9706_w16_qp_33 - Cambridge International Examinations Cambridge International Advanced Subsidiary and Advanced Level 9706\/33 ACCOUNTING Paper 3

9706_w16_qp_33 - Cambridge International Examinations...

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This document consists of 10 printed pages, 2 blank pages and 1 insert. IB16 11_9706_33/7RP © UCLES 2016 [Turn over  Cambridge International Examinations Cambridge International Advanced Subsidiary and Advanced Level ACCOUNTING 9706/33 Paper 3 Structured Questions October/November 2016 3 hours No Additional Materials are required. READ THESE INSTRUCTIONS FIRST An answer booklet is provided inside this question paper. You should follow the instructions on the front cover of the answer booklet. If you need additional answer paper ask the invigilator for a continuation booklet. Answer all questions. All accounting statements are to be presented in good style. International accounting terms and formats should be used as appropriate. Workings should be shown. You may use a calculator. The number of marks is given in brackets [ ] at the end of each question or part question.
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2 © UCLES 2016 9706/33/O/N/161M Limited manufactures a single product. The following balances have been extracted from the ledgers for the year ended 31 December 2015: Debit Credit $ Inventories at cost at 1 January 2015 Raw materials 10400 Work-in-progress 12600 Finished goods at transfer price 14904 Purchases of raw materials 146200 Carriage inwards 3160 Carriage outwards 2790 Direct wages 249400 Indirect wages 54650 Rent 49000 Heat, light and power 28600 General expenses 12600 Office salaries 24780 Revenue 742490 Provision for unrealised profit at 1 January 2015 2484 Plant and machinery at cost 200000 Office equipment at cost 15000 Motor vehicles used by salesmen 25000 Provision for depreciation: plant and machinery 60000 office equipment 4600 motor vehicles 5740 Additional information 1 Inventories at 31 December 2015 $ Raw materials at cost 11750 Work-in-progress at cost 14670 Finished goods at transfer price 15750 2 Expenses are to be apportioned to the production department as follows: Rent 4/Heat, light and power 4/General expenses 3/3 Rent has been prepaid by $4000 at 31 December 2015. 4 Heat, light and power is in arrears by $3500 at 31 December 2015. 5 Completed goods are transferred at a mark-up on factory cost of 20%. 6 Depreciation is to be provided as follows: Plant and machinery 10% per annum on cost Motor vehicles 25% per annum on cost Office equipment 15% on the net book value Section A: Financial Accounting $ 5 5 4
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3 © UCLES 2016 9706/33/O/N/16 [Turn over REQUIRED (a) Prepare the manufacturing account for the year ended 31 December 2015. [9] (b) Prepare theincome statement forthe year ended 31 December 2015. [10] (c) Explain what is meantby the term transfer price. [2] Additional information 10000 units of the product were manufactured in the year, which is the maximum that can be produced. A supplier has offered to supply the product to M Limited for $60 per unit in the future. REQUIRED (d)Advise the directors of M Limited whether or not they should accept this offer. Justify your answer on financial grounds. [4] [Total: 25]
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