<p>Model answers </p><p>NVQ/SVQ in Accounting Diploma pathway Level 3 Advanced certificate Maintaining Financial Records Financial Accounting (FRA) and Preparing Accounts (FRA) 2003 Standards 2003 Standards</p><p>June 2008 Task 1.1</p><p>(a) Purchases ledger control account</p><p>£ £</p><p>Bank/payments 33,900 Balance b/f 5,100</p><p>Balance c/f 6,800 Purchases 35,600</p><p>40,700 40,700</p><p>(b) Sales ledger control account</p><p>£ £</p><p>Balance b/f 18,690 Bank/receipts 135,290</p><p>Sales 141,000 Balance c/f 24,400</p><p>159,690 159,690</p><p>Task 1.2</p><p>(a) £ £ Balance as at 31 March 2007 6,350 Balance as at 31 March 2008 (3,240) Difference = bank payments 3,110</p><p>(b) Bank account £ £</p><p>Receipts from debtors 135,290 Balance b/f 5,140</p><p>Loan payments 3,110</p><p>Payments to creditors 33,900</p><p>Wages 42,500</p><p>Administration expenses 5,200</p><p>Rent 8,000</p><p>Drawings - Adil 18,000</p><p>Drawings - Jan 20,000</p><p>Balance c/f 560</p><p>135,850 135,850</p><p>2 Task 1.3</p><p>(a) £ £ Furniture and equipment at cost 20,000 Furniture and equipment accumulated depreciation (7,200) Net book value 12,800 Depreciation at 20% 2,560</p><p>(b) £ £ Accumulated depreciation b/f 7,200 Depreciation for the year 2,560 Accumulated depreciation as at 31 March 2008 9,760</p><p>Task 1.4</p><p>£ £ Administration expenses - bank 5,200 Accrued interest expense 1,200 Accrued accountancy fees 580 Adjusted administration expenses 6,980</p><p>Task 1.5</p><p>(a)</p><p>Wages £ £</p><p>Bank 42,500 Wages for the year (P&L) 44,500</p><p>Drawings - Jan 2,000</p><p>44,500 44,500</p><p>(b)</p><p>Current accounts Adil £ Jan £ Adil £ Jan £</p><p>Drawings (bank) 18,000 20,000 Balance b/f 4,200 2,600</p><p>Wages 2,000</p><p>Balance c/f 13,800 15,400</p><p>18,000 20,000 18,000 20,000</p><p>3 Task 1.6</p><p>Bookends Trial balance as at 31 March 2008 Dr £ Cr £</p><p>Accrual - accountancy fee 580</p><p>Accrual - interest 1,200</p><p>Administration expenses (1.4) 6,980</p><p>Bank 560</p><p>Capital account - Adil 6,000</p><p>Capital account - Jan 6,000</p><p>Current account – Adil 13,800</p><p>Current account – Jan 15,400</p><p>Furniture and equipment - cost 20,000</p><p>Furniture and equipment - accumulated depreciation (1.3b) 9,760</p><p>Depreciation expense (1.3a) 2,560</p><p>Loan 3,240</p><p>Purchases 35,600</p><p>Purchases ledger control account 6,800</p><p>Rent 8,000</p><p>Sales 141,000</p><p>Sales ledger control account 24,400</p><p>Stock - closing - balance sheet 1,800</p><p>Stock - closing - profit and loss account 1,800</p><p>Stock - opening 3,900</p><p>Wages (1.5a) 44,500</p><p>Total 176,940 176,940</p><p>4 Task 1.7</p><p>(a) Goodwill is the difference between the value of a business as a whole and the aggregate fair values of its separate assets and liabilities. </p><p>(b) It is important to account for goodwill so that existing partners are fairly rewarded for their contribution to the value of the business as at the date of the change in the partnership.</p><p>(c)</p><p>Account name Dr Cr Goodwill  Capital - Adil  Capital - Jan  </p><p>5 Section 2</p><p>Task 2.2</p><p>(a) £ £ Cost 1,700 Net book value (425) Accumulated depreciation 1,275</p><p>(b) £ £ Net book value 425 Part-exchange allowance (300) Loss on disposal 125</p><p>(c) £ £ Cash paid 1,000 Part exchange allowance given 300 Cost of new equipment 1,300</p><p>(d) £ £ Cost of new equipment 1,300 x 25% 325</p><p>6 Tasks 2.1 and 2.2 (e)</p><p>Nell Tan Extract from extended trial balance as at 31 March 2008</p><p>Ledger balances Adjustments Dr £ Cr £ Dr £ Cr £ Bank 6,555 2.2(c) 1,000</p><p>Capital 4,050</p><p>Cash 75</p><p>Consumables 1,200</p><p>Delivery expenses 2,000</p><p>Depreciation expense 200 2.2(d) 325</p><p>Drawings 13,200</p><p>Equipment at cost 2,700 2.2(c)(a) 1,300 1,700</p><p>Equipment accumulated depreciation 1,875 2.2(a),(d) 1,275 325</p><p>General expenses 950 2.1 115</p><p>Opening stock 900</p><p>Purchases 9,800</p><p>Purchases ledger control account 405</p><p>Rent 2,500 2.1 500</p><p>Sales 35,000</p><p>Sales ledger control account 1,250</p><p>Prepayments 2.1 500</p><p>Closing stock - balance sheet 2.1 750</p><p>Closing stock - profit and loss account 2.1 750</p><p>Interest received 2.1 115 1,275 Disposals 2.2 (a)(b) 1,700 300 Total 41,330 41,330 5,965 5,965</p><p>7 Task 2.3</p><p>Nell Tan Profit and loss account for the year ended 31 March 2008</p><p>Workings £ £</p><p>Sales 35,000</p><p>Opening stock 900</p><p>Purchases 9,800</p><p>Closing stock (750)</p><p>Cost of goods sold (9,950)</p><p>Gross profit 25,050</p><p>Add: Interest received 115</p><p>Less: Expenses</p><p>Consumables 1,200</p><p>Delivery expenses 2,000</p><p>200 + 325 Depreciation expense 525</p><p>950 + 115 General expenses 1,065</p><p>2,500 - 500 Rent 2,000 1,700 - 1,275 - Loss on disposal 125 300 (6,915)</p><p>Net profit 18,250</p><p>8 Task 2.4</p><p>Nell Tan Balance sheet as at 31 March 2008</p><p>Workings £ £</p><p>Fixed assets</p><p>2,700 + 1,300 - 1,700 Equipment 2,300</p><p>1,875 - 1,275 + 325 Accumulated depreciation (925)</p><p>1,375</p><p>Current assets</p><p>Stock 1CF 750</p><p>Debtors (sales ledger control) 1CF 1,250</p><p>Prepayments 500</p><p>6,555 - 1,000 Bank 5,555</p><p>Cash 75</p><p>8,130</p><p>Current liabilities</p><p>Trade creditors (purchases ledger control account) (405)</p><p>Net current assets 7,725</p><p>Net assets 9,100</p><p>Financed by:</p><p>Opening capital 4,050</p><p>Net profit 18,250</p><p>Drawings (13,200)</p><p>9,100</p><p>Task 2.5</p><p>(a) Capital expenditure is expenditure on the purchase, alteration or improvement of fixed assets. These are items which have a life of more than one year and are of significant value. </p><p>(b) Revenue expenditure is expenditure on the day to day running expenses of a business.</p><p>(c) It should be treated as capital expenditure because it will be of use to the business for more than one year and the cost is significant to Nell.</p><p>9</p>