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Series 2 2007 (Code 2606) Malaysia
Book-Keeping & Accounts Level 2 - Malaysia
Series 2 2007

How to use this booklet

Model Answers have been developed by Education Development International pic (EDI) to offer
additional information and guidance to Centres, teachers and candidates as they prepare for LCCI
International Qualifications. The contents of this booklet are divided into 3 elements:

(1) Questions - reproduced from the printed examination paper

(2) Model Answers - summary of the main points that the Chief Examiner expected to
see in the answers to each question in the examination paper,
plus a fully worked example or sample answer (where applicable)

(3) Helpful Hints - where appropriate, additional guidance relating to individual

questions or to examination technique

Teachers and candidates should find this booklet an invaluable teaching tool and an aid to success.

EDI provides Model Answers to help candidates gain a general understanding of the standard
required. The general standard of model answers is one that would achieve a Distinction grade. EDI
accepts that candidates may offer other answers that could be equally valid.

© Education Development International pic 2007

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published, without the prior consent of the Publisher.

2606/2/07/MA 2
QUESTION 1

The following information relating to the month of April 2007 was extracted from the books of Bronx
Ltd:

At 1 April 2007:
RM
Purchases Ledger Dr balance 252
Purchases Ledger Cr balance 16,972
Sales Ledger Dr balance 30,950
Sales Ledger Cr balance 187

Transactions for the month ending 30 April 2007:

Receipts from customers 132,177

Cash sales 75,740
Returns outwards 3,215
Credit purchases 106,477
Legal costs charged to customers accounts 200
Payments to suppliers 100,955
Debit balances in sales ledger transferred to
purchases ledger 885
Customer's cheque dishonoured 965
Bad Debts written off 502
Credit sales 153,455
Discounts allowed 4,360
Cash purchases 1,420
Discounts received 2,775
Returns inwards 3,330

At 30 April 2007:

Sales Ledger Cr balance 550

Purchases Ledger Dr balance 350
Provision for Doubtful Debts 650

REQUIRED

(a) Prepare for the month ended 30 April 2007:

(i) Purchases Ledger Control Account.

(8 marks)
(ii) Sales Ledger Control Account.
(12 marks)

(b) A Balance Sheet extract at 30 April 2007 to show debtors and creditors at that date.
(5 marks)

(Total 25 marks)

2606/2/07/MA 3
MODEL ANSWER TO QUESTION 1

(a) (i) Purchases Ledger Control Account

2007 RM 2007 RM
April 1 Balances bId 252 April 1 Balances bId 16,972
30 Returns outwards 3,215 30 Purchases 106,477
30 Bank/Cash 100,955 30 Balances c/d 350
30 Discounts 2,775
30 Set off/contra 885
30 Balances c/d 15,717
123,Z99 123,Z99
May 1 Balance bId 350 May 1 Balance bId 15,717

(ii) Sales Ledger Control Account

2007 RM 2007 RM
April 1 Balances bId 30,950 April 1 Balances bId 187
30 Legal costs 200 30 Bank/Cash 132,177
30 Bank/dishonoured cheque 965 30 Discounts 4,360
30 Sales 153,455 30 Set off/contra 885
30 Balances c/d 550 30 Bad debts 502
30 Returns inwards 3,330
30 Balance c/d 44,679
186120 18612Q
May 1 Balances bId 44,679 May 1 Balances bId 550

(b)

Bronx Ltd
Balance Sheet as at 30 April 2007

Current Assets RM RM
Debtors 44,679
~
45,029
Less: Provision for Doubtful Debts --2§Q 44,379
Current Liabilities
Creditors
16,267

2606/2/07/MA 4
QUESTION 2

Mann and Hatten are in partnership. The following trial balance was prepared on
31 December 2006:
RM RM
Furniture and fittings at cost 11,280
Carriage outwards 2,880
Sundry expenses 8,886
Insurance 1,080
Premises at cost 73,500
Gross Profit 59,610
Cash in hand 114
Bank 132
Dividends received 1,220
Provision for depreciation furniture and fittings 1,128
Capital Accounts:
Mann 72,600
Hatten 90,900
Current Accounts:
Mann 2,100
Hatten 900
Stock at 31 December 2006 47,086
Discounts 1,980 1,680
Salaries 12,614
Debtors and creditors 13,250 24,870
Investment - shares in Jersey Ltd 53,400
Drawings - Mann 10,950
Hatten 18,120
255.140 255140

The partnership agreement provides:

(i) Interest is allowed on the partners capital balances at 6% per annum.

(ii) Hatten shall be paid a salary of RM10,000 per annum.

(iii) Profits and losses to be shared between Mann and Hatten in the ratio of 3:1
respectively.

Additional information at 31 December 2006:

(i) Depreciation is to be provided at 10% on cost offurniture and fittings.

(ii) Insurance was prepaid, RM240.

(iii) Salaries, RM300, were owing.

(iv) The premises were revalued at RM81 ,500 on 31 December 2006.

No entries had been made in the books.

REQUIRED

Prepare:

(a) The Profit and Loss and Appropriation Account for the year ended
31 December 2006. (14 marks)

(b) The Current and Capital Accounts in columnar format at

31 December 2006. (11 marks)

(Total 25 marks)

2606/2/07/MA 5
MODEL ANSWER TO QUESTION 2

(a) Mann and Hatten

Profit and Loss and Appropriation Account
for the year ended 31 December 2006

RM RM
Gross Profit 59,610
Discount received 1,680
Dividends received 1,220
62,510
Less:
Depreciation - furniture and fittings 1,128
Carriage outwards 2,880
Sundry expenses 8,886
Insurance (1,080 - 240) 840
Discount allowed 1,980
Salaries (12,614 + 300) 12,914 28,628
Net Profit 33,882
Interest on capital
Mann 4,356
Hatten 5,454
9,810
Salary - Hatten 10,000 19,810
Share of profit: 14,072
Mann 10,554
Hatten 3,518 !14, 072 l
(b) Current Accounts

M H M H
RM RM RM RM
Drawings 10,950 18,120 Balance bId 2,100 900
Balance cld 6,060 1,752 Interest 4,356 5,454
Salary 10,000
Profit share 1.M.M 3,518
17.010 ~

Balance bId 6060 1,752

Capital Accounts

M H M H
RM RM RM RM
Balance cld 78,600 92,900 Balance bId 78,600 90,900
Revaluationl premises 6,000 2,000
~ .92..9..QQ

Balance bId 78,600 92,900

2606/2/07/MA 6
QUESTION 3

Central Brothers is a firm that has branches throughout the country.

The head office purchases all goods that are sold by the branches. Goods are charged to the
branches at their normal selling price. This is determined by adding 20% to the cost price.

The Park branch had a stock of RM54,00Q, valued at the normal selling price, on
1 February 2007.

Branch debtors on 1 February 2007 totalled RM24,315.

During February 2007 the following transactions occurred at the Park branch:

RM
Goods received from head office at normal selling price 810,000
Goods returned to head office at normal selling prices 36,000
Branch Cash Sales 361,800
Branch Credit Sales 311,100
Goods returned to branch by a cash customer 5,400
Payments by branch credit customers 304,710
Discounts allowed to branch credit customers 324
Branch Bad Debts 6,300
Price reductions made by the branch manager 3,900
Branch expenses paid by head office 9,651

REQUIRED

Prepare the following for the month ended 28 February 2007:

(a) Two column Branch Stock Account.

(15 marks)
(b) Branch Debtors Account.
(4 marks)
(c) Branch Profit and Loss Account.
(6 marks)

(Total 25 marks)

2606/7107MA 7
MODEL ANSWER TO QUESTION 3

(a) Branch Stock Account

Selling Cost Selling Cost
Price Price Price Price
RM RM RM RM
2001 2007
Feb 1 Balance bId 54,000 45,000 Feb 28 Returns to head office 36,000 30,000
28 Goods to branch 810,000 675,000 28 Cash sales/bank 361,800 361,800
28 Returns 5,400 5,400 28 Credit sales/debtors 311,100 311,100
28 Gross profit 108,000 28 Price reduction 3,900
28 Balance c/d 156,600 130,500
869,400 833,400 869,400 833,400
2007
March 1 Balance bId 156,600 130,500

(b)

Branch Debtors Account

2001 RM 2007 RM
Feb 01 Balance bId 24,315 Feb 28 Bank 304,710
28 Branch stock 311,100 28 Discounts 324
28 Bad Debts 6,300
28 Balance c/d 24,081
2007 335,415 335,415
March 1 24,081

2606/2107/MA 8
MODEL ANSWER TO QUESTION 3 CONTINUED

(c)
Profit and loss Account for month ended 28 February 2007

RM RM
Gross ProfiUBranch Stock 108,000
Less: Bad debts 6,300
Discounts 324
Branch expenses 9,651 16,275
Net profit to H.O. profit and loss account 91,725

2606/2/07/MA 9
QUESTION 4

Battery Ltd depreciate their machinery at 20% per annum on a straight line basis on all machinery
owned at the year end. A full year's depreciation is charged regardless of the date of purchase, but
no depreciation is charged in the year of disposal.

During the financial year to 30 September 2006, the following transactions were recorded:

(i) Machine X, bought on 1 October 2004 for RM128,OOO, was sold on 1 June 2006 for
RM101,OOO.

(ii) Machine Y, bought on 30 November 2003 for RM100,OOO, was sold on 1 August 2006
for RM62,OOO.

(iii) Machine Z, bought on 1 October 2004 for RM144,OOO, was still in use at
30 September 2006.

REQUIRED

(a) Copy the table below into your answer book and complete the missing figures. Show your
workings.

Machine
X Y Z
RM RM RM

Accumulated depreciation to
30 September 2005

Depreciation for year ended

30 September 2006

Profit/Loss on disposal

(9 marks)

(b) Prepare an extract of the entries for depreciation and disposal in the Profit and Loss Account for
the year ended 30 September 2006.
(4 marks)

2606/2/07/MA 10 CONTINUED ON THE NEXT PAGE

QUESTION 4 CONTINUED

The trial balance of Battery Ltd at 31 January 2006 did not agree. The following errors were
discovered:

(i) A sales invoice sent to Lansing & Co for RM4,936 had not been entered in the books.

(ii) An invoice received from N. Hardy for RM 4,000 had been entered in the purchases journal
as RM 4,400.

(iii) A payment from Y. Bolt, a debtor, of RM9,380 had been posted to the account of Y. Bait.

(iv) Discounts allowed of RM2,568 had been posted to the credit of the discounts received
account.

(v) The total of Sales Returns during January 2006, RM4,390, had been posted to the credit of
the Returns Outwards Account. Correct entries had been made in the debtors personal
accounts in the Sales Ledger.

REQUIRED

(c) Prepare journal entries, without narrations, to correct the errors.

(12 marks)

(Tota! 25 marks)

2606/2/07/MA 11
MODEL ANSWER TO QUESTION 4

(a)
Machine
X Y Z
RM RM RM
Accumulated depreciation to 30 September 2005 (W1) 25,600 40,000 28,800

Depreciation at 30 September 2006 (W2) 28,800

ProfiULoss on disposal (W3) (1,400) 2,000

WORKINGS
RM
(1 ) MACHINE X 2005 128,000 X 20% = 25,600
MACHINEY 2004 100,000 X 20% = 20,000
2005 100,000 X 20% = 20,000
~
MACHINE Z 2005 144,000 X 20% = 28,800

(2) MACHINE Z 2006 144,000 X 20% =

(3)
Cost (Depreciation + Sale Value)
MACHINE X 128,000 - (25,600 + 101,000) = 1,400 Loss on disposal
MACHINE Y 100,000 - (40,000 + 62,000) = 2,000 Profit on disposal

(4) MACHINE Z 144,000 X 20% = 28,800

(b) Battery Ltd

Profit and Loss Account (extract) for the year ended 30 September 2006

RM RM
Depreciation - Machinery (W4) 28,800 Profit on disposal (W3) 2,000
Loss on disposal (W3) 1,400

Or: Net profit on disposal 600

(c)
Dr Cr
RM RM
(i) Lansing & Co 4,936
Sales 4,936

(ii) N, Hardy 400

Purchases 400

(iii) Y, Bait 9,380

Y,Bolt 9,380

(iv) Discounts received 2,568

Discounts allowed 2,568
Suspense 5,136

(v) Returns inwards 4,390

Returns outwards 4,390
Suspense 8,780

2606/2/07/MA 12 © Education Development International pic 2007