[Mandip]

Thank you

[Mandip]

Thank you. Sorry for being thick but for share pool then, we use the figure on our calculator (more than 3 dp)?

[Mandip]

This is from the BPP book. In the book, the answer given has the cash receipts total as £41,000 + (4,000 – 1,500). I do not understand why we have to add the invoices sales to the cash receipts as we have not received the cash. I thought under Cash Basis we onyl include receipts for actual cash received. Is this an error in the text book? Thanks

[Mandip]

Thank you for your reply and clarification

[Mandip]

Thanks Mike.

[Mandip]

Ignore me, the carrying value of the revalued asset is £1,187,500, sold for £1,195,000 therefore profit of £7,500.00

Sorry to have wasted your time

[Mandip]

Thank you for your reply John.

From your first paragraph then the answer to the question should be £247,500 and not £7,500 as stated in the book. Can you please confirm?

Thanks

[Mandip]

To further elaborate the questions from the text book is: “How is the total of the purchase day book posted to the nominal ledger?”

Answer is “Debit purchases, Credit Payables Control”

Now i understand why it is a debit purchases but for Credit shouldnt it be a mixture of Cash and Payables control?

For example two transactions:

Purchased £10 for goods x by cash
Purchased £100 for goods y on credit

Purchase t account is debit £110
Cash at bank is credit £10
Payabales accounts is credit £100

No???

[Mandip]

Hi Sir

Just thought I say thank you for your help. I managed to pass my F2 paper with a mark of 88%. Now onto F3!!!

Mandip

[Mandip]

i thought so. Thank you for getting back to me so quickly. Much appreciated

[Mandip]

Hi i have another question of budgeting.

Its from the BPP book but i am confused with how they got the answer.

Company makes a component M which uses 3 kg of raw material X. Opening inventory of start of year is: 5,000kg ($4 a kg) and 3,000 units. Budgeted sales is 48,000 throughout the year (evenly). Closing inventory at the end of the year is:

Raw material x = one months worth of production
Units of M = 2 months worth of sales.

i have managed to work our the closing units of m = 8,000 but the book has the closing inventory of material x to be (96,000/12) = 8,000. i do not know where they have got the figure 96,000 from?

please help

[Mandip]

Thanks for that. I was using the Present Value Table for each year to work out what the Present value of £90k which accumulated to a slightly different figure if when i used the annuity value.

For part B is the accounting rate of return the same as internal rate of return? If so the answer is 21% but this is hard to work out if the present value figure table go only to 20%.

Part C i have understood as it is not discounted, so it is the accumulation of $90k until the $300k is paid back.

Once again, thank you for answering my queries.

[Mandip]

There is another question on the test but this time i do not know how to arrive at the answer. The question is:

A company operates a process costing system. WIP at start of process of 500 units ($4000) which were 30% complete. Total of 2000 units were completed and transferred to finished goods warehouse. Cost per equivalent unit for output produced during the month was $30. Company uses FIFO method. What is the total cost of the 2,000 units transferred to the finished goods warehouse?

[Mandip]

No problem. Apologies for posting this twice. My browser refreshed by accident.

[Mandip]

Sorry John for posting on the other “Ask Tutor Section”. It is my first time posting but that is no excuse.

I am also sorry but i still do not understand. I understand the investment is earning 2% more than the cost of capital so it will make a profit. But how can you say it will earn more of a profit than the original ROI of 18%. Cost of capital remains the same at 15% and i’m assuming the amount invested will be the same.

I have tried with numbers and i get RI to decrease not increase.

[Author]

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