You are on page 1of 4

KENY ATTA UNIVERSITY

UNIVERSITY EXAMINATIONS 2008/2009 SECOND SEMESTER EXAMINATION FOR THE DEGREE OF BACHELOR OF COMMERCE BAC 100: FOUNDAMENTALS OF ACCOUNTING I

DATE: WEDNESDAY, 9TH SEPTEMBER 2009 INSTRUCTIONS: 1.


a) b)

TIME:

11.00 A.M. - 1.00 P.M.

Answer ALL questions. [6marks]

What is accounting?

Outline the users of accounting information and clearly show how they benefit from this information. [6marks] [2marks] [6marks]

c) d)

What are GAAPS? Explain i) historical cost convention and ii) substance over form.

2.

The balances extracted from the ledger of Kamau, a sole trader, are as shown here below as at 31 st December 2008. Dr (shs) Plant and machinery Depreciation on plant and machinery Repairs to plant Wages Salaries Cash Land and building 16,000 280,000 40,000 25,000 745,000 Overdraft Salary outstanding Bills payable Provision for Bad debts Purchase discounts 38,000 20,000 30,000 60,000 40,000 180,000 20,000 Kamau capital Sales Cr (shs) 500,000 2,490,000

Page I of 4

Depreciation

on building

25,000 1,235,000 15,000 100,000 10,000 350,000 370,000 3,411,000

Accounts payable

233,000

Net purchases Accrued income

Bills Receivable Bad debts Accounts Receivable Stock 01.01.08

3,411,000

Additional i) ii) iii)

Information Stock on 31 st December 2008 was shs 300,000

Write off shs 30,000 bad debts and maintain a provision of 5% on account receivable. Shs 12,000 worth of rent was debited to landlord account and included in the list of account receivable.

REQUIRED (a) (b) 3. The income statement for Kamau for period ended December 31, 2008 A balance sheet as at that date [10 marks] [10 marks]

A trial balance of the ledger of Yasin Car cleaners as at 31 st December 2008 is shown here below: Yasin Car cleaners Trial Balance As at December 31 2008

Page 2 of 4

(Shs) Bank Account Receivable Prepaid Insurance 74,550 15,050 92,400 57,050 21,000 182,700 Cleaning Equipment 1,159,200 Depreciation: motor vehicles

(Shs)

Cleaning supplies Prepaid rent Cleaning Equipment Depreciation:

Accumulated Motor vehicles Accumulated

79,800

267,400 45,150 28000 822,150 1081500 2,422,700 870,800 56,000 54,950 3,665,200 3,665,200

Accounts payable Unearned cleaning Revenue Mohammed Mohammed Yasin Capital Yasin Drawing

Cleaning Revenue Earned Wages expense Rent expense Motor Vehicle Running Expenses

Additional (a)
(b)

Information: Expired Insurance shs. 66500.

An inventory cleaning supplies showed shs. 87750 on hand The cleaning services rents a garage and equipment storage space. At the

(c)

beginning of the year, three months rent was prepaid on the first day of each month and debited to the rent expense account. as the trial balance date. The December rent was unpaid

Page 3 of 4

(d)

Estimated depreciation on cleaning equipment shs. 25,550 and on motor vehicles shs. 151900.

(e)

On November 15, the company entered into contract and began cleaning vehicles for Citi Hopa for shs. 14,000 a month. Citi Hopa paid for two months services in advance and the amount was credited to unearned cleaning revenue account to clean vehicles for Emba Sacco. By end of month of December, shs. 84,00 had been earned on this contract but had not been recorded.

REQUIRED:
(a) (b)

A ten column work sheet. Prepare adjusting and closing entries.

[20 marks] [10 marks]

*****************

, "

Page 4 of 4

You might also like