Unit 5 Assessment Exercises

Multiple choice
Questions 1–3 are based on the information below. 6 Which of the following is a statutory deduction a
business is legally required to make from the gross
Pilar works in the customer care centre of a computer
pay of its employees each payroll period?
software company and is paid the following wage rates:
A subscriptions to trade unions
A 
$10 per hour for up to 35 hours per week
between Monday and Friday B donations to named charities
B 
$15 per hour for every hour worked over 35 C national insurance contributions
hours per week between Monday and Saturday D pension contributions
C 
$20 per hour for every hour worked on a
Sunday Questions 7–9 are based on the following answers:
D 
$2 for every customer call successfully dealt A wages sheet C clock card
with
B payslip D wages account
Which of the above wage rates is:
Which of the above provides:

1 a piece rate?
7 A record of the number of hours worked by an
2 an overtime rate at double time? employee each period and the times the hours
3 a basic hourly time rate? were worked?

4 Last week Pilar worked a total of 40 hours between 8 A record of the gross and net pay of all employees
Monday and Saturday and successfully dealt with for a given payroll period and total deductions from
150 customer calls. What was her gross wage for the their gross pay?
week?
A $400 C $600 9 A record for an employee showing the net pay he or
she received at the end of a payroll period and how
B $425 D $725
it was calculated?

5 The following deductions were made from Pilar’s

gross wage: 10 An employer has deducted income tax from the
gross pay of its employees at the end of a payroll
●● income tax at 20% period. Payment of the tax collected to the tax
●● national insurance contributions of 4% authorities is due at the end of the following month.
●● a pension contribution of 8% Which of the following journal entries will be
required to record the tax collected?
What was Pilar’s net wage for the week?
A $232 C $551 Wages account Income tax account
B $493 D $725 A Debit Debit
B Credit Debit
C Credit Credit
D Debit Credit

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 Structured questions
1 Indira is a computer consultant. She does not keep a full set of double-
entry accounts but the following information was available for the year
ended 31 March 2010.

Summarised Cash Book

$ $
Balance 1 April 2009 3 500 Purchase of office equipment 5 500
Receipts of consultancy fees 74 000 Wages 23 600
Sale of office equipment    750 Drawings 20 000
Loan interest and repayments 2 600
General expenses 12 900
Rent 9 000
Balance 31 March 2010 4 650
78 250 78 250
The sale of office equipment was at net book value.
Additional information:
1 April 31 March
2009 2010
$ $
Plant and equipment (office equipment) 16 000 17 500
Trade receivables for consultancy fees 14 200 11 000
Non-current liability (6% loan) 10 000 8 000
Other receivables (general expenses prepaid)    100    500
Other payables (rent accrued)    400    600

(a) (i) Calculate the capital at 1 April 2009. [3]

(ii) Calculate the consultancy fees for the year ended 31 March
2010. [3]
(b) Prepare the income statement for the year ended 31 March 2010. [7]
(c) Indira does not keep a full set of double-entry accounts. State two
advantages to Indira of maintaining a full set of double-entry
accounts. [4]
Included in the wages in the summarised cash book are payments to the
office supervisor. The office supervisor is paid $1000 per month plus 10
hours of overtime per month at $8 per hour. Statutory deductions will be
made at the rate of 15%. Indira will also have to make a 10% employer’s
contribution to the government.
(d) Calculate:
(i) the net payment made by Indira to the office supervisor for one
month. [3]
(ii) the total cost to Indira of employing the office supervisor for one
month. [2]
Total [22]
Cambridge O Level Principles of Accounts 7110, Paper 2, Q3, May/June 2010

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 2 The Ranford Sports Club keeps a full set of double-entry accounts and
prepares monthly accounts. The summarised receipts and payments
account for the month of April 2009 was as follows.

Receipts and Payments Account

$ $
Balance b/d 1 680 Payments for café purchases 4 320
Café takings 9 850 General expenses 1 890
Donations     50 Repairs to café fixtures    165
Subscriptions    530 Balance c/d 5 735
12 110 12 110
Additional information:
1 Other balances
1 April 30 April
$ $
Café stock 1 700 1 230
Creditors for café purchases 1 830 1 470
Café fixtures 5 450 5 400
2 The café takings recorded in the receipts and payments account do not
include the income, $770, for a birthday party held on 20 April 2009.
3 The wages for the café manager have not been paid for the month of April.
The café manager worked a total of 138 hours in the month of which:
XX 120 hours were paid at $5 per hour
XX 12 hours were paid at time and a half
XX 6 hours were paid at double time.
A total of 40% of gross pay was deducted for tax and social security
contributions.
The Ranford Sports Club must also pay an additional $65 to the tax authority.
On 5 May 2009 the Ranford Sports Club paid the total tax and social security
contributions to the tax authority.

(a) Calculate the net wages to be paid to the café manager for the month
of April 2009. [5]
(b) Prepare the journal entry to record the entries made on 30 April 2009
for wages and statutory deductions. A narrative is not required. [3]
(c) Prepare the café trading account for the month ended 30 April 2009.
[9]
(d) State two differences between a receipts and payments account and
an income and expenditure account. [4]
Total [21]
Cambridge O Level Principles of Accounts 7110, Paper, Q3, May/June 2009

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