no. 8 to McCarthy Ltd € 1,800 9/5/2006 Murphy Ltd sent an invoice no. 32 to McCarthy Ltd €16,000 14/5/2006 Murphy Ltd received a cheque from McCarthy Ltd € 5,600 18/5/2006 Murphy Ltd sent an invoice no. 78 to McCarthy Ltd € 8,200 24/5/2006 Murphy Ltd sent a credit note no. 43 to McCarthy Ltd € 4,500 31/5/2006 Murphy Ltd sent an invoice no. 89 to McCarthy Ltd € 7,900 (a) List three checks that McCarthy Ltd should carry out on receiving the statement. (b) Complete the following statement No. 70 sent by Murphy Ltd on 31 May 2006 below. (a) (i) Check the name and address (ii) Check the calculations (iii) Check statement details against Creditors Ledger (b) STATEMENT No. 70 Murphy Ltd, Carlow View, Kilkenny

To : McCarthy Ltd Tel : 056-421234 9 Centre Street Fax : 056-421235 Dublin VAT No. IE7686524 Account No. 23 Date 31/5/2006

Date Details Debit € Credit € Balance € 1/5/2006 Balance b/d 376 4/5/ Invoice no. 8 1,800 2,176 9/5/ Invoice no. 32 16,000 18,176 14/5/ Cheque 5,600 12,576 18/5/ Invoice no. 78 8,200 20,776 24/5/ Credit note no. 43 4,500 16,276 31/5/ Invoice no. 89 7,900 24,176

321 Junior Certificate Business Studies Workbook Teacher’s Manual 9. The following details refer to the sale of goods on credit by Victory Ltd to Lyons Ltd, Shane Road, Longford for the month of May 2007. On 1 May 2004 there was a balance of €250 in Lyons’ account in the Debtors Ledger of Victory Ltd. 5/5/2007 Victory Ltd sent an invoice no. 4 to Lyons Ltd € 2,300 8/5/2007 Victory Ltd sent an invoice no. 29 to Lyons Ltd €13,000 16/5/2007 Victory Ltd received a cheque from Lyons Ltd € 9,500 19/5/2007 Victory Ltd sent an invoice no. 46 to Lyons Ltd € 9,500 26/5/2007 Victory Ltd sent a credit note no. 12 to Lyons Ltd € 2,800 31/5/2007 Victory Ltd sent an invoice no. 57 to Lyons Ltd € 8,300 (a) Should cash sales be entered in the statement? Yes No (b) Complete the following statement No. 98 sent by Victory Ltd on 31 May 2007. STATEMENT No. 98 Victory Ltd, Athlone Road, Galway.

To : Lyons Ltd Tel: 091-444331 Shane Road Fax: 091-444332 VAT No. IE7686524 Longford Account No. 45 Date: 31/5/2007

Date Details Debit € Credit € Balance € 1/5/2007 Balance b/d 250 5/5/ Invoice no. 4 2,300 2,550 8/5/ Invoice no. 29 13,000 15,550 16/5/ Cheque 9,500 6,050 19/5/ Invoice no. 46 9,500 15,550 26/5/ Credit note no. 12 2,800 12,750 31/5/ Invoice no. 57 8,300 21,050

10. The following details refer to the sale of goods on credit by Macken Ltd to Cox Ltd, Tullamore, Co. Offaly for the month of May 2008. On 1 May 2008 there was a balance of €700 in Cox’s account in the Debtors Ledger of Macken Ltd. 2/5/2008 Macken Ltd sent an invoice no. 3 to Cox Ltd € 2,700 6/5/2008 Macken Ltd sent an invoice no. 54 to Cox Ltd €12,900 11/5/2008 Macken Ltd received a cheque from Cox Ltd € 8,500 17/5/2008 Macken Ltd sent an invoice no. 61 to Cox Ltd € 7,700 27/5/2008 Macken Ltd sent a credit note no. 21 to Cox Ltd € 3,200 31/5/2008 Macken Ltd sent an invoice no. 74 to Cox Ltd € 6,100 (a) With what should Cox Ltd compare the statement? Cox Ltd should compare the statement with Macken Ltd account in the Creditors Ledger. (b) Complete the following statement No. 100 sent by Macken Ltd on 31 May 2008.

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STATEMENT No. 100 Macken Ltd, Hanlon Lane, Monaghan.

To : Cox Ltd Tel : 047-7729617 Tullamore Fax : 047-7729618 VAT No. IE7987654 Co. Offaly Account No. 123 Date 31/5/2008

Date Details Debit € Credit € Balance € 1/5/2008 Balance b/d 700 2/5/ Invoice no. 3 2,700 3,400 6/5/ Invoice no. 54 12,900 16,300 11/5/ Cheque 8,500 7,800 17/5/ Invoice no. 61 7,700 15,500 27/5/ Credit note no. 21 3,200 12,300 31/5/ Invoice no. 74 6,100 18,400

Other Continuous Balancing Ledger Exercises Record the following expense and gains transactions in the Continuous Balancing Ledgers. 11. On 23 January 2007 paid rent by cheque €500. Rent A/C Date Details F Dr debit Cr credit Balance 2007 1/1/ Balance b/d 2,000 23/1/ Bank ACB 500 2,500

12. On 15 May 2007 paid insurance by cheque €1,200. Insurance A/C Date Details F Dr debit Cr credit Balance 2007 1/5/ Balance b/d 200 15/5/ Bank ACB 1,200 1,400

13. On 26 June 2008 received interest from bank €3,200. This was lodged in the bank. Interest Receivable A/C Date Details F Dr debit Cr credit Balance 2008 1/6/ Balance b/d 900 26/6/ Bank ACB 3,200 4,100

14. On 19 August 2008 received commission from Nissan Ireland of €15,500. This was lodged in the bank. Commission Receivable A/C Date Details F Dr debit Cr credit Balance 2008 1/8/ Balance b/d 6,000 19/8/ Bank ACB 15,500 21,500

323 Junior Certificate Business Studies Workbook Teacher’s Manual Chapter 39 Analysed Cash Books I

1. Please tick the correct answer in each of the following statements.

True False (a) A receipt is issued by the buyer (b) A cheque is issued by the buyer (c) Payments by cheque are entered on the debit side of the Analysed Cash Book 2. Complete the following statements. (a) A receipt is proof of payment for goods and services received.

(b) A cheque is a method of payment where a current account holder instructs its bank to make a payment to another person.

Cheque and Counterfoil Completion 3. Assume you are John Joyce. Complete the cheque no. 236 below from the following details: 16/5/2006 Paid Victory Ltd €3,560.

16/5/06

16/5/06 Victory Ltd

Three thousand, five hundered and sixty euro 3,560

Victory Ltd

3,560 John Joyce

4. Assume you are Peggy Shields. Complete the cheque no. 450 below from the following details: 30/6/2007 Paid Holy Ltd €980.

30/6/07

30/6/07 Holy Ltd 980 Nine hundred and eighty euro

Holy Ltd

980 Peggy Shields

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Receipt Completion 5. Assume you are Dara Carriage. Complete the receipt no. 23 on behalf of Bus Ltd below from the following details: Issued a receipt to Dunne Car Repairs Ltd, Four Lane Avenue, Sligo, for €2,112 on 10 March 2006.

Bus Ltd, Castlebar, Co. Mayo Receipt No: 23 DATE: ______10/3/2006 Received with thanks

€ The sum of: Two thousand, one hundred and twelve euro 2,112

From: Dunne Car Repairs Ltd, Four Lane Avenue, Sligo

Signed: Dara Carriage Accounts Department

6. Assume you are Mary Car, complete the receipt no. 67 on behalf of Car Ltd below from the following details: Issued a receipt to Fiona Donnelly, Ilona Avenue, Longford, for €14,300 on 20 May 2007.

Car Ltd, Castlebar, Co. Mayo Receipt No: 67 DATE: ______20/5/2007 Received with thanks

€14,300 The sum of: Fourteen thousand, three hundred euro

From: Fiona Donnelly, Ilona Avenue, Longford Signed: Mary Car Accounts Department

Chapter 40 Analysed Cash Books II/Monitoring Overheads 1. Complete the following statements. (i) Overheads are also known as expenses. Examples of overheads include wages; light and heat; insurances; advertising; rent; carriage outwards. (ii) Monitoring overheads involves preparing budgets for each overhead and keeping records of actual overheads.

(iii) It is important to monitor overheads because it identifies the main overheads of a business. It allows comparison between actual overheads and budgeted overheads and allows changes to be made. 2. Complete the following statements: (i) The Petty Cash Book is used to record small cash payments made from the petty cash. (ii) A Petty Cash Voucher shows what the money was spent on, who received it and who authorised payment.

325 Junior Certificate Business Studies Workbook Teacher’s Manual (iii) The Petty Cash Imprest is the amount of cash the petty cashier has at the start of each week. 3. (i) Complete the partially completed budget comparison sheet provided from the following details. Budget Comparison Sheet for 2005 Actual Overheads 2005 € Wages 94,000 Light and Heat 34,000 Advertising 28,000 Loan Interest 14,500

Actual Overheads Budgeted € Actual € Difference € Wages 76,500 94,000 + 17,500 Light and Heat 48,000 34,000 – 14,000 Advertising 37,600 28,000 – 9,600 Loan Interest 11,900 14,500 + 2,600

(ii) Tick the appropriate box to indicate which is greater than or less than. If the actual overheads are less than the budgeted figures, indicate this with a minus sign, eg – €3,500. Suggest suitable business reasons why there are differences. Overheads Greater Less Possible Reason Than Than Wages Extra overtime worked Light and Heat Good weather required less heat Advertising Change in advertising media Loan Interest Increase in rate of interest

4. (i) Complete the partially completed budget comparison sheet below from the following details.

Actual Overheads 2006 € Insurance 14,800 Carriage Outwards 22,800 Rent 56,000 Bad Debts 16,500

Budget Comparison Sheet for 2006

Overheads Budgeted € Actual € Difference € Insurance 11,600 14,800 + 3,200 Carriage Outwards 13,200 22,800 +9,600 Rent 42,500 56,000 +13,500 Bad Debts 10,000 16,500 + 6,500

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Overhead Greater Less Possible Reason Than Than Insurance Increase in insurance premiums Carriage Outwards Increase in sales to far-away places Rent Changes to new expensive premises Bad Debts Increase in credit sales

5. The following table shows the Budgeted and Actual figures for a business’s overheads for 2007. Business Overheads for 2007 Overheads Budgeted € Actual € Wages 67,000 78,000 Telephone 28,400 36,200 Carriage Outwards 27,500 41,000 Postage 17,600 19,860 Advertising 19,000 19,000 Bad Debts 15,000 13,000

(i) List the overheads whose actual figures are greater than the budgeted figures and give one possible business-related reason for the difference in each case. Overheads Possible Reasons For Being Greater Than Wages Extra staff taken on Telephone Increased use of telesales Carriage outwards Increase in motor insurance and tax Postage Increase in cost of stamps

(ii) List the overheads whose actual figures are less than the budgeted figures and give one possible business-related reason for the difference in each case. Overheads Possible Reasons For Being Less Than Bad Debts Introduced better credit control

6. Complete the petty cash voucher below from the following details. 18/3/2005 Purchase of tea and biscuits for the office by Richard Gervaise: €6.40. Passed by John West.

PETTY CASH VOUCHER

Voucher no: 1 Date: ______18/3/2005 For what Required Amount € Tea and biscuits for the office 6.40

Signature: Passed by:

Richard Gervaise John West

327 Junior Certificate Business Studies Workbook Teacher’s Manual 7. Complete the petty cash voucher below from the following details. 28/8/2005 Purchase of stationery for the office by Pat Shortt: €11.50. Passed by John Kenny.

PETTY CASH VOUCHER

Voucher no: 76 Date: ______28/8/2005 For what Required Amount €11.50 Stationery

Signature: Passed by: Pat Shortt John Kenny

8. Complete the petty cash voucher below from the following details. 11/9/2006 Paid for taxi by Hector Navan: €7.50. Passed by Niall Quinn.

PETTY CASH VOUCHER

Voucher no: 32 Date: ______11/9/2006 For what Required Amount €7.50 Taxi

Signature: Passed by: Hector Navan Niall Quinn

9. Complete the petty cash voucher below from the following details. 18/1/2006 Paid window cleaner by Ronan Keating: €10.00 Passed by Louis Walsh.

PETTY CASH VOUCHER

Voucher no: 231 Date: ______18/1/2006 For what Required Amount

Window cleaner €10

Signature: Passed by: Ronan Keating Louis Walsh

10. Complete the petty cash voucher below from the following details. 18/3/2007 Purchase of stamps by Tommy Tiernan: €17.42. Passed by Colin Farrell.

PETTY CASH VOUCHER

Voucher no: 450 Date: ______18/3/2007 For what Required Amount € Stamps 17.42

Signature: Passed by: Tommy Tiernan Colin Farrell

328 Junior Certificate Business Studies Workbook Teacher’s Manual Chapter 41 General Journal

1. Only one of the following statements is correct. Tick the correct one. The General Journal is used to record: (a) The sale of fixed assets and stock on credit (b) Transactions not entered in other books of first entry (c) Purchase of machinery by cheque 2. Complete the following table, by showing which account is debited and which account is credited. Transaction Debit Credit (a) Purchased machinery on credit from Bell Ltd Machinery Bell Ltd (b) Sold a second-hand computer to Kelly Ltd Kelly Ltd Computer (c) Lawlor Ltd was written off as a bad debt Bad debt Lawlor Ltd 3. The following debtors were written off as bad debtors. Tick the correct amount of the bad debt in each case. A B C (a) Ward owes €2,400, pays €0.20 in the €1 €480 €1,920 €2,400 (b) Smith owes €3,500, pays €0.60 in the €1 €2,100 €1,400 €4,900 (c) Corran owes €2,100, pays €0.25 in the €1 €1,575 €525 €1,500 4. The following entries appeared in the General Journal of a grocer. Complete the General Journal by writing an appropriate narration/explanation. General Journal Date Details F Dr € CR € 21/3/2005 Machinery GL 50,000 Crown Machines Ltd CL 50,000 Narration:

Purchased machinery on credit

5. The following entries appeared in the General Journal of a business. Complete the General Journal by writing an appropriate narration/explanation. General Journal Date Details F Dr € CR € 14/5/2006 Burns Ltd DL 17,500 Equipment GL 17,500 Narration:

Sold equipment on credit

329 Junior Certificate Business Studies Workbook Teacher’s Manual 6. The following entries appeared in the General Journal of a business. Complete the General Journal by inserting the appropriate figure opposite Clarke Ltd and an appropriate narration/explanation. General Journal Date Details F Dr € CR € 30/3/2006 Cash ABC 6,000 Bad Debts GL 17,000 Clarke Ltd DL 23,000 Narration: Clarke Ltd declared 23,000 23,000 bankrupt, paid €6000 cash

7. The following entries appeared in the General Journal of a business. Complete the General Journal by inserting the figure for Ordinary Share Capital and an appropriate narration/ explanation. General Journal Date Details F Dr € CR € 1/2/2007 Machinery GL 60,000 Bank Overdraft ACB 5,000 Ordinary Share Capital GL 55,000 Narration: Asset, liability and 60,000 60,000 ordinary share capital

8. Record the following in the General Journal of Hynes Ltd below. On 3/10/2006 Kiernan Ltd who owes €44,000 goes bankrupt and pays €0.50 in the euro. The remainder is written off as a bad debt. General Journal of Hynes Ltd Date Details F Dr € CR € 3/10/06 Cash ACB 22,000 Bad debts GL 22,000 Kiernan Ltd DL 44,000 Narration: Kiernan Ltd declared bankrupt, paid 50 cent per euro owed

9. Record the following in the General Journal of Ryan Ltd below. On 7/7/2007 Connor Ltd who owes €13,000 goes bankrupt and pays €0.20 in the euro. The remainder was written off as a bad debt. General Journal of Ryan Ltd Date Details F Dr € CR € 7/7/07 Cash ACB 2,600 Bad debts GL 10,400 Connor Ltd DL 13,000 Narration: Connor Ltd declared bankrupt, paid 20 cent per euro owed

330 Junior Certificate Business Studies Workbook Teacher’s Manual Chapter 42 Combined Books of First Entry and Ledger

1. The following account appeared in the ledger of Given Ltd. DR Purchases Account CR Date Details F Total Date Details F Total 2005 € 2005 € 12/5/ Bank ACB 14,500 18/5/ Total Creditors PB 23,600

Complete the sentences below to explain these entries. (a) On 12/5/2005 Given Ltd purchases goods for resale by cheque €14,500.

(b) On 18/5/2005 Given Ltd purchased goods for resale on credit €23,600.

2. The following account appeared in the ledger of O’Shea Ltd. DR Delivery Van Account CR Date Details F Total Date Details F Total 2005 € 2005 € 1/5/ Balance b/d 56,500 28/5/ Bank ACB 28,000

Complete the sentences below to explain these entries. (a) On 1/5/2005 O’Shea Ltd has delivery vans which cost €56,500.

(b) On 28/5/2005 O’Shea Ltd purchased a new delivery van by cheque €28,000.

3. The following account appeared in the ledger of Carr Ltd.

DR Cunningham Ltd Account CR Date Details F Total Date Details F Total 2006 € 2006 € 22/4/ Bank ACB 14,500 1/4/ Balance b/d 16,000

Complete the sentences below to explain these entries. (a) On 1/4/2006 Carr Ltd owes Cunningham Ltd €16,000.

(b) On 28/4/2006 Carr Ltd paid by cheque €14,500 to Cunningham Ltd.

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4. The following account appeared in the ledger of O’Brien Ltd. DR Kerr Ltd Account CR Date Details F Total Date Details F Total 2006 € 2006 € 10/9/ Balance b/d ACB 14,500 29/9/ Sales SB 11,456

Complete the sentences below to explain these entries. (a) On 10/9/2006 O’Brien Ltd is owed €14,500 by Kerr Ltd.

(b) On 29/9/2006 O’Brien Ltd sold goods €11,456 on credit to Kerr Ltd.

5. The following account appeared in the ledger of Duff Ltd. DR Roy Ltd Account CR Date Details F Total Date Details F Total 2007 € 2007 € 12/11/ Balance b/d 20,000 30/11/ Bad Debt GL 20,000

Complete the sentences below to explain these entries. (a) On 12/11/2007 Duff Ltd is owed €20,000 by Roy Ltd.

(b) On 30/11/2007 Duff Ltd wrote Roy Ltd off as a bad debt for the full amount owing.

6. The following account appeared in the ledger of Kilbane Ltd. DR Interest Receivable Account CR Date Details F Total Date Details F Total 2007 € 2007 € 13/4/ Bank ACB 3,500 30/4/ Balance c/d 1,000

Complete the sentences below to explain these entries. (a) On 13/4/2007 Kilbane Ltd received €3,500 in interest and this was lodged in the bank. (b) On 30/4/2007 Kilbane Ltd is owed €1,000 interest from the bank.

332 Junior Certificate Business Studies Workbook Teacher’s Manual 7. The following account appeared in the ledger of Reid Ltd. DR Bank Account CR Date Details F Total Date Details F Total 2007 € 2007 € 12/10/ Finnan Ltd DL 6,500 1/10/ Balance b/d 4,400

Complete the sentences below to explain these entries. (a) On 1/10/2007 Reid Ltd has a bank overdraft of €4,400.

(b) On 12/10/2007 Reid Ltd received €6,500 from Finnan Ltd and this was lodged.

Chapter 43 Control Accounts

1. Complete the Debtors Control Account below from the following data. Total credit sales for June 2006 €45,000 Total sales returns for June 2006 €3,400 Total cash paid by debtors for June 2006 €31,000 DR Debtors Control A/C CR Date Details F Total Date Details F Total 2006 € 2006 € 30/6/ Sales SB 45,000 30/6/ Sales returns SBR 3,400 30/6/ Bank ACB 31,000 30/6/ Balance c/d 10,600 45,000 45,000 1/7/ Balance b/d 10,600

2. Complete the Creditors Control Account below from the following data. Total credit purchases for August 2006 €32,000 Total purchases returns for August 2006 € 7,400 Total cash paid to creditors for August 2006 €21,000

DR Creditors Control A/C CR Date Details F Total Date Details F Total 2006 € 2006 € August Purchase returns PRB 7,400 August Purchases 32,000 August Bank ACB 21,000 August Balance c/d 3,600 32,000 32,000 September Balance b/d 3,600

3. Complete the Debtors Control Account provided from the following data. Total credit sales for May 2007 €67,000 Total sales returns for May 2007 € 6,900 Total cash paid by debtors for May 2007 €53,400

333 Junior Certificate Business Studies Workbook Teacher’s Manual

Debtors Control A/C Date Details F Dr debit Cr credit Balance € € € 1/5/07 Balance b/d €12,000 31/5/ Sales SB 67,000 79,000 31/5/ Sales returns SRB 6,900 72,100 31/5/ Bank ACB 53,400 18,700

4. Complete the Creditors Control Account below from the following data. Total credit purchases for March 2007 €37,000 Total purchases returns for March 2007 €2,400 Total cash paid to creditors for March 2007 €21,900 Creditors Control A/C Date Details F Dr debit Cr credit Balance € € € 1/5/07 Balance €4,500 31/5/ Purchases PB 37,000 41,500 31/5/ Purchases returns PRB 2,400 39,100 31/5/ Bank ACB 21,900 17,200

Chapter 44 Trading Account

Calculating the Average Stock 1. Calculate the average stock from the following information. (a) Opening stock €20,000; Closing Stock €40,000. Answer: Workings €30,000 €20,000 + €40,000 2

(b) Opening stock €16,000; Closing stock €36,000. Answer: Workings €26,000 €16,000 + €36,000 2

Calculating the Mark-up on Cost of sales 2. Calculate the gross (profit) mark-up from the following information. (a) Gross Profit €50,000; Cost of sales €250,000. Answer %: Workings 20% 50,000 x 100 250,000

334 Junior Certificate Business Studies Workbook Teacher’s Manual (b) Gross Profit €45,000; Cost of sales €160,000. Answer %: Workings 28.13% 45,000 x 100 160,000

Calculating the Margin on Sales 3. Calculate the gross (profit) margin from the following information. (a) Gross Profit €39,000; Sales €300,000. Answer %: Workings 13% 39,000 x 100 300,000

(b) Gross Profit €81,000; Sales €450,000. Answer %: Workings 18% 81,000 x 100 450,000

4. Close off the following accounts to the Trading Account in your copybook. Find the Gross Profit or Loss for the year ended 31/3/2006. Complete the Trading Account in your exercise book. Note: Opening Stock is €16,000 and Closing Stock is €14,000.

Date Details F Total Date Details F Total € € 2006 2006 Sales A/C (p1) 31/3/ Trading 85,000 31/3/ Balance b/d 85,000 Purchases A/C (p2) 31/3/ Balance b/d 35,000 31/3/ Trading 35,000 Purchases Returns A/C (p3) 31/3/ Trading 5,000 31/3/ Balance b/d 5,000 Import Duty A/C (p4) 31/3/ Balance b/d 5,000 31/3/ Trading 5,000

Trading account for year ending 31/3/2006 Sales 85,000 Less cost of sales 1/6/05 Opening stock 16,000 Purchases 35,000 Less purchases returns 5,000 30,000 Import duty 5,000 Cost of goods available 51,000 31/5/06 Less closing stock 14,000 Cost of actual sales 37,000 Gross profit 48,000

335 Junior Certificate Business Studies Workbook Teacher’s Manual

5. Close off the following accounts to the Trading Account in your copybook. Find the Gross Profit or Loss for the year ended 31/5/2007. Complete the Trading Account in your exercise book. Note: Opening Stock is €16,000 and Closing Stock is €14,000.

Date Details F Total Date Details F Total € € 2007 2007 Sales A/C (p1) 31/5/ Trading 190,000 31/5/ Balance b/d 190,000 Purchases A/C (p2) 31/5/ Balance b/d 43,000 31/5/ Trading 43,000 Sales Returns A/C (p3) 31/5/ Balance b/d 11,000 31/5/ Trading 11,000 Carriage In A/C (p4) 31/5/ Balance b/d 9,000 31/5/ Trading 9,000

Trading account for year ending 31/5/2007 Sales 190,000 Less sales returns 11,000 Less cost of sales 179,000 1/6/06 Opening stock 16,000 Purchases 43,000 Carriage inwards 9,000 Cost of goods available 68,000 31/5/07 Less closing stock 14,000 Cost of actual sales 54,000 Gross profit 125,000

Chapter 45 Profit and Loss Account

1. Classify the following items of expenditure under capital or revenue expenditure for a bakery: Carriage outwards; Heating oil; Loan interest; Machinery; Wages; Repairs to machinery; Vans; Factory extension; Computer. Capital Expenditure Revenue Expenditure Machinery Carriage outwards Vans Heating oil Factory extension Loan interest Computers Wages Repairs to machinery

2. The Trading, Profit and Loss Account of a company showed a Net Profit of €54,000. It was later realised that sales returns of €500 were omitted. Calculate the correct net profit when the error is corrected. Answer: Calculations €53,500 €54,000 – €500

3. The Trading, Profit and Loss Account of a company showed a Net Profit of €102,000. It was later realised that the wages of €40,000 were entered twice. Calculate the correct net profit when the error is corrected. Answer: Calculations €142,000 €102,000 + €40,000

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4. The Trading, Profit and Loss Account of a company showed a Net Loss of €1,500. It was later realised that the following were omitted: Carriage inwards €200; interest receivable €12,000 and depreciation of €3,200. Calculate the correct net profit when the error is corrected. Answer: Calculations €7,100 – €1,500 + €12,000 – €200 – €3,200 = Net profit €7,100 Net profit

Chapter 46 Profit and Loss Appropriation Account

1. Calculate the dividends paid from the following information: Net Profit €50,000; Issued Share Capital €200,000; Rate of dividend paid 15%. Answer: Calculations €30,000 15% of €200,000 = €30,000

2. Calculate the retained earnings (reserves) from the following information: Net Profit €70,000; Issued Share Capital €180,000; Rate of dividend paid 25%. Answer: Calculations €45,000 25% of €180,000 = €45,000

3. Calculate the dividends paid and the retained earnings from the following information: Net Profit €120,000; Issued Share Capital €300,000; Rate of dividend paid 30%. Answer: Calculations €90,000 (Dividends) Dividends 30% of €300,000 = €90,000 €30,000 (RE) Retained earnings = €120,000 – €90,000 = €30,000

4. Calculate the retained earnings at the end of a year from the following information: Opening Retained Earnings Balance on 1/12/2006 €50,000; Net Profit for year ending 31/12/2006 €130,000; Issued Share capital €400,000; Rate of dividend paid 20%. Answer: Calculations €100,000 Dividends 20% of €400,000 = €80,000 Retained earnings €130,000 – €80,000 = €50,000 €50,000 + €50,000 = €100,000

5. Complete the following Profit and Loss Appropriation Account for the year ended 31/5/2007 from the following information: Opening Retained Earnings Balance on 1/6/2006 €75,000; Net Profit for year ending 31/5/2007 €187,000; Dividends paid €77,000. Profit and Loss Appropriation Account for the year ended 31/5/2007

Net Profit € 187,000 Less dividends 77,000 € 110,000 Add opening RE € 75,000 Retained earnings € 185,000

337 Junior Certificate Business Studies Workbook Teacher’s Manual

6. Complete the following Profit and Loss Appropriation Account for the year ended 31/5/2007 from the following information: Opening Retained Earnings Balance on 1/6/2006 €36,000; Net Profit for year ending 31/5/2007 €210,000; Dividends paid €104,500. Profit and Loss Appropriation Account for the year ended 31/5/2007

Net profit €210,000 Less dividends €104,500 €105,500 Add opening RE €36,000 Retained earnings €141,500

Chapter 47 Balance Sheet

1. Indicate with a tick 0 the correct answer to each question. (a) Only one of the following is not a current asset: 0 (i) Machinery (ii) Closing Stock (iii) Debtors

(b) Total net assets are the same as: (i) Fixed assets plus working capital 0 (ii) Fixed assets less liabilities

(d) Authorised share capital cannot be: 0 (i) Less than issued capital (ii) Equal to issued capital (iii) Greater than issued capital

2. Classify the following assets and liabilities under their correct headings below: 20 year loan; dividends due; machinery; bank overdraft; cash; creditors; equipment; closing stock. Long Term Liabilities Current Liabilities Fixed Assets Current Assets 20-year loan Dividends due Machinery Cash Bank overdraft Equipment Closing stock Creditors

338 Junior Certificate Business Studies Workbook Teacher’s Manual Chapter 48 Adjustments to Final Accounts

1. Indicate with a tick 0 which of the following statements are true or false. Explain your answer.

True False (a) Amounts prepaid are always added in the profit and loss account. 0 Explanation They are always deducted as they belong to another trading period.

True False (b) Closing stock of stationery is treated as an amount due. 0 Explanation Closing stock of stationery will be used in another trading period, so it’s a prepaid expense.

True False (c) Amounts due to a firm are treated as current assets. 0 Explanation Amounts due to a firm are owed to the firm (i.e. by debtors).

2. An annual insurance premium is paid on 1 April 2006. Close off and balance the insurance account for the year ended 31/12/2006. Show clearly the amount to be transferred to the Profit and Loss account.

Date Details F Total Date Details F Total 2006 € 2006 € Insurance A/C 1/4/ Balance b/d 1,600 31/12/ P. Loss Account 4,000 1/4/ Bank ACB 3,200 31/12/ Balance c/d 800 4,800 4,800 1/1/07 Balance b/d 800

3. A business owed €230 for repairs on the 31/12/2007. Close off and balance the repairs account for the year ended 31/12/2007. Show clearly the amount to be transferred to the profit and loss account. Date Details F Total Date Details F Total 2007 € 2007 € Repairs A/C 1/12/ Bank ACB 1,800 31/12/ P. Loss Account 2,030 31/12/ Balance c/d 230 2,030 2,030 1/1/08 Balance b/d 230

339 Junior Certificate Business Studies Workbook Teacher’s Manual

4. A business owed €670 for wages on the 31/12/2007. Close off and balance the wages account for the year ended 31/12/2007. Show clearly the amount to be transferred to the profit and loss account.

Date Details F Total Date Details F Total 2007 € 2007 € Wages A/C 1/12/ Bank ACB 18,500 31/12/ P. Loss Account 19,170 31/10/ Balance c/d 670 19,170 19,170 1/1/08 Balance b/d 670

5. The following is an extract from the profit and loss account of a business for the year ending December 2007.

Profit and Loss Account for year ending 31/12/2007 Electricity 1,200 Add electricity due 800 2,000

(a) What is the figure for electricity used during the year? €2,000 € (b) What is the figure for electricity paid for during the year? 1,200

6. The following is an extract from the profit and loss account of a business for the year ending March 2007.

Profit and Loss Account for year ending 31/3/2007 Advertising 4,200 Less advertising prepaid 900 3,300

(a) What is the figure for advertising used during the year? €3,300 € (b) What is the figure for advertising paid for during the year? 4,200

7. The following is an extract from the profit and loss account of a business for the year ending July 2007.

Profit and Loss Account for year ending 31/7/2007 Interest receivable 4,500 Add interest receivable due 1,500 6,000

(a) What is the figure for interest used during the year? €6,000 € (b) What is the figure for interest recieved for during the year? 4,500

340 Junior Certificate Business Studies Workbook Teacher’s Manual Chapter 49 Final Accounts and Balance Sheet with Adjustments

1. Balance Sheet of McGrath Ltd as on 31 May 2006 Fixed Assets 200,000 Current Assets 75,000 Less Current Liabilities 45,000 30,000 230,000 Financed By Authorised Issued 400,000 Ordinary Shares 400,000 175,000 Add reserves 35,000 210,000 Long term Liabilities 20,000 230,000

(a) What is the Working Capital figure of McGrath Ltd? € 30,000 (b) What is the Capital Employed figure of McGrath Ltd? € 230,000

2. Indicate with a tick 0 where each of the following adjustments are entered in the Trading, Profit and Loss and Appropriation Account (TPLA) and Balance Sheet.

Adjustment Added in Subtracted in Current Assets Current Liabilities TPLA TPLA in Balance Sheet in Balance Sheet Dividends due 0 0 Wages due 0 0 Insurance prepaid 0 0 Interest receivable prepaid 0 0 Carriage inwards due 0 0 Rent receivable due 0 0 Advertising prepaid 0 0 Interest due 0 0 Closing stock 0 0

3. Show how the following adjustments are entered in the Trading, Profit and Loss Account and Balance Sheet extracts below. Machinery €300,000, Motor vans €120,000. Depreciation: Machinery 15%; Motor Vans 12½%.

Trading, Profit and Loss and Appropriation Account for the year ended 31 May 2006 Less Expenses Depreciation: machinery 45,000 motor vans 15,000 60,000

Balance Sheet as on 31 May 2006 Fixed Assets Cost Deprecation NBV Machinery 300,000 45,000 255,000 Motor vans 120,000 15,000 105,000 420,000 60,000 360,000

341 Junior Certificate Business Studies Workbook Teacher’s Manual

4. Enter the following adjustments in the partially completed Trading, Profit and Loss Account and Balance Sheet below. Interest Receivable due €500, Advertising due €1,500, Insurance prepaid €700.

Trading, Profit and Loss and Appropriation Account for the year ended 31 May 2007 Gross Profit 200,000 Add gains Interest Receivable 7,500 Add interest due 500 8,000 208,000 Less Expenses Advertising 12,000 Add advertising due 1,500 13,500 Insurance 6,500 Less insurance prepaid 700 5,800 19,300 Net Profit 188,700

Balance Sheet as on 31 May 2007 Current Assets Interest receivable due 500 Insurance prepaid 700 1,200 Current Liabilities Advertising due 1,500 Working capital (300) Chapter 50 Assessing a Business

1. Given a cost price of €150 and a selling price of €200, calculate the percentage mark-up. Answer: Workings €200 – €150 = €50 mark-up € ______%33.33 50 x 100% = 33.33% 150

2. Given a cost price of €200 and a selling price of €250, calculate the percentage margin on sale. Answer: Workings €250 – €200 = €50 margin €50 x 100% ______%20 = 20% €250

3. A company has a net profit of €250,000 and a capital employed of €500,000. Calculate the return on capital employed. Answer: Workings € 250,000 x 100% = 50% €500,000 ______%50

4. A company has a net profit of €60,000 and a capital employed of €240,000. Calculate the return on capital employed. Answer: Workings € 60,000 x 100% = 25% €240,000 ______%25

342 Junior Certificate Business Studies Workbook Teacher’s Manual 5. A company has current assets of €11,000 and current liabilities of €4,650. Calculate the working capital ratio correct to one decimal point. Answer: Workings 2.37:1 €11,000 : €4,650 2.37 :1

6. A company has current assets of €47,000 (including closing stock of €12,000) and current liabilities of €17,000. Calculate the acid test ratio correct to two decimal points.

Answer: Workings 2.06:1 (€47,000 – €12,000) : 17,000 €35,000 : 17,000 2.06 :1

7. Calculate the rate of Stock Turnover from the following data. Opening Stock €40,000, Closing Stock €30,000, Cost of Sales €175,000. Answer: Workings 17.5 times €175,000 €175,000 = = 17.5 times €40,000 + €30,000 €10,000

8. Examine the following balance sheets and state if the companies are solvent or insolvent. Give a reason for your answer in each case. Balance Sheet of D&D as on 31/5/2006 Balance Sheet of M&M as on 31/5/2006 Fixed Assets 400,000 Fixed Assets 300,000 Current Assets 60,000 Current Assets 40,000 Less Current Liabilities 50,000 Less Current Liabilities 95,000 Total Net Assets 410,000 Total Net Assets 245,000 Financed By Financed By Share Capital 350,000 Share Capital 130,000 Loan 60,000 Loan 115,000 Capital Employed 410,000 Capital Employed 245,000 Answer: D&D are solvent Answer: M&M are solvent

Reason: Total assets greater than total liabilities Reason: Total assets greater than total liabilities €460,000 greater than €110,000 €340,000 greater than €210,000

9. (a) Explain the terms:

(i) Overtrading This is where a company is operating without enough permanent capital. It tries to produce more than it is capable of.

(ii) Solvent A business is solvent if its total assets are greater than its external liabilities.

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(b) The directors of Bridge Ltd, Main Street, Cork supplied the following figures for the years 2005 and 2006.

2005 2006 € € Sales 480,000 510,000 Gross Profit 200,000 280,000 Net Profit 100,000 180,000 Current Assets 48,000 54,000 Current Liabilities 18,000 39,000 Closing Stock 12,000 17,000 Capital Employed 520,000 580,000

Assume you are Kevin Scully, Management Consultant, Suspense Street, Waterford. Prepare a report in your copybook, on today’s date, for the directors of Bridge Ltd. Compare and comment on the performance of the business over the two years, 2005 and 2006. Use the following ratios in comparing the performance: Gross Profit Percentage; Net Profit Percentage; Return on Capital Employed; Acid Test Ratio.

Suspense Street, Waterford.

Report on the performance of Bridge Ltd for the years 2005 and 2006

Date The Directors of Bridge Ltd, Main Street, Cork.

I was asked on your behalf to prepare a report on the performance of the company for the years 2005 and 2006. I used the following ratios: gross profit percentage; net profit precentage; return on capital employed; acid test ratio. My findings are as follows:

2005 2006 Gross profit % 41.67% 54.90% Net profit % 20.83% 35.29% Return on capital employed 19.23% 31.03% Acid test ratio 2 : 1 0.95 : 1

The profitability of the company is very high and increasing. However, the acid test ratio is falling, which is a cause for concern. I am available to discuss the report if requested.

Kevin Scully. Management Consultant

10. (a) Why would a company compare the interest paid on a long term loan and the return on capital employed? To see if it is costing the company more to borrow the money than it is getting from using the money.

344 Junior Certificate Business Studies Workbook Teacher’s Manual (b) The directors of Chess Ltd, Main Street, Cork supplied the following figures for the years 2006 and 2007.

2006 2007 € € Sales 660,000 610,000 Gross Profit 320,000 260,000 Net Profit 140,000 90,000 Current Assets 65,000 58,000 Current Liabilities 25,000 43,000 Long Term 15% Loan 100,000 140,000 Capital Employed 580,000 700,000

Assume you are George Lee, Management Consultant, News Road, Wicklow. Prepare a report in your copybook, on today’s date, for the directors of Chess Ltd. Compare and comment on the performance of the business over the two years, 2006 and 2007. Use the following ratios in comparing the performance: Gross Profit Percentage; Net Profit Percentage; Return on Capital Employed; Current Ratio.

Ratio analysis as follows 2006 2007 Gross profit % 48.49% 42.62% Net profit % 21.21% 14.75% Return on capital employed 24.14% 12.86% Current ratio 2.6:1 1.35:1

The profitability while very good is falling and efforts should be made to investigate same. The current ratio has fallen below the recommended ratio of 2:1 in 2007. Report to be laid out following the nine-point plan, as in Exercise 9.

11. (a) Why might a company have different mark-ups on its products in different parts of the country? Some of its customers may be able to pay more in other parts of the country. There may be extra costs in getting products to different parts of the country. (b) The directors of Solo Ltd, Main Street, Cork supplied the following figures for the years 2006 and 2007. 2006 2007 € € Sales 480,000 510,000 Gross Profit 200,000 280,000 Net Profit 100,000 180,000 Current Assets 48,000 54,000 Current Liabilities 18,000 39,000 Share Capital 350,000 350,000 Capital Employed 490,000 534,000

Assume you are Gerry Ryan, Management Consultant, Pop Parade, Mullingar, Co. Westmeath. Prepare a report in your copybook, on today’s date, for the directors of Solo Ltd. Compare and comment on the performance of the business over the two years, 2006 and 2007. Use the following ratios in comparing the performance: Gross Profit Percentage; Net Profit Percentage; Return on Capital Employed; Current Ratio.

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Ratio analysis as follows 2006 2007 Gross profit % 41.67% 54.90% Net profit % 20.83% 35.29% Return on capital employed 20.41% 33.71% Current ratio 2.67 : 1 1.39 : 1

The profitability is increasing and hopefully will continue. The current ratio has fallen below the recommended ratio of 2:1 in 2007. There is a worry that the company is expanding too quickly and may be relying too much on creditors and bank overdrafts i.e., overtrading.

Answer: Dividends paid €42,000 €35,000

(12% of €350,000) (10% of €350,000)

(c) State, in the space provided above, the amount paid out in dividends each year if the rate of dividends is 12% in year 2006 and 10% in 2007. Chapter 51 Club Accounts 1. Column 1 is a list of club officers of an athletic club. Column 2 is a list of duties performed by these officers. Match the two lists by placing the letter of the correct duty under the relevant number below. (One of the duties does not apply to any of the terms.)

Column 1 Club Officers Column 2 Duties 1. Treasurer A. Controls the meeting 2. Secretary B. Records the times of athletes at race meetings 3. Chairperson C. Collects membership fees D. Records decisions made at meetings

1. 2. 3. C D A 2. Indicate with a tick 0 where each of the following receipts and expenditures are entered in the accounts of a club.

Receipt/Expenditure Income and Expenditure Receipts and Payments Account Account Bought a tractor 0 Paid insurance 0 0 Sold land 0 Received interest on savings 0 0 Won lotto prize of €500,000 0 Received membership fees 0 0

346 Junior Certificate Business Studies Workbook Teacher’s Manual Chapter 52 Club Accounts with Adjustments

1. Complete the following sentences. (a) Wages due are entered under Expenditure in the Income and Expenditure and under Current Liabilities in the Balance Sheet. (b) Opening cash and bank balances are entered in the Analysed cash book debit side and in the Receipts and payments account debit side . (c) The sale for cash of fixed assets is entered in the Receipts and payments account but not in the Income and expenditure account .

2. Name four possible costs of running a disco.

(i) DJ(ii) Tickets(iii) Hire of hall

(iv) Insurance 3. Indicate with a tick 0 where each of the following receipts and expenditures are entered in the accounts of a club.

Receipt /Expenditure Bar Trading Income and Expenditure Receipts and Payments Account Account Account Bought a tractor 0 Paid insurance 0 0 Sold land 0 Received interest on 0 0 savings Won lotto prize of 0 €500,000 Received membership 0 0 fees

4. Complete the Bar Trading Account below from the following data. Bar purchases €35,000, Barperson’s wages €16,000, Barperson’s wages due €3,000, Closing stock of bar supplies €12,000.

Bar Trading Account for the year ended 31/5/2007 Sales 340,000 Less cost of sales 1/6/06 Opening Stock 11,000 Bar purchases 35,000 Barperson’s wages 16,000 Add wages due 3,000 19,000 65,000 31/5/07 Less closing stock 12,000 53,000 Bar profit 287,000

347 Junior Certificate Business Studies Workbook Teacher’s Manual Chapter 53 Farm Accounts

1. List four reasons why farmers should keep accounts. (i) Required for taxes and grants(ii) To find out if the farm made a profit (iii) To manage the farm better (iv) To find out what the farm is worth 2. Name four possible examples of farm income. (i) Sale of milk(ii) Sale of cattle (iii) Sale of sheep (iv) EU grant 3. Name two possible examples of farm capital expenditure (i) Purchase of land (ii) Purchase of machinery and two possible examples of farm revenue expenditure. (i) Light and heat (ii) Insurance Chapter 54 Service Firms

1. Give four examples of service firms. (i) Banks(ii) Insurance companies (iii) Decorators(iv) Hairdressers 2. List four reasons why service firms should keep accounts. (i) Required by law (ii) To manage the business better (iii) Needed for loan applications (iv) To find out if the business is profitable

3. Name four possible examples of a service firm’s income. (Depends on type of business, e.g. hairdresser) (i) Wash & blow dry (ii) Cut (iii) Style (iv) Colour 4. Name two possible examples of a service firm’s capital expenditure. (i) Motor vans(ii) Equipment and two possible examples of a service firm’s revenue expenditure. (i) Light and heat(ii) Telephone Chapter 55 Information Technology

1. Place a tick 0 opposite each statement to indicate whether it is true or false.

True False (a) A monitor is another name for a screen 0 (b) A database is an example of hardware 0 (c) A modem links a computer to a telephone 0 2. Place a tick 0 opposite each statement to indicate whether it is true or false.

True False (a) A spreadsheet can be used to prepare a cash forecast 0 (b) A computer game is an example of computer software 0 (c) The Internet is a system of networks 0

348 Junior Certificate Business Studies Workbook Teacher’s Manual 3. Write the following abbreviations out in full.

(a) WWW World Wide Web (b) VDU Visual Display Unit (c) ROM Read Only Memory (d) CAD Computer Aided Design

4. Tick 0 the correct answer. In relation to information technology a menu is (a) the number of characters a programme can hold (b) a list of choices on screen 0 (c) the order of the keys on a keyboard (d) found on a spread sheet

5. Tick 0 the correct answer. Which one of the following computer programmes can best be used for filing information and preparing accounts Filing Information Preparing Accounts (a) Spreadsheets 0 (b) Data base 0 (c) Word Processing (d) Graphics

6. Purchased a computer system by cheque for €7,450 on 1 May 2006. Record this purchase in the computer and bank accounts below.

General Ledger Date Details F Total Date Details F Total

Computer A/C (p1)

1/5/2006 Bank ACB 7,450

Bank A/C (p2)

1/5/2006 Computer ACB 7,450

7. Purchased a computer system by cheque for €9,800 on 1 May 2006. Record this purchase in the computer and bank accounts below.

General Ledger Date Details F Total Date Details F Total

Computer A/C (p1)

1/5/2006 Bank ACB 9,800

Bank A/C (p2)

1/5/2006 Computer ACB 9,800

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7. Purchased a computer system on credit from PK Computers Ltd for €15,000 on 1 June 2007. Record this purchase in the General Journal, the Computer and PK Computers Ltd accounts below.

General Journal p1 Date Details F Dr debit Cr credit 1/6/2007 Computer GL 15,000 PK Computers Ltd 15,000 Narration: Purchase of computer on credit

General Ledger Date Details F Total Date Details F Total Computer A/C (p1) 1/6/2007 PK Computers GJ 15,000

PK Computers Ltd A/C (p2) 1/6/2007 Computer GJ 15,000

8. Purchased a computer system on credit from Infocom Ltd for €25,000 on 1 May 2007. Record this purchase in the General Journal, the Computer and Infocom Ltd accounts below.

General Journal p1 Date Details F Dr debit Cr credit 1/5/2007 Computer GL 25,000 Infocom Ltd GL 25,000 Narration: Purchase of computer on credit

General Ledger Date Details F Total Date Details F Total Computer A/C (p1) 1/5/2007 Infocom Ltd GJ 25,000

INFOCOM Ltd A/C (p2) 1/5/2007 Computer GJ 25,000

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