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