*B18*

Pre-Leaving Certiϐicate Examination, 2024

ACCOUNTING – ORDINARY LEVEL

(400 marks)

TIME: 3 HOURS

This paper is divided into 3 SecƟons:

SecƟon 1: Financial AccounƟng (120 marks)

This sec on has four ques ons (numbers 1 - 4). The first ques on (A or B) carries 120 marks and
the remaining three ques ons carry 60 marks each.

Candidates should answer QUESTION 1 (A or B) only OR a empt any TWO of the remaining
three ques ons in this sec on.

SecƟon 2: Financial AccounƟng (200 marks)

This sec on has three ques ons (numbers 5 – 7). Each ques on carries 100 marks.
Candidates should answer any TWO of these ques ons.

SecƟon 3: Management AccounƟng (80 marks)

This sec on has two ques ons (numbers 8 and 9). Each ques on carries 80 marks.
Candidates should answer ONE of these ques ons.

Calculators
Calculators may be used in answering the ques ons on this paper. It is very
important that workings are shown in the answer book(s) so that full credit can be
given for correct work.
 SECTION 1 (120 Marks)
Answer QuesƟon 1(A) OR 1(B) OR any TWO other ques ons

1. (A) Final Accounts of a Manufacturing Company

The following balances were extracted from the books of O’Connor Ltd as at 31/12/2023:

€ €
Share capital:
Authorised: 700,000 ordinary shares at €1 each
Issued: 680,000 ordinary shares at €1 each 680,000
Factory Buildings 575,000
Plant and equipment (Cost €500,000) 380,000
Delivery trucks 130,000
Accumulated deprecia on on delivery trucks 25,000
Patents 64,000
Stocks 01/01/2023
Raw materials 29,000
Work in progress 14,000
Finished goods 64,200
Sales 870,000
Purchases of raw materials 267,500
Debtors and creditors 43,600 59,400
Returns 800 1,100
Factory wages 83,600
Sale of scrap materials 800
Factory light and heat 26,800
Factory insurance 19,300
Directors fees 46,800
Discount allowed 6,900
Bank 25,400
12% Debentures (issued on 01/04/2023) 180,000
VAT 2,900
Provision for bad debts 1,600
Profit and loss balance at 01/01/2023 66,300
Adver sing 12,500
Direct expenses 15,900
1,846,200 1,846,200

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You are given the following addiƟonal informaƟon:

(i) Stocks at 31/12/2023: raw materials €22,000

work in progress €12,200
finished goods €60,000

(ii) Provision should be made for Debenture interest due.

(iii) Finished goods are to be transferred from factory at current market value of €620,000.

(iv) Provision for bad debts to be adjusted to 4% of the debtors.

(v) Deprecia on to be provided as follows:

Factory buildings 2% of cost

Plant and equipment 6% of cost
Delivery trucks 10% of net book value

(vi) Factory wages are to be divided 75% for direct wages and 25% for supervisors’ wages.

(vii) Factory insurance is for the year ended 31/03/2024.

(viii) Provide for corpora on tax €15,000.

Required:

(a) Prepare a manufacturing account for the year ended 31/12/2023. (40)

(b) Prepare a trading and profit and loss account for the year ended 31/12/2023. (40)

(c) Prepare a balance sheet as on 31/12/2023. (40)

(120 marks)

3
1. (B) Final Accounts of a Sole Trader

The following balances were extracted from the books of David McGee, a sole trader, as at 31/12/2023:

€ €
Premises 860,000
Equipment 145,000
Accumulated deprecia on on equipment 32,600
Delivery vans 195,000
Accumulated deprecia on on delivery vans 47,000
Term loan (received on 01/05/2023) 120,000
Stock of goods for resale 01/01/2023 43,000
Purchases and sales 750,000 1,350,000
Returns outwards 2,600
Debtors and creditors 68,500 54,900
Carriage inwards 4,600
Loan interest paid 2,400
Adver sing 9,500
Patents 25,000
Wages 76,900
Business insurance 6,400
Profit and loss balance 01/01/2023 28,800
Discount received 5,300
Light and heat 20,400
Provision for bad debts 3,000
Bank 43,900
Capital 01/01/2023 684,600
Drawings 3,400
VAT 17,200
2,300,000 2,300,000

4
You are given the following addiƟonal informaƟon:

(i) Stock of goods for resale 31/12/2023: €29,200

(ii) Included in the business insurance is a payment of €900, which is for David McGee’s private house.

(iii) Deprecia on is to be provided as follow:

Premises 2% of cost
Delivery Vans 10% of cost
Equipment 12% of book value.

(iv) Adver sing is for the year ending 31/03/2024.

(v) Provision to be made for interest due on the term loan. The rate of interest is 6% per annum.

(vi) Provision for bad debts to be adjusted to 4% of debtors.

(vii) Wages are to be divided: 60% for employees and 40% for drawings.

Required:

(a) Prepare a trading, profit and loss account for the year ended 31/12/2023. (75)

(b) Prepare a balance sheet as at 31/12/2023. (45)

(120 marks)

5
2. Club Accounts

Included in the assets and liabili es of longwood soccer club on 01/01/2023 were the following:
clubhouse/pitches €620,000, equipment €23,600, members subscrip ons paid in advance €2,500,
bar stock €1,200, investments €30,000, wages due €500, general expenses prepaid €350.

You are required to:

(a) Prepare a statement showing the club’s accumulated fund on 01/01/2023. (15)

The following is a summary of the club’s receipts and payments for the year 2023:

Receipts and Payments Account for the year ended 31/12/2023

Receipts € Payments €
Cash in hand 01/01/2023 4,600 Bar purchases 18.500
Subscrip ons 22,500 Wages 5,800
Interest received 700 Club lo o prizes 3,500
Club lo o receipts 8,400 Purchases of equipment 6,500
Bar sales 36,400 General expenses 3,600
Annual sponsorship 10,000 Bar Creditors 4,900
Cash Balance 31/12/2023 39,800
82,600 82,600

The Treasurer also supplied the following informa on on 31/12/2023:

(i) Bar stock €2,100

(ii) Bar creditors €900

(iii) Subscrip ons due €1,500, Subscrip ons in advance €800

(iv) Equipment held on 31/12/2023 to be depreciated by 10% of cost.

(v) Depreciate clubhouse/pitches by 2% of cost.

Required:

(b) Prepare a bar trading account for the year ended 31/12/2023. (9)

(c) Prepare the club’s income and expenditure account for the year ended 31/12/23. (30)

(d) Explain the term ‘Subscrip ons’. (6)

(60 marks)

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3. CorrecƟon of Errors and Suspense Account

The Trial Balance of Harry Flynn failed to agree on 31/12/2023 and the difference was entered into
a Suspense Account. On examina on of the books, the following errors were revealed:

(i) The total of the purchases book €13,150 had been posted to the purchases account as €15,130.

(ii) The total of the sales returns book was under to ed by €690.

(iii) Rent received €2,500 by cheque had not been entered in the books.

(iv) Goods for resale, taken by Harry Flynn for his own use, €850 had not been entered in the books.

(v) Goods sold on credit to John Smith, €1,300 had been entered in James Smith’s account.

You are required to:

(a) Journalise the necessary correc ons. (35)

(b) Prepare a statement of corrected net profit, if the net profit as per accounts is €23,540. (25)

(60 marks)

7
4. Company Profit and Loss

The following informa on was extracted from the books of Holdings Ltd:

• Holdings Ltd has an authorised capital of 750,000 ordinary shares at €1 each and 250,000 4%
preference shares at €1 each.

• The company has already issued 450,000 ordinary shares and 120,000 4% preference shares.

• On 01/01/2023 the company’s general reserve account showed a balance of €63,200.

• Holdings Ltd carried forward a profit of €27,300 from 2022, and the accounts showed profits
before interest and taxa on of €73,000 for the year ended 31/12/2023.

• During the year, a total dividend of 3c per ordinary share was paid to the ordinary
shareholders and the total preference dividend for the year was paid to the preference
shareholders.

On 31/12/2023, the Directors recommended that:

(i) Interest of €9,000 to be provided for.

(ii) Taxa on of €15,750 to be provided for.

(iii) The general reserve to be increased to €75,000

Required:

(a) Show the profit and loss account for the year ended 31/12/2023. (35)

(b) Prepare a balance sheet showing the relevant accounts a er making the above provisions
and appropria ons. (25)

(60 marks)

8
Section 2 begins on page 10

9
 SECTION 2 (200 Marks)
Answer TWO ques ons.

5. InterpretaƟon of Accounts
The following informa on has been taken from the accounts of McGann Ltd for the year ended
31/12/2023:

Trading and Profit and Loss Account for the year ended 31/12/2023
€ €
Credit Sales 850,000
Less: Cost of sales
Stock 01/01/2023 35,000
Add: Credit purchases ???????
???????
Less: Stock 31/12/2023 28,000
Cost of sales 296,000
Gross Profit 554,000
Less: Total expenses (including interest) 286,000
Net profit for year 268,000

Balance Sheet as at 31/12/2023

€ € €
Cost DepreciaƟon NBV
Fixed Assets 750,000 39,000 711,000

Current Assets (including trade debtors €47,000) 152,000

Less Creditors: amounts falling due within 1 year
Trade creditors 45,000
107,000
818,000
Financed by:
Creditors: amounts falling due a er more than 1 year.
8% Debentures (2029/2030) 150,000
Capital and Reserves Authorised Issued
Ordinary shares at €1 each 900,000 400,000 400,000
Profit and loss account 268,000
818,000

10
(a) You are required to calculate: (to 2 decimal places where appropriate)

(i) The figure for credit purchases.

(ii) Return on capital employed

(iii) The net profit margin

(iv) The number of shares available for sale. (40)

(b) Explain the following terms and show how they apply to the above accounts as appropriate.

(i) 8% debentures (2029/2030)

(ii) Liquid assets

(iii) Shareholders funds

(iv) Trade debtors (40)

(c) (i) Calculate the acid test ra o for 2023 (to 2 decimal places).

(ii) What does the ra o tell us about Mc Gann Ltd? (10)

(d) The return on capital employed for McGann Ltd in 2022 was 20.8%.

Comment on the profitability of McGann Ltd in 2023. (10)

(100 marks)

11
6. Cash Flow Statement
The following informa on has been extracted from the books of Jackson Ltd.

Profit and Loss (extract) for year ended 31/12/2023 €

Opera ng profit 147,000
Interest paid (11,000)
136,000
Taxa on (27,000)
109,000
Dividends paid (34,000)
Retained profit 75,000
Profit and loss balance 01/01/2023 23,000
Profit and loss balance 31/12/2023 98,000

Balance Sheet as at 31/12/2023 31/12/2022

€ € € €
Fixed Assets
Land and buildings 720,000 650,000
Less deprecia on provision (92,000) 628,000 (75,000) 575,000
Current Assets
Stock 37,000 52,000
Debtors 40,000 26,000
Bank 27,000 18,000
104,000 96,000
Less Creditors: amounts falling due within 1 year
Creditors 29,000 35,000
Taxa on 27,000 31,000
(56,000) (66,000)
Net Current Assets 48,000 30,000
Total Net Assets 676,000 605,000

Financed by:
Creditors: amounts falling due a er 1 year
7% Debentures 80,000 120,000
Capital and Reserves
Ordinary share capital issued 480,000 450,000
Share premium 18,000 12,000
Profit and loss account 98,000 23,000
676,000 605,000

12
Required:

(a) Reconcile the opera ng profit to net cash inflow/ou low from opera ng ac vi es. (30)

(b) Prepare the cash flow statement of Jackson Ltd for the year ended 31/12/2023 using the
following headings:

1. Opera ng ac vi es

2. Returns on investments and servicing of finance

3. Taxa on

4. Capital expenditure and financial investment

5. Equity dividends paid

6. Financing. (65)

(c) Reconcile the net cash flow to movement in net debt. (5)

(100 marks)

13
7. Incomplete Records – Control Accounts
Orla Flynn did not keep a full set of accounts during the year ended 31/12/2023.

The following informa on is available:

01/01/2023 31/12/2023
Buildings 312,000 312,000
Delivery trucks 78,000 78,000
Trade debtors 16,500 21,900
Stock 9,300 14,700
Trade creditors 14,200 19,300
Commission due 1,300 ----------
General expenses prepaid 570 400

(a) Calculate Orla Flynn’s capital in 01/01/2023. (10)

Her bank account showed the following details:

Bank Receipts € €
Trade debtors 68,400
Commission 11,900
Sales 267,400 347,700

Bank Payments € €
Balance 01/01/2023 17,300
Purchases 75,500
Trade creditors 10,000
Drawings 1,800
Wages & general expenses 39,700
Furniture 11,000
Adver sing 2,500 157,800

(b) Calculate total sales and total purchases using control accounts. (20)

(c) Prepare a trading and profit and loss account for the year ended 31/12/2023, taking
the following into account: Depreciate delivery trucks by 20% and buildings by 2%. (30)

(d) Prepare a balance sheet as on 31/12/2023. (40)

(100 marks)

14
 SECTION 3 (80 Marks)
Answer ONE ques on

8. Marginal CosƟng

Hussey Ltd manufactures a single product. The following is the proposed annual budget for
the coming year:

€ €
Sales (75,000 units) 825,000
Variable costs 450,000
Fixed costs 125,000 575,000
Net profit 250,000

Required:

(a) Calculate the selling price per unit.

(b) Calculate the variable cost per unit.

(c) Calculate the contribuƟon from each unit sold.

(d) Calculate the break-even point in volume (units) and sales value (€).

(e) Calculate the margin of safety in units and sales value, if the budgeted sales for the period
are 55,000 units.

(f) Calculate the level of produc on (units) and sales revenue that will yield a profit of €250,000.

(g) Explain the term “variable costs” in rela on to Hussey Ltd. Give two examples of variable
costs.
(80 marks)

15
*B18*

9. Cash BudgeƟng

Seamus Connolly had the following assets, liabili es and capital on 01/01/2024.

Assets
Machinery 470,000
Stock 29,000
Debtors 38,500
537,500

LiabiliƟes
Creditors 47,000
Bank overdra 15,000
Capital 475,500
537,500

The expected sales and purchases for the next 5 months are as follows:

January February March April May

Sales €41,000 €39,600 €41,800 €49,700 €52,300
Purchases €21,700 €26,500 €30,200 €33,500 €36,800

• All sales are on credit and are paid for one month a er sale.

• All purchases are on credit, and are paid for one month a er the month of purchase, except
€10,000 for cash in March.

• Equipment will be purchased for €8,000. 50% of this amount will be paid in March and the
balance will be paid in May.

• Wages are €4,000 per month and will increase by 5% from 1st March.
• Connolly rents the premises for €36,000 per annum, payable monthly.

• Closing stock on 31/05/2024 is expected to be €12,400.

• Net profit for the first five months is expected to be €28,500 and drawings by Connolly for
the same period is expected to be €5,000.

Required:

(a) Prepare a cash budget on a monthly basis for the period January to May 2024 and also the
total column for the period.

(b) Prepare a budgeted balance sheet as at 31/05/2024.

(c) Give two items of informa on Connolly can get from the prepared cash budget.

(80 marks)

16