Sariah owns a business selling ladies' clothing. She maintains a system of double entry bookkeeping. The following occurred during September 2020. 1 Purchased a motor vehicle on credit from Sharpe Motors $6350. 2 Ruhee, a credit customer, was declared bankrupt owing Sariah $1200. The debt is to be written off. Sariah is preparing her financial statements for the year ended 30 September 2020. She provides the following information for fixtures and fittings. 2019 October 1 $ Fixtures and fittings at cost 28600 Provision for depreciation of fixtures and fittings 6185 2020 January 31 Sold fixtures and received a cheque 1150 The fixtures had been purchased on 1 February 2018 for $1500 March 31 Purchased new fixtures paying by cheque 3500 Sariah's policy is to provide depreciation on fixtures and fittings at 10% per annum using the reducing balance method. A full year's depreciation is charged in the year of purchase but none in the year of disposal.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2020). The mark or mark type is shown in brackets.

1. [1] (a) Motor vehicles Debit $
2. [1] (a) Sharpe Motors Credit $
3. [1] (a) Irrecoverable debts Debit $
4. [1] (a) Ruhee Credit $
5. [1] (b) Correct dates for all entries in the accounts
6. [1] (b) Fixtures and fittings account: Mar 31 Bank 3500
7. [1] (b) Fixtures and fittings account: Jan 31 Disposal 1500
8. [1]OF (b) Fixtures and fittings account: Sep 30 Balance c/d or Oct 1 Balance b/d 30 600
9. [1] (b) Provision for depreciation of fixtures and fittings account: Jan 31 Disposal 285
10. [1] (b) Provision for depreciation of fixtures and fittings account: Sep 30 Income statement 2470
11. [1]OF (b) Provision for depreciation of fixtures and fittings account: Sep 30 Balance c/d or Oct 1 Balance b/d 8 370
12. [1] (b) Disposal account: Jan 31 Fixtures and fittings 1500
13. [1]OF (b) Disposal account: Jan 31 Prov. for Dep. 285
14. [1] (b) Disposal account: Jan 31 Bank 1150
15. [1]OF (b) Disposal account: Sep 30 Income statement 65
16. [1] (c) Advantage: Emy may introduce additional capital
17. [1] (c) Advantage: Emy may bring additional specialist skills to the business
18. [1] (c) Advantage: Sariah may benefit from Emy's contacts from her business
19. [1] (c) Advantage: The partners will be able to share the workload/responsibilities/risks
20. [1] (c) Disadvantage: Sariah will have to share profits with Emy
21. [1] (c) Disadvantage: Decision making may take longer
22. [1] (c) Disadvantage: Disagreements between the partners may occur
23. [1] (c) Recommendation