IGCSE Accounting 0452

[Qtie Pie]

I need help with 2 questions from the past paper Oct/Nob 2011 paper 13
Question no. 2 (h) where it says "He uses a standard mark up of 25% and asks the cost of sales"
The solution is "Mark-up of 25% = Gross margin of 20%"
I wonder if it is a theory or is there any method of calculation.. and if the mark up was for example 30%, what would be the gross margin?

The second doubt is Question no. 6 (c) from the same paper.. I do not know how to calculate the capital employed to find the opening capital employed.. please help

I havent gone through it for like 6 weeks b4 i started last saturday
I dont know... I think u do as much as you can... if u get time do from the older papers too...

 

[Rahma Abdelrahman]

I need help with 2 questions from the past paper Oct/Nob 2011 paper 13
Question no. 2 (h) where it says "He uses a standard mark up of 25% and asks the cost of sales"
The solution is "Mark-up of 25% = Gross margin of 20%"
I wonder if it is a theory or is there any method of calculation.. and if the mark up was for example 30%, what would be the gross margin?

The second doubt is Question no. 6 (c) from the same paper.. I do not know how to calculate the capital employed to find the opening capital employed.. please help

Q2.. There is no theory method as far as I know... But u can get it by calculation... Check attachment...
Q6--> The difference here is in capital employed, u have to take the total retained profit for the year, but for opening u don't include this year's profit in the capital, thats why u use 1200 The retained profit brought forward from last year added to share capital and debentures (long term liability, included in the capital employed..You don't need to know return on capital employed to know the return on opening capital employed.
Hope this helped...

 

[Timi Adeg]

Someone gimme notes or a pdf on depreciation&disposal and bad debts&provision for doubtful debts please. Like all the accounts that get debited and credited and when to use cost price and proceeds etc

 

[Timi Adeg]

I believe once you run through 10 years of questions you should be good to go

 

[MnMz]

Someone gimme notes or a pdf on depreciation&disposal and bad debts&provision for doubtful debts please. Like all the accounts that get debited and credited and when to use cost price and proceeds etc

Here are the steps for the disposal of fixed assets:

Step 1: Transfer the cost of Asset sold to the disposal Account
Credit - Asset account
Debit - Disposal account

Step 2: Transfer Provision for depreciation (that belongs to the asset sold) to the disposal account.
Debit - Provision for depreciation account
Credit - Disposal account

Step 3: Receipt of Cash/cheque.
Debit - Cash book

Credit - Disposal account

I will put the bad debts up in a while

 

[MnMz]

When are the formats coming? I am waiting!

Could you please inbox me the formats you need?

 

[Qtie Pie]

Q2.. There is no theory method as far as I know... But u can get it by calculation... Check attachment...
Q6--> The difference here is in capital employed, u have to take the total retained profit for the year, but for opening u don't include this year's profit in the capital, thats why u use 1200 The retained profit brought forward from last year added to share capital and debentures (long term liability, included in the capital employed..You don't need to know return on capital employed to know the return on opening capital employed.
Hope this helped...

I didnt get question(6)..

 

[GuardianSoul]

I will put the bad debts up in a while

Hey thanks a bunch! Can you post something for part exchange please, that chapter has me completely stumped

 

[MnMz]

Bad Debt is a loss
Timi Adeg
Allowance/Provision for Bad debts:

E.g. - Old Provision.....$405 (is ignored and not counted in any final account)
New Provision....$496 (is subtracted from the debtors in the balance sheet)
Difference.............$91 (which is an increase) (hence is counted as an expense in the profit&loss account)

If Old Provision......$400 (is ignored and not counted in any final account)
New Provision....$350 (is subtracted from the debtors in the balance sheet)
Difference............$50 (which is a decrease) ( hence is counted as an income in the profit&loss account)


any other doubts?

 

[MnMz]

Hey thanks a bunch! Can you post something for part exchange please, that chapter has me completely stumped

Part exchange
If a business wants to sell off or dispose the existing non current asset (fixed asset) part exchange deal will be organized with the supplier. part exchange amount or allowance will be deducted from the total amount paid to buy new non current asset (Fixed asset).

Ex :
Old Vehicle
Cost: $3,000
Accumulated Depreciation: $1,734
Net book value: $1,266
Part Exchanged for: $1,000
So loss on disposal of: $266

New Vehicle:
Cost: $4,000
Part ex from old van: $1,000
Balance paid: $3,000

Remove the old van
(3,000) Vehicles - Remove capital cost (credit vehicle account)
1,734 Accumulated Depreciation. - Remove accumulated depreciation.(debit provision for dep.)
1,000 Motor Vehicles - Part ex. proportion of value of new van (debit vehicle account)
266 Disposals - The loss on the valuation (swap if it's a profit)

Add in new vehicle
3,000 Vehicles - Balancing amount paid

(3,000) Bank - Actual payment

did you get it???

 

[Timi Adeg]

Bad Debt is a loss
Timi Adeg
Allowance/Provision for Bad debts:

E.g. - Old Provision.....$405 (is ignored and not counted in any final account)
New Provision....$496 (is subtracted from the debtors in the balance sheet)
Difference.............$91 (which is an increase) (hence is counted as an expense in the profit&loss account)

If Old Provision......$400 (is ignored and not counted in any final account)
New Provision....$350 (is subtracted from the debtors in the balance sheet)
Difference............$50 (which is a decrease) ( hence is counted as an income in the profit&loss account)


any other doubts?

Thanks, no more doubts. Much appreciated

 

[Timi Adeg]

In questions they sometimes give the bad debts figure under the additional information. When it's there you're meant to treat it twice right?

 

[umair1161]

In questions they sometimes give the bad debts figure under the additional information. When it's there you're meant to treat it twice right?

Yup!! once in income statement and once in balance sheet!!

 

[Rahma Abdelrahman]

I didnt get question(6)..

Ok tell me what u understood from the question?
You said that u don't have the return on capiatl emplyed so tht u can get the return on OPENING capital employed... But I said that u don't need to know that...

 

[umair1161]

can someone teach me this revaluation metheod of depriciation! thanks in advance!

 

[Rahma Abdelrahman]

can someone teach me this revaluation metheod of depriciation! thanks in advance!

The formula for this method is:
Depreciation=(Value of assets at beginning + Value of any additional assets purchased during the year) - (Value of assets at the end of the year)
It's simple... Just use the formula.... Anything u didn't get let me know

 

[umair1161]

The formula for this method is:
Depreciation=(Value of assets at beginning + Value of any additional assets purchased during the year) - (Value of assets at the end of the year)
It's simple... Just use the formula.... Anything u didn't get let me know

but i thought it also had something to do with the ledger accounts....like a machine a/c

 

[MnMz]

can someone teach me this revaluation metheod of depriciation! thanks in advance!

John purchased fixtures costing $2500 and paid by cheque. He decided to revalue the fixtures at the end of each year.
On 30 Sept. the fixtures were valued $2050/

therefore the depreciation is
Cost of fixtures on 1 Oct. $2500
Value of fixtures on 30 Sept ( $2050 )
Depreciation for the yer ended 30 Sept = $450

Did you get it?

 

[Rahma Abdelrahman]

but i thought it also had something to do with the ledger accounts....like a machine a/c

In the machine account u always apply historical cost concept... therefore it shows the value of machinery if it is a machinery account, so I guess this can be used and then subtract from it the value of asset at the end...
MnMz Please coorect me if I'm wrong

 

[umair1161]

John purchased fixtures costing $2500 and paid by cheque. He decided to revalue the fixtures at the end of each year.
On 30 Sept. the fixtures were valued $2050/

therefore the depreciation is
Cost of fixtures on 1 Oct. $2500
Value of fixtures on 30 Sept ( $2050 )
Depreciation for the yer ended 30 Sept = $450

Did you get it?

Yup! was pretty simple! but there are also some accounts we have to make such as fixtures a/c.....so what do we do there?