2024 Cambridge IGCSE Accounting (0452) 模拟试题及答案详解

Financial statements, such as the income statement and statement of financial position, are prepared to assess the profitability (performance) and financial position (progress) of the business over a specific financial period. They do not calculate individual worker productivity, nor do they determine the market resale value of non-current assets, nor is that the primary purpose of year-end reporting compared to day-to-day bookkeeping.

1 mark for the correct option B.

Opening capital = \( \$12000 - \$4000 = \$8000 \).
Closing capital = Opening Capital + Additional Capital - Drawings + Profit.
Closing capital = \( \$8000 + \$3000 - \$800 + \$2500 = \$12700 \).

1 mark for the correct calculation leading to $12700 (Option B).

Credit purchases of non-current assets (such as office computer equipment) are not recorded in the purchases journal (which is only for credit purchases of inventory/goods for resale) or the cash book (since it is a credit transaction). Instead, they are recorded in the general journal.

1 mark for the correct option B.

The cash book is adjusted for items on the bank statement that have not yet been recorded in the cash book.
Adjusted balance = \( \$1450 - \$60 \text{ (bank charges)} - \$250 \text{ (dishonoured cheque)} = \$1140 \).
Since it is still positive, it is a debit balance. Unpresented cheques are timing differences and are adjusted in the bank reconciliation statement, not the cash book.

1 mark for the correct answer A.

Debiting repairs (revenue expenditure) to the motor vehicles asset account (capital expenditure) means:
- Non-current assets are overstated by $120.
- Expenses are understated by $120, so profit for the year is overstated by $120.

1 mark for Option A.

Interest on Layla's loan = \( \$20000 \times 6\% = \$1200 \).
Net profit after loan interest (which is an expense in the income statement) = \( \$42000 - \$1200 = \$40800 \).
Residual profit = Net Profit - Partner Salary = \( \$40800 - \$8000 = \$32800 \).
Layla's share of residual profit = \( \$32800 \times 50\% = \$16400 \).

1 mark for Option A.

Year 1 (2022) Depreciation = \( \$24000 \times 25\% = \$6000 \).
Year 2 (2023) Depreciation = \( (\$24000 - \$6000) \times 25\% = \$4500 \).
Total accumulated depreciation = \( \$6000 + \$4500 = \$10500 \).
Net Book Value at date of sale = \( \$24000 - \$10500 = \$13500 \).
Loss on disposal = \( \$13500 \text{ (Net Book Value)} - \$11500 \text{ (Sale Proceeds)} = \$2000 \text{ loss} \).

1 mark for Option D.

Raw materials consumed = Purchases (\( \$85000 \)) + Carriage inwards on raw materials (\( \$3000 \)) + Decrease in raw materials inventory (\( \$5000 \)) = \( \$93000 \).
Prime Cost = Cost of Raw Materials Consumed + Direct Wages.
Prime Cost = \( \$93000 + \$42000 = \$135000 \).
Note: Factory supervisor's salary is an indirect factory overhead and is not included in prime cost.

1 mark for Option C.

Financial statements are prepared to summarize the financial transactions of a business over a period and present its financial performance (profitability) and financial position (assets and liabilities) to various internal and external stakeholders (interested parties) to help them make informed decisions.

1 mark for the correct option B.

Initial values: Assets = $45 000, Liabilities = $15 000. Capital = $45 000 - $15 000 = $30 000. For the purchase of inventory: 1. Inventory (asset) increases by $4 000. 2. Cash (asset) decreases by $1 000. 3. Trade Payables (liability) increases by $3 000 ($4 000 - $1 000). New Assets = $45 000 + $4 000 - $1 000 = $48 000. New Liabilities = $15 000 + $3 000 = $18 000. Check with the accounting equation: Assets ($48 000) = Capital ($30 000) + Liabilities ($18 000).

1 mark for the correct option B.

Writing off an irrecoverable debt cannot be recorded in any other book of prime entry (such as the cash book, sales journal, or purchases journal), so it must be recorded in the general journal. Cash received and paid are recorded in the cash book, and credit purchases of inventory are recorded in the purchases journal.

1 mark for the correct option C.

When a credit customer returns goods, the sales returns account is debited to reduce the revenue, and the customer's personal account is credited to reduce the amount they owe to the business.

1 mark for the correct option B.

The rent payment was correctly credited to the bank account for $1 500. However, the debit to the rent payable account was only $510, which is an understatement of $990 ($1 500 - $510). To correct this, the rent payable account must be debited with $990, and the corresponding credit entry is made in the suspense account.

1 mark for the correct option A.

The cash book balance must be corrected for items that are on the bank statement but not yet in the cash book (bank charges and the dishonoured cheque). Original Cash Book Balance = $2 450 (debit). Less Bank charges = -$75. Less Dishonoured cheque = -$150. Corrected Cash Book Balance = $2 450 - $75 - $150 = $2 225 (debit). Note: Unpresented cheques are timing differences and are only used to reconcile the corrected cash book balance with the bank statement balance; they do not require an entry to correct the cash book.

1 mark for the correct option B.

First, calculate the Net Book Value (NBV) at the date of disposal: Cost = $12 000. Depreciation for 2021 (20% of $12 000) = $2 400. NBV at 31 December 2021 = $12 000 - $2 400 = $9 600. Depreciation for 2022 (20% of $9 600) = $1 920. NBV at 31 December 2022 = $9 600 - $1 920 = $7 680. Now, calculate profit or loss on disposal: Disposal Proceeds = $7 200. Loss on Disposal = NBV - Proceeds = $7 680 - $7 200 = $480.

1 mark for the correct option B.

Calculate the residual profit: Profit before appropriations = $50 000. Add Interest on drawings (Hassan) = +$400. Total = $50 400. Less Interest on Capital: Hassan (5% of $40 000) = -$2 000; Ibrahim (5% of $30 000) = -$1 500. Residual Profit = $50 400 - $2 000 - $1 500 = $46 900. Since they share profits equally: Ibrahim's share of residual profit = $46 900 / 2 = $23 450.

1 mark for the correct option B.

To calculate the corrected bank balance:

\begin{tabular}{lr}
Original overdrawn balance & $(1500) \\
Less: Bank charges & (65) \\
Less: Standing order & (180) \\
Less: Direct debit & (120) \\
Add: Credit transfer & 450 \\
\hline
Corrected balance & $(1415) \\
\hline
\end{tabular}

An overdrawn bank balance of $1415 is a credit balance in the cash book.

1 mark for the correct option A.

Depreciation for 2021 = $30000 \times 20\% = $6000
Net Book Value at 1 January 2022 = $24000
Depreciation for 2022 = $24000 \times 20\% = $4800
Net Book Value at 1 January 2023 = $19200
No depreciation is charged in 2023 (year of disposal).
Loss on disposal = Net Book Value ($19200) - Sale proceeds ($15400) = $3800 loss.

1 mark for the correct option A.

Profit for the year: $42000
Less Lisa's salary: $8000
Less Interest on Capital: Lisa $2000 + Monica $1500 = $3500
Residual Profit = $42000 - $8000 - $3500 = $30500
Monica's share of residual profit = $30500 \times \frac{2}{5} = $12200
Total credited to Monica's current account = Interest on Capital ($1500) + Residual profit ($12200) = $13700.

1 mark for the correct option B.

Carriage inwards is part of cost of sales, which directly reduces Gross Profit. Carriage outwards is an operating expense, which reduces Profit for the Year but not Gross Profit. By debiting carriage outwards instead of carriage inwards, Cost of Sales is understated, meaning Gross Profit is overstated by $150. However, because total expenses remain the same, there is no effect on the Profit for the Year.

1 mark for the correct option A.

Cost of production = Prime Cost ($112000) + Factory Overheads ($48000) + Opening Work in Progress ($4500) - Closing Work in Progress ($5200) = $159300.

1 mark for the correct option A.

Let \( X \) be the credit sales. Using a Sales Ledger Control Account format:
Opening Balance + Credit Sales = Receipts + Discount Allowed + Irrecoverable Debts + Closing Balance
\( 8400 + X = 32500 + 1200 + 400 + 9100 \)
\( 8400 + X = 43200 \)
\( X = 34800 \)

1 mark for the correct option B.

Remaining trade receivables = $52000 - $1200 = $50800.
New provision required = 4\% of $50800 = $2032.
Existing provision = $1800.
Increase in provision (charged to Income Statement) = $2032 - $1800 = $232.

1 mark for the correct option A.

Cost of sales = Revenue \times (100\% - Gross Profit Margin) = $180000 \times 70\% = $126000.
Rate of inventory turnover = Cost of Sales / Average Inventory = $126000 / $14000 = 9.00 times.

1 mark for the correct option B.

Office stationery is an expense. Since it was debited to a non-current asset account (office equipment) instead of the office stationery account, expenses are understated, meaning the profit for the year is overstated by $250. Non-current assets are overstated by $250 because office equipment was incorrectly debited.

1 mark for correct identification of the effects on profit and non-current assets.

Starting with a debit balance of $1450 in the cash book:
- Deduct bank charges: -$75
- Deduct direct debit: -$120
- Deduct dishonoured cheque: -$300
Corrected balance = $1450 - $75 - $120 - $300 = $955 debit.

1 mark for the correct calculation of the debit balance.

1. Depreciation for year ended 31 Dec 2021: 20% of $12 000 = $2400.
2. Carrying value at 1 Jan 2022 = $12 000 - $2400 = $9600.
3. Depreciation for year ended 31 Dec 2022: 20% of $9600 = $1920.
4. Carrying value at 31 Dec 2022 = $9600 - $1920 = $7680.
5. Profit/Loss on disposal = Proceeds - Carrying value = $7200 - $7680 = -$480 (loss of $480).

1 mark for the correct calculation of the loss on disposal.

Clara's credits include:
1. Salary = $9000
2. Interest on Capital = 5% of $30 000 = $1500
3. Share of residual profit:
Total profit = $43 000
Less Emma's Interest on Capital (5% of $50 000) = $2500
Less Clara's Interest on Capital = $1500
Less Clara's Salary = $9000
Residual profit = $43 000 - $2500 - $1500 - $9000 = $30 000
Clara's share (1/3 of $30 000) = $10 000
Total credited = $9000 + $1500 + $10 000 = $20 500.

1 mark for the correct total credited amount.

Prime Cost = Raw materials consumed ($45 000) + Direct wages ($32 000) = $77 000.
Factory Overheads = Supervisor's salary ($12 000) + Depreciation ($8 000) + Rent & rates ($15 000) = $35 000.
Total factory cost = $77 000 + $35 000 = $112 000.
Cost of Production = Total factory cost ($112 000) + Opening WIP ($6 000) - Closing WIP ($4 500) = $113 500.

1 mark for the correct calculation of cost of production.

Liquid Assets = Current Assets - Inventory = Trade receivables ($12 000) + Cash at bank ($4 000) = $16 000.
Current Liabilities = Trade payables ($16 000) + Bank overdraft ($4 000) = $20 000.
Liquid (acid test) Ratio = $16 000 / $20 000 = 0.80 : 1.

1 mark for the correct liquid ratio.

Closing Retained Earnings = Opening Retained Earnings ($25 000) + Profit for the year ($18 000) - Transfer to general reserve ($3 000) - Dividend paid ($5 000) = $35 000.

1 mark for the correct calculation of closing retained earnings.

The consistency principle states that accounting methods should be applied consistently from one period to another to ensure comparability.

1 mark for identifying consistency.

Let's calculate the depreciation and net book value (NBV) step by step:

1. Year ended 31 December 2021 (Year 1):
- Depreciation = $12,000 * 20% = $2,400
- NBV = $12,000 - $2,400 = $9,600

2. Year ended 31 December 2022 (Year 2):
- Depreciation = $9,600 * 20% = $1,920
- NBV = $9,600 - $1,920 = $7,680

3. Year ended 31 December 2023 (Year of disposal):
- Since no depreciation is charged in the year of disposal, the book value at disposal remains $7,680.

4. Profit or Loss on Disposal:
- Sale Proceeds = $6,500
- Net Book Value = $7,680
- Loss on Disposal = $7,680 - $6,500 = $1,180 loss.

1 mark for the correct option (B).

Let's analyze the effect of each error on the trial balance and the suspense account:

- Option A: A completely omitted transaction does not affect the agreement of the trial balance, so it has no effect on the suspense account.
- Option B: If the purchases journal was overcast by $150, the Purchases account (debit) was too high by $150. This means total debits exceeded total credits by $150, requiring a credit entry of $150 in the suspense account to balance the trial balance. Correcting this requires debiting the suspense account by $150, which eliminates the credit balance of $150. This is correct.
- Option C: If a payment of $150 was debited as $510, total debits are too high by $360. This would require a credit of $360 in the suspense account.
- Option D: If the sales journal was overcast by $150, the Sales account (credit) was too high by $150. This would require a debit of $150 in the suspense account.

1 mark for the correct option (B).

Let's prepare the Profit and Loss Appropriation calculation:

1. Profit for the year = $34,000
2. Add: Interest on drawings = $500 (X) + $300 (Y) = $800
Total = $34,800
3. Less: Salary to Y = $8,000
Balance = $26,800
4. Less: Interest on capital = $3,000 (X) + $2,000 (Y) = $5,000
Residual Profit = $21,800

5. X's share of residual profit (3/5) = $21,800 * 3/5 = $13,080.

1 mark for the correct option (C).

### (a) Updated Cash Book (Bank column)

**Tariq - Cash Book (Bank Column) for October 2024**

| Date | Details | $ | Date | Details | $ |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Oct 31 | Balance b/d | 3450 | Oct 31 | Bank charges | 75 |
| | | | Oct 31 | Insurance (Direct Debit) | 140 |
| | | | Oct 31 | K. Khan (Dishonoured Cheque) | 380 |
| | | | Oct 31 | P. Patel (Correction of error) | 450 |
| | | | Oct 31 | Balance c/d | 2405 |
| | | **3450** | | | **3450** |
| Nov 1 | Balance b/d | **2405** | | | |

*Workings for P. Patel error:*
Tariq recorded $500 instead of $50 in the Cash Book. It was over-debited by:
\(500 - 50 = 450\)
To correct this, a credit entry of $450 is made in the cash book under P. Patel's name.

---

### (b) Bank Reconciliation Statement

**Tariq - Bank Reconciliation Statement at 31 October 2024**

| Details | $ | $ |
| :--- | :--- | :--- |
| **Balance on bank statement (credit)** | | **1895** |
| Add: Amounts not yet credited (Outstanding deposits) | | 1110 |
| | | **3005** |
| Less: Unpresented cheques: | | |
| - J. Smith | 180 | |
| - L. Taylor | 420 | (600) |
| **Balance in cash book (debit)** | | **2405** |

*(Alternative presentation starting with Cash Book balance is also acceptable)*

---

### (c) Two reasons why a cheque received from a customer might be dishonoured:
1. **Insufficient funds:** The customer's bank account does not have enough money to cover the cheque amount.
2. **Signature issues:** The signature of the drawer is missing, incomplete, or does not match the specimen signature held by the bank.
*(Other valid reasons include: the cheque is post-dated or stale, or words and figures disagree.)*

---

### (d) How a bank reconciliation statement helps prevent/detect fraud:
- **Deterrent effect:** Regular independent check discourages employees from misappropriating cash since any missing funds or unexplained bank entries will be discovered quickly.
- **External verification:** Comparing internal accounting records with an independent external document (the bank statement) ensures unauthorized or modified transactions are identified immediately.

---

### (e) Advice on outsourcing debt collection and cash management:

*Advantages:*
1. **Improved Liquidity:** Professional agencies have more effective collection systems, resulting in faster debt recovery and improved cash flow.
2. **Time Savings:** Reduces administrative workload for Tariq, allowing him to focus on business growth.
3. **Reduced Bad Debts:** The agency can perform rigid credit checks on prospective customers, reducing the risk of credit losses.

*Disadvantages:*
1. **High Costs:** The agency will charge a service fee or commission, which directly reduces business profit margins.
2. **Damaged Customer Goodwill:** External collections can be aggressive, potentially alienating loyal customers and causing loss of future sales.
3. **Loss of Control:** Tariq loses direct oversight of customer relationships and credit control policies.

*Recommendation:*
Tariq should not outsource unless his bad debts are exceptionally high and cash flow is severely constrained, as the high costs and potential loss of customer goodwill may outweigh the collection benefits of a small business.

### (a) Updated Cash Book [6 marks]
- **Balance b/d** ($3450) on debit side (No mark, starting point)
- **Bank charges** ($75) on credit side: **(1 mark)**
- **Insurance** ($140) on credit side: **(1 mark)**
- **K. Khan / Dishonoured Cheque** ($380) on credit side: **(1 mark)**
- **P. Patel** ($450) on credit side: **(1 mark)**
- **Balance c/d** ($2405) on credit side: **(1 mark)**
- **Balance b/d** ($2405) on debit side on 1 November: **(1 mark) OF** (Only if it matches the balance c/d and is brought down to the correct side)

### (b) Bank Reconciliation Statement [5 marks]
- Starting balance of $1895 (bank statement credit): **(1 mark)**
- Add: Outstanding deposits/lodgements ($1110): **(1 mark)**
- Less: Unpresented cheques ($600): **(1 mark)**
- Correct arithmetic/format layout: **(1 mark)**
- Ending balance of $2405 (matching updated cash book): **(1 mark) OF**

*(Alternative starting with Cash Book balance: Cash Book balance $2405 (1), Add Unpresented cheques $600 (1), Less Outstanding deposits $1110 (1), Arithmetical flow (1), Bank statement balance $1895 (1) OF)*

### (c) Reasons for dishonoured cheque [2 marks]
- Insufficient funds in customer's account: **(1 mark)**
- Cheque is post-dated / stale: **(1 mark)**
- Words and figures on cheque do not match: **(1 mark)**
- Missing or mismatching signature: **(1 mark)**
*(Max 2 marks, 1 mark per valid point)*

### (d) Prevention/detection of fraud [2 marks]
- Acts as a deterrent as employees know discrepancy will be detected: **(1 mark)**
- Reconciles cash book records with an independent external record (bank statement): **(1 mark)**
- Identifies unrecorded withdrawals or altered cheque amounts: **(1 mark)**
*(Max 2 marks, 1 mark per valid point / well-explained point)*

### (e) Outsourcing Evaluation [5 marks]
- **Advantages** of outsourcing (e.g., faster debt recovery, saves time, credit checks): **(Max 2 marks)**, 1 mark per valid point.
- **Disadvantages** of outsourcing (e.g., high fees/commissions, risk of damaging customer relations, loss of control): **(Max 2 marks)**, 1 mark per valid point.
- **Recommendation/Conclusion**: **(1 mark)** for a clear decision supported by arguments.

(a)
**Clara and David**
**Profit and Loss Appropriation Account for the year ended 31 December 2023**

$$
\begin{array}{lrr}
& \$ & \$
\\ \text{Profit for the year (56000 - 1200)} && 54800 \\
\text{Add: Interest on drawings} \\
\quad \text{Clara (16000 } \times \text{ 5\%)} & 800 \\
\quad \text{David (12000 } \times \text{ 5\%)} & 600 & 1400 \\
\hline
&& 56200 \\
\text{Less: Interest on capital} \\
\quad \text{Clara (80000 } \times \text{ 4\%)} & 3200 \\
\quad \text{David (50000 } \times \text{ 4\%)} & 2000 & (5200) \\
\text{Salary - Clara} && (8500) \\
\hline
\text{Residual Profit} && 42500 \\
\hline
\text{Profit share:} \\
\quad \text{Clara } (\frac{3}{4} \times 42500) && 31875 \\
\quad \text{David } (\frac{1}{4} \times 42500) && 10625 \\
\hline
&& 42500 \\
\hline
\end{array}
$$

(b)
**Clara**
**Current Account**

$$
\begin{array}{llr|llr}
\hline
\text{Date} & \text{Details} & \$ & \text{Date} & \text{Details} & \$
\\ \hline
\text{2023} &&& \text{2023} \\
\text{Jan 1} & \text{Balance b/d} & 1200 & \text{Dec 31} & \text{Interest on capital} & 3200 \\
\text{Dec 31} & \text{Drawings} & 16000 & \text{Dec 31} & \text{Partnership salary} & 8500 \\
\text{Dec 31} & \text{Interest on drawings} & 800 & \text{Dec 31} & \text{Profit share} & 31875 \\
\text{Dec 31} & \text{Balance c/d} & 25575 && \\
\hline
&& 43575 & && 43575 \\
\hline
&&& \text{2024} \\
&&& \text{Jan 1} & \text{Balance b/d} & 25575 \\
\hline
\end{array}
$$

(c)
**Journal Entry**

$$
\begin{array}{lcc}
\hline
\text{Details} & \text{Debit (\$)} & \text{Credit (\$)} \\
\hline
\text{Interest on partner's loan (David)} & 1200 \\
\quad \text{Bank} && 1200 \\
\hline
\end{array}
$$

(d)
1. **More capital can be raised:** Multiple partners can contribute capital, providing more resources for business expansion than a single owner.
2. **Shared workload and specialization:** Partners can divide tasks based on their specific areas of expertise (e.g., one manages sales, the other finances), leading to better efficiency.

(a) Profit and Loss Appropriation Account [8 marks]:
- Correct profit for the year calculation ($56000 - $1200) [1]
- Clara interest on drawings ($800) [1]
- David interest on drawings ($600) [1]
- Clara interest on capital ($3200) [1]
- David interest on capital ($2000) [1]
- Clara partnership salary ($8500) [1]
- Clara profit share ($31875) [1] OF
- David profit share ($10625) [1] OF

(b) Clara Current Account [6 marks]:
- Balance b/d on debit side ($1200) [1]
- Drawings ($16000) [1]
- Interest on drawings ($800) [1] OF
- Interest on capital ($3200) AND Salary ($8500) [1]
- Share of profit ($31875) [1] OF
- Correct balancing and bringing down balance b/d on credit side ($25575) [1] OF

(c) Journal entry [2 marks]:
- Debit: Interest on partner's loan/Interest on David's loan ($1200) [1]
- Credit: Bank ($1200) [1]

(d) Advantages [4 marks]:
- 1 mark for stating the advantage, 1 mark for explaining it (max 2 advantages).
- Acceptable advantages: more capital available, specialization/shared skills, shared workload/responsibilities, shared risk/losses, cover during illness/holiday.

**(a) Maya - Journal Entries**

| Error | Details | Debit ($) | Credit ($) |
| :--- | :--- | :--- | :--- |
| 1 | Insurance account | 310 | |
| | Suspense account | | 310 |
| 2 | Computer Equipment account | 1500 | |
| | Office Expenses account | | 1500 |
| 3 | Liam account ($620 - $260) | 360 | |
| | Suspense account | | 360 |
| 4 | Bank account | 85 | |
| | Interest Received account | | 85 |
| 5 | Cash account ($150 \times 2) | 300 | |
| | Sales account | | 300 |

**(b) Suspense Account**

| Date | Details | $ | Date | Details | $ |
| :--- | :--- | :--- | :--- | :--- | :--- |
| 2024 | | | 2024 | | |
| Apr 30 | Difference on trial balance | 670 | Apr 30 | Insurance | 310 |
| | | | Apr 30 | Liam | 360 |
| | | **670** | | | **670** |

**(c) Error Types Table**

| Error Number | Error Type |
| :--- | :--- |
| Error 2 | Error of principle |
| Error 5 | Complete reversal |

**(d) Effect on Profit Table**

| Error Number | Decrease | Increase | No effect |
| :--- | :--- | :--- | :--- |
| Error 1 | ✓ | | |
| Error 2 | | ✓ | |
| Error 3 | | | ✓ |
| Error 4 | | ✓ | |
| Error 5 | | ✓ | |

**(a) Journal Entries [10 marks]:**
- Error 1: Debit Insurance $310 (1 mark), Credit Suspense $310 (1 mark).
- Error 2: Debit Computer Equipment $1500 (1 mark), Credit Office Expenses $1500 (1 mark).
- Error 3: Debit Liam $360 (1 mark), Credit Suspense $360 (1 mark).
- Error 4: Debit Bank $85 (1 mark), Credit Interest Received $85 (1 mark).
- Error 5: Debit Cash $300 (1 mark), Credit Sales $300 (1 mark).

**(b) Suspense Account [3 marks]:**
- Difference on trial balance debit entry $670 (1 mark).
- Credit entry of Insurance $310 (1 mark).
- Credit entry of Liam $360 (1 mark).

**(c) Error Types [2 marks]:**
- Error 2: Error of principle (1 mark).
- Error 5: Complete reversal (1 mark).

**(d) Effect on Profit [5 marks]:**
- Error 1: Decrease (1 mark).
- Error 2: Increase (1 mark).
- Error 3: No effect (1 mark).
- Error 4: Increase (1 mark).
- Error 5: Increase (1 mark).

**(a)**
Cost of remaining assets = $120 000 - $20 000 = $100 000
Accumulated depreciation of remaining assets = $48 000 - $12 000 = $36 000
Net book value of remaining assets = $100 000 - $36 000 = $64 000
Additions cost = $30 000
Total Net Book Value to depreciate = $64 000 + $30 000 = $94 000
Depreciation charge for 2023 = $94 000 \times 20\% = \mathbf{$18\,800}

**(b)**
**(i) Computer Equipment Account**

$$\begin{array}{llr|llr}
\hline
\text{Date} & \text{Details} & \text{\$} & \text{Date} & \text{Details} & \text{\$} \\
\hline
\text{2023} & & & \text{2023} & & \\
\text{Jan 1} & \text{Balance b/d} & 120\,000 & \text{Oct 1} & \text{Disposal} & 20\,000 \\
\text{Jun 1} & \text{Byte Tech Ltd} & 30\,000 & \text{Dec 31} & \text{Balance c/d} & 130\,000 \\
\hline
& & 150\,000 & & & 150\,000 \\
\hline
\text{2024} & & & & & \\
\text{Jan 1} & \text{Balance b/d} & 130\,000 & & & \\
\end{array}$$

**(ii) Provision for Depreciation of Computer Equipment Account**

$$\begin{array}{llr|llr}
\hline
\text{Date} & \text{Details} & \text{\$} & \text{Date} & \text{Details} & \text{\$} \\
\hline
\text{2023} & & & \text{2023} & & \\
\text{Oct 1} & \text{Disposal} & 12\,000 & \text{Jan 1} & \text{Balance b/d} & 48\,000 \\
\text{Dec 31} & \text{Balance c/d} & 54\,800 & \text{Dec 31} & \text{Income statement} & 18\,800 \\
\hline
& & 66\,800 & & & 66\,800 \\
\hline
& & & \text{2024} & & \\
& & & \text{Jan 1} & \text{Balance b/d} & 54\,800 \\
\end{array}$$

**(iii) Disposal of Computer Equipment Account**

$$\begin{array}{llr|llr}
\hline
\text{Date} & \text{Details} & \text{\$} & \text{Date} & \text{Details} & \text{\$} \\
\hline
\text{2023} & & & \text{2023} & & \\
\text{Oct 1} & \text{Computer equipment} & 20\,000 & \text{Oct 1} & \text{Prov. for Depreciation} & 12\,000 \\
& & & \text{Oct 1} & \text{Bank} & 6\,500 \\
& & & \text{Dec 31} & \text{Income statement (Loss)} & 1\,500 \\
\hline
& & 20\,000 & & & 20\,000 \\
\hline
\end{array}$$

**(c)**
* **Advantages:**
1. Straight-line is simpler and easier to calculate than reducing balance.
2. It charges an equal amount of depreciation each year, making the expense predictable.
* **Disadvantages:**
1. Computer equipment depreciates much faster in the early years due to rapid technological change. Reducing balance reflects this matching of benefit to cost more accurately.
2. Changing the method is a change of accounting policy, violating consistency and making comparisons across years more difficult.
* **Recommendation:** Tariq should not change the method.

**(d)**
* Freehold land $\rightarrow$ No depreciation
* Office fixtures $\rightarrow$ Straight-line
* Loose tools $\rightarrow$ Revaluation

**(a)**
* Calculation of NBV of remaining assets ($64 000$) or additions ($30 000$) [1]
* Final correct charge of $18 800$ [1] (or OF if method correct)

**(b)**
*(i) Computer Equipment Account*
* Opening balance & addition debited with correct names [1]
* Disposal credited with $20 000$ [1]
* Correctly balanced and brought down on 1 Jan 2024 [1] (OF)

*(ii) Provision for Depreciation Account*
* Opening balance credited with $48 000$ [1]
* Disposal debited with accumulated depreciation of $12 000$ [1]
* Income statement credited with $18 800$ [1] (OF from part a)
* Balanced and brought down on 1 Jan 2024 with $54 800$ [1] (OF)

*(iii) Disposal Account*
* Computer equipment cost $20 000$ debited [1]
* Provision for depreciation $12 000$ and Bank $6 500$ credited [1]
* Correct transfer of $1 500$ loss to Income Statement [1] (OF)
*(Award 1 mark overall for correct dates in all ledger accounts)*

**(c)**
* Max 2 marks for advantages of straight-line [1] each.
* Max 2 marks for disadvantages/arguments for reducing balance [1] each.
* Recommendation [1].

**(d)**
* 1 mark for each correct tick [1] \times 3.

### Part (a) H Limited - Manufacturing Account for the year ended 30 September 2024

$$
\begin{array}{lrr}
\text{\bf Cost of materials consumed} & & \\
\text{Opening inventory of raw materials} & 14\,300 & \\
\text{Purchases of raw materials} & 75\,000 & \\
\text{Add: Carriage on raw materials} & 3\,200 & \\
\hline
& 92\,500 & \\
\text{Less: Closing inventory of raw materials} & 15\,900 & \\
\hline
& & 76\,600 \\
\text{Direct factory wages} & & 156\,000 \\
\text{Royalties} & & 4\,500 \\
\hline
\text{\bf Prime cost} & & \mathbf{237\,100} \\
\text{\bf Factory Overheads} & & \\
\text{Wages of factory supervisors} & 38\,000 & \\
\text{Factory general expenses} & 17\,400 & \\
\text{Factory rent and rates } ((12\,000 - 800) \times 75\%) & 8\,400 & \\
\text{Depreciation of factory machinery } ((180\,000 - 36\,000) \times 20\%) & 28\,800 & 92\,600 \\
\hline
& & 329\,700 \\
\text{Add: Opening work in progress} & & 19\,800 \\
\hline
& & 349\,500 \\
\text{Less: Closing work in progress} & & 18\,400 \\
\hline
\text{\bf Cost of production} & & \mathbf{331\,100} \\
\end{array}
$$

---

### Part (b) H Limited - Trading Section of the Income Statement for the year ended 30 September 2024

$$
\begin{array}{lrr}
\text{\bf Revenue } (359\,900 \times 1.40) & & \mathbf{503\,860} \\
\text{\bf Less: Cost of sales} & & \\
\text{Opening inventory of finished goods} & 11\,200 & \\
\text{Cost of production} & 331\,100 & \\
\text{Purchases of finished goods} & 28\,400 & \\
\text{Carriage inwards on finished goods} & 1\,800 & \\
\hline
& 372\,500 & \\
\text{Less: Closing inventory of finished goods} & 12\,600 & 359\,900 \\
\hline
\text{\bf Gross Profit} & & \mathbf{143\,960} \\
\end{array}
$$

---

### Part (c) Advice on Credit Policy Consultant

**Advantages of employing the consultant:**
* The expert knowledge can introduce a more robust credit screening system, reducing the probability of irrecoverable debts (which have risen significantly to $$26,400\$).
* The consultant can design training programs for staff, improving credit monitoring and reducing the credit period (which has worsened from 32 days to 45 days).
* Improved collection times and lower write-offs will significantly enhance cash flow and working capital.

**Disadvantages of employing the consultant:**
* The consultant charges a high one-off fee of $$12,000$, which is a certain cash outflow.
* Implementing stricter credit checks or credit control policies may offend existing loyal customers and lead to a reduction in total sales volume.
* There is no guarantee that the consultant's proposed system will be successful or fully embraced by the existing team.

**Recommendation:**
H Limited should hire the consultant. The cost of $$12,000\$ is a one-off expenditure, whereas the savings from correcting the upward trend in irrecoverable debts (currently $$26,400$) and recovering cash faster from credit customers will provide significant long-term financial benefits.

**(a) Manufacturing Account [10 marks]:**
* Cost of raw materials consumed: opening + purchases + carriage - closing (76 600) [1]
* Direct factory wages (156 000) [1]
* Royalties (4 500) [1]
* Prime cost (237 100) [1] OF
* Wages of factory supervisors (38 000) + Factory general expenses (17 400) [1]
* Factory rent and rates: $(12\,000 - 800) \times 75\% = 8\,400$ [1]
* Depreciation of factory machinery: $(180\,000 - 36\,000) \times 20\% = 28\,800$ [1]
* Total overheads sum (92 600) [1]
* Adjustment of Work in Progress (both opening and closing) [1]
* Cost of production (331 100) [1] OF

**(b) Trading Section [5 marks]:**
* Cost of production (331 100) [1] OF
* Purchases of finished goods + Carriage inwards (28 400 + 1 800) [1]
* Correct calculation of Cost of Sales (359 900) [1]
* Revenue (503 860) [1] OF
* Gross Profit (143 960) [1] OF

**(c) Business Evaluation [5 marks]:**
* Max 2 marks for advantages of employing the consultant [2]
* Max 2 marks for disadvantages of employing the consultant [2]
* 1 mark for clear reasoned recommendation based on data [1]