Junior Certificate Business Studies for Households and Enterprises by Matt Hynes

JC Business TM Contents for textbook and workbook Chapter Textbook Workbook1 Communications 1 182 2 Communications in Action 2 182 3 Introduction to Record Keeping 5 183 4 Household Accounts 7 185 5 Income 9 186 6 Expenditure 11 189 7 The Budget 12 192 8 The Good Consumer 13 230 9 Protecting the Consumer 13 230 10 Making a complaint 14 232 11 Money and Banking I No exercises 233 12 Money and Banking II 16 234 13 Money and Banking III No exercises 234 14 Bank Accounts 16 238 15 Personal Borrowing 18 246 16 Insurance 19 249 17 Premium Calculation and Estimating

Compensation 20 252

18 Economic Framework 20 256 Budgeting - the National Budget 21 258

20 Foreign Trade 23 260 21 Forms of Ownership 24 263 22 Private Limited Company No exercises 264 23 Chain of Production 26 267 24 People at Work 26 267 25 Being an Employer 27 269 26 Industrial Relations 29 275 27 Finance for Business 30 276 28 Preparation of a Business Plan 32 277 29 Business Loan Applications 32 283 30 Banking for Business 32 287 31 Business Insurance 34 287 32 Delivery Systems 35 290 33 Marketing 36 295 34 Financial Recording and Filing 38 297 35 Business Documents I 38 302 36 Business Documents II No exercises 305 37 Recording Credit Transactions 40 310 38 Continuous Balancing Ledgers and

Statements No exercises 317

39 Analysed Cash Books I 71 324 40 Analysed Cash Books II Monitoring

Overheads 80 325

41 General Journal 84 329

1 9

42 Combined Books of First Entry and Ledger Questions

91 331

43 Control Accounts 109 333 44 Trading Account 109 334 45 Profit and Loss Account 111 336 46 Profit and Loss Appropriation Account 114 337 47 Balance Sheet 118 338 48 Adjustments to Final Accounts 127 339 49 Final Accounts and Balance Sheet with

Adjustments 132 341

50 Assessing a Business 148 342 51 Club Accounts 152 346 52 Club Accounts with Adjustments 161 347 53 Farm Accounts 166 348 54 Service Firms 173 348 55 Information Technology 177 348

Junior Certificate

Business Studiesfor Households and Enterprises

TEXTBOOK TEACHER’S MANUAL

Matt Hynes

© Matt Hynes 2005

ISBN 1-84131-703-9Folens Publishers,

Hibernian Industrial Estate,Greenhills Road,

Tallaght,Dublin 24.

Editor: Fiona DunneDesign and Layout: Compuscript

Produced in Ireland by Folens Publishers

All rights reserved.

The publisher reserves the right to change, without notice, at any time the specification of this product.

FOLENS

Junior Certificate Business Studies Textbook Teacher’s Manual

1

Chapter 1 Communications

1.

2. Internal communication

External communication

3. Oral communication

Written communication

Visual communication

4. See chart at bottom of p4 in the textbook.

Method Explanation

ChartsUsed to provide detailed information in lines or easy-to-understand pictures

Television Used to show people actually communicating in real-life situations

Method Explanation

Letters Written communication from one person to another sent by post

Notice boardA space that employees will look at to keep them up-to-date withwhat is happening

Method Explanation

Telephone Use of landline or wire-free device to contact someone else

Meetings Bring employees together to discuss topics face-to-face

Method Explanation

Letters Written communication from one person to another sent in the post

Newspapers Written communication printed on local or national newspapers

Method Explanation

Notice boardA space that employees will look at to keep them up-to-date withwhat is happening

Meetings Bring employees together to discuss topics face-to-face

Factors Explanation

Destination Is communication within Ireland or worldwide?

Cost How do the different methods compare on price?

Speed How urgent is the information to be communicated?

Record Is it necessary to keep the information?

Chapter 2 Communications in Action

Letter WritingThe answers to letters should follow the nine-point plan. It’s good discipline for the studentsto put in the numbers beside the text when doing the exercises, to ensure that they completethe letter fully. The address of the sender and date of the letter can also be placed on the left-hand side of the page.

1.

2.

1. Harmony Street,Carlow.(086) 85341245.

2.3. Edge Music Store,

Piano Row,Waterford.

4. Dear Mr Edge,

5. I wish to order a new CD called How to Make A Snowman Melt.6. When can you have it in stock?7. Please phone or text me when it’s in.

8. Yours faithfully,

9. Nora Jones.

1. Top View Road,Sligo.(087) 4325676.

2.3. Ms News Agent,

Corner Grove,Sligo.

4. Dear Ms News Agent,

5. I wish to enquire about a new magazine called Predict Your Future.6. Can you obtain this magazine for me?

How much will it cost?How many issues are there?

7. Please let me know as soon as possible.

8. Yours sincerely,

9. Patrick Kerns.


2

3.

Report WritingThe answers to reports should follow the nine-point plan. It’s good discipline for thestudents to put in the numbers beside the text when doing the exercises, to ensure that theycomplete the report fully.

4.1. Siobhán Gallagher,

Class 1,Vocational School,Letterkenny,Co. Donegal.

2. Best Value In Mobile Phone Credit

3.

4. Class 1,Vocational School,Letterkenny,Co. Donegal.

5. I was asked by you to prepare a report on where the best value in mobile phone credit can be obtained. I checked out all the providers. My findings are set out below.

6. Providers O2 Vodafone Meteor

Price per call per minute cent cent cent

Price per text cent cent cent

I recommend

7. I am available to discuss my findings if required.

8. Siobhán Gallagher.9. Mobile Phone Consultant.

1. Students Union,St. Mark’s Community School,Celbridge,Co. Kildare.

2.

3. Finbar Keenan,Main Street,Maynooth,Co. Kildare.

4. Dear Finbar,

5. I was delighted to hear that you are coming to our school in September.6. As you will be in Second Year, I would like to set out the ten subjects you will study.

Six subjects are compulsory:

For the other four you can choose from:

7. Please contact me if you want details about these subjects.

8. Yours faithfully,

9. Monica Grey.President Students’ Union.


3

5.

6.

7. Notice is given that a meeting of the Business Studies Students Club will take place in Room5 at 12.30 pm on Monday 3 October 2005. All members please attend.

8. AGM Agenda for the Business Studies Student Club.1. Minutes of previous meeting2. Matters arising from the minutes3. Correspondence received by club officers4. Treasurer’s report5. Club tour to AIB headquarters6. Membership fees7. Any Other Business for the next meeting

1. Máire McGrath,Class A,Ard Scoile.

2. Main Sources of Income for Students in Class A

3.

4. I was asked by you to prepare a report on the main sources of income for students in Class A. I surveyed all twenty-six students. My findings are set out below.

5. Income Pocket money Part-time Work Other

Percentage of income earned 60% 30% 10%

6. The main source is pocket money.


8. Máire McGrath.9. Financial Consultant.

1. Ilona Donnelly,Class D,Mercy Convent.

2. Best Fast-Food Outlets in

3.

4. Class D,Mercy Convent.

5. I was asked by you to prepare a report on the best fast-food outlets in .I visited all the outlets and sampled the food. My findings are set out below. The providers are rated out of 10.

6. Providers Mighty Sams Mini Macks Burger Queen

Price 7 6 9

Quality 8 8 5

Service 9 7 8

I recommend Mighty Sams.


8. Ilona Donnelly.9. Fast Food Consultant.


4

Charts and Graphs

9. Bar chart showing sales of shoes for period 2000–2005.

10. Line graph showing rate of inflation for period 1999–2004.

11. Pie chart showing breakdown of sales for the four seasons 2005.

Chapter 3 Introduction to Record Keeping

The solutions to exercises 1 to 5 show the accounts balanced. You may wish your studentsto do likewise depending on their progress.

1.

Date Details Total Date Details Total

2005 € 2005 €

1/1 Prize money 100 8/1 Sports gear 30

6/1 Pocket money 10 10/1 Lunch 5

10/1 Balance c/d 75

110 110

11/1 Balance b/d 75


5

2.

3.

4.

5.

6.Date Details Total Date Details Total

2008 € 2008 €

1/5 Birthday 75 2/5 CD 18

9/5 Sale of CD 30 5/5 Magazine 15

13/5 Uncle 10 13/5 Clothes 45

13/5 Balance c/d 37

115 115

14/5 Balance b/d 37


2008 € 2008 €

1/4 Aunt 20 6/4 Hair styles 5

4/4 Parents 80 8/4 Music lessons 75

10/4 Wages 45 18/4 School tour 60

18/4 Balance c/d 5

145 145

19/4 Balance b/d 5


2007 € 2007 €

1/1 Parents 100 2/1 School books 90

5/1 Pocket money 12 3/1 Lunch 8

7/1 Interest 38 9/1 Magazine 24

9/1 Balance c/d 28

150 150

10/1 Balance b/d 28


2006 € 2006 €

1/3 Interest 28 8/3 School books 40

4/3 Wages 32 12/3 Sweets 6

6/3 Pocket money 8 12/3 Balance c/d 22

68 68

13/3 Balance b/d 22


2005 € 2005 €

1/2 Pocket money 12 6/2 New books 20

4/2 Sale of books 55 8/2 Video 4

10/2 Magazines 6

10/2 Balance c/d 37

67 67

11/2 Balance b/d 37


6

Chapter 4 Household Accounts

1.

2.

3.

Analysed Cash Book

Date Details TotalCash

TotalBank

Date Details Ch.no.

TotalCash

TotalBank

HK Car Mort-gage

2007 € € 2007 € € € € €

1/2 Balance b/d 180 320 2/2 Car service 1 85 85

3/2 Child Benefit 120 6/2 Groceries 60 60

4/2 Wages 650 7/2 Insurance 2 150 150

9/2 Petrol 25 25

10/2 Mortgage 3 320 320

12/2 Meat bill 4 100 100

85 655 310 110 320

12/2 Balance c/d 215 315

300 970 300 970

13/3 Balance b/d 215 315

Analysed Cash Book

Date Details Total Date Details Total HK Car Other

2005 € 2005 € € € €

1/4 Balance b/d 500 2/4 Groceries 300 300

6/4 Wages 850 4/4 Petrol 45 45

5/4 Electricity 100 100

8/4 Car service 155 155

11/4 Groceries 185 185

13/4 School books 35 35

820 485 200 135

13/4 Balance c/d 530

1,350 1,350

14/4 Balance b/d 530

Analysed Cash Book

Date Details Total Date Details Total HK L&H Other

2005 € 2005 € € € €

1/3 Balance b/d 200 5/3 Groceries 120 120

3/3 Wages 600 6/3 Fuel 220 220

7/3 Petrol 40 40

8/3 Electricity 80 80

10/3 Groceries 145 145

12/3 Window clean 60 60

665 265 300 100


800 800



7

4.

5.

6.

Analysed Cash BookDate Details Total

CashTotalBank

Date Details Ch.no.

TotalCash

TotalBank

HK Mort-gage

Other

2008 € € 2008 € € € € €

1/4 Balance b/d 100 1/4 Balance b/d 250


6/4 Wages 500 8/4 Mortgage 1 355 355

9/4 Insurance 2 380 380

11/4 Milk bill 3 65 65

12/4 Electricity 4 75 75

13/4 School fees 55 55

150 160 355 510

13/4 Balance c/d 625 13/4 Balance c/d 70220 1,125 220 1,125



CashTotalBank

Date Details Ch.no.

TotalCash

TotalBank

HK Per L&H

2007 € € 2007 € € € € €

1/3 Balance b/d 50 230 4/3 Heating oil 1 380 380

3/3 Child Benefit 120 5/3 Milk bill 2 38 38

12/3 Wages 450 6/3 Groceries 82 82

8/3 Hair cut 3 50 50

10/3 Doctor 4 31 31


82 599 120 81 480

12/3 Balance c/d 88 81

170 680 170 680

13/3 Balance b/d 88 81


8


CashTotalBank

Date Details Ch.no.

TotalCash

TotalBank

HK L&H Other

2008 € € 2008 € € € € €



8/6 Wages 860 5/6 Insurance 1 500 500


10/6 Milk bill 3 50 50

12/6 Holiday 4 50 50

80 130 55 550

12/6 Balance c/d 45 12/6 Balance c/d 320

440 905 440 905


7.

Chapter 5 Income

1. (a) Tom’s gross wage = €400 (40 hours @ €10. Basic = €400. No overtime.)(b) Anne’s gross wage = €648 (40 hours @ €12. Basic = €480 + overtime €168.)(c) Jim’s gross wage = €624 (40 hours @ €8. Basic = €320 + overtime €304.)

2. (a) Pat’s gross wage = €531 (38 hours @ €9. Basic = €342 + overtime €135 + €54.)(b) Irene’s gross wage = €440 (38 hours @ €8. Basic = €304 + overtime €120 + €16.)

3.

4.

5. Employee Gross Wage Tax before deducting tax credit Tax Credit Tax Due PRSI Net Wage

(a) Martin €350 €70 €50 €20 €17.50 €312.50

(b) Louise €650 €273 €65 €208 €32.50 €409.50

Employee Gross Wage Tax before deducting tax credit Tax Credit Tax Due

(a) Shelia €320 €64 €25 €39

(b) Paul €320 €64 €35 €29

(c) Breda €450 €90 €50 €40

(d) Conor €500 €100 €60 €40

Deductions Explanation Example

Statutory Compulsory payments by employees to the government taken from the gross wage

Income Tax, PRSI

Non-statutory Voluntary amounts taken from an employee’s grosswage at the request of the employee

Pension, Savings, VHI, Union Fee

Difference Statutory payments are compulsory whereas non statutory are voluntary


9


CashTotalBank

Date Details Ch.no.

TotalCash

TotalBank

L&H

School Other

2008 € € 2008 € € € € €

1/2 Balance 40 120 3/2 Cash C 100


3/2 Bank C 100 5/2Schooluniform

1 150 150

10/2 Child Benefit 80 6/2 Electricity 2 105 105

7/2 Petrol 38 38

11/2CentralHeating

3 440 440

88 795 545 150 88

12/8 Balance c/d 132 175

220 970 220 970

13/8 Balance b/d 312 175

6. (a) Gerard

(b) Monica

(c) Adrian

(d) Josephine

€ Tax Due € Total Deductions €

Gross pay 37,000

First €21,586 @ 20% 21,586 4,317.20

Remainder @ 42% 15,414 6,473.08

Tax before deducting tax credits 10,791.08

Less tax credits 1,850

Tax due 8,941.08

Add PRSI due 1,850 10,791.08

Net pay = Gross pay less deductions: €37,000 – €10,623.08 = €26,208.92


Gross pay 55,000

First €21,586 @ 20% 21,586 4,317.20

Remainder @ 42% 33,414 14,033.88



Tax due 15,651.08

Add PRSI due 2,750 18,401.08



Gross pay 42,000

First €21,586 @ 20% 21,586 4,317.20

Remainder @ 42% 20,414 8,573.88



Tax due 10,491.08

Add PRSI due 2,100 12,591.08



Gross pay 30,000

First €21,586 @ 20% 21,586 4,317.20

Remainder @ 42% 8,414 3,533.88



Tax due 6,259.08

Add PRSI due 1,500 7,759.08



10

Chapter 6 Expenditure

1. ‘Our income is limited’ = We have not got enough income to buy all the things we wouldlike to buy.

2. The financial cost = The actual price of the item purchased.The opportunity cost = What is given up when you decide to purchase one item instead ofanother.

3. (a) The financial cost is €30.(b) The opportunity cost of buying the shirt is not being able to go to the football match.

4. (i) Make a list and stick to it.(ii) Only bring enough money with you to buy necessities.

5.

6. Capital expenditure is spending on things that will last for more than one year e.g. cars,houses. Current expenditure is spending on things that are used up within one year e.g.petrol for the car, groceries.

7.

8.

9.

Lynch King Highest Bill

Units used 723 737

Cost €68.69 €70.02

Standing charge €9 €9

VAT €10.49 €10.67

Total cost €88.18 €89.87 King

Cost of electricity Standing charge VAT@ 13.5% Total Cost

(i) €44.52 €9 €7.23 (13.5% of €53.52) €60.75

(ii) €43.54 €9 €7.09 €59.63

(iii) €49.98 €9 €7.96 €66.94

(iv) €73.64 €9 €11.16 €93.8

Number of units used Cost of electricity

(i) 636 (8,516 – 7,880) €44.52

(ii) 622 (9,202 – 8,580) €43.54

(iii) 714 (5,493 – 4,779) €49.98

(iv) 1,052 (3,393 – 2,341) €73.64

Type of Expenditure Examples

Fixed House insurance, mortgage

Irregular Electricity, telephone

Discretionary Birthday presents, entertainment


11

10. Households usually receive a telephone bill every two months for a landline and once amonth for a mobile phone bill.

Chapter 7 The Budget

1. (a)

(b)

2.

3. People save because: (i) They want to earn interest;

(ii) They want to go on a holiday; (iii) They want to buy a car; (iv) They want to have money in case of an emergency.

It is important to plan savings because otherwise the money will be unwisely spent before onethinks about it.

Expenditure Present Cost 3% Increase Future Cost

Mortgage €260 €7.80 €267.80

Housekeeping €140 €4.20 €144.20

Telephone €90 €2.70 €92.70

Car Tax €290 €8.70 €298.70

Saver Deposit 3% Interest

Pat €1,230 €36.90

Mike €740 €22.20

Kate €335 €10.10

Mary €1,940 €58.20

Employee Monthly wage 5% Increase Future Income

Monica €780 €39 €819.00

Oliver €920 €46 €966.00

Pat €535 €26.75 €561.75

Butler Lennon

Number of calls 1,432 689

Cost €71.60 €34.45

Rental charge €40.00 €40.00

VAT €23.44 €15.64

Total cost €135.04 €90.09


12

Chapter 8 The Good Consumer

1.

Chapter 9 Protecting the Consumer

1. Consumers need protection because of: (i) Unsafe goods;

(ii) Overcharging by retailers; (iii) Misleading advertisements.

2. (a) Laura is entitled to a full refund or replacement shoes. She does not have to accept acredit note.

(b) Pat is entitled to a replacement suit unless he was clearly warned in advance by thedrycleaner that the suit might shrink.

(c) Sheila is entitled to have her engine repaired or replaced and also any damage repaired.(d) Maura can refuse to take the ham in case it is out-of-date.

3. Sign 1: This sign is legal because the shop does not have to sell on credit. Sign 2: This sign is not legal because the shop has to refund money if the good sold is faulty.Sign 3: This sign is not legal because the shop has to refund money if the good sold is faulty.

4. (a) The Small Claims Court helps consumers who cannot get a retailer to make good anyloss due to faulty goods, but who do not want to go to the District Court or employ asolicitor. The largest amount they can claim is €1,270.The Office of the Ombudsman can help consumers who have difficulty gettingsatisfaction from government bodies and departments.

(b) Trade Associations are made up of members of similar types of business to protect theirinterests and provide them with assistance when required, e.g. Irish Travel AgentsAssociation.The Office of the Director of Consumer Affairs is responsible for enforcing theConsumer Information Act 1978. It educates consumers on their rights.

5. (a) The Consumer Association of Ireland.(b) Consumer Choice Magazine.

1.

2.

3.

4.5/6.

7.

8.

9.

Handlebar Street,Roscommon.(086) 8732258.

KM Cycles Ltd,Main Street,Longford.

Dear Mr. Martin,I wish to order one of the new racing bicycles which you advertised on ShannonsideNorthern Sound on 15/4/2006 at a price of €140.Can you ring me if one is available?

Yours faithfully,

Mary Farrell.


13

6. (i) Goods should be of merchantable quality;(ii) Good should be fit for their purpose;

(iii) Goods should be as described;(iv) Goods should correspond to sample shown;(v) The suppliers of services must be qualified.

Chapter 10 Making a complaint

1. Consumers complain because: the seller gives misleading information; they are unhappywith the quality of goods or service; they are overcharged; goods are not as ordered.

2. The steps a consumer should take when a product is unsatisfactory will depend on theproblem. If it is a normal good then the consumer should:Identify the problem; obtain proof of purchase; contact the seller and ask for a refund orreplacement; put the complaint in writing; contact the seller’s trade association if available;bring the seller to the Small Claims Court.

3. (a)

(b) Mr Murphy could contact the seller’s trade association or contact the registrar of theSmall Claims Court.

1.

2.

3.

4.

5.

6.7.

8.

9.

6 Bridge Street,Granard,Longford.

8/9/2006

Ms Susan Tarpey,Manager,S&S Arkin Ltd,Dublin Road,Longford.

Dear Ms Tarpey,

I am writing to you concerning a new colour television set SAMO Model P107, which Ibought in your shop on 7/9/2006.The sound does not work.I require a replacement or a refund of my money €399. Please let me know your responseby return of post.

Yours faithfully,

Tom Murphy.


14

4. (a)

(b) Mr Cooney could contact the local media or the registrar of the Small Claims Court.

5. (a)

(b) The Sale of Goods and Supply of Services Act 1980. The goods were not fit for thepurpose and the fitter was not properly qualified.

(c) The receipt; credit card statement; the door itself, copy of contract signed by AllbriteLtd.

1.

2.

3.

4.5.

6.

7.

8.

9.

Rioscarraig,Ardara,Co. Donegal.

3/3/2006

The Sales Manager,Allbrite Ltd,Church Street,Letterkenny,Co. Donegal.

Dear Sir/Madam,I am writing to you concerning a new, fitted aluminium patio door from your firm. I enclose acopy of the contract.After a month, it did not seal properly and allowed in the wind and rain. Spots of rust havedeveloped on it.I'm very dissatisfied with the door and demand an immediate replacement or a full refund ofmy money €698. Please let me know your response by return of post.

Yours faithfully,

Maeve O'Sullivan.

1.

2.

3.

4.

5.

6.

7.

8.

9.

16 Castle Street,Ennis,Co. Clare.

15/4/2006

Mr. Frank Clarke,Manager,The Bike Shop Ltd,Nenagh Road,Limerick.

Dear Mr Clarke,

I am writing about a new bicycle Model RB 25, which I bought in your shop on 11/4/2006.Within a few days the bicycle has given me trouble. The chain slips off every time I meet ahill. I am very disappointed with it.I require a replacement or a refund of my money €179. Please let me know your responseby return of post.

Yours faithfully,

Peter Cooney.


15

6. A credit note is a document given by a seller to a customer that states that the amount owingor paid has been reduced. It is only acceptable if the customer agrees to it. This is usually whenthere is nothing wrong with the goods but the customer changes his/her mind on the colour etc.

Chapter 11 Money and Banking I

There are no exercises in the textbook.

Chapter 12 Money and Banking II

1.

2. A standing order is an instruction by a bank current account holder to pay a fixed sum ofmoney on a fixed date to a named person/organisation. A direct debit is where a named person/organisation obtains permission from a currentaccount holder to take a varying amount out of their account on a date to be decided by theperson/organisation.

3. (a) €75 (b) €600 (c) €1,197

4. (a) €78.81 (b) €702 (c) €1,481.19

5. (a) €40 (b) €160 (c) €100 (d) €144 (e) € 288 (f) €319.20

Chapter 13 Money and Banking III


Chapter 14 Bank Accounts

1.

Date Details Total Date Details Cheque/ATM Total

2005 € 2005 €

1/4 Balance b/d 950 8/4 Cash ATM 100

5/4 Wages 600 15/4 Insurance 7 600


23/4 Car repairs 9 200

28/4 Cash ATM 200

30/4 Balance c/d 1,000

2,350 2,350

1/5 Balance b/d 1,000

Method Cost Safety Record

Cheque Expensive Could be forged Yes in stub

Bank draft Most expensive 100% safe Yes in a receipt

Standing order Fixed charge 100% safe Yes in statement

Direct debit Fixed charge 100% safe Yes in statement

Credit transfer Least expensive 100% safe Yes in statement


16

Bank A/C

2.

3.

Bank Reconciliation Statement as on 31/5/2006Balance as per Bank Statement €1,925Add lodgements not credited €1,100

€3,025Less cheques not cashed €2,900Balance as per Updated Bank Account €125

4.(a) The statement was issued on 30 March 2006.

(b) Michael Lynch had money in his bank account.

(c) People do not cash cheques in the order they are issued. Some people keep them for upto six months.

(d) Current account fees could include: cost of standing orders; cost of direct debits; chequebook.

(e) A direct debit differs from a standing order in the following ways:The amounts can vary in direct debits but are fixed in standing orders; the date themoney is taken from the account is decided by the receiver when a direct debit is usedand by the account holder when a standing order is used.


2006 € 2006 €

31/5 Balance b/d 210 SO 480

CT 700 DD 200

Interest/charges 105

Balance c/d 125

910 910

1/6 Balance b/d 125

Date Details Total Date Details Cheque/ATM Total

2006 € 2006 €

Bank A/C

1/5 Balance b/d 1,200 11/5 Cash ATM 200

8/5 Wages 950 13/5 Milk bill 4 230

31/5 Wages 950 22/5 Grocery bill 5 170

26/5 Mortgage 6 600

29/6 Cash ATM 300


3,100 3,100



17

Bank A/C

(f)

Bank Reconciliation Statement as 31/5/2006Balance as per Bank Statement €497Add lodgements not credited €355

€852Less cheques not cashed € 75Balance as per Updated Bank Account €777

Chapter 15 Personal Borrowing

1. The lender will require the following information:Name and address of applicant; where the person is employed; the amount earned; theamount required; the purpose of the loan; security available.

2. Renting is suitable for obtaining something that is only needed on a once-off basis. It ischeaper than most other methods in that you only have to pay for it when you need it.

3. (a) Hire purchase has two stages. The first stage involves a person hiring the item by makinga number of instalments. The second stage involves the person taking ownership of theitem by paying a final instalment.

(b) Hire purchase can be used for obtaining cars; furniture; household equipment such aswashing machines, refrigerators, TVs etc.

4. (a) Cost €600 (b) Cost €1,255 (c) Cost €780 (d) Cost €1,330

5. Two rights of the borrower are: To be shown the APR; To know the cash price.

Two responsibilities of the borrower are:To provide true and accurate information about him/herself;To repay the amount owing on time.

6. It is important to budget for the cost of borrowing because if a person does not allow for thecost of repaying a loan, then that person may not be able to repay the amount owing on time.


2006 € 2006 €

Updated Bank A/C

31/3 Balance b/d 683 Fees 6

CT 100

Balance c/d 777

783 783

1/6 Balance b/d 777


18

7. (a) The extra cost of buying the cooker by Easy Pay is €487.10.(b) The ESB might offer this form of repayment because borrowers can make their

repayments when they are paying their electricity bills. The cost is spread over five years.(c) Yes, the Lee household will keep within their budget by saving €6 per week because

they only need to repay €40.87 per two months and they are saving €48 per two months.(d) A five-year loan of €739 at 15% flat rate would cost them €1,293.25 in total. They

should take the ESB Easy Pay offer and save €67.15.

8.

Option 3 is the best value.

Chapter 16 Insurance

1. People need insurance because they are afraid of risks occurring which would make themworse off and they may not be able to recover from these losses, e.g. fire burning down theirhouse, car crashing into someone else.

2. Insurance operates as follows. People who fear possible losses can share these fears withothers by paying premiums to an insurer, who in turn agrees to pay compensations shouldthese losses occur.

3. (a) Ann Smyth might purchase any or all of the following: Flat and contents insurance; motor insurance; health insurance; salary protectioninsurance; travel insurance.

(b) The Mulligan family might purchase any or all of the following: House and contents insurance; motor insurance; health insurance; boat insurance;travel insurance.

4. (a) With insurance there is only a possibility that some loss will occur, but with lifeassurance there is a certainty that the loss will occur. Insurance is purchased on anannual basis whereas life assurance has to be purchased for a number of years.

(b) With whole life assurance the insurer will pay out when the insured dies but withendowment assurance the insurer will pay out on death or the insured reaching a certainage, whichever comes first.

5. Car insurance is required by law because a motorist is driving on public roads, which arebuilt by the government, and may injure another party (third party).

6. One starts with finding out what cover is required. A proposal form is then completed. Onbeing accepted, a premium is paid and an insurance policy or certificate is given by theinsurer to the insured.

7. The two principles of insurance that apply to purchasing insurance are:

Insurable Interest – you can only insure something that you benefit from or from whose lossyou will suffer.Utmost Good Faith – when completing an insurance proposal form all questions must beanswered truthfully and accurately.

Options Cost of each option workings

Option 1 Bank Loan €9,000 + interest €2,970 = €11,970

Option 2 Hire Purchase €500 + instalments €9,720 = €10,220

Option 3 Bank Loan €9,000 + interest €2,700 = €11,700


19

Chapter 17 Premium Calculation and Estimating Compensation

1. Patrick Kiernan

2. Geraldine Lally

3. Inform the Gardaí and the insurer of the loss; obtain estimates for the loss; complete a claimsform; an insurance assessor estimates damage; compensation is paid if necessary.

4. (a) (i) Shane should complete a claims form. (ii) €7,900 (€8,000 – €100).(b) (i) Annual Cost= €146 (Building €100 + Contents €36 + Loading premium €10).

(ii) Renewal date – the date when the premium is due for payment.Proposal form – A form completed by the person seeking insurance.Loading – An additional premium charged when the risk is higher.Premium – The fee paid by the insured to the insurer when purchasing insurance.

(iii) Yes because: (a) The broker is independent of any insurance company, (b) Thebroker is arranging better cover than the agent.

(iv) An insurance agent sells the policies of only one insurance company. An insurancebroker on the other hand, being independent, can select from a number of insurancecompanies.

Chapter 18 Economic Framework

1. People have to make choices because their income is limited, but they want to obtain themost satisfaction possible from their available income.

2. Choices made by student:

Reasons for choices included:

3. (a) The financial cost is €20 (b) The opportunity cost is a CD and a football

Basic Premium €1,200

Add loadings

Medical condition €180

Living abroad €180

Dangerous hobby €180 €540

Basic plus loadings €1,740

Less loadings

Non-drinker €87

Non-smoker €87 €174

Total Premium €1,566

Basic Premium €1,000

Add loadings

Working abroad €100

Dangerous hobby €100 €200

Basic plus loadings €1,200

Less loadings

Non-smoker €60

Total Premium €1,140


20

4. (a) The four factors of production are:Land – anything provided by nature used in the production of goods/services.Labour – the human effort used in the production of goods/services.Capital – money and man-made goods used in the production of goods/services.Enterprise – the taking of a risk in bringing the other factors together for a profit.

(b) Combinations of these factors are needed because no factor can operate on its own, e.g.land without labour will produce nothing.

5. (a) The purpose of an economic system is to decide:What goods and services will be produced; how production will take place; who willreceive the goods and services produced; how fast the economy will grow.

(b) Ireland has a mixed economy.

6. (a) Economic growth is 40% (b) Economic growth is 2.27%(c) Economic growth is 1.79%

7. (a) Rate of inflation is 8% (b) Rate of inflation is 4%(d) Rate of inflation is 1%

Chapter 19 Budgeting – The National Budget

1. Certain services require a level of investment that only the government can provide.Some services are non profit-making and will therefore not be provided by the private sector.Certain services are too important to leave to private individuals e.g. an Garda Síochána, theArmy.

2. The main services provided by the government are education; healthcare; transport; postalservices; electricity.

3. National government lays down guidelines on how the country as a whole should be run –it is responsible for trains, electricity, postal services etc.Local government is responsible for services and decisions on a county or big town-basis. Itis responsible for local roads, water, housing, sewage etc.

4. The government provides services through government departments e.g. Department ofEducation and Science; Department of Health and Children; semi state bodies e.g. An Post,ESB; local government agencies e.g. County Councils and Urban Councils.

5. National Budget

Income € millions Expenditure € millions

Income Tax 3,500 Social welfare 3,500

VAT 2,800 National debt 2,900

Customs and excise duty 2,100 Security 880

Corporation tax 350 Education 1,400

Capital tax 150 Health 1,550

EU and other receipts 3,200 Agriculture 340

Deficit 770 Other 2,300

12,870 12,870


21

6. National Budget

(a) The biggest source of income is EU receipts, the biggest source of expenditure is SocialWelfare.

(b) The percentage of total expenditure spent on social welfare is 37.14%.(c) Capital tax is 1.88% of total income. (d) Revised National Budget

7. (a) National Budget 2001

(b) This budget was a deficit of €500m.(i) The main source of government income was income tax.

(ii) The percentage spent on education was 12%.(iii) Gardaí, Army.

(c) Increase corporation tax by €150m. Reason: the employees are paying too much tax andthe businesses are paying too little.Decrease Miscellaneous by €350m. Reason: savings could be found in each departmentto ensure that there would be a balanced budget.


Income Tax 3,200 Security 800

EU and other receipts 2,100 Social welfare 3,000

VAT 2,100 Education 1,368

Customs and excise 1,900 Health 1,400

Corporation tax 500 Agriculture 400

Capital tax 100 Debit services 2,432

Other receipts 1,000 Miscellaneous 2,000

Deficit 500

11,400 11,400


Income Tax 3,100 Education 1,627.50

VAT 2,475 Agriculture 602.49

Customs duties 2,900 Health 2,047.50

Capital tax 240 Social welfare 3,220

EU receipts 3,800 Security 703.50

Surplus 4,314.01

12,515 12,515


Income Tax 3,100 Education 1,550

VAT 2,750 Agriculture 570

Customs duties 2,900 Health 1,950

Capital tax 240 Social welfare 2,800

EU receipts 3,800 Security 670

Surplus 5,250

12,790 12,790


22

(d) Total expenditure would be up by €570 (5% of €11,400) to €11,970. Total incomewould be down by €210 (10% of VAT €2,100) to €10,690. The overall budget deficitwould be €1,280m.

(e) An increase in the level of unemployment would increase the social welfare paymentsand decrease the income tax receipts.

Chapter 20 Foreign Trade

1. Ireland engages in foreign trade for the following reasons:The Irish market is too small; creation of more employment by selling to larger markets;Ireland does not possess certain raw materials; Irish people like to have a greater choice ofgoods.

2.

3.

4. Enterprise Ireland. It provides information about foreign markets and introduces Irishbusinesses to foreign buyers.

5.

6. Balance of trade is a surplus of €100m. (€400m–€300m).

7. (a) Balance of trade deficit is €20m.Balance of payments deficit is €230m.

(b) Balance of trade surplus is €140m.Balance of payments is in balance, i.e. receipts are equal to expenditure.

8. (a and b)

EU Country Language Currency

Belgium Flemish/French Euro

Denmark Danish Krone

France French Euro

Hungary Hungarian Forint

Italy Italian Euro

Poland Polish Zloty

Amount in € millions Surplus/Deficit

a 15 Surplus

b 70 Surplus

c 25 Deficit

d 30 Deficit

e 120 Surplus

f 10 Deficit

(a) Butter (b) Cattle (c) Computer parts (d) Irish Water (e) CDs

England Egypt USA Spain Japan

(a) Cars (b) Newspapers (c) Oil (d) Coal (e) Shoes (f) Bananas

Germany England USA Poland Italy Israel


23

9. (a and b)

Note: any of the ten new countries would also be correct answers.

10. (a) £280 (£1 = €1.56 is equal to €1 = £0.64. £0.64 × 450 = £280)(b) €703.13 (£1 = €1.56 is equal to €1 = £0.64. £450 ÷ 0.64 = £703.125)

11. (a) £122,400 (b) €5 (c) €694.44(d) €820.90 (e) $65,000

Chapter 21 Forms of Ownership

1.

2.

3.

Form of Ownership Ownership Liability Profitability

Sole Trader 1 Unlimited Owner takes all

Private LimitedCompany

1–50 LimitedShared betweenshareholders

Co-operatives 8 plus LimitedShared betweenmembers

State-owned business Government UnlimitedReinvested or taken bygovernment

Form of Ownership Advantage 1 Advantage 2 Disadvantage 1 Disadvantage 2Sole Trader Easy to set up Takes all the

profitsUnlimited liability Lacks continuity


Limited liability Can have up to 50shareholders

A lot of legalitieswhen setting up

Costly to set up

Co-operative Limited liability Together everyoneachieves moresuccess (TEAMS)

One vote permember

Often too small todevelop

State-owned busi-ness

Provides extrarevenue ifprofitable

Providesemployment

Losses have to beborne by the taxpayer

Too dependent ongovernment forcapital

Form of Ownership Characteristic 1 Characteristic 2 Characteristic 3Sole Trader One person puts up the

investmentOne person makes allthe decisions

One person takes allthe profit or suffers allthe loss


Owed by between 1and 50 shareholders

Control over who canbuy the shares

Must have the word‘limited’ after its name

Co-operative Owed by eight or moremembers

Each member has onlyone vote

Each member has anequal say in the run-ning of the co-operative

State-owned business Owned by the government

Government makes top managementappointments

Profits are reinvestedor taken by the government

Country UK Sweden Denmark

Currency Pound Sterling Krona Krone


24

(b) State ownership has been used in Ireland because no one invests in non profit-makingbusinesses. Employment had to be created.Co-operatives were used to process the milk produced by farmers. Some workersformed co-operatives, to give themselves employment when their businesses closeddown.

5.(a) A state-owned or semi-state company is a business owned by the government.(b) A sole trader is a business owned and run by one person.(c) A co-operative is a business owned and controlled by the workers or members.(d) A private limited company is a business owned by between 1 and 50 people and managed

by a board of directors.(e) The owners of a private limited company have limited liability and are called

shareholders.

6. (a)

(a) Sentences written out correctly:(a) The VHI provides insurance for people's health.(b) RTE provides a television service for the country.(c) Bord Fáilte promotes the tourist industry in Ireland.(d) An Post delivers letters every morning.(e) Aer Lingus provides an air transport service.(f) The ESB provides power for light and heat.(g) The ACC Bank provides finance for farmers.(h) Iarnród Éireann runs the railways in Ireland.(i) Bord na Móna provides turf and briquettes.(j) Telecom Éireann provides telephone and fax services.

Note: Bord Fáilte, Telecom Éireann and ACC have changed since this Q7 was asked in1995. Bord Fáilte is now Fáilte Ireland and Telecom and ACC are no longer state-ownedcompanies.

(b) FÁS provides training for unemployed people.Bus Éireann provides a national road transport service.

Chapter 22 Private Limited Company



25

4. (a)

Chapter 23 Chain of Production

1. (a) The channels of distribution are the means by which goods and services are passed fromthe producers to the final consumers.

(b) 1. Manufacturer → ConsumerExample: Shipbuilding

2. Manufacturer → Retailer → ConsumerExample: Groceries (e.g. Tesco)

3. Manufacturer → Wholesaler → Retailer → ConsumerExample: Bread, Milk

2. For the manufacturer, the wholesaler pays cash immediately and stores the goods.For the retailer, the wholesaler provides a variety of goods and sells in small quantities.

3. To sell goods and services in convenient locations; to sell wide variety of goods; to provideadvice for consumers.

4. In-store banking; growth in international retailers; greater use of technology e.g. bar codescanners; buying and selling via the internet.

5. Unit shops: independent shops convenient to customers.Voluntary groups: independent shops which come together to buy in bulk.Shopping centres: one-stop shopping areas containing a wide variety of shops with carparking.Vending machines: use of machines to provide 24-hour sale of selected goods.Multiple shops: shops, owned by one owner, with a similar look and design.

6. (a) Sentences written out correctly: • Primary Production is where raw materials are produced.• Secondary Production is where raw materials are turned into finished goods.• The Services Industry is where teachers, nurses and hairdressers are employed.• The Wholesaler is a person who buys in bulk (large amounts) from the

Manufacturer.• A Department Store is one shop divided into many sections.• A Shopping Centre is a covered area where there are many shops.• A Chain Store is a retailer with branches around the country.• A Vending Machine is a slot machine where you can buy cans of orange.• A Travel Agency is a shop that sells airline tickets.• A Newsagent is a shop that sells newspapers.

(b) Supermarkets sell groceries on a self-service basis.Greengrocers sell fruit and vegetables.

Chapter 24 People at Work

1. Three rights: An employee is entitled to receive a minimum wage; have a safe and healthyworkplace; be treated in an equal way.Three responsibilities: An employee is responsible for doing an honest day’s work; protectingtheir employer’s property; providing honest information when applying for a job.


26

2. Two reasons for unemployment include businesses downsizing and increase in numbers doingpart-time work.

3.

4. Two rewards of being self-employed include: Making one’s own decisions; keeping all the profit made.Two risks of being self-employed include: Losing everything if the business fails; using up all one’s savings to start up business.

5.

Products used in Ireland Yes/No

Motor cars No

Clothes Yes

Petrol No

Coal No


27

6. (a and b)

Chapter 25 Being an Employer

1. Three rights of employers include:Set up a business; select suitable staff; dismiss dishonest staff.

Three responsibilities of an employer include:Provide safe working conditions; pay the agreed wage; keep proper employment records.

2. The procedure for employing staff includes:Finding out what staff is required;Preparing job descriptions;Advertising the job;Short-listing applicants;Interviewing and appointing applicants.

Department Work Skills required

Finance Recording income and expenditure Bookkeeping, accuracy

Production Designing and making goods Creative, engineering

Marketing Researching the market; advertising and selling goods Good communication skills

3.

4. Basic week 40 hours @ €8 = €320Overtime 9 hours @ €12 = €108Gross wage €428

5. Basic wage 40 hours @ €10 €400Overtime 10 hours @ €15 per hour €150

6 hours @ €20 per hour €120 €270Gross wage €670

6. Basic wage 10 rolls @ €7 per roll €70Bonus 5 rolls @ €8 per roll €40Gross wage €110

7. Basic wage €125Commission 6 policies @ €350 €2,100Gross wage €2,225

8. Basic wage €15Commission 250 copies @ €1 €250

47 copies @ €1.50 €70.50 €320.50Gross wage €335.50

9. Gross income €43,000First €29,400 @ 20% €5,880Remainder €13,600 @ 42% €5,712Gross tax due €11,592Less tax credits (€1,580 + €1,270) €2,850Actual tax due €8,742

PRSI Calculation 7.5% of €43,000 €3,225

Net Wage: Gross Wage (€43,000) – PAYE (€8,742) – PRSI (€3,225) = €31,033

Caretaker required for St Veronica’s College, Cork

Qualifications: FÁS certificate in caretaker studiesExperience: Four yearsHours of work: 48-hour week, flexi-workRate of pay: €25 per hourHolidays: 34 days per year

Apply to Chairperson, BOM, St Veronica’s College, CorkClosing date for applications 25 August 2008

St Veronica’s College is an equal opportunities employer


28


PRSI: Calculation 7.5% of €63,000 €4,725

Net Wage Gross Wage (€63,000) – PAYE (€17,140) – PRSI (€4,725) = €41,135


PRSI: Calculation 7.5% of €62,000 €4,650

Net Wage: Gross Wage (€62,000) – PAYE (€16,470) – PRSI (€4,650) – BUPA (€600) –Union Fee (€1,350) = €38,930

Chapter 26 Industrial Relations

1. Good industrial relations are important because disputes over wages, working conditionsetc., can be settled without a strike taking place.

2. Trade unions: Negotiate wage increases for their members;Protect their members against unfair dismissal;Represent their members in discussions with employers and government onmatters such as taxation and employment.

3.

4. Industrial disputes arise when: Working conditions are dangerous;Pay should be increased because of extra work done.

5. Industrial disputes can be settled by:Workers discussing the problem with their supervisor;The shop steward discussing the problem with the manager;An acceptable third party bringing the two sides in dispute together.

Union Type Explanation Example

Craft Union Represents workers who have served an apprenticeship NUJ

White Collar Union Represents workers who have professional qualification ASTI

Industrial Union Represents workers who work in the same industry INO

General Union Represents workers who are not in any of the other three unions SIPTU


29

6. (a)(i) Line graph showing number of strikes for the period 1990–1994

(ii) 44.2 strikes.(iii) 1992 and 1994.

(i) Breach of agreement on the employment of temporary staff.(ii) Department of Agriculture and members of the CPSU.

(iii) Ban on overtime, refusal to perform duties of higher grades, ban on telephone andpublic enquiries.

(iv) Both sides going to conciliation or arbitration.

7. (a) Strikes take place because: Workers are seeking higher wages;Poor working conditions;Demarcation disputes over who does what work.

(b) (i) Suspension by An Post of staff at its Dublin mail centre in Clondalkin.(ii) An Post and the CWU (postal workers).

(iii) Reinstatement of suspended staff and the restoration of the postal service. An Postwanted the union to deliver work changes that had already been paid for.

(iv) Members of the public who could not get any post; charities, e.g. Concern, who wouldnot get donations that were sent in the post.

(v) The Labour Relations Commission (LRC).

Chapter 27 Finance for Business

1. It is important to distinguish between short-, medium- and long-term needs because eachone has a different time period and will require a different type of finance. E.g. a long-termneed would require a source of finance to be paid back after at least five years.


30

(b)

2.

3.

4.

5.

Killoe,Co. Longford.

Title: Suitable Sources of Finance for Kennedy Ltd.

Date:___________________

Kennedy Ltd,College Park,Longford.

I was asked by you to advise on suitable sources of finance for your business. As your needs are both long and medium term, I advise the following:Extension of the factory should be financed by investing extra capital in the business andusing up the available reserves.The purchase of suitable equipment should be financed by a four-year bank loan. I am available to discuss this report if necessary.

Thomas Mahon.Financial Consultant.

Long-Term Source ExplanationReserves This an internal source of finance that is available to a profitable business

that has set some of its profit aside for use at a later stage.

Grants This is an external source of finance, which is obtained from the EU orgovernment, to start or expand a business, if certain conditions are met.

Long-term loan This is an external source of finance that is obtained from a financial institu-tion for the purchase of land, buildings and machinery.The business mustbe creditworthy, be able to repay the loan and have security.

External Source ExplanationHire Purchase This is a source of finance where the business that requires the three vans,

pays a number of instalments and becomes the eventual owner when the lastinstalment is paid.

Leasing This is a source of finance where the business that wants the use but notownership of the three vans, pays a finance company for the use of them.

Short-Term Source ExplanationCreditors This is where a business buys goods from a supplier and pays for them

at a later date.

Expenses due This where certain expenses are incurred and paid for later, e.g.electricity and telephone.

Bank overdraft This where a person has a current account and has permission fromthe bank to take out more money than is in the account.


31

Chapter 28 Preparation of a Business Plan

1. (i) The business background giving details of the owners and a history of the business;(ii) A description of the product or service;(iii) Market research details of customers and competitors;(iv) How the product or service will be promoted;(v) The sources of finance that will be used, both internal and external.

2. Total cost of project (€60,000 + €30,000 + €18,000 + €14,000) = €122,000Less Finance Available (€56,000 + €30,000) = €86,000Finance Required: €36,000

3. Total cost of project (€80,000 + €40,000 + €60,000 + €20,000 + €10,000) = €210,000Less Finance Available (€62,500 + €35,000) = €97,500Finance Required: €112,500

Chapter 29 Business Loan Applications

1. The business history; purpose of the loan; amount of the loan; time period of the loan; proofof ability to repay the loan; details of security available in case the loan is not paid back.

2. Total cost of project (€150,000 + €140,000) = €290,000Less finance available (€80,000 + €50,000) = €130,000Loan required: €160,000

Chapter 30 Banking for Business

1.

2. A private limited company must provide memorandum of association; articles of association;written agreement of directors to open an account; signatures of persons permitted to signcheques.

Service ExplanationMoney transmission This involves moving money from one business to another e.g.

cheques, credit transfers etc

Lending Banks provide loans for different periods as well as overdrafts

Night-safe facilities Banks provide a safe place to keep business money overnight

Paypath Banks will transfer money to an employee’s account

International services Banks will make payments to foreign businesses on behalf of theiraccount holders


32

3.The directors of the company, having completed an application form and provided necessarydetails, open the account; Money is lodged to the account using lodgement slips, credit transfers, standing orders etc;Payments are made from the account by way of cheques signed by authorised people, bystanding orders, direct debits, credit transfers etc;The account is checked against the bank statement.

4. Adjusted Bank Account

Bank Reconciliation Statement as on 31/7/2005

Balance as per bank statement €12,750Add lodgements not credited €10,600

€23,350Less cheques not yet presented (4,600 + 6,000) €10,600Balance as per adjusted bank account €12,750

5. Adjusted Bank Account

Bank Reconciliation Statement as on 31/5/2007


€17,310Less cheques not yet presented (1,300 + 600 + 1,450) €3,350Balance as per adjusted bank account €13,960

6. Adjusted bank account


2007 € 2007 €

31/3 Balance b/d 16,740 31/3 Direct debit 1,790

Credit transfer 2,780 Bank charges 100

Balance c/d 17,630

19,520 19,520

Balance b/d 17,630


2007 € 2007 €

31/5 Balance b/d 12,900 31/5 Standing order 1,300

Credit transfer 2,400 Bank charges 40

Balance c/d 13,960

15,300 15,300

Balance b/d 13,960

Date Details Debit Credit Balance

2005 € € €

31/7 Balance b/d 17,000

Credit transfer 3,000 20,000

Standing order 2,400 17,600

Direct debit 4,500 13,100

Bank charges 350 12,750


33

Bank Reconciliation Statement as on 31/3/2007Balance as per bank statement €14,890Add lodgements not credited €11,600

€26,490Less cheques not yet presented (950 + 4,360 + 3,550) €8,860Balance as per adjusted bank account €17,630

7. (a) Bank Account

(b) Adjusted Bank Account

(c)Bank Reconciliation Statement as on 31/5/2004


€18,745Less cheques not yet presented (4,500 + 1,900) €6,400Balance as per adjusted bank account €12,345

Chapter 31 Business Insurance

1.

Types of Insurance ExplanationThird party motor insurance Required by law in case damage is caused by its motor

vehicles

Theft insurance In case goods or equipment is stolen

Cash in transit In case money is stolen on the way to the bank

Employer’s liability In case workers get injured at work

Product liability In case consumers get injured using the product


2004 € 2004 €

31/5 Balance b/d 5,920 Direct debit 3,400

Credit transfer 10,000 Bank fees 175

Balance c/d 12,345

15,920 15,920

12,345

Date Details Total Date Details Ch. no./ATM Total

2004 € 2004 €

1/5 Balance b/d 1,500 7/5 Martin Ltd 1 1,700

3/5 Lodgement 3,500 10/5 Bruton Ltd 2 4,500

31/5 Lodgement 12,400 14/5 Cash withdrawal ATM 600

19/5 Kenny Ltd 3 2,780

27/5 Harney Ltd 4 1,900


17,400 17,400



34

2. (a) Hayes Ltd is required by law to have third party motor insurance, and to pay its share ofPRSI.

(b) Hayes Ltd should also take out:Fire insurance in case fire causes damage to furniture, premises or equipment;Theft insurance in case furniture or equipment is stolen;Employer’s liability in case any of its five workers are injured at work.

(c) Hayes Ltd may be unable to insure against losses due to bad management or furnituregoing out of date.

(d) Hayes Ltd should have adequate insurance so that all possible risks are insured for thecorrect amounts.

(e) Hayes Ltd should consult an insurance broker because the broker will be independentand experienced.

Chapter 32 Delivery Systems

1. An efficient delivery system is important in the chain of distribution because:Raw materials have to be transported to manufacturers;Finished goods have to be transported to retailers;Workers have to be transported to their places of work;Consumers have to be transported to the retailers.

2. Cost – the cost of transport adds to the cost of the goods so it must be as low as possible.Reliability – the system must be punctual and meet deadlines.Speed – speed is very important for delivery of many goods e.g. fish, fruit etc.Convenience – the system should be available as and when required.

3. Road transport is very popular and is suitable for fast deliveries of non-bulky goods.Air transport is very quick and is suitable for transporting people and high-value non-bulkygoods.

4.

5. Dublin Port Tunnel, which allows trucks to bypass Dublin city on the way to Dublin Port.

6. A business can transport goods as and when it needs to and is not tied to timetables. It canalso advertise its goods on the side of its trucks.

7. (a) 178 km (b) 206 km (c) 188 km (d) 164 km

8. (a) 325 km (b) 326 km

9. (a) 10.14 am (b) 11.30 am

10. (a) 5.55 am (b) 5.36 am

DeliverySystem

Speed Cost Reliability Good transported

Road Fast over short distances

Expensive Very reliable Non-bulky

Rail Very fast Cheaper than road Very reliable Bulky

Sea Slow Cheaper than airDependent onweather

Bulky

Air Very fast Very expensiveDependent onweather

Non-bulky


35

11. (a) Cost of diesel: 168 = 6.72 litres @ €0.60 = €4.0325

Driver wages: €100Annual costs: €1,500 + €600 + €1,100 = €10

320Total costs: €114.03

(b) Cost of diesel: 168 = 6.72 litres @ €0.60 = €4.0325

Driver wages: €120Annual costs: €1,350 + €750 + €1,200 = €11

300Total costs: €135.03

12. (a) Cost of diesel: 472 = 18.88 litres @ €0.60 = €11.3325

Driver wages: 11@ €8 + 11 @ €3 = €121

Annual costs: €900 + €520 + €3,000 = €14.98295

Total costs: €147.31

(b) 1.46%.

13. Cost of diesel: 460 = 28,75 litres @ €0.60 = €17.2516

Driver wages: €98

Annual costs: €580 + €1,500 + €750 = €10283

Total costs: €125.25

Chapter 33 Marketing

1. ‘Market’ means the exchange of goods or services for payment. Examples include: market for labour; transport; money; education.

2. Carrying out market research;Production of a product or service; Deciding on a place to sell the product or service;Deciding on the price at which to sell the product or service;Deciding on how to promote the product or service;Carry out further market research to get customer feedback.

3.

Product/Service Conrad Hotel Farmer’sJournal

Sky Sports BusinessStudies Books

Doc Martensboots

Target Market Business people Farmers Sports JuniorCertificateStudents

Teenagers


36

4. Sample layout

5. Market research is important because it provides details of customers and competitors. Thishelps identify the target market.

6. A business would first use desk research, which involves studying existing information onthe market. It would then use field studies to get additional information that is not availablefrom desk research. This involves using questionnaires, interviews etc.

7. A business advertises to inform customers about its products or services, to persuadecustomers to buy only its products or services and also to highlight the difference betweenits products or services and those of its competitors.

8. Who is the target market; The type of product or service;The cost.

9. Be careful with the number of words used because that determines the price ofnewspaper advertisements.

Example:

‘Don’t dry up,Quench your thirst with ‘Irish Rain’.Available NOW in retail stores nationwide!’

10. To launch a new Finance and Consumer TV Show.

Example:

‘You’ve seen the restNow watch the bestGet it all off your chestWith the new Finance and Consumer test.’

11. Students to suggest answer.

12.

13. Students to suggest answers.

14. ‘Must have’, ‘Can’t live without it’, ‘Be ahead of the pack’.

Product/Service Smarties Swimwear Festival Circus Bank

Media Television Colour magazine Posters Fliers Radio

Four P’s Product chosen: school bag

Product Available in ten colours and five sizes

Price Range from €12.50 to €28.60

Promotion Send fliers to schools.Television advertisements in August

Place Available in all sports and school bookshops


37

Chapter 34 Financial Recording and Filing

1. To know how much you have; To know how much you owe; To know how much you are owed; To know if you are making a profit or a loss.

2. Complete documents;Record data in Books of First Entry;Post data to the Ledger;Extract a Trial Balance;Prepare Final Accounts and Balance Sheet.

3. Double entry bookkeeping is the recording of the giving and the receiving aspects of atransaction.

4. Debtors Ledger is used to record the names of people who owe the business money.Creditors Ledger is used to record the names of people to whom the business owes money.General Ledger is used to record all transactions that cannot be recorded in the Debtors orCreditors Ledgers.

Chapter 35 Business Documents I

1. ‘Effective purchasing’ means purchasing the right quantity and quality of goods at the rightprice and time.

2. Letter, phone or e-mail.

3. Quality; price; method of payment; delivery; discounts.

4.

Providers Hardware Stores Ltd,Cavan.(049) 23246.VAT Reg. No. 6311141H_______________________

The Sales Department,Crown Paints Ltd,Dublin.

Dear Sir/Madam,

Please send me the best terms and conditions under which you can supply me with the following:

50 10 litre drums of white emulsion;30 5 litre tins of cream paint;60 5 litre tins of white ceiling paint;15 1 litre tins of brown gloss paint for exterior use.

Yours faithfully,

_____________________________

Purchasing Manager.


38

5.

6. C €556.20 (A = €565.25 B = €580.30 C = €556.20)

7.

8. A business can check the credit ratings of a customer by:Checking the existing records to see if the customer paid up in the past;Asking for a bank reference to see if the bank would recommend the customer;Asking for a trade reference to see if another business would recommend the customer.

9. (a) Gross Profit €200 (b) Mark up % = 50%. Margin % = 33 %

10. (a) 20% (b) 16.67%

11. (a) €50 (b) 40%

12. 25%

Chapter 36 Business Documents II


Term Explanation

CWO Cash must be sent with the order

Ex WorksPrice does not include delivery. If goods have to be delivered theywill cost more

Trade Discount 30%Retailers will receive a 30% reduction in the price to encouragethem to sell the goods

5% in 10 days otherwise netIf payment is made within 10 days of receiving the goods a furtherreduction of 5% will be given, otherwise the normal price applies

Subject to VAT @21%Value Added Tax at 21% has to be added to the price of thegoods

All Sports Ltd,Cork Rd.,Dublin.(01) 7734218.VAT Reg. No. 4812641S ________________________

Connolly Sportswear Manufacturers Ltd,Tuam Rd.,Galway.

Dear Sir/Madam,

Please send me the best terms and conditions under which you can supply me with the following:

4 Sets of Leitrim Jerseys (Senior size);60 Hurling Helmets varying sizes;30 Tracksuits with Leitrim crest;120 Hurleys varying sizes.

Yours faithfully,

_______________________

Purchasing Manager.


39

13

Chapter 37 Recording Credit Transactions

1.

2.

Sales Book (p1)

Date Details Inv. no. F Net VAT Total

2006 € € €

17/4 Foley Ltd 34 DL 11,000 1,485 12,485

18/4 Roley Ltd 35 DL 19,000 2,565 21,565

20/4 Poley Ltd 36 DL 52,000 7,020 59,020

82,000 11,070 93,070

Trial Balance as on 15/10/2006

Coyne Ltd 36,320

Hynes Ltd 31,780

Lyons Ltd 18,160

Sales 76,000

VAT 10,260

86,260 86,260

Debtors Ledger

Date Details F Total Date Details F Total

2006 € 2006 €

Coyne Ltd A/C

11/10 Sales SB 36,320

Hynes Ltd A/C

13/10 Sales SB 31,780

Lyons Ltd A/C

15/10 Sales SB 18,160

General Ledger

Sales A/C

15/10 Total debtors SB 76,000

Vat A/C

15/10 Credit sales SB 10,260

Sales Book (p1)


2006 € € €

11/10 Coyne Ltd 54 DL 32,000 4,320 36,320

13/10 Hynes Ltd 55 DL 28,000 3,780 31,780

15/10 Lyons Ltd 56 DL 16,000 2,160 18,160

76,000 10,260 86,260


40

3.

Sales Book (p1)


2007 € € €

12/5 Mark Ltd 67 DL 27,000 3,645 30,645

14/5 Dark Ltd 68 DL 10,400 1,404 11,804

15/5 Park Ltd 69 DL 38,400 5,184 43,584

75,800 10,233 86,033


Foley Ltd 12,485

Roley Ltd 21,565

Poley Ltd 59,020

Sales 82,000

VAT 11,070

93,070 93,070

Debtors Ledger


2006 € 2006 €

Foley Ltd A/C

17/4 Sales SB 12,485

Roley Ltd A/C

18/4 Sales SB 21,565

Poley Ltd A/C

20/4 Sales SB 59,020

General Ledger

Sales A/C




41

VAT A/C

4.Sales Book (p1)


2007 € € €

23/9 Brown Ltd 45 DL 21,000 4,410 25,410

24/9 White Ltd 46 DL 50,000 10,500 60,500

26/9 Green Ltd 47 DL 16,000 3,360 19,360

87,000 18,270 105,270


Mark Ltd 30,645

Dark Ltd 11,804

Park Ltd 43,584

Sales 75,800

VAT 10,233

86,033 86,033

Debtors Ledger


2007 € 2007 €

Mark Ltd A/C

12/5 Sales SB 30,645

Dark Ltd A/C

14/5 Sales SB 11,804

Park Ltd A/C

15/5 Sales SB 43,584

General Ledger

Sales A/C


VAT A/C



42

5.

Purchases Book (p1)


2007 € € €

3/4 PM Ltd 4 CL 18,000 3,780 21,780

5/4 ET Ltd 2 CL 8,000 1,680 9,680

8/4 AA Ltd 1 CL 12,000 2,520 14,520

38,000 7,980 45,980


Brown Ltd 25,410

White Ltd 60,500

Green Ltd 19,360

Sales 87,000

VAT 18,270

105,270 105,270

Debtors Ledger


2007 € 2007 €

Brown Ltd A/C

23/9 Sales SB 25,410

White Ltd A/C

24/9 Sales SB 60,500

Green Ltd A/C

26/9 Sales SB 19,360

General Ledger

Sales A/C


VAT A/C



43

6.

Purchases Book (p1)


2007 € € €

17/9 BC Ltd 7 CL 36,000 7,560 43,560

19/9 MP Ltd 5 CL 4,000 840 4,840

23/9 CC Ltd 3 CL 54,000 11,340 65,340

94,000 19,740 113,740


PM Ltd 21,780

ET Ltd 9,680

AA Ltd 14,520

Purchases 38,000

VAT 7,890

45,790 45,790

Creditors Ledger


2007 € 2007 €

3/4 Purchases PB 21,780



8/4 Total creditors PB 38,000

8/4 Credit purchases PB 7,890


44

PM Ltd A/C

ET Ltd A/C

AA Ltd A/C

Purchases A/C

General Ledger

VAT A/C

7.

Purchases Book (p1)


2007 € € €

29/5 PP Ltd 9 CL 64,000 8,640 72,640

30/5 DJ Ltd 8 CL 48,000 6,480 54,480

31/5 FI Ltd 7 CL 96,000 12,960 108,960

208,000 28,080 236,080


BC Ltd 43,560

MP Ltd 4,840

CC Ltd 65,340

Purchases 94,000

VAT 19,740

113,740 113,740

Creditors Ledger


2007 € 2007 €




23/9 Total purchases PB 94,000



45

BC Ltd A/C

MP Ltd A/C

CC Ltd A/C

General Ledger

Purchases A/C

VAT A/C

8.

Purchases Book (p1)


2007 € € €

14/7 PJ Ltd 7 CL 16,000 2,160 18,160

16/7 SM Ltd 2 CL 44,000 5,940 49,940

18/7 JC 4 CL 36,000 4,860 40,860

96,000 12,960 108,960


PP Ltd 72,640

DJ Ltd 54,480

FI Ltd 108,960

Purchases 208,000

VAT 28,080

236,080 236,080

Creditors Ledger


2007 € 2007 €







46

PP Ltd A/C

DJ Ltd A/C

FI Ltd A/C

General Ledger

Purchases A/C

VAT A/C

9.

Sales Returns Book (p1)

Date Details Credit note no. F Net VAT Total

2006 € € €

20/4 Bun Ltd 67 DL 1,300 273 1,573

23/4 Gun Ltd 68 DL 600 126 726

1,900 399 2,299


PJ Ltd 18,160

SM Ltd 49,940

JC Ltd 40,860

Purchases 96,000

VAT 12,960

108,960 108,960

Creditors Ledger


2007 € 2007 €







47

PJ Ltd A/C

SM Ltd A/C

JC Ltd A/C

General Ledger

Purchases A/C

VAT A/C

10.



2006 € € €

12/1 Bob Ltd 45 DL 3,000 405 3,405

14/1 Rob Ltd 46 DL 1,600 216 1,816

4,600 621 5,221


Bun Ltd 1,573

Gun Ltd 726

Sales returns 1,900

VAT 399

2,299 2,299

Debtors Ledger


2006 € 2006 €

20/4 Sales returns SRB 1,573

23/4 Sales returns SRB 726

20/4 Total debtors SRB 1,900



48

Bun Ltd A/C

Gun Ltd A/C

General Ledger

Sales Returns A/C

VAT A/C

11.

Debtors Ledger


2006 € 2006 €







2006 € € €

24/9 Joe Ltd 78 DL 2,400 324 2,724

26/9 Coe Ltd 79 DL 5,600 756 6,356

8,000 1,080 9,080


Bob Ltd 3,405

Rob Ltd 1,816

Sales returns 4,600

VAT 621

5,221 5,221

Debtors Ledger


2006 € 2006 €






49

Bob Ltd A/C

Rob Ltd A/C

General Ledger

VAT A/C

Sales Returns A/C

General Ledger

Sales Returns A/C

VAT A/C

Coe Ltd A/C

Joe Ltd A/C

12.


Mike Ltd 4,086

Alma Ltd 1,589

Purchases returns 5,000

VAT 675

5,675 5,675

Creditors Ledger


2007 € 2007 €

Mike Ltd A/C

7/3 Purchases returns PRB 4,086

Alma Ltd A/C


Purchases Returns A/C

8/3 Total creditors PRB 5,000

VAT A/C

8/3 Purchases returns PRB 675

Purchases Returns Book (p1)


2007 € € €

7/3 Mike Ltd 56 CL 3,600 486 4,086

8/3 Alma Ltd 12 CL 1,400 189 1,589

5,000 675 5,675


Joe Ltd 2,724

Coe Ltd 6,356

Sales returns 8,000

VAT 1,080

9,080 9,080


50

13.

14.



2007 € € €

16/2 Vera Ltd 14 CL 3,400 714 4,114

18/2 Jack Ltd 67 CL 2,800 588 3,388

6,200 1,302 7,502


Vickie Ltd 3,178

Steve Ltd 908

Purchase returns 3,600

VAT 486

4,086 4,086

Creditors Ledger


2007 € 2007 €








2007 € € €

23/1 Vicki Ltd 34 CL 2,800 378 3,178

25/1 Steve Ltd 5 CL 800 108 908

3,600 486 4,086


51

Vickie Ltd A/C

Steve Ltd A/C

General Ledger

VAT A/C

15.



2008 € € €

8/4 Smyth Ltd 12 DL 4,500 945 5,445

9/4 Smart Ltd 13 DL 3,200 672 3,872

7,700 1,617 9,317

Sales Book (p1)

Date Details Invoice no. F Net VAT Total

2008 € € €

3/4 Smyth Ltd 43 DL 20,000 4,200 24,200

5/4 Smart Ltd 44 DL 15,500 3,255 18,755

35,500 7,455 42,955


Vera Ltd 4,114

Jack Ltd 3,388

Purchase returns 6,200

VAT 1,302

7,502 7,502

Creditors Ledger


2007 € 2007 €





18/2 Purchase returns PRB 1,302


52

Vera Ltd A/C

Jack Ltd A/C

General Ledger

VAT A/C

16.

Sales Book (p1)


2008 € € €

13/2 Harry Ltd 67 DL 35,000 4,725 39,725

14/2 Helen Ltd 68 DL 24,000 3,240 27,240

59,000 7,965 66,965


Smyth Ltd 18,755

Smart Ltd 14,883

Sales 35,500

Sales returns 7,700

VAT 5,838

41,338 41,338

Debtors Ledger


2008 € 2008 €

3/4 Sales SB 24,200 8/4 Sales returns SRB 5,445


24,200 24,200

10/4 Balance b/d 18,755



18,755 18,755

10/2 Balance b/d 14,883

General Ledger

Sales A/C



VAT A/C

9/4 Sales returns SRB 1,617 9/4 Credit sales SB 7,455


7,455 7,455



53

Smart Ltd A/C

Sales Returns A/C

Smyth Ltd A/C


Harry Ltd 32,915

Helen Ltd 24,516

Sales 59,000

Sales returns 8,400

VAT 6,831

65,831 65,831

Debtors Ledger


2008 € 2008 €

Harry Ltd A/C


18/2 Balance c/d 32,915

39,725 39,725

19/2 Balance b/d 32,915

Helen Ltd A/C


Balance c/d 24,516

27,240 27,240

19/2 Balance b/d 24,516

General Ledger

Sales A/C


Sales Returns A/C


VAT A/C



7,965 7,965




2008 € € €

16/2 Harry Ltd 56 DL 6,000 810 6,810

18/2 Helen Ltd 57 DL 2,400 324 2,724

8,400 1,134 9,534


54

17.


Glass Ltd 45,254

Task Ltd 94,380

Sales 123,000

Sales returns 7,600

VAT 24,234

147,234 147,234

Debtors Ledger


2008 € 2008 €


27/6 Balance c/d 45,254

54,450 54,450

28/6 Balance b/d 45,254

26/6 Sales SB 94,380




27/6 Balance c/d 24,234

25,830 25,830

28/6 Balance b/d 24,234



2008 € € €

27/6 Glass Ltd 32 DL 7,600 1,596 9,196

Sales Book (p1)


2008 € € €

25/6 Glass Ltd 78 DL 45,000 9,450 54,450

26/6 Task Ltd 79 DL 78,000 16,380 94,380

123,000 25,830 148,830


55

VAT A/C

Sales Returns A/C

General Ledger

Task Ltd A/C

Glass Ltd A/C

Sales A/C

18.


Dinny Ltd 39,930

Tesie Ltd 88,814

Purchases 116,300


VAT 22,344

138,644 138,644

Creditors Ledger


2006 € 2006 €

14/4 Purchase returns PRB 7,744 10/4 Purchases PB 47,674

16/4 Balance c/d 39,930

47,674 47,674

17/4 Balance b/d 39,930

16/4 Purchases returns PRB 4,235 12/4 Purchases PB 93,049

16/4 Balance c/d 88,814

93,049 93,049

17/4 Balance b/d 88,814


16/4 Total creditor PRB 9,900

16/4 Credit purchases PB 24,423 16/4 Purchases ret. 2,079

16/4 Balance c/d 22,344

24,423 24,423

17/4 Balance b/d 22,344



2006 € € €

14/4 Dinny Ltd 21 CL 6,400 1,344 7,744

16/4 Tesie Ltd 89 CL 3,500 735 4,235

9,900 2,079 11,979

Purchases Book (p1)


2006 € € €

10/4 Dinny Ltd 32 CL 39,400 8,274 47,674

12/4 Tesie Ltd 56 CL 76,900 16,149 93,049

116,300 24,423 140,723


56

General LedgerPurchases A/C

Purchase Returns A/C

VAT A/C

Tesie Ltd A/C

Dinny Ltd A/C

19.


Miley Ltd 78,088

Biddy Ltd 60,155

Purchases 132,600


VAT 16,443

149,043 149,043

Creditors Ledger


2006 € 2006 €


27/5 Balance c/d 78,088

86,260 86,260

28/5 Balance b/d 78,088


28/5 Balance c/d 60,155

64,241 64,241

29/5 Balance b/d 60,155



28/5 Credit purchases PB 17,901 28/5 Purchases ret. PRB 1,458

28/5 Balance c/d 16,443

17,901 17,901

29/5 Balance b/d 16,443



2006 € € €

26/5 Miley Ltd 34 CL 7,200 972 8,172

28/5 Biddy Ltd 56 CL 3,600 486 4,086

10,800 1,458 12,258

Purchases Book (p1)


2006 € € €

13/5 Miley Ltd 43 CL 76,000 10,260 86,260

25/5 Biddy 12 CL 56,600 7,641 64,241

132,600 17,901 150,501


57


VAT A/C

Purchases A/C

General Ledger

Biddy Ltd A/C

Miley Ltd A/C

20.

Creditors Ledger


2006 € 2006 €

Nora Ltd A/C


22/8 Balance c/d 50,167

52,664 52,664

23/8 Balance b/d 50,167

Brian Ltd A/C

22/8 Purchase returns PRB 2,951 19/8 Purchases PB 64,241

22/8 Balance c/d 61,290

64,241 64,241

23/8 Balance b/d 61,290

General Ledger

Purchases A/C




VAT A/C

22/8 Credit purchases PB 13,905 22/8 Purchases ret. PRB 648

22/8 Balance c/d 13,257

13,905 13,905

23/8 Balance b/d 13,257



2006 € € €

20/8 Nora Ltd 14 CL 2,200 297 2,497

22/8 Brian Ltd 86 CL 2,600 351 2,951

4,800 648 5,448

Purchases Book (p1)


2006 € € €

17/8 Nora Ltd 13 CL 46,400 6,264 52,664

19/8 Brian Ltd 92 CL 56,600 7,641 64,241

103,000 13,905 116,905


58

21.


Date Details Credit note no. F Net € VAT € Total €

8/7/2006 Turner Ltd 42 DL 1,600 216 1,816

Sales Book (p1)

Date Details Invoice no. F Net € VAT € Total €

4/7/2006 Turner Ltd 17 DL 4,800 648 5,448



6/7/2006 Fagan Ltd 61 CL 2,400 324 2,724

Purchases Book (p1)


1/7/2006 Fagan Ltd 6 CL 14,000 1,890 15,890


Nora Ltd 50,167

Brian Ltd 61,290

Purchases 103,000


VAT 13,257

116,257 116,257


59

Creditors Ledger


2006 € 2006 €

Fagan Ltd A/C



15,890 15,890


Debtors Ledger

Turner Ltd



5,448 5,448


General Ledger

Purchases A/C




Sales A/C


Sales Returns A/C


VAT A/C

8/7 Credit purchases PB 1,890 8/7 Credit sales SB 648

8/7 Sales returns SRB 216 8/7 Purchases returns PRB 324


2,106 2,106



60

22.



8/4/2006 Rice Ltd 71 DL 8,600 1,806 10,406

Sales Book (p1)


5/4/2006 Rice Ltd 92 DL 56,000 11,760 67,760



4/4/2006 CB Ltd 16 CL 10,000 2,100 12,100

Purchases Book (p1)


1/4/2006 CB Ltd 50 CL 36,000 7,560 43,560


Fagan Ltd 13,166

Turner Ltd 3,632

Purchases 14,000


Sales 4,800

Sales returns 1,600

VAT 1,134

20,366 20,366


61

Creditors Ledger


2006 € 2006 €

CB Ltd



43,560 43,560


Debtors Ledger

Rice Ltd A/C



67,760 67,760

9/4 57,354

General Ledger

Purchases A/C




Sales A/C


Sales Returns A/C


VAT A/C

8/4 Credit purchases PB 7,560 8/4 Credit sales SB 11,760

8/4 Sales returns SRB 1,806 8/4 Purchases returns 2,100


13,860 13,860



62

23.



4/1/2007 Dolan Ltd 9 DL 4,000 840 4,840

Sales Book (p1)


1/1/2007 Dolan Ltd 78 DL 72,000 15,120 87,120



9/1/2007 FX Ltd 40 CL 3,400 714 4,114

Purchases Book (p1)


6/1/2007 FX Ltd 23 CL 28,000 5,880 33,880


CB Ltd 31,460

Rice Ltd 57,354

Purchases 36,000


Sales 56,000

Sales returns 8,600

VAT 4,494

101,954 101,954


63

Creditors Ledger


2007 € 2007 €

FX Ltd A/C



33,880 33,880

10/1 Balance b/d 29,766

Debtors Ledger

Dolan Ltd A/C



87,120 87,120

10/1 Balance b/d 82,280

General Ledger

Purchases A/C




Sales A/C


Sales Returns A/C


VAT A/C




15,834 15,834



64

24.



7/11/2007 Glynn Ltd 8 DL 1,400 189 1,589

Sales Book (p1)


1/11/2007 Glynn Ltd 3 DL 16,000 2,160 18,160



9/11/2007 DL Ltd 18 CL 5,400 729 6,129

Purchases Book (p1)


6/11/2007 DL Ltd 6 CL 38,000 5,130 43,130


FX Ltd 29,766

Dolan Ltd 82,280

Purchases 28,000


Sales 72,000

Sales returns 4,000

VAT 9,114

114,280 114,280


65

Creditors Ledger


2007 € 2007 €

DL Ltd A/C


9/11 Balance c/d 37,001

43,130 43,130

10/11 Balance b/d 37,001

Debtors Ledger

Glynn Ltd A/C


9/11 Balance c/d 16,571

18,160 18,160

10/11 16,571

General Ledger

Purchases A/C




Sales A/C


Sales Returns A/C


VAT A/C




5,319 5,319

10/11 Balance b/d 2,430


66

25.



9/6/2007 Adams Ltd 38 DL 12,000 1,620 13,620

Sales Book (p1)


1/6/2007 Adams Ltd 4 DL 46,000 6,210 52,210



8/6/2007 KC Ltd 17 CL 5,000 675 5,675

Purchases Book (p1)


3/6/2007 KC Ltd 94 CL 35,000 4,725 39,725


DL Ltd 37,001

Glynn Ltd 16,571

Purchases 38,000


Sales 16,000

Sales returns 1,400

VAT 2,430

58,401 58,401


67

Creditors Ledger


2007 € 2007 €

KC Ltd A/C



39,725 39,725

10/6 Balance b/d 34,050

Debtors Ledger

Adams Ltd A/C



52,210 52,210

10/6 Balance b/d 38,590

General Ledger

Purchases A/C




Sales A/C


Sales Returns A/C


VAT A/C


9/6 Sales returns SRB 1,620 9/6 Purchases returns PRB 675

9/6 Balance c/d 540

6,885 6,885



68

26.



9/3/2007 Keenan Ltd 57 DL 1,400 294 1,694

Sales Book (p1)


1/3/2007 Keenan Ltd 10 DL 34,000 7,140 41,140



8/3/2007 MG Ltd 15 CL 1,200 252 1,452

Purchases Book (p1)


3/3/2007 MG Ltd 64 CL 14,000 2,940 16,940


KC Ltd 34,050

Adams Ltd 38,590

Purchases 35,000


Sales 46,000

Sales returns 12,000

VAT 540

85,590 85,590


69

Creditors Ledger


2007 € 2007 €

MG Ltd A/C



16,940 16,940

10/3 Balance c/d 15,488

Debtors Ledger

Keenan Ltd A/C



41,140 41,140

10/3 Balance b/d 39,446

General Ledger

Purchases A/C




Sales A/C


Sales Returns A/C


VAT A/C




7,392 7,392



70

Chapter 38 Continuous Balancing Ledgers and Statements


Chapter 39 Analysed Cash Books I

1.

Analysed Cash Book (Credit Side) p1

Date2006

Details Cheque no. F Total Bank€

Purchases€

VAT€

Other€

2/1 Purchases 1 GL 13,620 12,000 1,620

3/1 Advertising 2 GL 3,200 3,200

4/1 Insurance 3 GL 2,750 2,750

5/1 Purchases 4 17,252 15,200 2,052

7/1 Carriage 5 GL 1,700 1,700


133,990 27,200 3,672 7,650

Analysed Cash Book (Debit Side) p1Date2006

Details Rec. no. F Total Bank €

Sales€

VAT€

Other€

1/1 Sales GL 20,430 18,000 2,430

4/1 Sales GL 63,560 56,000 7,560

6/1 Shareholders GL 50,000 50,000

133,990 74,000 9,990 50,000



MG Ltd 15,488

Keenan Ltd 39,446

Purchases 14,000


Sales 34,000

Sales returns 1,400

VAT 4,158

54,846 54,846


71

2.

Analysed Cash Book (Debit Side) p1Date

2006

Details Rec. no. F Total Bank

€

Sales

€

VAT

€

Other

€

1/2 Sales GL 38,720 32,000 6,720

4/2 Sales GL 58,080 48,000 10,080


271,800 80,000 16,800 175,000

10/2 Balance b/d 190,206


Sales 74,000

Purchases 27,200

VAT 6,318

Share capital 50,000

Advertising 3,200

Insurance 2,750

Carriage 1,700

Bank 95,468

130,318 130,318

General LedgerDate Details F Total Date Details F Total

2006 € 2006 €

Sales A/C

7/1 Bank ACB 74,000

Purchases A/C

7/1 Bank ACB 27,200

VAT A/C

7/1 Purchases ACB 3,672 7/1 Sales ACB 9,990


9,990 9,990

6,318

Share Capital A/C

6/1 Bank ACB 50,000

Advertising A/C

3/1 Bank ACB 3,200

Insurance A/C

4/1 Bank ACB 2,750

Carriage A/C

7/1 Bank ACB 1,700


72


Sales 80,000

Purchases 31,400

VAT 10,206


Rent 2,200

Wages 6,400

Machinery 35,000

Bank 190,206

265,206 265,206


2006 € 2006 €

Sales A/C

9/2 Bank ACB 80,000

Purchases A/C

9/2 Bank ACB 31,400

VAT A/C



16,800 16,800

10/2 Balance b/d 10,206

Share Capital A/C

6/2 Bank ACB 175,000

Rent A/C

3/2 Bank ACB 2,200

Wages A/C

4/2 Bank ACB 6,400

Machinery A/C

9/2 Bank ACB 35,000

Analysed Cash Book (Credit Side) p1Date

2006

Details Cheque no. F Total Bank

€

Purchases

€

VAT

€

Other

€

2/2 Purchases 21 GL 21,780 18,000 3,780

3/2 Rent 22 GL 2,200 2,200

4/2 Wages 23 GL 6,400 6,400

5/2 Purchases 24 GL 16,214 13,400 2,814

9/2 Machinery 25 GL 35,000 35,000

9/2 Balance c/d 190,206

271,800 31,400 6,594 43,600


73

3.

General LedgerDate

2007

Details F Total

€

Date

2007

Details F Total

€

8/4 Bank ACB 132,000

8/4 Bank ACB 37,400



27,720 27,720


6/4 Bank ACB 110,000

3/4 Bank ACB 900

4/4 Bank ACB 20,000

8/4 Bank ACB 8,700


Date

2007


€

Purchases

€

VAT

€

Other

€

3/4 Light and heat 34 GL 900 900

3/4 Purchases 35 GL 15,004 12,400 2,604

4/4 Equipment 36 GL 20,000 20,000

7/4 Purchases 37 GL 30,250 25,000 5,250

8/4 Repairs 38 GL 8,700 8,700

8/4 Balance c/d 194,866

269,720 37,400 7,854 29,600


2007


€

Sales

€

VAT

€

Other

€

1/4 Sales GL 87,120 72,000 15,120


6/4 Sales GL 72,600 60,000 12,600

269,720 132,000 27,720 110,000

9/4 Balance b/d 194,866


74

Sales A/C

Purchases A/C

VAT A/C

Share Capital A/C

Light and Heat A/C

Equipment A/C

Repairs A/C

4.


Date

2007


€

Purchases

€

VAT

€

Other

€

13/5 Purchases 78 GL 40,860 36,000 4,860

14/5 Insurance 79 GL 2,400 2,400

17/5 Equipment 80 GL 95,000 95,000

18/5 Purchases 81 GL 52,210 46,000 6,210

19/5 Advertising 82 GL 2,600 2,600

193,070 82,000 11,070 100,000

20/5 Balance b/d 22,270


2006


€

Sales

€

VAT

€

Other

€

12/5 Sales GL 54,480 48,000 6,480


19/5 Sales GL 36,320 32,000 4,320

19/5 Balance c/d 22,270

193,070 80,000 10,800 80,000


Sales 132,000

Purchases 37,400

VAT 19,866


Light and heat 900

Equipment 20,000

Repairs 8,700

Bank 194,866

261,866 261,866


75

5.


2007


€

Sales

€

VAT

€

Debtors

€

Other

€


1/3 Sales GL 72,640 64,000 8,640

4/3 Sales GL 90,800 80,000 10,800

4/3 Fahey Ltd DL 4,500 4,500

170,340 144,000 19,440 4,500



Sales 80,000

Purchases 82,000

VAT 270

Shareholders 80,000

Insurance 2,400

Equipment 95,000

Advertising 2,600

Bank 22,270

182,270 182,270


2007 € 2007 €

Sales A/C

19/5 Bank ACB 80,000

Purchases A/C

19/5 Bank ACB 82,000

VAT A/C



11,070 11,070


Shareholders A/C

16/5 Bank ACB 80,000

Insurance A/C

14/5 Bank ACB 2,400

Equipment A/C

17/5 Bank ACB 95,000

Advertising A/C

19/5 Bank ACB 2,600


76


77


2007 € 2007 €

6/3 Bank ACB 144,00

Purchases A/C

6/3 Bank ACB 56,000

VAT A/C



19,440 19,440


Insurance A/C

3/3 Bank ACB 4,200

Motor Vehicles A/C

4/3 Bank ACB 21,000

Debtors Ledger

Fahey Ltd A/C

1/3 Balance b/d 4,500 4/3 Bank ACB 4,500

Creditors Ledger

Duffy Ltd A/C

6/3 Bank ACB 4,900 1/3 Balance b/d 6,900


6,900 6,900



Date

2007


€

Purchases

€

VAT

€

Creditors

€

Other

€

2/3 Purchases 6 GL 63,560 56,000 7,560

3/3 Insurance 7 GL 4,200 4,200

4/3 Motor vehicle 8 GL 21,000 21,000

6/3 Duffy Ltd 9 CL 4,900 4,900


170,340 56,000 7,560 4,900 25,200

General Ledger

Sales A/C

Purchases A/C

VAT A/C

Insurance A/C

Motor Vehicles A/C

Debtors Ledger

Fahey Ltd A/C

Creditors Ledger

Duffy Ltd A/C

6.


Date Details Chequeno.

F Total Bank Purchases VAT Creditors Other

2008 € € € € €


3/6 Purchases 23 GL 27,830 23,000 4,830

4/6 Rent 24 GL 2,800 2,800

5/6 Hayden Ltd 25 CL 7,500 7,500

7/6 Purchases 26 GL 54,450 45,000 9,450


122,760 68,000 14,280 7,500 2,800

Analysed Cash Book (Debit Side) p1Date Details Rec. no. F Total Bank Sales VAT Debtors Other

2008 € € € € €

1/6 Sales GL 67,760 56,000 11,760

2/6 Fallon Ltd 34 DL 10,000 10,000


122,760 56,000 11,760 10,000 45,000



Sales 144,000

Purchases 56,000

VAT 11,880

Insurance 4,200

Motor vehicle 21,000

Duffy Ltd 2,000

Bank 76,680

157,880 157,880


78


Sales 56,000

Purchases 68,000

VAT 2,520

Shareholders 45,000

Rent 2,800

Fallon Ltd 2,000

Bank 25,680

101,000 101,000


2007 € 2007 €

Sales A/C

7/6 Bank ACB 56,000

Purchases A/C

7/6 Bank ACB 68,000

VAT A/C

7/6 Purchases ACB 14,280 7/6 Bank ACB 11,760


14,280 14,280


Shareholders A/C

6/6 Bank ACB 45,000

Rent A/C

4/6 Bank ACB 2,800

Debtors Ledger

Fallon Ltd A/C

1/6 Balance c/d 12,000 2/6 Bank ACB 10,000


12,000 12,000


Creditors Ledger

Hayden Ltd A/C

5/6 Bank ACB 7,500 1/6 Balance b/d 7,500


79

General Ledger

Sales A/C

Purchases A/C

VAT A/C

Shareholders A/C

Rent A/C

Debtors Ledger

Fallon Ltd A/C

Creditors Ledger

Hayden Ltd A/C

Chapter 40 Analysed Cash Book II Monitoring Overheads

1.

General LedgerDate2005

Details F Total€

Date2005

Details F Total€

Postage A/C

6/4 Petty cash PC 9

Cleaning A/C

6/4 Petty cash PC 12

Stationery A/C


Travel A/C


Other A/C

6/4 Petty cash PC 7

Bank A/C


Petty Cash Book (p1) Date Details Total Date Details V. no. Total Post Clean. Stat. Travel Other

2005 € 2005 € € € € € €

1/4 Bank 60 1/4 Cleaning 23 5 5

2/4 Taxi 24 6 6

2/4 Stamps 25 4 4

3/4 Disks 26 8 8

3/4 Raffle 27 7 7

4/4 Parcel 28 5 5

5/4 Cleaning 29 7 7

6/4 Tippex 30 3 3

6/4 Bus fare 31 8 8

53 9 12 11 14 7

6/4 Balance c/d 7

60 60

7/4 Balance 7

7/4 Bank 53

60


80

Postage A/C

Cleaning A/C

Stationery A/C

Travel A/C

Other A/C

Bank A/C

2.


Details F Total€

Date2005

Details F Total€

Postage A/C


Cleaning A/C

7/6 Petty cash PC 8

Stationery A/C


Office A/C

7/6 Petty cash PC 6

Other A/C


Bank A/C


Petty Cash Book (p1) Date Details Total Date Details V. no. Total Post Clean. Stat. Travel Other

2005 € 2005 € € € € € €

1/6 Bank 70 1/6 Stamps 12 7 7

2/6 Flower 13 6 6

3/6 Cleaning 14 8 8

3/6 Pens 15 3 3

4/6 Taxi 17 12 12

5/6 Disks 18 10 10

6/6 Parcel 19 11 11

57 18 8 13 6 12

6/6 Balance c/d 13

70 70

7/6 Balance 13

7/6 Bank 57

70


81

Postage A/C

Cleaning A/C

Stationery A/C

Office A/C

Other A/C

Bank A/C

3.


Details F Total€

Date2005

Details F Total€

Postage A/C


Repairs A/C


Stationery A/C

6/7 Petty cash PC 4

Travel A/C

6/7 Petty cash PC 6

Other A/C


Bank A/C


Petty Cash Book (p1) Date2005

Details Total€

Date2005

Details V. no. Total€

Post€

Repairs€

Stat.€

Travel€

Other€

1/7 Bank 60 1/7 Stamps 2 9 9

2/7 Taxi 3 6 6

3/7 Tippex 4 4 4

4/7 Repairs 5 11 11

5/7 Donation 6 10 10

6/7 M/B 7 3 3

6/7 Cleaning 8 6 6

6/7 Parcel 9 7 7

56 16 11 4 6 19

6/7 Balance c/d 4

60 60

7/7 Balance 4

7/7 Bank 54

60


82

Postage A/C

Repairs A/C

Stationery A/C

Travel A/C

Other A/C

Bank A/C

4.

5. (a) Wages; light and heat; telephone; electricity; advertising.(b) Overheads can be monitored by preparing overhead budgets; checking all invoices/

statements before payment is made.


Details F Total€

Date2005

Details F Total€

Postage A/C


Cleaning A/C


Stationery A/C


Travel A/C


Other A/C


Bank A/C


Petty Cash Book (p1) Date2005

Details Total€

Date2005

Details V. no. Total€

Post€

Clean.€

Stat.€

Travel€

Other€

1/8 Bank 85 1/8 Bus fare 33 8 8

2/8 Cleaning 34 10 10

3/8 Stamps 35 14 14

4/8 Folders 36 13 13

4/8 T/S/M 37 7 7

5/8 Raffle 38 10 10

6/8 Taxi 39 9 9

7/8 Parcel 40 14 14

85 28 10 13 17 17

7/8 Balance c/d 00

85 85

7/8 Balance 00

7/8 Bank 85

85


83

Postage A/C

Cleaning A/C

Stationery A/C

Travel A/C

Other A/C

Bank A/C


(c) (i) and (ii)

Chapter 41 General Journal

1.


2005 € 2005 €

Machinery A/C

1/5 Balance GJ 45,000

Stock A/C

1/5 Balance GJ

Bank A/C


Ordinary Share Capital A/C


Creditors Ledger

King Ltd A/C


General Journal (p1)Date2005

Details F DR€

CR€

1/5 Machinery GL 45,000

Stock GL 11,000

Bank overdraft ACB 1,000

King Ltd CL 15,000

Ordinary share capital 40,000

Assets, liabilities of company on 1/5/2005 56,000 56,000

Greater thanbudgeted figures

Less thanbudgeted figures

Possible reason for difference

Insurance Increase in risks leading to increased premiums

Advertising Incorrect estimates in budgeted figures

Repairs Employees were more careful with equipment etc

Carriage Outwards Less deliveries had to be made

84

General Ledger

Machinery A/C

Stock A/C

Bank A/C


Creditors Ledger A/C

King Ltd A/C

2.

3.


Details F DR€

CR€

1/7 Premises GL 90,000

Machinery GL 40,000

Bank ACB 4,000

Debtors: Reynolds Ltd DL 20,000

Creditors: Farrell Ltd CL 16,000

Giles Ltd CL 24,000




2005 € 2005 €

Buildings A/C


Stock A/C


Bank Loan A/C




Creditors Ledger

Kelly Ltd A/C


Debtors Ledger

Toolin Ltd A/C

1/6 Balance GK 12,000


Details F DR€

CR€

1/6 Buildings GL 60,000

Stock GL 6,000

Debtors: Toolin Ltd DL 12,000

Kelly Ltd CL 17,000

Bank loan GL 30,000




85

General Ledger

Buildings A/C

Stock A/C

Bank Loan A/C


Creditors Ledger A/C

Kelly Ltd A/C

Debtors Ledger A/C

Toolin Ltd A/C

4.


Details F DR€

CR€

1/8 Land GL 75,000

Buildings GL 55,000

Bank ACB 3,500

Stock GL 2,000

Debtors: Prunty Ltd DL 6,000

Creditors: Mitchell Ltd CL 14,000

Long-term loan GL 90,000

Ordinary share capital GL 37,500



2006 € 2006 €

Premises A/C


Machinery A/C


Bank A/C




Creditors Ledger

Giles Ltd A/C


Farrell Ltd A/C


Debtors Ledger

Reynolds Ltd A/C



86

General Ledger

Premises A/C

Machinery A/C

Bank A/C


Creditors Ledger

Giles Ltd A/C

Farrell Ltd A/C

Debtors Ledger

Reynolds Ltd A/C

5.


2005 € 2005 €

Van A/C

23/7 A. Murphy GJ 9,000

Debtors Ledger (p1)

A. Murphy A/C

23/7 Van GJ 9,000

General Journal (p1) of Pat the Baker LtdDate2005

Details F DR€

CR€

23/7 A. Murphy DL 9,000

Van GL 9,000

Sale of second-hand van on credit


2006 € 2006 €

Land A/C


Stock A/C


Buildings A/C


Bank A/C


Long-Term Loan A/C




Creditors Ledger

Mitchell Ltd A/C


Debtors Ledger

Prunty Ltd A/C



87

General Ledger

Land A/C

Stock A/C

Buildings A/C

Bank A/C

Long-Term Loan A/C


Creditors Ledger

Mitchell Ltd A/C

Debtors Ledger

Prunty Ltd A/C

General Ledger

Van A/C

Debtors Ledger (p1)

A. Murphy A/C

6.

7.

8.

General Journal (p1) of John Joe Ltd Painting SpecialistsDate2006

Details F DR€

CR€

7/8 Van GL 35,000

Tom Cunningham Ltd CL 35,000

Purchase of van on credit


2006 € €

Computer System A/C

1/6 Info Tec Ltd GJ 600,000

Creditors Ledger

Info Tec Ltd A/C

1/6 Computer system GJ 600,000

General Journal (p1) of Mels Ltd Educational ConsultantsDate2006

Details F DR€

CR€

1/6 Computer system GL 600,000

Info Tec Ltd CL 600,000

Purchase of computer system on credit


2005 € 2005 €

Electric Saw A/C

6/10 Butler Ltd GJ 18,000

Debtors Ledger

6/10 Electric saw GJ 18,000

General Journal (p1) of Oak Ltd Furniture ManufacturersDate2005

Details F DR€

CR€

6/10 Butler Ltd DL 18,000

Electric saw GL 18,000

Sale of electric saw on credit


88

General Ledger

Electric Saw A/C

Debtors Ledger

General Ledger

Computer System A/C

Creditors Ledger

Info Tec Ltd A/C

9.

10.


Details F DR€

CR€

7/5 Cash GL 1,250

Bad debts GL 3,750

Tully Ltd DL 5,000

Tully Ltd goes bankrupt, pays 25 cent in the €1


2005 € 2005 €

Bad Debts A/C

4/11 Donlon Ltd GJ 4,000

Debtors Ledger

Donlon Ltd A/C

4/11 Balance b/d 4,000 4/11 Bad Debts GJ 4,000


Details F DR€

CR€

4/11 Bad debts GL 4,000

Donlon Ltd DL 4,000

Donlon Ltd was written off as a bad debt


2006 € 2006 €

Van A/C

7/8 Tom Cunningham Ltd GJ 35,000

Creditors Ledger

7/8 Van GJ 35,000


89

General Ledger

Van A/C

Creditors Ledger

General Ledger

Bad debts A/C

Debtors Ledger

Donlon Ltd A/C

11.

12.


Details F DR€

CR€

6/6 Cash GL 24,000

Bad debts GL 8,000

Gallagher Ltd DL 32,000

Gallagher Ltd goes bankrupt, pays 75 cent in the €1


2006 € 2006 €

Cash A/C

9/4 Kilbride Ltd GJ 10,000

Bad Debts A/C

9/4 Kilbride Ltd GJ 10,000

Debtors Ledger

9/4 Balance b/d 20,000 9/4 Cash GJ 10,000

9/4 Bad debts GJ 10,000

20,000 20,000


Details F DR€

CR€

9/4 Cash GL 10,000

Bad debts GL 10,000

Kilbride Ltd DL 20,000

Kilbride Ltd goes bankrupt, pays 50 cent in the €1


2005 € 2005 €

Cash A/C

7/5 Tully Ltd GJ 1,250

Bad Debts A/C

7/5 Tully Ltd GJ 3,750

Debtors Ledger

Tully Ltd A/C



5,000 5,000


90

General Ledger

Cash A/C

Bad Debts A/C

Debtors Ledger

Tully Ltd A/C

General Ledger

Cash A/C

Bad Debts A/C

Debtors Ledger

Chapter 42 Combined Books of First Entry and Ledger Questions1.


2005

Details Chequeno.

F TotalBank

€

Purchases

€

VAT

€

Creditors

€

Other

€

3/3 McGrath 3 CL 15,000 15,000

5/3 Purchases 4 GL 27,830 23,000 4,830

16/3 Insurance 5 GL 3,500 3,500

28/3 Balance c/d 45,630

91,960 23,000 4,830 15,000 3,500


Details Rec. no. F Total Bank€

Sales€

VAT€

Debtors€

1/3 Sales GL 31,460 26,000 5,460

28/3 Murray Ltd 23 DL 60,500 60,500

91,960 26,000 5,460 60,500

29/3 Balance b/d 45,630

Sales Book (p1)Date2005

Details Inv. no. F Net€

VAT€

Total€

16/3 Murray Ltd 2 DL 50,000 10,500 60,500

Purchases Book (p1)Date Details Inv. no. F Net VAT Total

2005 € € €

12/3 McGrath Ltd 10 CL 24,000 5,040 29,040

13/3 Smyth Ltd 34 CL 20,000 4,200 24,200

44,000 9,240 53,240


2006 € 2006 €

Cash A/C

6/6 Gallagher Ltd GJ 24,000

Bad Debts A/C

6/6 Gallagher Ltd GJ 8,000

Debtors Ledger

Gallagher Ltd



32,000 32,000


91

General Ledger

Cash A/C

Bad Debts A/C

Debtors Ledger

Gallagher Ltd


Sales 76,000

Purchases 67,000

VAT 1,890

Insurance 3,500

McGrath Ltd 14,040

Smyth Ltd 24,200

Bank 45,630

116,130 116,130


2005 € 2005 €

Sales A/C


28/3 Bank ACB 26,000

76,000

Purchases A/C


28/3 Bank ACB 23,000

67,000

VAT A/C


28/3 Cash purchases ACB 4,830 28/3 Cash sales ACB 5,460


15,960 15,960


Insurance A/C

16/3 Bank ACB 3,500

Debtors Ledger

Murray Ltd A/C

16/3 Sales SB 60,500 28/3 Bank ACB 60,500

Creditors Ledger

McGrath Ltd A/C

3/3 Bank ACB 15,000 1/3 Purchases PB 29,040

28/3 Balance c/d 14,040

29,040 29,040

29/3 Balance b/d 14,040

Smyth Ltd A/C



92

General Ledger

Sales A/C

Purchases A/C

VAT A/C

Insurance A/C

Debtors Ledger

Murray Ltd A/C

Creditors Ledger

McGrath Ltd A/C

Smyth Ltd A/C

2.


2005

Details Chequeno.

F TotalBank

€

Purchases

€

VAT

€

Creditors

€

Other

€

3/5 Wages 45 GL 1,700 1,700

4/5 Purchases 46 GL 31,780 28,000 3,780

6/5 Mona Ltd 47 CL 25,000 25,000


103,560 28,000 3,780 25,000 1,700



Sales€

VAT€

Debtors€

8/5 Sales GL 63,560 56,000 7,560

9/5 Maloney Ltd 4 DL 40,000 40,000

103,560 56,000 7,560 40,000


Sales Book (p1)Date2005


VAT€

Total€

4/5 Maloney Ltd 23 DL 40,000 5,400 45,400

Purchases Book (p1)Date2005


VAT€

Total€

2/5 Mona Ltd 56 CL 32,000 4,320 36,320

6/5 Ton Ltd 67 CL 46,000 6,210 52,210

78,000 10,530 88,530


93

Trial Balance as on 9/5/2005Sales 96,000

Purchases 106,000

VAT 1,350

Wages 1,700

Maloney Ltd 5,400

Mona Ltd 11,320

Ton Ltd 52,210

Bank 45,080

159,530 159,530


2005 € 2005 €

Sales A/C


9/5 Bank ACB 56,000

96,000

Purchases A/C


4/5 Bank ACB 28,000

106,000

VAT A/C




14,310 14,310

1,350

Wages A/C

3/5 Bank ACB 1,700

Debtors Ledger

Maloney Ltd A/C

4/5 Sales SB 45,400 9/5 Bank ACB 40,000


45,400 45,400


Creditors Ledger

Mona Ltd A/C



36,320 36,320

10/5 Balance b/d 11,320

Ton Ltd A/C



94

General Ledger

Sales A/C

Purchases A/C

VAT A/C

Wages A/C

Debtors Ledger

Maloney Ltd A/C

Creditors Ledger

Mona Ltd A/C

Ton Ltd A/C

3.


2006

Details Chequeno.

F TotalBank

€

Purchases

€

VAT

€

Creditors

€

Other

€

3/7 Purchases 23 GL 21,780 18,000 3,780

5/7 Electricity 24 GL 700 700

8/7 Pony Ltd 25 CL 5,000 5,000


121,000 18,000 3,780 5,000 700



Sales€

VAT€

2/7 Sales GL 62,920 52,000 10,920

7/7 Sales GL 58,080 48,000 10,080

121,000 100,000 21,000


Purchases Returns Book (p1)Date2006

Details Credit note no. F Net€

VAT€

Total€

7/7 Tony Ltd 23 CL 7,500 1,575 9,075



VAT€

Total€

4/7 Tony Ltd 3 CL 32,000 6,720 38,720

5/7 Pony Ltd 9 CL 13,000 2,730 15,730

45,000 9,450 54,450


95


Sales 100,000

Purchases 63,000


VAT 9,345

Electricity 700

Pony Ltd 10,730

Tony Ltd 29,645

Bank 93,520

157,220 157,220


2006 € 2006 €

Sales A/C

8/7 Bank ACB 100,000

Purchases A/C


8/7 Cash purchases ACB 18,000

63,000



VAT A/C

8/7 Credit purchases PB 9,450 8/7 Cash sales ACB 21,000

8/7 Cash purchases ACB 3,780 8/7 Purchases returned PRB 1,575


22,575 22,575


Electricity A/C

5/7 Bank ACB 700

Creditors Ledger

Tony Ltd A/C



38,720 38,720


Pony Ltd A/C



15,730 15,730



96

General Ledger

Sales A/C

Purchases A/C


VAT A/C

Electricity A/C

Creditors Ledger

Tony Ltd A/C

Pony Ltd A/C

4.

Analysed Cash Book (Credit Side p1)Date

2006

Details Chequeno.

F TotalBank

€

Purchases

€

VAT

€

Creditors

€

Other

€

2/9 Insurance 34 GL 1,500 1,500

8/9 Purchases 35 GL 27,240 24,000 3,240

9/9 Rent 36 GL 3,000 3,000

9/9 Norm Ltd 37 CL 29,510 29,510

61,250 24,000 3,240 29,510 4,500

10/9 Balance b/d 24,930

Analysed Cash Book (Debit Side p1)Date2005


Sales€

VAT€

3/9 Sales GL 36,320 32,000 4,320


61,250 32,000 4,320

Purchases Returns Book (p1)Date

2005

Details Creditnote no.

F Net

€

VAT

€

Total

€

7/9 Norm Ltd 67 CL 10,000 1,350 11,350



VAT€

Total€

2/9 Norm Ltd 12 CL 36,000 4,860 40,860

6/9 Form Ltd 57 CL 44,000 5,940 49,940

80,000 10,800 90,800


97


Sales 32,000

Purchases 104,000


VAT 8,370

Insurance 1,500

Rent 3,000

Form Ltd 49,940

Bank 24,930

116,870 116,870


2006 € 2006 €

Sales A/C

9/9 Bank ACB 32,000

Purchases A/C


9/9 Bank ACB 24,000

104,000



VAT A/C


9/9 Cash purchases ACB 3,240 9/9 Purchases returns PRB 1,350


14,040 14,040


Insurance A/C

2/9 Bank ACB 1,500

Rent A/C

9/9 Bank ACB 3,000

Creditors Ledger

Form Ltd A/C


Norm Ltd A/C


9/9 Bank ACB 29,510

40,860 40,860


98

General Ledger

Sales A/C

Purchases A/C


VAT A/C

Insurance A/C

Rent A/C

Creditors Ledger

Form Ltd A/C

Norm Ltd A/C

5.


2006

Details Chequeno.

F TotalBank

€

Purchases

€

VAT

€

Creditors

€

Other

€

13/1 Wages 45 GL 7,000 7,000

15/1 Purchases 46 GL 27,830 23,000 4,830

18/1 Mel Ltd 47 CL 20,000 20,000

21/1 Balance c/d 87,950

142,780 23,000 4,630 20,000 7,000



Sales€

VAT€

10/1 Sales GL 72,600 60,000 12,600

21/1 Sales GL 70,180 58,000 12,180

142,780 118,000 24,780

22/1 Balance b/d 87,950

Purchases Returns Book (p1)Date

2006

Details Creditnote no.

F Net

€

VAT

€

Total

€

17/1 Del Ltd 97 CL 4,800 1,008 5,808



VAT€

Total€

12/1 Mel Ltd 3 CL 25,000 5,250 30,250

14/1 Del Ltd 26 CL 34,000 7,140 41,140

59,000 12,390 71,390


99


2006 € 2006 €

Sales A/C

21/1 Bank ACB 118,000

Purchases A/C


21/1 Bank ACB 23,000

82,000



VAT A/C


21/1 Cash purchases ACB 4,830 21/1 Purchases returns PRB 1,008


25,788 25,788


Wages A/C

13/1 Bank ACB 7,000

Creditors Ledger

Mel Ltd A/C


21/1 Balance c/d 10,250

30,250 30,250

22/1 Balance b/d 10,250

Del Ltd A/C


21/1 Balance c/d 35,332

41,140 41,140

22/1 Balance b/d 35,332


100

General Ledger

Sales A/C

Purchases A/C


VAT A/C

Wages A/C

Creditors Ledger

Mel Ltd A/C

Del Ltd A/C

6.


2006

Details Chequeno.

F TotalBank

€

Purchases

€

VAT

€

Creditors

€

Other

€

4/4 Purchases 1 GL 21,565 19,000 2,565

6/4 Insurance 2 GL 3,000 3,000

7/4 Morrissey Ltd 3 CL 14,755 14,755


120,750 19,000 2,565 14,755 3,000



Sales€

VAT€

Other€


2/4 Sales GL 56,750 50,000 6,750

9/4 Share capital GL 50,000 50,000

120,750 50,000 6,750 50,000

10/4 Balance b/d 81,374


Sales 118,000

Purchases 82,000


VAT 8,568

Wages 7,000

Mel Ltd 10,250

Del Ltd 35,332

Bank 87,950

176,950 176,950


101


2006 € 2006 €

Buildings A/C




9/4 Bank ACB 50,000

124,000

Purchases A/C


19/4 Bank ACB 19,000

53,000



Sales A/C

19/4 Bank ACB 50,000

VAT A/C

19/4 Credit purchases PB 4,590 19/4 Cash sales SB 6,750

19/4 Cash purchases ACB 2,565 19/4 Purchases returns PRB 405

7,155 7,155

Insurance A/C

6/4 Bank ACB 3,000

Creditors Ledger

Morrissey Ltd A/C

9/4 Purchases PRB 3,405 3/4 Purchases PB 18,160

9/4 Bank ACB 14,755

18,160 18,160

Shanley Ltd A/C



102

General Ledger

Buildings A/C


Purchases A/C


Sales A/C

VAT A/C

Insurance A/C

Creditors Ledger

Morrissey Ltd A/C

Shanley Ltd A/C

7.


2006

Details Chequeno.

F TotalBank

€

Purchases

€

VAT

€

Other

€

4/5 Purchases 1 GL 22,990 19,000 3,990

6/5 Wages 2 GL 4,000 4,000

9/5 Machinery 3 GL 25,000 25,000


101,830 19,000 3,990 29,000



Sales€

VAT€

Other€


2/5 Sales GL 60,500 50,000 10,500

17/5 Murtagh Ltd 8 DL 27,830 27,830

101,830 50,000 10,500 27,830

19/5 Balance b/d 49,830


Buildings 60,000


Purchases 53,000


Sales 50,000

Insurance 3,000

Shanley Ltd 20,430

Bank 81,430

197,430 197,430


103


2006 € 2006 €

Machinery A/C


9/5 Bank ACB 25,000

65,500



Sales A/C


19/5 Bank ACB 50,000

114,000

Sales Returns A/C

19/5 Total debtors PRB 3,000

Purchases A/C

19/5 Bank ACB 19,000

Wages A/C

6/5 Bank ACB 4,000

VAT A/C

19/5 Cash purchases ACB 3,990 19/5 Credit sales SB 13,400

19/5 Sales returns SRB 630 19/5 Cash sales ACB 10,500

19/5 Balance c/d 19,230

23,900 23,900

20/5 Balance b/d 19,230

Debtors Ledger

Murtagh Ltd A/C


17/5 Bank ACB 27,830

31,460 31,460

Lyons Ltd A/C

3/5 Sales SB 45,980


104

General Ledger

Machinery A/C


Sales A/C

Sales Returns A/C

Purchases A/C

Wages A/C

VAT A/C

Debtors Ledger

Murtagh Ltd A/C

Lyons Ltd A/C

8.


2006

Details Chequeno.

F TotalBank

€

Purchases

€

VAT

€

Creditors

€

Other

€

4/6 Brennan Ltd 3 CL 25,000 25,000

6/6 Purchases 4 GL 31,780 28,000 3,780

7/6 Advertising 5 GL 3,400 3,400

9/6 Neary Ltd 6 CL 45,400 45,400


141,040 28,000 3,780 25,000 48,800



Sales€

VAT€

Other€


3/6 Sales GL 63,560 56,000 7,560

8/6 Carey Ltd 45 DL 54,480 54,480

141,040 56,000 7,560 54,480

10/6 Balance b/d 35,460

General Journal

Date Details F DR € CR €

1/6/2006 Buildings GL 45,000

Bank ACB 23,000


Assets and share capital of company 68,000 68,000


Machinery 65,500


Sales 114,000

Sales returns 3,000

Purchases 19,000

Wages 4,000

VAT 19,320

Lyons Ltd 45,980

Bank 49,840

187,320 187,320


105


2006 € 2006 €

Buildings A/C




Sales A/C


9/6 Bank ACB 56,000

104,000

Purchases A/C


9/6 Bank ACB 28,000

100,000

Advertising A/C

7/6 Bank ACB 3,400

VAT A/C



9/6 Balance c/d 540

14,040 14,040


Debtors Ledger

Carey Ltd A/C

2/6 Sales SB 54,480 8/6 Bank ACB 54,480

Creditors Ledger

Neary Ltd A/C


Brennan Ltd A/C



36,320 36,320

10/6 Balance b/d 11,320


106

General Ledger

Buildings A/C


Sales A/C

Purchases A/C

Advertising A/C

VAT A/C

Debtors Ledger

Carey Ltd A/C

Creditors Ledger

Neary Ltd A/C

Brennan Ltd A/C

9.

Date

2006

Details Chequeno.

F TotalBank

€

Purchases

€

VAT

€

Other

€

6/9 Insurance 1 GL 5,000 5,000

7/9 Purchases 2 GL 38,720 32,000 6,720

7/9 Rent 3 GL 8,400 8,400

9/9 Balance c/d 109,382

161,502 32,000 6,720 13,400



Sales€

VAT€

Other€

2/9 Sales GL 101,640 84,000 17,640

8/9 Dardis Ltd 35 DL 26,862 26,862

9/9 Tobin Ltd 36 DL 33,000 33,000

161,502 84,000 17,640 59,862

10/9 Balance b/d 109,502

General Journal

Date Details F DR € CR €

1/9/2006 Machinery GL 39,000

Stock GL 13,000


Assets, ordinary share capital of the company 52,000 52,000


Buildings 45,000


Sales 104,000

Purchases 100,000

VAT 540

Advertising 3,400

Brennan Ltd 11,320

Bank 35,460

183,860 183,860


107


2006 € 2006 €

Machinery A/C


Stock A/C




Sales A/C


9/9 Bank ACB 84,000

144,000

Purchases A/C

9/9 Bank ACB 32,000

Sales Returns A/C


VAT A/C

9/9 Cash purchases ACB 6,720 9/9 Credit sales SB 12,600

9/9 Sales returns SRB 1,008 9/9 Cash sales ACB 17,640


30,240 30,240

10.90 Balance b/d 22,512

Insurance A/C

6/9 Bank ACB 5,000

Rent A/C

7/9 Bank ACB 8,400

Debtors Ledger

Dardis Ltd A/C


8/9 Bank ACB 26,862

32,670 32,670

Tobin Ltd A/C

3/9 Sales SB 39,930 9/9 Bank ACB 33,000


39,930 39,930



108

General Ledger

Stock A/C


Sales A/C

Purchases A/C

Sales Returns A/C

VAT A/C

Insurance A/C

Rent A/C

Debtors Ledger

Dardis Ltd A/C

Tobin Ltd A/C

Machinery A/C

Chapter 43 Control Accounts

1. Main control procedures used by a business

Chapter 44 Trading Account

1. Trading period ends on: (a) 31 December 2006 (b) 29 February 2007 (c) 6 May 2008 (d) 8 October 2008 (e) 22 April 2008

2. Cost of sales €57,000 (60,000 – 15,000 + 12,000)

3. Cost of sales €52,000 (70,000 – 17,000 + 10,000 + 4,000 – 15,000)

4. Cost of sales €94,000 (16,000 + 96,000 – 16,000 + 11,000 + 5,500 – 18,500)

5.

Sales 300,000

Less cost of sales

Purchases 160,000

Less closing stock 30,000

Cost of actual sales 130,000

Gross profit 170,000

Control Procedure ExplanationTrial balance This checks that the double entry process has

been followed correctly

Bank reconciliation statement This checks the accuracy of the bank accountand the bank statement

Control accounts These check the accuracy of the debtors andcreditors ledger accounts


Machinery 39,000

Stock 13,000


Sales 144,000

Sales returns 4,800

Purchases 32,000

VAT 22,512

Insurance 5,000

Rent 8,400

Tobin Ltd 6,930

Bank 109,382

218,512 218,512


109

Trading Account for year ending 31/5/20062006 € €

6.

7.

8.

9.

Sales 270,000

Less sales returns 30,000 240,000

Less cost of sales

Opening stock 36,000

Purchases 200,000

Less purchases returns 10,000 190,000

Add carriage inwards 19,000

Add import duty 12,000

Cost of goods available for sale 257,000



Gross loss (10,000)

Sales 180,000


Less cost of sales


Purchases 96,000


Import duty 5,500




Gross profit 77,000

Sales 72,000


Less cost of sales

Purchases 70,000


Add carriage inwards 10,000




Gross profit 16,000

Sales 270,000

Less cost of sales

Purchases 145,000

Less purchases returns 85,000




110

Trading Account for year ending 31/5/20052005 € €

Trading Account for year ending 31/12/20062006 € € €



10. (a) To see if the stock records are correct (have any goods been stolen);to find closing stock; to identify slow moving or damaged stock.

(b) Place stock in its correct place. Use two-person teams. One person counts while theother records. Identify slow-moving or damaged goods. Complete stock sheets andprepare a stock report.

11. Students to do this in class.

Chapter 45 Profit and Loss Account

1.

2.

Profit and Loss Account for the year ending 31/5/2006

€ €


Add gains

Rent receivable 12,000

Interest receivable 9,000 21,000

141,000

Less expenses

Wages 34,000

Insurance 6,000

Bad debts 8,000

Advertising 8,500 56,500

Net profit 84,500


€ €

Gross profit 65.000

Add gains


80,000

Less expenses

Wages 24,000

Insurance 8,000

Light and heat 9,000

Advertising 6,500

Interest paid 8,000 55,500

Net profit 24,500


111

3.

4.

€ €

Sales 220,000


Less cost of sales


Purchases 56,000

Carriage inwards 3,000





Add gains


163,000

Less expenses

Wages 45,000

Advertising 13,900

Bad debts 9,000 67,900

Net profit 95,100


€ €


Add gains

Commission receivable 20,000

Rent receivable 14,500 34,500

195,500

Less expenses

Wages 75,000

Advertising 11,000

Bad debts 16,700

Interest paid 8,000 110,700

Net profit 84,800


112

Trading, Profit and Loss Account for year ending 31/5/2006

5.

6.


€ € €

Sales 340,000

Less cost of sales


Purchases 96,000







Add gains


272,000

Less expenses

Wages 75,000

Advertising 15,300

Rent paid 17,000 107,300

Net profit 164,700


€ €

Sales 250,000


Less cost of sales


Purchases 67,000

Import duty 4,000





Add gains

Interest receivable 6,000

160,000

Less expenses

Wages 56,000

Carriage outwards 8,000

Light and heat 5,400 69,400

Net profit 90,600


113

7.

8.(a) Net profit × 100% €21,000 × 100% = 15%

Net sales €140,000

(b) Net profit × 100% €24,050 × 100% = 13%Net sales €185,000

(c) Net profit × 100% €39,100 × 100% = 17%Net sales €230,000

Chapter 46 Profit and Loss Appropriation Account

1. Directors face three choices: to retain all the profit; to give all the profit out in dividends; toretain some profit and give out some profit in dividends.

2. Dividends are calculated as a percentage of issued share capital, i.e. if the issued share is€200,000 and the directors declare a 20% dividend, then the dividends are €40,000.

3. (a) €20,000 (¼ of €80,000)(b) €4,000 (¼ of €16,000)

4. (a) 25% (€30,000 is ¼ of €120,000)(b) €70,000 (€40,000 + €30,000)


€ € €

Sales 460,000

Less cost of sales


Purchases 85,000


Import duty 5,000





Add gains


347,000

Less expenses

Wages 93,000


Bad debts 12,500 111,500

Net profit 235,500


114

5. Erratum. Year ended 30 November, not 31 November.

6.

7.

8.

9.

Date2006

Details F Total€

Date2006

Details F Total€

Dividends A/C

30/5 Profit and loss app. 60,000

Reserves A/C

30/5 Profit and loss app. 35,000

€

Net profit 95,000

Less dividends 60,000

Reserves 35,000

€

Net profit 180,000


120,000

Add opening balance 50,000

Reserves 170,000

€

Net profit 140,000


Reserves 65,000

€

Net profit 105,000


Reserves 30,000

€

Net profit 95,000


Reserves 65,000


115

Profit and Loss Appropriation Account for year ended 30/11/ 2006

Profit and Loss Appropriation Account for year ended 30/8/2006




Dividends A/C

Reserves A/C

10.(a) €2,500.(b) The company retains some of the profit for use in future expansion.

11.

€ € €

Sales 290,000

Less cost of sales

1/6/05 Opening stock 37,000

Purchases 76,000







Add gains


245,000

Less expenses

Wages 75,000


Net profit 156,700


Reserves 126,700

____________________________________________________________

____________________Ms Mary Furey,Main St,Cavan.

Dear Ms Furey,

I refer to your questions re (i) the amount of dividends you will receive and (ii) why the companyretains some of its profits.

(i) You will receive €2,500 in dividends, i.e. 20% of what you invested in shares (20% of€12,000).

(ii) The company retains some of its profits for future expansion, e.g. purchase of new equipment,buildings etc. I attach a pie chart showing how the profit is divided.

If I can be of any further help please contact me.

Yours faithfully,_________________

Financial Consultant.


116

Trading, Profit and Loss Appropriation Account for year ended 31/5/2006

12.

13.

€ €

Sales 390,000


Less cost of sales


Purchases 107,000

Import duty 8,000





Add gains


265,000

Less expenses

Wages 65,000

Insurance 14,600 79,600

Net profit 185,400


167,400


Reserves 177,400

€ € €

Sales 560,000

Less cost of sales


Purchases 95,000


Import duty 15,000





Add gains


465,000

Less expenses

Wages 73,000

Bad debts 15,500 88,500

Net profit 376,500


Reserves 331,500


117



14.

Chapter 47 Balance Sheet

1.

€ € €

Fixed Assets Cost Depreciation NBV

Buildings 150,000 150,000

Machinery 60,000 60,000

Total fixed assets 210,000 210,000

Current assets

Closing stock 12,000

Debtors 10,000

Cash 2,000 24,000

Less current liabilities

Creditors 39,000

Bank overdraft 5,000 44,000

Working capital (20,000)

Total net assets 190,000

Financed by Authorised Issued

200,000 €1 ordinary shares 200,000 180,000

Reserves 10,000

Capital employed 190,000

€ €

Sales 450,000


Less cost of sales


Purchases 120,000






Add gains


248,000

Less expenses

Wages 86,000

Carriage outwards 8,000 94,000

Net profit 154,000


104,000


Reserves 128,000


118


Balance Sheet as on 31/5/2005

2.

3.

€ € €


Buildings 150,000 150,000

Motor vehicles 40,000 40,000


Current assets


Debtors 40,000

Cash 7,000 59,000


Creditors 16,000

Dividends due 20,000


Working capital 18,000



400,000 €1 ordinary shares 400,000 200,000

Reserves 8,000


€ € €


Land 150,000 150,000

Equipment 72,000 72,000


Current assets


Debtors 35,000

Bank 13,000 72,000


Creditors 19,000

Dividends due 30,000 49,000




300,000 €1 ordinary shares 300,000 200,000

Reserves 45,000



119



4.

5.

€ € €


Buildings 150,000 150,000

Machinery 40,000 40,000


Current assets

Closing stock 8,000

Debtors 20,000

Cash 2,000 30,000


Creditors 20,000






300,000 €1 ordinary shares 300,000 100,000

Long-term liabilities

20-year loan 60,000


€ € €


Land 150,000 150,000

Machinery 58,000 58,000


Current assets


Debtors 27,000

Bank 9,000 52,000


Creditors 19,000





250,000 €1 ordinary share capital 250,000 160,000

Reserves 15,000 175,000


10-year loan 50,000



120



6.

7. (a)

€ € €

Sales 260,000


Less cost of sales

Opening stock 1/6/2004 14,000

Purchases 130,000






Add gains


149,000

Less expenses

Wages 25,000


Advertising 8,000


Bad debts 10,000 55,000

94,000


Reserves 75,600

€ € €


Land 170,000 170,000

Equipment 52,000 52,000


Current assets


Debtors 15,000

Cash 4,000 34,000


Creditors 39,000






450,000 €1 ordinary shares 450,000 100,000


12-year loan 90,000



121


Trading, Profit and Loss Appropriation Account for year ending 31/5/2005

(b) Goods are faulty; goods are not as ordered.

8. (a)

€ € €

Sales 300,000


Less cost of sales


Purchases 140,000

Import duty 12,000





Add gains


159,000

Less expenses

Wages 40,000


Advertising 8,000


Bad debts 13,000 77,000

Net profit 82,000


Reserves 49,000

€ € €


Buildings 100,000 100,000

Machinery 120,000 120,000


Current assets


Debtors 40,000

Bank 12,000

Cash 1,000 78,000


Creditors 20,000





250,000 €1 ordinary shares 250,000 184,000

Reserves 75,600



122



(b). Radio; television; newspapers.

9. (a)

€ € €

Sales 410,000

Less cost of sales


Purchases 200,000







Add gains


234,000

Less expenses

Wages 10,000


Insurance 10,000


Rent 10,000 44,000

Net profit 190,000


Reserves 172,500

€ € €


Buildings 110,000 110,000

Machinery 115,000 115,000

225,000 225,000

Current assets


Debtors 47,000

Bank 10,000

Cash 7,000 94,000


Creditors 17,000





450,000 €1 ordinary shares 450,000 220,000

Reserves 49,000



123



(b) Hourly rate and piece rate10. (a) Erratum. Date should be 31/5/2006 not 29/5/2006

€ € €

Sales 370,000


Less cost of sales


Purchases 160,000




Cost of goods actually sold 175,000


Add gains


209,000

Less expenses

Wages 55,000

Insurance 9,000


Net profit 124,000


Reserves 105,000

€ € €


Land and buildings 200,000 200,000

Machinery 123,000 123,000


Current assets


Debtors 55,000

Cash 3,000 80,000


Creditors 30,000

Bank overdraft 8,000





500,000 €1 ordinary shares 500,000 175,000

Reserves 172,500



124



(b) Motor insurance; fire and theft; employer’s liability.

11.

€ € €

Sales 190,000


Less cost of sales


Purchases 100,000






Add gains


131,000

Less expenses

Wages 21,000


Advertising 4,000


Repairs 7,000 43,000

Net profit 88,000


Reserves 68,000

€ € €


Equipment 120,000 120,000

Buildings 180,000 180,000


Current assets


Debtors 40,000

Bank 19,000

Cash 1,000 85,000


Creditors 10,000




320,000 €1 ordinary shares 320,000 190,000

Reserves 105,000 295,000


10-year loan 80,000



125



(b) Monark Ltd could raise a further €290,000 by issuing shares.

12. (a)

€ € €

Sales 390,000


Less cost of sales


Purchases 210,000






Add gains


222,000

Less expenses

Advertising 8,000

Wages 55,000


Bank interest 10,000 79,000

Net profit 143,000


Reserves 105,500

€ € €


Buildings 112,000 112,000

Equipment 76,000 76,000


Current assets


Debtors 20,000

Bank 10,000

Cash 1,000 76,000


Creditors 16,000





450,000 €1 ordinary shares 450,000 160,000

Reserves 68,000



126



(b) Rate of dividend paid is 12½%.

Chapter 48 Adjustments to Final Accounts1.

2.

2006 € 2006 €

Rent A/C

1/4 Bank ACB 3,200 31/12 Profit and loss 2,400


3,200 3,200

1/5 Balance b/d 800


Current assets €

Insurance prepaid 600

Profit and Loss Account for year ending 31/12/2006

Less expenses €

Insurance (1,200 – 600) 600

2006 € 2006 €

Insurance A/C

1/6 Bank ACB 1,200 31/12 Profit and loss 600


1,200 1,200

1/1 Balance b/d 600

€ € €


Buildings 200,000 200,000

Motor vehicles 180,000 180,000


Current assets


Debtors 44,500

Cash 4,000 90,500


Creditors 20,000





500,000 €1 ordinary shares 500,000 300,000

Reserves 105,500



127




Insurance A/C

Rent A/C

3.

4.


Current liabilities €

Wages due 2,500


Less expenses €

Wages (27,000 + 2,500) 29,500

€ €

Wages A/C

Bank ACB 27,000 31/12/2006 Profit and loss 29,500

31/12/2006 Balance c/d 2,500

29,500 29,500

1/1/2007 2,500


Current assets €

Stationery on hand 450


Less expenses €

Stationery (1,900 – 450) 1,450

2006 € 2006 €

Statioery A/C

31/5 Bank ACB 1,900 31/5 Profit and loss 1,450


1,900 1,900

1/6 Balance b/d 450


Current assets €

Rent prepaid 800


Less expenses €

Rent (3,200 – 800) 2,400


128



Stationery A/C

Wages A/C

5.

6.

7.

2006 € 2006 €

Machinery A/C

1/1 Bank ACB 12,000

Bank A/C

1/1 Machinery ACB 12,000

Provision for depreciation A/C

31/12 Profit and loss 1,200


Current assets €

Interest receivable due 1,800


Add gains €


€ €

Interest receivable A/C

31/12/2006 Profit and loss 1,800 31/12/2006 Balance c/d 1,800

1/1/2007 Balance b/d 1,800


Current liabilities €

Electricity due 1,500


Less expenses €

Electricity (6,000+1,500) 7,500

€ €

Electricity A/C

Bank ACB 6,000 31/12/2005 Profit and loss 7,500

31/12/2005 Balance c/d 1,500

7,500 7,500

1/1/2006 Balance b/d 1,500


129




Interest receivable A/C

Machinery A/C

Bank A/C


8.



€ € €

Motor vans 60,000 24,000 36,000



€ € €

Motor vans 60,000 12,000 48,000


Less expenses €

Depreciation: Motor vans 12,000


Less expenses €


General Ledger


€ €

Motor Vans A/C

1/1/2005 Bank ACB 60,000

Bank A/C

1/1/2005 Motor vans ACB 60,000


31/12/2005 Balance c/d 12,000 31/12/2005 Profit and loss 12,000

1/1/2006 Balance b/d 12,000


24,000 24,000

1/1/2007 Balance b/d



€ € €

Machinery 12,000 1,200 10,800


Less expenses €

Depreciation: Machinery 1,200


130

9.

10.

General Ledger


€ €

Motor Vans A/C

1/9/2006 Bank ACB 40,000

Bank A/C

1/1/2006 Machinery ACB 40,000



1/1/2007 Balance b/d 8,000


16,000 16,000

31/12/2007 Balance b/d 16,000



€ € €

Equipment 30,000 8,800 21,200



€ € €

Equipment 30,000 4,400 25,600


Less expenses €

Depreciation: Equipment 8,800


Less expenses €


General Ledger


€ €

Equipment A/C

1/1/2005 Bank ACB 30,000

Bank A/C

1/1/2005 Equipment ACB 30,000



1/1/2006 Balance b/d 4,400


8,800 8,800

1/1/2007 Balance b/d 8,800


131

Chapter 49 Final Accounts and Balance Sheet with Adjustments

1. (a)

Trading, Profit and Loss Appropriation Account of Niall Ltd for year ending 31/5/2005

€ € €

Sales (365,000 – 24,000) 341,000

Less cost of sales


Purchases 210,000

Import duty 11,000





Add gains

Commission receivable (25,000 + 2,500) 25,000 27,500

140,500

Less expenses

Insurances 9,870

Wages (56,000 + 4,600) 60,600


Depreciation: Motor vehicles 12,300

Buildings 3,600 15,900 99,770

Net profit 40,730


10,730


Reserves 34,730



€ € €

Motor vans 40,000 16,000 24,000


Less expenses €




€ € €

Motor vans 40,000 8,000 32,000


Less expenses €



132

(b) Profit is retained for future expansion or losses.

2. (a)

Trading, Profit and Loss Appropriation Account of Adrian Ltd for year ending 31/5/2005

€ € €

Sales (275,000 – 19,000) 256,000

Less cost of sales


Purchases (165,000 – 2,000) 163,000





Gross profit 93,200

Add gains

Interest receivable (18,000 + 6,000) 24,000

117,200

Less expenses

Insurance 8,600

Bad debts 10,900

Repairs (16,000 + 2,900) 18,900

Advertising 6,600

Depreciation: Delivery van 27,312

Machinery 11,600 38,912 83,912

Net profit 33,288


Reserves 20,538

Balance Sheet of Niall Ltd as on 31/5/2005

€ € €

Fixed assets Cost Depreciation NBV

Buildings 180,000 3,600 176,400

Motor vehicles 123,000 12,300 110,700

Total fixed assets 303,000 15,900 287,100

Current assets


Debtors 78,000


Cash 2,330 112,830


Creditors 63,000


Wages due 4,600





360,000 €1 ordinary shares 360,000 250,000

Reserves 34,730

284,730


133

(b) Bad debts constitute one third of the debtors. This means that one third of credit saleswill not be paid for.

3. (a)Trading, Profit and Loss Appropriation Account of Richard Ltd for year ending 31/7/2005

€ € €

Sales (312,000 – 8,000) 304,000

Less cost of sales


Purchases 120,000

Import duty 11,600





Add gainsNone 000000

182,400

Less expensesLight and heat (18,000 + 2,500) 20,500

Insurances (8,900 – 600) 8,300

Wages and salaries 38,600

Depreciation: Premises 5,500

Machinery 11,200 16,700 84,100

Net profit 98,300


81,200


Reserves 106,200

Balance Sheet of Adrian Ltd as on 31/5/2005

€ € €


Delivery vans 170,700 27,312 143,388

Machinery 145,000 11,600 133,400


Current assets


Debtors 34,000

Bank 10,000

Interest receivable due 6,000 70,000


Creditors 15,600

Repairs due 2,900





500,000 €1 ordinary shares 500,000 255,000

Reserves 20,538 275,538


12-year loan 40,000



134

(b) Goods sold can be returned because they are not as ordered or are faulty.

4. (a)

Trading, Profit and Loss Appropriation Account of Darra Ltd for the year ending 30/4/2005

€ € €

Sales (298,000 – 18,000) 280,000

Less cost of sales


Purchases (140,000 – 6,000) 134,000

Cost of goods available for sales 151,000




Add gains

Rent receivable (24,900 – 5,500) 19,400

188,400

Less expenses

Advertising (25,000 + 860) 25,860

Petty cash expenses 4,000

Loan interest 2,800

Depreciation: Motor vehicles 21,120 53,780

Net profit 134,620


98,620


Reserves 123,620

Balance Sheet of Richard Ltd as on 31/7/2005

€ € €


Premises 220,000 5,500 214,500

Machinery 80,000 11,200 68,800


Current assets


Debtors 34,000


Cash 5,200 66,800


Creditors 45,000


Light and heat due 2,500 53,900




600,000 €1 ordinary shares 600,000 190,000

Reserves 106,200



135

(b) The source document for purchases returns is a credit note received and for petty cashexpenses is a petty cash voucher.

5. (a)Trading, Profit and Loss Appropriation Account of James Ltd for the year ending 30/6/2005

€ € €

Sales (272,000 – 18,000) 254,000

Less cost of sales


Purchases 120,000

Import duty 7,000





Add gainsCommission receivable (35,000 + 4,750) 39,750

171,650

Less expensesInsurance 13,700


Repairs (13,400 + 2,600) 16,000


Equipment 26,950 43,498 90,698

Net profit 80,952


41,952


Reserves 61,952

Balance Sheet of Darra Ltd as on 30/4/2005

€ € €

Fixed assets Cost Depreciation NBVMotor vehicles 132,000 21,120 110,880

Land 196,000 196,000


Current assetsClosing stock 40,000

Debtors 64,000

Bank 14,100

Cash 2,000 120,100

Less current liabilitiesCreditors 46,000

Interest receivable prepaid 5,500

Advertising due 860





200,000 €1 ordinary shares 200,000 180,000

Reserves 123,620 303,620

Long-term liability7-year loan 35,000



136

(b) James Ltd can raise a further 140,000 ordinary shares.

6. (a)

Trading, Profit and Loss Appropriation Account of Conor Ltd for year ending 31/5/2005

€ € €

Sales 214,000

Less cost of sales


Purchases (120,000 – 12,000) 108,000





Add gains

Rent receivable (25,000 + 2,500) 27,500

132,500

Less expenses

Wages 56,000

Insurance (3,800 – 600) 3,200

Bad debts 5,700

Advertising 11,800


Machinery 15,840 23,600 100,300

Net profit 32,200


4,200


Reserves 49,200

Balance Sheet of James Ltd as on 30/6/2005

€ € €


Equipment 245,000 26,950 218,050

Motor vehicles 118,200 16,548 101,652

363,200 43,498 319,702

Current assets


Debtors 34,000

Commission receivable due 4,750

Cash 2,100 68,750


Creditors 12,000

Repairs due 2,600






400,000 €1 ordinary shares 400,000 260,000

Reserves 61,952



137

(b) Closing stock should be valued at the lower price of: cost price, market price orreplacement cost.

7. (a)

Trading, Profit and Loss Appropriation Account of Enda Ltd for year ending 31/3/2005

€ € €

Sales (230,000 – 5,000) 225,000

Less cost of sales


Purchases (89,000 – 1,200) 87,800

Import duty 4,450





Add gains

Interest receivable (13,750 – 4,500) 18,250

155,000

Less expenses

Advertising (8,000 – 1,370) 6,630

Insurance 4,600

Repairs 6,900

Depreciation: Premises 4,000

Machinery 21,120 25,120 43,250

Net profit 111,750


Reserves 97,350

Balance Sheet of Conor Ltd as on 31/5/2005

€ € €


Motor vehicles 97,000 7,760 89,240

Machinery 132,000 15,840 116,160

229,000 23,600 205,400

Current assets


Debtors 33,000



Cash 300

Bank 1,400 67,800


Creditors 56,000





200,000 €1 ordinary shares 200,000 140,000

Reserves 49,200



138

(b) TV, cinema, colour magazines.

8. (a)

Trading, Profit and Loss Appropriation Account of Andrew Ltd for year ending 30/4/2006

€ € €

Sales (460,000 – 13,000) 447,000

Less cost of sales


Purchases (290,000 – 3,600) 286,400





Add gains

Rent receivable (19,700 + 2,500) 22,200

186,800

Less expenses

Loan interest 8,000

Insurance (14,800 – 900) 13,900

Bad debts 10,000

Carriage outwards (4,300 + 3,500) 7,800


Machinery 49,000 60,040 99,740

Net profit 87,060


Reserves 47,960

Balance Sheet of Enda Ltd as on 31/3/2005

€ € €


Premises 200,000 4,000 196,000

Machinery 132,000 21,120 110,880


Current assets


Debtors 24,000

Cash 3,000

Advertising prepaid 1,370


Current liabilities

Creditors 14,000




322,350


400,000 €1 ordinary shares 400,000 180,000

Reserves 97,350 277,350


20-year loan 45,000



139

(b) 17% (Dividend ÷ Issued shares × 100%)

9. (a)

Trading, Profit and Loss Appropriation Account of Burns Ltd for year ending 31/5/2005

€ € €

Sales 200,000

Less cost of sales


Purchases (110,000 – 15,000) 95,000






Add gains

Interest receivable (12,000 + 8,000) 20,000

143,000

Less expenses


Wages (47,500 + 2,500) 50,000

Bad debts 6,700


Delivery van 12,000 42,000 106,200

Net profit 36,800


2,000


Reserves 24,000

Balance Sheet of Andrew Ltd as on 30/4/2006

€ € €


Motor vehicles 110,400 11,040 99,360

Machinery 245,000 49,000 196,000


Current assets


Debtors 29,700


Rent receivable due 2,500

Cash 19,000 73,100


Creditors 47,000

Carriage outwards due 3,500 50,500




400,000 €1 ordinary shares 400,000 230,000

Reserves 47,960 277,960


10-year loan 40,000



140

(b) €55,000 (€42,000 + €68,000 ÷ 2)

10.(a)Trading, Profit and Loss Appropriation Account of Balfe Ltd for year ending 31/3/2006

€ € €

Sales (270,000 – 7,500) 262,500

Less cost of sales


Purchases 130,000

Import duty 11,800





Add gains

Commission receivable (16,000 + 4,000) 20,000


165,700

Less expenses

Advertising (14,000 – 3,000) 11,000

Wages 32,000


Delivery vans 22,000 47,600 90,600

Net profit 75,100


45,100


Reserves 113,100

Balance Sheet of Burns Ltd as on 31/5/2005

€ € €


Machinery 200,000 30,000 170,000

Delivery vans 120,000 12,000 108,000


Current assets


Debtors 54,000

Cash 4,300



Creditors 13,000


Wages due 2,500





350,000 €1 ordinary shares 350,000 290,000

Reserves 24,000 314,000


15-year loan 35,000



141

(b) 3.96 times (124,800 ÷ 31,500)

11.(a)

Trading, Profit and Loss Appropriation Account of Carr Ltd for year ending 31/5/2007

€ € €

Sales 270,000

Less cost of sales


Purchases (160,000 – 13,000) 147,000






Add gains

Rent receivable (8,600 + 4,400) 13,000

129,400

Less expenses

Insurance (7,800 – 1,200) 6,600

Wages 32,800

Bad debts 5,600


Delivery vans 23,400 33,800 78,800

Net profit 50,600


24,600


Reserves 39,600

Balance Sheet of Balfe Ltd as on 31/3/2006

€ € €


Buildings 200,000 200,000

Equipment 160,000 25,600 134,400

Delivery vans 110,000 22,000 88,000


Current assets


Debtors 28,000

Advertising prepaid 3,000

Commission receivable due 4,000

Cash 2,700 77,700


Creditors 43,000






400,000 €1 ordinary shares 400,000 300,000

Reserves 113,100



142

(b) Carr Ltd should have motor insurance; employers liability insurance; product liabilityand should pay its share of PRSI.

12.(a)

Trading, Profit and Loss Appropriation Account of Keogh Ltd for year ending 31/5/2008

€ € €

Sales (310,000 – 12,000) 298,000

Less cost of sales

Opening stock (1/6/2007) 20,000

Purchases 168,000

Import duty 4,600





Add gainsInterest receivable 3,500

126,900

Less expensesRent (8,800 – 1,200) 7,600

Wages (40,000 + 6,000) 46,000


Delivery vans 18,000 27,600 81,200

Net profit 45,700


9,700

Add balances 16,700

Reserves 26,400

Balance Sheet of Carr Ltd as on 31/5/2007

€ € €


Machinery 130,000 10,400 119,600

Delivery vans 195,000 23,400 171,600


Current assets


Debtors 49,500

Rent receivable due 4,400

Cash 1,300

Insurance prepaid 1,200

Bank 11,000 89,400


Creditors 30,000





300,000 €1 ordinary shares 300,000 260,000

Reserves 39,600 299,600

Long-term liability

12-year loan 25,000



143

(b) Keogh Ltd can raise €100,000 from issuing the remaining shares.

13.(a)Trading, Profit and Loss Appropriation Account of Kirby Ltd for year ending 31/3/2008

€ € €

Sales 340,000

Less cost of sales

Opening stock (1/4/2007) 12,000

Purchases 125,000






Add gainsRent receivable (5,600 – 1,800) 3,800

212,800

Less expensesLoan interest due (2,500 + 500) 3,000

Wages (57,000 + 3,000) 60,000

Bad debts 2,400


Delivery vans 15,000 36,600 102,000

Net profit 110,800


76,800

Add opening balance 32,000Reserves 108,800

Balance Sheet for Keogh Ltd as on 31/5/2008

€ € €

Fixed assets Cost Depreciation NBVBuildings 200,000 200,000

Machinery 160,000 9,600 150,400

Delivery vans 150,000 18,000 132,000


Current assets


Debtors 32,000

Cash 3,400

Rent prepaid 1,200 54,600




Wages due 6,000 78,600




500,000 €1 ordinary shares 500,000 400,000

Reserves 26,400 426,400

Long-term liabilities10-year loan 32,000



144

(b) Kirby Ltd can reduce its bad debts by not selling on credit, checking the creditworthiness of its debtors and giving incentives for prompt payment.

14.(a)

Trading, Profit and Loss Appropriation Account of Moore Ltd for year ending 31/5/2007

€ € €

Sales 330,000

Less cost of sales

Opening stock (1/6/2006) 15,000

Purchases 145,000

Import duty 3,400





Add gainsCommission receivable (12,400 + 1,600) 14,000


210,600

Less expensesWages (28,400 + 600) 29,000

Carriage outwards (6,600 + 2,200) 8,800


Delivery vans 26,000 50,000 87,800

Net profit 122,800


90,800


Balance Sheet of Kirby Ltd as on 31/3/2008

€ € €

Fixed assets Cost Depreciation NBVEquipment 180,000 21,600 158,400

Delivery van 150,000 15,000 135,000



Debtors 54,000

Cash 2,100

Bank 5,600 75,700


Rent receivable prepaid 1,800

Wages due 3,000

Loan interest due 500 45,300




300,000 €1 ordinary shares 300,000 200,000

Reserves 108,800 308,800

Long-term liabilities6-year loan 15,000Capital employed 323,800


145

(b) 11.43%

15.(a)

Trading, Profit and Loss Appropriation Account of Joyce Ltd for year ending 31/5/2007

€ € €

Sales 320,000

Less cost of sales

Opening stock (1/6/2006) 22,000

Purchases (140,000 – 4,000) 136,000

Import duty 8,000





Add gainsInterest receivable (10,000 + 4,000) 14,000

184,000

Less expensesCarriage outwards 5,600

Wages (48,400 + 1,600) 50,000

Bad debts 4,000


Delivery vans 12,900 24,900 84,500

Net profit 99,500


69,500


Balance Sheet of Moore Ltd as on 31/5/2007

€ € €

Fixed assets Cost Depreciation NBVMachinery 200,000 24,000 176,000

Delivery vans 190,000 26,000 164,000



Debtors 80,000

Cash 2,000

Bank 20,000

Commission receivable due 1,600 121,600


Creditors 13,000

Wages due 600

Carriage outwards due 2,200 15,800




350,000 €1 ordinary shares 350,000 280,000

Reserves 125,800 405,800

Long-term liabilities20-year loan 40,000Capital employed 445,800


146

(b) 1.33 : 1 (58,000 : 43,600)16. (a)

Trading, Profit and Loss Appropriation Account of Nevin Ltd for year ending 31/5/2008

€ € €

Sales 390,000

Less cost of sales

Opening stock (1/6/2007) 14,500

Purchases (175,000 – 5,000) 170,000






Add gains

Commission receivable (6,600 + 1,800) 8,400

230,400

Less expenses

Insurance (4,800 – 900) 3,900

Wages 32,200

Bad debts 8,000


Delivery vans 8,450 27,170 71,270

Net profit 159,130


133,530


Reserves 167,930

Balance Sheet of Joyce Ltd as on 31/5/2007

€ € €


Buildings 200,000 200,000

Machinery 120,000 12,000 108,000

Delivery vans 86,000 12,900 73,100


Current assets


Debtors 30,000

Cash 2,300

Bank 5,700



Creditors 12,000


Wages due 1,600 43,600 14,400



400,000 €1 ordinary shares 400,000 300,000

Reserves 95,500



147

(b) 56.92% (€222,000 × 100%)€390,000

Chapter 50 Assessing a Business

1. They only measure things that can be expressed in monetary terms;They only provide information for a given year or day;They do not take into account factors such as good industrial relations, staff morale etc.

2.

Name of Formula Formula Workings Answer

Gross profit marginGross profit × 100%

Sales€25,000 x 100%

€100,00025%


Sales€30,000 x 100%

€120,00025%


Sales€24,000 x 100%

€96,00025%


Sales€15,000 x 100%

€65,00023.08%

Balance Sheet of Nevin Ltd as on 31/5/2008

€ € €


Buildings 300,000 300,000

Equipment 156,000 18,720 137,280

Delivery vans 65,000 8,450 56,550


Current assets


Debtors 28,000

Cash 2,000


Commission receivable due 1,800 54,700


Creditors 20,000






400,000 €1 ordinary shares 400,000 320,000

Reserves 167,930



148

3.

4.

5.

Burns Ltd got the highest overall returns in 2008.

6. (a) Stock turnover is 4 times (€120,000 ÷ €30,000)(b) Stock turnover is 10 times (€150,000 ÷ €12,000 + €18,000)

2

7.

8.

Name of Ratio Formula Workings Answer

Current Ratio Current Assets: Current Liabilities €50,000 : €25,000 2 : 1

Current Ratio Current Assets: Current Liabilities €54,000 : €32,000 1.69 : 1



Ratio A B C

Rate of stock turnover 15 times 16 times 7.38

Ratio 2005 2006 2007 2008

Gross profit % 30% 40% 35% 29.5%

Net profit % 20% 12% 17% 20.49%

Return on capital employed 6.67% 12% 6.89% 12.18%


Return on capitalemployed

Net profit × 100%Capital employed

€10,000 x 100%€300,000

3.33%



€15,000 x 100%€450,000

3.33%



€12,000 x 100%€360,000

3.33%



€5,000 x 100%€250,000

2%


Net profit marginNet profit × 100%

Sales€10,000 x 100%

€100,00010%


Sales€15,000 x 100%

€120,00012.5%


Sales€12,000 x 100%

€96,00012.5%


Sales€5,000 x 100%

€65,0007.69%


149

9.

10.Workings for report

Louise Ltd has the greatest liquidity problem.

11. A company is solvent if Total Assets are greater than External Debts and vice versa.Cork Bus Ltd has Total Assets of €204,000 and External Liabilities of €54,000. It istherefore solvent.

Workings for report

Assets Buildings €80,000 + Buses €74,000 + Equipment €40,000 + Debtors€8,000 + Cash €2,000

External Liabilities Wages due €5,000m + Creditors €2,000 + Bank overdraft €7,000 + 15-yearloan €40,000

1. Liquidity Consultants Ltd,Anytown,Longford.

2. Liquidity problems of Louise Ltd

3. _______________________

4. The Directors of Louise Ltd,Anytown,Longford.

5. I was asked by the directors to examine the liquidity situation of the company and makerecommendations. I used both the Current and Acid Test ratios in my examination. Myfindings are set out below.

6. Louise Ltd has a Current ratio of 0.5 : 1. This is below the recommended ratio of 2 : 1.The Acid Test ratio is 0.37 : 1. This is below the recommended ratio of 1 : 1.I recommend the following:Louise Ltd must obtain extra finance to pay off its liabilities. It must also reduce its liabilities by buying less on credit, by keeping the bank overdraft down to a minimum or bypaying less in dividends.

7. I am available to discuss this report if required.

8. Patricia Cooney.

9. Liquidity Consultant.

Ratio Hilary Ltd Louise Ltd Helen Ltd Aisling Ltd

Current Ratio 1.25 : 1 0.50 : 1 2.06 : 1 1.98 : 1

Acid Test Ratio 0.88 : 1 0.37 : 1 1.37 : 1 1.69 : 1

Name of Ratio Formula Workings Answer

Acid Test RatioCurrent Assets – Closing stock:Current Liabilities

€50,000 – €15,000 : €25,000 1.4 : 1


€54,000 – €17,000 : €32,000 1.16 : 1


€35,000 – €15,000 : €45,000 0.44 : 1


€38,000 – €12,000 : €56,000 0.46 : 1


150

12.(a)(i) Overtrading means that a business is over-relying on current liabilities instead of

obtaining additional capital.(ii) Solvent means having more assets than external liabilities.

(b) Workings for report

1. Management Consultants Ltd,Suspense Street,Waterford.

2. Report on the Performance of Bridge Ltd for years 2004 and 2005

3. ______________________

4. The Directors of Bridge Ltd,Main Street,Cork.

5. I was asked by the shareholders to examine the performance of the company. I used anumber of ratios. My findings are as follows.

6. On the profitability side, 2005 has been an improvement on 2004.Gross Profit % increased from 41.67% to 54.90%, which is an increase of 13.23%.Net Profit % increased from 20.83% to 35.29%, which is an increase of 14.46%.Return on Capital Employed increased from 19.23% to 31.03%, which is an increase of 11.8%.The Acid Test ratio however fell from 2 : 1 to 0.95 : 1.Although the company is very profitable, the liquidity position must be monitored.


8. Kevin Scully.

9. Management Consultant.

Ratios Answers

2004 2005

Gross profit % 41.67% 54.90%

Net profit % 20.83% 35.29%

Return on capital employed % 19.23% 31.03%

Acid test ratio 2 : 1 0.95 : 1

1. Financial Consultants Ltd, Cork.

2. Solvency of Cork Bus Ltd

3. ___________________4. The Shareholders of Cork Bus Ltd, Cork.

5. I was asked by the shareholders to examine the solvency position of the company. Ideducted the Total External Liabilities of the company from the Total Assets. My findingsare as follows.

6. Cork Bus Ltd is solvent as its Total Assets of €204,000 exceeds its Total ExternalLiabilities of €54,000.


8. Mary Smyth.

9. Financial Consultant.


151

13.(a) A company would compare the interest paid on a long term loan with the return of Capital Employed because there is no point in paying more interest on a loan than thecompany is making from using the loan. If the loan cost 12% per year and the Return onCapital is 7%, then the company is paying 5% more on the loan than it is able to makefrom using the loan.

(b) Workings for report

Chapter 51 Club Accounts

1.

Functions of Treasurer Explanation

Collect membership Issue receipts and record membership received

Make all club payments Write cheques and pay all club expenses

Prepare accounts Prepare Income and Expenditure and Balance Sheet for club

Report on clubs finances at AGM Inform members of the club's finances at the AGM

1. Management Consultants Ltd,News Road,Wicklow.

2. Report on the Performance of Chess Ltd

3. _______________________

4. The Directors of Chess Ltd,Main Street,Cork

5. I was asked by the directors to examine the performance of the company. I used a numberof ratios. My findings are as follows.

6. There is a decrease in the level of profitability and liquidity in 2006.Gross Profit % fell from 48.48% to 42.62%, which is a decrease of 5.86%.Net Profit % decreased from 21.21% to 14.75%, which is a decrease of 6.46%.Return on Capital Employed decreased from 24.1% to 12.8%, a decrease of 11.29. Returnis now less than the cost of the loan at 15%, which means the company is losing 2.15% onthe loan.The Current Ratio decreased from 2.6 : 1 (greater than the recommended ratio of 2:1) to1.35 : 1. This trend is worrying.


8. George Lee.

9. Management Consultant.

Ratios Answers

2005 2006

Gross profit % 48.48% 42.62%

Net profit % 21.21% 14.75%

Return on capital employed % 24.14% 12.86%

Current ratio 2.6 : 1 1.35 : 1


152

2.

3.

Analysed Cash Book

Date Details Total Subs Disco Com. Date Details Total Wage Disco Com.

2005 € € € € 2005 € € € €

1/5Balanceb/d

225 5/5Competi-tion prizes

25 25

2/5Subscrip-tions

40 40 12/5 DJ 30 30

6/5Competi-tion fees

35 35 15/5Caretak-er’s wages

100 100

14/5Subscrip-tions

65 65 16/5Discoposters

10 10

20/5Competi-tion fees

60 60 19/5 Prizes 45 45

26/5Discoreceipts

160 160 29/5Caretak-er’s wages

100 100

29/5Balancec/d

275

585 105 160 95 585 200 40 70

30/5Balanceb/d

275

Analysed Cash BookDate Details Total Subs Disco Lotto Date Details Total Rent Disco Lotto2005 € € € € 2005 € € € €

7/1Balancec/d

460 12/1Lottoprizes

100 100

8/1Subscrip-tions

65 65 14/1 Rent 55 55

9/1Lottotickets

170 170 15/1Discoposters

20 20

11/1Discoreceipts

250 250 19/1Lottoprizes

80 80

13/1Subscrip-tions

85 85 26/1Lottoprizes

150 150

17/1Lottotickets

135 135 27/1 DJ 120 120

24/1Lottotickets

190 190 28/1 Rent 55 55

25/1Discoreceipts

300 300 31/1 Balance 1,075

1,655 150 550 495 1,655 110 140 330

1/2Balanceb/d

1,075


153

4.

5.

Analysed Cash Book

DateDe-tails

TotalBank

Subs. Bar Oth. Date DetailsCh.no

TotalBank

Bar Trvl.Dan-ce

Oth.

2006 € € € € 2006 € € € € €

8/4Sub-scrip-tions

2,400 2,400 5/4Barpurch-ases

1 4,600 4,600

10/4Dancerecei-pts

3,750 3,750 14/4Danceexp-enses

2 750 750

26/4Grantreceiv-ed

3,000 3,000 18/4Adver-tising

3 500 500

29/4Barsales

2,100 2,100 21/4Barexpen-ses

4 980 980

28/4Affilia-tion

5 450 450

30/4 Travel 6 400 400

30/4Clean-ing

7 100 100

30/4Balan-ce c/d

3,470

11,250 2,400 2,100 6,750 11,250 5,580 400 750 1,050

1/5Balan-ce c/d

3,470

Analysed Cash Book

DateDe-tails

TotalBank

Subs. Bar Oth. DateDe-tails

Ch.no

TotalBank

Bar Trvl.Dan-ce

Oth.

2006 € € € € 2006 € € € € €

3/3 Grant 6,000 6,000 13/3Insur-ance

6 350 350

7/3Barsales

2,700 2,700 17/3Purch-ases

7 2,100 2,100

10/3Loanreceiv-ed

10,000 10,000 23/3Clean-ing

8 130 130

19/3Sub-scrip-tions

3,500 3,500 28/3 Travel 9 870 870

26/3Barsales

1,780 1,780 31/3Danceexp.

10 320 320

31/3Dancereceip-ts

1,790 1,790 31/3Balan-ce c/d

22,000

25,770 3,500 4,480 17,790 25,770 2,230 870 320 350

1/4Balan-ce b/d

22,000


154

6.

7.

Analysed Cash Book

DateDetai-

lsTotalbank

Subs.Dan-ce

Oth. Date DetailsCh.no.

TotalBank

Ins.Dan-ce

Oth.

2006 € € € € 2006 € € € €

5/6Dancereceip-ts

4,600 4,600 1/6Balanceb/d

2,000

8/6Grantreceiv-ed

10,000 10,000 3/6 ESB 2 300 300

10/6Sub-scrip-tions

3,655 3,655 14/6 Minibus 3 11,300 11,300

23/6Lottowin

15,000 15,000 16/6Danceexpences

4 1,325 1,325

29/6Spon-soredwalk

5,500 5,500 18/6Equip-ment

5 4,660 4,660

26/6 Affiliation 6 1,700 1,700

30/6 Insurance 7 675 675

30/6Balancec/d

16,795

38,755 3,655 4,600 30,050 38,755 675 1,325 17,960

1/7Balan-ce b/d

16,795

Analysed Cash Book

Date DetailsTotalbank

Subs. Dance Oth. Date DetailsCh.no.

TotalBank

Ins.Dan-ce

Oth.

2006 € € € € 2006 € € € €

1/5Balanceb/d

1,400 5/5Equip-ment

1 2,600 2,600

3/5Subscri-ptions

3,800 3,800 7/5 Drinks 2 285 285

9/5Loanreceived

12,000 12,000 17/5Danceexpen-ses

3 1,455 1,455

11/5Sale ofland

30,000 30,000 19/5Insur-ance

4 675 675

15/5Dancereceipts

4,300 4,300 24/5Affilia-tion

5 2,200 2,200

31/5Grantreceived

7,000 7,000 27/5 ESB 6 430 430

50,855

58,500 3,800 4,300 49,000 31/5Balan-ce b/d

58,500 675 1,455 5,515

1/6Balanceb/d

50,855


155

8.

9.

Income and Expenditure Account for year ended 30/6/2005

Income € €

Subscriptions 12,400

Profit on dance (3,500 – 1,155) 2,345

Profit on refreshments (6,895 – 2,565) 4,330

19,075

Less expenses


Travel 2,345 4,235

Surplus (excess income over expenditure) 14,840

Receipts and Payment Account for year ended 30/6/2006Date Details Total Bank Date Details Total Bank 2005 € 2005 €

Subscriptions 12,400 1/7 Balance 500Dance receipts 3,500 Dance expenses 1,155Sale of refreshments 6,895 Light and heat 1,890Loan received 15,000 Travel 2,345

Loan repayment 5,000Purchase of refreshments 2,565

30/6 Balance c/d 24,34037,795 37,795



Income € €

Subscriptions 4,500

Raffle profit (1,565 – 650) 915

Competition receipts 6,455

11,870

Less expenses

Insurance 1,440

Postage and telephone 1,565

Rent 855 3,860


Receipts and Payments Account for year ended 30/4/2005Date Details Total Bank Date Details Total Bank 2005 € 2005 €

1/5/04 Balance b/d 3,200 Raffle expenses 650Subscriptions 4,500 Equipment 3,500Grant 2,500 Insurance 1,440Raffle receipts 1,565 Postage and stationery 1,565Competition receipts 6,455 Rent 855

30/4 Balance c/d 10,21018,220 18,220



156

Note to teachers: loan repayments are not revenue expenditure and are therefore not treatedas an expense. If the exercise stated ‘loan interest’, then this would be treated as an expense.

10.

11.


Income € €

Subscriptions 26,865

Profit on competition (670 – 125) 545

Green fees 12,900

Rent of club car park 3,600

43,910

Less expenses


Caretakers wages 10,900

Telephone 4,500 17,070


Receipts and Payment Account for year ended 31/7/2005Date Details Total Bank Date Details Total Bank 2005 € 2005 €

1/7 Balance b/d 650 Competition expenses 125Subscriptions 26,865 Light and heat 1,670Competition receipts 670 Caretaker's wages 10,900Green fees 12,900 Purchase of roller 2,565Rent of club car park 3,600 Telephone 4,500

30/6 Balance c/d 24,92544,685 44,685



Income € €

Profit on dance (5,605 – 1,950) 3,655

Membership fees 4,550

8,205

Less expenses

Insurance 2,450



Receipts and Payment Account for year ended 30/4/2006

Date Details Total Bank Date Details Total Bank

2005 € 2005 €


Dance expenses 1,950

Dance receipts 5,605 Purchases of machinery 12,450

Membership fees 4,550 Insurance 2,450

Lotto win 50,000 Purchase of minibus 17,800

Sale of machinery 6,895 Light and heat 2,455

30/4 Balance c/d 28,545

67,050 67,050



157

12.

13.

14.


€ € €

Fixed assets Cost NBV

Premises and track 90,000 90,000

Equipment 4,500 4,500

Minibus 18,300 18,300


Current assets

Cash 200





Financed by

Accumulated fund 65,000


Bank loan 46,000


Accumulated Fund Statement as on 1/1/2006

Assets € €

Buildings 200,000

Equipment 75,000

Cash 900 275,900

Less liabilities


Bank loan 60,000 62,600



Assets € €

Cash 300

Bank 2,000

Stock bar supplies 700

Clubhouse 80,000 83,000

Less liabilities

Bank loan 40,000



158

15.

16.

1. Financial Consultants Ltd,Euro Avenue,Cavan.

2. Report on ways of raising finance for new den

3. _______________________________

4. The Members of Cavan Girl Guides,Main Street,Cavan.

5. I was asked by the members for advice on methods of raising €70,000 for a newden. I researched different methods. My findings are as follows.

6. €70,000 is a substantial amount of money to raise and will require a number of methods. Here are some suggestions:

• Apply to the government for Lotto funds;• Look for local sponsorship;• Organise a Ms and Mr Cavan Festival;• Organise a Cavan mini-marathon with the help of Caterina McKiernan;• Organise some discos or other social events.


8. Margaret Murray.

9. Financial Consultant.

Balance Sheet of Athenry Gun Club as on 31/12/2005

€ € €

Fixed assets Cost NBVBuildings 50,000 50,000



Current assetsCash 25

Bank 1,700

Stock of rain gear 400 2,125

Less current liabilities 0000



Financed byAccumulated fund 33,325

Long-term liabilitiesBank loan 22,000



159

17.

18.(a)

Analysed Cash Book (Debit Side)

Date Details Total Bank Membership Fees Games Receipts Collection

2001 € € € €

15/2 Membership fees 1,500 1,500

19/3 Gate receipts 516 516

21/6 Church collection 2,347 2,347

15/8 Membership fees 500 500

19/10 Gate receipts 1,200 1,200

10/12 Flag day 849 849

6,912 2,000 1,716 3,196

1/1/02 Balance b/d 888

1. Disco Consultants Ltd,Roscrea,Co. Tipperary.

2. Report on the organisation of a disco

3. _______________________

4. The Members of Roscrea Youth Club,Roscrea,Co. Tipperary.

5. I was asked by the members to outline how to organise a disco to raise club funds. Icontacted a number of clubs and I outline my findings below.

6. Organising a disco is time-consuming and requires many helpers. The following factorshave to be considered:

• Selection of a venue;• Have adults available to assist;• Purchase insurance;• Hire a DJ and bouncers;• Advertise the disco;• Get tickets printed.

The following are some of the expenses that the club may have:

• Wages of bouncers;• Insurance premium;• Hire of hall;• Cost of tickets;• Cost of DJ;• Cost of advertising.

The entrance fee will depend on the number that might attend, the costs involved and the profit you want to make. E.g. if the attendance will be 400, charge between€8 and €10.


8. John Murphy.

9. Disco Consultant.


160

(b)

(c) (i) Treasurer.(ii) Receipts and Payments Account; Income and Expenditure Account; Balance Sheet.

Chapter 52 Club Accounts with Adjustments

1.

Bar Trading Account for year ending 31/12/2006

€ €

Bar sales 58,000

Less cost of sales


Bar purchases 16,000

22,000

Less closing stock 4,000 18,000

Gross profit 40,000

Less bar wages 7,000

Bar net profit (add to income in the I & E account) 33,000

Receipts and Payment Account for year ended 31/12/2001

Date Details Date Details

2001 € 2001 €

Membership fees 2,000 1/1 Balance b/d 781

Game receipts 1,716 Travel 2,025

Collection 3,196 Insurance 1,658

Equipment 1,170

Wages 400


2002 6,912 6,912

1/1 Balance b/d 888

Analysed Cash Book (Credit Side)

Date Details Ch. no. Total Bank Travel Insurance Equipment Wages

2001 € € € € €

1/1 Balance b/d 781

8/1 Calidonian Ltd 70 1,648 1,648

7/3 Sportswear Ltd 71 700 700

13/4 Caretaker 72 240 240

9/3 Bus Éireann 73 325 325

4/7 Hurleys 74 470 470

3/9 Cleaner 75 160 160

6/11 Bus Éireann 76 1,700 1,700


6,912 2,025 1,648 1,170 400


161

2.

3.

4. (a)

Income and Expenditure Account for year ending 28/2/2006

Income € €

Subscriptions (1,900 + 1,700) 3,600

Profit on dinner dance (3,400 – 2,500) 900

4,500

Less expenses

Loss on light and heat (4,300 – 2,400) 1,900

Cleaner’s wages 4,500

Travel 950

Insurance (1,700 – 300) 1,400

Playing gear 400

Prizes 600

Depreciation of equipment 600 10,350

Deficit (excess expenditure over income) (5,850)


Assets € €

Clubhouse 70,000

Equipment 5,000

Bank 1,700 76,700

Less liabilities 000000


Disco Account for year ending 31/12/2006

€ € €

Disco receipts 700

Less expenses

Hire of hall 200

DJ 250

Add due to DJ 50 300

Tickets 100

Insurance 140

Less prepaid 50 90

Advertising 120

Add advertising due 40 160 850

Loss on disco (add to expenditure in I & E account) (150)

Canteen Trading Account for year ending 30/6/2006

€ €

Sales 42,000

Less cost of salesOpening stock 1/7/05 2,000

Canteen purchases 20,000

22,000


Gross profit 23,000

Less canteen wages 17,000

Add wages due 2,000 19,000

Canteen net profit (add to income in I & E account) 4,000


162

(b)

5. (i)


Assets € €

Land and buildings 140,000

Equipment 1,600

Bar stock 3,000

Bank 4,000 148,600

Less liabilities

Bank loan 50,000


1. Membership Consultant,Mullingar,Co. Westmeath.

2. Report on members not paying membership

3. ____________________________

4. Members of Leinster Ladies Squash Club,Mullingar,Co. Westmeath.

5. I was asked by the members to report on the problem of members not paying theirsubscriptions. I contacted different clubs to see how they deal with this situation.My findings are as follows.

6. The club can do one or other of the following to improve the situation:

• Impose a levy on members;• Ban members who are behind in membership payments, from playing;• Set clear deadlines for payment each year;• Non-paid up members have no vote at meetings;• Appoint a new treasurer.


8. Sarah Walshe.

9. Membership Consultant.


€ € €


Clubhouse 70,000 70,000

Equipment 5,000 600 4,400

Total fixed assets 75,000 600 74,400

Current assets

Bank (receipts + opening bank balance – payments) 450


Subscriptions due 1,700 2,450

Less current liabilities 0000



Financed by


Less deficit (5,850) 70,850

Add Lottery grant 6,000



163

(ii)

(iii)

(iv)


€ € €


Land and buildings 140,000 140,000



Current assets

Bank 35,100

Bar closing stock 9,000

Subscriptions due 300 44,400


Subscriptions prepaid 900

Wages due 500 1,400



Financed by


Add surplus 36,000 134,600


Long-term loan 50,000


Income and Expenditure for year ending 30/4/2005

Income € €

Bar net profit 28,000

Subscriptions (6,000 + 300 – 900) 5,400

Profit on disco (17,000 – 9,000) 8,000

41,400

Less expenditure

Insurance 1,800

Travel 3,600 5,400


Bar Trading Account for year ending 30/4/2005

€ €

Bar sales 57,000

Less cost of sales



32,000


Gross profit 34,000

Less expenses

Bar wages (5,500 + 500) 6,000

Bar net profit (add to income in I & E account) 28,000


164

6.

7.Income and Expenditure Account for year ended 31/12/2005

Income € € €

Raffle income 7,198

Subscriptions (9,300 – 800) 8,500

Dance income (6,430 + 860) 7,290

22,988

Less expenditure

Wages 12,500

Telephone (635 + 147) 782

Catering 2,466

Insurance 2,700

Light 1,597

Depreciation: Premises 800 20,845

Surplus (excess of income over expenditure) 2,143


€ € €

Fixed assets Cost Depreciation NBVEquipment 18,000 2,160 15,840

Minibus 18,000 2,700 15,300

Total net assets 36,000 4,860 31,140

Current assetsCash 200

Subscriptions due 6,000

Stationery 300 6,500

Less current liabilitiesSubscriptions prepaid 100

Light and heat due 250




Financed byAccumulated fund 18,950

Add surplus 15,840


Income and Expenditure Account for year ending 30/11/2004Income € € €

Subscriptions (17,000 + 6,000 – 100) 22,900

Dance profits 6,000

28,900

Less expenditureInsurance 950

Rent 3,000

Light and heat (2,800 + 250) 3,050

Stationery (1,500 – 300) 1,200


Minibus 2,700 4,860 13,060



165

Chapter 53 Farm Accounts

1.

2.

Analysed Cash Book (Debit Side) p1

Date Details Total Bank Livestock Grants/Loans Other

2006 € € € €


1/9 Sale of cattle 1,600 1,600

7/9 Sale of hay 300 300

15/9 Loan 12,000 12,000

19/9 EU grant 8,000 8,000


24,730 1,600 20,000 300


Date Details Ch.no.

TotalBank

Electr. Fertilisers Tractor Livest. Other

2006 € € € € € €


7/5 Tractor diesel 5 400 400

9/5 Wages 6 200 200

14/5 Fertiliser 7 600 600

18/5 Builder 8 5,000 5,000

24/5 IFA membership 9 80 80

29/5 Calves 10 1,200 1,200

29/5 Seeds 11 300 300

30/5 Wages 12 200 200

31/5 Tractor repairs 13 120 120


10,550 250 600 520 1,200 5,780

Analysed Cash Book (Debit Side) p1

Date Details Total Bank Milk Cattle Other

2006 € € € €

1/5 Balance b/d 750

3/5 Milk receipts 900 900

8/5 Cattle sales 1,900 1,900

16/5 EU grant 7,000 7,000

10,550 900 1,900 7,000



166

3.Ordinary Level

Income and Expenditure Account of Farmer Conway for year ended 31/12/2005

Income € €

Milk 45,000

Cattle 25,000

Sheep 9,000

79,000

Less expenditure

Wages 14,500


Rent 2,750

Tractor repairs 1,950

Fertiliser and seed 2,670

Silage contractor 6,500

Insurance 1,750 33,620



Date DetailsCh.no.

TotalBank

Electricity Feeds Drawings Livestock Other

2006 € € € € € €

1/9 Purchase of calves 16 800 800

5/9 Feedstuff 17 280 280

5/9 Fertiliser 17 550 550

7/9 Silage contractor 18 800 800


9/9 Telephone 20 240 240

15/9 Fencing 21 140 140

19/9 Land reclamation 22 20,000 20,000

22/9 Drawings 700 700

22/9 Insurance 23 500 500

26/9 Vet 24 70 70

26/9 Diesel 25 320 320

26/9 Interest on loan 150 150

24,730 180 280 700 800 22,770



167

Higher Level

4.Ordinary Level

Income and Expenditure Account of Farmer Campbell for year ended 31/12/2005

Income € €

Cattle 38,500

Crops 17,500

Pigs 8,500

64,500

Less expenditure


Repairs to machinery 3,100

Wages 17,400

Vet fees 1,950

Bank interest 1,900

Light and telephone 4,200



Income and Expenditure Account of Farmer Conway for year ended 31/12/2005

Income € €

Milk 45,000

Cattle 25,000

Sheep 9,000

79,000

Less expenditure

Wages 14,500

Light and heat (3,500 + 500) 4,000

Rent 2,750

Tractor repairs 1,950

Fertiliser and seed (2,670 – 230) 2,440

Silage contractor 6,500

Insurance 1,750

Depreciation: Tractor 3,200 37,090



168

Higher Level

5.Ordinary Level

Higher LevelIncome and Expenditure Account of Farmer Ward for year ended 31/5/2006

Income € €

Crops 36,800

Interest on deposit account 2,500

Poultry 13,900

53,200

Less expenditure

Repairs 3,400

Wages (14,600 + 1,400) 16,000

Fertiliser 2,785

Telephone 1,895

Packaging (5,675 – 900) 4,775

Depreciation: Equipment 1,400 30,255


Income and Expenditure Account of Farmer Ward for year ended 31/5/2006

Income € €

Crops 36,800

Interest on deposit account 2,500

Poultry 13,900

53,200

Less expenditure

Repairs 3,400

Wages 14,600

Fertiliser 2,785

Telephone 1,895

Packaging 5,675 28,355


Income and Expenditure Account of Farmer Campbell for year ended 31/12/2005

Income € €

Cattle 38,500

Crops 17,500

Pigs 8,500

64,500

Less expenditure


Repairs to machinery 3,100

Wages (17,400 + 1,600) 19,000

Vet fees 1,950

Bank interest 1,900

Light and telephone 4,200

Insurance (2,400 – 600) 1,800

Depreciation: Equipment 1,500 40,850



169

6.Ordinary Level

Higher LevelIncome and Expenditure Account of Farmer Slevin for year ended 31/5/2006

Income € €

Cattle 45,000

Milk 29,000

Sheep 13,455

87,455

Less expenditure

Loan interest (5,000 + 700) 5,700

Feed 3,900

Transport 6,500

Insurance (2,765 – 500) 3,265


Depreciation: Tractor 1,900 25,565


Income and Expenditure Account of Farmer Slevin for year ended 31/5/2006

Income € €

Cattle 45,000

Milk 29,000

Sheep 13,455

87,455

Less expenditure

Loan interest 5,000

Feed 3,900

Transport 6,500

Insurance 2,765




170

Note: EU grant is treated as annual income.

7.

Balance Sheet of Farmer J. Flood as on 31/12/2006

Ordinary Level Higher Level

Fixed assets Cost € NBV € Fixed assets Cost € Depr. € NBV €

Land and buildings 185,000 185,000 Land and buildings 185,000 ------- 185,000

Machinery 54,800 54,800 Machinery 54,800 6,576 48,224

239,800 239,800 239,800 6,576 233,224

Current assets Current assets

Cash 1,200 Cash 1,200

Stock of feed on hand 2,200 3,400

Less current liabilities ------- Less current liabilities

Loan interest due 1,000

Working capital 1,200 Working capital 2,400

Total net assets 241,000 Total net assets 235,624

Financed by Financed by

Capital 85,100 Capital 85,100

Add surplus 100,900 186,000 Add surplus 95,524 180,624

Long-term liabilities Long-term liabilities

20-year loan 55,000 20-year loan 55,000

Capital employed 241,000 Capital employed 235,624

Income and Expenditure Account of Farmer J. Flood for year ending 31/12/2006


Income € € Income € €

Sale of cattle 45,600 Sale of cattle 45,600

Sale of milk 67,800 Sale of milk 67,800

EU grant 20,000 EU grant 20,000

133,400 133,400

Less expenditure Less expenditure

Wages 13,400 Wages 13,400

Light and heat 3,600 Light and heat 3,600

Feed 7,800 Feed (7,800 – 2,200) 5,600

Loan interest 4,500 Loan interest (4,500 + 1,000) 5,500

Repairs 3,200 32,500 Repairs 3,200

Depreciation: Machinery 6,576 37,876

Surplus (excess ofincome over expenditure)

100,900Surplus (excess of incomeover expenditure)

95,524


171

8.

Balance Sheet of Farmer B. Hay as on 31/12/2006


Fixed assets Cost € NBV € Fixed assets Cost € Depr. € NBV €

Land and buildings 245,000 245,000 Land and buildings 245,000 245,000

Tractor 23,000 23,000 Tractor 23,000 3,450 19,550

268,000 268,000 268,000 3,450 264,550

Current assets Current assets

Bank 12,000 Bank 12,000

Insurance prepaid 400 12,400

Less current liabilities -------- Less current liabilities

Wages due 700

Working capital 12,000 Working capital 11,700

Total net assets 280,000 Total net assets 276,250

Financed by Financed by

Capital 188,500 Capital 188,500

Add surplus 51,500 240,000 Add surplus 47,750 236,250

Long-term liabilities Long-term liabilities

10-year loan 40,000 10 year loan 40,000

Capital employed 280,000 Capital employed 276,250

Income and Expenditure Account of Farmer J. Flood for year ending 31/12/2006


Income € € Income € €

Sale of sheep 14,500 Sale of sheep 14,500

Sale of cattle 67,900 Sale of cattle 67,900

REP grant 10,000 REP grant 10,000

92,400 92,400

Less expenditure Less expenditure

Contractors fees 6,500 Contractors fees 6,500

Wages 14,300 Wages (14,300 + 700) 15,000

Loan interest 3,600 Loan interest 3,600

Insurance 3,200 Insurance (3,200 – 400) 2,800

Feed and fertiliser 13,300 40,900 Feed and fertiliser 13,300

Depreciation 3,450 44,650

Surplus (excess ofincome over expenditure

51,500Surplus (excess ofincome over expenditure)

47,750


172

Chapter 54 Service Firms

1.

2.

Analysed Cash Book of Insure all (Debit Side) p1

Date Details F Rec.no.

TotalBank

Life Car House Business

2006 € € € € €

4/6 House insurance GL 5 140 140

6/6 Car insurance GL 6 500 500

9/6 Bar insurance GL 7 550 550

16/6 House insurance GL 8 160 160

22/6 Life assurance GL 9 50 50

26/6 Life assurance GL 10 300 300

1,700 350 500 300 550


Analysed Cash Book of Quinn’s Travel (Credit Side) p1

Date Details F Ch.no.

TotalBank

Wages L&H Teleph. Advert. Other

2006 € € € € € €

7/5 Advertising GL 75 300 300

18/5 Electricity GL 76 180 180

21/5 Telephone GL 77 600 600

28/5 Wages GL 78 500 500

30/5 Window cleaner GL 79 15 15


10,120 500 180 600 300 15

Analysed Cash Book of Quinn’s Travel (Debit Side) p1

Date Details F Rec. no. Total Bank

Ireland EU Rest ofworld

2006 € € € €

1/5 Balance 20

2/5 Holidays in France GL 1 1,600 1,600

4/5 Holidays in Russia GL 2 3,000 3,000

12/5 Holiday in Kerry GL 3 700 700

16/5 Holidays in USA GL 4 2,800 2,800

24/5 Holidays in Greece GL 5 2,000 2,000

10,120 700 3,600 5,800



173

3.

4.

Analysed Cash Book of ‘Big T’Taxi (Debit Side) p1

Date Details F Rec. no. Total Bank Routine Weddings HSE

2008 € € € €

1/4 Routine hire GL 1 700 700

3/4 Routine hire GL 2 580 580

4/4 Wedding hire GL 3 420 420

9/4 HSE GL 4 400 400

16/4 HSE GL 5 600 600

29/4 Wedding hire GL 6 340 340

3,040 1,280 760 1,000

1/5 Balance b/d 740

Analysed Cash Book of Spring Cleaners (Credit Side) p1

Date Details F Ch. no. TotalBank

Wages Equipment Transport

2007 € € € €

6/7 Petrol GL 89 40 40

10/7 Ladders GL 90 240 240

14/7 Wages GL 91 180 180

18/7 Vacuum cleaner GL 92 280 280

21/7 Car insurance GL 93 360 360

27/7 Balance c/d 40

1,140 180 520 400

Analysed Cash Book of Spring Cleaners (Debit Side) p1

Date Details F Rec. no. Total Bank Households Business

2007 € € €

1/7 Balance b/d 50

4/7 Window cleaning DL 1 160 160

5/7 Butler Ltd DL 2 120 120

11/7 Willis Oil Ltd DL 3 350 350

24/7 Dunnes Stores DL 4 400 400

27/7 Mrs Kane DL 5 60 60

1,140 320 870

28/7 Balance b/d 40

Analysed Cash Book of Insure all (Credit Side) p1

Date Details F Ch.no.

TotalBank

Wages Rent Telephone

Station-ery

2006 € € € € €

3/6 Rent GL 50 160 160

6/6 Wages GL 51 200 200

12/6 Eircom GL 52 230 230

18/6 Office stationery GL 53 75 75


1,700 200 160 230 75


174

5.

6.


Income € €

Fees earned 75,900


88,400

Less expenditure

Insurance 4,300

Rent 6,600 10,900

Surplus (net profit) 77,500


Fixed assets Cost € Depreciation € NBV €

Buildings 98,000 ----------------- 98,000

Machinery 45,000 ----------------- 45,000

Total fixed assets 143,000 ----------------- 143,000

Current assets

Cash 3,600

Debtors 14,600 18,200





Financed by


Add surplus 47,100 130,600


15-year loan 25,000



Income

Sales income 65,000

Less expenditure

Wages 13,400

Telephone 4,500 17,900


Analysed Cash Book of ‘Big T’Taxi (Credit Side) p1

Date Details F Ch. no. Total Bank Wages Transport

2008 € € €

7/4 Wages GL 60 600 600

12/4 Car taxes GL 61 900 900

18/4 Car service GL 62 200 200

30/4 Wages GL 63 600 600


3,040 1,200 1,100


175

7.



Delivery vans 65,000 ----------------- 65,000


Current assets

Cash 3,400

Bank 34,500

Debtors 14,500 52,400

Less current liabilities --------



Financed by


Add surplus 44,100 87,400


10-year loan 30,000



Income

Income from fees 55,000

Commissionable receivable 21,000

76,000

Less expenditure

Wages 17,500

Rent 12,000





Equipment 34,500 ------------------ 34,500

Vans 84,500 ----------------- 84,500


Current assets

Cash 2,940



Creditors 11,340 14,640



Financed by


Add surplus 77,500



176

8.

Chapter 55 Information Technology

1.

2.Computers are used in the home to:

Send messages via the internet; purchase items like travel tickets via the internet; keepfiles on education results and medical records, prepare CVs; operate alarms.

Computers are used in business to:Send messages to customers and suppliers; advertise via the internet; monitor and orderstock; keep employee records; prepare accounts and cash budgets; operate alarms andmachinery; design and manufacture goods.

Software Programs Explanation

Word processingThis program allows the user to type letter/reports, make corrections onscreen before printing them or sending them by email.

SpreadsheetThis program allows the user perform mathematical calculations, keepfinancial records and prepare budgets.

DatabaseThis is a computerised filing system. It allows the user keep computerisedrecords, which can be sorted and linked to letters.

Computer AidedDesign

This program allows the user produce drawings and plans for designinghouses, equipment clothes etc.



Buildings 120,000 --------------- 120,000

Machinery 68,000 --------------- 68,000

Total fixed assets 188,000 --------------- 188,000

Current assets

Bank 12,400

Debtors 13,500 25,900


Creditors 19,000



Financed by


Add surplus 65,400

194,900


Income € €

Sale of services 98,600


102,000

Less expenditure

Wages 23,400

Advertising 6,500




177

3.Computers are used in banks to:

Send messages to customers; lodge and withdraw money; prepare statements of bankingrecords; keep customer files; prepare accounts and cash budgets; advertise.

Computers are used in communications to:Enable people/businesses to contact each other via the internet; provide up-to-the-minute information on what is happening around the world, by publishing newsbulletins on the internet.

4.Some factors to be considered when purchasing a computer system for a household/business are:

Is it necessary? What is the intended use of the computer?Is the size of memory important? How much does it cost? Is it complicated to use?Additional points for businesses include:Do the workers need training to use the new system? Will workers be replaced by the computer?

5.

6.

7.

General Journal (p1)

Date Details F Dr Cr

2006 € €

1/9 Computer GL 11,400

MBI Ltd CL 11,400

Purchase of computer on credit

General Ledger


2006 € 2006 €

Computer A/C (p1)

1/7 Bank ACB 7,700

Bank A/C ( p2)


General Ledger


2006 € 2006 €

Computer A/C (p1)

1/2 Bank ACB 8,500

Bank A/C (p2)



178

8.(a) P = Monitor (VDU); Q = Scanner; R = Keyboard; S = Mouse; T = Central Processing

Unit (CPU).(b) (i) Hard disk = a permanent internal storage disk in the computer.

(ii) Modem = a device which enables one computer communicate with anothercomputer via the telephone line.

(iii) Hard copy = a computer printout on paper.(iv) Networking = linking computers within an organisation together.

(c) (i) Will she have use for it; will her staff require training; size of RAM (memory); is it upgradeable.

(ii) The purpose of the loan; capacity to repay the loan; security available in the eventthat the loan is not repaid; credit-worthiness of the borrower.

9.(a) (i) Prepare accounts for their business, keep control of stock, design notices for their

discos.(ii) Philip can do research, download notes from his lecturers, type his assignments.

(iii) Send messages via the internet; purchase items like travel tickets via the internet;keep files on education results and medical records, prepare CVs; operate alarmsetc.

(b) Monitor: This displays the work of the computer to the user.Megabytes: The size of the computer memory is stated in megabytes. The greater

the number of megabytes, the bigger the memory.Keyboard: This is an input device that allows the user enter (type in)

instructions into the computer.Mouse: This is a hand-operated electronic device that controls the movement

of the cursor (pointer) on the computer screen.Word processing: This is a computer program which allows the user type letter/reports,

make corrections on screen before printing them or sending them byemail.

Database: This is a computer program which acts as a computerised filingsystem. It allows the user keep computerised records, which can besorted and linked to letters.


2006 € 2006 €

General Ledger

Computer A/C (p1)

1/9 MBI Ltd GJ 11,400

Creditors Ledger

MBI LTD A/C (p2)

1/9 Computer GJ 11,400


179

Junior Certificate

Business Studiesfor Households and Enterprises

WORKBOOK TEACHER’S MANUAL

Matt Hynes

© Matt Hynes 2005

ISBN 1-84131-703-9Folens Publishers,

Hibernian Industrial Estate,Greenhills Road,

Tallaght,Dublin 24.

Editor: Fiona DunneDesign and Layout: Compuscript

Produced in Ireland by Folens Publishers

All rights reserved.

The publisher reserves the right to change, without notice, at any time the specification of this product.

FOLENS

Chapter 1 Communication

1. Tick � the most appropriate box to show which of the following methods of communicationare internal or external means of communication.

2. Complete the sentences below showing which of the following methods of communicationare oral, written or visual.

(i) A memo is a form of communication.

(ii) The intercom is a form of communication.

(iii) An e-mail is a form of communication.

(iv) A chart is a form of communication.

(v) A report is a form of communication.

(vi) A notice board is a form of communication.

(vii) A committee meeting is a form of communication.

Chapter 2 Communications in Action 1. Place the following customers’ names in alphabetical order: Malcolm Reilly; Mary Roche;

Graham Reilly; Peggy Rafter.

2. Place the following customers’ names in alphabetical order: Stephen Kelly; Sean Kirwan;Shane Victory; James Mulligan.

3. Place the following customers’ names in alphabetical order: Mary Mahon; MonaCampbell; Nora Kennedy; Deirdre Warde.

4. (a) Complete the memo, dated 2 September 2005, sent by the PE teacher Ms V. Fit to yourBusiness Studies teacher Mr Money to remind his class that athletics trials will takeplace in the sports field at 12.30 pm on 10 September 2005. Assume you are Ms V. Fit.

(b) A memo is a form of communication.

Memo

To: Mr Money, Business Studies Teacher

From: Ms V Fit, PE Teacher

Date: 2 September 2005

Subject: Athletic Trials

Message: Trials will take place in the sports field

at 12.30 pm on 10 September 2005

Signed: V. Fit

(a) Mona Campbell (b) Nora Kennedy (c) Mary Mahon (d) Deirdre Warde

(a) Stephen Kelly (b) Sean Kirwan (c) James Mulligan (d) Shane Victory

(a) Peggy Rafter (b) Graham Reilly (c) Malcolm Reilly (d) Mary Roche

Methods of Communication Internal External

Letter �

Memo �

Notice Board �

Staff Meeting �

182

Junior Certificate Business Studies Workbook Teacher’s Manual

written

oral

written

visual

written

written

oral

written

5. Complete the memo, on today’s date, that your IT teacher might send to your BusinessStudies teacher regarding the use of the computer room at lunchtime. The computer room isavailable to the Business Studies class from 12.30 pm to 1 pm on Monday and Wednesday.

Additional memo for practice.

6. Complete the notice of meeting for the Mullingar Golf Club AGM which will be held in theclubhouse at 3.30 pm on 20 November 2006.

Chapter 3 Introduction to Record Keeping

In questions 1 to 4 you are required to complete the sentences by inserting the correct words.1. Money received is entered on the _________ side of the Cash Account.2. Money paid out is entered on the _________ side of the Cash Account.3. The details column shows the money or

the money to.4. The date column should show the _______, ____________ and year. 5. Group the words below under Left Hand Side or Right Hand Side of the Cash Account: In;

Out; Give; Receive; Debit Side; Balance; Credit Side. One word does not belong.

Cash Account

Left Hand Side Right Hand Side

1. In 1. Out

2. Receive 2. Give

3. Debit side 3. Credit side

Notice of MeetingNotice is hereby given that the AGM of , will take place in the

, at on the .All members are welcome to attend.

Memo

To:

From:

Date:

Subject:

Message:

Signed:

Memo

To: Ms Fiona Dunne, Business Studies Teacher

From: Mr William Web, IT Teacher

Date:

Subject: Use of Computer Room

Message: The computer room is available to the

Business Studies class from 12.30 pm to 1 pm

on Monday and Wednesday

Signed: William Web

183


Mullingar Golf Club

debitcredit

who gave you

who you gaveday month

club house 3.30 pm 20 November 2006

184


6. Balance the following Cash Account and bring down the balance to the next day.



9. (a) Record the following details in the blank Cash Account below:

2006 €

1/1/ Received pocket money 256/1/ Won raffle prize 2007/1/ Paid for new trainers 708/1/ Paid for lunch 8

(b)Balance the Cash Account on 8 January 2006.Cash Account

Date Details Total€


2006 2006

1/1/ Pocket money 25 7/1/ Trainers 70

Raffle prize 200 8/1/ Lunch 8

8/1/ Balance c/d 147

225 225

9/1/ Balance b/d 147

Cash Account



2008 2008

1/7/ Balance b/d 13 1/7/ Mobile phone credit 10

7/7/ Pocket money 142 8/7/ New clothes 143

8/7/ Balance c/d 2

155 155

9/7/ Balance b/d 2

Cash Account



2007 2007

1/4/ Balance b/d 195 3/4/ CDs 45

6/4/ Part-time work 120 9/4/ New shoes 97


315 315


Cash Account



2006 2006

1/1/ Balance b/d 230 2/1/ New bicycle 212

3/1/ Pocket money 65 5/1/ Mobile phone credit 30

5/1/ Balance c/d 53

295 295

6/1/ Balance b/d 53

10. (a) Record the following details in the blank Cash Account below:2007 €

1/4/ Received pocket money 102/4/ Received wages from part-time job 604/4/ Paid for school trip 307/4/ Paid for cinema 12

(b)Balance the Cash Account on 7 April 2007.

11. (a) Record the following details in the blank Cash Account below:2008 €

1/5/ Cash on hand (balance) 453/5/ Received wages from part-time job 1005/5/ Paid for cosmetics 349/5/ Paid hairdresser 43

(b)Balance the Cash Account on 9 May 2008.

Chapter 4 Household Accounts1. Total the Analysed Columns and balance the Cash and Bank columns and bring down the

balances on 8 January 2006.

Analysed Cash Book

Date Details Cash Bank Date Details Cash Bank HK L & H Other

2006 2006

1/1/ Balance b/d 20 200 3/1/ ESB 300 300

5/1/ Child Ben. 260 5/1/ Groceries 160 160

8/1/ Wages 700 8/1/ Car tax 450 450

8/1/ Balance c/d 120 150

280 900 280 900 160 300 450

9/1/ Balance b/d 120 150

Cash Account



2008 2008

1/5/ Balance b/d 45 5/5/ Cosmetics 34

3/5/ Wages 100 9/5/ Hairdresser 43

9/5/ Balance c/d 68

145 145


Cash Account



2007 2007

1/4/ Pocket money 10 4/4/ School trip 30

2/4/ Wages 60 7/4/ Cinema 12

7/4/ Balance c/d 28

70 70

8/4/ Balance b/d 28

185


186


3. Total the Analysed Columns and balance the Cash and Bank columns and bring down thebalances on 7 February 2007.

4. Total the Analysed Columns and balance the Cash and Bank columns and bring down the balances on 7 April 2008.

Chapter 5 Income1. Only one statement in each group of three statements set out below is correct.

Tick � the correct statement.(a) In relation to household income, regular income consists of:

(b) In a wage slip the net wage is calculated by:

Statement Tick ��

i Adding deductions to gross wage

ii Subtracting VIVAS payments and PRSI from gross wage

iii Subtracting all deductions from gross wage ��

Statement Tick ��

i Basic wage, bank interest, overtime wages

ii Basic wage and child benefit ��iii Basic wage, child benefit, bank interest and lotto win

Analysed Cash Book

Date Details Cash Bank Date Details Cash Bank HK School

2008 2008

1/4/ Balance b/d 240 1/4/ Balance b/d 90


7/4/ Wages 1,200 6/4/ School trip 700 700

6/4/ Exam fee 240 240

220 1,030 220 940

7/4/ Balance c/d 280 170

500 1,200 500 1,200

8/4/ Balance b/d 280 170

Analysed Cash Book

Date Details Cash Bank Date Details Cash Bank HK Car

2007 2007

1/2/ Balance b/d 90 1/2/ Balance b/d 200


7/2/ Wages 1,900 5/2/ Car Insurance 600 600

7/2/ New tyres 300 300

190 1,100 190 900

7/2/ Balance c/d 290 800

480 1,900 480 1,900

8/2/ Balance b/d 290 800

2. Column 1 is a list of income terms. Column 2 is a list of possible explanations for thoseterms. Match the two lists by placing the number of the explanation beside the relevantterm. One explanation does not match a term. E.g. Explanation no. 4 matches PRSI.

3. Column 1 is a list of people. Column 2 is a list of different sources of income. Match thetwo lists by placing the number of the income beside the relevant person. One source ofincome does not match.

4. (a) Calculate the net wage for Sean Kirwin, employee No. 246 for week No. 1, whosupplied the following information: Basic wage €200; overtime €160; PAYE €60;PRSI €14; BUPA €12; Pension €15.

(b) Complete the wage slip below.

5. (a) Calculate the net wage for Jamie Mulligan, employee No. 135 for week No. 6, whosupplied the following information: Jamie worked 60 hours, basic week 48 hours at €10per hour, overtime at time and half for all additional hours worked. Tax credit €50; Rateof tax 40%; PRSI 5% of gross wage; VHI €20; Pension €15; Union €10.


Wage Slip Jamie Mulligan Employee No:

Week Gross Wage DeductionsNet

Wage

No. Basic Overtime Total PAYE PRSI Union VHI Pension Total

6 480 180 660 214 33 10 20 15 292 368

Wage Slip Sean Kirwin Employee No: 246


Wage

No. Basic Overtime Total PAYE PRSI BUPA Pension Total

1 200 160 360 60 14 12 15 101 259

Column 1 People Insert Number No. Column 2 Source of Income

Employee 4 1. Pension

Student 3 2. PAYE

Unemployed person 5 3. Pocket money

Retired person 1 4. Wages

5. Social welfare assistances

Column 1 Terms Insert Number No. Column 2 Explanations

PRSI 4 1. Amount paid for working a normal week

Gross Wage 8 2. Contributions paid towards pension

Net Wage 7 3. Tax on income paid to government

Superannuation 2 4. Pay-related social insurance in case of unemployment

Statutory Deductions 5 5. Compulsory deductions paid to government

Basic Wage 1 6. Payment given for working more than normal hours

Overtime payment 6 7. Amount of wages after all deductions are paid

8. Amount of wages before deductions are made

187


6. (a) Calculate the net wage for Marie Dowler, employee No. 78 for week No. 10, whosupplied the following information: Marie worked 56 hours, basic week 39 hours at€12 per hour, overtime at time and half for the first ten hours of overtime and doubletime thereafter. Tax credit €48; Rate of tax 40%; PRSI 5% of gross wage; VHI €20;Savings €20; Union €10.


7. (a) Calculate the net wage for Cathal Maher, employee No. 188 for week No. 4, whosupplied the following information: Cathal worked 66 hours, basic week 48 hours at€10 per hour, overtime at time and half for the first ten hours of overtime and doubletime thereafter. Tax credit €64; Rate of tax 40%; PRSI 5% of gross wage; VIVAS €23;Savings €30; Pension €12.


8. (a) Calculate the net wage for Thomas Madden, employee No. 13 for week No. 30, whosupplied the following information: Thomas worked 57 hours, basic week 39 hours at€14 per hour, overtime time and half for the first ten hours of overtime and double timethereafter. Tax credit €65; Rate of tax 40%; PRSI 5% of gross wage; BUPA €25,Savings €30, Union €8.


9. Complete the six-month income record below from the following information: Net basicwage €1,200 per month; Net overtime February €300 and May €500; Child Benefit €399per month; Interest of bank deposit account €100 in March.

Jan Feb March April May June Total

Income € € € € € € €

Net Basic Wage 1,200 1,200 1,200 1,200 1,200 1,200 7,200

Net Overtime – 300 – – 500 – 800

Child Benefit 399 399 399 399 399 399 2,394

Bank Interest – – 100 – – – 100

Total Income 1,599 1,899 1,699 1,599 2,099 1,599 10,494

Wage Slip Thomas Madden Employee No: 13


Wage

No. Basic Overtime Total PAYE PRSI BUPA Savings Union Total

30 546 434 980 327 49 25 30 8 439 541

Wage Slip Cathal Maher Employee No: 188


Wage

No. Basic Overtime Total PAYE PRSI VIVAS Savings Pension Total

4 480 310 790 252 39.50 23 30 12 356.50 433.50

Wage Slip Marie Dowler Employee No: 78


Wage

No. Basic Overtime Total PAYE PRSI Union VHI Savings Total

10 468 348 816 278.40 40.80 10 20 20 369.20 446.80

188


10. Complete the six-month income record below from the following information:Net basic wage €1,450 per month; Net overtime August €450 and December €800; ChildBenefit €133 per month; Sale of table in November €350.

Chapter 6 Expenditure1. Write brief notes on:

(a) Opportunity Cost:

(b) Priorities:

(c) Impulse Buying:

2. Sindy has €1 to spend. She would love to buy a bar of chocolate or a can of orange, butthey both cost €1. She decides to buy the bar of chocolate.(a) What is the financial cost of buying the bar of chocolate? (b) The opportunity cost of buying the bar of chocolate is: (tick � the correct answer)

3. Classify the following household expenses under the following headings: Fixed; Irregular;Discretionary.Expenditure: Car insurance; Entertainment; Telephone; Church donation; School fees;Holiday in Greece; House mortgage; Petrol.

Fixed Irregular Discretionary

Car insurance Telephone Entertainment

House mortgage Petrol Church donation

School fees Holiday in Greece

Tick �

€1 paid for the bar of chocolate

The can of orange she did not buy �The energy she used up in going to the shop

The bar of chocolate she bought

July Aug Sept Oct Nov Dec Total

Income € € € € € € €

Net Basic Wage 1,450 1,450 1,450 1,450 1,450 1,450 8,700

Net Overtime - 450 - - - 800 1,250

Child Benefit 133 133 133 133 133 133 798

Sale of table - - - - 350 - 350

Total Income 1,583 2,033 1,583 1,583 1,933 2,383 11,098

189


The decision to give up something and choose

These are things that are most important or most needed,

e.g. food, clothing etc.

Buying things on the spur of the moment, i.e things

that are not planned for.

€ 1

something else is referred to as the opportunity cost of the things chosen.

4. (a) Complete the six-month expenditure record below from the following data:January: Mortgage €280; groceries €180; entertainment €60; car tax €240; petrol€40; electricity €85.February: Mortgage €280; groceries €165; entertainment €60; telephone €170;clothes €300.March: Mortgage €280; groceries €170; entertainment €40; car insurance €450;petrol €30; electricity €65.April: Mortgage €280; groceries €190; entertainment €50; car repairs €110; petrol€25; telephone €190.May: Mortgage €320; groceries €180; entertainment €50; birthday €90; petrol €25;electricity €60.June: Mortgage €320; groceries €200; entertainment €60; house insurance €120;holiday €800.

(b) Calculate the total cost of the car for the six months and insert your answer in the spaceprovided.

(Note: annual costs should be divided evenly over the whole year.)

(a)

(b) Cost of the car for six months is: €

Household Expenditure Record for Six Months

Jan Feb March April May June Total forJan to June

Expenditure

Fixed

Mortgage 280 280 280 280 320 320 1,760

Car Tax 240 240

Car Insurance 450 450

House Insurance 120 120

Subtotal 520 280 730 280 320 440 2,570

Irregular

Housekeeping 180 165 170 190 180 200 1,085

Petrol 40 30 25 25 - 120

Electricity 85 65 60 210

Telephone 170 190 360

Clothes 300 300

Car Repairs 110 110

Subtotal 305 635 265 515 265 200 2,185

Discretionary

Entertainment 60 60 40 50 50 60 320

Birthday 90 90

Holidays 800 800

Subtotal 60 60 40 50 140 860 1,210

Total Expenditure 885 975 1,035 845 725 1,500 5,965

190


575

5. (a) Complete the four-month expenditure record below from the following data: January: Mortgage €340; housekeeping €190; life assurance €80; petrol €40;birthday €70; electricity €100; heating oil €300.February: Mortgage €340; housekeeping €210; life assurance €80; petrol €30;telephone €210; Car tax €240; church €80.March: Mortgage €340; housekeeping €180; life assurance €80; petrol €35;electricity €65; television licence €62; clothes €120.April: Mortgage €340; housekeeping €200; life assurance €80; petrol €45;telephone €220; house decoration €700.

(b) If the household wished to save €100 per month how much income would it need to receive each month to meet its expenses and saving?

(a)

Household Expenditure Record for Four Months

Jan Feb March AprilTotal for

Jan to April

Expenditure

Fixed

Mortgage 340 340 340 340 1,360

Car Tax 240 240

Life Insurance 80 80 80 80 320

TV Licence 62

Subtotal 420 660 482 420 1,982

Irregular

Housekeeping 190 210 180 200 780

Petrol 40 30 35 45 150

Electricity 100 65 165

Telephone 210 220 430

Clothes 120 120

Heating Oil 300 300

Subtotal 630 450 400 465 1,945

Discretionary

House Decoration 700 700

Birthday 70 70

Church 80 80

Subtotal 70 80 – 700 850

Total Expenditure 1,120 1,190 882 1,585 4,777

Amount of income required

1,220 1,290 982 1,685

191


Chapter 7 The Budget

1. Column 1 is a list of budgeting terms. Column 2 is a list of possible explanations. Matchthe two lists by placing the letter of the correct explanation under the relevant number inthe table below. One explanation does refer to any term.

2. Complete the budget statement below. Show the Net Cash position for each month and forthe total.

3. Complete the budget statement below. Show the Net Cash position for each month and forthe total.

4. Complete the budget statement below.


Jan€

Feb€

March€

April€

May€

June€

Total€

Income 2,200 2,100 3,220 2,850 2,150 2,700 15,220

Expenditure 1,800 2,300 2,850 2,700 1,950 2,400 14,000

Net Cash 400 (200) 370 150 200 300 1,220

Opening Cash 100 500 300 670 820 1,020 100

Closing Cash 500 300 670 820 1,020 1,320 1,320

Jan€

Feb€

March€

April€

May€

June€

Total€

Income 1,700 1,800 2,000 2,900 1,800 1,900 12,100

Expenditure 1,400 1,900 3,200 2,000 1,400 1,500 11,400

Net Cash 300 (100) (1,200) 900 400 400 700

Opening Cash 30 330 230 (970) (70) 330 30

Closing Cash 330 230 (970) (70) 330 730 730

Jan€

Feb€

March€

April€

May€

June€

Total€

Income 1,000 1,200 1,400 1,300 1,550 1,900 8,350

Expenditure 1,400 1,100 950 1,000 1,150 1,200 6,800

Net Cash (400) 100 450 300 400 700 1,550

Jan€

Feb€

March€

April€

May€

June€

Total€

Income 700 700 900 900 960 960 5,120

Expenditure 600 650 850 1,100 960 960 5,120

Net Cash 100 50 50 (200) – – –

Column 1 Terms Column 2 Explanations1.2.3.4.

SavingsNet CashClosing CashDiscretionary Expenditure

A.B.C.D.E.

Income equals to expenditureGoods and services that can be done withoutIncome greater than expenditureNot spending income until sometime in the futureNet cash plus opening cash

1. 2. 3. 4.

D C E B

192





Jan€

Feb€

March€

April€

May€

June€

Total€

Income 2,200 2,100 3,220 2,850 2,150 2,700 15,220

Expenditure 1,800 2,300 2,850 2,700 1,950 2,400 14,000

Savings 150 150 200 200 300 300 1,300

Total Expenditureand Savings

1,950 2,450 3,050 2,900 2,250 2,700 15,300

Net Cash 250 (350) 170 (50) (100) – (80)

Opening Cash 100 350 – 170 120 20 100

Closing Cash 350 – 170 120 20 20 20

Jan€

Feb€

March€

April€

May€

June€

Total€

Income 2,200 2,100 3,220 2,850 2,150 2,700 15,220

Expenditure 1,800 2,300 2,850 2,700 1,950 2,400 14,000

Savings 300 300 400 400 500 500 2,400

Total Expenditureand Savings

2,100 2,600 3,250 3,100 2,450 2,900 16,400

Net Cash 100 (500) (30) (250) (300) (200) (1,180)

Opening Cash 100 200 (300) (330) (580) (880) 100

Closing Cash 200 (300) (330) (580) (880) (1,080) (1,080)

Jan€

Feb€

March€

April€

May€

June€

Total€

Income 1,550 1,550 1,760 1,850 2,230 2,140 11,080

Expenditure 1,980 890 1,150 1,220 1,650 3,400 10,290

Net Cash (430) 660 610 630 580 (1,260) 790

Opening Cash (150) (580) 80 690 1,320 1,900 (150)

Closing Cash (580) 80 690 1,320 1,900 640 640

193


9. Opposite is a budget for the Dowd household for four months, January, February, Marchand April: opening cash in hand was €80.

Planned Income• Mr Dowd earns €1,000 net per month. • Mrs Dowd earns €900 net per month. • Child benefit is €40 per month.

Expenditure• House mortgage is €300 per month.• House insurance is €100, payable in April.• School fees are €90 in January and €150 in March.• Electricity bills are €100 in February and €80 in April.• Annual car tax of €250 and car insurance of €550 are paid in March.• Life assurance costs €120 per month.

The Dowds spend €400 per month on household expenses and they spend €40 per monthon entertainment. The Dowds spend €40 per month on diesel. In April they will spend€700 on painting the house.

Complete fully the blank household budget form (opposite) using all the above figures.

194


Dowd Household Jan Feb March April Total

€ € € € €

Planned Income

Mr Dowd – Salary 1,000 1,000 1,000 1,000 4,000

Mrs Dowd – Salary 900 900 900 900 3,600

Child Benefit 40 40 40 40 160

Total Income A. 1,940 1,940 1,940 1,940 7,760

Planned Expenditure

Fixed

Mortgage 300 300 300 300 1,200

Car Tax 250 250


Life Assurance 120 120 120 120 480

House Insurance 100 100

Subtotal 420 420 1,220 520 2,580

Irregular

Household Expenses 400 400 400 400 1,600

Diesel 40 40 40 40 160

School Fees 90 150 240


Subtotal 530 540 590 520 2,180

Discretionary

Entertainment 40 40 40 40 160

House Decoration 700 700

Subtotal 40 40 40 740 860

Total Expenditure B. 990 1,000 1,850 1,780 5,620

Net Cash (A – B) 950 940 90 160 2,140

Opening Cash 80 1,030 1,970 2,060 80

Closing Cash 1,030 1,970 2,060 2,220 2,220

195


10. Opposite is a budget for the Lynch household for four months, January, February, Marchand April: opening cash in hand was €80.

Planned Income• R. Lynch earns €800 net per month. • M. Lynch earns €650 net per month. • Child benefit is €30 per month.

Planned Expenditure• House mortgage will be €300 per month.• Annual car tax €140 due in February.• Repayments on car loan (to be fully paid by end of March) will cost €230 per

month until then.• Annual car insurance €400, due for payment in March.• House insurance premium amounts to €120 per year payable monthly from

January.• Household expenses are usually €450 per month.• Car running costs are expected to be €90 per month except in March when the

annual garage service to the car will cost an extra €70.• Electricity bills for light and heat are expected to amount to €180 in January and

€230 in March.• Birthdays will cost €90 in February and €50 in April.• Entertainment will cost €70 each month.

(a) Complete fully the blank household budget form (opposite) using all the above figures.

(b) How much will the Lynch household have saved in the four months?

(Junior Certificate Ordinary Level 1992 amended for euro)

196


(a)

(b)Saved in four months: €

Lynch Household Jan Feb March April Total

€ € € € €

Planned Income

R. Lynch – Salary 800 800 800 800 3,200

M. Lynch – Salary 650 650 650 650 2,600


Total Income A. 1,480 1,480 1,480 1,480 5,920

Planned Expenditure

Fixed

Mortgage 300 300 300 300 1,200

Annual Car Tax 140 140

Car Loan 230 230 230 – 690

Annual Car Insurance 400 400

House Insurance 10 10 10 10 40

Subtotal 540 680 940 310 2,470

Irregular

Household 450 450 450 450 1,800

Car Running Costs 90 90 160 90 430


Subtotal 720 540 840 540 2,640

Discretionary

Birthdays 90 50 140

Entertainment 70 70 70 70 280

Subtotal 70 160 70 120 420

Total Expenditure B. 1,330 1,380 1,850 970 5,530

Net Cash (A – B) 150 100 (370) 510 390

Opening Cash 80 230 330 (40) 80

Closing Cash 230 330 (40) 470 470

197


390

11. Opposite is a budget for the Mullins household for four months, May, June, July andAugust: opening cash in hand was €240.

Planned Income• John Mullins earns €1,225 net per month.• Brenda Mullins earns €1,250 net per month and expects to receive an increase of €50 in

August.• Child benefit is €150 per month.

Planned Expenditure• House mortgage will be €340 per month.• House insurance premium, €480 per year, is payable monthly from May.• John’s annual car insurance €450. Brenda’s annual car insurance is €375. Both are payable

in June.• Household expenses are usually €550 per month except in July, when they are €250 less.• Car running costs are expected to be €100 per month for John and €125 a month for

Brenda.• Irish college for the children will cost €550 in June.• Electricity bills for light and heat are expected to amount to €110 in May and €80 in July.• The Mullins family has a home telephone and a mobile phone. The home telephone is

expected to be €165 in June and €150 in August. The mobile phone bill is expected to be€30 per month.

• A birthday party will cost €350 in August.• The family expects to spend €2,500 on a holiday in July.• Entertainment will cost €200 each month except July, when it will cost nothing as the

family is on holiday.


(Junior Certificate Ordinary Level 1998 Section(B) Q1 amended for euro)

198


Mullins Household May June July Aug Total

Planned Income € € € € €

John Mullins – Salary 1,225 1,225 1,225 1,225 4,900

Brenda Mullins – Salary 1,250 1,250 1,250 1,300 5,050

Child Benefit 150 150 150 150 600

Total Income A. 2,625 2,625 2,625 2,675 10,550

Planned Expenditure

Fixed

Mortgage 340 340 340 340 1,360



Subtotal 380 1,205 380 380 2,345

Irregular

Household Expenses 550 550 300 550 1,950

Car Running Costs 225 225 225 225 900

Irish College 550 550

Light and Heat 110 80 190

Telephone Costs 30 195 30 180 435

Subtotal 915 1,520 635 955 4,025

Discretionary

Birthday Parties 350 350

Holidays 2,500 2,500

Entertainment 200 200 200 600

Subtotal 200 200 2,500 550 3,450

Total Expenditure B. 1,495 2,925 3,515 1,885 9,820

Net Cash (A – B) 1,130 (300) (890) 790 730

Opening Cash 240 1,370 1,070 180 240

Closing Cash 1,370 1,070 180 970 970

199


12. Opposite is a budget for the Hughes household for January, February, March and April:opening cash in hand was €150.

Planned Income• Aidan Hughes earns €825 net per month.• Fiona Hughes earns €650 net per month and expects to receive an increase of €40 in

April.• Child benefit is €120 per month.

Planned Expenditure• House rental is €400 per month but will increase by €50 per month from the

beginning of March.• House contents insurance premium, €120 per year, is payable monthly from January.• The Hughes family pay health insurance of €55 per month to the VHI. This will increase

to €60 per month from the beginning of March.• Groceries are usually €350 per month.• Aidan pays €50 a month and Fiona pays €55 a month on bus and train fares to travel to

work.• The family expects to spend €600 on clothes in the January sales.• Electricity bills for light and heat are expected to amount to €95 in January and €80 in

March.• A fill of heating oil, costing €220, will be needed in February.• A birthday will cost €100 in February.• Entertainment will cost €120 each month except March, when it will be €300 extra due

to a wedding.• The Hughes family hope to buy a new television and video recorder costing €700 in April.


(Junior Certificate Ordinary Level 1997 Section (B)QI amended for euro)

200


Hughes Family January February March April Total


Aidan Hughes – Salary 825 825 825 825 3,300

Fiona Hughes – Salary 650 650 650 690 2,640

Child Benefit 120 120 120 120 480

Total Income A. 1,595 1,595 1,595 1,635 6,420

Planned Expenditure

Fixed

House Rental 400 400 450 450 1,700

Contents Insurance 10 10 10 10 40

Health Insurance 55 55 60 60 230

Subtotal 465 465 520 520 1,970

Irregular

Groceries 350 350 350 350 1,400

Travel Costs 105 105 105 105 420

Clothes 600 600

Light and Heat 95 220 80 395

Subtotal 1,150 675 535 455 2,815

Discretionary

Birthdays 100 100

Entertainment 120 120 420 120 780

TV and Video 700 700

Subtotal 120 220 420 820 1,580


Net Cash (A – B) (140) 355 120 (160) 55

Opening Cash 150 10 245 365 150

Closing Cash 10 245 365 205 205

201


13. Opposite is the budget for the Keane household for the last four months of 2004:opening cash in hand was €880.

Planned Income• Brian Keane earns €2,500 net per month and expects to receive a bonus of €2,000 net in

April.• Mary Keane earns €1,950 net per month and expects to receive an Easter bonus of €700

net in April.• The family expect to receive interest €900 on a deposit account in March.

Planned Expenditure• House Mortgage of €950 per month will increase by €50 per month from March 2004.• House insurance premium, €720 per year, is payable monthly from January.• Repayments on the car loan (to be paid off in full in March) are €240 per month.• Household expenses are usually €1,600 per month except March, when they are €300

less.• Car running costs will be €295 per month.• Mary’s driving lessons, costing €140 per month, will end in March.• ESB bills for light and heat are expected to amount to €640 in January and €570 in

March, while gas, costing €300, will be needed in February.• Telephone bills for the home are expected to be €350 in February and April.• Presents for parents’ fiftieth wedding anniversary will cost €1,000 in March.• Entertainment will cost €600 each month except in April, when it will cost €300 less.


(b) Explain what House Insurance means.

(c) State whether tickets for a Britney Spears concert is fixed, irregular or discretionaryexpenditure.

202


This is where the owner of a house pays a premium to an insurance company

in return for a promise of compensation should damage be done to the house.

Britney Spears tickets are discretionary.

Keane Family Jan Feb March April Total


Brian Keane – Salary 2,500 2,500 2,500 4,500 12,000

Mary Keane – Salary 1,950 1,950 1,950 2,650 8,500

Deposit Interest 900 900

Total Income A. 4,450 4,450 5,350 7,150 21,400

Planned Expenditure

Fixed

House Mortgage 950 950 1,000 1,000 3,900


Car Loan 240 240 240 – 720

Subtotal 1,250 1,250 1,300 1,060 4,860

Irregular

Household Expenses 1,600 1,600 1,300 1,600 6,100

Car Running Costs 295 295 295 295 1,180

Driving Lessons 140 140 140 – 420

Light and Heat 640 300 570 – 1,510

Telephone Costs – 350 – 350 700

Subtotal 2,675 2,685 2,305 2,245 9,910

Discretionary

Presents 1,000 1,000

Entertainment 600 600 600 300 2,100

Subtotal 600 600 1,600 300 3,100


Net Cash (A – B) (75) (85) 145 3,545 3,530

Opening Cash 880 805 720 865 880

Closing Cash 805 720 865 4,410 4,410

203


(a)

14. Opposite is the budget for the Kelly household for the last four months of 2005: opening cash in hand was €460.

Planned Income• Noel Kelly earns €1,800 net per month.• Nora Kelly earns €1,750 net per month and expects to receive an increase of €200 starting

in July.• Child Benefit is €280 net per month.

Planned Expenditure• House Mortgage of €750 per month will decrease by €70 per month from 1 August

2005.• House insurance premium, €720 per year, is payable monthly from May.• Noel’s annual car insurance is €480. Nora’s annual car insurance is €550. Both are

payable in June.• Household expenses are usually €1,200 per month except in August, when they are

€1,000 extra.• Car running costs will be €310 per month for Noel and €195 per month for Nora.• Irish College fees in July €675.• ESB bills for light and heat are expected to amount to €480 in May and €370 in July.• Telephone bills for the home are expected to be €250 in June and August, while bills for

mobile phones for all the family will be €245 per month.• Presents for birthday parties will cost €900 in July.• The family will take a holiday in July costing €3,800.

(a) Complete fully the blank household budget form (opposite) using all the abovefigures.

(b) Name three examples of car running costs.1. 2. 3.

(c) Name three ways of paying the telephone bill.1. 2. 3.

204


PetrolRepairsReplacement parts e.g. tyres

By direct debitBy chequeBy credit card

205


Kelly Family May June July August Total


Noel Kelly – Salary 1,800 1,800 1,800 1,800 7,200

Nora Kelly – Salary 1,750 1,750 1,950 1,950 7,400

Child Benefit 280 280 280 280 1,120

Total Income A. 3,830 3,830 4,030 4,030 15,720

Planned Expenditure

Fixed

House Mortgage 750 750 750 680 2,930


Car Insurance 1,030 1,030

Subtotal 810 1,840 810 740 4,200

Irregular



Irish College Fees 675 675

Light and Heat 480 370 850

Telephone Costs 245 495 245 495 1,480

Subtotal 2,430 2,200 2,995 3,200 10,825

Discretionary

Presents 900 900


Subtotal 4,700 4,700


Net Cash (A – B) 590 (210) (4,475) 90 (4,005)

Opening Cash 460 1,050 840 (3,635) 460

Closing Cash 1,050 840 (3,635) (3,545) (3,545)

(a)

206


15. Opposite is the budget for the Diffley household for the last four months of 2006:opening cash in hand was €5,000.

Planned Income• Murt Diffley earns €3,600 net per month and expects to go on half pay from October

onwards.• Agnes Diffley earns €2,450 net per month and expects an increase in salary of €800

net in November.• Dividends on shares €5,000 are expected in November.

Planned Expenditure• House Mortgage of €1,200 per month will increase by €120 per month from 1 October

2006.• House insurance premium, €840 per year, is payable monthly from September.• Murt’s annual car insurance is €685. Agnes’s annual car insurance is €580. Both are

payable in December.• Household expenses are usually €1,500 per month except in December, when they

are €200 extra.• Car running costs will be €350 per month for Murt and €450 per month for Agnes.• Clothes are expected to cost €1,800 in October.• ESB bills for light and heat are expected to amount to €640 in September and €870

in November, while a fill of heating oil, costing €1,200, will be needed in November.• Telephone bills for the home are expected to be €450 in September and November,

while the bill for Agnes’s mobile phone will be €125 per month.• Presents for birthday parties will cost €700 in October and €500 in October.• Medical bills for the family are expected to cost €2,500 in October and €3,000 in

October.• Entertainment will cost €400 each month except in November, when it will reduce

by half.


(b) Advise the Diffleys on ways to cover their medical bills.

(c) Give three examples of discretionary expenditure other than those given in the budgetabove.1. 2.

3.

Join VHI, BUPA or VIVAS;

Join the Saturday Hospital Fund;

Claim under PRSI.

Holidays Decorations

Church donations

207


Diffley Family Sept Oct Nov Dec Total


Murt Diffley – Salary 3,600 1,800 1,800 1,800 9,000

Agnes Diffley – Salary 2,450 2,450 3,250 3,250 11,400

Share Dividend 5,000 5,000

Total Income A. 6,050 4,250 10,050 5,050 25,400

Planned Expenditure

Fixed

House Mortgage 1,200 1,320 1,320 1,320 5,160


Car Insurance 1,265 1,265

Subtotal 1,270 1,390 1,390 2,655 6,705

Irregular



Clothes 1,800 1,800

Medical Bills 5,500 5,500

Light and Heat 640 2,070 2,710

Telephone Costs 575 125 575 125 1,400

Subtotal 3,515 9,725 4,945 2,625 20,810

Discretionary

Presents 1,200 1,200

Entertainment 400 400 200 400 1,400

Subtotal 400 1,600 200 400 2,600


Net Cash (A – B) 865 (8,465) 3,515 (630) (4,715)

Opening Cash 5,000 5,865 (2,600) 915 5,000

Closing Cash 5,865 (2,600) 915 285 285

(a)

208


Questions on Estimating Budgets16. Complete the partially completed budget form opposite for the Lynch family by filling in

the figures for the ‘Estimate June-December’ column and the ‘Total for Year’ column. Thefollowing information should be taken into account.• T. Lynch will be moving to a new section and is promised a salary increase of 4%

from 1 August 2004.• P. Lynch is due a salary increase of 6% from 1 June 2004.• Child benefit will continue as for other months of 2004.• Dividends from investments amounting to €250 are expected in July.• The mortgage will be reduced by €50 per month from 1 November 2004.• The car loan will be fully repaid by end of June 2004.• House insurance per month will continue as for other months of 2004.• Housekeeping costs per month are expected to remain the same as for first five months

except for December when they will be €580.• Car running costs will cost €80 per month until the end of 2004. New tyres will be

needed in November, costing €90.• The total cost of both electricity and telephone charges for the whole of 2004 are

expected to be €1,040 and €780 respectively.• Birthdays will cost €80 in November.• Entertainment is expected to cost a total of €900 for the whole year 2004.

209


Lynch Household Jan Feb March April May Total Estimate TotalJan-May Jun-Dec for year

Planned Income € € € € € € € €

T. Lynch – Salary 1,000 1,000 1,000 1,000 1,000 5,000 7,200 12,200

P. Lynch – Salary 800 800 800 800 800 4,000 5,936 9,936

Child Benefit 45 45 45 45 45 225 315 540

Dividends 250 250

Total Income A. 1,845 1,845 1,845 1,845 1,845 9,225 13,701 22,926

Planned Expenditure

Fixed

Mortgage 450 450 450 450 450 2,250 3,050 5,300

House Insurance 25 25 25 25 25 125 175 300

Car Loan 310 310 310 310 310 1,550 310 1,860

Annual Car Tax 250 – – – – 250 – 250

Annual Car Insurance – 600 – – – 600 – 600

Subtotal 1,035 1,385 785 785 785 4,775 3,535 8,310

Irregular

Housekeeping Costs 360 360 360 360 360 1,800 2,740 4,540

Car Running Costs 80 80 80 180 80 500 650 1,150

Telephone – 90 – 100 – 190 850 1,040

Electricity 205 – 190 – 170 565 215 780

Subtotal 645 530 630 640 610 3,055 4,455 7,510

Discretionary

Birthdays 35 – – 30 – 65 80 145

Entertainment 60 50 40 50 50 250 585 835

Subtotal 95 50 40 80 50 315 665 980

Total Expenditure B. 1,775 1,965 1,455 1,505 1,445 8,145 8,655 16,800

Net Cash (A – B) 70 –120 390 340 400 1,080 4,046 6,126

Opening Cash 30 100 –20 370 710 30 1,110 30

Closing Cash 100 –20 370 710 1,100 1,110 6,156 6,156

210


17. Complete the personal budget form (opposite) for the Reidy family by filling in the figures for the ‘Estimate April to December’ column. The following information should be takeninto account.

• John Reidy is due a salary increase of 5% from 1 July.• Mary Reidy expects a special bonus of €320 in December.• Child benefit will continue each month as for the first three months of the year.• House mortgage is expected to increase by €40 a month from 1 August.• House insurance, per month, will continue as for the first three months of the year.• Household costs, per month, are expected to remain the same for each month until

September and to increase by €30 a month beginning in October.• Car running costs are expected to remain at €80 a month with an additional car service

cost of €90 in September.• Electricity for the 12 months (January-December) is estimated at €1,150.• Christmas presents are expected to cost €200 in December.• Entertainment is expected to cost €600 for the twelve months (January-December).• The family holiday in July is expected to cost €1,400.

(Junior Certificate Higher Level 1993 amended for euro)

211


Total Estimate TotalReidy Family Jan Feb Mar

Jan-Mar Apr-Dec for yearJan-Dec

Planned Income € € € € € €

John Reidy – Salary 660 660 660 1,980 6,138 8,118

Mary Reidy – Salary 700 700 700 2,100 6,620 8,720


Total Income A. 1,390 1,390 1,390 4,170 13,028 17,198

Planned Expenditure

Fixed

Mortgage 280 280 280 840 2,720 3,560

Annual Car Tax 240 – – 240 – 240

Annual Car Insurance – – 650 650 – 650

House Insurance 18 18 18 54 162 216

Subtotal 538 298 948 1,784 2,882 4,666

Irregular

Household Costs 490 490 490 1,470 4,500 5,970

Car Running Costs 80 80 80 240 810 1,050

Electricity 190 – 160 350 800 1,150

Subtotal 760 570 730 2,060 6,110 8,170

Discretionary

Presents – – 40 – 40 200 240

Entertainment 45 60 55 160 440 600

Holidays – – – – – 1,400 1,400

Subtotal 45 100 55 200 2,040 2,240

Total Expenditure B. 1,343 968 1,733 4,044 11,032 15,076

Net Cash (A – B) 47 422 –343 126 1,996 2,122

Opening Cash 75 122 544 75 201 75

Closing Cash 122 544 201 201 2,197 2,197

90

212


18. (a) Opposite is a partially completed personal budget form for the Keane family for 2004.You are required to complete this form by filling in the figures for the ‘Estimate Aprilto December’ column, and the ‘Total for year’ column. The following informationshould be taken in account.

• Martin expects to get promotion in September which will increase his salary by30%.

• Norah is doing overtime from 1 October and this will result in a 10% increase in hersalary from that date.

• Child benefit will increase to €120 per month from 1 July 2004.• The house mortgage will be paid off in full following the August payment.• Car insurance is payable quarterly.• Household expenses will remain at the same level until the end of September and

will increase by 20% beginning in 2004.• Car running costs are expected to remain at €90 a month with an additional cost of

€280 in June for new tyres and a car service cost €200 in October 2004.• ESB for the 12 months Jan-Dec 2004 is estimated at €840.• The telephone is paid every second month and it is estimated that the cost will

remain at the same level as at the beginning of the year.• A wedding present in June is expected to cost €400.• Entertainment will average at €160 per month for the remaining 9 months of the

year.• A family holiday in July is expected to cost €1,500.• House insurance payable monthly will continue as for the first three months of the

year.

(b) (i) When the mortgage is paid off in August, what would you suggest that the Keanefamily would do with the €600 per month that they no longer have to pay?

____________________________________________________________________

_____________________________________________________________________

(ii) Name a suitable method that the Keane family could save for their holiday andgive a reason for your answer.

____________________________________________________________________

_____________________________________________________________________

The Keane family should save it in an index-linked saving scheme in An Post,

The Keane family could save €215 per month in a deposit account.

In seven months they will have saved €1,500.

where fixed amounts are paid in.

October

213


Total Estimate TotalKeane Household Jan Feb Mar



Martin Keane – Salary 1,000 1,000 1,000 3,000 10,200 13,200

Norah Keane – Salary 1,100 1,100 1,100 3,300 10,230 13,530

Child Benefit 100 100 100 300 1,020 1,320

Total Income A. 2,200 2,200 2,200 6,600 21,450 28,050

Planned Expenditure

Fixed

House Mortgage 600 600 600 1,800 3,000 4,800

Car Insurance 120 120 360 480

Annual Car Tax 400 400 – 400

House Insurance 30 30 30 90 270 360

Subtotal 750 630 1,030 2,410 3,630 6,040

Irregular

Household Expenses 650 650 650 1,950 6,060 8,010

Car Running Costs 100 100 100 300 1,290 1,590

Light and Heat Costs 160 140 300 540 840

Telephone 160 160 320 640 960

Subtotal 1,070 750 1,050 2,870 8,530 11,400

Discretionary

Presents 400 400

Entertainment 150 150 150 450 1,440 1,890


Subtotal 150 150 150 450 3,340 3,790

Total Expenditure B. 1,970 1,530 2,230 5,730 15,500 21,230

Net Cash (A – B) 230 670 (30) 870 5,950 6,820

Opening Cash 10 240 910 10 880 10

Closing Cash 240 910 880 880 6,830 6,830

(a)

214


19. (a) Opposite is a partially completed personal budget form for the Lyons family for 2005.You are required to complete this form by filling in the figures for the ‘Estimate Aprilto December’ column, and the ‘Total for year’ column. The following informationshould be taken in to account.

• Andrew expects to go on a two-week month from August which will reduce hissalary by half.

• Ilona will take up a second job from 1 July which will earn her an extra €600 permonth.

• The house mortgage will be increased by €150 per month to pay for an extension.• Household expenses will remain at the same level until the end of October and will

increase by 15% beginning in November 2005.• Car running costs are expected to remain at €110 a month with an additional cost of

€700 in July for new tyres and a car respray.• ESB for the 12 months Jan-Dec 2005 is estimated at €770.• The telephone is paid every second month and it is estimated that the cost will

remain at the same level as at the beginning of the year.• Christmas presents will cost €780 in December.• Entertainment will average at €200 per month for the remaining 9 months of the

year.• The Lyons family plan to save €250 per month starting in July.• Car tax payable quarterly will continue as before.

(b) (i) Name two examples of car running costs.

(a)

(b)

(ii) Why might Andrew have to go on a two-week month?

_______________________________________________________________________

_______________________________________________________________________

_______________________________________________________________________

Petrol

Repairs

The sales in his job might be slowing down and there is less work available.

215


Total Estimate TotalLyons Household Jan Feb Mar



Andrew – Salary 1,600 1,600 1,600 4,800 10,400 15,200

Ilona – Salary 1,000 1,000 1,000 3,000 12,600 15,600

Deposit Interest 400 400 – 400

Total Income A. 2,600 2,600 3,000 8,200 23,000 31,200

Planned Expenditure

Fixed

House Mortgage 800 800 800 2,400 8,550 10,950

Car Insurance 700 700 – 700

Annual Car Tax 115 115 345 460

House Insurance 550 550 – 550

Subtotal 800 2,165 800 3,765 8,895 12,660

Irregular

Household Expenses 960 960 960 2,880 8,928 11,808

Car Running Costs 110 110 110 330 1,690 2,020

Light and Heat Costs 150 150 620 770

Telephone 140 140 280 560 840

Subtotal 1,210 1,220 1,210 3,640 11,798 15,438

Discretionary

Presents 200 200 780 980

Entertainment 180 180 180 540 1,800 2,340

Savings 1,500 1,500

Subtotal 180 380 180 740 4,080 4,820

Total Expenditure B. 2,190 3,765 2,190 8,145 24,773 32,918

Net Cash (A–B) 410 (1,165) 810 55 1,714 1,718

Opening Cash 300 710 (455) 300 355 300

Closing Cash 710 (455) 355 355 1,418 1,418

(a)

216


20. The Egan household have to change their budget because M. Egan has to take a 15% cut insalary.School fees of €200 to be paid in March; house insurance of €20 per month was omitted;bank interest of €400 to be paid to the Egans in March was also omitted. The Egansdecided to provide for these changes by cutting entertainment down to €80 per month andreducing decoration costs to €600.All other figures were to remain unchanged.

(a) Complete the revised budget form opposite for January-March taking the above intoaccount.

(b) Will these reductions in expenditure be enough to cover the changes above?

Yes No

Reason for Answer

(c) What other actions could be considered?

�

The net cash will be €385 and the total expenditure will

They could consider taking out a loan.

reduce by €100.

217


Budget Revised Budget

Egan Household Jan Feb Mar Total Jan Feb Mar Total


M. Egan – Salary 900 900 900 2,700 765 765 765 2,295

N. Egan – Salary 700 700 700 2,100 700 700 700 2,100

Child Benefit 60 60 60 180 60 60 60 180

Bank Interest 400 400

Total Income A. 1,660 1,660 1,660 4,980 1,525 1,525 1,925 4,975

Planned Expenditure

Fixed

House Mortgage 320 320 320 960 320 320 320 960

Car Tax 280 280 280 280

Car Insurance – – –

House Insurance – – – 20 20 20 60

Subtotal 320 600 320 1,240 340 620 340 1,300

Irregular

Housekeeping 380 380 380 1,140 380 380 380 1,140

Car Expenses 60 60 60 180 60 60 60 180

Telephone 160 180 340 160 180 340

School Fees 200 200

Subtotal 600 440 620 1,660 600 440 820 1,860

Discretionary

Entertainment 100 100 100 300 80 80 80 240

House Decorations 900 – 900 – 600 600

Birthday 60 80 140 60 80 140

Subtotal 160 1,000 180 1,340 140 680 160 980

Savings 150 150 150 450 150 150 150 450


Net Cash (A – B) 430 –530 390 290 295 (365) 455 385

Opening Cash 20 450 –80 20 20 315 (50) 20

Closing Cash 450 –80 310 310 315 (50) 405 405

218


21. Opposite is a completed budget and a revised budget form for the O’Mara family fromApril to June.After preparing the budget for April-June the O’Mara family were informed thatMr O’Mara was to go on a three-day week in his employment. This would result in a substantial drop in the family’s income. The O’Maras decided to revise their budget in viewof the changed circumstances.

(a) Complete the revised budget form opposite taking the following into account:

• Mr O’Mara’s wages to be reduced by 40%.• They decided to install Cablelink television and rent a video at a monthly cost of

€30 to occupy his spare time.• Car running costs to be reduced by €20 per month.• Telephone expenses to be reduced to €100 per bill.• It is decided to omit holiday expenses.• Savings plan to be abandoned.• All other income and expenses are to remain the same.

(b) (i) If Mr O’Mara had not suffered a drop in income, would you consider the original budget a good one?

Yes ____________________ No _____________________(ii) Give two reasons for your answer.

1. _______________________________________________________________

2.__________________________________________________________________

(c) What other actions could be considered?


�

There was an overall net cash of €20

They were able to save each month

Mr O’Mara could look for a part-time job.

The O’Maras could pay the car tax quarterly and the car insurance monthly.

219



Income Apr May Jun Total Apr May Jun Total


Mr O’Mara – Wage 900 900 900 2,700 540 540 540 1,620

Mrs O’Mara – Wage 595 595 595 1,785 595 595 595 1,785

Child Benefit 25 25 25 75 25 25 25 75

Total Income A. 1,520 1,520 1,520 4,560 1,160 1,160 1,160 3,480

Planned Expenditure

Fixed

Car Loan 240 240 240 720 240 240 240 720


Car Tax 220 220 220 220

House Insurance 75 75 75 75

Video/T.V. 30 30 30 90

Subtotal 460 315 445 1,220 490 345 475 1,310

Irregular

Housekeeping 600 600 600 1,800 600 600 600 1,800

Car Running Costs 125 125 125 375 105 105 105 315

Electricity 105 85 190 105 85 190

Telephone 130 130 130 130

Subtotal 830 855 810 2,495 810 805 790 2,405

Discretionary

Holidays 75 75 75 225

Entertainment 60 60 60 180 60 60 60 180

Birthdays/Presents 60 60 60 60

Subtotal 135 195 135 465 60 120 60 240

Savings 120 120 120 360


Net Cash (A – B) –25 35 10 20 (200) (110) (165) (475)

Opening Cash 180 155 190 180 180 (20) (130) 180

Closing Cash 155 190 200 200 (20) (130) (295) (295)

(a)

220


22. After preparing the budget for January-March Mrs Byrne, who had qualified as an accountant, secured employment. This would result in a substantial increase in the family’sincome starting in February. The Byrnes decided to revise their budget in view of the changed circumstances.

(a) Complete the revised budget form opposite, taking the following into account:

• Mrs Byrne’s annual salary will be €24,000.• Mr & Mrs Byrne decided to buy a holiday mobile home by getting a loan. The total

cost of the loan including interest will be €36,000 repayable monthly over 4 yearsbeginning in January.

• The insurance on the mobile home is €480 per annum payable on 1 January.• Baby sitting costs will increase by 50%.• It is estimated that entertainment will increase by €200 per month.• All other income and expenses are to remain the same.

(b) (i) Comment on the Byrnes’ finances before February.

____________________________________________________________________

____________________________________________________________________

(ii) If the Byrnes family had not received an increase in income would you consider the original budget a good one? Give reasons for your answer.

___________________________________________________________________

___________________________________________________________________

(iii) Is their revised budget a good one in their new circumstances? Give reasons foryour answer.

__________________________________________________________________

___________________________________________________________________

The income was less than expenditure.

No. They had a net cash deficit in January and February

No. The car insurance should be paid quarterly and the house insurance

and the mobile home insurance should be paid monthly.

221



Income Jan Feb March Total Jan Feb March Total


Mr Byrne – Salary 1,800 1,800 1,800 5,400 1,800 1,800 1,800 5,400

Mrs Byrne – Salary – 2,000 2,000 4,000

Child Benefit 120 120 120 360 120 120 120 360

Total Income A. 1,920 1,920 1,920 5,760 1,920 3,920 3,920 9,760

Planned Expenditure

Fixed

House Mortgage 560 560 560 1,680 560 560 560 1,680

Mobile Home Loan 750 750 750 2,250


Car Tax 80 80 80 80

House Insurance 140 140 140 140

Mobile Home Insurance 480 480

Subtotal 640 1,650 560 2,850 1,870 2,400 1,310 5,580

Irregular

House Keeping 460 460 460 1,380 460 460 460 1,380


Tel. & ESB 200 90 80 370 200 90 80 370

Baby Sitting 480 480 480 1,440 720 720 720 2,160

Subtotal 1,240 1,130 1,120 3,490 1,480 1,370 1,360 4,210

Discretionary

Entertainment 100 100 100 300 300 300 300 900

Birthdays 45 100 145 45 100 145

Subtotal 145 100 200 445 345 300 400 1,045


Net Cash (A – B) (105) (960) 40 (1,025) (1,775) (150) 850 (1,075)

Opening Cash 500 395 565 500 500 (1,275) (1,425) 500

Closing Cash 395 (565) (525) (525) (1,275) (1,425) (575) (575)

222


23. After preparing the budget for May-July the Lynch family were informed that Mr Lynch wasto go on a three-day week. Mrs Lynch who qualified as a nurse, secured employment. Thiswould result in a change in the family’s income starting in May. The Lynchs decided torevise their budget in view of the changed circumstances.

(a) Complete the revised budget form, taking the following into account:

• Mr Lynch’s wages to be reduced by 30%.• Mrs Lynch’s annual salary will be €30,000.• They decided to enrol their son Patrick in a private school. Deposit of €3,000 is

payable in July.• A new car was bought by getting a loan. The total cost of the loan including interest

will be €24,000, repayable monthly over 4 years beginning in June.• Road tax for new car is €360 payable quarterly from May.• Car running costs will increase by 40%.• The insurance on the new car is €600 per annum payable monthly starting on 1 June.• Baby sitting costs will increase by 20%.• The planned holiday was cancelled.• They reduced savings by 50%.• All other income and expenses are to remain the same.

(b) (i) Comment on the Lynchs’ finances before May.

(ii) If the Lynch family had not had a change in circumstances would you consider the original budget a good one?

Yes _______ No _______

Give reasons for your answer.

(iii) Is their revised budget a good one in their new circumstances?

Yes _______ No _______

Give reasons for your answer.

Their finances were poor because there was a net cash deficit each month and

all their savings were used up.

They were intending to live beyond their means by planning a holiday even

though they could not afford it.

They have a net cash surplus in May and June and their closing cash has

increased.

�

�

223


Original Budget Revised Budget

Income May June July Total May June July Total


Mr. Lynch – Salary 1,800 1,800 1,800 5,400 1,260 1,260 1,260 3,780

Mrs. Lynch – Salary – – – – 2,500 2,500 2,500 7,500

Child Benefit 140 140 140 420 140 140 140 420

Total Income A. 1,940 1,940 1,940 5,820 3,900 3,900 3,900 11,700

Planned Expenditure

Fixed

House Mortgage 800 800 800 2,400 800 800 800 2,400

New Car Loan 500 500 1,000

Car Insurance 560 560 50 50 100

Car Tax – – – – 90 90

House Insurance 40 40 40 120 40 40 40 120

School Fees – – – – 3,000 3,000

Subtotal 840 1,400 840 3,080 930 1,390 4,390 6,710

Irregular

House keeping 400 400 400 1,200 400 400 400 1,200


Telephone & ESB 120 140 120 380 120 140 120 380

Baby Sitting 400 400 400 1,200 480 480 480 1,440

Subtotal 1,020 1,040 1,020 3,080 1,140 1,160 1,140 3,440

Discretionary

Holiday 1,500 1,500 – – – –

Entertainment 100 100 100 300 100 100 100 300

Subtotal 100 1,600 100 1,800 100 100 100 300

Savings 500 500 500 1,500 250 250 250 750


Net Cash (A – B) (520) (2,600) (520) (3,640) 1,580 1,100 (1,880) 800

Opening Cash 2,600 2,080 (520) 2,600 2,600 4,180 5,280 2,600

Closing Cash 2,080 (520) (1,040) (1,040) 4,180 5,280 3,400 3,400

(a)

224


Comparing the Budget with Actual

24. Study the budgeted and actual figures for March given below.

(a) Calculate and enter the differences, if any, between budgeted and actual figures, inthe differences column.

(b) What are the main reasons for the difference?

(c) What action should be taken to deal with the differences?

Budget Actual Difference

Planned Income € € €

Wages 950 860 –90

Child Benefit 60 60 –

Deposit Interest 160 120 –40

Lotto Prize 500 +500

Total Income A. 1,170 1,540 +370

Planned Expenditure

Fixed

Mortgage 310 375 +65

Car Insurance 360 450 +90

House Insurance – 180 +180

Subtotal 670 1,005 +335

Irregular

Food 240 280 +40

Petrol 70 55 –15

Clothes 100 180 +80

Pocket Money 20 20 –

Subtotal 430 535 +105

Discretionary

Entertainment 40 80 +40

Church 10 – –10

Subtotal 50 80 +30

Savings 10 – –10

Total Expenditure B. 1,160 1,620 +460

Net Cash (A – B) 10 –80 –70

Wages are less by €90. There was a lotto prize of €500. Most of the expenses

were greater than budgeted for.

Rework the budget, cut back on clothes by €80 and entertainment by €40.

Shop around for food and save €20.


25. The O’Brien family keeps a record of all financial transactions in an analysed cash book(bank columns only). On 1 May 2003 they had €110 in the bank.

During May they had the following bank transactions.

(a) Enter the above transactions in the analysed cash book (blank columns only) in yourcopybook, using the following money column headings:

Debit (Receipts) side: Total; wages; child benefit; other.

Credit (Payments) side: Total; groceries; light and heat; shoes and clothes; car; other.

(b) Using the Budget Comparison Statement provided enter the appropriate figures, from the analysed cash book you have prepared, into the ‘Actual’ column.

Then show the differences between the ‘actual’ and ‘budget’ figures, by completing the col-umn marked ‘Difference’. Use a plus + or minus – sign in front of each figure in that column.

Budget Comparison Statement of the O’Brien Family


Planned Income € € €

Wages 840 860 +20


Other – 125 +125

Total Income A. 870 1,015 +145

Expenditure – – –

Groceries 195 195 –

Light and Heat 200 187 –13

Shoes and Clothes 130 108 –22

Car 50 91 +41

Other – 415 +415

Total Expenditure B. 575 996 +421

Net Cash (A – B) 295 +19 –276

Analysed Cash Book Credit side (Summary)

Total Groceries L&H Shoe/clothes Car Other

996 195 187 108 91 415

Analysed Cash Book Debit side (Summary)

Total Wages Child Benefit Other

1,125 860 30 125

2003 Transaction €

May 2 Paid for shoes by cheque (No. 14) 35

May 4 Withdrew cash by ATM for groceries 93

May 5 Paid electricity bill by cheque (No. 15) 87

May 8 Paid for petrol by cheque (No. 16) 26

May 11 Paid for heating oil by cheque (No. 17) 100

May 15 Paid for car repairs by cheque (No. 18) 65

May 19 Paid for coat by cheque (No. 19) 73

May 23 Withdrew cash by ATM for groceries 102

May 26 Lodged wages cheque €860 plus child benefit €30 (No. 20) 890

May 27 Paid hospital expenses by cheque (No. 21) 415

May 28 Lodged cash from sale of old furniture 125

226


(c) (i) How much money had the O’Briens intended to save in May?

(ii) By how much did the O’Briens’ actual income exceed their actual expenditure inMay?

(iii) By how much did the O’Briens’ actual expenditure exceed their budgeted expenditure in May?

(iv) How much money did the O’Briens have in their bank account at the end of May?


26. The following information has been obtained from the analysed cash book of the O’Reilly family for the month of May 2005.

Total Receipts: Wages €2,000; child benefit €300; deposit interest €250.Total Payments: Housekeeping €712; car €900; personal €350; other €220.

(a) Enter the figures above in the Actual Column in the Budget Comparison Sheet provided and show the difference in the Difference column (place a plus + or a minus –in front of each figure in that column).

Budget Comparison Sheet of the O’Reilly Family for May 2005

(b) (i) Suggest one reason why the actual figures are not as budgeted.

(ii) What advice would you give to the O’Reilly family when preparing theirbudget for June 2005 and onwards?

(iii) Should the annual deposit interest be included in the June budget? Yes __ No __Give a reason for your answer.

Planned Income Budget Actual Difference

€ € €

Wages 1,500 2,000 +500

Child Benefit 250 300 +50

Deposit Interest 300 250 –50

Total Income A. 2,050 2,550 +500

Expenditure

Housekeeping 650 712 +62

Personal 500 350 –150

Car 390 900 +510

Other 120 220 +100


Net Cash (A – B) 390 368 –22

€295

€19

€421

€129 (€1,125 – €996)

Additional wages from overtime. Increase in child benefit. Repairs to car that

were not planned.

When planning the budget, don’t leave out any possible income, such as overtime.

Don’t leave out possible expenses, such as car repairs.

The interest is payable in May so it can only be included in the May budget.

�

227


27. The Crilly family keeps a record of all financial transactions in an analysed cash book. On 1 May 2004 they had €300 in the bank.During the month of May 2004 they had the following transactions.

(a) Record the above transactions in the analysed cash book in your copybook using the following money column headings:

Debit (Receipts) Side: Bank; wages; child benefit; other.Credit (Payments) Side: Bank; groceries; school; car; other.

(b) Enter the appropriate figures from the above analysed cash book in the Actual column inthe Budget Comparison Sheet below and show the difference in the Difference column(place a plus + or minus – sign in front of each figure in that column).

Budget Comparison Sheet of the Crilly Family for May 2004

(c) (i) How much money did the Crilly family hope to have at the end of May?€

(ii) How much money did the Crilly family have in the bank at the end of May?€

Planned Income Budget Actual Difference

€ € €

Wages 1,600 1,800 +200


Other – 5,000 +5,000

Total Income A. 1,840 7,040 +5,200

Expenditure

Groceries 180 210 +30

School 400 520 +120

Car 450 370 –80

Other 800 1,500 +700


Net Cash (A – B) 10 4,440 +4430

Analysed Cash Book (Credit Side) Summary

Bank Geoceries School Car Other

2,600 210 520 370 1,500

Analysed Cash Book (Debit Side) Summary

Bank Wages Child Benefit Other

7,340 1,800 240 5,000

2004 Transaction €

1 May Purchased groceries by cheque (No. 1) 80

3 May Lodged wages in bank 1,800

5 May Paid for repairs to car cheque (No. 2) 300

7 May Lodged child benefit 240

9 May Paid for school trip cheque (No. 3) 400

13 May Paid meat bill cheque (No. 4) 130

15 May Paid BUPA membership cheque (No. 5) 800

18 May Paid for petrol cheque (No. 6) 70

23 May Lodged Lotto win 5,000

27 May Withdrew cash by ATM for clothes 700

30 May Paid for new school uniform cheque (No. 7) 120

10

4,740 (€7,340 + €2,600)

228


(iii) Was the Crillys’ family budget a good one? Yes_____ No ____

Give a reason for your answer:

28. When the Doyle family checked their analysed cash book at the end of December 2000,they found that their actual income and expenditure for the 12 months January toDecember differed from the budgeted figures (contained in the Budget ComparisonStatement opposite) due to the following:

• Their salaries had increased by 10% from 1 July.• Child benefit had increased by €10 per month from 1 April for each of the two

children in the family.• The actual interest received was €37 less than budgeted.• They had won a prize of a holiday in the USA which they did not wish to use and

sold it for €1,200.• The mortgage had increased by €55 per month from 1 March and by another €25

per month from 1 November.• They had lost their No Claims Bonus of €240 on their car insurance due to a car

crash during the year.• House insurance costs were 20% higher than budgeted.• Household costs were 12½% less than budgeted.• The cost of shoes and clothes amounted to €1,635.• They had changed their car so that car costs had increased by €4,270 over those

budgeted.• A saving of 8% had been made in the light and heat budget.• The only medical expense for the year had resulted from monthly medication

costs of €25 for the last three months of the year.• Entertainment costs had averaged €60 per month.• Gifts were €20 less than budgeted.

(Junior Certificate Higher Level 2001 Paper I(B) Q1 amended)

(a) Using the Budget Comparison Statement provided opposite enter the appropriate figures into the Actual column.

Then show the difference between the actual and the budget figures by completingthe column marked difference.

Place a plus + or minus – sign in front of each figure in that column.

Note: Use plus sign if the actual is GREATER than the budget figure.Use minus sign if the actual is LESS than the budget figure.

Example


430 480 +50

780 710 –70

Total 1,210 1,190 –20

They planned to have a surplus budget.

�

229


(a) Budget Comparison Statement for the Doyle Family for the year 2000

(b) (i) Did the Doyle family have a surplus or deficit at the end of the year?

What was this figure? €

(ii) How much money had the Doyles intended to save during the year? €

(iii) By how much did they exceed their budgeted expenditure? €

(iv) If the Doyles had an opening cash balance of €2,000 on 1 January 2000, what wastheir actual closing cash balance at the end of the year?

€

BudgetJan-Dec

€

ActualJan-Dec

€

Difference€

Income

Salaries 18,000 18,900 +900

Child Benefit 960 1,140 +180

Interest 150 113 –37

Other – 1,200 +1,200

Total Income A. 19,110 21,353 +2,243

Expenditure

Fixed

Mortgage 4,320 4,920 +600

Car Insurance 397 637 +240

House Insurance 170 204 +34

Subtotal 4,887 5,761 +874

Irregular

Household Costs 7,504 6,566 –938

Shoes and Clothes 1,740 1,635 –105

Car Costs 1,800 6,070 +4,270

Medical Expenses 200 75 –125

Subtotal 11,244 14,346 3,102

Discretionary

Entertainment 1,000 720 –280

Gifts 200 180 –20

Subtotal 1,200 900 –300

Total Expenditure B. 17,331 21,007 +3,676

Net Cash (A – B) 1,779 +346 1,433

Surplus

346

1,779

3,676

2,346

230


Chapter 8 The Good Consumer

1. Complete the following sentences.

(a) A consumer is

(b) An informed consumer is

2. Complete the receipt below from the following data:Received €240 by cheque from Mary Mulligan, Mohill, Co. Leitrim on today’s date.Assume you are Andrea Flynn.

3. Complete the receipt below from the following data:Received €500 cash from Francis King, Oranmore, Co. Galway on today’s date.Assume you are Darren Walsh.

Chapter 9 Protecting the Consumer

1. The following sign was displayed in a shop.

Is this sign legal? . Give a reason for your answer.

No ChequesAccepted Under Any Circumstances

RECEIPT No: 475Walsh Concrete, Oranmore, Co. Galway

Date:

RECEIVED FROM:

€

THE SUM OF:

With Thanks Signed:(Accounts Department)

RECEIPT No: 20Flynn’s Furniture Stores Ltd, Sligo

Date:

RECEIVED FROM:

€

THE SUM OF:

With Thanks Signed:(Accounts Department)

a person who buys goods and services.

a person who chooses goods and services wisely.

Mary Mulligan,

Francis King,

Oranmore, Co. Galway

Five hundred euro

Mohill, Co Leitrim

Two hundred and forty euro240

500

Andrea Flynn

Darren Walsh

Yes

Cheques are not regarded as legal tender and do not have to be accepted.

231


2. Complete the following sentences by choosing the appropriate term below. One term does not fit.

(a) Ingredients on a label must be stated in order.

(b) Giving misleading information breaks the Act.

(c) The investigates complaints against state agencies.

(d) A exists when goods or services are bought by a consumer.

(e) A is written proof of payment for goods or services.

3. Crunchy Corn Flakes can be purchased in two packet sizes, each a different weight andprice.

Which size is the best value? Show your workings.

The best value is:

4. Bubbles Washing Up Liquid comes in two sizes.


The best value is:

5. Munch Cereal comes in three sizes.


The best value is:

Size Price

450 grams €1.26

528 grams €1.52

600 grams €2.03

Size Price

100ml €0.25

280ml €0.89

Size Weight Price

Small 500 grams €0.93

Large 1,000 grams €1.90

Contract, Ombudsman, Consumer Information, Descending, Small Claims, Receipt

Workings

Workings

Workings

descending

Consumer Information

Ombudsman

contract

receipt

Small

100 ml

Two small 500 gramscost only €1.86

Per ml 100 = €0.00250280 = €0.00318

Per gram 450 = €0.0028528 = €0.00289600 = €0.00338

450 grams


232

Chapter 10 Making a Complaint

1. Complete the Credit Note below from the following data:Issue credit note to Joan Morris, Mill Street, Cork, for return of five boxes of unused tiles at€50 per box. Use today’s date and assume you are Mary Black.

2. Complete the Credit Note below from the following data:Issue credit note to Bernard Cronin, Maynooth, Co. Kildare for return of two microwavesreceived as unwanted wedding present, value €150 each. Use today’s date and assume youare Siobhan O’Farrell.

3. Complete the Credit Note provided from the following data:Issue credit note to Michael Daly, Cork Street, Carlow, for return of five cans of unopenedpaint at €45 per tin. Use today’s date and assume you are Patricia Cooney.

CREDIT NOTE No. 371Murphy’s Stores, Nass, Co. Kildare

Tel No: 045-777503To: ____________________ e-mail: [email protected]

____________________ VAT Reg. IE786543

____________________ Date _________________

Quantity Description Unit Price€

Total€

2 Microwaves 150300

ReasonUnwanted wedding present

Signed Total________________________________________________Manager

300

CREDIT NOTE No. 490Cork Tiles Ltd, Marble Arch, Cork

Tel No: 021-2213345To: _ ___________________ e-mail: [email protected]

____________________ VAT Reg. IE234345

____________________ Date _________________


Total€

5 Tiles 50 250

ReasonUnused


250

Joan Morris

Mill Street

Cork

Mary Black

Bernard Cronin

Maynooth

Co. Kildare

Siobhan O’Farrell

Chapter 11 Money and Banking I

1. Column 1 is a list of money and banking terms. Column 2 is a list of possible explanations.Match the two lists by placing the letter of the correct explanation under the relevant numberin the table below. (One explanation does not refer to any term.)

2. State what the following initials stand for.

ATM ___________________________________________________________

PIN ___________________________________________________________

AIB ___________________________________________________________

EBS ___________________________________________________________

ACC ___________________________________________________________

3. Name four banks operating in Ireland.

1.2. ___________________________________________________________

3. ___________________________________________________________

4. ___________________________________________________________

1. 2. 3. 4.

d c e a

Column 1 Terms Column 2 Explanations

1. Money2. Barter3. Twenty-four hours banking4. Credit Union

(a) Financial co-operatives owned and run by members(b) A clock in a bank which gives the time of a bank

transaction(c) Exchanging goods for other goods(d) Accepted by people in exchange for goods or services(e) Carrying out bank transactions with an ATM card

CREDIT NOTE No. 124McGraths Paints Ltd, High St, Carlow

Tel No: 0503-12543To: ____________________ e-mail: [email protected]

____________________ VAT Reg. IE234345

____________________ Date _____________


Total€

5 Paint 45225

ReasonUnopened paint


225


233

Michael Daly

Cork Street

Carlow

Patricia Cooney

Automated Teller Machine

Personal Identity Number

Allied Irish Bank

Educational Building Society

Agricultural Credit Corporation

Allied Irish BankBank of Ireland

Ulster Bank

Permanent TSB

Chapter 12 Money and Banking II

1. Indicate with a tick � which of the following are true or false. State a reason for your answer.

(a) Only banks lend money

(b) It is safe to send cash in the post

(c) A person can pay some bills with an ATM card

(d) Standing Orders are for once-off payments

(e) DIRT is only paid by businesses

2. You wish to pay your club membership by twelve equal monthly payments. Indicate themost suitable method, from the list below, by placing a tick � in the box.

(a) Standing Order(b) Credit Card(c) Bank Overdraft(d) Direct Debit

3. Apart from banks, name two other financial agencies where people can save their money.

1. ____________________________ 2. ____________________________

4. Assume you are Mary Hannifin, Aherne Lane, Dublin 4. Make a credit transfer of €230 cashto BUPA which has an account no. 99876723 in the Bank of Ireland, Abbey Street, Dublin.Complete the blank Credit Transfer form below on today’s date.

Chapter 13 Money and Banking III

1. John Monaghan paid a cheque to Olive Heslin. Answer the following question by selectingthe correct term from the following list: Drawer; Drawee; Payee.Olive is known as the ______________ of that cheque.(Write the answer in the space provided.)


234

True

�

�

False

�

�

�

�

Credit Union An Post

payee


235

2. Complete the following sentences:

(a) Endorsing a cheque means __________________________________________

(b) A dishonourable cheque is __________________________________________

3. List four methods by which a current account holder can make payments from a currentaccount.

(a) _____________________________ (b) ____________________________

(c) _____________________________ (d) ____________________________

4. You make a lodgment to your personal account in your local bank. The bank official givesyou back the counterfoil of the lodgment slip. What does the bank official do to thiscounterfoil before handing it back to you? Explain your answer.

5. The following information is given on the counterfoil of current account lodgment slips.

Explain its significance to the current account holder.

6. Column 1 is a list of cheque terms. Column 2 is a list of possible explanations. Match thetwo lists by placing the letter of the correct explanation under the relevant number in thetable below. (One explanation does not refer to any term.)

7. Assume you are Kerry Holmes, Olympic Avenue, Greek Road, Carlow. Your date of birth is7 September 1974 and you work as a fitness coach in the Glen Eagle Hotel, Killarney, Co.Kerry. Your gross pay is €4,400 per month.

(a) Complete the partially completed application form supplied on 12 September 2006.

(b) Lodge €850 (Cheques €690, Notes €133 and Coin €27) to your current account15008004, on 16 September 2006, using the lodgment form supplied.

1. 2. 3. 4.

c a d e


1. Endorsed cheque2. Stopped cheque3. Open cheque4. Blank cheque

(a) A cheque which the drawer informs the bank not to honour(b) A cheque with two parallel lines on the face of it(c) A cheque which is signed on the back by the payee(d) A cheque which is not crossed(e) A cheque with some of the details missing

Cheques are accepted subject to examination and verification and are transmitted for collection atthe customer’s risk. Though credited when paid in, they should not be drawn against until clear.

the payee passes on the cheque by signing it on the back.

a cheque that the bank refuses to accept.

Withdrawal slip

ATM

Cheque

Standing order

The bank official stamps it and intials it. This is proof of the lodgment.

The cheques lodged by the account holder have to be cleared before the account

holder can withdraw money.


236

(a)

(b)

CURRENT ACCOUNT APPLICATION FORM

Personal Details

Mr/Mrs/Miss/Ms Surname �� Forename ��

Address ..............................................................................................................................................................................................................................................

Tel. Home: 066 740211 Work: 066 74852

Date of Birth Status: Single �� Married � Other �

Dependant Children No.�� Ages ��

Are You Homeowner: �� Tenant � With Parents �

Employment Details:

Occupation �� Gross Pay �€��

Employer’s Name: ......................................................................................................................Address: ......................................................................................................................

......................................................................................................................

Bank/Other/Details ......................................................................................................................

If account elsewhere Yes �� No � Name of Agency An Post

Signature: ..................................................................................... Date: ........................................

Holmes Kerry

Olympic Avenue, Greek Road, Carlow

7/9/1974

0

Fitness Coach 4,400 per month

Glen Eagle HotelKillarneyCo, Kerry

Kerry Holmes 12/9/2006

8. Complete the following cheques and counterfoils supplied from the following data. Makethe cheques as safe as possible.

(a) Pauline Murphy paid Ryanair €250 on 14 November 2005.

(b) Richie Ryan paid ESB €240 on 10 December 2006.

(c) Gertie Barrett paid Brown Thomas €3,200 on 16 April 2006.


237

SPECIMEN

SPECIMEN

SPECIMEN

A/C p

ayee

only

A/C p

ayee

only

A/C p

ayee

only


238

(d) Jack Burns paid Trinity College €4,500 on 5 October 2006.

Chapter 14 Bank Accounts

1. The following initials can appear in a bank statement. Write them out in full below.

(i) OD (ii) SO (iii) DD (iv) CT

2. Compare the balance in Ann Hannon’s bank account below with that of the bank statementand update it as necessary. Prepare a Bank Reconciliation Statement in your copybook as on31 May 2005.

Current Account Bank Statement NO. 11

Date Details Debit€

Credit€

Balance€

2006

1/5/ Balance 1,680

2/5/ Cheque (No. 20) 300 1,380

4/5/ Cheque (No. 21) 340 1,040

11/5/ Credit Transfer 600 1,640

17/5/ Cheque (No. 23) 310 1,330

19/5/ Standing Order 600 730

22/5/ ATM Withdrawal 320 410

24/5/ Direct Debit 200 210

30/5/ Current Account Fees 50 160

Date Details Amount Date Details Cheque No./ATM Amount

2005 Bank A/C 2005

1/5/ Balance 1,680 2/5/ Eircom 20 300

31/5/ Lodgment 820 4/5/ Rent 21 340

7/5/ Dr O’Rourke 22 300

11/5/ ESB 23 310

22/5/ Cash ATM 320

31/5/ Balance C/D 930

2,500 2,500

31/5/ Balance B/D 930

SPECIMEN

Over DrawnDirect Debit

Standing OrderCredit Transfer

A/C p

ayee

only

3. Compare the balance in Andrew Lyons’ bank account with that of the bank statement andupdate it as necessary. Prepare a Bank Reconciliation Statement in your copybook as on 31May 2006.

OD = Overdrawn

Current Account Bank Statement NO. 50

Date Details Debit€

Credit€

Balance€

2006

1/5/ Balance 1,000

4/5/ Cheque (No. 1) 700 300

5/5/ ATM Cash Withdrawal 400 100 OD

6/5/ Lodgment 900 800

12/5/ ATM Cash Withdrawal 250 550

16/5/ Cheque (No. 2) 540 10

18/5/ Credit Transfer 700 710


22/5/ Lodgment 2,000 2,230

26/5/ Direct Debit 200 2,030

31/5/ Bank Interest and Charges 105 1,925


2006 Bank A/C 2006

1/5/ Balance B/D 1,000 1/5/ Insurance 1 700

6/5/ Lodgment 900 5/5/ Cash ATM 400

21/5/ Lodgment 2,000 9/5/ Car Tax 2 540

31/5/ Lodgment 1,100 12/5/ Cash ATM 250

17/5/ Carpet 3 700

21/5/ Furniture 4 2,200


5,000 5,000



239

Updated Bank A/C

31/5/05 Balance b/d 930 SO 600

C/T 600 OD 200

Fees 50

Balance c/d 680

1,530 1,530

Balance b/d 680

Bank Reconciliation Statement

Balance as per bank statement 160

Add lodgments not credited 820

980

Less cheques not yet cashed 300

Balance as per updated Bank A/C 680


240

4. Compare the balance in Donal Clarke’s bank account with that of the bank statement andupdate it as necessary. Prepare a Bank Reconciliation Statement in your copybook as on 31May 2006.

OD = Overdrawn

Current Account Bank Statement NO. 32Date Details Debit

€

Credit€

Balance€

2006

1/5/ Balance 200 OD

5/5/ Lodgment 650 450

9/5/ Cheque (No. 1) 40 410


13/5/ Credit Transfer 300 560

16/5/ Cheque (No. 3) 70 490

17/5 ATM Withdrawal 30 460

21/5/ Direct Debit 600 140 OD

31/5/ Bank Charges and Interest 85 225 OD

31/5/ Bank Interest 45 270 OD


2006 Bank A/C 2006

5/9/ Lodgment 650 1/5/ Balance 200

31/5/ Lodgment 200 2/5/ Groceries 1 40

7/5/ Petrol 2 25

9/5/ Clothes 3 70

17/5/ Cash ATM 30

24/5/ Clothes 4 200


850 850


Updated Bank A/C

31/5/05 Balance b/d 210 DD 200

C/T 700 SO 480

Charges 105

Balance c/d 125

910 910

Balance b/d 125


Balance as per bank statement 1,925

Add lodgments not credited 1,100

3,025

Less cheques not cashed 2,900

Balance as per updated Bank A/C 125

5. Compare the balance in Duffy Ltd’s bank account with that of the bank statement and updateit as necessary. Prepare a Bank Reconciliation Statement in your copybook as on 31 May2005.

OD = Overdrawn


€

Credit€

Balance€

2005

1/5/ Balance 700

5/5/ Cheque (No. 1) 550 150

10/5/ Cheque (No. 3) 140 10

14/5/ Cheque (No. 4) 120 110 OD

16/5/ Lodgment 1,600 1,490

18/5/ Cheque (No. 2) 360 1,130


26/5/ Credit Transfer 550 1,280

28/5/ Lodgment 1,700 2,980

30/5/ Current Account fees 25 2,955


2005 Bank A/C 2005

1/5/ Balance B/D 700 2/5/ Suppliers 1 550

16/5/ Sales 1,600 6/5/ Purchases 2 360

28/5/ Lodgment 1,700 9/5/ ESB 3 140

31/5/ Sales 1,450 11/5/ Insurance 4 120

19/5/ Jones Ltd 5 1,900

30/5/ Eircom 6 320

31/5/ Balance C/D 2,060

5,450 5,450

31/5/ Balance B/D 2,060


241

Updated Bank A/C

31/5/05 Balance b/d 285 SO 150

C/T 300 DD 600

Charges 85

Interest 45

Balance c/d 295

880 880

Balance B/D 295


Balance as per bank statement 270 OD

Add lodgments not credited 200

70 OD

Less cheques not cashed 225

Balance as per updated Bank A/C 295 OD


242

6. Compare the balance in Carey Ltd’s bank account with that of the bank statement and updateit as necessary. Prepare a Bank Reconciliation Statement in your copybook as on 31 May2005.


€

Credit€

Balance€

2005

1/6/ Balance 12,450

8/6/ Cheque (No. 2) 2,500 9,950

12/6/ Lodgment 12,000 21,950

14/6/ Standing Order 2,200 19,750

17/6/ Cheque (No. 1) 550 19,200

21/6/ Credit Transfer 5,500 24,700

24/6/ Direct Debit 3,800 20,900

27/6/ Cheque (No. 4) 4,000 16,900



2005 Bank A/C 2005

1/6/ Balance B/D 12,450 4/6/ Butter Ltd 1 550

12/6/ Lodgment 12,000 4/6/ Jam Ltd 2 2,500

31/6/ Lodgment 8,000 17/6/ Honey Ltd 3 3,600

23/6/ Flora Ltd 4 4,000

30/6/ Marg Ltd 5 5,000

30/6/ Balance C/D 16,800

32,450 32,450

30/6/ Balance B/d 16,800

Updated Bank A/C

31/5/05 Balance b/d 2,060 SO 400

C/T 550 Fees 25

Balance c/d 2,185

2,610 2,610

Balance b/d 2,185




4,405


Balance as per updated Bank A/C 2,185


243

7. Prepare Murphy Ltd’s bank account and calculate the closing bank balance from the datasupplied. Compare the balance in Murphy Ltd’s bank account with that of the bankstatement and update it as necessary. Prepare a Bank Reconciliation Statement in yourcopybook as on 31 May 2005.


2005 Bank A/C 2005

1/5/ Balance b/d 1,200 6/5/ Lynam Ltd 1 1,400

2/5/ Lodgment 3,200 11/5/ Dolan Ltd 2 4,200

31/5/ Lodgment 12,100 15/5 Cash ATM 300

18/5/ Lynch Ltd 3 2,480

26/5/ Tobin Ltd 4 1,000

31/5/ Balance c/d 7,120

16,500 16,500

31/5/ Balance b/d 7,120

2005 Transactions €

1/5/

2/5/

6/5/

11/5/

15/5/

18/5/

26/5/

31/5/

Balance in bank 1,200

Lodged to bank 3,200

Paid Lynam Ltd cheque (No. 1) 1,400

Paid Dolan Ltd cheque (No. 2) 4,200

ATM withdrawal 300

Paid Lynch Ltd cheque (No. 3) 2,480

Paid Tobin Ltd cheque (No. 4) 1,000

Lodged to bank 12,100

Updated Bank A/C30/6/05 Balance b/d 16,800 SO 2,200

C/T 5,500 DD 3,800

Charges 270

Balance c/d 16,030

22,300 22,300

Balance b/d 16,030




24,630




244

OD = Overdrawn


€

Credit€

Balance€

2005

1/5/ Balance 1,200

2/5/ Lodgment 3,200 4,400

10/5/ Cheque (No. 1) 1,400 3,000

13/5/ Direct Debit 4,000 1,000 OD

15/5/ ATM withdrawal 300 1,300 OD


26/5/ Cheque (No. 3) 2,480 8,220


Updated Bank A/C

31/5/05 Balance b/d 7,120 DD 4,000

C/T 12,000 Charges 150

Balance c/d 14,970

19,120 19,120

Balance b/d 14,970




20,170



8. Prepare Bannon Ltd’s bank account and calculate the closing bank balance from the datasupplied. Compare the balance in Bannon Ltd’s bank account with that of the bank statementand update it as necessary. Prepare a Bank Reconciliation Statement in your copybook as on31 May 2006.

2006 Transactions €

1/5/ Balance in bank 1,900 OD

3/5/ Paid Mitchell Ltd cheque (No. 1) 4,100

5/5/ Paid Glennon Ltd cheque (No. 2) 2,350

11/5/ Lodged to bank 3,100

15/5/ Paid Nolan Ltd cheque (No. 3) 2,950

20/5/ ATM withdrawal 850

24/5/ Paid Barry Ltd cheque (No. 4) 5,200

31/5/ Lodged to bank 9,600

OD = Overdrawn


€

Credit€

Balance€

2006

1/5/ Balance 1,900 OD

3/5/ Standing Order 900 2,800 OD

8/5/ Cheque (No. 1) 4,100 6,900 OD

11/5/ Lodgment 3,100 3,800 OD

14/5/ Direct Debit 1,700 5,500 OD


20/5/ ATM Withdrawal 850 6,350

25/5/ Cheque (No. 3) 2,950 3,400



2006 Bank A/C 2005

11/05 Lodgment 3,100 1/5/ Balance b/d 1,900

31/05 Lodgment 9,600 3/5/ Mitchell Ltd 1 4,100

5/5/ Glennon Ltd 2 2,350

15/5/ Nolan Ltd 3 2,950

20/5/ Cash ATM 850

31/5/ Balance c/d 4,650 24/5/ Barry Ltd 4 5,200

17,350 17,350

Balance b/d 4,650


245

Updated Bank A/C

31/5/06 C/T 12,700 Balance b/d 4,650

SD 900

DD 1,700

Charges 340

Balance c/d 5,110

12,700 12,700Balance b/d 5,110

Bank Reconcilation Statement



12,660



Chapter 15 Personal Borrowing

1. Explain how the following methods of purchasing goods operate:(a) Credit purchase

(b) Hire purchase


(a) Being creditworthy means

(b) Collateral means

(c) A person is declared bankrupt when

3. Select suitable forms of borrowing for each of the following:

(a) House purchase of €250,000

(b) Payment of two monthly ESB bills

(c) Payment of annual car tax

(d) Payment of annual school fees of €5,000

(e) Purchase of TV €780

(f) Purchase of a new car €23,500

4.Cheap finance available

only 12% per annum

(a) Comment on the legality of this advertisement:

Easy Credit €120 depositplus €25 monthly for

three years

(b) Comment on the legality of this advertisement:


246

The seller gives the buyer a period of time to pay, e.g. Eircom gives customers two

months’ credit.

The customer obtains immediate use by paying installments and owns the item on paying the last installment.

being trusted to pay all money owing on time.

some form of security which the lender can take if the loan is not

a court declares that money owed cannot be

paid back.

paid back.

Long-term loan (mortgage)

Overdraft

Budget account

Budget account

Hire purchase

Term loan

This advertisement is illegal because it does not show the APR, the cash price,

the number of instalments or the total credit price.

This advertisement is illegal because it does not show the APR, the cash price or the

total credit price.


247

5. Complete the partially completed National Irish Bank Loan Application supplied for NoraJones, Piano Keys, Waterford on today’s date. Nora requires a loan of €13,000 for five yearsto buy a new piano. She owns her own house valued at €350,000. She works as a concertpianist with RTE, Dublin 4 and earns €3,500 gross per month. She has €25,000 saved inthe National Irish Bank and €5,000 in An Post. Her current account number is 23233232.

PERSONAL LOAN APPLICATION FORM

National Irish Bank

Name(s) ________________________________

Mr, Mrs, Ms _____________________________

Address(es) _____________________________

__________________________________________

__________________________________________

__________________________________________

Number of years at this address 7 years

Owned or Rented _________________________

Telephone 051-3456651____________________

Date of Birth 3/1/1980______________________

Mortgage amount (if any) €200,000_________

Annual repayments on mortgage €8,600____

Mortgage borrowed from EBS_______________

EMPLOYMENT DETAILS

Occupation ________________________________

Employer’s Name & Address _______________

__________________________________________

__________________________________________

Gross pay per month €______________________

No. of years in your present employment6 years

LOAN REQUIRED

Amount €____________________________

Purpose _____________________________

How long do you want the loan for? ________

BANK DETAILS (for existing customers)

Time with bank 8 years__________________

Current Account Yes � No

Account No. ____________________________

Details of savings

Bank/Other ______________________________

_______________________________________

_______________________________________

Name _________________________________

Amount

€ _ ____________________________________

€ _ ____________________________________

SIGNATURE ___________________________

DATE __________________________________

Nora Jones

Piano Keys

Waterford

13,000

Purchase of piano

Ms

5 years

Owned

23233232

Yes

NIB and An Post

25,000

5,000

Nora Jones

Pianist

RTE

Dublin 4

3,500


248

6. Rhona King lives at 56 Banks Road, Cork, in a house which she purchased in 1995 with thehelp of a mortgage of €59,000 from the Startup Building Society and to whom she repays€250 per month. She is single. Her telephone number is 021-134567. Rhonda is employedas a legal secretary with Smart & Keane, Solicitors, Airport Road, Cork, where she startedwork in 1991. She earns a Gross Salary of €2,400 per month, out of which she pays incometax and PRSI totalling €826. Rhonda wishes to buy a new car for her next birthday. She willbe 35 years old on 14 August 2005. In order to buy the car, she needs to borrow €12,500which she hopes to repay in monthly instalments of €290 over the next four years. She isalready paying the Cork Credit Union €64 per month for a loan which she obtained in 2004.She gets a Loan Application Form from her local branch of AIB.

(a) Complete Rhona’s Loan Application Form supplied, on today’s date.

(b) If the bank grants Rhona the loan for the car at €290 per month, how much interest willshe have paid after four years? €_________________________Show your workings in the space provided.

PERSONAL LOAN APPLICATION FORM

AIB

Name(s) _____________________________

Mr, Mrs, Ms _____________________________

Address(es) _____________________________

_________________________________________

_________________________________________

_________________________________________

Number of years at this address ___________

Owned or Rented ________________________

Telephone ______________________________

Date of Birth ____________________________

Mortgage amount (if any) €________________

Annual repayments on mortgage € _________

Mortgage borrowed from __________________

EMPLOYMENT DETAILS

Occupation ______________________________

Employer’s Name & Address_______________

_________________________________________

_________________________________________

Net pay per month €______________________

No. of years in your present employment

LOAN REQUIRED

Amount € _______________________________

Purpose ________________________________

How long do you want the loan for? ________

How much can you repay each month?

€ ______________________________________

Details of existing loans

Lender _________________________________

_________________________________________

Amount

€ ______________________________________

Annual repayments

€ ______________________________________

_________________________________________

SIGNATURE ________

DATE ___________________________________

Rhona King

Ms 12,500

Purchase of car

4 years

290

Cork Credit Union

768

Rhona King

56 Banks Road

Cork

10 years

Owned

021-134567

14/8/1970

59,000

3,000

Startup Building Society

Legal secretary

Smart and Keane Solicitors,

Airport Road, Cork

1,574

14

1,420

Total repaid €13,920 less loan €12,500 = €1,420

64 per month

(c) Explain the following terms:

(i) Mortgage

(ii) Debtor

(iii) Bankruptcy

Chapter 16 Insurance

1. (a) Explain the following insurance terms:

(i) Premium

(ii) Adequate Insurance

(iii) All Risks Insurance

(iv) Proposal Form

(b) What conditions must be present before a risk is insurable?

(i)

(ii)

(iii)

(iv)

2. Indicate with a tick � which of the following are true or false.

(a) A premium is paid by the insurer to the insured

(b) The principle of Utmost Good Faith applies to thecompletion of a proposal form

(c) Comprehensive car insurance is required by law

(d) The VHI is an example of an insurance company

(e) Endowment assurance is the same as whole life assurance


249

This is a long-term loan which is used to purchase or build a house.

This is a person who owes money to another person.

This is where the court declares publicly that a person cannot pay

money owing.

This is payment made to an insurance company when insurance is

purchased.

This insures all possible risks for the correct amount.

This covers any accidental loss or damage to selected

household items anywhere in Ireland or Europe.

This is an application form that has to be completed when

purchasing insurance.

There must be an insurable risk

There must be a large number of similar risks insured

All losses must be accidental

It must be possible to calculate the risk of a loss occuring

True

�

�

False

�

�

�


250

3. Name and explain the two principles of insurance that apply to the purchasing of insurance/assurance.1. Name:

Explanation:

2. Name:

Explanation:

4. Martin Keane, aged 27 and single, of 12 Roy Lane, Waterford, is a carpenter. He wishes topurchase an endowment policy of €100,000 on his life. He likes to go mountain climbing andis hoping to get his helicopter licence next year. Martin does not drink or smoke and is ingood health. He will pay his monthly premium by standing order. Assume that you are MartinKeane, complete the partially completed life assurance proposal form below on today’s date.

EUROLIFE INSURANCE LTD

Life Assurance Proposal Form

Please answer all questions fully to the best of your knowledge. Failure to do so may result in allor part of the benefits under this policy being cancelled. Please use BLOCK CAPITALS.

1. Name

Address

Age Next Birthday

2. Type of Policy Premiums to be paid monthly

Method of Payment

3. Have you ever had Life Assurance

4. Are you likely to:(a) Fly other than as a fare paying passenger

(b) Engage in a hazardous occupation orhobby

5. Are you in good health

6. Do you smoke

7. Do you consume alcohol

Please tick �

Single �� Married �

Occupation

Sum to be insured €

Please tick Yes � No ��

Please tick Yes � No �If Yes give details

Please tick Yes � No �If Yes give details

Please tick Yes � No �If No give details

Please tick Yes � No ��If Yes state how many

Please tick Yes � No ��If Yes state average daily consumption

DeclarationI declare that the above statements are true and complete, and I agree that these statements,together with the statements to be made to a doctor, if required, shall form the basis of the con-tract between me and the Insurance Company.

Date Signature of Proposer

Insurable interestThe insured must gain from the existence of the item insured and

suffer from its loss.Utmost Good Faith

All questions asked must be answered truthfully.

MARTIN KEANE

12, ROY LANE, WATERFORD

28

ENDOWMENT

STANDING ORDER

CARPENTER

100,000

�

HELICOPTER PILOT

�

MOUNTAIN CLIMBING

�

Martin Keane

5. Why might a person purchase comprehensive insurance for their new car?

6. Mary Mulligan, born in 13 May 1981 and single, lives in MBNA View, Carrick-on-Shannon,Co. Leitrim. Mary works as an accountant in a local credit card company and wishes topurchase comprehensive insurance on her car, a Nissan Micra Reg. No. 05LM612, valued at€19,600. Mary obtained a full licence in 2004 and has no driving convictions. This is herfirst insurance. Complete the partially completed car insurance proposal form from thefollowing details.


251

XA INSURANCE LTDCAR INSURANCE PROPOSAL FORM

Please answer all questions fully to the best of your knowledge. Failure to do so may result in all orpart of the benefits under this policy being cancelled. Please use BLOCK CAPITALS.

THE PROPOSER

Name and Address

Date of Birth

Address where car is usually kept

Occupation

THE CAR

Make and Model

Engine Type

Year of Manufacture

Registration No.

Value €

1400cc

COVER

Type of policy required Please tick

Use of car Comprehensive Third Part Fire and Theft

Pleasure Business

OTHER INFORMATION

Have you passed your driving test Please tick Yes No

Will the car be driven by anyone Please tick Yes No

under twenty-five If Yes state when

Have you had any accidents in the Please tick Yes No last four years

Have you or anyone who will drive Please tick Yes No this car had any driving convictions inthe last five years

DECLARATIONI declare that I am the owner of the vehicle, that the above statements or any other written state-ments by me are true and that they and this proposal shall be the basis of the contract between meand the Insurance Company.

Date / / Proposer’s Signature

Comprehensive insurance will give third party, fire and theft cover as well as covering

accidental damage to the insured’s own car.

MARY MULLIGAN

MBNA VIEW, CARRICK-ON-SHANNON, CO. LEITRIM

13/5/1981

AT THE ABOVE ADDRESS

ACCOUNTANT

NISSAN MICRA

2005

05 LM 612

19,600

�

�

�

�

�

�

BY MYSELF

Mary Mulligan


252

Chapter 17 Premium Calculation and Estimating Compensation

1. Column 1 is a list of insurance terms. Column 2 is a list of possible explanations. Match thetwo lists by placing the letter of the correct explanation under the relevant number in thetable below. (One explanation does not refer to any term.)

2. The Mahon family wish to insure their house for €300,000 and their contents for €100,000.They have a burglar alarm and are members of the Killoe Neighbourhood Watch scheme.They were given the following quotation: House insurance €2.5 per €1,000 and contents€7.5 per €1,000. They will receive deductions on contents insurance of 10% for having analarm and being a member of a neighbour watch scheme.

(a) Calculate their total premium.

(b) Assume you are Theresa Mahon, complete the cheque No. 102, payable to Ross Insurers,on 1/5/2006.

(a)

(b)

Details Calculations Premium

Total Premium

1. 2. 3. 4.


1. Underinsurance2. Loadings3. Actuary4. Principle of Contribution

(a) Calculates the amount of the premium(b) Applies in cases where something is insured by more than one insurer (c) Additional premiums charged due to higher risks(d) Calculates the amount of compensation to be paid out(e) Applies in cases of partial loss

e c a b

House €300,000Contents 100,000

Less deductions

Alarm system

Neighbour watch scheme

2.5 per €1,000

7.5 per €1,000

10% of €750

10% of €750

€750

€600

€1,350

€50

€750

SPECIMEN

Ross Insurers

1/5/

2006

1,35

0

1/5/06

1,350

Ros

s In

sure

rs

Thirteen hundred and fifty euro

Theresa Mahon

3. The Slevin family wish to insure their house for €200,000 and their contents for €50,000.They are members of the Newtown Neighbourhood Watch scheme and have an approvedalarm system. They carry on the family business from their house. The Slevins were giventhe following quotation: House insurance €2 per €1,000 and contents €8 per €1,000.There will be a loading of 20% on both house and contents for carrying on the business fromhome. They will receive deductions on contents insurance of 10% of basic plus loadings forhaving an alarm and being a member of a neighbour watch scheme.

(a) Calculate their total premium.

(b) Assume you are Geraldine Slevin, complete the cheque No. 678, payable to ConwayInsurers, on 1/5/2007.

(a)

(b)

4. Complete the partially completed claims form provided from the following details. On 25May 2005 at 22.45 pm Maura Smith, 15 Downs Avenue, Mullingar, Co. Westmeath returnedhome to find her house broken into. Missing were her new Dell Laptop which she hadpurchased ten days earlier for €1,400 and a Cannon camera purchased in 2003 for €600.She reported the theft to her local garda station. She estimated that her camera was worth€500.

Details Calculations Premium

Total Premium


253

House €200,000

Contents €50,000

Add loadings

Less deductions

2 per €1,000

8 per €1,00020% of €800

20% of €480

€400

€400 €800

€160

€960€96

€864

SPECIMEN


254

5. Complete the partially completed claims form provided from the following details. On 5May 2006 at 02.30 am Paddy Neary, 46 Doran Road, Waterford had his 2005 Micra 05 WD796 stolen from outside his house. He had purchased the car in March 2005 for €19,500 andhe estimated that it was worth €16,000. He reported the theft to his local garda station. Hispolicy number was P1167L.

6. A house was fully insured for €100,000. Fire caused €20,000. How much compensationshould be paid?

€

WAT INSURERS LTDLOSS / DAMAGE CLAIMS FORM

Name

Address

Policy No.

Occupation Factory Worker

Details of Loss/Damage Time: Date

Reported at Garda Station Name: Ballybricken Garda: J.P. Rock

Description of ItemsLost / Damaged

Date of Purchase Cost PriceDeduction forUse / Wear / Tear

Amount Claimed

I declare that the above statements are true to the best of my knowledge

Signed Date:

EAT INSURERS LTD

LOSS / DAMAGE CLAIMS FORM

Name

Address

Policy No. P 2312

Occupation Bus Éireann driver

Details of Loss / Damage Time: Date

Reported at Garda Station Name: Mullingar Garda: Joan Kelly

Description of ItemsLost / Damaged

Date of Purchase Cost PriceDeduction forUse / Wear/ Tear

Amount Claimed

I declare that the above statements are true to the best of my knowledge

Signed _____________________Date: ______________

Maura Smith

15, Downs Avenue, Mullingar, Co. Westmeath

22.45 pm 25 May 2005

Dell Laptop

Maura Smith26 May 2005

Cannon camera

15/5/2005

2003

€1,400

€600

0

€100

€1,400

€500

Paddy Neary46, Doran Road, Waterford

P 1167L

2.30 am 5 May 2006

Micra 05 WD 796 March 2005 €19,500 €3,500 €16,000

Paddy Neary6 May 2006

20,000

7. A house was insured for €300,000 with A Ltd and for €300,000 with B Ltd. The house wasburned. How much compensation can the insured expect to receive? Give a reason for youranswer.

8. A person who had his car stolen was compensated fully by an insurance company. The thiefwho stole the car was eventually caught. Who has the right to sue the thief?

9. A house with a market value of €250,000 was insured for €200,000. Fire caused €50,000damage. How much compensation should be paid? Give a reason for your answer.

10. Contents valued €40,000 were insured for €30,000. A thief stole €20,000 worth. Howmuch compensation should be paid? Give a reason for your answer.

11. Martin’s car insurance policy had an excess clause of €500. An accident caused €1,400damage. How much compensation can he expect to receive? Give a reason for your answer.

12. Name and explain the three insurance principles that apply to the estimation and paymentof compensation.

Name Explanation

1.

2.

3.

Calculations Answer €

Reason:


Reason:


Reason:


Reason:


255

€150,000 from A Ltd and €150,000 from B

The Principle of Contribution Applies - cannot gain

300,000

The insurer, as the principle of subrogation applies.

4/5 of €50,000

3/4 of €20,000

The house was underinsured by 1/5 of its value

40,000

The contents were underinsured by 1/4 of their value

15,000

900€1,400 less €500

Martin had agreed to pay the first €500 of a loss

Indemnity

Contribution

Subrogation

This states that the insured cannot gain from insurance

When two or more insurers insure some item, they share

the compensation

When an insurer pays compensation, it takes over the

legal rights of the insured


256

Chapter 18 Economic framework


(a) Enterprise is

(b) Resources are

(c) The term GNP means

2. To which factors of production do the following refer? Lorries, lorry drivers, engineers,trees, machinery, shopkeeper, bank loan, farmer, hairdresser, rivers.

3. To a teenager in Ireland, which of the following are needs and which are wants? Place a tick � in the appropriate box in each case and give a brief explanation for your answer.

4. Seán has €20. He can buy one CD, a football or a school tie. He chooses to buy a school tie.

(i) What is the financial cost of buying the school tie? €(ii) What is the opportunity cost of his decision?

5. Rose has €30. She can buy cosmetics, a mobile phone credit or join the supporters club ofher favourite football team. She joins the supporters club.

(i) What is the financial cost of joining the supporters club? €(ii) What is the opportunity cost of her decision?

6. Complete the following chart naming the four factors of production and giving twoexamples of each.

7. Answer the following questions on employment and unemployment.

(a) The labour force consists of:

(b) The implications for the government of high unemployment are:

Factors of Production Example 1 Example 2

1. Land Fields Mines

2. Labour Engineer Block layer

3. Capital Buildings Loans

4. Enterprise Denis O’Brien Michael O’Leary

Items Wants Needs Explanation

Clothes � You need to wear clothes

Computer games � You can do without computer games

Food � You need food to survive

School Books � You need books to be educated

Land Labour Capital Enterprise

Trees Lorry drivers Lorries Shopkeeper

Rivers Engineers Machinery Farmer

Hairdresser Bank loan

the factor of production that brings together land, labour and capital.

things that are used in the production of goods and services.

Gross National Production.

20

30Cosmetics and mobile phone credit

people who are able and available to work.

less income

from taxation and more social welfare payments.

A CD and a football

8. Calculate the rate of economic growth from the following information.

(i) Production of goods and services in Year 1 €23,000 and Year 2 €24,610(ii) Production of goods and services in Year 3 €28,000 and Year 4 €29,400

(iii) Production of goods and services in Year 5 €32,000 and Year 6 €33,600(iv) Production of goods and services in Year 7 €36,000 and Year 8 €38,880

9. Calculate the rate of inflation from the following information.

(i) Cost of living in Year 1 €2,000 and Year 2 €2,120(ii) Cost of living in Year 3 €1,800 and Year 4 €1,872

(iii) Cost of living in Year 3 €1,950 and Year 4 €2,028(iv) Cost of living in Year 3 €3,500 and Year 4 €3,745

10. (a) Explain the term economic growth

(b) Name two consequences of economic growth

(c) Name two consequences of high inflation

Formula Workings Answer

(i)Difference × 100

Original amount120 × 100

2,0006%

(ii)Difference × 100

Original amount72 × 1001,800

4%

(iii)Difference × 100

Original amount78 × 1001,950

4%

(iv)Difference × 100

Original amount245 × 100

3,5007%

Formula Workings Answer

(i)Difference × 100

Original amount1,610 × 100

23,0007%

(ii)Difference × 100


28,0005%

(iii)Difference × 100


32,0005%

(iv)Difference × 100


36,0008%


257

This is the increase in the production of goods and

services from one year to the next.

Higher standard of living. More money

to create employment.

Workers will look for more wages. Irish

goods and services will be too expensive.

Chapter 19 Budgeting: The National Budget

1. Indicate with a tick � which of the following are true or false.

(a) A budget deficit is where income is greater thanexpenditure

(b) FÁS is an example of a government department

(c) The national debt is money owed to the government

(d) Roads and school buildings are examples of capitalexpenditure

(e) The Minister for Education and Science presents thebudget to Dáil Éireann in December each year


(a) Current expenditure includes spending on

(b) An increase in unemployment can effect the budget in two ways:

3. Tick � the correct answer. When government–planned expenditure is greater than plannedspending the budget is a:

(a) Surplus Budget

(b) Balanced Budget

(c) Deficit Budget

4. Tick � the correct answer. An increase in government income without any changes inspending will:

(a) Decrease the budget deficit

(b) Increase the budget deficit

(c) Have no effect on the budget deficit

5. List four examples of spending on social welfare by the Minister of Social, Community andFamily Affairs.

(a) (b)

(c) (d)


258

True

�

False

�

�

�

�

wages of teachers and nurses as well as

There will be less

Old age pension Unemployment assistance

Disability paymentsFree school books

income tax received and more social welfare payments to be made.

supplies for hospitals.

�

�

6. The following figures were produced by a Minister of Finance on Budget Day as projectionsfor the year 2003.

(a) From the above information, draft the National Budget for 2003 in your copybook.

(b) Is this budget a surplus or deficit budget?

Give one example of current expenditure by:

(i) the Department of Justice and Law Reform

(ii) the Department of Social, Family and Community Affairs

(c) Suggest one effect each of the following would have on a National Budget:

(i) an increase in VAT:

(ii) an increase in the number of Gardaí:

National Budget


PAYE 600 Health and Children 350

Excise 80 Education and Science 335

VRT 25 Environment 268

VAT 385 Debt Servicing 195

Corporation Tax 198 Justice and Law Reform 157

Balance (Deficit) 383 Social, Family 366

1,671 1,671

Main Item of Revenue and Expenditure Estimated figures in millions€

Health and Children 350

PAYE 600

Education and Science 335

Excise Duty 80

VRT 25

Environment 268

VAT 385

Debt Servicing 195

Justice and Law Reform 157

Corporation Tax 198

Social, Family and Community Affairs 366


259

Deficit budget of €383m

Wages of judges

Old age pension

Increase income / Decrease deficit

Increase expenditure / Increase deficit


260

7. The following figures were provided by the Minister of Finance on Budget Day as hisprediction for the year ahead.

(a) From the above information, draft the National Budget for the year ahead in yourcopybook. Show clearly the total income and total expenditure and balance the budget.

(b) (i) Is this budget a surplus or deficit budget?

(ii) Suggest two courses of action which the government can take to rectify a budgetdeficit.

1.

2.

(c) What effect, if any, has a budget surplus on the National Debt of a country?

(d) From 2007 Ireland will pay more to the EU than it receives. What effect will this haveon the Irish Government’s finances?

Chapter 20 Foreign Trade

1. Which of the following are in the European Union. Tick � to indicate membership.

The Netherlands Estonia Bulgaria Austria Norway Turkey Russia

National Budget


Corporation Tax 5,100 Contributions to EU 1,400

Income Tax 9,300 Social, Family 10,300

VAT 9,800 Education and Science 5,300

Excise 4,900 Debt Servicing 2,500

Stamp duty 2,000 Health and Children 8,600

Balance (Deficit) 2,400 Security 2,500

Industry, Farming, Tourism 2,900

33,500 33,500

Main Item of Revenue and Expenditure Estimated figures in millions €

Contributions to EU 1,400

Social, Family and Community Affairs 10,300

Corporation Tax 5,100

Education and Science 5,300

Income Tax 9,300

Debt Servicing 2,500

VAT 9,800

Health and Children 8,600

Excise 4,900

Security 2,500

Stamp Duty 2,000

Industry, Farming and Tourism 2,900

Deficit of € 2,400 million

Increase taxation / VAT, Income Tax

Reduce spending / Reduce Civil Service

It could be used to reduce the debt.

The government will have to find more income from taxes and reduce spending.

� � �


261

2. As far as Ireland is concerned, two of the following are invisible imports. Tick 0 which areinvisible.

Irish fans going to Germany for the World Cup finalsIrish lamb sold to FranceEnglish rugby fans coming to Ireland for a rugby match

Robbie Keane being paid a match fee to play for Ireland


(a) Import substitution means

(b) Examples of invisible exports include

4. Tick 0 which of the following are imports or exports.

(a) Britney Spears on tour in Ireland(b) Irish mushrooms sold to France(c) Irish tourists in Greece(d) Purchase of clothes on the internet from New York fashions(e) Ryanair flying passengers from Rome to Berlin(f) Purchase of Toyota cars from Japan(g) U2 on a worldwide tour

5. In the spaces provided, write the names of the currencies of the following countries:

6. Complete the chart below and state whether the balance of trade is a surplus or deficit in each year.

The balance of trade is a _________________________________

7. Complete the chart below and state whether the balance of trade is a surplus or deficit in each year.

The balance of trade is a ________________________________

Year 3 €m Year 4 €m

Visible Exports 18,900 Visible Exports 27,900

Visible Imports 18,880 Visible Imports 29,670

Balance of Trade 20 Balance of Trade – 1,770


Visible Exports 17,300 Visible Exports 23,400

Visible Imports 17,680 Visible Imports 21,980

Balance of Trade – 380 Balance of Trade 1,420

Country Currency

United Kingdom Pound Sterling

Sweden Krona

Italy Euro

Japan Yen

United States US Dollar

0

0

Exports

0

0

0

Imports

0

00

0

replacing foreign goods with Irish goods.

foreign tourists in Ireland, money earned

deficit in Year 1 and a surplus in Year 2.

by U2 and the Corrs.

surplus in Year 3 and a deficit in Year 4.

8. Complete the chart below and state whether the balance of payments is a surplus or a deficit ineach year.

The balance of payments is a _________________________________

9. Prepare the balance of payments of a country from the following details, and state whether thebalance of payments is a surplus or a deficit: Visible exports €23,000; other monies coming in €15,000; other monies going out €6,000; visible imports €42,000. Complete the blankBalance of Payments Statement below.

The balance of payments is a _____________________________

10. Calculate the Balance of Trade and Balance of Payments from the following details and complete the blank statements below and state if the balance of trade is a surplus or a deficit:Visible imports €34,000; other monies coming in €13,200; visible exports €37,430; othermonies going out €16,780.

Balance of Trade Statement

The balance of trade is a _____________________________

Balance of Payments Statement

Year 1 €m

Total monies coming into Ireland 50,630

Total monies going out of Ireland 50,780

Balance of payments –150

Year 1 €m

Visible exports 37,430

Visible imports 34,000

Balance of trade 3,430

Year 1 €m

Total monies coming into Ireland 38,000

Total monies going out of Ireland 48,000

Balance of payments –10,000


Total monies coming into Ireland 76,500 Total monies coming into Ireland 87,760

Total monies going out of Ireland 77,540 Total monies going out of Ireland 86,670

Balance of Payments –1,040 Balance of Payments 1,090


262

deficit in Year 1 and a surplus in Year 2.

deficit.

surplus.


263

11. (a) If the rate of exchange is €1 = $1.16, how much would you receive if you converted$1,340 to euro?Answer Workings

(b) If the rate of exchange is €1 = £0.66, how much would you receive if you converted £1,250 to euro?Answer Workings

(c) If the rate of exchange is €1 = £0.66, how much would you receive if you converted €2,500 to sterling?Answer Workings

Chapter 21 Forms of Ownership

1. Tick 0 the most appropriate answer below. A private company is

(a) A business run by one person(b) A business owned by the state(c) A business owned by between one and fifty people

2. Tick 0 the most appropriate answer below. Which of the following state companies is involvedin production?

(a) An Post

(b) An Bord Bia

(c) Bord na Móna

(d) Fáilte Ireland

3. Explain:

(a) Limited Liability

(b) Dividend

4. Indicate with a tick 0 which of the following are true or false.

(a) Private limited companies have unlimited liability

(b) RTE is an example of a co-operative

(c) State businesses do not charge for their services

(d) A shareholder in a co-operative has only one vote

(e) A sole trader can keep half of the profits made

2500 × 0.66€ 1,650

12500.66

€ 1,893.94

13401.16

€ 1,155.17

0

True

0

False

0

0

0

0

0

Shareholders in a company can only lose what they invested in the company.

This is a share of the profits made by a company in a given year, paid to

the shareholders.

5. The maximum number of shareholders a private limited company can have is shares.

6. Compare Sole Traders, Co-operatives and Private Limited Companies under these headings:Control, Profits and Number of Owners.

7. Name and explain five different types of state-owned companies.

1. Name:

Explanation:

2. Name:

Explanation:

3. Name:

Explanation:

4. Name:

Explanation:

5. Name:

Explanation:

Chapter 22 Private Limited Company

1. Indicate the correct answer to (a) and (b) with a tick 0.(a) A private limited company has the following letters after its name.

PLC LTD

STD CPU

(b) The document that deals with the internal running of a company is:

(i) Memorandum of association

(ii) Articles of association

2. Indicate the correct answer to the following statement with a tick 0.The document which shows that a company is a legal entity is called:

(a) A share certificate

(b) Articles of association

(c) A certificate of incorporation

Forms of Ownerships Control Profits Number of Owners

Sole traders Total control Keeps all 1

Co-operatives Shared Shared 8+

Private Limited Company Shared Shared 1–50


264

0

0

0

50

Bord na Móna

Produces peat

ESB

Produces electricity

Fáilte Ireland

Encourages people to holiday in Ireland

An Post

Provides a postal delivery service

Bus Éireann

Provides bus transport throughout Ireland


265

3. On 1 July 2006, Tom and Marie Kelly of Hill Top Road, Galway decided to set up a private limited company called Kelly Insurers Ltd. The object of the company was to sell household,personal and business insurance. Their nominal share capital was 200,000 €1 ordinary shares(€200,000). They each purchased 15,000 €1 ordinary shares. They lodged the money invest-ed in shares, in the company bank account.

(a) Complete the memorandum of association below.

(b) Record the issue of shares in the bank and ordinary share capital accounts below.

General Ledger

4. On 1 October 2007, Nora Martin, Ballsbridge, Dublin and Philip Keogh, Dart View, Skerries,Co. Dublin, formed a private limited company called NK Ltd. They completed all the necessary documents and sent them to the Registrar of Companies. The objects of the company are to produce and sell business books and teaching aids. The authorised share capital of NK Ltd is 250,000 €1 ordinary shares.On 20 October 2007 Nora and Philip purchased 25,000 €1 ordinary shares. The moneyreceived from the issue of shares was lodged to the company bank account.


Bank A/C

1/7/06 Share cap. 30,000

Share Capital A/C

1/7/06 Bank 30,000

MEMORANDUM OF ASSOCIATION

1. The name of the Company is:

2. The Objects of the Company are:

3. The Liability of the shareholders is Limited.

4. The Share Capital of the Company is € divided into €1 Ordinary Shares.

We the several persons whose names, addresses and descriptions are subscribed wish to beformed into a Company in pursuance of the Memorandum of Association and we agree to takethe number of shares in the Capital, of the Company set opposite our names.

Date Signed:

Witness to the above signatures:

Name, Address of each Subscriber Number of shares taken by each Subscriber

Tom KellyHill Top RoadGalway

15,000

Marie KellyHill Top RoadGalway

15,000

Kelly Insurers Ltd

Sale of household, personal and business insurance

200,000

1 July 2000 Tom Kelly, Marie Kelly

Martin Jones

200,000

(a) Complete the memorandum of association below.

(b) (i) Record the issue of shares in the bank and ordinary share capital accounts below.(ii) Show the opening Balance Sheet of NP Ltd on 20 October 2007.

(i)General Ledger

(ii)

(c) Name the document that the Registrar of Companies would send to NK Ltd when the

company was formed: ______________________________________________________

Balance Sheet of NK Ltd as on 20 October 2007

Current Assets

Bank 50,000

Financed By Authorised Issued

250,000 € 1 ordinary shares 250,000 50,000 50,000


Bank A/C

20/10/07 Share cap. 50,000

Share Capital A/C

20/10/07 Bank 50,000


266

MEMORANDUM OF ASSOCIATION

1. The name of the Company is:

2. The Objects of the Company are:

3. The Liability of the shareholders is Limited.

4. The Share Capital of the Company is € divided into €1 Ordinary Shares.

We the several persons whose names, addresses and descriptions are subscribed wish to beformed into a Company in pursuance of the Memorandum of Association and we agree to takethe number of shares in the Capital, of the Company set opposite our names.

Date Signed:

Witness to the above signatures:

Name, Address of each Subscriber Number of shares taken by each Subscriber

Nora MartinBallsbridgeDublin

25,000

Philip KeoghDart ViewSkerriesCo, Dublin

25,000

NK Ltd

Produce and sell business books and teaching aids

250,000

20/10/2007 Nora Martin, Philip Keogh

Certificate of Incorporation

250,000

Fiona Hyde


267

Chapter 23 Chain of Production

1. Explain the term Primary Production.

Primary production is

Two examples of primary production include:

(a) (b)

2. Indicate with a tick 0 which of the following are examples of primary, secondary and tertiaryproduction.

3. Column 1 is a list of people in the chain of production. Column 2 is a list of possible explanations of the work which they do. Match the two lists by placing the letter of the correctexplanation under the relevant number in the table below. One explanation does not refer to any of the people mentioned.

(Junior Certificate Ordinary Level 1999 amended for euro)

4. Fill in the blank spaces in the two channels of distribution below:

Chapter 24 People at Work

1. Write brief notes on:

(a) The live register

1. 2.(a) Manufacturer (a) Wholesaler

(b) Wholesaler (b) Retailer

(c) Retailer (c) Consumer

1. 2. 3.b d c

Column 1 Terms Column 2 Explanations1. Wholesaler (a) Makes goods for the public

2. Consumer (b) Sells goods to the shops for resale

3. Retailer (c) Sells goods for private use

(d) Buys goods for private use

Good/Service Primary Secondary TertiaryShoe manufacturer 0Advertising manufacturer 0Fisherman 0Coal mining 0Credit Union 0Builder 0

the extraction of raw materials from land, sea and air.

Fishing Mining

measures the level of unemployment, i.e. those who are able and willing

to work

(b) Self-employed

(c) Managing Director

2. Indicate with a tick 0 which of the following are true or false.

(a) Job sharing means dividing one job between two workers

(b) A teacher is an example of a self-employed person

(c) An entrepreneur can never make a loss

(d) The purchasing department deals with the hiring of workers

(e) An employer has rights and responsibilities

3. Show, with four examples, the difference between work and employment.

4. Complete the sentences below by filling the blank spaces from the following list of terms. Oneterm does not match.

Labour Force, Responsibilities, Work, Risks, Shareholders, Unemployed, Rewards, Rights,Employment, Managing Director

(a) The difference between and is payment.

(b) Those who are available for work are referred to as the .

(c) People who want to work but can not find a job are called .

(d) There are and involved in being self employed.

(e) The Board of Directors appoint the .

(f) Employees have certain and .

Example Work EmploymentNote taking Student taking notes in class Reporter taking notes for news-

paper

1. Cooking a meal Parents making dinner Chef preparing dinners

2. Preparing accounts Student doing accounts Accountant doing accounts

3. Training a team Teacher training a school team Sir Alex training Man Utd

4. Painting Jack painting a house Jack B. Yeats painting a portrait

Junior Certificate Business Studies Workbook

268

True

0

0

False

0

0

0

These are people who work for themselves for payment.

The M.D. is appointed by the Board of Directors and is responsible

for the day-to-day running of the company.

work employment

labour force

unemployed

risks rewards

Managing Director

rights responsibilities


269

Chapter 25 Being an Employer

1. Match the following methods of calculating the gross wage for the different type of workers:Hourly rate; Commission; Piece rate.

2. Complete the following sentences below by inserting a suitable terms.

(a) Equal opportunity employers employ both and

workers.

(b) A sets out the work to be done and the qualificationsrequired.

(c) Workers on can start and finish work at differenttimes.

(d) The total cost of employing workers is made up of

plus .

3. Study the job advertisement and explain the terms in bold.

Basic Wage:

Overtime:

Subsidized canteen and travel:

Human Resources Manager:

MORGAN INSURANCE BROKERS LtdGeneral Insurance Clerk required

Computer knowledge and bookkeeping skills an advantage

Basic Wage €390 gross for a 39 hour weekOvertime also a possibility

Subsidized canteen and travel

Apply in writing toThe Human Resources Manager

MORGAN INSURANCE BROKERS Ltd,Indemnity Road,

Sligo

MORGAN INSURANCE BROKERS Ltd is an equal opportunities employer

Workers Method of calculating Gross Wage

Car sales person Commission

Blocker layer Piece rate

Office worker Hourly rate

Garda Hourly rate

Insurance sales person Commission

Strawberry picker Piece rate

male

female

contract

flexitime

employer’s share

gross wageof PRSI

This is payment for working normal hours, e.g. a 39-hour week.

This is additional payment for working more than 39 hours.

These are known as Benefits in Kind and are an extra type

of payment.

The person responsible for employing staff.

4. Study the Contract of Employment given below and answer the questions that follow.

(a) Who is being employed? _______________________________________________

(b) What job has the employee obtained? _____________________________________

(c) What is the basic weekly wage? € _______________________________________

(d) What additional benefits will the employee receive? _________________________

(e) Why is it important to have a contract of employment? _______________________

5. Tina Clarke is paid €320 for a 40-hour week. This week she works 48 hours. Overtime is paidat the rate of €12 per hour. Her tax credits are €30 per week. Her tax rate is 20%. PRSI is 10%of gross. Other deductions are Union fee €12 and VHI €18.Calculate her Net Wage and complete the wage slip below.

6. Andrew Conway earns €890 per week. His standard cut-off point is €565.38 and he has taxcredits of €49.23 His tax rates are 20% on the first €565.38 and 42% on the remainder of hisincome. He pays per week 7.5% PRSI, BUPA €25, Savings €12.

(a) Calculate his income tax due, his PRSI due and his Net Wage for week No. 3.

(i) Income Tax

(ii) PRSI

(iii) Net Wage

Wage Slip

Tina Clarke Employee No. 1221

Gross Wage Deductions

Basic O/Time Total PAYE PRSI VHI Union Total Net Wage

320 96 416 53.20 41.60 18 12 124.80 291.20

Contract of EmploymentEmployer: Finn Harps Monthly Journal

Employee: Máire McGee

Hours of work per week: 38 hours flexi-time

Job Description: Assistant editor

Rates of Pay:

€45,6001% of sales over 25,000 copies

Basic:

Bonus:

Date of commencing work: 1/5/2006

Holidays: Four weeks

Pension: Non-contributory

Company Car: Nissan Micra

Health Insurance: Vivas premium paid in half

Signed: Máire McGee

Fergus Healy

Date: 30 April 2006

Junior Certificate Business Studies Workbook

270

Máire McGee

Assistant Editor

Company car; non-contributory pension

To show your rights

876.92

€ 200.19€ 63.75

€ 589.06


271

(b) Complete Andrew Conway’s wage slip.

7. Sonia Stone earns €1,300 per week. Her standard cut-off point is €565.38 and she has taxcredits, Personal Credit €1,520 and Employee Credit of €1,040. Her tax rates are 20% on thefirst €565.38 and 42% on the remainder of her income. She pays per week 7.5% PRSI, VHI€15, Union €10.

(a) Calculate her income tax due, her PRSI due and her Net Wage for week No. 9.

(i) Income Tax

(ii) PRSI

(iii) Net Wage

(b) Complete Sonia Stone’s wage slip below.

8. (a) Name two rights and responsibilities of an employer.

(i) _____________________________________________________________________

(ii) _____________________________________________________________________

(b) Assume you are the principal of St. Mark’s Secondary School. Draft a suitable jobdescription in your copybook for the position of PE Teacher. The job description should contain four important pieces of information.

(c) St. Mark’s Secondary School has three non-teaching employees who are paid on a weekly basis. William Kenny pays €71 income tax, Bríd Moore pays €63 income tax,and Philip Farrell pays €47 income tax. Each employee pays PRSI at the rate of 8%. Theemployer’s rate of PRSI is 12%.

(i) Complete the Wages Book, for the month of May, 2005, using the partially completedWages Book provided.

(ii) Calculate the total cost of wages for the month of May, 2005.

Wage SlipSonia Stone Employee No. 5678


Week no. Total PAYE PRSI VHI Union Total Net Wage

9 1,300 372.39 97.50 15 10 494.89 805.11

Wage SlipAndrew Conway Employee No. 1335


Week no. Total PAYE PRSI BUPA Savings Total Net Wage

3 890 200.19 63.75 25 12 300.94 589.06

€372.39

€97.50

€806.37

Select suitable staff

Dismiss dishonest staff

(i)

(ii) Total cost of wages: € _________________________________________

(d) Record the total cost of wages for the month of May 2005 in the Wages Account andAnalysed Cash Book of St. Mark’s Secondary School provided.

9. (a) Complete the wages book on the 27 February 2005 below from the following data.

(b) Calculate the total cost of employing the workers, assuming employers PRSI is 10% ofgross wage.

Ryan Martin: Gross wage €360; PAYE €90; PRSI 5% of gross; Union €10;VHI €10; Pension €8.

Jackie Mulligan: Gross wage €280; PAYE €72; PRSI 5% of gross; Union €10; VHI €15; Pension €6.

Jenny Yorke: Gross wage €450; PAYE €110; PRSI 5% of gross; Union €10;VHI €20; Pension €16.

(a)

(b) Total cost of wages: €___________________________________

Date NameGrossWage

Deductions NetWage

Employer’s PRSIPAYE PRSI Pension VHI Union Total

€ € € € € € € €27/2/05 R. Martin 360 90 18 8 10 10 136 224 36

27/2/05 J. Mulligan 280 72 14 6 15 10 117 163 28

27/2/05 J. Yorke 450 110 22.50 16 20 10 178.50 271.50 45

27/2/05 Total 1,090 272 54.50 30 35 30 431.50 658.50 109

Analysed Cash Book (p1)

Date Details F Bank Wages

May 2005 Wages GL 1 1,747.20 1,747.20

General Ledger


Wages A/C

May 2005 Bank 1,747.20

Date Name Gross Wages Deductions Net Wages EmployersPRSIPAYE PRSI Total

€ € € € € €

31/5/2005 William Kenny 600 71 48 119 481 72

31/5/2005 Bríd Moore 560 63 44.80 107.80 452.20 67.20

31/5/2005 Philip Farrell 400 47 32 79 321 48

Total 1,560 181 124.80 305.80 1,254.20 187.20


272

1747.20

1,199


273

10. Answer (a) and (b) below from the following data.Polly Dunne: Gross wage €570; PAYE €190; PRSI 5% of gross; Union €15;

Savings €30; Pension €13.Mini McGrath: Gross wage €680; PAYE €230; PRSI 5% of gross; Union €15;

Savings €40; Pension €19.Mark Kelly: Gross wage €380; PAYE €90; PRSI 5% of gross; Union €15;

Savings €10; Pension €10.(a) Complete the wages book on the 15 March 2006.

(b) Calculate the total cost of employing the workers, assuming employers PRSI is 10% ofgross wage.

(a)

(b) Total cost of wages: €

11. Answer (a) and (b) below from the following data.Total cost of employing ten workers €15,000 plus employer PRSI €1,500.

(a) Total cost of wages: €

(b) Show the entries in the Wages Account and Analysed Cash Book and the extract in theProfit and Loss Account below on 31 March 2006.

12. Answer (a) and (b) below from the following data.Total cost of employing workers €16,000 plus employer’s share of PRSI 10%.


(b) Show the entries in the Wages Account and Analysed Cash Book and the extract in theProfit and Loss Account below on 30 September 2007.

General Ledger

Date Details F Total Date Details F TotalWages A/C

30/9/07 Bank ACB 17,600

Profit and Loss Account for year ended 31 March 2006Less Expenses

Wages 16,500


Date Details Bank Wages

31/3/06 Wages 16,500 16,500

General Ledger

Date Details F Total Date Details F TotalWages A/C

31/3/06 Bank ACB 16,500

Date Name GrossWage

Deductions NetWage

Employer’s PRSIPAYE PRSI Pension Savings Union Total

15/5/06 € € € € € € € €

15/5/06 P. Dunne 570 190 28.50 13 30 15 276.50 293.50 57

15/5/06 M. McGrath 680 230 34 19 40 15 338 342 68

15/5/06 M. Kelly 380 90 19 10 10 15 144 236 38

15/5/06 Total 1,630 510 81.50 42 80 45 758.50 871.50 163

1,793

16,500

17,600

13. Answer (a) and (b) below from the following data.Total cost of employing ten workers € 32,000.


(b) Show the entries in the Wages Account and the Analysed Cash Book and the extract inthe Profit and Loss Account below on 31 July 2008.

14. (a) List two rights and responsibilities of an employer:

Two rights are: 1. 2.

Two responsibilities are: 1. 2.

(b) State two methods of calculating gross wages.

1. 2.

(c) Oidar Ltd has three employees who are paid on a monthly basis. Each employee paysincome tax (PAYE) at the rate of 30% of gross wages. The employer’s share of PRSI is12% of gross wages.

Profit and Loss Account for year ended 31 July 2008

Less Expenses

Wages 32,000



31/7/08 Wages 32,000 32,000


Wages A/C

31/7/08 Bank ACB 32,000

Profit and Loss Account for year ended 30 September 2007Less Expenses

Wages 17,600



30/9/07 Wages 17,600 17,600


274

32,000

Set up business

Pay agreed wage Keep proper records

Hourly rate Piece rate

Decide on aims


275

(i) Complete the Wages book for the month of May 2006.

(ii) Total cost of wages for May 2006: € _______________________

(d) Record the total cost of wages for the month of May 2006 in the Wages Account and theAnalysed Cash Book of Oidar Ltd.

(Junior Certificate Higher Level 1995 Q5 amended for euro)

Chapter 26 Industrial Relations


(a) The ASTI and TUI are examples of unions.

(b) help their members obtain higher wages.

(c) A is the local union representative.

(d) The Labour Court is an example of a .

(e) The use of a third party to end a dispute is called .

2. Column 1 is a list of industrial relations terms. Column 2 is a list of possible explanations ofthe work which they do. Match the two lists by placing the letter of the correct explanationunder the relevant number in the table below. One explanation does not apply.

Analysed Cash Book (p 1)

Date Details F Bank Wages

31/5/06 Wages GL 4,704 4,704


Bank A/C

31/5/06 Wages ACB 4,704

Wages A/C

31/5/06 ACB 4,704

Date NameGrossWages

Deductions NetWages

Employer’sPRSIPAYE PRSI Pension Total

€ € € € € € €

31/5/2006 R. Kenny 1,600 480 112 80 672 928 192

31/5/2006 L. Dunne 1,400 420 98 70 588 812 168

31/5/2006 T. Doyle 1,200 360 84 60 504 696 144

Total 4,200 1,260 294 210 1,764 2,436 504

4,704

white collar

Unions

Shop Steward

Third Party

conciliation

3. Explain:

(a) Work to rule:

(b) Conciliation:

Chapter 27 Finance for Business

1. Select a suitable source of finance for each of the following needs of a garage from this list ofsources of finance.Creditors, Bank Overdraft, Hire Purchase, Leasing, Term Loan, Share Capital, Reserves, LongTerm Loan.

2. Indicate with a tick 0 in the table below which of the following needs of a hairdressing business are short, medium or long term. Suggest a suitable source of finance for each need.

Need Short Medium Long Suitable Source of Finance

Mirrors and Chairs 0 Bank term - loan

Wages of Staff 0 Bank overdraft

Buildings 0 Capital

Light and Heat 0 Expenses due

Cash Register 0 Hire purchase

Advertising 0 Creditors

Computerised Hairdryer 0 Leasing

Shampoo 0 Creditors

Need Suitable Source of Finance

Cars Term loan

Office Equipment Leasing

Extension to Garage Reserves

Light and Heat Creditors

Breakdown Truck Long-term loan

Petrol for Resale Creditors

1. 2. 3. 4.

d c a e


1. Craft Union (a) An organisation which represents employers

2. Arbitration (b) Represents workers in a particular industry

3. IBEC (c) Use of a third party to settle a dispute

4. Demarcation Dispute (d) Represents workers who have served an apprenticeship

(e) A disagreement over who does what work


276

Only doing exact work as laid out in the contract.

This is where a third party helps both sides in dispute to settle their

differences.


277

3. Indicate with a tick 0 which of the following statements are true or false.

(a) Term loans are usually repaid in full at the end of the term(b) Leasing is a useful source of long-term finance(c) Creditors are only available to business who buy and sell

goods(d) With hire purchase a person will never become the owner

of the goods(e) Reserves are only available to profitable businesses

Chapter 28 Preparation of a Business Plan

1. Explain:

(a) Business Plan:

(b) Cash Flow Forecast:

(c) Net Cash:

2. List four examples of business receipts and four examples of business payments.

3. Indicate with a tick 0 which of the following statements are true or false.

(a) A business plan should include details of the market(b) Fixed costs vary with production(c) Collateral is another name for security(d) Net Cash is cash received less cash paid out(e) Cash flow forecasts are similar to household budgets

Business Receipts Business Payments

1. Cash sales 1. Cash purchases

2. Payment by debtors 2. Payments to creditors

3. Loans 3. Repayment of loans

4. Owner’s capital 4. Taxation

True

0

000

False

0

This sets out what a business wants to do in the future.

This is a statement setting out future income and

expenditure.

This is the difference between expected income and expected expenditure.

True

0

0

False

00

0


278

BUSINESS PLAN

COMPANY DETAILS

Name of Company

Address of Company

Shareholders/Owners

Managing Director

Company Bank

PRODUCT

Description of Product

MARKET RESEARCH

Size of Market

Competition

Price per house €

SALES PROMOTION

Methods

FINANCE

Total Required €

Amount Available €

Amount Required €

SIGNED (i)

(ii)

DATE

4. Complete the blank business plan provided from the following data:Niall Quinn and Monica McCarthy plan to set up a new painting business catering for privatecustomers. They named their company Picture That Ltd. It is located in Centre Forward Drive,Naas, Co. Kildare. Niall is the managing director. Their bank is the permanent TSB.Their market research showed that there were 15,000 potential customers each year. There arefive competitors. The average price for painting a house is €3,200. Total costs are €150,000.They have savings of €70,000 and hope to receive a loan of €80,000. They will promote theirbusiness by advertising in local radio and newspapers.

Picture That Ltd

Centre Forward DriveNaasCo, Kildare

Niall Quinn

Monica McCarthyNiall Quinn

Permanent TSB

Painting of private houses

15,000 potential customers

Five competitors

3,200

150,000

70,00080,000Niall Quinn

Monica McCarthy

Advertisements in local radio and newspapers


279

5. Paul Hughes and Emma Daly hope to set up a secretarial services business called H&D ICTLtd. The company will be located in Keyboard Avenue, Carrick-on-Shannon, Co. Leitrim. Emma is the managing director.Their market research showed that there was only one other competitor and that there were over2000 potential private and business customers. The price per A4 sheet printed is €3.Their estimated costs are: Lease of buildings €38,000; purchase of equipment €27,000; day to day running expenses and wages for first two months €18,000. They have savings of€17,500. They will advertise on local radio and in local papers.

(a) Calculate the amount of finance they will need to raise to set up the business.

H&D ICT will need € __________

(b) Complete the blank business plan provided.

WorkingsCosts: 38,000 + 27,000 + 18,000

= 83,00083,000 – 17,500 = 65,500

BUSINESS PLAN

COMPANY DETAILS

Name of Company

Address of Company

Shareholders/Directors

Managing Director

Company Bank

PRODUCT


MARKET RESEARCH

Size of Market

Competition

Price per A4 Sheet €

SALES PROMOTION

Methods

FINANCE

Total Required €


Amount Required €

SIGNED (i)

(ii)

DATE

65,500

H&D ICT Ltd

Keyboard Avenue

Carrick-on-ShannonCo. Leitrim

Paul Hughes

Emma Daly

Emma DalyAIB

Secretarial Services

2,000 potential customers

1 competitor

3 per A4 printed sheet

Advertise on local radio and in local papers

83,00017,500065,500

Paul Hughes

Emma Daly

6. HM Ltd is located at Hit Parade Avenue, Kiltamagh, Co. Mayo. It produces and distributesmusical t-shirts for the Irish and European market. Its shareholders are Samanta Harte andMichael Joseph Mumba. The managing director is Louise Walshe. HM Ltd has its bank accountin the Permanent TSB. It promotes its t-shirts on the internet and in pop magazines and offersa mail order service.

Its market research has provided the following information:There are 20 million potential customers; there are five main competitors but none of themoffer a mail order service. HM Ltd offers the following financial information for the year end-ing 31/5/2004:Sales (30,000 t-shirts) €600,000; HM Ltd wishes to expand its company at a total cost of€2,000,000. It has reserves of €300,000 and will receive a grant of €500,000. It hopes to raisethe remaining finance by issuing shares to friends of the company.

(a) Calculate how much finance it will need to raise through issuing shares. (Show workingsclearly.)

HM Ltd will need to raise € __________

(b) Complete the Business Plan below, using today’s date. (Junior Certificate Higher level 2004 Q5 amended)


280

BUSINESS PLAN

COMPANY DETAILS

Name of Company

Address of Company

Shareholders/Directors

Managing Director

Company Bank

PRODUCT


MARKET RESEARCH

Size of Market

Competitors

Price per t-shirt €

SALES PROMOTION

Methods

FINANCE

Total Required €


Share Investment Required €

SIGNED (i)

(ii)

DATE

Workings2,000,000 – 300,000 – 500,000

= 1,200,000

1,200,000

HM Ltd Hit Parade Avenue

Kiltamagh

Co, Mayo.Samanta Harte

Michael Joseph Mumba

Louise Walshe Permanent TSB

20 million potential customers

5 main competitors

20

2,000,000

Internet; pop magazines

800,000 1,200,000

Samanta Harte Michael Joseph Mumba

Musical T-shirts for the Irish and European Markets


281

7. Complete the partially completed cash flow forecast for Queen Ltd.

8. Complete the cash flow forecast for MAC Ltd, for the period January to June of 2006 from thefollowing data.Opening Cash €1,000Receipts Jan, Feb, March, Cash Sales €16,000 per month. April, May, June Cash Sales

€19,000 per month. Ordinary Share Capital €15,000 invested in March.Payments Wages €1,350 per month. Advertising €700 per month. Electricity €180 in

February, €160 in April and €140 in June. Telephone €300 in January, €280 inMarch and €290 in May. Purchase of equipment in April €40,000. Purchasedstock in January €3,000 and February €10,000, March €5,000, April €4,000,May €6,000 and June €7,000.

Cash Flow Forecast of MAC Ltd for the period January to June 2006

Jan

€

Feb

€

March

€

April

€

May

€

June

€

Total forJan-June

€

Receipts

Sales 16,000 16,000 16,000 19,000 19,000 19,000 105,000

Share Capital 15,000 15,000

A. Total Receipts 16,000 16,000 31,000 19,000 19,000 19,000 120,000

Payments

Purchases 3,000 10,000 5,000 4,000 6,000 7,000 35,000

Advertising 700 700 700 700 700 700 4,200

Telephone 300 280 290 870

Electricity 180 160 140 480

Wages 1,350 1,350 1,350 1,350 1,350 1,350 8,100

Equipment 40,000 40,000

B. Total Payments 5,350 12,230 7,330 46,210 8,340 9,190 88,650

C. Net Cash (A–B) 10,650 3,770 23,670 (–27,210) 10,660 9810 31,350

D. Opening Cash 1,000 11,650 15,420 39,090 11,880 22,540 1,000

Closing Cash (C+D) 11,650 15,420 39,090 11,880 22,540 32,350 32,350

Cash Flow Forecast of Queen Ltd for the period January to June 2005

Jan€

Feb€

March€

April€

Total€

A. Total receipts 16,000 18,000 19,000 22,000 75,000

B. Total payments 13,000 24,000 20,000 19,000 76,000

C. Net Cash (A–B) 3,000 (6,000) (1,000) 3,000 (1,000)

D. Opening Cash 2,000 5,000 (1,000) (2,000) 2,000

Closing Cash (C+D) 5,000 (1,000) (2,000) 1,000 1,000

9. Complete the partially completed cash flow forecast for King Ltd, from the following data forthe months of April, May and June. Sales to increase by 15% beginning in April; bank loan to be obtained in April €20,000; Wagesto increase by 5%; Equipment to be purchased in April €50,000; Light and heat expenses todecrease by 12% in June; Loan repayments to begin in May €500 per month; All other payments to remain the same.

10. (a) With what should a business compare its cash flow forecast at the end of the year?

(b) Complete the partially completed Cash Flow Forecast of YAM Ltd that follows for the months of March, April, May and June, as well as the total columns. The followinginformation should be taken into account:Monthly sales are expected to increase by 20% beginning in May. The shareholders are expected to invest an additional €40,000 in April. Buildings are expected to be soldin June for €100,000. An EU Grant of €100,000 is expected in May. Monthly purchasesare expected to increase by 30% in May. Wages and transport costs are expected to remainthe same every month. Light and heat expenses are expected to decrease by 25% in themonths March and May. New buildings are expected to be purchased in May for€250,000. Shareholders are expected to be paid a dividend of €20,000 in June.

Cash Flow Forecast of King Ltd for the period January to June 2006

Jan

€

Feb

€

March

€

April

€

May

€

June

€

Total forJan-June

€

Receipts

Sales 25,000 25,000 25,000 28,750 28,750 28,750 161,250

Bank Loan 20,000 20,000

A. Total Receipts 25,000 25,000 25,000 48,750 28,750 28,750 181,250

Payments

Purchases 9,000 9,000 9,000 9,000 9,000 9,000 54,000

Advertising 500 500 500 500 500 500 3,000

Loan Repayment — — — 500 500 1,000

Light and Heat 1,600 1,600 1,504 4,704

Wages 8,000 8,000 8,000 8,400 8,400 8,400 49,200

Equipment — — — 50,000 — — 50,000

B. Total Payments 19,100 17,500 19,100 67,900 18,400 19,904 161,904

C. Net Cash (A–B) 5,900 7,500 5,900 (19,150) 10,350 8,846 19,346

D. Opening Cash 100 6,000 13,500 13,500 250 10,600 100

Closing Cash (C+D) 6,000 13,500 19,400 250 10,600 19,446 19,446


282

The cash flow forecast should be compared with the actual figures from the

cash book.


283

(c) YAM Ltd forgot to allow for the purchase of new machinery of €30,000 during this period. Show the new closing cash figure for June in the box provided.

(Junior Certificate Higher Level 2003 Paper II Q6 amended for euro)

(b)

(c) Answer €

Chapter 29 Business Loan Applications

1. Explain

(a) Collateral: ______________________________________________________________________________________________________________________________________

(b) Auditor: ________________________________________________________________________________________________________________________________________

Cash Flow Forecast of Yam Ltd for the Period January to June 2007

Jan

€

Feb

€

March

€

April

€

May

€

June

€

Total forJan-June

€

Receipts

Sales 60,000 60,000 60,000 60,000 72,000 72,000 384,000


Buildings 100,000 100,000

EU Grant 100,000

A. Total Receipts 60,000 60,000 60,000 100,000 172,000 172,000 624,000

Payments

Purchases 24,000 24,000 24,000 24,000 31,200 31,200 158,400

Wages 7,000 7,000 7,000 7,000 7,000 7,000 42,000

Transport Costs 4,500 4,500 4,500 4,500 4,500 4,500 2,700

Light and Heat 3,600 — 2,700 2,700 9,000

Delivery Vans 42,000 42,000

Equipment 250,000 250,000

Dividend 20,000 20,000

B. Total Payments 39,100 77,500 38,200 35,500 295,400 67,200 548,400

C. Net Cash (A–B) 20,900 –17,500 21,800 64,500 (123,400) 109,300 75,600

D. Opening Cash 2,500 23,400 5,900 27,700 92,200 (31,200) 2,500

Closing Cash (C+D) 23,400 5,900 27,700 92,200 (31,200) 78,100 78,100

Workings78,100 – 30,000 = 48,100

48,100

This is security that is put up in case a loan cannot be repaid.

This is an independent accountant who checks the accuracy and truthfulness

of accounts on behalf of the owners.

2. Complete the loan application form provided from the following data, on today’s date. Doreenand John Clarke, directors of Auto Service Ltd, 10 Park Road, Lisdoonvarna, Co. Clare, havebeen in business for five years, Their garage business has been very profitable, and recentlythey obtained the agency for Nissan Cars. They are both qualified mechanics. Dooreen also hasa business diploma. Their business current account is in the AIB Account No. 56787665. Theywish to extend their garage at a cost of €250,000. They have retained earnings of €85,000 ondeposit with the AIB, and require a loan for the remainder repayable over ten years. They willput their garage, valued at €650,000, up as collateral. The average profit is €60,000 per year.

(a) Calculate the amount of a loan they require. €__________

(b) Complete the blank Loan Application Form provided on today’s date.


284

AIB Loan Application Form

PERSONAL

Name of Business:

Name of Directors: 1. 2.

Address:

BUSINESS HISTORY

QUALIFICATIONS AND EXPERIENCE OF OWNERS

1. 2.

FINANCIAL INFORMATION

Bank Accounts

LOAN DETAILS

Purpose of Loan:

Total Cost of Project: €

Amount of Loan Required: €

Term of Loan:

Ability to Repay Loan:

Security Available:

Signed: 1. 2.

Date:

165,000 (250,000 – 85,000)

Auto Service Ltd

Doreen Clarke John Clarke

10, Park Road

Lisdoonvarna

Co. Clare

In business for 5 years

Very profitable

Recently obtained agency for Nissan Cars

Dooreen is a qualified mechanic with John is a qualified mechanica business diploma

Current Account AIB No. 56787665

250,000

165,000

Garage extension

10 years plus

Average profit €60,000 per year

Garage valued at €650,000

Doreen Clarke John Clarke


285

3. Dessie and Joan Monaghan, directors of Thermo Glaze, 12 Main Street, Ballina, Co. Mayo,have been in business for twelve years. Dessie has a marketing degree from GMIT and Joan isa qualified glazier. The glazing industry has been very profitable over the last few years due tothe boom in the building industry. They wish to expand their factory at a cost of €320,000 andpurchase two new pickup trucks costing €34,000 each. They have reserves of €95,000 and willreceive a grant of 20% of the total cost. They require a 12 year loan for the remainder. Theysupply the following additional information:Average profit over the last five years was €75,000 per year. They will put their existing premises valued at €450,000 up as collateral. They have a Current Account in the NIB No.23456784.

(a) Calculate the amount of the loan required. €

(b) Complete the Loan Application Form provided on today’s date.

National Irish Bank Loan Application Form

PERSONAL

Name of Business:

Name of Directors: 1. 2.

Address:

BUSINESS HISTORY

QUALIFICATIONS AND EXPERIENCE OF OWNERS

1. 2.

FINANCIAL INFORMATION

Bank Accounts

LOAN DETAILS

Purpose of Loan:

Total Cost of Project: €

Amount of Loan Required: €

Term of Loan:

Ability to Repay Loan:

Security Available:

Signed: 1. 2.

Date:

215,400 (388,000 – 95,000 – 77,600)

Thermo Glaze

Dessie Monaghan Joan Monaghan

12 Main Street

Ballina

Co. Mayo

In business for 12 years

Very profitable

Dessie has a marketing degree for GMIT

Current Account NIB

Expansion of factory

12 years

No. 23456784

388,000

215,400

Average profit €75,000 per year

Premises valued €450,000

Dessie Monaghan Joan Monaghan

Joan is a qualified glazier

4. Finnan Ltd received a loan of €50,000 on 23 March 2007. Record the receipt of this loan inthe Bank Account and in the Bank of Ireland Loan Account Finnan Ltd ledger below.

5. Gear Ltd is a sportswear manufacturer operating from Back Four Street, Drogheda, Co. Louth.It has two directors, Ian Harte and Garry Kelly. It owns premises worth €550,000 and hasmachinery and delivery vans valued €120,000. Gear Ltd has a weekly income of €20,000 andfeels that this can be increased to €30,000 by building an extension to the factory costing€100,000 and purchasing new machinery costing €50,000. Gear Ltd has reserves of €45,000and is eligible for a €30,000 grant. On 1 May 2000 it applied for a seven-year loan, from UlsterBank, for the remainder. The loan was granted on 10 May 2000.

You are required to:(a) Calculate the amount of the loan required. €(b) Complete the Loan Application Form below.(c) Record the receipt of the loan in the Ulster Bank loan and Bank accounts below.

(Junior Certificate Higher Level 2000 Paper II Q5 amended)(b)

(c)

Date Details FAmount

€Date Details F

Amount€

Ulster Bank Loan A/C

10/5/00 Bank ACB 75,000

Bank A/C

10/5/00 U.B. Loan GL 75,000

General Ledger of Finnan Ltd

Date Details F Amount€

Date Details F Amount€

Bank of Ireland Loan A/C

23/3/07 Bank ACB 50,000

Bank A/C

23/3/07 B of I loan GL 50,000


286

Ulster Bank Loan Application Form

Company Details Name:Address:

Names of Directors:

Name of Business:

Annual Income:

Amount of loan required€

€

Purpose of Loan:

Length Required For:

Security Available :Signatures of Directors:

Date:

_______________________________________________________________________

1,040,000

75,000

75,000 (150,000 – 45,000 – 30,000)

Gear Ltd

Back Four Street

Garry Kelly

Ian HarteGear Ltd

Drogheda

Co. Louth

7 years

Garry Kelly Ian HartePremises worth €550,000

1/5/2000

Factory extension and purchase of new machinery


287

Chapter 30 Banking for Business

1. Explain

(a) ATM cash withdrawal _____________________________________________________

__________________________________________________________________________

(b) Bank overdraft ___________________________________________________________

__________________________________________________________________________

(c) Bank charges ____________________________________________________________

__________________________________________________________________________

2. State two reasons for preparing a bank reconciliation statement.

1. ________________________________________________________________________

__________________________________________________________________________

2. ________________________________________________________________________

__________________________________________________________________________

Chapter 31 Insurance – Business

1. Match the following types of insurance cover in Column 1 to the different types of businessrisks in Column 2. One risk does not match. Match the types of cover to the risks by placingthe correct number or letter under the relevant number in the table below.

2. Complete the following sentence. The payment of an insurance premium by cheque is debited in the _______________ account and credited in the _________________ account.

3. Indicate with a tick 0 which of the following amounts of compensation are correct. State areason for your answer.

(a) Burke Ltd insured its premises valued at €240,000 for €180,000. Fire caused €60,000 damage.

(i) €240,000___ (ii) €180,000___ (iii) €60,000___ (iv) €45,000___.

The reason for my answer is:

________________________________________________________________________

________________________________________________________________________

________________________________________________________________________

1 2 3 4

C E A B

Column 1 Types of Insurance Cover Column 2 Types of Business Risks

1 Fidelity insurance A. Injury to employees at work

2 Public liability B. Theft of money being transferred

3 Employers’ liability C. Theft by employees

4 Cash in transit D. Death of owner

E. Injury to customers visiting premises

This is where a current account holder takes more money out of their

current account than they have in it.

These are the fees which bank customers have to pay when making transactions i.e. lodging and withdrawing money.

To make sure that the bank did not make a mistake in their records.

To identify any mistakes in the customer records in the bank records.

The premises is only insured for 3/4 of its value, therefore Burke Ltd is only entitled to

3/4 of the damage caused by the fire.

insurance bank

This is a means of taking money from an account

using a special card and a PIN.

0

(b) Martin Ltd insured its buildings valued at €400,000 for €450,000. Fire caused €90,000 damage. Tick 0 the correct answer.

(i) €450,000 __(ii) €90,000 __ (iii) €80,000 __.

The reason for my answer is:

______________________________________________________________________

4. Jordan Ltd requested an insurance quotation, from Sword Insurers Ltd for the following assets:Buildings €230,000; Equipment €95,000; Four Delivery Vans valued at €30,000 each; Stock€15,000 and Cash in the Office €3,500.

Sword Insurers Ltd supplied the following quotation for one years insurance:Insurance for Buildings and Machinery €7 per €1,000 value; Stock Insurance €11 per €1,000value; Delivery Van comprehensive cover €1,650 per van; Cash insurance €16 per €500.A new business introductory offer 12% off total premium is available.Jordan Ltd accepted the quotation and took out insurance on everything at replacement cost (as stated above) except Equipment which they insured for €60,000. Jordan Ltd paid the premium by cheque on 1 May 2004.

(a) Calculate the amount of premium paid by Jordan Ltd on 1 May 2004. (Show workings clearly.)

Answer €

(b) Assume you are Peter Andrews, complete the cheque No. 100 paid to Sword Insurers Ltd.

(c) Record the payment of the premium in the Insurance Account and The Analysed Cash Bookprovided.

Analysed Cash Book of Jordan Ltd

Date Details Cheque No. F Bank Insurance

1/5/04 Insurance 100 GL 7,838.16 1,061.84

General Ledger of Jordan Ltd

Date Details F Amount Date Details F Amount

Insurance A/C (p1)

1/5/04 Bank ACB 7,838.16


288

Workings

SPECIMEN

The damage was €90,000 and the buildings were over-insured.

7,838.16

Sw

ord

Insu

ranc

es L

td

Sword Insurance Ltd

Seven thousand, eight hundred and thirty eight euro and

sixteen cent

1/5/2004

7,838.16

Peter Andrews7,83

8.16

1/5/

04

0

B E DV S C1,610 + 420 + 6,600 +165 + 112 = 8,907.

8,907 – 1,068.84 = 7,838.16


289

5. Kerry Ltd requested an insurance quotation, from West Insurers Ltd for the following assets:Premises €410,000; Machinery €105,000; Two Motor Vehicles valued at €45,000 each; Stock€13,000 and Cash in the Office €6,000. Kerry Ltd has twenty-four security and CCTV cameras.

West Insurers Ltd supplied the following quotation for one year’s insurance:Insurance for Buildings and Machinery €9 per €1,000 value; Stock Insurance €14 per €1,000value; Motor Vehicles comprehensive cover €1,650 per vehicle; Cash insurance €11 per€1,200.A reduction of 16% off total premium is available for having good security.

Kerry Ltd accepted the quotation and took out insurance on everything at replacement cost (as stated above) except Buildings which they insured for €380,000 and Machinery which theyinsured for 100,000. Kerry Ltd paid the premium by cheque on 1 May 2005

(a) Calculate the amount of premium paid by Kerry Ltd on 1 May 2005. (Show workings clearly.)

Answer €

(b) Assume you are Louise McFadden, complete the cheque No. 675 paid to West Insurers Ltd.

(c) Record the payment of the premium in the Insurance Account and the Analysed Cash Bookprovided.

Analysed Cash Book of Kerry Ltd

Date Details Cheque No. F Bank Insurance

1/5/05 Insurance 675 GL 6,599.88 6,637.68

General Ledger of Kerry Ltd

Date Details F Amount Date Details F Amount

Insurance A/C (p1)

1/5/05 Bank ACB 6,599.88

Workings P M MV S C3,420 + 900 + 3,300 +182 + 55= 7,857. 7,857 – 1,257.12 = 6,599.88

SPECIMEN

6,599.88

West Insurers Ltd

1/5/2005

6,599.88

Louise McFadden

Six thousand, five hundred and ninety nine euro and

eighty eight cent

Wes

t Ins

urer

s Lt

d

6,59

9.88

1/5/

2005

Chapter 32 Delivery Systems 1. What main form of transport would be most likely to be used to transport the following:

2. Using the distance table below calculate the distance from:

Sligo to Ennis kmsWexford to Galway kmsLimerick to Donegal kmsBelfast to Mullingar kms

3. Using the distance table below calculate the distance of a return journey from:

Waterford to Donegal kmsCavan to Ennis kmsSligo to Carlow kmsTralee to Carlow kms

4. Calculate the cost of diesel (show workings) for one day from the following details providedby Joe Ltd.

The diesel van can travel 25km per litre.The distance travelled in one day is 600km.The cost of diesel is 75 cent per litre.

Answer € ___________

Workings600 km25 = 24 litres

24 litres @75 cent

Goods to be transported Form of transportA. Fresh salmon from Rossaveal (Galway) to Paris Air

B. Industrial diamonds from Limerick to Antwerp Air

C. Bananas from South America Sea

D. Coal from Poland to Waterford Sea

E. Milk from farm to local creamery Road


290

225

115 250

85 140 172

220 425 188 300

185 180 296 110 400

125 167 84 112 260 222

145 85 172 82 325 158 85

110 340 178 200 142 260 232 256

87 305 178 166 210 205 216 238 70

120 325 142 206 105 296 198 240 37 105

48 180 100 64 236 172 82 92 164 144 148

210 330 98 275 208 390 164 246 246 274 210 204

118 245 230 126 336 66 216 168 195 138 232 135 326

188 430 252 312 120 350 303 346 94 162 105 254 290 288

175 332 74 235 126 356 158 242 164 220 130 170 82 292 210

190 310 76 256 188 372 142 228 228 254 190 185 19 306 275 62

Distance Table (km)

Athlone

Belfast

Carlow

Cavan

Cork

Donegal

Dublin

Dundalk

Ennis

Galway

Limerick

Mullingar

Rosslare

Sligo

Tralee

Waterford

Wexford

195254296180

712400460504

18


291

5. Calculate the cost of diesel (show workings) for one day from the following details providedby Pat Ltd.

6. Calculate the cost of diesel (show workings) for one day from the following details providedby May Ltd.

7. Joan Ltd supplies the following information on its annual costs. Calculate the annual costs(show workings).

8. Emer Ltd supplies the following information on its annual costs. Calculate the annual costs(show workings).

9. Nora Ltd supplies the following information on its annual costs. Calculate the annual costs(show workings).

10. On 1 June 2005 O’Brien Ltd purchased a delivery van by cheque No. 51 €42,000. Show howthis purchase would be recorded in the Analysed Cash Book and the Delivery Van Account of O’Brien Ltd below.

Analysed Cash Book of O’Brien Ltd (p1)Date Details Cheque No. F Bank

€Delivery Van

€1/6/05 Delivery van 51 GL 42,000 42,000

Nora Ltd operates 312 days of the year.Annual motor tax €600.Annual insurance €2,200.Repairs and maintenance €1,800.

Answer € ___________

Workings

€600 + €2,200 + €1,800312

Emer Ltd operates 290 days of the year.Annual motor tax €700.Annual insurance €3,400.Repairs and maintenance €2,800.

Answer € ___________

Workings

€700 + €3,400 + €2,800290

Joan Ltd operates 340 days of the year.Annual motor tax €800.Annual insurance €1,600.Repairs and maintenance €1,200.

Answer € ___________

Workings

€800 + €1,600 + €1,200340


Answer € ___________

Workings450 km

30 = 15 litres

15 litres @75 cent


Answer € ___________

Workings500 km

30 = 16.67 litres

16.67 litres @75 cent12.50

11.25

10.59

29.79

14.74

11. On 1 June 2005 Keenan Ltd purchased a delivery van by cheque No. 1 €30,000. Show howthis purchase would be recorded in the Analysed Cash Book and the Delivery Van Accountof Keenan Ltd below.

12. On 1 June 2006 Waldron Ltd purchased a delivery van on credit from Shannon Motors Ltd for €37,000.Show how this purchase would be recorded in the General Journal, Delivery Van andShannon Motors Ltd Accounts of Waldron Ltd below.

General Ledger of Waldron Ltd

Date Details F Total€


2005 2005

Delivery Van A/C (p1)

1/6/05 S. Motors Ltd GL 37,000

Shannon Motors Ltd (p2)

1/6/ D. van GL 37,000

General Journal of Waldron Ltd (p1)Date Details F DR

€CR€

1/6/05 Delivery van GL 37,000

1/6/05 Shannon Motors Ltd GL 37,000


General Ledger of Keenan Ltd



2005 2005

Delivery Van A/C (p1)1/6/05 Bank ACB 30,000

Analysed Cash Book of Keenan Ltd (p1)Date Details Cheque No. F Bank

€Delivary Van

€1/6/05 D.van 1 GL 30,000 30,000

General Ledger of O’Brien Ltd



2005 2005

Delivery Van A/C (p1)1/6/05 Bank ACB 42,000


292


293

13. On 1 June 2006 Davis Ltd purchased a delivery van on credit from Duffy Motors Ltd for€37,000. Show how this purchase would be recorded in the General Journal, Delivery Vanand Duffy Motors Ltd Accounts of Davis Ltd below.

14. (a) State four factors to be considered when a business is choosing a delivery system.

1.

2.

3.

4.

(b) Why should a driver take into account the permitted drop-off time when planning a journey? _____________________________________________________________

(c) Calculate the cost of transport (show workings) for one day from the following detailsprovided by CD Ltd: CD Ltd operates 290 working days in the year. The diesel van cantravel 25km per litre. The distance travelled in one day is 500km. The cost of diesel is 75cent per litre. The journey takes 12 hours. The van driver’s wages are €20 per hour. Thevan driver’s helper’s wages are €8 per hour. The Annual Motor Tax is €560. The AnnualMotor Insurance is €1,600. The Annual Repairs are €1,100.

Answer € _____________________________

(d) On 1 May 2006 CD Ltd purchased a new delivery van by cheque for €42,000. Record thepurchase of this delivery van in the Analysed Cash Book and the Delivery Van Accountprovided.

Analysed Cash Book of CD Ltd (p1)Date Details Cheque No. F Bank

€Delivery Van

€1/5/06 Delivery van GL 42,000 42,000

General Ledger of Davis Ltd



2006 2006


1/5/06 Duffy Motors GJ 37,000

Duffy Motors Ltd (p2)

1/5/06 GJ 37,000

General Journal of Davis Ltd (p1)Date Details F Dr

€CR€


1/5/06 Duffy Motors Ltd GL

Purchase of van on credit 37,000

WorkingsDiesel 20 litre @75c = €15wages €240 + €96 = €336Annual lists = €11.24Total costs = €362.24

Cost

Speed

Reliability

Convenience

If the driver arrives too late they will not be allowed to unload.

362.24

15. (a) Explain the importance of delivery systems in the chain of distribution.

______________________________________________________________________________________________________________________________________________

(b) State where the costs of collecting and delivering goods are entered in the Final Accountsof a business. ___________________________________________________________

(c) Calculate the cost of transport (show workings) for one day (round trip) from Athlone toWaterford and back from the following details provided by MU Ltd:MU Ltd operates 310 working days in the year. The distance from Athlone to Waterfordis 175 km. The diesel van can travel 30km per litre. The cost of diesel is 75 cent per litre.The journey takes 9 hours. The van driver’s wages are €25 per hour. The van driver’shelper’s wages are €10 per hour. The Annual Motor Tax is €6300. The Annual MotorInsurance is €2,200. The Annual Repairs are €1,900.

Answer € ________________________________

(d) On 1 May 2006 MU Ltd purchased a new delivery van on credit from PK Motors Ltd for €42,000. Record the purchase of this delivery van in the General Journal and theDelivery Van and PK Motors Ltd Accounts of CD Ltd below.

General Ledger of MU Ltd



2006 s2006


1/5/06 PK Motors GJ 42,000

PK Motors Ltd (p2)

1/5/ D. van GJ 42,000

General Journal of MU Ltd (p1)Date Details F Dr

€CR€


1/5/06 PK Motors Ltd GL 42,000


General Ledger of CD Ltd



2006 2006


1/5/ Bank ACB 42,000


294

WorkingsDiesel €8.75Wages €315.00Annual costs €33.55Total costs €357.30

Transports raw materials to the manufacturer; transports finished goods to

357.30

wholesaler/retailer; transports workers to their jobs.

Costs of collecting is in trading account; costs of delivery in profit/loss account.


295

Chapter 33 Marketing

1. A firm wishes to launch a new product. From the following list of activities to be undertaken,indicate by means of a tick 0 which of the following sequences below is the correct one.

1. Sales Promotion (a) 3 1 4 2

2. Retail Sales (b) 4 2 1 3

3. Product Development (c) 3 4 2 1

4. Market Research (d) 4 1 3 2

(Junior Certificate Higher Level Paper I 1998 Section (A))

2. Complete the following sentences by filling in the blanks from this list of marketing terms. Oneword does not match.

Kelly Ltd was interested in expanding into the EU ___________________________________.

It first did some ___________________________________ but later found that it needed

to do some _____________________________________as well. It decided to choose the French

market as its ___________________________________. It launched its goods by using___________________________________.

3. Column 1 is a list of marketing terms. Column 2 is a list of possible explanations of these terms.Match the two lists by placing the letter of the correct explanation under the relevant numberbelow. (One explanations does not apply.)

4. Write brief notes on:

(a) Product development ___________________________________________________

______________________________________________________________________

(b) Branding ____________________________________________________________

______________________________________________________________________

5. Name the four Ps of marketing.

(i) (ii)

(iii) (iv)

1 2 3 4

D E A B

Column 1 Marketing Terms Column 2 Explanation1. Marketing A. Responsible for ensuring a business has a good public image.

2. Advertising B. Studying existing information to find out more about a market.

3. Public relations Officer C. Researching the market through surveys and questionnaires.

4. Desk Research D. Production of goods and services wanted by customers.

E. Informing potential customers about a product or service.

Field Research

Product Development

SpecialOffers

Market DeskResearch

Target Market

market

desk research

field research

target marketspecial offers

Bringing in new products to meet the changing needs and

habits of customers.

Use of a logo or name to distinguish one product from another.

Product

Promotion

Price

Place

0

6. Suggest target markets for the following products or services. Complete the chart below.

7. Complete the marketing mix chart for a pair of trainers of your choice.

8. Complete the marketing mix chart for a product or service of your choice.

9. Complete the chart below by giving examples of products or services using each typeof advertising.

10. The following chart sets out different methods of advertising products and services.Complete the chart below by giving an example of a product or service using thismethod and state a reason for your choice.

Methods of Advertising Chart

Method Used to Advertise Reason for choice

Radio Pop songs Can play the song

Television Food Can see colour in the food

Cinema Drink Encourages audience to drink

Billboards McDonalds To attract passing motorists

On delivery vans Bread Pat the Baker is nationwide

Internet Computer upgrades Dedicated audience

Newspapers Airlines Wide circulation

Magazines Clothes Use of colours

Type of Advertising Examples of products or services that use this type

Informative Bus Éireann bus times

Generic Fáilte Ireland – holiday in Ireland

Persuasive Cosmetic companies

Competitive Car manufacturers

Four Ps of Marketing Name of ProductProduct

Price

Promotion

Place

Four Ps of Marketing Name of Product

Product Trendy trainers – all leather

Price Ranges from €17.99 to €65.99

Promotion T. V. advertisements

Place All leading shoe shops

Product/Service Possible Target Markets

Mobile Phones Teenagers

Irish Times Business people

Farmers’ Journal Farmers

Business Studies Texts Business studies students


296


297

11. Complete the chart below by giving your own examples of products or services that use thepromotional methods.

12. Murray Ltd paid €23,000 by cheque No. 11, on 12 May 2005, for advertising its services.Show how this expense is recorded in the analysed cash book and advertisement account ofMurray Ltd.

13. Bannon Ltd paid €23,000 by cheque No. 11, on 12 May 2005, for advertising its services.Show how this expense is recorded in the analysed cash book and advertisement account ofBannon Ltd.

Chapter 34 Financial Recording and Filing

1. Complete the following document sequence charts by inserting the correct document in spacesA and B.

General Ledger of Bannon Ltd



2005 2005

Advertising A/C (p1)

12/5/ Bank ACB 23,000

Analysed Cash Book (Credit Side) of Bannon Ltd (p1)

Date Details Cheque No. F Bank Advertising

12/5/05 Advertising 11 GL 23,000 23,000

General Ledger of Murray Ltd



2005 2005

Advertising A/C (p1)

12/5/ Bank ACB 23,000

Analysed Cash Book (Credit Side) of Murray Ltd (p1)

Date Details Cheque No. F Bank Advertising

12/5/05 Advertising 11 GL 23,000 23,000

Method Example

Sales Promotion Mobile phone companies – free credit

Branding Levis; Toyota

Sponsorship Flancare – Longford Town

Merchandising Supermarkets – new product displays

Public Relations GAA; Irish Racing Board

Letter of Enquiry

Quotation

Order

Invoice

→→

→

A.

B.

2. Indicate with a tick 0 which of the following documents would be sent by a seller to a customer who made a complaint.

3. Column 1 is a list of Books of First Entry. Column 2 is a list of possible source documents.Match the lists by placing the letter of the correct document under the number of the relevantbook of first entry. (One source document does not apply.)

4. Indicate with a tick 0 the correct answer to the following:

(a) Credit notes received are the source documents for writing up the:

Purchases Returns Book Sales Returns Book Purchases Book

(b) Receipts are the source documents for writing up the:

Sales Book Cash Book Purchases Book

(c) Cheques issued are the source document for writing up the:

General Journal Purchases Book Analysed Cash Book

(d) Invoices received are the source document for writing up the:

Purchases Book Sales Book Purchases Returns Book

5. State which accounts are involved in the following transactions by a garage:

6. State which account is receiving and which account is giving in the following transactions of agrocer.

Transactions Receiving Account Giving Account

Paid an employee €500 by cheque Wages Bank

Norah purchased a van on credit from Fast Motors Ltd Van Fast Motors Ltd

Sold goods to Carey for €65 cash Cash Sales

Took out €100 cash from the bank Cash Bank

Transactions Accounts

Purchased land by cheque €500,000 Land and Bank

Sold motor van for cash €9,000 Cash and Motor van

Put €3,000 into the bank Bank and Capital

Purchases car parts from Nissan Ltd Purchases and Nissan Ltd

1 2 3 4

C B E A

Column 1 Books of First Entry Column 2 Source Documents1. Analysed Cash Book A. Copy of Invoice sent

2. Sales Returns Book B. Copy of Credit Note sent

3. Purchase Book C. Receipt

4. Sales Book D. Credit Note received

E. Invoice received


298

Invoice Credit Note Receipt0

0

0

0

0


299

7. Record the following transaction in the ledger accounts of John below and extract a TrialBalance as on 1/3/2005: 1/3/2005 John gave Mary €500 cash.

Trial Balance as on ____________________

8. Record the following transaction in the ledger accounts of Bernadette below and extract a TrialBalance as on 14/8/2006: 14/8/2006 Bernadette gave Patrick €1,500 cash.


9. Record the following transaction in the ledger accounts of Josephine below and extract a TrialBalance as on 14/8/2006: 14/8/2006 Martin gave Josephine €3,100 cash.

Ledger of Josephine



2006 2006

Cash A/C

14/8/ Martin GL 3,100

Martin A/C

14/8/06 Cash GL 3,100

Debit (DR) Credit (CR)

Cash 1,500

Patrick 1,500

1,500 1,500

Ledger of Bernadette



2006 2006

Cash A/C

14/8/06 Patrick GL 1,500

Patrick A/C

14/8/ Cash GL 1,500


Cash 500

Mary 500

500 500

Ledger of John



2005 2005

Cash A/C

1/3/05 Mary GL 500

Mary A/C

1/3/ Cash GL 500

1/3/2005

14/8/2006


10. Record the following transaction in the ledger accounts of Philip below and extract a Trial Balance as on 7/7/2007: 7/7/2007 Emily gave Philip €1,750 cash.


11. Record the following transaction in the ledger accounts of Claire below and extract a Trial Balance as on 16/2/2007: 16/2/2007 Graham gave Claire €4,300 cash.



Cash 4,300

Graham 4,300

4,300 4,300

Ledger of Claire



2007 2007

Cash A/C

16/2/ Graham GL 4,300

Graham A/C

16/2/ Cash GL 4,300


Cash 1,750

Emily 1,750

1,750 1,750

Ledger of Philip



2007 2007

Cash A/C

7/7/ Emily GL 1,750

Emily A/C

7/7/ Cash GL 1,750


Cash 3,100

Martin 3,100

3,100 3,100


300

7/7/2007

16/2/2007

14/8/2006


301

12. Balance the following cash account.




2007 € 2007 €Cash A/C

1/10/ Balance c/d 500 4/10/ Purchases 1,000

3/10/ Owner 3,200 7/10/ Machinery 5,200

7/10/ Sales 4,444 12/10/ Expenses 700

12/10/ Balance c/d 1,244

8,144 8,144

13/10/ Balance b/d 1,244


2007 € 2007 €Cash A/C

1/8/ Owner 2,500 2/8/ Purchases 2,400

3/8/ Sales 1,320 4/8/ Insurance 760

6/8/ Sales 890 8/8/ Purchases 1,100

8/8/ Balance c/d 4504,710 4,710



2006 € 2006 €Cash A/C

1/6/ Sales 700 2/6/ Expenses 660

3/8/ Owner 1,200 6/6/ Purchases 800

9/6/ Sales 1,800

9/6/ Balance c/d 2,240

3,700 3,700

10/6/ Balance b/d 2,240

Chapter 35 Business Documents I

Order Completion1. Assume you are Larry Lambe, purchasing manager, of Lambe Footwear Ltd, Drogheda, Co.

Louth. Complete the following order form, which he sent to Dubarry Ltd, Ballinasloe, Co.Galway on 1/7/2005.

30 pairs of boots @ €12 a pair.20 pairs of AV8’s @ €32 a pair.

2. Assume you are Siobhan Kelly, purchasing manager, of Tee Shirts For All Ltd, Ennis, Co.Clare. Complete the order form below, which she sent to Balwin Designs, Coronation Drive,Roscommon.

60 large multi-colour t-shirts @13 each.100 small training tops @12 each.


302

ORDER Order No. 70Lambe Footware LTDDrogheda, Co. Louth Tel: (041) 232343

Fax: (041) 232 344e-mail: [email protected] Reg. IE218450

To: Date:

Please supply the following goods as per quotation no. 468 the following:

Goods to be delivered to the above address within 10 days.

Signature Position

QUANTITY DESCRIPTION UNIT PRICE €

3020

Pairs of bootsAV8’s

€12€32

ORDER Order No. 45Tee Shirts For All LTD

Ennis, Co. Clare Tel: (065) 20066Fax: (065) 20067e-mail: [email protected] Reg. IE765672

To: Date:

Please supply the following goods as per quotation no. 281


Signature Position

QUANTITY DESCRIPTION UNIT PRICE €

60100

Multicolour t-shirtsSmall training tops

€13€12

Dubarry Ltd

Ballinasloe

Co. Galway

1/7/2005

Larry Lambe

Balwin Designs 1/10/2006

Coronation Drive

Siobhan Kelly

Roscommon

Purchasing Manager

Purchasing Manager


303

3. Winters Stationery Ltd, Lismore, Co. Waterford, ordered the following goods from LeavesLtd, Branch Avenue, Kildare on 14 May 2007.

200 sets of Business Studies record books @ 1.50 per set.750 10 pack sets of 42 page copies @ 3.40 per set.

Assume you are Kathleen Winters, purchasing manager. Complete the order form below.

Ordinary Level4. Maura Burke is the purchasing manager of Maura’s Alcohol-Free Drinks Ltd, Ballyjamesduff,

Co. Cavan. On 28 March 2007 she orders the following goods from the manager of Soft DrinkWholesaler Ltd, Corrib Industrial Park, Galway.

150 bottles of Cidona @ €.0.80 per bottle.300 bottles of Coco Cola @ €0.45 per bottle.400 bottles of Fanta Orange @ €0.34 per bottle.Complete the Order no. 345.

ORDER Order No. 13Winters Stationary LTDLismore, Co. Waterford Tel: (051) 543217

Fax: (051) 543718e-mail: [email protected] Reg. IE888653

To: Date:

Please supply the following goods as per quotation no. 127


Signature Position

QUANTITY DESCRIPTION UNIT PRICE

200

750

Business studies record books

42-page copies

€1.50

€3.40

ORDER No. 345

Tel: (049) 37625 VAT Reg. IE7326825Fax: (049) 37666e-mail: [email protected]

MAURA’S ALCOHOL FREE DRINKS Ltd.Ballyjamesduff, Co. Cavan

Date :To:

Please supply the following goods:

Signature Position

QUANTITY DESCRIPTION UNIT PRICE

150300400

Bottles of CidonaBottles of Coco ColaBottles of Fanta

80 cent45 cent34 cent

Leaves Ltd

Kathleen Winters Purchasing Manager

Purchasing ManagerMaura Burke

Soft Drink Wholesaler Ltd

Corrib Industrial Park

Galway

28/5/2007

Branch Avenue,

Kildare

14/5/2007

Delivery Docket Completion

5. Crown Paints Ltd sold the following goods to JJ Paints Ltd, Newtownforbes, Longford:

300 litres white emulsion.120 litres exterior varnish.

Complete the Delivery Docket below sent by Crown Paints Ltd. Assume you are Stephen Brennan the person who signs the Delivery Docket on behalf of JJPaints Ltd.

6. Connolly Sports Ltd sold the following goods to the Kerry County Board, FitzgeraldStadium, Killarney, Co. Kerry.

300 hurleys.250 helmets.

Complete the Delivery Docket below sent by Connolly Sports Manufacturers Ltd.Assume you are Cooper Quilter, the person who signs the Delivery Docket on behalf of theKerry County Board.


304

Crown Paints Ltd. Athlone, Co. WestmeathDELIVERY DOCKET No. 2

Order No. 45 VAT Reg. IE12367821To: Tel: (090) 6452779

Fax: (090) 6452779e-mail: [email protected]:

Received the above goods in good condition.

Signed (For Purchaser)

Quantity Description

300120

Litres white emulsionLitres exterior varnish

Connolly Sports Ltd. Oranmore, Co, GalwayDELIVERY DOCKET No. 7

Order No. 67 VAT Reg. IE12367821GTo: Tel: (091) 4563721

Fax: (091) 4563722e-mail: [email protected] :

Received the above goods in good condition.

Signed (For Purchaser)

Quantity Description

300250

HurleysHelmets

J.J Paints LtdNewtown ForbesLongford

Stephen Brennan

Cooper Quilter

Kerry County BoardFitzgerald StadiumKillarney, Co. Kerry

305


Chapter 36 Business Documents II

Ordinary Level

1. Techno Supplies Ltd, The Curragh Industrial Estate, Kildare, received an order No. 54 fromDigicomp Ltd, Retailers of Computer Equipment, Astral Shopping Centre, Naas, Co.Kildare on 14 May 2006 for the following goods:30 Clarity Scanners Model SC22 @ €125 each.20 Viscount VDUs Model VT @ €245 each.75 Soft Touch Keyboards Model KB48 @ €62 each.Techno Supplies Ltd issued an invoice No. 7621 to Digicomp Ltd on 16 May 2006.Complete the blank invoice provided. Please note that Trade Discount is 10% and VAT is20% on all goods.

(Junior Certificate Ordinary Level 2001 Q5 amended)

2. Hardwood Furniture, Forest Lane, Cork, received an order No. 231 from Yorke HomeSupplies, Carrick-on-Shannon, Co. Leitrim, on 25 June 2007 for the following goods:12 Kitchen Tables Model HF2 @ €230 each.130 Bedroom Lockers Model HF7 @ €20 each.60 Computer Desks Model HF9 @ €40 each.Hardwood Furniture Ltd issued an invoice No. 3445 to Yorke Home Supplies Ltd on 29 June2007. Complete the following blank invoice. Please note that Trade Discount is 20% andVAT is 10% on all goods.

Techno Supplies Ltd.The Curragh Industrial Estate, Kildare

INVOICE No. 7621

To:

Order No:

Tel: 045-4399221Fax: 045-4399762e-mail: [email protected] VAT Reg. No. IE139868WDate:

Quantity Description Model No. Unit Price € Total €

30 Clarity Scanners SC22 125 3,750

20 Viscount VDUs VT 245 4,900

75 Soft Touch keyboards KB48 62 4,650

Total (Excluding VAT)Trade DiscountSubtotalVAT

E & OE Total (Including VAT)

13,300

1,330

11,970

2,394

14,364

Digicomp Ltd

Retailers of Computer Equipment

Astral Shopping Centre

Naas, Co. Kildare

54

16/5/2006


306

3. Indicate with a tick � which of the following statements are true or false.

(a) VAT is added before trade discount is deducted in aninvoice

(b) E & OE on an invoice allows mistakes to be corrected(c) The seller sends the buyer a letter of complaint when

goods are not right

4. List three procedures used by the seller when issuing invoices.

(a)

(b)

(c)

5. List three procedures used by the buyer on receiving credit notes.

(a)

(b)

(c)


On receiving an order the seller sends the buyer a delivery docket and an .

The seller records the invoice sent in the

When the buyer sends a

of the seller issues a credit note. The

buyer records the credit note received in the .

Hardwood Furniture LtdForest Lane, Cork

INVOICE No. 3445

To:

Order No:

Tel: 021-821687Fax: 021-821688e-mail: [email protected] Reg. No. IE145673CDate:

Quantity Description Model No. Unit Price € Total €

12 Kitchen tables HF2 230 2,760

130 Bedroom lockers HF7 20 2,600

60 Computer desks HF9 40 2,400


E & OE Total (Including VAT)

7,760

1,552

6,208

620.80

6,828.80

True

�

False

�

�

Yorke Home Supplies

Carrick-on-Shannon

Co, Leitrim

Check the name and address

Check the calculations

File a copy


Record in the Purchases Returns Book

File the credit note

Book.

complaint

Purchases Returns Book

letter

Sales

invoice.

231

25/6/2007

307


7. On 1 May 2006, Mayo Paints Ltd issued an invoice to DIY Ltd, Dungarvan, Co. Waterford,who ordered (Order No. 23) the following goods:20 5 litre tins of gloss paint @ €50 per tin (excluding VAT).50 2 litre tins of varnish @ €10 per tin (excluding VAT).Trade discount was 20% and VAT was 21%.

Complete the following blank invoice.

8. On 20 March 2007, Crossan Electric Ltd issued an invoice to Power Electric Ltd, Waterford,who ordered (Order No. 47) the following goods:10 Solara flat screen televisions @ €550 per set (excluding VAT).5 Sony DVD players recorders @ €600 per player (excluding VAT).Trade discount was 20% and VAT was 21%.


Mayo Paints Ltd.Forest Lane, Cork

INVOICE No. 411

To:

Order No:

Tel: 021-537281Fax: 021-537284e-mail: [email protected] Reg. No. IE678321Date:

Quantity Description Unit Price € Total(Ex VAT) €

20 5 litre tins of gloss paint 50 1,000

50 2 litre tins of varnish 10 500


E & OE Total Due

1,500

300

1,200

252

1,452

1/5/2006

23

Dungarvan

Co, Waterford

DIY Ltd


308

9. On 10 August 2007, Daly Car Parts Ltd issued an invoice to Quilter Service Station, Tralee,Co. Kerry who ordered (Order No. 93) the following goods:8 HP35 Batteries @ €50 per battery (excluding VAT).10 ICRX Batteries @ €60 per battery (excluding VAT).Trade discount was 30% and VAT was 21%.


Daly Car Parts Ltd.Carlow

INVOICE No. 312

To:

Order No:



8 HP35 Batteries 50 400

10 ICRX Batteries 60 600


E & OE Total Due

1,000

300

700

147

553

Crossan Electric Ltd.Longford

INVOICE No. 47

To:

Order No:



10 Solara Flat TVs 550 5,500

5 Sony DVD Players 600 3,000


E & OE Total Due

8,500

1,700

6,800

1,428

8,228

Power Electric Ltd

Waterford

47

Quilter Service Station

Tralee

Co, Kerry

93

10/8/2007

20/3/2007

309


10. On 23 May 2006 Jones Ltd, Dublin Road, Galway issued a credit note No. 23 to SparksLtd, Longford, because six faulty TV aerials, unit price €60, were returned. Trade discount is 25% and VAT was 21%.

Complete the Credit Note No. 23 provided.

11. On 17 May 2006 Barry Ltd, Sea Road, Sligo issued a credit note No. 67 to Cavan StoresLtd, Cavan, because ten broken chairs, unit price €12, were returned. Trade discount is 25% and VAT was 21%.


Barry Ltd.Sea Road, Sligo

CREDIT NOTE No. 67

To:

Order No:32



10 Chairs 12 120

Broken


E & OE Total Due

120

30

90

18.90

108.90

Jones Ltd.Dublin Road, Galway

CREDIT NOTE No. 23

To:

Order No:32



6 TV Aerials 60 360

Faulty


E & OE Total Due

360

90

270

56.70

326.70

Sparks Ltd

Longford

Cavan Stores Ltd

Cavan

17/5/2006

23/5/2006


310

12. On 16 February 2007 Brooks Ltd, Castlebar, Co. Mayo issued a credit note No. 45 to BKLtd, Cork, because five unordered bicycles, unit price €75, were returned. Trade discount is 25% and VAT was 21%.


Chapter 37 Recording Credit Transactions

1. Match the following books of first entry to the source documents. Books of First Entry:Purchases book; General Journal; Sales returns book; Sales book; Purchases returns book.One book does not match.

2. Write out the following abbreviations in full:(i) DR (v) CR

(ii) DL (vi) GL

(iii) CL (vii) B/D

(iv) C/D

Source Document Book of First Entry

Invoice sent Sales Book

Credit Note received Purchases Returns Book

Invoice received Purchases Book

Credit Note sent Sales Returns Book

Brooks Ltd.Castlebar Co. Mayo

CREDIT NOTE No. 45

To:

Order No:19



5 Bicycles 75 375

Unordered


E & OE Total Due

375

93.75

281.25

59.06

340.31

BK Ltd

Cork

Debit

Debtors Ledger

Creditors Ledger

Credit

General Ledger

Brought Down

Carry Down

16/2/2007

311


Integrated Invoice Exercises

3. On 16 June 2005, Walshe Ltd, Mallow, Co. Cork sent an Order No. 7 to Morris Electric Ltd,Main Street, Cork, for the following goods:50 Sony Walkmans @ €110 each excluding VAT.10 Nut DVDs @ €100 each excluding VAT.The goods ordered are in stock and on 18 June 2005 are delivered by Morris Electric Ltd.An Invoice No. 31 accompanies the goods.Trade discount is 20% and the furniture is subject to VAT at 21%.

(a) Outline how Walshe Ltd should treat outgoing orders.(b) From the details provided complete the Invoice No. 31.(c) Record the invoice issued in the sales book of Morris Electric Ltd.

(a)

(b)

(c)

4. On 25 May 2006, Nolan Ltd, Station Road, Kildare, Co. Kildare sent an Order No. 65 toKelly Tiles Ltd, Cross Street, Carlow, for the following goods:30 boxes of Ceramic Tiles @ €50 per box excluding VAT.20 boxes of Floor Tiles @ €100 per box excluding VAT.The tiles ordered are in stock and on 28 May 2006 are delivered by Kelly Tiles Ltd. AnInvoice No. 78 accompanies the goods.

SALES BOOK (p1)

Date Details Invoice No F Net € VAT € Total €

18/6/05 Walshe Ltd 31 DL 5,200 1,092 6,292

Morris Electric Ltd.Main Street, Cork

INVOICE No. 31

To:

Order No:



50 Sony Walkmans 110 5,500

10 Nut DVDs 100 1,000


E & OE Total Due

6,500

1,300

5,200

1,092

6,292

Walshe Ltd

Mallow

Co. Cork

7

18/6/2005

Check the name and address;

Check stock and credit rating of buyer;

File copy of order.


312

Trade discount is 20% and the tiles are subject to VAT at 13½%.(a) Outline how Kelly Tiles Ltd should treat outgoing orders.(b) From the above details complete the Invoice No. 78.(c) Record the invoice received in the purchases book of Nolan Ltd.

(a)

(b)

(c)

5. On 13 March 2007, Daly Ltd, Howth, Co. Dublin sent an Order No. 24 to Cronin Paints Ltd,Naas, Co. Kildare, for the following goods:100 tins of white emulsion @ €20 per tin excluding VAT.40 tins of wood gloss @ €50 per tin excluding VAT.The paints ordered are in stock and on 15 March 2007 are delivered by Cronin Paints Ltd. An Invoice No. 57 accompanies the goods.Trade discount is 30% and the furniture is subject to VAT at 13½%.(a) Outline how Daly Ltd should treat incoming invoices.(b) From the above details complete the Invoice No. 57.(c) Record the invoice issued in the Sales Book of Cronin Paints Ltd.

(a)

PURCHASES BOOK (p1)


28/05/06 Kelly Tiles 78 CL 2,800 378 3,178

Kelly Tiles Ltd.Cross Street, Carlow

INVOICE No. 78

To:

Order No:



30 Ceramic Tiles 50 1,500

20 Floor Tiles 100 2,000


E & OE Total Due

3,500

700

2,800

378

3,178


Check stock levels and credit rating of buyer;

File copy of order.

Nolan Ltd

28/5/2006

65

Station Road

Kildare

Co. Kildare


Check the calculations;

Record in Purchases Book.

313


(b)

(c)

6. On 28 January 2005, Burke Ltd, Ballina, Co. Mayo sent an Order No. 3 to Shine Jeans Ltd,Centre Street, Sligo, for the following goods:50 pairs of Levi mens’ jeans @ €45 per pair excluding VAT.70 pairs of Kearns mens’ jeans @ €60 per pair excluding VAT.The jeans ordered are in stock and on 3 February 2005 are delivered by Shine Jeans Ltd. An Invoice No. 87 accompanies the goods.Trade discount is 25% and the jeans are subject to VAT at 21%.(a) Outline how Shine Jeans Ltd should treat outgoing invoices.(b) From the above details complete the Invoice No. 87.(c) Record the invoice received in the purchases book of Burke Ltd.

(a)

SALES BOOK (p1)


15/3/07 Daly Ltd 57 DL 2,800 378 3,178

Cronin Paints Ltd.Naas, Co. Kildare

INVOICE No. 57

To:

Order No:



100 White emulsion 20 2,000

40 Wood gloss 50 2,000


E & OE Total Due

4,000

1,200

2,800

378

3,178

Daly Ltd

24

15/3/2007

Howth

Co. Dublin


Check the calculations;

Record the invoice in the Sales Book.


314

(b)

(c)

Integrated Credit Note Exercises

7. On 12 June 2004, East Ltd, Wexford, a computer manufacturer, received a letter of complaintfrom a customer, Young Ltd, Gate Street, Navan, Co. Meath. In the letter from Young Ltd, itwas stated that four printers, which had been delivered, were black instead of coloured. Theprice per printer was €100 excluding VAT.East Ltd issued a Credit Note, No. 45 on 23 June 2004.Trade Discount was 25% and VAT was 21%.(a) Assume you are Sheila Young, Purchasing Manager for Young Ltd. Write a letter of

complaint in your copybook to the Sales Manager of East Ltd stating why you are notsatisfied with the printers you received and requesting a reduction in the amount owed.

PURCHASES BOOK (p1)


28/1/05 Shine Jeans Ltd 87 CL 4,837.50 1,015.90 5,853.40

Shine Jeans Ltd.Centre Street, Sligo

INVOICE No. 87

To:

Order No:



50 Levi men’s jeans 45 2,250

70 Kearns men’s jeans 60 4,200


E & OE Total Due

6,450

1,612.50

4,837.50

1,015.90

5,853.40

Burke Ltd

Ballina

Co. Mayo

3

28/1/2005

(b)

(c)

8. On 17 May 2004, South Ltd, Waterford, a shoe manufacturer, received a letter of complaintfrom one of their customers, Foot Ltd, Toe Street, Kinsale, Co. Cork. In the letter from FootLtd, it was stated that fifteen pairs of shoes, which had been delivered, were scratched. Theprice per pair was €50 excluding VAT.South Ltd issued a Credit Note, No. 67 on 23 June 2004.Trade Discount was 20% and VAT was 21%.(a) Set out the procedure, in your copybook, for dealing with credit notes issued.(b) Complete the credit note on the blank document sheet provided.(c) Record the credit note issued in the Sales Returns Book of South Ltd.

PURCHASES RETURNS BOOK (p1)

Date Details Credit Note No F Net € VAT € Total €

23/6/04 East Ltd 45 CL 300 63 363

East Ltd.Wexford.

CREDIT NOTE No. 45

To:

Order No: 76



4 Computer printers 100 400

Black instead of colour


E & OE Total Due

400

100

300

63

363

Young Ltd

Gate Street

Navan

Co. Meath

23 June 2004

(b) Complete the credit note on the blank document sheet provided.(c) Record the credit note received in the purchases returns book of Young Ltd.(a)

Young Ltd,Gate Street,

Navan,Co. Meath.

12 June 2004.East Ltd,Wexford.

Dear Sales Manager,

My company recently purchased a number of printers from you. Unfortunately, I found that four of the printers wereblack instead of coloured.As these printers are not as ordered, I would like you to collect them and reduce the amount owing.

Yours faithfully,Sheila Young.

315


Purchasing Manager


316

(b)

(c)

9. On 20 June 2004, North Ltd, Donegal, a shirt manufacturer, received a letter of complaintfrom one of their customers, Back Ltd, Arm Street, Thurles, Co. Tipperary. In the letter fromBack Ltd, it was stated that thirty shirts, which had been delivered, were missing buttons.The price per shirt was €40 excluding VAT.North Ltd issued a Credit Note, No. 45 on 23 June 2004.Trade Discount was 25% and VAT was 21%.(a) Set out the procedure, in your copybook, for dealing with incoming credit notes.(b) Complete the credit note on the blank document sheet provided.(c) Record the credit note received in the Purchases Returns Book of Back Ltd.

(a) • Check the name and address• Check the calculations• Record in Purchase Returns Book• File credit note

Sales Return Book (p1)


23/6/04 Foot Ltd 67 DL 600 126 726

South Ltd.Waterford

CREDIT NOTE No. 67

To:

Order No: 100



15 Pairs of shoes 50 750

Shoes scratched


E & OE Total Due

750

150

600

126

726

Foot Ltd

23/6/2004

Toe Street

Kinsale

Co. Cork

(a) • Check the name and address• Check that the details of the complaint are true• Check calculations• Record in Sales Returns Book

317


(b)

(c)

Chapter 38 Continuous Balancing Ledgers and Statements

In Q1-Q6, record the following information using the T Ledger formats and ContinuousBalancing Ledger formats provided.

Debtors Ledgers1. Quinn Ltd Account

1/3/2005 Balance (dr) €12,000 4/3/2005 Sales €65,0006/3/2005 Sales returns €11,500 8/3/2005 Sales €23,500

T Ledger format


2005 2005

Quinn Ltd A/C

1/3/ Balance b/d 12,000 6/3/ Sales returns SRB 11,500

4/3/ Sales SB 65,000 8/3/ Balance c/d 89,000

8/3/ Sales SB 23,500

100,500 100,500

9/3/ Balance b/d 89,000

PURCHASES RETURNS BOOK (p1)


23/6/04 North Ltd 45 CL 900 189 1,089

North Ltd.Donegal.

CREDIT NOTE No. 45

To:

Order No: 101



30 Shirts 40 1,200

Missing buttons


E & OE Total Due

1,200

300

900

189

1,089

Back Ltd

Arm Street

Thurles

Co. Tipperary

23/6/2004


318

2. Aldemero Ltd Account1/7/2006 Balance (dr) €17,300 6/7/2006 Sales €35,0008/7/2006 Sales returns €10,700 10/7/2006 Sales €54,000

Creditors Ledgers3. Agusto Ltd Account

1/3/2006 Balance (cr) € 6,000 7/3/2006 Purchases €47,0009/3/2006 Purchases returns € 9,500 16/3/2006 Purchases €38,200

T Ledger format


2006 2006

Agusto Ltd A/C

9/3/ Purchase returns SRB 9,500 1/3/ Balance b/d 6,000

7/3/ Purchases PB 47,000

16/3/ Balance c/d 81,700 16/3/ Purchases PB 38,200

91,200 91,200

17/3/ Balance b/d 81,700

Continuous Balancing Ledger format

Aldemero Ltd A/C

Date Details F Dr debit Cr credit Balance

2006

1/7/ Balance b/d 17,300

6/7/ Sales SB 35,000 52,300

8/7/ Sales returns SRB 10,700 41,600

10/7/ Sales SB 54,000 95,600

T Ledger format


2006 2006

Aldemero Ltd A/C

1/7/ Balance b/d 17,300 8/7/ Sales returns SRB 10,700

6/7/ Sales SB 35,000 10/7/ Balance c/d 95,600

10/7/ Sales SB 54,000

106,300 106,300

11/7/ Balance b/d 95,600


Quinn Ltd A/C


2005

1/3/ Balance b/d 12,000

4/3/ Sales SB 65,000 77,000


8/3/ Sales SB 23,500 89,000

319


4. Ryan Ltd Account1/11/2007 Balance (cr) €17,000 6/11/2007 Purchases €52,000

19/11/2007 Purchases returns €9,500 27/11/2007 Purchases €34,800

5. Yorke Ltd Account1/8/2007 Balance (cr) € 83,600 11/8/2007 Purchases returns €52,000

16/8/2007 Purchases € 24,900 23/8/2007 Purchases returns € 7,600

T Ledger format


2007 2007

Yorke Ltd A/C

11/8/ Purchases returns PRB 52,000 1/8/ Balance b/d 83,600

23/8/ Purchases returns PRB 7,600 16/8/ Purchases PB 24,900

23/8/ Balance c/d 48,900

108,500 108,500

24/8/ Balance b/d 48,900


Ryan Ltd A/C


2007

1/11/ Balance b/d 17,000

6/11/ Purchases PB 52,000 69,000

19/11/ Purchases returns PRB 9,500 59,500

27/11/ Purchases PB 34,800 94,300

T Ledger format


2007 2007

Ryan Ltd A/C

19/11/ Purchases returns PRB 9,500 1/11/ Balance b/d 17,000

6/11/ Purchases PB 52,000

27/11/ Balance c/d 94,300 27/11/ Purchases PB 34,800

103,800 103,800

28/11/ Balance b/d 94,300


Agusto Ltd A/C


2006

1/3/ Balance b/d 6,000

7/3/ Purchases PB 47,000 53,000


16/3/ Purchases PB 38,200 81,700


320

Statement Completion6. Complete the statement given below which was sent by Darren Ltd to Farrell Ltd, Reynolds

Avenue, Waterford on 31 May 2006. Use the following information.

7. Complete the statement provided which was sent by Aaron Ltd to Daly Ltd, Cassidy Drive,Sligo on 31 May 2007.

2007 €

1/5/ Balance (dr) 7,600

8/5/ Invoice No. 5 issued to Farrell Ltd 78,000

12/5/ Credit note No. 34 issued to Farrell Ltd 24,100


31/5/ Credit Note No. 89 issued to Farrell Ltd 24,800

STATEMENT No. 45

Darren Ltd, Athlone Road, Wexford

To : Tel : 053-421234Fax : 053-421235VAT No. IE768652Account No. 23Date:

Date Details Debit € Credit € Balance €

1/5/2006 Balance b/d 12,300

5/5/ Invoice no. 5 45,000 57,300

8/5/ Credit note no. 34 11,400 45,900

14/5/ Invoice no. 19 33,880 79,780

31/5/ Credit note no. 89 5,600 74,180

2006 €

1/5/ Balance (dr) 12,300


8/5/ Credit note No. 34 issued to Farrell Ltd 11,400


31/5/ Credit Note No. 89 issued to Farrell Ltd 5,600


Yorke Ltd A/C


2007

1/8/ Balance b/d 83,600


16/8/ Purchases PB 24,900 56,500


Farrell LtdReynolds AvenueWaterford

31/5/2006

321


8. The following details refer to the sale of goods on credit by Murphy Ltd to McCarthy Ltd,9 Centre Street, Dublin for the month of May 2006.On 1 May 2006 there was a balance of €376 in McCarthy’s account in the Debtors Ledgerof Murphy Ltd.

4/5/2006 Murphy Ltd sent an invoice no. 8 to McCarthy Ltd € 1,8009/5/2006 Murphy Ltd sent an invoice no. 32 to McCarthy Ltd €16,000

14/5/2006 Murphy Ltd received a cheque from McCarthy Ltd € 5,60018/5/2006 Murphy Ltd sent an invoice no. 78 to McCarthy Ltd € 8,20024/5/2006 Murphy Ltd sent a credit note no. 43 to McCarthy Ltd € 4,50031/5/2006 Murphy Ltd sent an invoice no. 89 to McCarthy Ltd € 7,900(a) List three checks that McCarthy Ltd should carry out on receiving the statement.(b) Complete the following statement No. 70 sent by Murphy Ltd on 31 May 2006 below.

(a) (i)

(ii)

(iii)

(b)

STATEMENT No. 70

Murphy Ltd, Carlow View, Kilkenny

To : Tel : 056-421234Fax : 056-421235VAT No. IE7686524Account No. 23Date


1/5/2006 Balance b/d 376

4/5/ Invoice no. 8 1,800 2,176

9/5/ Invoice no. 32 16,000 18,176

14/5/ Cheque 5,600 12,576

18/5/ Invoice no. 78 8,200 20,776

24/5/ Credit note no. 43 4,500 16,276

STATEMENT No. 22

Aaron Ltd, The Square, Donegal

To : Tel : 074-421234Fax : 074-421233VAT No. IE332214Account No. 23Date:


1/5/2007 Balance b/d 7,600

8/5/ Invoice no. 5 78,000 85,600

12/5/ Credit note no. 34 24,100 61,500

19/5/ Invoice no. 19 67,920 129,420

31/5/ Credit note no. 89 24,800 104,620

31/5/ Invoice no. 89 7,900 24,176

31/5/2007

Daly LtdCassidy DriveSligo

Check the name and address

McCarthy Ltd

9 Centre StreetDublin

31/5/2006


Check statement details against Creditors Ledger


322

9. The following details refer to the sale of goods on credit by Victory Ltd to Lyons Ltd, ShaneRoad, Longford for the month of May 2007.On 1 May 2004 there was a balance of €250 in Lyons’ account in the Debtors Ledger ofVictory Ltd.

5/5/2007 Victory Ltd sent an invoice no. 4 to Lyons Ltd € 2,3008/5/2007 Victory Ltd sent an invoice no. 29 to Lyons Ltd €13,000

16/5/2007 Victory Ltd received a cheque from Lyons Ltd € 9,50019/5/2007 Victory Ltd sent an invoice no. 46 to Lyons Ltd € 9,50026/5/2007 Victory Ltd sent a credit note no. 12 to Lyons Ltd € 2,800 31/5/2007 Victory Ltd sent an invoice no. 57 to Lyons Ltd € 8,300

(a) Should cash sales be entered in the statement? Yes No

(b) Complete the following statement No. 98 sent by Victory Ltd on 31 May 2007.

10. The following details refer to the sale of goods on credit by Macken Ltd to Cox Ltd,Tullamore, Co. Offaly for the month of May 2008.On 1 May 2008 there was a balance of €700 in Cox’s account in the Debtors Ledger ofMacken Ltd.

2/5/2008 Macken Ltd sent an invoice no. 3 to Cox Ltd € 2,7006/5/2008 Macken Ltd sent an invoice no. 54 to Cox Ltd €12,900

11/5/2008 Macken Ltd received a cheque from Cox Ltd € 8,50017/5/2008 Macken Ltd sent an invoice no. 61 to Cox Ltd € 7,70027/5/2008 Macken Ltd sent a credit note no. 21 to Cox Ltd € 3,200 31/5/2008 Macken Ltd sent an invoice no. 74 to Cox Ltd € 6,100

(a) With what should Cox Ltd compare the statement?

(b) Complete the following statement No. 100 sent by Macken Ltd on 31 May 2008.

STATEMENT No. 98

Victory Ltd, Athlone Road, Galway.

To : Tel: 091-444331Fax: 091-444332VAT No. IE7686524Account No. 45Date:


1/5/2007 Balance b/d 250

5/5/ Invoice no. 4 2,300 2,550

8/5/ Invoice no. 29 13,000 15,550

16/5/ Cheque 9,500 6,050

19/5/ Invoice no. 46 9,500 15,550

26/5/ Credit note no. 12 2,800 12,75031/5/ Invoice no. 57 8,300 21,050

Lyons Ltd

Shane Road

Longford31/5/2007

Cox Ltd should compare the

statement with Macken Ltd account in the Creditors Ledger.

�

323


Other Continuous Balancing Ledger ExercisesRecord the following expense and gains transactions in the Continuous Balancing Ledgers.

11. On 23 January 2007 paid rent by cheque €500.

12. On 15 May 2007 paid insurance by cheque €1,200.

13. On 26 June 2008 received interest from bank €3,200. This was lodged in the bank.

14. On 19 August 2008 received commission from Nissan Ireland of €15,500. This was lodgedin the bank.

Commission Receivable A/C


2008


19/8/ Bank ACB 15,500 21,500

Interest Receivable A/C


2008


26/6/ Bank ACB 3,200 4,100

Insurance A/C


2007


15/5/ Bank ACB 1,200 1,400

Rent A/C


2007


23/1/ Bank ACB 500 2,500

STATEMENT No. 100

Macken Ltd, Hanlon Lane, Monaghan.

To : Tel : 047-7729617Fax : 047-7729618VAT No. IE7987654Account No. 123Date


1/5/2008 Balance b/d 700

2/5/ Invoice no. 3 2,700 3,400

6/5/ Invoice no. 54 12,900 16,300

11/5/ Cheque 8,500 7,800

17/5/ Invoice no. 61 7,700 15,500

27/5/ Credit note no. 21 3,200 12,300

31/5/ Invoice no. 74 6,100 18,400

31/5/2008

Cox Ltd

Tullamore

Co. Offaly


324

Chapter 39 Analysed Cash Books

1. Please tick � the correct answer in each of the following statements.

(a) A receipt is issued by the buyer(b) A cheque is issued by the buyer(c) Payments by cheque are entered on the debit side

of the Analysed Cash Book

2. Complete the following statements.

(a) A receipt is

(b) A cheque is

Cheque and Counterfoil Completion

3. Assume you are John Joyce. Complete the cheque no. 236 below from the following details:16/5/2006 Paid Victory Ltd €3,560.

4. Assume you are Peggy Shields. Complete the cheque no. 450 below from the followingdetails:30/6/2007 Paid Holy Ltd €980.

True

�

False

�

�

proof of payment for goods and services received.

Vic

tory

Ltd

Victory Ltd

Three thousand, five hundered and sixty euro

Hol

y Lt

d

Holy Ltd

Nine hundred and eighty euro

3,56

016

/5/0

6

3,560

John Joyce

Peggy Shields

16/5/06

a method of payment where a current account holder instructs its bank

to make a payment to another person.

980

980

30/6

/07

30/6/07

I

325


Receipt Completion

5. Assume you are Dara Carriage. Complete the receipt no. 23 on behalf of Bus Ltd belowfrom the following details:Issued a receipt to Dunne Car Repairs Ltd, Four Lane Avenue, Sligo, for €2,112 on 10March 2006.

6. Assume you are Mary Car, complete the receipt no. 67 on behalf of Car Ltd below from thefollowing details:Issued a receipt to Fiona Donnelly, Ilona Avenue, Longford, for €14,300 on 20 May 2007.

Chapter 40 Analysed Cash Books II/Monitoring Overheads

1. Complete the following statements.(i) Overheads are also known as

Examples of overheads include

(ii) Monitoring overheads involves

(iii) It is important to monitor overheads because

2. Complete the following statements:

(i) The Petty Cash Book is used to record

(ii) A Petty Cash Voucher shows

Car Ltd, Castlebar, Co. MayoReceipt No: 67

DATE: _________________Received with thanks

The sum of:

From:

Accounts Department

Bus Ltd, Castlebar, Co. MayoReceipt No: 23

DATE: _________________Received with thanks

The sum of:

From:

Accounts Department

€2,112

€14,300

10/3/2006

20/5/2007

Mary Car

Two thousand, one hundred and twelve euro

Dunne Car Repairs Ltd, Four Lane Avenue, Sligo

Dara CarriageSigned:

Signed:

Fourteen thousand, three hundred euro

Fiona Donnelly, Ilona Avenue, Longford

expenses.

wages; light and heat; insurances;

advertising; rent; carriage outwards.

it identifies the main overheads of

a business. It allows comparison between actual overheads and budgeted

overheads and allows changes to be made.

preparing budgets for each overhead and keeping records of actual overheads.

small cash payments made from the petty

cash.

what the money was spent on, who received it and

who authorised payment.


326

(iii) The Petty Cash Imprest is

3. (i) Complete the partially completed budget comparison sheet provided from the followingdetails.

Budget Comparison Sheet for 2005

(ii) Tick � the appropriate box to indicate which is greater than or less than. If the actualoverheads are less than the budgeted figures, indicate this with a minus sign, eg – €3,500.Suggest suitable business reasons why there are differences.

4. (i) Complete the partially completed budget comparison sheet below from the followingdetails.

Budget Comparison Sheet for 2006

Overheads Budgeted € Actual € Difference €

Insurance 11,600 14,800 + 3,200

Carriage Outwards 13,200 22,800 +9,600

Rent 42,500 56,000 +13,500

Bad Debts 10,000 16,500 + 6,500

Actual Overheads 2006€

Insurance 14,800

Carriage Outwards 22,800

Rent 56,000

Bad Debts 16,500

Overheads Greater Than

Less Than

Possible Reason

Wages � Extra overtime worked

Light and Heat � Good weather required less heat

Advertising � Change in advertising media

Loan Interest � Increase in rate of interest

Actual Overheads Budgeted € Actual € Difference €

Wages 76,500 94,000 + 17,500

Light and Heat 48,000 34,000 – 14,000

Advertising 37,600 28,000 – 9,600

Loan Interest 11,900 14,500 + 2,600

Actual Overheads 2005 €

Wages 94,000

Light and Heat 34,000

Advertising 28,000

Loan Interest 14,500

the amount of cash the petty cashier has at the start

of each week.

327


(ii) Tick � the appropriate box to indicate which is greater than or less than. If the actualoverheads are less than the budgeted figures, indicate this with a minus sign, eg – €3,500.Suggest suitable business reasons why there are differences.

5. The following table shows the Budgeted and Actual figures for a business’s overheads for2007.

Business Overheads for 2007

(i) List the overheads whose actual figures are greater than the budgeted figures and giveone possible business-related reason for the difference in each case.

(ii) List the overheads whose actual figures are less than the budgeted figures and give onepossible business-related reason for the difference in each case.

6. Complete the petty cash voucher below from the following details.18/3/2005 Purchase of tea and biscuits for the office by Richard Gervaise: €6.40. Passedby John West.

PETTY CASH VOUCHER

Voucher no: 1 Date: _______________For what Required Amount

Signature: Passed by:

Overheads Possible Reasons For Being Less Than

Bad Debts Introduced better credit control

Overheads Possible Reasons For Being Greater Than

Wages Extra staff taken on

Telephone Increased use of telesales

Carriage outwards Increase in motor insurance and tax

Postage Increase in cost of stamps

Overheads Budgeted € Actual €

Wages 67,000 78,000

Telephone 28,400 36,200

Carriage Outwards 27,500 41,000

Postage 17,600 19,860


Bad Debts 15,000 13,000

Overhead GreaterThan

LessThan

Possible Reason

Insurance � Increase in insurance premiums

Carriage Outwards � Increase in sales to far-away places

Rent � Changes to new expensive premises

Bad Debts � Increase in credit sales

€6.40Tea and biscuits for the office

18/3/2005

Richard Gervaise John West


328

7. Complete the petty cash voucher below from the following details.28/8/2005 Purchase of stationery for the office by Pat Shortt: €11.50. Passed by John Kenny.

8. Complete the petty cash voucher below from the following details.11/9/2006 Paid for taxi by Hector Navan: €7.50. Passed by Niall Quinn.

9. Complete the petty cash voucher below from the following details.18/1/2006 Paid window cleaner by Ronan Keating: €10.00 Passed by Louis Walsh.

10. Complete the petty cash voucher below from the following details.18/3/2007 Purchase of stamps by Tommy Tiernan: €17.42. Passed by Colin Farrell.

PETTY CASH VOUCHER



PETTY CASH VOUCHER



PETTY CASH VOUCHER



PETTY CASH VOUCHER



€7.50

€11.50

€10

€17.42

Stationery

28/8/2005

Pat Shortt John Kenny

Taxi

Window cleaner

Stamps

Ronan Keating Louis Walsh

Tommy Tiernan Colin Farrell

11/9/2006

18/1/2006

18/3/2007

Hector Navan Niall Quinn

329


Chapter 41 General Journal

1. Only one of the following statements is correct. Tick � the correct one.The General Journal is used to record:

(a) The sale of fixed assets and stock on credit(b) Transactions not entered in other books of first entry(c) Purchase of machinery by cheque

2. Complete the following table, by showing which account is debited and which account iscredited.

Transaction(a) Purchased machinery on credit from Bell Ltd(b) Sold a second-hand computer to Kelly Ltd(c) Lawlor Ltd was written off as a bad debt

3. The following debtors were written off as bad debtors. Tick � the correct amount of the baddebt in each case.

(a) Ward owes €2,400, pays €0.20 in the €1(b) Smith owes €3,500, pays €0.60 in the €1(c) Corran owes €2,100, pays €0.25 in the €1

4. The following entries appeared in the General Journal of a grocer. Complete the GeneralJournal by writing an appropriate narration/explanation.

5. The following entries appeared in the General Journal of a business. Complete the GeneralJournal by writing an appropriate narration/explanation.

General Journal

Date Details F Dr € CR €

14/5/2006 Burns Ltd DL 17,500

Equipment GL 17,500

Narration:

Sold equipment on credit

General Journal


21/3/2005 Machinery GL 50,000

Crown Machines Ltd CL 50,000

Narration:

Purchased machinery on credit

�

Debit

Machinery

Kelly Ltd

Bad debt

Credit

Bell Ltd

Computer

Lawlor Ltd

A � B � C �

€480 €1,920 � €2,400

€2,100 €1,400 � €4,900

€1,575 � €525 €1,500


330

6. The following entries appeared in the General Journal of a business. Complete the GeneralJournal by inserting the appropriate figure opposite Clarke Ltd and an appropriatenarration/explanation.

7. The following entries appeared in the General Journal of a business. Complete the GeneralJournal by inserting the figure for Ordinary Share Capital and an appropriate narration/explanation.

8. Record the following in the General Journal of Hynes Ltd below.On 3/10/2006 Kiernan Ltd who owes €44,000 goes bankrupt and pays €0.50 in the euro.The remainder is written off as a bad debt.

9. Record the following in the General Journal of Ryan Ltd below.On 7/7/2007 Connor Ltd who owes €13,000 goes bankrupt and pays €0.20 in the euro. Theremainder was written off as a bad debt.

General Journal of Ryan Ltd


7/7/07 Cash ACB 2,600

Bad debts GL 10,400

Connor Ltd DL 13,000

Narration:Connor Ltd declaredbankrupt, paid20 cent per euro owed

General Journal of Hynes Ltd


3/10/06 Cash ACB 22,000

Bad debts GL 22,000

Kiernan Ltd DL 44,000

Narration:Kiernan Ltd declaredbankrupt, paid50 cent per euro owed

General Journal


1/2/2007 Machinery GL 60,000

Bank Overdraft ACB 5,000

Ordinary Share Capital GL 55,000

Narration:Asset, liability andordinary share capital

60,000 60,000

General Journal


30/3/2006 Cash ABC 6,000

Bad Debts GL 17,000

Clarke Ltd DL 23,000

Narration:Clarke Ltd declaredbankrupt, paid €6000cash

23,000 23,000

331


Chapter 42 Combined Books of First Entry and Ledger

1. The following account appeared in the ledger of Given Ltd.

Complete the sentences below to explain these entries.

(a) On 12/5/2005 Given Ltd

(b) On 18/5/2005 Given Ltd

2. The following account appeared in the ledger of O’Shea Ltd.


(a) On 1/5/2005 O’Shea Ltd

(b) On 28/5/2005 O’Shea Ltd

3. The following account appeared in the ledger of Carr Ltd.


(a) On 1/4/2006 Carr Ltd

(b) On 28/4/2006 Carr Ltd

DR Cunningham Ltd Account CR

Date2006

Details F Total€

Date2006

Details F Total€

22/4/ Bank ACB 14,500 1/4/ Balance b/d 16,000

DR Delivery Van Account CR

Date2005

Details F Total€

Date2005

Details F Total€

1/5/ Balance b/d 56,500

28/5/ Bank ACB 28,000

DR Purchases Account CR

Date2005

Details F Total€

Date2005

Details F Total€

12/5/ Bank ACB 14,500

18/5/ Total Creditors PB 23,600

purchases goods for resale by cheque €14,500.

purchased goods for resale on credit €23,600.

has delivery vans which cost €56,500.

purchased a new delivery van by cheque €28,000.

owes Cunningham Ltd €16,000.

paid by cheque €14,500 to Cunningham Ltd.

4. The following account appeared in the ledger of O’Brien Ltd.


(a) On 10/9/2006 O’Brien Ltd

(b) On 29/9/2006 O’Brien Ltd

5. The following account appeared in the ledger of Duff Ltd.


(a) On 12/11/2007 Duff Ltd

(b) On 30/11/2007 Duff Ltd

6. The following account appeared in the ledger of Kilbane Ltd.


(a) On 13/4/2007 Kilbane Ltd

(b) On 30/4/2007 Kilbane Ltd

DR Interest Receivable Account CR

Date2007

Details F Total€

Date2007

Details F Total€

13/4/ Bank ACB 3,500

30/4/ Balance c/d 1,000

DR Roy Ltd Account CR

Date2007

Details F Total€

Date2007

Details F Total€

12/11/ Balance b/d 20,000 30/11/ Bad Debt GL 20,000

DR Kerr Ltd Account CR

Date2006

Details F Total€

Date2006

Details F Total€

10/9/ Balance b/d ACB 14,500

29/9/ Sales SB 11,456


332

is owed €14,500 by Kerr Ltd.

sold goods €11,456 on credit to Kerr Ltd.

is owed €20,000 by Roy Ltd.

wrote Roy Ltd off as a bad debt for the full amount owing.

bank.

received €3,500 in interest and this was lodged in the

is owed €1,000 interest from the bank.

333


7. The following account appeared in the ledger of Reid Ltd.


(a) On 1/10/2007 Reid Ltd

(b) On 12/10/2007 Reid Ltd

Chapter 43 Control Accounts

1. Complete the Debtors Control Account below from the following data.

Total credit sales for June 2006 €45,000Total sales returns for June 2006 €3,400Total cash paid by debtors for June 2006 €31,000

2. Complete the Creditors Control Account below from the following data.

Total credit purchases for August 2006 €32,000Total purchases returns for August 2006 € 7,400Total cash paid to creditors for August 2006 €21,000

3. Complete the Debtors Control Account provided from the following data.

Total credit sales for May 2007 €67,000Total sales returns for May 2007 € 6,900Total cash paid by debtors for May 2007 €53,400

DR Creditors Control A/C CR

Date2006

Details F Total€

Date2006

Details F Total€

August Purchase returns PRB 7,400 August Purchases 32,000

August Bank ACB 21,000

August Balance c/d 3,600

32,000 32,000

September Balance b/d 3,600

DR Debtors Control A/C CR

Date2006

Details F Total€

Date2006

Details F Total€

30/6/ Sales SB 45,000 30/6/ Sales returns SBR 3,400

30/6/ Bank ACB 31,000

30/6/ Balance c/d 10,600

45,000 45,000

1/7/ Balance b/d 10,600

DR Bank Account CR

Date2007

Details F Total€

Date2007

Details F Total€

12/10/ Finnan Ltd DL 6,500 1/10/ Balance b/d 4,400

has a bank overdraft of €4,400.

received €6,500 from Finnan Ltd and this was lodged.

4. Complete the Creditors Control Account below from the following data.

Total credit purchases for March 2007 €37,000Total purchases returns for March 2007 €2,400Total cash paid to creditors for March 2007 €21,900

Chapter 44 Trading Account

Calculating the Average Stock1. Calculate the average stock from the following information.

(a) Opening stock €20,000; Closing Stock €40,000.

(b) Opening stock €16,000; Closing stock €36,000.

(c) Opening stock €18,000; Closing stock €12,000.

Calculating the Mark-up on Cost of sales2. Calculate the gross (profit) mark-up from the following information.

(a) Gross Profit €50,000; Cost of sales €250,000.

Answer %:20%

Workings50,000 x 100

250,000

Answer:€15,000

Workings€18,000 + €12,000

2

Answer:€26,000

Workings€16,000 + €36,000

2

Answer:€30,000

Workings€20,000 + €40,000

2

Creditors Control A/C

Date Details F Dr debit€

Cr credit€

Balance€

1/5/07 Balance €4,500

31/5/ Purchases PB 37,000 41,500


31/5/ Bank ACB 21,900 17,200

Debtors Control A/C

Date Details F Dr debit€

Cr credit€

Balance€

1/5/07 Balance b/d €12,000

31/5/ Sales SB 67,000 79,000


31/5/ Bank ACB 53,400 18,700


334

335


(b) Gross Profit €45,000; Cost of sales €160,000.

(c) Gross Profit €45,000; Cost of sales €180,000.

Calculating the Margin on Sales3. Calculate the gross (profit) margin from the following information.

(a) Gross Profit €39,000; Sales €300,000.

(b) Gross Profit €81,000; Sales €450,000.

(c) Gross Profit €82,800; Sales €345,000.

4. Close off the following accounts to the Trading Account in your copybook. Find the Gross Profitor Loss for the year ended 31/3/2006. Complete the Trading Account in your exercise book.Note: Opening Stock is €16,000 and Closing Stock is €14,000.



2006 2006

Sales A/C (p1)

31/3/ Trading 85,000 31/3/ Balance b/d 85,000

Purchases A/C (p2)

31/3/ Balance b/d 35,000 31/3/ Trading 35,000

Purchases Returns A/C (p3)


Import Duty A/C (p4)


Answer %:24%


345,000

Answer %:18%


450,000

Answer %:13%


300,000

Answer %:25%


180,000

Answer %:28.13%


160,000

Trading account for year ending 31/3/2006

1/6/05

31/5/06

SalesLess cost of salesOpening stockPurchasesLess purchases returnsImport dutyCost of goods availableLess closing stockCost of actual salesGross profit

35,0005,000

16,000

30,0005,000

51,00014,000

85,000

37,00048,000

5. Close off the following accounts to the Trading Account in your copybook. Find the Gross Profitor Loss for the year ended 31/5/2007. Complete the Trading Account in your exercise book.Note: Opening Stock is €16,000 and Closing Stock is €14,000.

Chapter 45 Profit and Loss Account

1. Classify the following items of expenditure under capital or revenue expenditure for a bakery:Carriage outwards; Heating oil; Loan interest; Machinery; Wages; Repairs to machinery;Vans; Factory extension; Computer.

2. The Trading, Profit and Loss Account of a company showed a Net Profit of €54,000. It waslater realised that sales returns of €500 were omitted. Calculate the correct net profit whenthe error is corrected.

3. The Trading, Profit and Loss Account of a company showed a Net Profit of €102,000. Itwas later realised that the wages of €40,000 were entered twice. Calculate the correct netprofit when the error is corrected.

Answer:€142,000

Calculations€102,000 + €40,000

Answer:€53,500

Calculations€54,000 – €500

Capital Expenditure Revenue Expenditure

Machinery Carriage outwards

Vans Heating oil

Factory extension Loan interest

Computers Wages

Repairs to machinery



2007 2007

Sales A/C (p1)


Purchases A/C (p2)


Sales Returns A/C (p3)


Carriage In A/C (p4)



336

Trading account for year ending 31/5/2007

1/6/06

31/5/07

SalesLess sales returnsLess cost of salesOpening stockPurchasesCarriage inwardsCost of goods availableLess closing stockCost of actual salesGross profit

190,00011,000

16,00043,0009,000

68,00014,000

179,000

54,000125,000

337


4. The Trading, Profit and Loss Account of a company showed a Net Loss of €1,500. It waslater realised that the following were omitted: Carriage inwards €200; interest receivable€12,000 and depreciation of €3,200. Calculate the correct net profit when the error iscorrected.

Chapter 46 Profit and Loss Appropriation Account

1. Calculate the dividends paid from the following information:Net Profit €50,000; Issued Share Capital €200,000; Rate of dividend paid 15%.

2. Calculate the retained earnings (reserves) from the following information:Net Profit €70,000; Issued Share Capital €180,000; Rate of dividend paid 25%.

3. Calculate the dividends paid and the retained earnings from the following information:Net Profit €120,000; Issued Share Capital €300,000; Rate of dividend paid 30%.

4. Calculate the retained earnings at the end of a year from the following information:Opening Retained Earnings Balance on 1/12/2006 €50,000; Net Profit for year ending31/12/2006 €130,000; Issued Share capital €400,000; Rate of dividend paid 20%.

5. Complete the following Profit and Loss Appropriation Account for the year ended 31/5/2007from the following information: Opening Retained Earnings Balance on 1/6/2006 €75,000;Net Profit for year ending 31/5/2007 €187,000; Dividends paid €77,000.

Profit and Loss Appropriation Account for the year ended 31/5/2007

Net Profit € 187,000


€ 110,000

Add opening RE € 75,000

Retained earnings € 185,000

Answer:€100,000

CalculationsDividends 20% of €400,000 = €80,000Retained earnings €130,000 – €80,000 = €50,000€50,000 + €50,000 = €100,000

Answer:€90,000 (Dividends)€30,000 (RE)

CalculationsDividends 30% of €300,000 = €90,000Retained earnings = €120,000 – €90,000 = €30,000

Answer:€45,000

Calculations25% of €180,000 = €45,000

Answer:€30,000

Calculations15% of €200,000 = €30,000

Answer:€7,100Net profit

Calculations– €1,500 + €12,000 – €200 – €3,200 = Net profit €7,100

6. Complete the following Profit and Loss Appropriation Account for the year ended 31/5/2007from the following information: Opening Retained Earnings Balance on 1/6/2006 €36,000;Net Profit for year ending 31/5/2007 €210,000; Dividends paid €104,500.

Profit and Loss Appropriation Account for the year ended 31/5/2007

Chapter 47 Balance Sheet

1. Indicate with a tick 0 the correct answer to each question.

(a) Only one of the following is not a current asset:

(i) Machinery

(ii) Closing Stock

(iii) Debtors

(b) Total net assets are the same as:

(i) Fixed assets plus working capital

(ii) Fixed assets less liabilities

(c) Dividends declared but not yet paid is an example of:

(i) Current assets

(ii) Current liability

(iii) Investment

(d) Authorised share capital cannot be:

(i) Less than issued capital

(ii) Equal to issued capital

(iii) Greater than issued capital

2. Classify the following assets and liabilities under their correct headings below: 20 year loan; dividends due; machinery; bank overdraft; cash; creditors; equipment;closing stock.Long Term Liabilities Current Liabilities Fixed Assets Current Assets20-year loan Dividends due Machinery Cash

Bank overdraft Equipment Closing stock

Creditors

Net profit €210,000

Less dividends €104,500

€105,500

Add opening RE €36,000

Retained earnings €141,500


338

0

0

0

0

339


Chapter 48 Adjustments to Final Accounts

1. Indicate with a tick 0which of the following statements are true or false. Explain your answer.

(a) Amounts prepaid are always added in the profit and loss account.

Explanation

(b) Closing stock of stationery is treated as an amount due.

Explanation

(c) Amounts due to a firm are treated as current assets.

Explanation

2. An annual insurance premium is paid on 1 April 2006. Close off and balance the insuranceaccount for the year ended 31/12/2006. Show clearly the amount to be transferred to the Profitand Loss account.

3. A business owed €230 for repairs on the 31/12/2007. Close off and balance the repairsaccount for the year ended 31/12/2007. Show clearly the amount to be transferred to the profit and loss account.


2007 € 2007 €

Repairs A/C1/12/ Bank ACB 1,800 31/12/ P. Loss Account 2,030


2,030 2,030



2006 € 2006 €

Insurance A/C1/4/ Balance b/d 1,600 31/12/ P. Loss Account 4,000

1/4/ Bank ACB 3,200 31/12/ Balance c/d 800

4,800 4,800


True False

0

True False

0

True

0

False

They are always deducted as they belong to another trading period.

prepaid expense.

Closing stock of stationery will be used in another trading period, so it’s a

Amounts due to a firm are owed to the firm (i.e. by debtors).

4. A business owed €670 for wages on the 31/12/2007. Close off and balance the wages accountfor the year ended 31/12/2007. Show clearly the amount to be transferred to the profit and lossaccount.

5. The following is an extract from the profit and loss account of a business for the year endingDecember 2007.

(a) What is the figure for electricity used during the year?

(b) What is the figure for electricity paid for during the year?

6. The following is an extract from the profit and loss account of a business for the year endingMarch 2007.

(a) What is the figure for advertising used during the year?

(b) What is the figure for advertising paid for during the year?

7. The following is an extract from the profit and loss account of a business for the year endingJuly 2007.

(a) What is the figure for interest used during the year?

(b) What is the figure for interest recieved for during the year?

Profit and Loss Account for year ending 31/7/2007Interest receivable 4,500

Add interest receivable due 1,500 6,000

Profit and Loss Account for year ending 31/3/2007Advertising 4,200

Less advertising prepaid 900 3,300

Profit and Loss Account for year ending 31/12/2007Electricity 1,200

Add electricity due 800 2,000


2007 € 2007 €

Wages A/C1/12/ Bank ACB 18,500 31/12/ P. Loss Account 19,170


19,170 19,170



340

€2,000

€1,200

€3,300

€4,200

€6,000

€4,500

341


Chapter 49 Final Accounts and Balance Sheet with Adjustments

1.

(a) What is the Working Capital figure of McGrath Ltd? €

(b) What is the Capital Employed figure of McGrath Ltd? €

2. Indicate with a tick 0 where each of the following adjustments are entered in the Trading,Profit and Loss and Appropriation Account (TPLA) and Balance Sheet.

3. Show how the following adjustments are entered in the Trading, Profit and Loss Account andBalance Sheet extracts below.Machinery €300,000, Motor vans €120,000. Depreciation: Machinery 15%; Motor Vans12½%.

Balance Sheet as on 31 May 2006

Fixed Assets Cost Deprecation NBV

Machinery 300,000 45,000 255,000

Motor vans 120,000 15,000 105,000

420,000 60,000 360,000

Trading, Profit and Loss and Appropriation Account for the year ended 31 May 2006Less Expenses

Depreciation: machinery 45,000

motor vans 15,000 60,000

Adjustment Added inTPLA

Subtracted inTPLA

Current Assetsin Balance Sheet

Current Liabilitiesin Balance Sheet

Dividends due 0 0Wages due 0 0Insurance prepaid 0 0Interest receivable prepaid 0 0Carriage inwards due 0 0Rent receivable due 0 0Advertising prepaid 0 0Interest due 0 0Closing stock 0 0

Balance Sheet of McGrath Ltd as on 31 May 2006

Fixed Assets 200,000

Current Assets 75,000

Less Current Liabilities 45,000

30,000

230,000

Financed By Authorised Issued

400,000 Ordinary Shares 400,000 175,000

Add reserves 35,000 210,000

Long term Liabilities 20,000

230,000

30,000

230,000

4. Enter the following adjustments in the partially completed Trading, Profit and Loss Accountand Balance Sheet below.Interest Receivable due €500, Advertising due €1,500, Insurance prepaid €700.

Chapter 50 Assessing a Business

1. Given a cost price of €150 and a selling price of €200, calculate the percentage mark-up.

2. Given a cost price of €200 and a selling price of €250, calculate the percentage margin on sale.

3. A company has a net profit of €250,000 and a capital employed of €500,000.Calculate the return on capital employed.

4. A company has a net profit of €60,000 and a capital employed of €240,000.Calculate the return on capital employed.

Answer:

__________%

Workings€60,000 x 100%

€240,000= 25%

Answer:

__________%

Workings€250,000 x 100%

€500,000 = 50%

Answer:

__________%

Workings€250 – €200 = €50 margin€50 x 100% = 20%

€250

Answer:

__________%

Workings€200 – €150 = €50 mark-up

€50 x 100% = 33.33%150

Balance Sheet as on 31 May 2007Current Assets

Interest receivable due 500

Insurance prepaid 700 1,200

Current Liabilities

Advertising due 1,500

Working capital (300)

Trading, Profit and Loss and Appropriation Account for the year ended 31 May 2007Gross Profit 200,000

Add gains

Interest Receivable 7,500

Add interest due 500 8,000

208,000

Less Expenses

Advertising 12,000

Add advertising due 1,500 13,500

Insurance 6,500

Less insurance prepaid 700 5,800 19,300

Net Profit 188,700


342

33.33

20

50

25

343


5. A company has current assets of €11,000 and current liabilities of €4,650.Calculate the working capital ratio correct to one decimal point.

6. A company has current assets of €47,000 (including closing stock of €12,000) and current liabilities of €17,000. Calculate the acid test ratio correct to two decimal points.

7. Calculate the rate of Stock Turnover from the following data.Opening Stock €40,000, Closing Stock €30,000, Cost of Sales €175,000.

8. Examine the following balance sheets and state if the companies are solvent or insolvent.

Give a reason for your answer in each case.

9. (a) Explain the terms:

(i) Overtrading

(ii) Solvent

Answer:17.5 times

Workings€175,000 = €175,000

€40,000 + €30,000 €10,000= 17.5 times

Answer:2.06:1

Workings(€47,000 – €12,000) : 17,000

€35,000 : 17,0002.06 :1

Answer:2.37:1

Workings€11,000 : €4,650

2.37 :1

Balance Sheet of D&D as on 31/5/2006 Balance Sheet of M&M as on 31/5/2006

Fixed Assets 400,000 Fixed Assets 300,000

Current Assets 60,000 Current Assets 40,000

Less Current Liabilities 50,000 Less Current Liabilities 95,000

Total Net Assets 410,000 Total Net Assets 245,000

Financed By Financed By

Share Capital 350,000 Share Capital 130,000

Loan 60,000 Loan 115,000

Capital Employed 410,000 Capital Employed 245,000

Answer: D&D are solvent Answer: M&M are solvent

Reason: Total assets greater than total liabilities€460,000 greater than €110,000

Reason: Total assets greater than total liabilities€340,000 greater than €210,000

This is where a company is operating without enough permanent

capital. It tries to produce more than it is capable of.

A business is solvent if its total assets are greater than its external

liabilities.


344

(b) The directors of Bridge Ltd, Main Street, Cork supplied the following figures for the years2005 and 2006.

Assume you are Kevin Scully, Management Consultant, Suspense Street, Waterford.Prepare a report in your copybook, on today’s date, for the directors of Bridge Ltd. Compareand comment on the performance of the business over the two years, 2005 and 2006. Use the following ratios in comparing the performance:Gross Profit Percentage; Net Profit Percentage; Return on Capital Employed; Acid Test Ratio.

2005 2006

€ €Sales 480,000 510,000

Gross Profit 200,000 280,000

Net Profit 100,000 180,000

Current Assets 48,000 54,000

Current Liabilities 18,000 39,000

Closing Stock 12,000 17,000

Capital Employed 520,000 580,000

Suspense Street,Waterford.

Report on the performance of Bridge Ltd for the years 2005 and 2006

Date The Directors of Bridge Ltd,Main Street,Cork.

I was asked on your behalf to prepare a report on the performance of the company for the years 2005and 2006. I used the following ratios: gross profit percentage; net profit precentage; return on capitalemployed; acid test ratio.My findings are as follows:

2005 2006Gross profit % 41.67% 54.90%Net profit % 20.83% 35.29%Return on capital employed 19.23% 31.03%Acid test ratio 2 : 1 0.95 : 1

The profitability of the company is very high and increasing. However, the acid test ratio is falling, whichis a cause for concern.I am available to discuss the report if requested.

Kevin Scully.Management Consultant

10. (a) Why would a company compare the interest paid on a long term loan and the return on capital employed? To see if it is costing the company more to borrow the money

than it is getting from using the money.

345


11. (a) Why might a company have different mark-ups on its products in different parts of the country?

(b) The directors of Solo Ltd, Main Street, Cork supplied the following figures for the years2006 and 2007.

Assume you are Gerry Ryan, Management Consultant, Pop Parade, Mullingar, Co. Westmeath.Prepare a report in your copybook, on today’s date, for the directors of Solo Ltd. Compare andcomment on the performance of the business over the two years, 2006 and 2007. Use the following ratios in comparing the performance:Gross Profit Percentage; Net Profit Percentage; Return on Capital Employed; Current Ratio.

2006 2007

€ €Sales 480,000 510,000

Gross Profit 200,000 280,000

Net Profit 100,000 180,000





Some of its customers may be able to pay more in other parts of the country.

There may be extra costs in getting products to different parts of the country.

(b) The directors of Chess Ltd, Main Street, Cork supplied the following figures for the years2006 and 2007.

Assume you are George Lee, Management Consultant, News Road, Wicklow.Prepare a report in your copybook, on today’s date, for the directors of Chess Ltd. Compareand comment on the performance of the business over the two years, 2006 and 2007. Use the following ratios in comparing the performance:Gross Profit Percentage; Net Profit Percentage; Return on Capital Employed; Current Ratio.

2006 2007

€ €Sales 660,000 610,000

Gross Profit 320,000 260,000

Net Profit 140,000 90,000



Long Term 15% Loan 100,000 140,000


Ratio analysis as follows

2006 2007

Gross profit % 48.49% 42.62%

Net profit % 21.21% 14.75%

Return on capital employed 24.14% 12.86%

Current ratio 2.6:1 1.35:1

The profitability while very good is falling and efforts should be made to investigate same.The current ratio has fallen below the recommended ratio of 2:1 in 2007.Report to be laid out following the nine-point plan, as in Exercise 9.


346

Ratio analysis as follows

2006 2007

Gross profit % 41.67% 54.90%

Net profit % 20.83% 35.29%

Return on capital employed 20.41% 33.71%

Current ratio 2.67 : 1 1.39 : 1

(c) State, in the space provided above, the amount paid out in dividends each year if the rateof dividends is 12% in year 2006 and 10% in 2007.

Chapter 51 Club Accounts1. Column 1 is a list of club officers of an athletic club.

Column 2 is a list of duties performed by these officers.Match the two lists by placing the letter of the correct duty under the relevant number below.(One of the duties does not apply to any of the terms.)

2. Indicate with a tick 0 where each of the following receipts and expenditures are entered in theaccounts of a club.

Receipt/Expenditure Income and ExpenditureAccount

Receipts and PaymentsAccount

Bought a tractor 0Paid insurance 0 0Sold land 0Received interest on savings 0 0Won lotto prize of €500,000 0Received membership fees 0 0

1. 2. 3.

C D A

Column 1 Club Officers Column 2 Duties

1.

2.

3.

Treasurer

Secretary

Chairperson

A.

B.

C.

D.

Controls the meeting

Records the times of athletes at race meetings

Collects membership fees

Records decisions made at meetings

Answer: Dividends paid €42,000 €35,000

(12% of €350,000) (10% of €350,000)

The profitability is increasing and hopefully will continue. The current ratio has fallen below the recom-mended ratio of 2:1 in 2007. There is a worry that the company is expanding too quickly and may be relying too much on creditors and bank overdrafts i.e., overtrading.

347


Chapter 52 Club Accounts with Adjustments


(a) Wages due are entered under

in the Income and Expenditure and under inthe Balance Sheet.

(b) Opening cash and bank balances are entered in the

and in the

.

(c) The sale for cash of fixed assets is entered in the

but not in the

.

2. Name four possible costs of running a disco.

(i) (ii) (iii)

(iv)

3. Indicate with a tick 0 where each of the following receipts and expenditures are entered in the accounts of a club.

4. Complete the Bar Trading Account below from the following data.Bar purchases €35,000, Barperson’s wages €16,000, Barperson’s wages due €3,000,Closing stock of bar supplies €12,000.

Bar Trading Account for the year ended 31/5/2007Sales 340,000

Less cost of sales1/6/06 Opening Stock 11,000


Barperson’s wages 16,000

Add wages due 3,000 19,000

65,00031/5/07 Less closing stock 12,000 53,000

Receipt /Expenditure Bar Trading Account

Income and ExpenditureAccount

Receipts and PaymentsAccount

Bought a tractor 0Paid insurance 0 0Sold land 0Received interest onsavings

0 0

Won lotto prize of€500,000

0

Received membershipfees

0 0

Bar profit 287,000

Expenditure

Current Liabilities

Analysed cash book debit side

Receipts and payments account debit side

Receipts and payments account

Income and expenditure account

DJ Tickets Hire of hall

Insurance


348

Chapter 53 Farm Accounts

1. List four reasons why farmers should keep accounts.

(i) (ii)

(iii) (iv)

2. Name four possible examples of farm income.

(i) (ii)

(iii) (iv)

3. Name two possible examples of farm capital expenditure

(i) (ii)

and two possible examples of farm revenue expenditure.

(i) (ii)

Chapter 54 Service Firms

1. Give four examples of service firms.

(i) (ii)

(iii) (iv)

2. List four reasons why service firms should keep accounts.

(i) (ii)

(iii) (iv)

3. Name four possible examples of a service firm’s income. (Depends on type of business, e.g.hairdresser)

(i) (ii)

(iii) (iv)

4. Name two possible examples of a service firm’s capital expenditure.

(i) (ii)

and two possible examples of a service firm’s revenue expenditure.

(i) (ii)

Chapter 55 Information Technology

1. Place a tick 0 opposite each statement to indicate whether it is true or false.

(a) A monitor is another name for a screen

(b) A database is an example of hardware

(c) A modem links a computer to a telephone

2. Place a tick 0 opposite each statement to indicate whether it is true or false.

(a) A spreadsheet can be used to prepare a cash forecast

(b) A computer game is an example of computer software

(c) The Internet is a system of networks

True

0

0

False

0

True

000

False

Required for taxes and grants To find out if the farm made a profit

To manage the farm better

Sale of milk Sale of cattle

Sale of sheep

Purchase of land

Light and heat

Banks Insurance companies

Decorators Hairdressers

Required by law

Needed for loan applications

Wash & blow dry

Style

Motor vans Equipment

Light and heat Telephone

Cut

Colour

To find out if the business is profitable

To manage the business better

Insurance

Purchase of machinery

EU grant

To find out what the farm is worth

349


3. Write the following abbreviations out in full.

(a) WWW

(b) VDU

(c) ROM

(d) CAD

4. Tick 0 the correct answer.In relation to information technology a menu is

(a) the number of characters a programme can hold

(b) a list of choices on screen

(c) the order of the keys on a keyboard

(d) found on a spread sheet

5. Tick 0 the correct answer.Which one of the following computer programmes can best be used for filing information andpreparing accounts

Filing Information Preparing Accounts

(a) Spreadsheets

(b) Data base

(c) Word Processing

(d) Graphics

6. Purchased a computer system by cheque for €7,450 on 1 May 2006. Record this purchase inthe computer and bank accounts below.

7. Purchased a computer system by cheque for €9,800 on 1 May 2006. Record this purchase inthe computer and bank accounts below.

General Ledger


Computer A/C (p1)

1/5/2006 Bank ACB 9,800

Bank A/C (p2)

1/5/2006 Computer ACB 9,800

General Ledger


Computer A/C (p1)

1/5/2006 Bank ACB 7,450

Bank A/C (p2)

1/5/2006 Computer ACB 7,450

0

0

0

World Wide Web

Visual Display Unit

Read Only Memory

Computer Aided Design


350

7. Purchased a computer system on credit from PK Computers Ltd for €15,000 on 1 June 2007.Record this purchase in the General Journal, the Computer and PK Computers Ltd accountsbelow.

8. Purchased a computer system on credit from Infocom Ltd for €25,000 on 1 May 2007. Recordthis purchase in the General Journal, the Computer and Infocom Ltd accounts below.

General Ledger


Computer A/C (p1)

1/5/2007 Infocom Ltd GJ 25,000

INFOCOM Ltd A/C (p2)

1/5/2007 Computer GJ 25,000

General Journal p1

Date Details F Dr debit1/5/2007 Computer GL 25,000

Infocom Ltd GL 25,000

Narration: Purchase of computeron credit

General Ledger


Computer A/C (p1)

1/6/2007 PK Computers GJ 15,000

PK Computers Ltd A/C (p2)

1/6/2007 Computer GJ 15,000

General Journal p1

Date Details F Dr debit1/6/2007 Computer GL 15,000

PK Computers Ltd 15,000

Narration: Purchase of computeron credit

Cr credit

Cr credit

Junior Certificate Business Studies for Households and Enterprises by Matt Hynes

Documents

business insurance

business documents

business plan

final accounts

club accounts

control accounts

farm accounts

bank accounts