PreparingFinancial

　　Statements

　　(International Stream)

　　PART1

　　THURSDAY 10 JUNE 2004

　　QUESTION PAPER

　　Time allowed 3 hours

　　This paper is divided into two sections

　　Section AALL 25 questions are compulsory and MUST be

　　answered

　　Section BALL FIVE questions are compulsory and MUST be

　　answered

　　Do not open this paper until instructed by the supervisor

　　This question paper must not be removed from the examination

　　hall

　　The Association of Chartered Certified Accountants

　　Section A – ALL 25 questions are compulsory and MUST be attempted

　　Please use the Candidate Registration Sheet provided to indicate your chosen answer to each multiple choice question.

　　Each question within this section is worth 2 marks.

　　1A business purchased a motor car on 1 July 2003 for $20,000. It is to be depreciated at 20 per cent per year on

　　the straight line basis, assuming a residual value at the end of five years of $4,000, with a proportionate depreciation

　　charge in the year of purchase.

　　The $20,000 cost was correctly entered in the cash book but posted to the debit of the motor vehicles repairs account.

　　How will the business profit for the year ended 31 December 2003 be affected by the error?

　　AUnderstated by $18,400

　　BUnderstated by $16,800

　　CUnderstated by $18,000

　　DOverstated by $18,400

　　2A company has sublet part of its offices and in the year ended 30 November 2003 the rent receivable was:

　　Until 30 June 2003$8,400 per year

　　From 1 July 2003$12,000 per year

　　Rent was paid quarterly in advance on 1 January, April, July, and October each year.

　　What amounts should appear in the company’s financial statements for the year ended 30 November 2003?

　　Income statement

　　Rent receivableBalance sheet

　　A$9,900$2,000 in sundry payables

　　B$9,900$1,000 in sundry payables

　　C$10,200$1,000 in sundry payables

　　D$9,900$2,000 in sundry receivables

　　3At 30 September 2002 a company’s allowance for doubtful debts amounted to $38,000, which was five per cent of

　　the receivables at that date.

　　At 30 September 2003 receivables totalled $868,500. It was decided to write off $28,500 of debts as bad and to

　　keep the allowance for doubtful debts at five per cent of receivables.

　　What should be the charge in the income statement for the year ended 30 September 2003 for bad and doubtful

　　debts?

　　A$42,000

　　B$33,925

　　C$70,500

　　D$32,500