2022

VCE
Accounting
Units 3 and 4
Trial Examination
Suggested
Answers

Kilbaha Education Tel: (03) 9018 5376

PO Box 2227
Kew Vic 3101 kilbaha@gmail.com
Australia https://kilbaha.com.au

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2022 Kilbaha VCE Accounting Trial Examination Units 3 and 4 Suggested Answers Page 1

Question 1 (10 marks)

a.

Type of Bike Cost NRV Lower

Amateur 4 * (400 + 100) 4 * (800 - 90 - 50) $2 000
= $2 000 = $2 640
Professional 10 * (800 + 100) 10 * (1 600 - 50) $9 000
= $9 000 = $15 500
Elite 8 * (1 200 + 150) 8 * (800 – 50) $6 000
= $10 800 = $6 000
Total Cost $17 000

• 1 mark for each cost of inventory (must include total)

3 marks

b.

General Journal
Date Details Debit Credit
30/9 Inventory Write-down 4 800 1
Inventory 4 800 1

30/9 Inventory Loss 900 1

Inventory 900 1

4 marks

c. An inventory loss was recorded on 30 September 2022. In the Balance Sheet there is a
decrease in current assets of $900 as inventory decreases by $900 and owners’ equity will
decrease by $900 as net profit will decrease by $900 of inventory loss expense.
In the Income Statement there will be a decrease in net profit of $900 as there is an inventory
loss of $900.
There is no impact on the Cash Flow Statement.
• 1 mark for impact on the Balance Sheet
• 1 mark for impact on the Income Statement
• 1 mark for not impact on the Cash Flow Statement
3 marks

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2022 Kilbaha VCE Accounting Trial Examination Units 3 and 4 Suggested Answers Page 2

Question 2 (32 marks)

a.
General Journal
Date Details Debit Credit
30/6 Bank 440
1
Capital 440

Sales 400
1
GST Clearing 40
Accounts Receivable – ABC Hobby Store 440 1
Inventory 200
1
Cost of Sales 200

Sales Returns 1 000

1
GST Clearing 100
Accounts Receivable – ABC Hobby Store 1 100 1
Inventory 500
1
Cost of Sales 500

Depreciation – Cabinets 3 600

1
Accumulated Depreciation – Cabinets 3 600

Wages expense 2 000

1
Accrued Wages Expense 2 000

Rent Expense 8 000 1

Prepaid Rent Expense 8 000 1

Inventory 700
1
Inventory Gain 700

12 marks

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2022 Kilbaha VCE Accounting Trial Examination Units 3 and 4 Suggested Answers Page 3

Question 2 (continued)
b.
General Journal
Date Details Debit Credit
30/6 Profit and Loss Summary 74 200 1 (Debit and Credit)

Cost of Sales 59 300

Wages Expense 2 000
Depreciation – Cabinets 3 600 1
Rent Expense 8 000
Discount Expense 400
1
Interest Expense 900

30/6 Discount Revenue 300

Interest Revenue 640
1
Sales 139 600
Sales Returns 21 000
1
Inventory Gain 700
Profit and Loss Summary 120 240 1
5 marks

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2022 Kilbaha VCE Accounting Trial Examination Units 3 and 4 Suggested Answers Page 4

Question 2 (continued)
c.

Drawings
Date Cross-Reference Amount Date Cross-Reference Amount
($) ($)
17/5 Inventory 900 30/6 Capital 2 100
16/6 Bank 1 200
2 100 2 100

Profit and Loss Summary

Date Cross-Reference Amount Date Cross-Reference Amount
($) ($)
30/6 Expenses 74 200 30/6 Revenues 120 240
30/6 Capital 46 040
120 240 120 240

Capital
Date Cross-Reference Amount Date Cross-Reference Amount
($) ($)
30/6 Drawings 2 100 1/7 Balance 52 010
30/6 Balance 96 450 15/1 Bank 500
30/6 Profit and Loss Summary 46 040
98 500 98 500
1/7 Balance 96 450
• 2 marks for Drawings
• 1 mark for Profit and Loss Summary
• 3 marks for Capital

6 marks

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2022 Kilbaha VCE Accounting Trial Examination Units 3 and 4 Suggested Answers Page 5

Question 2 (continued)

d.
Classic Kits
Income Statement (extract) for the year ended 30 June 2022
Revenue $ $

Sales 139 600

1
Less Sales Returns 21 000 118 600

Less Cost of Goods Sold

Cost of Sales 59 300

Gross Profit 59 300 1

Add Inventory Gain 700

Adjusted Gross Profit 60 000 1

Add Other Income

Discount Revenue 300 1

Interest Revenue 640 60 940 1

5 marks

e.

Current Liabilities $ $
Accounts Payable 14 000
Loan – Davis Bank 6 000 20 000
• 1 mark for title and completed report
• 1 mark for Accounts Payable $14 000
• 1 mark for Loan – Davis Bank $6 000
3 marks

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2022 Kilbaha VCE Accounting Trial Examination Units 3 and 4 Suggested Answers Page 6

Question 3 (11 marks)

a.

Option 1
Current operations
Sales = 2 500 * $80 = $200 000
Cost of Sales = 2 500 * $60 = $150 000
Gross Profit $ 50 000

Missing Deadline
Sales = 2 500 * $64 = $160 000
Cost of Sales = 2 500 * $60 = $150 000
Gross Profit $ 10 000

Alternative Supplier
Sales = 2 000 * $50 = $100 000
Cost of Sales = 2 000 * $40 = $ 80 000
Gross Profit $ 20 000

• 2 marks for each alternative

6 marks

b. Elaine needs to consider to a variety of alternatives when making her decision. She offers
schools a high quality VCE Polo Shirt that is produced using organic cotton and is fair trade
accredited. This alternative is the most profitable alternative although using this supplier
could result in the lowest gross profit if the supplier is unable to meet the deadline.
Elaine is purchasing a significant amount of shirts and could make the supplier aware that she
has an alternative supplier although the use of this supplier raises ethical concerns as her
original shirt option is ethically produced. As schools may have committed to their purchase
and may not be able to source an alternative supplier they may be force to use the non fair
trade option despite this being their original choice.
If Elaine chooses to remain with the original supplier she may end up with the lowest gross
profit, as she would have been able to source the shorts from the alternative source.
Mark this question globally.
5 marks

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2022 Kilbaha VCE Accounting Trial Examination Units 3 and 4 Suggested Answers Page 7

Question 4 (9 marks)
a.

General Journal
Date Details Debit Credit
30/6 Disposal of Food Truck 40 000
1
Food Truck 40 000

Accumulated Depreciation of Food Truck 26 000

1
Disposal of Food Truck 26 000

Food Truck 18 000

1
Disposal of Food Truck 18 000

Disposal of Food Truck 4 000

1
Profit on Disposal of Food Truck 4 000

Bank 37 000
1
Loan - HPY Bank 37 000

Food Truck 32 000

1
GST Clearing 5 000
Bank 37 000 1

7 marks

b. A business can generate a profit on disposal if they over depreciate the non-current asset. If
the business understates the useful life or the residual value of the non-current asset the
business will over depreciate the non-current asset resulting in a profit on disposal.
• 1 mark for over depreciation
• 1 mark for understating useful life or residual value
2 marks

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2022 Kilbaha VCE Accounting Trial Examination Units 3 and 4 Suggested Answers Page 8

Question 5 (10 marks)

a.

Item: BB200 Basketball Ring Cost Assignment method: FIFO

IN OUT BALANCE

Date Details Qty Unit Value Qty Unit Value Qty Unit Value
2022 Cost Cost Cost
1 June Balance 3 200 600
5 June Inv 92 7 210 1 470 3 200 600
7 210 1 470
8 June Inv 21 3 200 600
1 210 210 6 210 1 260
12 June Inv 45 3 240 720 6 210 1 260
3 240 720
18 June Cr Note 23 1 210 210 7 210 1 470
3 240 720
29 June Cr Note 18 1 210 210 6 210 1 260
3 240 720
30 June Memo 19 1 210 210 5 210 1 050
3 210 660
• 1 mark for each transaction
5 marks

b. The details column identifies the source document that is used to verify the transaction.
Verifiability is supported by the use of a source document as it allows users independent
observers to come to a consensus that an event is faithfully represented. The details column
provides a source document that can be used to cross check the details of each transaction.
• 1 mark for verifiability
• 1 mark for explanation
2 marks

c. The transaction on 8 June 2022 is a credit sale of four BB200 Basketball Rings. The credit
sale will increase assets of $2 710 as there is an increase of $3 520 of accounts receivable and
a decrease of inventory of $810. There will be an increase in liabilities of GST Clearing of
$320.
There will be an increase of $2 390 of net profit as sales will increase by $3 200 and cost of
sales of $810 which will increase owners’ equity.
• 1 mark for impact on assets
• 1 mark for impact on liabilities
• 1 mark for impact on owners’ equity
3 marks

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2022 Kilbaha VCE Accounting Trial Examination Units 3 and 4 Suggested Answers Page 9

Question 6 (7 marks)

a.
Rent Expense
Date Cross-reference Amount Date Cross-reference Amount
2022 2022
31/12 Prepaid Rent Expense 1 600 31/12 Profit and Loss Summary 1 600

1 600 1 600

Prepaid Rent Expense

Date Cross-reference Amount Date Cross-reference Amount
2022 2022
1/10 Balance 500 31/12 Rent Expense 1 600

24/10 Bank 3 300 31/12 Balance 2 200

3 800 3 800

1/1 Balance 2 200

• 2 marks for Rent Expense

• 3 marks for Prepaid Expense

5 marks

b. Prepaid rent expense is treated as a prepayment as the outflow of economic benefit will not
occur until future periods. The going concern assumption requires the business to assume
that the business will continue indefinitely into the future and therefore it can be assumed
that the prepaid rent will provide its benefit.
• 1 mark for Going Concern
• 1 mark for the outflow of economic benefit will not occur until future periods.
2 marks

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2022 Kilbaha VCE Accounting Trial Examination Units 3 and 4 Suggested Answers Page 10

Question 7 (7 marks)
a.
General Journal
Date Details Debit Credit
1 July Bank 25 000
1
Capital - Sam 25 000

1 July Van 45 000 1

Prepaid Insurance Expense 600 1
Loan – Aus Bank 44 000
1
Capital – Sam 1 600
4 marks

b. The van is contributed using the Fair Value at the date it was contributed to the business. The
fair value represents that market value of the van on the day that it is contributed and will be
the cost of the asset that is yet to be consumed by the business plus any residual value.
• 1 mark for Fair Value
• 1 mark for market value
• 1 mark for cost of the asset yet to be consumed plus any residual value
3 marks

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2022 Kilbaha VCE Accounting Trial Examination Units 3 and 4 Suggested Answers Page 11

Question 8 (6 marks)
Tech IT Up have experienced slowing of accounts receivable turnover, accounts payable turnover and
inventory turnover since 2020.
The slowing accounts receivable turnover would have a negative impact on liquidity as its is taking
longer to generate cash which will make it difficult to meet their short-term debts as they fall due and
will have minimal impact on profitability as the business does not offer discounts to customers. The
impact of the slowing accounts receivable turnover would also impact accounts payable turnover, as
there is less cash to pay their accounts payable. This could also impact profitability, as the business is
unable to take advantage of discounts that would increase profit and potentially increase profits
compared to a base such as sales, assets or owners’ equity. The slowing accounts payable turnover
does have a positive impact on liquidity as it allows the business to retain cash that will allow them to
meet their short-term debts as they fall due. The slowing inventory turnover also creates an issue as
the business is holding its inventory for more than 40 days on average. This is an issue as the business
sells computers that would become obsolete when held for too long. If the computers are held for too
long this could result in inventory write-downs and potential inventory losses which would have a
negative impact on profitability although the business would be able to provide its customers with a.
wide range of computers as they are holding more inventory.
Mark this question globally.
6 marks

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2022 Kilbaha VCE Accounting Trial Examination Units 3 and 4 Suggested Answers Page 12

Question 9 (8 marks)
a. The business reports on a monthly basis.
• 1 mark for monthly basis
1 mark

b. The transaction is a purchase return of inventory that cost $3 000 plus $300 of GST.
• 1 mark for purchase return
• 1 mark of inventory of $3 000 and GST of $300
2 marks

c. The transaction on the 7 July 2022 will result in a cash operating inflow of $15 000.
• 1 mark for cash operating inflow
• 1 mark for $15 000
2 marks

d. Accounts Payable would be reported as a current liability of $19 500 as it represents a

present obligation of the business to transfer an economic resource as a result of a past event
(credit purchase of inventory) that is reasonably expected to be settled within 12 months of
the end of the reporting period.
• 1 mark for current liability of $19 500
• 1 mark for present obligation of the business to transfer an economic resource
as a result of a past event
• 1 mark for expected to be settled within 12 months of the end of the reporting
period
3 marks

End of suggested answers

2022 Kilbaha VCE Accounting Trial Examination Units 3 and 4

Kilbaha Education Tel: (03) 9018 5376

PO Box 2227
Kew Vic 3101 kilbaha@gmail.com
Australia https://kilbaha.com.au

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2022 Kilbaha VCE Accounting Trial Examination Units 3 and 4 Suggested Answers Page 13

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