Financial Accounting in Practice - Practical Questions in The Ghanaian Perspective

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2011 GeeConsult, Contact: Email ekegey24ge@yahoo.co.uk Tel: +233 249529947 George Ekegey Ekeha
Get a Copy at http://ssrn.com/abstract=1750802
FINANCIAL ACCOUNTING
IN PRACTICE

PRACTICAL QUESTIONS IN THE GHANAIAN
PERSPECTIVE
(FOR ANSWERS TO ALL THE QUESTI ONS PLEASE GO TOhttp://ssrn.com/author=1590490 AND
PURCHASE THE WHOLE QUESTI ONS AND ANSWERS)

FOR
UNDERGRADUATES & DIPLOMA
STUDENTS

COMPILED BY
MR GEORGE EKEGEY EKEHA
(MBA Fin., MBA, B.Com)

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Abstract
More often that not, our accounting practices at the corporate levels have been very different from what
actually goes on in our schools and universities. Many of our graduate students in accounting get into the
real world of work and realised that whatever they learnt in the classrooms have got not much impact on
the practice of accounting in the corporate environment. It is very pathetic to see graduates in accounting
with very good honours but cannot even conduct a simple bank reconciliation investigation when they got
to the office. It is therefore becoming a normal practices to engage a fresh university graduate in an
organisation with all the financial stress on the organisation, as a result of the recruitment process, and
then spend some amount again to train them for the work environment. It is therefore s common place to
see organisations asking for several years of work experience before taking them in the job. I have heard
various youth advocacy groups in the country complaining about these demands from the recruiting
organisation stating that it frustrates the ambition of the youth. But unfortunately, nobody seems to care
about designing a strategy that would help our nations to come out of these situations and we all just
cherish complaining.
It is my intention to bring this practical (not totally though, but I am sure it would help others to start
thinking about the solutions) questions for prospective accounting graduates to test themselves on the
realities of accounting jobs. The business or corporate environments, I agreed, differ from one industry to
another and also from one particular organisation to the other. However, there are various issues which
are very common with any accounting practice, such as taxation and VAT. There is also a generally
accepted practices in the Ghanaian business environment (and Africa as a whole) which are practicable
within every organisation.
The Financial Accounting Practices, Question and Answers is compiled to help aspiring accounting
professionals to engage themselves in both theory and practical questions in accounting. Most of the
questions in this book are designed to help students understand some practical activities carried out by the
account officers in the corporate environments. I hope that it would be of immense help to all those who
are currently practicing accounting and still having petty problems on the job by using it as a reference
material for their jobs. I also hope that this material would go a long way to help University students in
Accounting, Polytechnic students in DBS Accounting and aspiring Professionals in any Accounting Field
in their endeavour to helping build a good Corporate Governance for this countrys business environment
which would protect the investors interest and thereby encouraging more investor to invest in the
country.
Please, contact the author for any clarification on the questions
and the answers thereof.

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Table of Contents
CHAPTER 1 BASIC BOOKKEEPING AND ACCOUNTING PRINCIPLES ............................ 1
Question 1 Atongo Sole Business.................................................................................................... 1
Question 2 FA Manyame Business Ventures .................................................................................. 2
Question 3 Bazzers Bombers Car Services ..................................................................................... 2
Question 4: Geeproperties Rentals .................................................................................................. 3
Question 5: Jennifer Agueliyah Boutique ........................................................................................ 4
Question 6: Gifty Adams Showers Ltd ............................................................................................ 5
Question 7: Big Bright Business Ventures ...................................................................................... 5
Question 8: Reggis Amevors Bank Reconciliation ........................................................................ 7
Question 9: Chicken John Eateries and Drinkeries ......................................................................... 8
Question 10: Suzzy and Daryl Ventures .......................................................................................... 9
Question 11: Amaglagla Business Ventures.................................................................................. 11
Question 12: Chucker and Zooloo Car Dealers ............................................................................. 12

CHAPTER 2 INCOMPLETE RECORDS AND CONTROL ACCOUNTS .............................. 13
Question 13: Prempeh Street Groceries ......................................................................................... 13
Question 14: Kwaku Agyepong Businesses .................................................................................. 14
Question 15: Volta Star Grocery Shops ......................................................................................... 15
Question 16: Blow Bambaloo Retailing Ventures......................................................................... 16
Question 17: Kokompeh Spare Parts Venture ............................................................................... 17
Question 18: Kofi Ghetto Ltd Bank Reconciliation ...................................................................... 18
Question 19: Norris Walter Ltd Control Accounts ........................................................................ 19
Question 20: Ronaldo Movete Ltd Control Accounts .................................................................. 20
Question 21: Jorgbenue Ltd Reconciliation Accounts .................................................................. 21
Question 22: Akosombo Fabrics Suspense Accounts ................................................................... 23
Question 23: John Jasper Shoes ..................................................................................................... 23
Question 24: Akwapim Botanical Gardeners ................................................................................ 24
Question 25: Ablode Tomefa Trading Company .......................................................................... 25
Question 26: Mandela Amewu Ice-cream Vendors ....................................................................... 16
Question 27: Euzebius Abusuapanyi Eye Clinic ........................................................................... 28
Question 28: Johnson Azaglo Conner Shops ................................................................................. 31

CHAPTER 3 MANUFACTURING ACCOUNTS AND STOCK VALUATION ..................... 33
Question 29: Gomoah Rubber Producers ...................................................................................... 33
Question 30: Kangaroo Carrier Bags Plc ....................................................................................... 33
Question 31: Calippo Sweets Production ...................................................................................... 34
Question 32: Bonavester Plc .......................................................................................................... 35
Question 33: Atongo Plastic Manufacturers .................................................................................. 36
Question 34: Jerry Leggs Wellington Boots .................................................................................. 37
Question 35: Borllar Waste Kitchen Accessories .......................................................................... 40
Question 36: Jonny Wood Garden Seats ....................................................................................... 42
Question 37: Sir Johayes Importers ............................................................................................... 43
Question 38: Akasanoma Vision Ltd Manufacturers .................................................................... 44

CHAPTER 4: PARTNERSHIP ACCOUNTS .............................................................................. 45
Question 39: Aba, Borbor and Chochoo Partnership .................................................................... 45
Question 40: Aba, Borbor and Chochoo Partnership II ................................................................. 45
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Question 41: Jonny, Jimmy and Jerry Business Ventures ............................................................. 45
Question 42: Messers George and Cyril Akpanaway Consultants ................................................ 46
Question 43: Azi, Nefi and Agoneh Traders ................................................................................. 46
Question 44: Piper, Dom and Jerry Trading Ventures .................................................................. 48
Question 45: Antie and Dede Chemists ......................................................................................... 49
Question 46: Olando, Jay and Simpson Confectioneries............................................................... 50
Question 47: Wawa and Mahoganey Furniture Producers ............................................................ 51

CHAPTER 5 COMPANY ACCOUNTS ..................................................................................... 54
Question 48: Amankwah Company Ltd ........................................................................................ 54
Question 49: Alluwako Company Ltd ........................................................................................... 55
Question 50: Biafra Bambara Company Ltd ................................................................................. 56
Question 51: Olusegun International Plc ....................................................................................... 57
Question 52: New Generation Hoteliers Ltd ................................................................................. 58
Question 53: Alhaji Lankan Ltd .................................................................................................... 58
Question 54: Alfa and Omega Company Ltd ................................................................................ 59
Question 55: Egue Kportufe Garages Ltd ..................................................................................... 60
Question 56: ZoomVultures Ltd, Developers of Cleaning Products ............................................. 61
Question 57: Motorway Jumpers Transportations ......................................................................... 62
Question 58: Amazing Freddy Company Ltd ................................................................................ 64
Question 59: Cazmil Public Limited Company (Plc) .................................................................... 65
Question 60: Suleman Garibah Company Ltd ............................................................................... 66
Question 61: Gasu Quofie Plc Farm Equipments .......................................................................... 67

CHAPTER 6 FUNDAMENTAL ACCOUNTING CONCEPTS ................................................ 69
Question 62: Nature and Purpose of SSAPs .................................................................................. 69
Question 63: Fundamental Accounting Concepts ......................................................................... 69
Question 64: Freddys Conner, Bepos and Jargoos ....................................................................... 69
Question 65: Needs of Accounts Users ......................................................................................... 69
Question 66: Atongo, The Science Student ................................................................................... 69
Question 67: Jorgbenue Gee Plc .................................................................................................... 70
Question 68: Principles of SSAP 9 ................................................................................................ 70
Question 69: Monallissa Ltd, A Processing Company .................................................................. 71
Question 70: Logba Young Plc...................................................................................................... 71
Question 71: Suzzy Selase Gee Study Notes ................................................................................. 71
Question 72: Accounting Terminologies as per SSAP2 ................................................................ 72
Question 73: Benjamin K Onimangbori Queries........................................................................... 72
Question 74: Fundamental Accounting Concepts SSAP2 ............................................................. 73

CHAPTER 7 CASH FLOW STATEMENTS ............................................................................. 74
Question 75: Darryl Amfic Company Ltd ..................................................................................... 74
Question 76: GBEBSUK Ltd......................................................................................................... 75
Question 77: Kojo Agyeman Motor Component Plc .................................................................... 76
Question 78: Selikem Garibah Plc ................................................................................................. 77
Question 79: Nzinga Chipolopolo Plc ........................................................................................... 79
Question 80: June July Engineering Business ............................................................................... 80

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CHAPTER 8 FINANCIAL STATEMENTS ANALYSIS AND INTERPRETATION ............. 83
Question 81: Divine Nooque Voluntaries Ltd ............................................................................... 83
Question 82: Gloria Suleman Ltd .................................................................................................. 85
Question 83: GeeBee Fashionable Trading Company Ltd ............................................................ 85
Question 84: Brad Pitts Business Ventures .................................................................................. 86
Question 85: Kantamanto Scrap Metal Merchants ........................................................................ 87
Question 86: Richard Branson Ltd ................................................................................................ 88
Question 87: Dansoman Control Ltd ............................................................................................. 89
Question 88: Kafui Akpoblu Diamonds Retailers ......................................................................... 90
Question 89: Gee Marketing Ltd ................................................................................................... 92
Question 90: GBEWAA & Co Architectural Engineers ............................................................... 93

REVISION QUESTIONS ................................................................................................................. 97
Question 91: Bamboozer Ltd, Wholesale Groceries ..................................................................... 97
Question 92: JAK WAWAA and JJR BOOM Veterinary Services .............................................. 98
Question 93: Suame Magazine International Garages Conglomerate ......................................... 100
Question 94: Logba Angry Lions Plc, Wholesaler of Alcoholic Beverages ............................... 101
Question 95: GeeMarketing & Co, Partners in Furniture & Equipment ..................................... 104
Question 96: Desmond and Tootoo Dental Practices .................................................................. 105
Question 97: Confidence Foofoos Restaurateurs ....................................................................... 107
Question 98: KINGDOM Furniture Assemblies ......................................................................... 109
Question 99: Alongays Double Glazing ..................................................................................... 111
Question 100: Amfic Yingors Garages ...................................................................................... 112

Financial Accounting (Practical Questions): Ghanaian Perspective

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CHAPTER 1 BASIC BOOKKEEPING AND ACCOUNTING PRINCIPLES
Question 1 Atongo Sole Business
Atongo started a grocery business on 1 January 2005 with capital of GH2,000 in cash. He rented
premises for GH600 per annum, payable quarterly in arrears, the first payment being due on 31
March 2005. Also on 1 January, he borrowed GH600 from a friend, Waakye, at the rate of 12%
per annum.

The following were the transactions of the business for the three months ended 31 March 2005.

6 January Purchased a second-hand Ford van for GH1,300 cash
9 January Purchased goods on credit from CFC Ghana Ltd GH350
16 January Paid wages GH24
20 January Purchased goods for cash GH180
24 January Sold goods on credit to Gladys Tawiah GH210
30 January Paid wages GH20
4 February Sold goods on credit to Mrs. Agbenyegah GH100
6 February Paid CFC Ghana Ltd GH300 cash on account
9 February Gladys Tawiah paid GH210
13 February Paid wages GH25
18 February Purchased goods on credit from Chipolopolo GH1,120
25 February Sold goods for cash GH60
26 February Received GH70 from Mrs. Agbenyegah
27 February Paid wages GH25
1 March Returned defective goods to Chipolopolo and was credited GH40
4 March Sold goods on credit to Gladys Tawiah GH350
12 March Paid wages GH30
14 March Received payment on account from Gladys Tawiah GH200
15 March Sold goods for cash GH160
18 March Gladys Tawiah paid GH125 on account
Sold goods on credit to Gladys Tawiah GH680
26 March Paid wages GH40
Paid Chipolopolo in full settlement
29 March Drew GH200 from the business
31 March Paid rent GH150
31 March Paid quarterly loan interest

At 31 March 2005 closing stock amounted to GH750.

Requirements
(a) Write up the ledger accounts for three months.
(b) Extract a trial balance at 31 March 2005
(c) Prepare a trading and profit and loss account for the three months ended 31 March 2005 and
a balance sheet at that date.


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Question 2 FA Manyame Business Ventures
FA Manyame has been meaning to start a business for some time, but never seems to have the
energy to make any direct purchases or sales. He has some business premises but simply rents them
out to a friend, Nyamenaye. Recently, he gathered the courage and the following information is
available in respect of FA Manyames sundry expenditure and income for the year ended 31
December 2004.

(a) FA Manyame paid rent of GH1,500 during the year for the fifteen month period ending on
31 March 2005.
(b) FA Manyame had paid for electricity up to date at 1 January 2004. During the year he paid
GH420 to cover charges from 1 January 2004 to 31 July 2004. He received further bills but
never got round to paying them. Assume that charges accrue evenly over the year.
(c) In December 2004 FA Manyame had a rush of blood to the head and paid GH500 to the
Gas Board. Gas consumed during 2004 amounted to only GH275.
(d) Bank interest has been charged to the bank account as follows.
Up to 31 May 2004 (no overdraft) GHNil
1 June to 31 August 2004 GH14
1 September to 30 November 2004 GH35
The bank statements shows that GH51 was charged to the account on 28 February 2005 in
respect of the three months ended on that date.
(e) Business rates
In December 2003 FA Manyame paid GH2,400 for the six months ended 31 March 2004.
During June 2004 He paid GH2,800 to cover the six months ended 30 September 2004.
In February 2005 he paid GH3,300 in respect of the six months ended 31 March 2005.
(f) In March 2004 FA Manyame received GH2,500 from Nyamenaye for rent of the premises
in respect of the six months ended 31 March 2004.
As from 1 April 2004 FA Manyame increased the rent to GH6,000 per annum; during
2004 Nyamenaye paid the full amount for the year ended 31 March 2005.

Requirement
Write up the ledger accounts for each of the above items, showing all relevant balances and
transactions.

Question 3 Bazzers Bombers Car Services
Bazzers Bombers operates a down-market car hire service. On 31 December 2005 the balance on
the motor vehicles account was GH75,400 and the provision for depreciation account was
GH36,300.

When preparing the accounts for the year the following discrepancies were found.

(a) A Skoda (cost GH4,000) had been bought on hire purchase. The terms of the agreement
included a deposit of GH500 and this was paid on 10 December 2005. The only entries
which had been made were to credit the cash book and debit the motor vehicles account in
respect of the deposit.
(b) A Fiat, which was purchased in June 2002 for GH3,200, was scrapped. There were no
proceeds and no entries had been made in relation to the disposal.

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(c) A Lada, which was purchased in March 2003 for GH4,400, was sold in August 2005 for
GH2,500. The only entry made in respect of the disposal was to debit cash and credit the
motor vehicles account with the proceeds.
(d) No depreciation had yet been charged for the year 2005. The company charges depreciation
at 25% per annum on the cost of motor vehicles held at the year-end.

Requirement
Write up the motor vehicles account, provision for depreciation account, depreciation expenses
account and disposals account for the year ended 31 December 2005.

Question 4: Geeproperties Rentals
Geeproperties owns a block of flats, and earns a living by rental income and general dealing. On 1
January 2006 his ledger included the following balances.

Debtors account GH75,000
Provision for doubtful debts account GH2,235
The balance on the provision account consisted of the following.
GH
Specific provision of 100% against the debt of Charles Sulemana, a tenant 1,500
General provision of 1% against remaining debts 735
2,235
During the year ended 31 December 2006 the following occurred.

(a) Charles Sulemana paid Geeproperties GH150 and then vanished without trace to a new
world, leaving no assets.
(b) Another tenant, Antonio Banderas, who owed GH900, fell into a river and was also found
to have died penniless.
(c) Azuma Nickson returned from total obscurity and an amount of GH450 which
Geeproperties had written off in 2003.
(d) Credit sales for the year amounted to GH167,400 and cash received from debtors (other
than Sulemana and Azuma) totaled GH150,000
(e) At 31 December 2006 Geeproperties decided to provide in full against a disputed debt of
GH1,200 owed by Kwesi Otoo Pratt, and to maintain the 1% general provision on other
debtors.

Requirement
Write up Geepropertiess debtors account, provision for doubtful debts account and bad debts
expense account for the year ended 31 December 2006.


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Question 5: J ennifer Agueliyah Boutique
Jennifer Agueliyah is a dealer in fancy goods. At 1 January 2007 his ledger included the following
balances.
GH
Debtors 17,349
Provision for doubtful debts 2,850
Creditors 16,593
The debtors at 1 January 2007 were as follows:
GH
S Mahama 5,700
J Baafi 5,823
The Miklin Executive Hotels 5,826
The creditors at 1 January 2007 were as follows.
GH
M Normenyo 5,481
James Nkomode 5,553
Obraku Sarpong 5,559

During January 2007 Agueliyas books of prime entry showed the following.
GH GH
Purchases day book Sales day book
Normenyo 2,850 Mahama 150
James Nkomode 2,055 Baafi 5,280
Obraku Sarpong 3,360 Miklin Executive Hotels 4,995
8,265 10,425

GH GH
Cash payments book Cash receipts book
Normenyo 2,700 Baafi 5,700
James Nkomode 150 Miklin Executive Hotels 5,826
Obraku Sarpong 2,469
5,319 11,526

The flowing information is relevant.
(1) The opening provision for doubtful debts consisted of a 50% provision against Mahamas
debt. During January Mahama was run over by an invalid car in Kasoa and was found to
have died penniless.
(2) Baafi argued about GH123 of her outstanding balance, saying that the goods concerned
were of the wrong design. Agueliya decided to provide for this amount as a specific
provision.

Requirements
Write up for the month of January 2007
(a) Individual debtors and creditors accounts
(b) Sales and purchases accounts
(c) Debtors and creditors ledger control accounts
(d) Provision for doubtful debts and bad debt expense accounts
(e) The individual debtors and creditors listings

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Question 6: Gifty Adams Showers Ltd
Gifty Adams Showers Ltd sells bathroom fittings on credit to most of its customers. In order to
control its debt collection system, the company maintains a debtors ledger control account. In
preparing the accounts for the year to 30 October 2003 the accountant discovers that the total of all
the personal balances disclosed a balance of GH12,802, whereas the debtors ledger control
account balance disclosed a balance of GH12,550.
Upon investigating the following errors were discovered.

(1) Sales for the week ending 27 March 2003 amounting to GH850 had been omitted from the
control account.
(2) A debtors account balance of GH300 had not been included in the list of balances.
(3) Cash received of GH750 had been entered in a personal account as GH570.
(4) Discounts allowed totalling GH100 had not been entered in the control account.
(5) A personal account balance had been undercast by GH200.
(6) A contra item of GH400 with the creditors ledger had not been entered in the control
account.
(7) A bad debt of GH500 had not been entered in the control account.
(8) Cash received of GH250 had been debited to a personal account.
(9) Discounts received of GH50 had been debited to Adams debtors ledger account.
(10) Returns inwards valued at GH200 had not been included in the control account.
(11) Cash received for GH80 had been credited to a personal account as GH8.
(12) A cheque for GH300 received from a customer had been dishonoured by the bank, but no
adjustment had been made in the control account.

Requirements
(a) Prepare a corrected debtors account, bringing down the amended balance at 30 October
2003.
(b) Prepare a statement showing the adjustments that are necessary to the list of personal
account balances so that it reconciles with the amended debtors ledger control account
balance.

Question 7: Big Bright Business Ventures
Big Bright, a sole trader does not maintain a set of ledgers to record his accounting transactions.
Instead, he relies on details of cash receipts/payments, bank statements and files of invoices. He
started business on 1 July 2007 with private capital of GH5,000 which comprised a second-hand
van valued at GH1,500 and GH3,500 cash which he deposited in a business bank account on that
date. He has not prepared any accounts since he commenced trading and you have agreed to prepare
his first set of accounts for him in respect of the eighteen months ended 31 December 2008. You
have discovered the following.


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(1) A summary of his cash transactions from his cash book for the period was
GH GH
Receipts
Capital introduced 3,500
Cash sale receipts 21,250
Sale of motor van 850
25,600
Payments
Cash paid to bank 21,350
Cash purchases 2,160
Postage and stationery 474
Motor expenses 919 (24,903)

Cash in hand at 31 December 2008 697

(2) A summary of his bank statement shows
GH GH
Receipts
Cash paid into bank 21,350
Bank loan 4,500
Credit sale receipts 1,955 27,805
Payments
Purchase of goods 7,315
Office equipment 1,280
Motor van 4,000
Drawings 5,400
Rent and rates 1,850
Light and heat 923 (20,768)
Balance are 31 December 2008 7,037

(3) The office equipment was purchased on 1 October 2007.
(4) The new motor van was purchased on 1 April 2008 to replace the original second-hand van
which was sold on the same date. Depreciation charges for the year on the second-hand van
can be ignored.
(5) Big Bright expects the office equipment to last five years but to have no value at the end of
its life. The motor van bought on 1 April 2008 is expected to be used for three years and to
be sold for GH700 at the end of that time.
(6) The cost of goods unsold on 31 December 2008 was GH1,425. Big Bright thought he
would sell these for GH2,650, with no item being sold for less than its original cost.
(7) On 31 December 2008 Big Bright owed GH749 for goods bought on credit and was owed
GH431 for goods sold on credit. Of these amounts GH189 was due from/to Harry
Governor who is both a customer and supplier of Big Bright. A contra settlement
arrangement has been agreed by both Big Bright and Harry Governor.
(8) Rent and rates paid includes an invoice for GH1,200 for the rates due for the year to 31
March 2009.
(9) No invoice was received for light and heat in respect of November and December 2008 until
25 February 2009. This showed that the amount due for the three months ended 31 January
2009 was GH114.

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(10) The bank loan was received on 1 January 2008. Interest is charged at 10% per annum on the
amount outstanding.

Requirement
Prepare Big Brights trading and profit and lass account for the period ended 31 December 2008
and his balance sheet at that date.

Question 8: Reggis Amevors Bank Reconciliation
Reggis Amevor, a well-rounded gentleman, prides himself on keeping a positive cash balance at the
bank all the times. He becomes apoplectic on discovering that the statement of his account at the
Stanbic Bank at 31 December 2002 shows an overdraft of GH44. He wishes you as his accountant
to resolve the matter.

Reggis banks all receipts, and all his payments are made by cheque.
The bank statement at 31 December 2002 is as follows.

STANBIC BANK PLC
South Kaneshi Branch
Account 71239581 R Amevor Esq
Payments Receipts Balance
2002 GH GH GH
1 Dec Balance b/f 734 Cr
8 Dec Credits 318 1,052 Cr
15 Dec Credits 1,174
15 Dec 343842 684 1,542 Cr
19 Dec Credits 86
19 Dec 343844 925 703 Cr
27 Dec Credits 623 1,326 Cr
30 Dec 343846 762
30 Dec Charges 69
30 Dec Cheque returned 623
30 Dec Amount paid in by NLM 84 44 Dr

Reggis cash account for December 2002 is as follows.

2002 GH 2002 GH
1 Dec Balance b/f 50 5 Dec GP Ltd 905
3 Dec P 140 19 Dec TP Ltd 762
5 Dec T Ltd 178 28 Dec SR Ltd 187
6 Dec M & Co 695 28 Dec Q 43
10 Dec KD Ltd 479 28 Dec AB 236
17 Dec J Ltd 86
24 Dec S Ltd 623
30 Dec MN Ltd 768
31 Dec TNT & Co 85 31 Dec Balance b/f 971
3,104 3,104


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The cheque issued to GP Ltd on 5 December 2002 for GH925 was entered into the cash book as
GH905 in error.
Requirement

Make any necessary adjustment to the cash account and prepare a bank reconciliation statement at
31 December 2002.

Question 9: Chicken J ohn Eateries and Drinkeries
You are given the following balance sheet: Chicken John Balance sheet as at 30 September
2003
Cost Depn NBV
GH GH GH
Fixed assets
Plant 150.000 60,000 90,000
Vehicles 20,000 10,000 10.000
170,000 70,000 100,000
Current assets
Stock 10,000
Trade debtor 20,000
Bank 500
30,500
Less Current liability
Trade creditors (12,000)
18,500
118,500
Financed by
Capital 20,000
Net profit for the year 53,600
Suspense account 44,900
118,500
Upon investigation you discover the following errors.
(1) The balance on the bad debts provision account at 1 October 2002 had been credited to the
profit and loss account. The balance of the account at that date was GH1,800.
(2) The bad debts provision account should have been made equal to 10% of trade debtors at 30
September 2003.
(3) Depreciation is charged on plant at a rate of 20% pa on cost, and on vehicles at a rate of
50% pa on the reduced balance. The depreciation for the year to 30 September 2003 has
been correctly charged to the profit and loss account for that year, but no adjustments have
been made elsewhere.
(4) The closing stock amounted to GH12,000, but the amount shown on the balance sheet was
the opening stock.
(5) A transposition error had understated sales by GH900.
(6) A new motor vehicles costing GH5,000 had been included in motor expenses. It is the
companys policy not to charge any depreciation in the year of acquisition.
(7) Drawings amounted to GH10,000 had been debited to the profit and loss account.

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(8) Discounts allowed of GH1,000 had been credited to the profit and loss account, and
discounts received amounting to GH1,500 had been debited to the profit and loss account.
(9) A loan of GH5,000 had been credited to the profit and loss account.
(10) Trade creditors had been understated by GH10,000.

Requirement
Prepare Chicken Johns corrected balance sheet at September 2003. A working showing how the
suspense account is cleared should be included.
Note: Chicken John does not maintain control accounts.

Question 10: Suzzy and Daryl Ventures
The bookkeeper has prepared a preliminary trial balance of Suzzy and Daryl for the year ended 31
December as follows.
GH GH
Capital account 110,000
Profit and loss account at 1 January 50,000
Bank loan 30,458
Debtors and creditors 77,240 60,260
Cash in hand and bank overdraft 1,000 5,036
Stocks and work in progress at 1 January 108,000
Fixed assets at cost and depreciation provision at 31 December 161,879 60,943
Depreciation for the year 15,000
Purchased and sales 300,297 400,000
Returns 4,370 4,630
Discounts allowed and received 9,760 6,740
Wages and salaries (net) 12,146
Payments of PAYE income tax 5,988
Payments of National Insurance 4,766
Creditors for PAYE at 1 January 900
Proceeds of sale of fixed assets 2,000
Rent, rates and insurance 18,036
Postage, telephone and stationery 3,009
Repairs and maintenance 2,124
Advertising 4,876
Packaging materials 924
Motor expenses 2,000
Sundry expenses 1,000
Loan interest 4,000
Accrued expenses 6,478
737,445 737,445

When the bookkeeper discovered that the preliminary trial balance did not balance he made it do so
by opening a suspense account and entering the amount on the appropriate side. A subsequent
investigation shows the following mistakes have been made.

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(1) A loan to the business of GH10,000 from the owners brother, Amfic, has been added to
capital.
(2) Accrued interest on the bank loan of GH458 has been credited to the bank loan account
instead of being treated as a current liability.
(3) Bank charges of GH1,000 have been completely omitted from the books.
(4) Fixed assets with an original cost of GH11,879 and accumulated depreciation of
GH10,943 have been sold for GH2,000. This amount is shown as a separate item in the
trial balance, and no entry has been made in the assets or provision for depreciation
accounts. Any surplus or deficit on sale should be shown in a separate account.
(5) Deduction of GH6,088 for PAYE income tax and GH1,766 for National Insurance,
graduated pensions, etc, were made from employees wages and salaries during the year.
The companys contribution for National Insurance amounted to GH3,000. No entries have
been made for these items.
(6) In addition to allowing discount of GH240 and receiving discount of GH260, various
debtors and creditors accounts amounting to GH10,000 were set off by contra. No
entries have been made in respect of these items.
(7) Debtors amounting to GH2,000 are bad and need to be written off.
(8) A debt of GH1,000 written off as bad in a previous year has been recovered in full. The
amount has been credited to the debtors account and deducted from the total of the other
debtors.
(9) Goods returned from a debtor of GH630 have been correctly entered into the debtors
account but by mistake were entered in the returns outwards journal.
(10) A payment for stationery of GH234 was correctly entered in the cash book but debited in
the ledger as GH243.
(11) A payment of GH76 for packing materials has been correctly entered in the cash book, but
no other entry has been made.
(12) A payment of GH124 for advertising has been debited to repairs and maintenance.
(13) A cheque payment of GH26 for insurance has been recorded in all accounts as GH62.
(14) A page in the purchase account correctly totalled GH125,124 was carried forward to the
top of the next page as GH125,421.
All entries other than those given above are to be assumed to have been made correctly.

Requirements
(a) Show the correcting entries in journal form (i.e. showing accounts and amounts debited and
credited but no supporting narrative is required) in respect of each of the mistakes
mentioned above.
(b) Show the trial balance of the company at 31 December after these corrections have been
made.
A working, showing how the suspense account is cleared, should be included.
Note Control accounts are not maintained.


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Question 11: Amaglagla Business Ventures
James Bernerman, the bookkeeper of Amaglaglas business has made his usual mess of things and
produced the following attempts at a trial balance for the year ended 30 April 2002, after preparing
a draft profit and loss account.
Fixed assets GH GH
At cost 60,000
Provision for depreciation 31,000
Capital at 1 May 2001 35,000
Profit and loss account 12,300
Stock in trade, at cost 14,000
Debtors ledger control account 9,600
Creditors ledger control account 6,500
Balance at bank 1,640
85,240 85,240

As chief accountant you discovered the following during an cross checking.
(1) A rent payment of GH350 in March 2002 have been debited in the debtors ledger control
account.
(2) Although instructed to do so, Bernerman had not set a debt from Walter of GH1,560 in the
debtors ledger control account against an amount due to him in the creditors ledger control
account.
(3) Discounts allowed of GH 500 during the year ended 30 April 2002 had not been recorded
in the books although correctly included the cash received book.
(4) No entry had been made for the refund of GH2,620 made by cheque to Richard in March
2002, in respect of defective goods returned to Amaglagla. Richard returned the goods on
28 February 2002.
(5) The purchases day book for February 2002 had been undercast by GH300.
(6) A payment of GH1,000 to Boboo in January 2002 for cash purchases had been debited in
the creditors ledger control account. (Note that Amaglagla does not maintain a credit
account with Boboo.)
(7) No entries had been made in the books of the business for cash sales of GH2,450 on 30
April 2002 and banked on that date.
(8) No entries had been made in the books of the business for bank charges of GH910 debited
in the companys bank account in December 2001.
(9) The cash control account (debit column) had been overcast by GH1,900 in March 2002.
(10) The purchase of new fixtures and fittings for GH8,640 cash on 30 April 2002 had not been
recorded in the books.
(11) The purchase of stationery for GH1,460 cash in June 2001 had not been recorded in the
appropriate expense account.

Requirements to Prepare:
(a) Journal entries to correct the errors
(b) A suspense account, showing how it is cleared

(c) A statement of adjusting to profit for the year ended 30 April 2002
(d) A corrected balance sheet at 30 April 2002


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Question 12: Chucker and Zooloo Car Dealers
Chucker and Zooloo are in business as car dealers. Their draft account for the year ended 31 March
2008 show a net profit of GH9,000. They feel that this figure is lower than expected and ask you as
their accountant to investigate.

You discover the following.
(1) Discount received in August 2008 of GH210 have been credited, in error, to purchases.
(2) A debt of GH300 due from Francis Terrison & Co was written off as irrecoverable in the
December 2007. Since preparing the draft account, Francis Terrison & Co has settled the debt
in full.
(3) The companys main warehouse was burgled in June 2007, when goods costing GH20,000
were stolen. This amount has been shown in the draft accounts as an overhead item
Loss due to burglary. Although the insurance company denied liability originally, in the
past day or two that decision has been changed and you have been advised that GH14,000
will be paid in settlement.
(4) On1 January2008 a Morris Marina car, which had cost GH1,800, was taken from the
showroom for the use of one of the sales representatives whilst on business. In the
showrooms this car had had a GH2,400 price label. Effects have not been given to the
transfer in the books although the car was not included in the trading stock valuation at 31
March 2008. The business provides for depreciation on motor vehicles at the rate of 25% of
the cost of vehicles held at the end of each financial year.
(5) An Austin Allegro bought and received from Adjingo on 30 March 2008 at a cost of
GH1,200 was not recorded in the books until early April 2008. Although unsold on 31
March 2008, the car in question was not included in the stock valuation at the date.
(6) The business is hoping to market a new car accessory product in July 2008. The new
venture is to be launched with an advertising campaign commencing in April 2008. The cost
of the campaign is GH5,000 and this has been debited in the profit and loss account for the
year ended 31 March 2008 and is included in current liabilities as a provision,
notwithstanding the confident expectation that the new product will be a success.
(7) On 31 March 2008 the business paid an insurance premium of GH600, the renewal being
the year beginning 1 April 2008. This premium was included in the insurance charge of
GH1,100 debited in the draft profit and loss account.

Requirement
Prepare a settlement of adjustment to profit for the year ended 31 March 2009.

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CHAPTER 2 INCOMPLETE RECORDS AND CONTROL ACCOUNTS
Question 13: Prempeh Street Groceries
Prempeh is a grocer who had not kept a full set of books. The following was a summary of his bank
statements for the year ended 31 December 2001.
GH GH
Amount credited by bank 35,170 Balance 1 January 2001 892
Payments to trade creditors 30,500
Rent and rates 475
Fixtures 100
Lighting and heating 210
General expenses 800
Loan interest 120
Drawings 900
Customers cheque dishonoured 180
Balance 31 December 2001 993
35,170 35,170

You are given the following information:
(1) Trading receipts consisted partly of cash and partly cheque. During the year Prempeh had
paid out of his cash takings, wages amounting to GH2,950 and sundry expenditure of
GH140. He retained GH3 a week pocket-money and maintained a balance of GH20 in
the till for change. The balance of his takings, together with cheque amounting to GH250,
which he had cashed out of his takings for the convenience of certain friends, was paid into
the bank.
(2) Cheque drawn payable to trade creditors, but not presented at 1 January 2001, amounted to
GH280, and at 31 December 2001 to GH320.
(3) All dishonoured cheque were re-presented and honoured during the year.
(4) The loan interest was paid to Bretwum who had lent Prempeh GH4,000 some years ago at
a rate of interest of 3% per annum. The interest was duly paid half-yearly on 31 March and
30 September, and the loan was still outstanding at the end of the year.
(5) Discounts allowed by trade creditors amounted to GH480 and those allowed to debtors
were GH520.
1 Jan 2001 31 Dec 2001
GH GH
Stocks 4,500 5,800
Trade debtors 2,800 3,200 (including a debt of H200
to be written off)
Accrued general expenses 240 190
Rates paid in advance 40 50
Fixtures valued at 2,800 2,550 (including those purchased
During year)
Trade creditors 1,800 2,200
Creditors lighting and heating 80 70


Page14
Requirements to Prepare:
(a) A statement of Prempehs capital at 1 January 2001
(b) A profit and loss account for the year ended 31 December 2001
(c) A balance sheet at that date.
Question 14: Kwaku Agyepong Businesses
Kwaku Agyepong received a legacy of GH20,000 on 1 January 2006 and on the same date
purchased a small retail business. The completion statement from the solicitor received the
following.
GH
Freehold shop property 10,000
Goodwill 2,000
Stock in trade 1,600
Trade debtors 400
Shop fixtures 2,600
Rates in advance to 31 March 2006 100
16,700

The legacy was used to discharge the amount due on completion and the balance was paid into a
newly opened business bank account.
Kwaku Agyepong had not kept proper records of his business transactions as he felt that time spent
"taping a keyboard was wasted selling time, but was able to supply the following information.
(1) A summary of the cash till rolls showed his shop takings for the year to be GH25,505; this
includes all cash received from debtors including those at 1 January 2006.
(2) The takings were paid periodically into the bank after payment of the following cash
expenses.
GH
Wrapping materials 525
Staff wages and National Insurance 3,423
Purchases for resale 165
Petrol and oil 236
(3) Personal cash drawings were estimated at GH20 per week and goods taken for own use at
GH2 per week.
(4) A summary of the bank account showed
GH GH
Legacy residual balance 3,300 Purchases for resale 14,863
Sale of fixtures purchased at Motor expenses 728
1January 2006 but not required Delivery van (cost 1April 2006) 1,200
(cost GH200; depreciation Nil) 130 General expenses 625
Loan from Robin at 10% pa 2,000 Loan interest
Cash banked 19,900 (six months to 30 Sept.) 100
Private cheque 1,329
Electricity 228
Rates (year to 31 March 2007) 500
Balance per statement at
31 December 2006 5,757
25,330 25,330


Page15
A cheque drawn on 28 December 2006 of GH125 for goods purchased was presented to the bank
on January 4, 2007.
(5) During the year bad debts of GH223 arose and were irrecoverable. The trade debtors at 31
December 2006 amounted to GH637, of which GH100 is doubtful and for which
provision should be made.
(6) At 31 December 2006 there were
GH
Stock in trade 2,360
Stock of wrapping materials 53
Trade creditors purchases 358
Electricity accrued 50
Accountancy fees accrued 100
Cash float in till 180
(7) The difference arising on the cash account was discussed with Kwaku Agyepong but
remained unexplained and was dealt with in an appropriate manner.
(8) Depreciation is to be provided at the rate of 10% per annum on the fixtures and at the rate of
20% on the van.
Requirement
Prepare a trading and profit and loss account for the year ended 31 December 2006 and a balance
sheet at the date.

Question 15: Volta Star Grocery Shops
Volta Star runs a retail grocery shop, but many of his accounting records were lost when coffee was
spilt over the back-up diskettes. On examining Volta Stars books you find that his recorded assets
and liabilities on 31 December 2006 were
GH
Shop fittings 500
Van 400
Stock 3,627
Trade debtors 1,960
Trade creditors 1,508

An analysis of his bank pass book gives the following information.
GH GH
Balance at 1 January 2007 479 Payments to trade creditors 16,594
Receipts from debtors 1,006 Purchase of new van on
Cash banked 15,537 30 September 2007 1,000
Sale of van on 30 September Rent, nine months to
2007 300 30 September 2007 225
Rates, eighteen months to
31 March 2008 360
Sundry expenses 446
Van expenses 60
Advertising 219
Balance at 31 December 2007 1,674 Drawings 92
18,996 18,996


Page16

An analysis of his cash transactions printout gives the following information.
GH GH
Balance at 1 January 2007 21 Wages and salaries 1,524
Cash sales 16,419 paid into bank 15,537
Receipt from debtors 2,317 Van expenses 168
Proceeds of surrender of life Advertising 84
Insurance policy (private) 142 Drawings 1,351
Sundry expenses 119
Payments to creditors 104
Balance at 31 December 2007 12
18,899 18,899

You are informed of the following in addition to the above.
(1) On 31 December 2007 stock at cost was GH4,651, debtors were GH2,000 and creditors
were GH1,543. There was also an unpaid account of GH41 for sundry expenses.
(2) There was an unpaid account of GH37 for sundry expenses outstanding on 31 December
2006.
(3) Depreciation is to be provided on shop fittings at 10% reducing balance, and on motor vans
at 20% reducing balance, on closing balances.
(4) During 2007 Volta Star has taken groceries from the shop costing GH156 for his own use.
He has not paid for these.
(5) A provision for doubtful debts should be raised (at the beginning and end of the year) of 5%
of the debtors. During the year bad debts amounting to GH42 have been written off, and
are not included in the figure of debtors on 31 December 2007.

Requirements
(a) Prepare a statement of affairs at 31 December 2007.
(b) Prepare a trading and profit and loss account for the year ended 31 December 2007 and a
balance sheet at the date.

Question 16: Blow Bambaloo Retailing Ventures
Blow Bambaloo, a retailer, adds 25% of the cost of all goods purchased for resale to arrive at his
selling prices.
His financial position at 30 June 2005 was as follows.
Assets GH
Plant and machinery (NBV) 5,000
Stock 3,825
Debtors 7,175
Cash at bank 2,200
Liabilities
Creditors 3,000
Loan from Z (interest free) 2,000
During the year ended 30 June 2006 the following transactions took place.
(1) Paid GH11,675 for goods for resale (cheque).
(2) Repaid GH500 of the loan from Z (cheque).
(3) Purchased a van for GH700 (cheque) on the last day of the year.

Page17
(4) Withdrew from the bank GH80 per month for personal expenses.
(5) Paid into the bank a legacy of GH300.
(6) Paid by cheque income tax of GH600 (treat as drawings).
(7) Withdrew an unspecified amount of cash from takings prior to banking.

At 30 June 2006 stocks at cost was GH4,000, debtors totalled GH7,000 and creditors were
GH3,500; the balance at bank amounted to GH1,950. Depreciation of plant was 10% per annum
on the reducing balance. No depreciation is to be provided on the van.

Requirement
Prepare a trading and profit and loss account for the year ended 30 June 2006 and a balance sheet at
that date.

Question 17: Kokompeh Spare Parts Venture
Kokompeh was a sole trader in a retail business, all sales being made for cash. His balance sheet at
31 March 2003 was as follows.
GH GH GH
Capital account 6,180 Fixtures and fittings 1,750
Creditors Stock at cost 4,200
Trade 380 Balance at bank 760
Expenses 170 cash in hand 20
550
6,730 6,730

Exactly ten weeks later, on the night of 9 June 2003, a fire occurred which completely destroyed all
his stock, fixtures and fittings, and accounts computer, leaving only a file of unpaid invoices which
he had retained at home.
He had not insured against loss of profits but his fire insurance policy included cover of his stock,
at cost, not exceeding GH5,000, cash up to GH50, and fixtures and fittings at agreed figure of
GH1,500.
The cash in hand on 31 March 2003 and all takings up to the close of business on 9 June 2003 had
been banked with the exception of
(1) GH20 per week paid to an assistant as wages
(2) GH25 per week drawn by Kokompeh for personal expenses
(3) GH10 retained as a cash float and which had been lost in the fire.

All payments for goods and business expenses, other than wages, were made by cheque.
The selling price of his goods was obtained by adding 40% to the cost price.
Duplicate bank statements were obtained from the bank and an analysis of the ten week period
ended 9 June 2003 showed the following.
GH
Receipts
Cash banked 4,600
Payments
Creditors for goods 3,200
Expenses 480
Unpaid invoices on 9 June 2003 amounted to GH320 for goods and GH60 for expenses.

Page18

Requirements
(a) Prepare a statement setting out the claim for loss of stock.
(b) Prepare a profit and loss account for the ten weeks ended 9 June 2003 and a balance sheet at
that date, assuming that the claims for loss of stock, cash and fixtures and fittings are
admitted.

Question 18: Kofi Ghetto Ltd Bank Reconciliation
The enthusiastic young accountant of Kofi Ghetto Ltd has closed off the books for the year ended
31 December 2007 and prepared draft accounts before receiving the December bank statements
which have been delayed by computerization.

The net profit for the year before taxation is shown as GH58,616 and cash at bank appears as
GH12,208.

The bank statements for December, showing a credit balance ofGH13,528 have now been received
and checked with the cash book, and the draft accounts have been checked by the accountants
assistant.

The points set out below have arisen as a result of the checking procedures.
(1) Cheques drawn entered in the cash book in December but not presented for payment by 31
December totalled GH1,879.
(2) Amounts received from customers and banked in December but not credited on the bank
statements by 31 December totalled GH684.
(3) Bank charges of GH197 debited on the bank statements in December had not been entered
in the cash book.
(4) The bank had wrongly credited the companys accounts in December with a cheque for
GH1,102 drawn in favour of Kofi Ghetto Building Components Ltd, an entirely different
company.
(5) A cheque for GH1,500 received from a customer and paid into the bank in December was
not honoured on presentation and was debited on the bank statements. The fact that it had
been returned was not known to the person writing up the cash book. It is agreed that the
GH1,500 must be regarded as irrecoverable.
(6) A balance of GH2,400 due from a customer at 31 December and included in debtors is
now reported by the companys solicitors to be a bad deb. In preparing the draft accounts, a
bad debt provision was created equivalent to 5% of debtors.
(7) A cheque paid for rates in respect of six months ending 31 March 2008 had been entered
wrongly in cash book as GH2,912 and posed to the debit of rates account in the nominal
ledger. The correct amount as debited on the bank statement is GH2,192.
(8) Goods costing GH2,400 have been invoiced to an agent and included in sales and debtors
at an amount which includes a 20% profit margin on sales value. The agent still held the
goods in a saleable condition at 31 December 2007.
(9) The discount column on the debit side of the cash book for December has been totalled to a
figure which exceeds the correct figure by GH1,977. This error has not prevented the
balancing of the books due to the fact that in the ledger account of a supplier the credit

Page19
balance has been arrived after including an amount ofGH1,977 in the addition of the credit
side of the account, which was in fact the account number.

Requirements
(a) Produce a bank reconciliation at 31 December 2007.
(b) Prepare statements showing the necessary adjustments to
(i) the cash book for the ended 31 December 2007
(ii) the profit and loss account for the year ended 31 December 2007
(iii) assets, liabilities and shareholders funds in the balance sheet at 31 December 2007.
(The balance sheet statement should show a reconciliation of the adjustments made.)

Question 19: Norris Walter Ltd Control Accounts
Norris Walter Ltd is a company which advertises wines and spirits through the mail and delivers
direct to customers.
For the year ended 31 December 2001 the balances have been extracted from the companys
debtors ledgers and the aggregate net figure of debtors amounts to GH78,615.

However, the debtors ledger control account for the year shows a balance of GH79,604. The sales
ledger has not yet been integrated with the computerized nominal ledger, and hence is not
simultaneously updated.
A thorough investigation reveals the matters set out below:
(1) A consignment of wines sent to an agent on a sale or return basis, and which remained
unsold at the year-end has been included in the sales daybook for November 2001 at the
pro-forma invoice value, but the amount has not been posted to the debtors ledger. The pro-
forma invoice value included a mark-up of GH275 representing 33 1/3% on cost.
(2) Wines are quoted at a price which includes delivery, but in the case of some October 2001
invoices delivery costs totalling GH325 have been added in error to the quoted prices, and
these invoices have passed through the sales records in the normal manner.
(3) Cash of GH115 paid to a customer to settle a credit balance owing to him has been
correctly posted to the relevant debtors ledger account but has been analysed incorrectly in
the cash book with the result that it has been included in the total of creditors ledger
payments.
(4) A special discount of GH19 allowed to a customer has been correctly entered in the
discounts column of cash book but posted to the debtors ledger account as GH91.
(5) A customer was issued with credit note of GH54 for wines returned by him in September.
He subsequently asked for a copy of this credit note. Both the original and the copy have
been entered in the sales returns book but only one credit entry has been made in the
customers ledger account.
(6) A credit balance of GH86 standing on the account of a customer has been listed as a debit
balance of GH68 in extracting the list of debtors ledger balances.
(7) The debtors ledger account of one customer contains credit entries in fact totalling
GH1,840. As a result of a casting error, this total was originally shown as GH1,890 but
then carried forward to the next page of the account as GH1,980.


Page20
Requirements
(a) Prepare the corrected debtors ledger control account.
(b) Set out an amended total of the list of debtors ledger balances.

Question 20: Ronaldo Movete Ltd Control Accounts
Ronaldo and Movete plc is a company specialized in the manufacturing and sale of security
systems. The accounts for the year ended 30 September 2004 are in the course of preparation. The
debtors total account controlling sales in the South Western area of the country has been prepared
on a microcomputer accounts packages by an inexperience assistant in the form set out below.
GH GH
Debtors at 1 October 2003 (agreed Cash received 632,429
with the total list of balances Transfer to creditors ledger 2,010
extracted from the ledger) 94,202 Sales returns VAT inclusive figure 14,260
Sales invoiced for the year 556,780 Bad debts 1,955
Discounts allowed 5,840 Debtors at 30 September 2004 6,168
656,822 656,822
The total of the balances as extracted and listed from the South Western area ledger is GH83,310.
Investigation brings out the facts given below.
Note Points (a) to (e) relate to the control accounts only.
(a) Sales
The following is a summary of the sales sheets for the year.
GH
Sales exclusive of VAT 556,780
Value added tax 83,517
640,297
(b) Sales returns
For the last month of the year, returns were GH1,950 but there is a mistake in the addition
of the total column of one sheet resulting in a total which is GH420 lower than the correct
figure. Moreover, including in the total of GH14,260 representing returns for the year, the
figure of GH1,950 was taken as GH1,590.
(c) Transfer
The transfer of GH2,010 to the creditors ledger is in respect of cash received from a
supplier for an overpayment to him.

(d) Bad debts
The figure of GH1,955 as shown in the bad debts account is made up as follows.
GH
Bad debts written out of the debtors ledger in 2003/04 2,500
Less Bad debts recovered in respect of a debt written out of the
Ledger in 2001/02 (2,045)
455
General bad debt provision against debts remaining on the ledger 1,500
1,955

Page21
(e) Cash received
The total of GH632,429 includes the bad debt recovered, and also a cheque for GH1,685
which was first received from a customer in September 2003 and entered in the records in
that month. In October 2003 it was dishonoured and debited on the bank statement. It was
presented again and duly honoured. It therefore appeared on both sides of the cashbook in
October 2003.
(f) List of balances
The total of GH83,310 includes a debit balance of GH540 standing on an account in the
name of a director. It is agreed that this will not be paid but should be transferred to the
directors emoluments accounts.
A ledger sheet relating to the North Eastern area has been mis-filed in the South Western
area at the time when the balances were extracted. It shows a credit balance of GH1,120.

Requirement
Prepare an amended debtors ledger control account relating to the South Western area for the year
ended 30 September 2004 showing the reconciliation of the debtors figure with the totals list
extracted from the ledger.

Question 21: J orgbenue Ltd Reconciliation Accounts
The bookkeeper of Jorgbenue Ltd, Mr Mawusi, prepares a monthly bank reconciliation statement
together with reconciliation of the lists of debtors and creditors ledger balances with the debtors
and creditors ledger control account balances.

On 30 June 2001 the various reconciliation disclosed the following positions.
(i) Bank reconciliation
Balance per cash book GH1,952 (in hand)
Balance per bank statement GH6,536 (in hand)
(ii) Debtors
Balance per list of balances GH743,206
Balance on debtors ledger control account GH736,747
(iii) Creditors
Balance per list of balances GH698,741
Balance on creditors ledger control account GH702,946
Mr. Mawusi cannot reconcile the differences, and requests you to investigate further. He also has to
present the monthly management accounts to his superior, Mrs. Apenor. These accounts show a
profit for the month of GH17,257 and Mrs Apenor urgently requires a revised profit figure, if any
changes arise as a result of your investigation.


Page22
You discover the following
(1) Interest and bank charges amounting to GH1,137 were debited by the bank on 30 June
2001, but no entries had been made in the cash book. When you inform Mr Mawusi, he is
incensed at the figure and telephones the bank which agrees to a reduction of GH837 and
this is credited on 17 July 2001.
(2) Cheques received totalling GH2,736 from credit customers had been correctly entered in
the cash book on 28 June 2001. No entry had been made in the individual ledger accounts,
and the lodgement did not appear on the bank statement until 7 July 2001.
(3) Cheques payable to suppliers amounting to GH7,257 had been correctly entered in the cash
account on 27 June 2001. The cheques did not appear on the bank statement until 8 July
2001, whilst you discover that only GH2,557 thereof had been entered in the individual
ledger accounts.
(4) A dividend receipts of GH1,200 on the bank statement had not been entered anywhere in
the books of account.
(5) Debit balances of GH1,200 in the debtors ledger had been included as credit balances in
the creditors ledger, whilst credit balances of GH348 in the creditors ledger had been
included as debit balances in the debtors ledger.
(6) A bad debt of GH75 owed by Westham had been correctly written off in his individual
ledger account, but no entry had been made in the debtors ledger control account.
(7) Discounts allowed by a supplier, James Nuque Ltd, had been correctly recorded in its
individual ledger account, but had been credited to the creditors ledger control account and
debited to the discounts allowed account. These discounts amounted to GH737.
(8) The sales day book had been undercast by GH4,750 and the purchase day book overcast by
GH3,250.
(9) The total of the debtors ledger balances had been overcast by GH72 and the total of the
creditors ledger balances undercast by GH363.
(10) A sales invoice to Barbara amounting to GH182 had been recorded incorrectly in the sales
day book as GH128. The wrong amount had been entered twice in the ledger account of
Barbara.
(11) A purchase invoice for GH4,500 had been debited to Whitechapel Ltds creditors ledger
account, but no entry had been made elsewhere.
(12) Contras of GH747 between the debtors ledger and the creditors ledger had been
incorrectly entered in the control accounts as GH447.
(13) A cheque paid to Martin amounting to GH65 had bee correctly entered in the cash account,
but incorrectly credited to the creditors ledger account of Martini ltd.

Requirements
(a) Calculate the corrected balance per the cash account and prepare a statement which
reconciles it with the balance per the bank statement.
(b) Reconcile the balance per the list of debtors ledger balances with the debtors ledger
control account.
(c) Reconcile the balances per the list of creditors ledger balances with the creditors ledger
control account.
(d) Calculate the revised profit figure for the monthly management accounts for Mr Mawusi to
present to Mrs Apenor.


Page23
Question 22: Akosombo Fabrics Suspense Accounts
The books of account for Akosombo Fabrics are handwritten with great care by a small team of
bookkeepers under the eagle eye of the office manager.

This redoubtable person has, however, recently taken extended leave to visit relations abroad, with
unfortunate results, since the month-end trial balance will not balance, there being a difference of
credits exceeding debits by GH318.

You are asked to help and, after inspection of the ledgers, discover the following errors.
(1) A balance of GH48 on a debtors account had been omitted from the schedule of debtors,
the total of which was entered as debtors in the trial balance.
(2) A small piece of machinery purchased for GH800 had been written off to repairs.
(3) The receipt side of the cash book had been undercast by GH300.
(4) The total of one page of the net sales column in the sales day book had been carried forward
as GH3,092 whereas the correct amount was GH3,902.
(5) A credit note for GH120 received from a supplier had been posted to the wrong side of his
account.
(6) An electricity bill in the sum of GH78, not yet accrued for, was discovered in filing basket.
(7) Mr Smith, whose past debts to the company had been the subject of provision, at last paid
GH540 to clear his account. His personal account has been credited but the cheque has not
yet passed through the cash book.

Note The business does not maintain control accounts
Requirements
(a) Write up the suspense account clearing up the differences
(b) State the effect of correcting each error on the accounts.

Question 23: J ohn J asper Shoes
John Jasper, who retails platform shoes, has been so busy since he commenced business on 1 April
2005 that he neglected to keep adequate accounting records. His opening capital consisted of
GH15,000 which he used to open a business bank account. The transaction in this bank account
during the year ended 31 March 2006 have been summarised from the bank statements as follows.
Receipts: GH
Loan from John Wawa his friend 10,000
Takings 42,000
Payments:
Purchases of goods for resale 26,400
Electricity for period to 31 December 2006 760
Rent of premises for fifteen months to 30 June 2006 3,500
Rates of premises for year ended 31 March 2006 1,200
Wages of assistants 14,700
Purchase of van, 1 October 2005 7,600
Purchase of large waterbed for his own private use 8,500
Van license and insurance, payments covering a year 250


Page24
According to his bank account the balance in hand at 31 March 2006 was GH4,090 in John
Jaspers favour. Whilst the intention was to bank all takings intact, it now transpires that, in
addition to cash drawings, the following payments were made out of taking before banking.
Van running expenses GH890
Postages, stationary and other sundry expenses GH355

On 31 March 2006 takings of GH640 awaiting banking; this was done on 1 April 2006. It has now
been discovered that amounts paid into the bank of GH340 on 29 March 2006 were not credited to
Johns accounts until 2 April 2006 and a cheque of GH120, drawn on 28 March 2006 for
purchases was not paid until 10 April 2006. The normal rate of gross profit on the goods sold by
John Jasper is 50%on sales. However, during the year a purchase of glittering suits costing GH600
proved to be unpopular with customers and therefore the entire stock bought had to be sold at cost
price.
Interest at the rate of 5% per annum is payable on each anniversary of the loan from John Wawa on
1 January 2006.
Depreciation is to be provided on the van on the straight line basis; it is estimated that the van will
be disposed of after five years use for GH100.
The stock of goods for resale at 31 March 2006 has been valued at cost at GH1,900.
Creditors for purchases at 31 March 2006 amounted to GH880 and electricity charges accrued at
that date were GH180.
Trade debtors at 31 March 2006 totalled GH2,300.

Requirement
Prepare a trading profit and loss account for the year ended 31 March 2006 and a balance sheet at
that date.

Question 24: Akwapim Botanical Gardeners
Akwapim Botanical is a market gardener who does not keep full records of his business
transactions.
An analysis of the business bank account for the year ended 30 June 2008 shows the following.
GH GH
Balance 30 June 2007 640
Add Deposits 4,942
5,582
Less Withdrawals:
Seeds and fertilizers 1,697
Boxes and packaging materials 715
Repairs to greenhouse 49
Tractor and machinery expenses 396
Crop-spraying 279
Rent and rates 416
School fees (Akwapim Botanicals son) 225
Hire purchase instalments 9 x GH20 180
(3,957)

Page25
Balance 30 June 2008 1,625
You also obtain the following information.
(1) Akwapim Botanical sells crops entirely for cash and banks the balance remaining after
paying certain items recorded in a notebook. A summary of the notebook for the year ended
30 June 2008 shows:
GH
Wages, National Insurance 1,130
Electricity 114
Sundry business expenses 47
Own drawings 856
(2) Bank deposits include the proceeds of an endowment assurance policy which matured in the
year amounting to GH525.
(3) The hire purchase instalments are for a new tractor purchased during the year for GH850.
The trade-up allowance on the old tractor was GH450 and the balance, including hire
purchase interest of GH80, is payable in twenty-four monthly instalments of GH20 each.
The hire purchase interest is to be deemed to accrue evenly over the period of payment. The
old tractor was stated at GH500 in the balance sheet at 30 June 2007 and the new tractor is
to be written down to GH750.
(4) On 30 June 2007 greenhouse were stated in the balance sheet at GH800 and machinery at
GH600. They are to be written down to GH700 and GH525 respectively.
(5) Outstanding amounts on 30 June were:
2007 2008
Electricity GH41 GH16

(6) Stocks on hand on 30 June have been valued as follows.
2007 2008
GH GH
Growing crops, produce and fertilizers 2,100 2,060
Boxes and packaging materials 250 260
Requirement
Prepare a trading and profit and loss account for the year ended 30 June 2008 and a balance
sheet at that date.

Question 25: Ablode Tomefa Trading Company
Ablode Tomefa is trader who does not keep a full record of all his transactions. He has asked you to
prepare his accounts for the year ended 31 March 2002 and has given you the following
information.

(1) He banks his takings periodically after payment of the following amounts.
Wages GH25 per week
Cleanings and sundries GH5 per week
Drawings for self GH40 per week

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His cash in hand at the beginning of the year was GH150 and at the end of the year GH125.
(2) His summarised bank statements for the year show the following.
GH GH
Balance at 1 April 2001 1,216 Payments to creditors 39,720
Deposits 44,700 Purchase of new van 5,000
Telephone 181
Rent, rates and insurance 457
Repairs 310
Balance at 31 March 2002 372 Cash withdrawn for self 620
46,288 46,288
The banking included GH950 received from the sale of his van on 1 April 2001 when the net book
value of the van was GH1,200.
(3) Other assets and liabilities were as follows.
31 March
2002 2001
GH GH
Stock 7,200 5,300
Trade debtors 3,900 3,140
Accrual telephone 38 26
Prepayment rent, rates and insurance 145 120
(4) Tomefa estimates that his gross profit percentage is 20%.
(5) Depreciation is provided on the van at 25% per annum on cost on the straight lines basis.
(6) Tomefa also informs you that he does not keep a record of goods which he has taken for his
own use. He tells you that his previous accountant used to work the figure out and then
charge the cost of the goods to his drawings account.
(7) All sales and purchases are on credit terms.
Requirements
(a) Prepare a trading and profit and loss account for the year ended 31 March 2002 and a
balance sheet at that date.
(b) State two factors which could cause the estimates of goods drawn for him to be incorrect.

Question 26: Mandela Amewu Ice-cream Vendors
Mandela Amewu carries on the business as a self-employed ice-cream vendor. The business is
seasonal and all the sales are made from a van. Mandela Amewu has his accounts of the business
prepared each year to 31 December. He has a contract with FAN Ice Cream Ltd whereby he buys
all his goods for resale from them at selling price less 33
1
/
3
% and less 2.5% for monthly settlement.
Mandela always takes the 2.5%. He also receives, at the end of the season, a rebate of 1% of the
cost of his purchases before cash discount if his sales for the season, which runs from 1 April to 30
October, exceed GH5,000. In the year under review, he received GH60. The firms policy is to
show the rebate as sundry income:

Page27

The following balances were on Mandelas books at 31 December 2005.
GH GH
Capital account 1,654
Van at cost 1,600
Depreciation of van 800
Equipment at cost 350
Depreciation of equipment 280
Garage rates in advance 9
Accountancy 60
Balance at bank 840
Garage rent due 5
2,799 2,799
You obtain the following information of his transactions for the year to 31 December 2006.
(1) From cheque books, paying-in books and bank statements.
GH
FAN goods for resale 5,350
Wages 280
Van expenses 300
Laundry 104
Garage rent (52 weeks) 52
Garage rates (two half-years) 40
Accountancy 60
Rebate from FAN Ice Cream Ltd (referred to above) 60
New van 1,100
Sundry business expenses 278
Private payments 320
Cash banked ex takings 7,574
Balance at bank at 31 December 2006 590

(2) There is no record of taking and some goods for resale have apparently been paid out of
takings. The only cash payments are as follows.
Petrol and oil GH27
Casual wages GH130
Sundry expenses GH19
Any cash not accounted for is to be treated as drawings.
(3) The old van was traded in for GH700, and this sum was used as a deposit on a new van
costing GH1,800.
(4) Due to a power supply failure, stock with a resale value of GH30 was damaged and had to
be destroyed.
(5) Depreciation is to be provided on a straight line basis at 25% on the van and 10% on the
equipment, the new van to be depreciated as if in use on 1 January 2006.
(6) GH64 is to be provided for accountancy.
(7) At the year-end the amounts for accrued rent and prepaid rates were GH6 and GH14
respectively.
Requirement

Page28
Prepare Mandela Amewus trading and profit and loss account 31 December 2006 and a balance
sheet at that date.
Question 27: Euzebius Abusuapanyi Eye Clinic
Euzebius Abusuapenyi is an eye specialist and surgeon practicing in Brigham Street, Manchester.
For the purpose of preparing his accounts for the year ended 31 January 2004 the information given
below is available.

(1) Balances in his computerised books of account at 1 February 2003

Motor car
Cost 12,500
Depreciation 4,500
Optical equipment
Cost 25,450
Depreciation 10,180
Office furniture and equipment:
Cost 6,250
Depreciation 3,750
Stock of contact lenses, at cost 2,975
Debtors for fees earned 6,010
Fees for operations, received in advance 2,450
Creditor for property costs 1,184
Accountancy 348
Creditors for medical books 113
Due to Inland Revenue for PAYE and National Insurance 292
Cash
In hand 77
At bank 4,019
Capital account Euzebius 34,464

(2) Summary of bank statements for the year ended 31 January 2004

Balance at 1 February 2003 4,019 Receptionist/secretary
Total cheques received from salary (net) for year 5,414
patients 44,625 Payments to Inland Revenue for
Cash banked 2,500 PAYE and National Insurance 3,476
Insurance claim received for Contact lenses purchased 5,367
damaged equipment (to be offset Fees to medical assistants 2,325
against equipment repairs) 430 Medical books 568
Property costs 6,584
Accountancy charges 348
Repairs to equipment 1,137
New optical equipment bought
on 1 August 2003 4,000
Medical supplies 465
Car expenses 1,940
Drawings 14,000

Page29
Balance at 31January 2004 5,950
51,574 51,574
(3) Cash receipts payments for the year ended 31 January 2004
Receipts:
Fees paid by patients in cash 3,850
Payments
Office stationery, postage and sundries 1,240
Cheque cashed for patient 75
Cash banked 2,500
(4) Fees
The patients fees printout for the Brigham Street practice shows total fees billed for the
year of 51,150 of which 945 relates to an operation on an overseas visitor who returned
home without paying. This fee is not recoverable. In addition to his practice, Euzebius has
two part-time hospital consultancy appointments. These fees, which totalled 19,500 for the
year under review, are paid gross as they are brought into account as part of the profits of
his practice. Euzebius in fact paid this total of 19,500 into his private bank account.
(5) Property costs
The premises are used by three other medical specialists. Property costs are shared between
occupants in proportion to space occupied. Monthly payments on account are made by each
specialist into a separate bank account, out of which the costs are paid.
A statement of account is prepared at 31 January annually, and balancing payments made in
February.
For the year under review this statement shows the following.

Rent, rates and insurance 26,000
Repairs 2,020
Heat and light 3,145
Security services 400
Word processing assistance 205
31,770

Euzebius agreed share is 20% and his payments on account have been at the rate of 450
per month.
(6) Receptionist/secretary
The lady who works for Euzebius has a gross salary of 8,000 per annum. Employers
National Insurance contributions can be taken as being 11.5% of gross salary.
(7) Mrs Abusuapanyi
Included in Euzebius drawings of 14,000 is a total of 1,500 paid by him to his wife for
her work in maintaining patients records.
(8) Car expenses
The total expenses incurred by Euzebius are paid through the practice. It is agreed, however,
that only 90%of such expenses, and of depreciation, shall be charged against the practice
profits.


Page30
(9) Depreciation
Depreciation on all fixed assets is charged at 20% on the cost of assets in use at the year-
end, subject to (8) above.
(10) Stocks, debtors and creditors at 31 January 2004

Stock of contact lenses 3,116
Debtors for fees to be calculated
Due for property costs to be calculated
Due to the Internal Revenue to be calculated
Fees received in advance 1,965
Outstanding accountancy charges 375
Fees due to medical assistants 725
Requirements
(a) Prepare the profit and loss account for the year ended 31 January 2004
(b) Produce the balance sheet at 31 January 2004
(Accounts are to be presented in vertical form.)


Page31
Question 28: J ohnson Azaglo Conner Shops
Johnson Azaglo is the owner of a shop selling tobacco, confectionery, stationery, magazines and
novelties.
The shop is managed by Longinius Amoateng.
You have been given the information set out below.
(a) Azaglo orders goods, checks the invoices and pays the suppliers statements. He also prices
the goods for sale and carries out the stock takings, but does not take part in the day-to-day
management of the shop. He engages staff and deals with the PAYE and National Insurance
records.
(b) Amoateng is allowed to draw cheques to pay wages in cash and to make small petty cash
payments. He is also responsible for banking intact all sales moneys.
(c) Azaglo knows that the gross profit percentages on sales values are as follows.
Tobacco 10%
Confectionery 20%
Stationery, magazines and novelties 33
1
/
3
%
(b) Azaglo is a pipe smoker, and takes from stock each week, without payment, tobacco with a
sales value of GH750.
He knows also that losses arise because of
(i) Deterioration of chocolate bars, and
(ii) Spoilt and unsalable magazines.
Experience has shown him that the loss under (i) amounts to 1% of cost of goods sold and
under (ii) totals GH5 per week in terms of selling price of unsalable magazines.
(e) Azaglo suspects that during the year ended 30 September 2004, Amoateng has been
gambling heavily and has been using money taken from the shop to try to recoup gambling
losses. He does not think that there is anything amiss with the petty cash, but suspects that
Amoateng has been misappropriating shop takings and drawings excessive amounts to pay
wages.
(f) Figures relating to the three categories of goods sold are given below.
Tobacco Confectionery Stationery,
Mags & Novelties
GH GH GH
Stocks at 1 October 2003
At cost 24,360 8,745 6,026
Purchases 135,485 50,213 35,042
Stocks at 30 September 2004
At cost 20,840 10,158 6,160
Sales for the year
Cash banked 152,380 59,045 49,073
(there was no unbanked cash at the start or end of the year)
(g) Included in the opening stock of stationery, etc are a number of sets of childrens games.
Supplies of these were bought in March 2003 for GH2,120. One-half of these were sold in
June 2003 at normal selling price. At 30 November 2003 it was thought that those
remaining were outdated and slightly shop-soiled. They were therefore valued for stock
purposes at 50%of cost. In July and August 2004 they were all sold at a mark-up of 20% on
stock value.


Page32
(h) Azaglo knows that the gross salaries for the year ended 30 September 2004 were as follows.
GH
Shop assistants 14,000
Casual wages for delivery of magazines paid gross 525
His PAYE records show that for the year under review the amount due to the Internal
Revenue and SSNIT for PAYE and National Insurance contributions was GH5,645,
including 11.4% of gross wages of GH14,000 in respect of employers National Insurance
contributions. Cheques drawn by Amoateng, purporting to be for payment of wages, totalled
GH12,265.

Requirement
Prepare a statement which shows the total amount which appear to have been misappropriated by
Amoateng.

Page33
CHAPTER 3 MANUFACTURING ACCOUNTS AND STOCK VALUATION
Question 29: Gomoah Rubber Producers
Gomoah had 100 litres of foam liquid in stock at 1 October 2002, purchased at GH2 per litre.
During the month to 31 October 2002 the following changes occurred in the position.
Date Quantity Cost per litre
litres GH
Purchases 7 October 2002 200 2.50
14 October 2002 300 3.00
21 October 2002 50 4.00
28 October 2002 100 3.50
Issues 4 October 2002 80
11 October 2002 70
18 October 2002 250
25 October 2002 200
Requirement
Calculate thee value of the closing stock of foam liquid at 31 October 2002 using each of the
following three methods of pricing the issue of materials to production.
(a) First in, first out (FIFO) (b) Last in, first out (LIFO) and (c) Weighted average (note that
the periodic weighted method is not required).

Question 30: Kangaroo Carrier Bags Plc
(a) Kangaroo Carrier Bags plc makes one product which it sells to the wholesale traders. The
following trial balance was extracted from the books of the company at 31 December 2001.
Stocks at 1 January 2001: GH GH
Raw materials, at cost 3,500
Work in progress, at factory cost 18,000
Finished goods (3,500 units) at factory cost 35,000
Raw materials purchased 39,500
Sales (12,000 units) 180,000
Manufacturing wages 30,000
Factory rent and rates 14,000
Factory light, heat and power 6,550
Plant, at cost 60,000
Plant depreciation at 1 January 2001 28,000
Work managers salary 2,450
Plant repairs 4,000
Administration overheads 18,000
Factory lease at cost (twenty years duration) 40,000
Amortization at 1 January 2001 12,000
Share capital 75,000
Debtors and bank balance 46,500
Creditors 24,500
Carriage inwards 2,000
319,500 319,500

Page34

Plant depreciation is to be provided at 10% on cost of plant owned at the year-end.
Raw materials costing GH5,000 were in stock on 31 December 2001.
Finished goods are transferred to the warehouse as soon as they are completed. During the
year 10,000 units were completed and transferred to the warehouse. Work in progress at 31
December 2001 (at factory cost) amounted to GH23,000. There was no wastage or
pilferage during 2001.

Requirement
Prepare the manufacturing, trading and profit and loss account for the year ended 31
December 2001.
(b) Facts as in part (a) except that it had always been the companys practice to transfer
completed units from the factory to the warehouse at cost plus 25%. Stocks of finished
goods are valued at the transfer price for the trading account but at factory cost for balance
sheet purposes.

Requirement
Prepare the manufacturing, trading and profit and loss account for the year ended 31
December 2001.

Question 31: Calippo Sweets Production
Calippo was the sole proprietor of a sweet manufacturing business and the following trial balance
was extracted from his computer records at 31 December 2007.
Dr Cr
GH GH
Capital 20,400
Freehold land and buildings at cost 15,000
Plant and machinery at cost 14,500
Travellers cars at cost 4,000
Loose tools and utensils at valuation on 1 January 2007 1,200
Stocks I January 2007
Raw materials 3,300
Finished goods 6,000
Purchases : Raw materials 18,500
Tools and utensils 800
Sales 66,000
Wages
Factory 13,640
Administration 5,400
Sales department 3,000
Rates and insurance 1,600
Repairs to buildings 1,000
Sales expenses, including vehicle running costs 1,440
Electricity and power 6,000

Page35
Administration expenses 2,810
Debtors 6,100
Creditors 3,580
Cash at bank 3,610
Cash in hand 100
104,390 104,390

You are given the following information.
(1) Closing stocks on 31 December 2007: raw materials GH2,800, finished goods GH3, 900,
loose tools and utensils GH1,600.
(2) Provision is to be made for the following amounts owing on 31 December 2007: electricity
and power GH800, new machinery GH500.
(3) Payments in advance on 31 December 2007 were rates GH300, vehicle licences GH40.
(4) Annual depreciation on plant and machinery and travellers cars is to be provided at 15%
and 20% respectively on cost at the end of the year.
(5) Bad debts amounting to GH500 are to be written off and the provision for doubtful debts
reduced to GH600.
(6) Expenses are to be allotted as follows.
Works Administration
Rates and insurance
7
/
10

3
/
10

Repairs
4
/
5

1
/
5

Electricity and power
9
/
10

1
/
10

Requirement
Prepare manufacturing, trading and profit and loss accounts for the year ended 31 December 2007
and a balance sheet at that date.

Question 32: Bonavester Plc
The trial balance of Bonavester plc at 31 December 2006 was as follows. Dr Cr
GH000 GH000
Ordinary shares of GH0.50 each fully paid 5,000
Retained profit at 1 January 2006 13,205
Fixed assets at cost 20,000
Depreciation provision at 1 January 2006 3,000
Provision for unrealized profit 800
Stock at 1 January 2006
Materials 1,531
Work in progress 85
Finished products (at transfer price) 4,800
Debtors 5,000
Bad debts provision 255
Cash at bank and in hand 150
Creditors 1,320
Sales 40,000
Purchases of materials 11,400

Page36
Manufacturing wages 4,705
Production overhead expenses 7,674
Distribution costs 3,715
Administrative expenses 4,520
63,580 63,580

(1) A physical stocktaking at 31 December 2006 valued materials stock at GH1,600,000.
(2) Finished goods are transferred from the factory to the warehouse at a mark-up of 20% on
cost
(3) Work in progress at 31 December 2006 was valued at GH80,000.
(4) Finished product stocks at 31 December 2006 were valued at GH4,200,000.
(5) Depreciation for 2006 was GH2,000,000 and is to be apportioned as follows:
GH000
Production 1,600
Distribution 200
Administration 200
(6) The bad debts provision is to be adjusted to 5% debtors. Any increase or decrease is to be
regarded as a distribution cost.
(7) Prepayments and accruals at 31 December 2006 were
Prepayments Accruals
GH000 GH000
Manufacturing wages 95
Production overhead expense 10 200
Distribution costs 5 95
Administrative expenses 30 110
Requirement
Prepare a manufacturing, trading and profit and loss account for the year ended 31 December 2006.

Question 33: Atongo Plastic Manufacturers
The following trial balance has been extracted from the books of Atongo Plastic, manufacturer, at
31 March 2008. Dr Cr
GH GH
Stock of raw material, 1 April 2007 6,300
Stock of finished goods (at cost) 11,670
Work in progress, 1 April 2007 4,050
Wages (direct GH54,000, indirect GH43,500) 97,500
Purchases of raw materials 111,000
Carriage inwards raw materials 1,050
Royalties 2,100
Factory general expenses 9,300
Factory power 4,110
Lighting and heating 2,250
Administrative salaries 13,200
Salesmens salaries 9,000
Sales commissions 3,450

Page37
Bank charges 690
Rent and rates 3,600
Insurance 1,260
General expenses 4,020
Discounts allowed 1,440
Carriage a outwards 1,770
Sales 300,000
Bank 17,040
Cash 450
Plant and equipment (cost GH84, 000) 69,000
Office computer (cost GH6,000) 3,600
Drawings 6,000
Capital as at 1 April 2007 89,040
426,540 426,540
Notes at 31 March 2008
(1) Rent, rates, insurance, lighting and heating are to be apportioned: factory 5/6, admin. 1/6.
(2) Depreciation on plant and equipment and the office computer are to be provided at 10% per
annum on the cost at the year-end.
(3) Stock of raw material GH7,200, finished goods (at cost) GH12,000 and work in progress
GH4,500.
(4) It has always been the companys practice to transfer completed units from the factory to the
Warehouse at cost plus 20%. Stocks of finished goods are valued at the transfer price for the
trading account but at factory cost for balance sheet purposes.

Requirement
Prepare a manufacturing and trading and profit and loss account for the year ended 31 March 2008
and a balance sheet at that date.

Question 34: J erry Leggs Wellington Boots
On 1 February 2004 Jerry Leggs has received patent for his design of an electrical warmer for
Wellington boots with a trade name of Welliwarm. He started business on the same date, with
arrangements to supply Welliwarms to a wholesaler in Russia with all takings paid in local
currency. The following information relates to the year ended 31 January 2005.
(1) Premises
On 1 February 2004 Leggs acquired the lease of a lock-up workshop at an annual rent of
GH8,000 exclusive of rates. The workshop is solely for manufacturing purposes. All
administration is done on a microcomputer at Leggss home by his wife acting as secretary.
Leggs feels that a figure of GH750 per annum would be a reasonable charge for the
business use of his house.
(2) Employees
On 1 February 2004 Leggs engaged a machinist/assembler at a gross salary of GH13,500
per annum, a salesman at a gross salary of GH9,500 per annum with the right to a bonus of
25p per unit sold, this bonus to be paid after the end of each year.

Page38
Employers National Insurance contributions can be taken as 10.5% of gross salaries.
Leggs also negotiated an arrangement with Akwesi Leda, a freelance electrical
manufacturing agent, whereby Leda would make daily visits to the workshop to plan and
supervise production. This arrangement started on 1 February 2004 with an agreed annual
fee of GH5,000 plus a bonus of 10p per unit produced if the total average work cost per
unit does not, for each year, exceed GH19. The charges for employers National Insurance
contributions, and for Ledas bonus, if any, are to appear in the profit and loss account and
are not to affect the manufacturing result. Note that there is no employers National
Insurance contribution on the bonuses.
(3) Bank account
On 31 January 2004 Leggs opened a business bank account by transferring GH6,500 from
his private account, and arranged a business overdraft limit of GH5,000 for two years.
Before opening the account, Leggs had made the following payments out of his private
account.
(i) Patent agents charges GH
(to be written off over two years) 1,150
(ii) Workshop rent for quarter year starting 1 February 2004 2,000
(iii) Manufacturing machinery 3,500

(4) Summary of business bank account
GH
Cash transferred 6,500
Cash received from customers 98,000
Bank overdraft at 31 January 2004 2,618
107,118
Manufacturing tools purchased 1,800
Workshop
Rent 4,000
Rates:
Period ended 31 March 2004 600
Year ended 31 March 2005 2,800
Power, light and heat 2,750
Salaries net payments to machinist and salesman 15,575
Collector of taxes payment on account of PAYE and National Insurance 7,000
Manufacturing material and electrical components 50,618
Advertising costs 3,779
Bank interest and charges 785
Salesmans van:
Deposit 800
Hire purchase instalments 3,025
Van costs deliveries to customers 2,686
Payments on account to Leda 4,500
Cheques drawn for cash 2,400
Drawings by Leggs 4,000
107,118

Page39
(5) Cash details
GH GH
Collected on account of Office stationery and sundries 1,460
Small sales orders 2,345 Paid to Mrs Leggs on account of
Drawn from bank 2,400 agreed secretarial fee GH2,000
(no liability for PAYE or
National Insurance) 1,500
Typewriter and filing cabinets
Bought 29 February 2004 720
Weekly drawings by Leggs 1,040
Balance at 31 January 2005 25
4,745 4,745

(6) Production and sales
4,400 sets of Welliwarms were sold during the year at a fixed selling price of GH25 per
set. No cash discounts were allowed and there were no bad debts. At 31 January 2005 there
were 100 sets of finished units in stock to be valued at total workshop cost. There were no
stocks of partly finished units and during the year no sets were lost or scrapped.

(7) Hire purchases agreement
This provided for the purchase of the van at a cost of GH6,800 with a deposit of GH800
and hire purchase charges of GH600. The balance due is payable by twenty-four equal
monthly instalments.
(8) Outstanding items at 31 January 2005
Apart from those from information already given, these were as follows.
GH
Creditors for manufacturing materials 5,632
Stocks of manufacturing materials at cost 6,750
Creditors for:
Accountancy charges 260
Workshop power, light and heat 330
(9) Depreciation
The machinery and salesmans van are to be depreciated at 20% per annum on the cost of
the assets in use at year-end. The typewritten and cabinets are to be depreciated at the rate of
20% per annum on the reducing instalment basis. The manufacturing tools are to be dealt
with by revaluation. The tools on hand at the year-end were valued at GH1,263.
Requirements
(a) Prepare a manufacturing account for the year ended 31 January 2005 showing
cost per unit for each main element of cost.
(b) Produce a trading and profit and loss account for the year ended 31 January 2005
and also the balance sheet as at that date.


Page40
Question 35: Borllar Waste Kitchen Accessories
(1) Borllar Waste Ltd is a small company formed on 1 October 2005 to manufacture and sell a
new type of kitchen waste-disposal unit. As an ancillary activity it buys and re-sells to
wholesalers a variety of kitchen accessories.
(2) The companys authorized capital is GH400,000, and on incorporation 250,000 GH1
shares were issued and paid for at price of GH1.15 per share.
(3) The companys accountant is away on jury service, and draft accounts have been prepared
for the year ended 30 September 2006 by his young assistant in the form set out in
paragraph (4).
(4) (i) Profit and loss account
GH GH
Purchases: Manufacturing materials 195,785 Sales (9,000 disposal units at
Kitchen accessories for Re-sale 99,642 GH75 each) 675,000
295,427 Kitchen accessories 115,650
Carriage and freight: Inwards on Discounts received on sales 4,032
Manufacturing materials 5,080
Outwards on sales generally 9,462
Wages and salaries 318,970
Sundry administration costs 10,560
Sundry selling costs 8,705
Formation and issue expenses 15,100
773,304
794,682 794,682

(ii) Balance sheet
GH GH
Receipts from shareholders 287,500 Fixed assets at cost
P&L account 21,378 Manufacturing plant and
Creditors due for payment equipment 115,000
within one year 43,193 Sales equipment 90,000
Administrative equipment 60,000
265,000
Current assets
Debtors 62,755
Bank 24,316
87,071
352,071 352,071

(5) You have been asked to re-draft the accounts and have obtained the information set out in
(6) to (11) below.


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(6) Stocks
No account has been taken of closing stocks at 30 September 2006. These were as follows.
(i) Manufacturing materials at cost GH21,335
(ii) Kitchen accessories at cost GH18,687
(iii) Completed waste-disposal units 1,000 units
Note: Stocks of completed units are to be valued at total factory cost, including depreciation
of assets used for production. There were no stocks of partly-completed units and no
completed units have been scrapped, lost or damaged.
(7) Depreciation
No provision has been made in the draft accounts.
Depreciation on all fixed assets is to be calculated at 20% of the cost of assets in use at each
year-end.
(8) Property costs
These comprise rent, rates, insurance, repairs, heat, light and power and can be allocated
80% to manufacturing space
15% to selling space
5% to administrative space
(9) Wages and salaries
GH
Plant operators 183,360
Factory supervisors 26,110
Sales force 60,500
Administrative staff 34,000
Directors fees 15,000
(10) Provision
Provision is to be made for the following.
Bad and doubtful debts GH1,255
Audit and accountancy charges GH3,815
Corporation tax GH21,000
Proposed dividend 8p per share

(10) Advantage is to be taken of the provisions of the companies Act relating to the use of share
premium account.

Requirements
Prepare the following
(a) Manufacturing account for waste-disposal units.
(b) Trading account showing the gross profit percentage on sales of
- waste-disposal units, and
- kitchen accessories.
(c) Profit and loss account and balance sheet at 30 September 2006.


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Question 36: J onny Wood Garden Seats
(1) On 1 July 2007 Jonny Wood started to manufacture under license a type of swinging garden
seat. A process is involved which is covered by patent rights and Wood has agreed to pay a
royalty of 30p per seat sold.
(2) The seat is sold for self-assembly, and the finished product ex-factory consists of the
various parts and fittings packaged in a long carton which also contains a set of assembling
instructions printed in a variety of languages.
(3) Wood has little idea of the preparation of final accounts but he has given you the following
draft profit and loss accounts for the year ended 30 June 2008.

GH GH
Purchases of materials Sales 316,500
Including nuts, bolts and Deficiency for year 10,956
Springs 127,825
Gross wages and salaries
including employers
National Insurance 138,334
Hire of manufacturing
equipment 7,750
Factory cleaning and factory
sundries 4,115
Printing, stationery, telephone
and office sundries 6,534
Purchases of cartons for
packaging 5,783
Delivering goods to customers 7,820
Advertising 2,479
337,936
Less stocks of materials, etc
At 30 June 2009 (10,480)
327,456 327,456
(4) Your examination of the position brings out the following points.
(i) You can agree the figure set out in the draft profit and loss account, subject to the
fact that Wood has not made provision for depreciation of the factory plant
(GH8,000), or of office equipment (GH800), or for royalties payable. In addition
he has not allowed for stocks of finished and partly-finished goods in the factory at
30 June 2009 (see (ii) below).
(ii) Stocks of materials etc have been correctly valued at cost and the figure of
GH10,480 is made as follows.
GH
Manufacturing materials 9,640
Cartons for packaging 618
Sets of printed assembling instructions 222
10,480

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The cost of assembling instructions was GH2,372 and is included in the figure of
GH6,534 for printing, stationery, telephone, etc. Stocks of finished and partly-
finished seats are to be valued at factory cost. During the year 9,000 seats were sold,
all at a fixed selling price of GH35 each. At the year-end 1,000 finished seats were
in stock in the sales department, and in the factory there was a batch of 1,500 seats
which can in all respects be regarded as one-half completed. Seats are transferred
from factory to sales department at cost.
(iii) In March 2008, due to flooding, materials included in purchases at a cost of
GH7,250 were severely damaged with no insurance recovery. They were sold for
scrap, and the proceeds are included in the sales figure of GH316,500. Wood
wishes the loss arising to be separately shown in the profit and loss account.
(iv) Gross salaries and property costs can be allocated as follows.
GH
Salaries Property costs:
Machine operators 89,000 Factory space 5/7 of total costs
Factory supervision 14,995 Administrative space 1/7 of total costs
Administration 15,684 Sales space 1/7 of total costs
Sales 18,655
138,334
Requirement
Prepare a manufacturing, trading and profit and loss account for the year ended 30 June 2008 in a
manner which is as informative and concise as possible.

Question 37: Sir J ohayes Importers
Sir Johayes commenced business as a coffee processor on 1 January 2007. Purchases of raw coffee
were made by him as follows.
Tons Price per ton
GH
1 January 30 700
15 February 20 750
31 March 40 820
16 April 25 880
30 May 35 900
8 June 10 1,050
120 tons were sold on 28 June 2007, the net proceedings being GH132,000.

Requirements
(a) Explain the following methods of computing the cost of stock on hand at the end of the
period.
(i) First in, first out
(ii) Average cost
(iii) Last, first out.
(b) Using the figures, show the effect of each method on Johayes trading for the six methods,
and comment thereon.

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Question 38: Akasanoma Vision Ltd Manufacturers
Akasanoma Vision Ltd is an old established company operating in the highly competitive business
of manufacturing and marketing radios and television sets.
A new board of directors is considering the draft accounts, prepared under the historical cost
convention, for the year ended 30 September 2004.
The main executive directors involved in the policy discussion are
- Georgio (managing)
- Kafui (sales)
- Daryl (production)
You are in attendance to give advice.
A standard model radio has the following disclosed costs.
GH
Direct labour and material 38
Bought-in components 5
Factory overhead costs 8
Royalty on sale payable to the owner of a patent 2
For 1,000 radio sets, the other overhead costs are GH14,000 made up as follows.
GH
Salary and space costs of executive responsible for production planning 4,000
General office administration 2,500
Selling and distribution costs, including a fixed GH4 per set commission
payable to salesmen 7,500
The advertised selling price of the model has recently been reduced to GH60 because of intensive
competition.
The three directors have expressed the following views on the most appropriate method of valuing
the companys closing stock:
(1) Georgio
A most prudent approach is necessary, particularly as the company has a cash flow
problem which means that the amount locked up in stock inventories should be kept as low
as possible. I propose a valuation of GH43 per set.
(2) Kafui
All the functions of the company are directed towards the production and sale of a good
finished product and therefore I think each set should be valued at the total cost involved.
Including the other overhead costs.
(3) Daryl
GH47 per set, because thats what the production cost we would have if wed been more
efficient and kept in line with budgets.

Requirement
Give your opinion in one note form on the views expressed by each director with your own opinion
of the appropriate valuation stating the principles involved.

Page45
CHAPTER 4: PARTNERSHIP ACCOUNTS
Question 39: Aba, Borbor and Chochoo Partnership
Aba, Borbor and Chochoo share profits in the ratio 3:2:1. The partnership agreement states that
(a) Aba and Chochoo are to receive salaries of GH700 and GH1,000 per annum respectively
(b) All partners are entitled to interest at 8% on their capital accounts which stand at Aba
GH10,000, Borbor GH9,000 and Chochoo GH5,000.

Aba has a loan to the partnership of GH2,000. Net profit for appropriation for the year was
GH6,980 and drawings during the year were Aba GH100 and Borbor GH500

Requirement
Prepare the appropriation statement for the year.

Question 40: Aba, Borbor and Chochoo Partnership II
A same fact as in question 39 except that profit for appropriation was GH1,820.

Requirement
Prepare the revised appropriation statement for the year

Question 41: J onny, J immy and J erry Business Ventures
Jonny, Jimmy and Jerry are in partnership sharing profits and losses in the ratio 2:2:1 respectively.
Interest is charged on partners drawings at the rate of 5% per annum and credited on partners
capital account balances at the rate of 5% per annum.
Jimmy is the firms sales manager and for his specialized services he is to receive a salary of
GH800 per annum.
During the year ended 30 April 2001 the net profit of the firm was GH6,200 and the partners
drawings were
Jonny GH1,200
Jimmy GH800
Jerry GH800
In each case the above drawings were withdrawn in two equal instalments on 31 October 2000 and
30 April 2001.
On 31 October 2000 the firm agreed that Jonny should withdraw GH1,000 from his capital
account for some personal family needs and that Jerry should subscribe a similar amount to his
capital account.

The balances on the partners accounts at 1 May 2000 were as follows (all credit balances).
Capital accounts Current accounts
Jonny GH8,000 GH640
Jimmy GH7,000 GH560
Jerry GH6,000 GH480


Page46

Requirements
(a) Prepare a profit and loss appropriation statement for the year ended 30 April 2001.
(b) Prepare the partners capital and current accounts for the year ended 30 April 2001.

Question 42: Messers George and Cyril Akpanaway Consultants
The following printout of balances was extracted from the computer archives of Messrs George and
Cyril Akpanaway at 31 March 2004.
Capital at 1 April 2003 GH
George Akpanaway 5,000 credit
Cyril Akpanaway 3,000 credit
Cash drawings
George Akpanaway 800
Cyril Akpanaway 600
Freehold buildings at 1 April 2003 5,100
Motor vehicles at 1 April 2003 1,260
Stock at 1 April 2003 3,600
Purchases 25,700
Sales 38, 610
Debtors 3,960
Creditors 3,670
Motor vehicle running costs 1,480
General trade expenses 1,994
Rates and insurance 964
Cash at bank and in hand 782
Provision for bad and doubtful debts 100
Additional information
(1) Stock at 31 March 2004 was GH4,100
(2) Provision is to be made for depreciation at the following rates.
Motor vehicles 25% per annum
Freehold buildings 2% per annum
(3) The provision for bad and doubtful debts is to be reduced to GH75.
(4) George and Cyril Akpanaway share profits and losses in the ratio 3:2 respectively.

Requirement
Prepare the trading and profit and loss account for the year ended 31 March 2004 and a balance
sheet at that date.

Question 43: Azi, Nefi and Agoneh Traders
Azi, Nefi and Agoneh are in partnership sharing profits and losses in the ratio 3:2:1. The following
is the trial balance of the partnership at 30 September 2003.
GH GH
Bad debts provision (at 1 October 2002) 1,000
Bank and cash in hand 2,500

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Capital accounts:
Azi 18,000
Nefi 12,000
Agoneh 6,000
Current accounts:
Azi 700
Nefi 500
Agoneh 300
Depreciation (at 1 October 2002)
Land and buildings 12,000
Motor vehicles 8,000
Drawings:
Azi 4,000
Nefi 3,000
Agoneh 3,000
Land and buildings at cost 60,000
Motor vehicles 20,000
Office expenses 4,000
Purchases 85,000
Rates 4,000
Sales 150,000
Selling expenses 14,000
Stock (at 1 October 2002) 20,000
243,000 243,000

You are provided with the following information.
(1) Stock at 30 September 2003 was valued at GH30,000.
(2) Fixed assets are written off against profit at the following rates.
Land and buildings 5% per annum on cost
Motor vehicles 20% per annum on cost
(3) At 30 September 2003 an amount of GH1,775 was owing for selling expenses.
(4) Rates were prepaid by GH2,000 as at 30 September 2003.
(5) A certain bad debt of GH500 is to be written off.
(6) The bad debts provision is to be made equal to 5% of outstanding debtors as at 30
September 2003.
(7) The partnership agreement covers the following appropriations.
(i) Agoneh is to be allowed a salary of GH6,000 per annum
(ii) Interest of 10% per annum is allowed on the partners capital account balances
(iii) No interest is allowed on the partners current accounts
(iv) No interest is charged on the partners drawings.

Requirements
(a) Prepare the partners trading, profit and loss account and appropriation statement for the
year to 30 September 2003
(b) Write up the partners current accounts for the year to 30 September 2003 and bring down
the balances at 1October 2003.

Page48
(c) Prepare the partnership balance sheet at 30 September 2003.

Question 44: Piper, Dom and J erry Trading Ventures
Piper, Dom and Jerry have been in partnership for many years. Under the terms of the partnership
agreement profits and losses are shared as follows.

(a) Each partner is entitled to interest on capital at the rate of 8% per annum.
(b) Dom and Jerry are entitled to annual salaries of GH5,000 and GH3,000 respectively.
(c) The balance of profits and losses is shared in the ratio 3:2:1.
The trial balance at the year-end, 30 September 2002, is as follows.
GH GH
Partners capital accounts
Piper 20,000
Dom 10,000
Jerry 4,000
Partners current accounts
Piper 4,106
Dom 3,750
Jerry 1,971

Partners drawings
Piper 8,060
Dom 5,400
Jerry 4,900
Sales 238,636
Stock at 1 October 2001 52, 750
Sundry expense 15,210
Fixtures and fittings
Cost 54,400
Accumulated depreciation 17,650
Debtors/creditors 61,050 55,100
Bank overdraft 35,487
Purchases 192,930
Loan from Dufie 4, 000
394,700 394,700

You ascertain the following.
(1) For the purpose of the final accounts, stocks at 30 September 2002 has been valued at
GH64,000.
(2) During the year Piper withdrew goods for his own use. Piper is to be charged the full selling
price ofGH2,764 for the goods. No entry has been made in the books.
(3) The depreciation provision of GH17,650 represented the provision at 30 September 2001.
The policy of the partnership is to depreciate fixtures at the rate of 10% per annum, applied
to cost on a straight-line basis.
(4) Sundry expenses to be accrued amount to GH3,950.
(5) The loan from Dufie is repayable in 2008. The loan carries an interest rate of 10% pa. No
interest has yet been paid or provided for in respect of the current year.

Page49

Requirements
Prepare:
(a) a trading and profit and loss account and appropriation statement for the year ended 30
September 2002
(b) the partner current accounts
(c) a balance sheet at 30 September 2002

Question 45: Antie and Dede Chemists
Antie and Dede were in partnership as wholesale chemists contributing capital and sharing profits
and losses in ratio 2:1. The partnership balance sheet was automatically drawn up on 31 December
2007 by the partners computer system and contained the following.
GH
Furniture and fixtures
Cost 25,000
Trade creditors goods for sale 41,354
Trade debtors 22,000
Provision for doubtful debts 660
Stock goods for resale 50,200
Cash in hand 300
Rates in advance 150
Accrued expenses wages 525
Current accounts
Antie (credit) 165
Dede (credit) 100
The following information relates to the year ended 31 December 2008.
(1) Credit sales amounted to GH252,655 and returns by customers GH3,685. Moneys
received from customers amounted to GH233,144; discounts allowed were GH4,756 and
bad debts written off GH6,150. Provision experience indicates that bad debts are in the
region of 2% and 3% of debtors. There were no cash sales.
(2) Goods purchased for resale amounted to GH193,272 and returns to suppliers GH2,758.
(3) A fire had destroyed stock costing GH6,000 and a refund for the full amount had been
obtained from the insurance company. On 31 December 2008 stock was valued at
GH46,560.
(4) Moneys received had been paid regularly into the bank after making the following cash
disbursements.
Wages GH23,273
Partners salaries (on account)
Antie GH7,500
Dede GH7,500
Under the partnership agreement Antie and Dede are entitled to salaries of GH10,000 each
per annum.

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(5) The following cheque payments were made.
GH
Suppliers of goods for resale (after deducting)
discount received GH3,752) 184,658
Vehicles hire and expenses 8,752
Rates (year to 31 March 2009) 800
Repairs and renewals 2,754
General administration expenses 3,264
Heating and lighting 1,792
(6) On 31 December 2008 wages accrued amounted to GH650 and the cash float in hand had
been increased to GH400.
(7) The business premises are owned by Antie and let to the partnership at an annual rent of
GH5,000; no payment had been made to Antie.
(8) Depreciation is provided at the rate of 10% per annum on the furniture and fixtures using
the reducing balance method. On 1 January 2008 furniture, costing GH2,000 on 1 January
2006, was sold for GH800 and the proceeds banked.
Requirement
Prepare a trading and profit and loss account for the year ended 31 December 2008 and a balance
sheet at that date.

Question 46: Olando, J ay and Simpson Confectioneries
Olando, Jay & Simpson are in partnership, sharing profits Olando
3
/
6
. Jay
2
/
6
, Simpson
1
/
6
.
Interest is credited on fixed capitals at the rate of 6% p a. No interest is charged on drawings.
Jay is entitled to a salary of GH600 per annum and Simpson a salary of GH800 per annum, the
latter being chargeable to Olando share of profit.
The following is a draft of the partnership trial balance at 31 December 2001.
GH GH GH
Current account Fixed capital accounts:
Jay 30 Olando 7,000
Goodwill 5,000 Jay 3,000
Motor vans, at cost 4,400 Simpson 2,000
Shop fittings, at cost 3,000 12,000
Trade Debtors 5,200 Current accounts
Stock 1 January 2001 9,000 Olando 1,000
Cash in hand 33 Simpson 800
Purchases 42,600 1,800
Wages 14,000 Provision for depreciation
Administrative salaries 10,200 at 31 December 2000 of:
Lighting and heating 445 Motor vans 1,160
Rent, rates and insurance 360 Shop fittings 1,600
Motor expenses 620 Bank 1,060
Professional charges 50 Trade creditors 2,700
General expenses 1,942 Commissioners of Internal
Revenue PAYE 360

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Sales 76,200
96,880 96,880
You are given the following information:
(1) Stock on 31 December 2001 was valued at GH8,800.
(2) The partnership premises were rented from Jay at the rate of GH300 pa, but nothing had
been paid or credited to Jay for the year ended 31 December 2001. It has been decided to
credit the amount to his current account.
(3) Partners had been supplied during the year with goods from stock, the agreed values being
Olando GH100, Jay GH45, Simpson GH25. No entries have yet been made.
(4) Provision is required for audit and accountancy charges GH315 and for heating and
lighting GH35.
(5) Included in rents, rates and insurance are annual insurance premiums of GH100 which
provide cover to 30 June 2002. The half years rates to 31 March 2002, paid in December
2001, amounted to GH80.
(6) Included in administrative salaries are partners drawings of Olando GH2,500 Jay
GH2,000, Simpson GH1,500.
(7) Bad debts amounting to GH600 are to be written off and a provision made for doubtful
debts of 4% on the remaining debts.
(8) Depreciation of motor vans is to be charged at 20% of cost, and shop fittings at 5% of cost.
(9) Trevor, the manager, is entitled to a commission of 3% of the net profits after charging such
commission, but before charging partners salaries or interest on capital.

Requirements
Prepare:
(a) A trading and profit and loss account for the year ended 31 December 2001 and the balance
sheet at that date
(b) Partners current accounts in columnar form for the year ended 31 December 2001.
Ignore income tax, with the exception of the PAYE balance.

Question 47: Wawa and Mahoganey Furniture Producers
Wawa and Mahoganey have traded in partnership as furniture manufactures since 1 October 2006.
Prior to that date Wawa was in business as a sole trader.
Draft accounts for the year ended 30 September 2007 have been prepared by a new and
inexperienced bookkeeper.
The balances remaining after the preparation of the draft manufacturing, trading and profit and loss
account have been listed by the bookkeeper as shown below:
Dr Cr
GH GH
Capital accounts
Wawa 76,000
Mahoganey 14,000
Current accounts:
Wawa:
Share of net profit 12,360

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Drawings 12,000
Mahoganey share of net profit 6,180
Stocks at cost 28,640
Work in progress 15,730
Cash at bank per bank statements 4,330
Cost and depreciation:
Plant and equipment 95,500 49,100
Motor vehicles 30,000 15,000
210,430
216,590 216,590

The bookkeeper apologises for existence of the suspense account.
You have been asked to locate the difference, review the accounts, and make such adjustments as
may be necessary.

Your enquiries disclosed the following matters:
(1) Mahoganey joined Wawa in partnership on 1 October 2006, bringing in cash capital of
GH14,000. The bookkeeper was told only that profits were to be shared in the ratio of Wawa 2:
Mahoganey 1 and no adjustments or entries have been made for items (i) to (iii) below:
(i) On admission Mahoganey brought into the firm his Rover car at an agreed value of
GH6,000 (see (7) below for depreciation rate).
(ii) Mahoganey is entitled to a partners salary of GH10,000 per annum. He drew this amount
during the year, and it has been included in salaries charged to profit and loss account.
(iii) Interest on capital is to be allowed at the rate of 8% per annum, calculated on the balances
at 1 October 2006 after making any necessary adjustments arising from the above.
(2) A batch of garden furniture costing GH3,600 was thought to be unsalable at 30 September
2006 and was included in stock at a scrap value equal to 10% of cost. Surprisingly, it was all sold
on 30 June 2007 for GH2,460. It is agreed that the surplus arising should be regarded before
Mahoganeys admission and that a transfer to reflect this should be made through the partners
capital accounts without any adjustment being made in the profit and loss account or appropriation
account.
(3) The bookkeeper has made the following note on the bank statements at 30 September 2007.
GH
Cash at bank per bank statements 4,330
Add Cheques received and entered in cash book but
not credited by bank 370
4,700
Less Cheques drawn and entered in cash book but not presented (5,660)
Overdrawn per cash book (960)
The balance overdrawn per the cash book is in fact GH880, but bank charges totalling
GH80 have not been entered in cash book.

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(4) A set of chairs has been included in sales and debtors at an invoice value of GH1,800,
representing a mark-up on cost of 50%. In fact, the goods were sent on a sale or return
basis and by 30 September 2007 had not been accepted by the customer.
(5) In the draft manufacturing account, the closing work in progress of GH15,730 has been
added to cost and the opening work in progress of GH12,940 deducted from cost.
(6) Furniture supplied without charge to partners has been evaluated at Wawa GH2,460 and
Mahoganey GH1,820 and included in sales, no other entries having been made. Assume
goods are sold to the partners at cost.
(7) During the year plant costing GH15,000 on 1 December 2003 was sold for GH4,600.
This figure of GH4,600 has been deducted from the cost of plant and equipment and
debited as a receipt in the cash book but no adjusting entries have been made. Depreciation
has always been calculated for plant and equipment, and for motor vehicles at 20% and 25%
respectively based on the cost of fixed assets in use at the year-end. For the purpose of the
draft accounts, the depreciation has been based on the cost figures as shown in the list of
balances.
(8) At 1 October 2006 a bad debt provision of GH1,350 was brought forward in the books. At
30 September 2007 it was decided to increase the provision to GH5,200 and this figure of
GH5,200 has been debited to profit and loss account and deducted from debtors in the list
of closing balances.
(9) Sales returns of GH850 have been credited to sales, although correctly entered in the
relevant sales ledger accounts.
(10) Legal and accounting charges totalling GH1,240 have not been provided for.

Requirements
Prepare the following.
(a) A statement showing the amended profit and appropriation of profit for the year ended 30
September 2007.

(b) A statement showing the elimination of the suspense account.

(c) A final balance sheet at30 September 2007


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CHAPTER 5 COMPANY ACCOUNTS
Question 48: Amankwah Company Ltd
The following balances have been extracted from the books of Amankwah Ltd at 30 September
2007.
Creditors 6,300
Sales 80,000
Land at cost 18,000
Building at cost 38,000
Furniture and fittings at cost 22,000
Bank (credit balance) 6,000
Accumulated depreciation
Buildings 6,000
Furniture and fittings 10,000
Discounts received 1,764
Unappropriated profit at 1 October 2006 2,000
Provision for doubtful debts 816
Goodwill 16,400
Cash in hand 232
Stock at 1 October 2006 14,248
Interim dividend on preference shares 600
Rates 2,124
Insurance 1,896
Returns inwards 372
General expenses 436
Debtors 12,640
Purchases 43,856
Debenture interest 400
Bad debts 676
5% Debentures 16,000
6% GH 1 preference shares 20,000
GH1 ordinary shares 20,000
General reserve 10,000
Share premium 1,000

(1) Stock on hand at 30 September 2007 was GH15,546.
(2) Insurance paid in advance GH100.
(3) Wages owing GH280.
(4) Depreciation is to be provided at 10% on cost of buildings and at 20% on the written down
value of furniture and fittings.
(5) Provision for doubtful debts is to be reduced to 5% of debtors.
(6) Debenture interest outstanding GH400.
(7) The directors propose to pay a 5% ordinary dividend and the final preference dividend, and
to transfer GH8,000 to general reserve.
(8) Goodwill is to be amortised over five years.


Page55
Requirement
Prepare for internal use the trading and profit and loss account for the period for the period ended
30 September 2007 and a balance sheet at that date.

Question 49: Alluwako Company Ltd
The draft balance sheet of a small company, Alluwako Ltd, has been prepared by an inexperienced
accountant in the form set out below. It will be noted that he has not been able to balance his
figures.

Balance sheet at 31 October 2003
GH GH GH
Fixed assets:
Plant, fixtures, fittings and equipment, at cost 98,420
Accumulated depreciation (32,760)
65,660
Current assets:
Stocks 32,183
Debtors 21,072
Prepayments 1,568
Bank 13,427
68,250
Less Creditors falling due within one year:
Creditors 16,402
Taxation 14,267
Proposed dividend 5,000
(35,669)
32,581
98,241
Share capital:
Authorized 80,000 shares of GH1 each
Issued 50,000 shares of GH1 each fully paid 50,000
Share premium 10,000
Unappropriated profits 25,262
10% debentures 15,000
100,262

Investigation has produced the following information.
(1) The companys depreciation policy has always been to provide depreciation at the rate of
20% per annum on the cost of fixed assets taking account of the dates of acquisitions and
disposals.
Equipment costing GH15,000 on 30 April 2001 was sold for GH7,250 on 30 June 2003.
The receipt of GH7,250 has been duly debited in the cash book, but in error, has been
credited to the trading sales account. No other entries have been made.
(2) GH4,000 10% debentures were redeemed on 30 October 2003 at a premium of 5%. The
amount paid has been credited in the cash book but no other entries made. The question of
debenture interest has been dealt with correctly.

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(3) On 31 August 2003 a bonus issue of shares (not ranking for dividend in the year of issue)
was made on the basis of one new share for every ten held. No entries to record this issue
have been made.
(4) A debit balance of GH 1,901 on a suppliers ledger account in the purchases ledger has
been carried down as GH1,091 and then inadvertently added to the total of suppliers
credit balances.
(5) A provision of GH5,145 has been made in respect of doubtful debts and this amount has
been debited to profit and loss account and deducted from debtors in the balance sheet at 31
October 2003 . The accountant has, however, overlooked the fact that there was a credit
balance of GH3,171 on doubtful debts account at 1 November 2002.
(6) Accrued rent of GH1,000 at 31 October 2003 has been duly debited to rent account but
carried down as a debit balance and included under prepayments in the balance sheet.
(7) The company wishes to maintain a large balance as possible of unappropriated profits.
It is the companys policy to net off all balances standing on the purchases ledger, and
similarly with the sales ledger.

Requirement
Prepare for review by the Directors of Alluwako Ltd an amended balance sheet at 31 October 2003.

Question 50: Biafra Bambara Company Ltd
The following trial balance has been extracted from the books of account of Biafra Bambara plc at
31 March 2008.
GH000 GH000
Administrative expenses 210
Called up share capital (ordinary shares of GH1 fully paid) 600
Debtors 470
Bank overdraft 80
Corporation tax (overprovision in 2007) 25
Provision for pension costs 180
Distribution costs 420
Fixed asset investments 560
Investment income 75
Plant and machinery
At cost 750
Accumulated depreciation (at 31 March 2008) 220
Profit and loss (at 1 April 2007) 240
Purchases 960
Stock (at 1 April 2007) 140
Trade creditors 260
Turnover 1,950
Interim dividend paid 120
3,360 3,630


Page57
(1) Stock at 31 March 2008 was valued at GH150,000.
(2) The following items are already included in the balances listed in above trial balance.
Distribution Administrative
Costs expenses
GH000 GH000
Depreciation (for year to 31 March 2008) 27 5
Hire of plant and machinery 20 15
Auditors remuneration - 30
(3) The corporation tax rate is 33%.
(4) The corporation tax charge based on the profit on ordinary activities is estimated to be
GH54,000.
(5) The provision for pension costs is to be increased by GH16,000. The increase should be
charged to administrative expenses. No pensions are expected to be paid for the foreseeable
future.
(6) The companys authorized share capital consists of 1,000,000 ordinary shares of GH1
each.
(7) There were no purchases or disposals of any fixed assets in the year and corporation tax is
33%.

Requirement
Insofar as the information permits, prepare the companys published profit and loss account for the
year to 31 March 2008 and a balance sheet at that date in a form suitable for publication to
members. Include notes on operating profit, taxation, fixed assets, creditors, share capital and
reserves
An accounting policies note is not required.

Question 51: Olusegun International Plc
Olusegun International plc has an authorized share capital of 500,000 GH1 ordinary shares and
200,000 GH1 6% Preference Shares. At 1 January 2008 the issued share capital was 100,000
GH1 Ordinary Shares and 50,000 GH1 preference shares. On 31 March 2008 the directors wish
to raise finance and the company issues a further 100,000 ordinary shares at GH1.50 and 50,000
preference shares at par.

On 30
th
September 2008, there was a bonus issue of 1 ordinary share for every 5 held
On November the same year, there was a right issue of 1 preference share for every 10 held at
GH1.25; the market value of the shares at that date was GH1.50. The right issue was fully taken
up by the preference shareholders.

Required:
Record the above transactions in the books of Olusegun International plc and show the relevant
extracts of the balance sheet at 31 December 2008.


Page58
Question 52: New Generation Hoteliers Ltd
The summarized balance sheet of New Generation Ltd at 31 March 2006 appears as follows.
GH GH
Sundry net sheets 300,000 Ordinary GH1 shares 100,000
6% GH1 preference shares 60,000
Share premium account 20,000
Revaluation reserve 30,000
300,000 300,000

The directors propose to pay a dividend to the preference and ordinary shareholders.
Requirement
What is the maximum dividend per share which can be paid for each type of share? Would the
directors wish to distribute the maximum dividend to the ordinary shareholders?

Question 53: Alhaji Lankan Ltd
The following list of balances was extracted from the books of Alhaji Lankan Ltd at 31 Dec. 2004.
GH GH
GH1 ordinary shares 150,000
8% GH1 preference shares 50,000
Land and buildings at cost 111,000
Plant and machinery at cost 382,000
Undistributed profit at 1 January 2004 35,000
Stock at 1 January 2004 35,000
Sales 290,000
Discounts allowed and received 3,200 4,600
Provision for depreciation plant and machinery 85,000
Bank 3,200
Carriage inwards 1,100
Purchases 165,000
Suspense account 400
Wages 23,500
Lighting and heating 2,900
Office salaries 8,600
Debenture interest 7,000
Directors fees 12,800
Interim dividends
Ordinary (5%) 7,500
Preference (4%) 2,000
General expenses 11,900
829,000 829,000

Page59

Inspection of the books and records of the company yields the following additional information.
(1) On 31 December 2004 the company issued bonus shares to the ordinary shareholders on a 1
for 10 basis. No entry relating to this has yet been made in the books.
It is intended that there should be the minimum deduction in distributable reserves.
(2) The authorized share capital of the company is 200,000 GH1 ordinary shares and 50,000
8% GH1 preference shares.
(3) Stock at December 2004 was valued at GH41,000.
(4) The suspense account (GH400) relates to cash received for the sale of some machinery on
1 January 2004. This machinery cost GH2,000 and the depreciation accumulated thereon
amounted to GH1,500.
(5) The directors, on the advice of an independent valuer, wish to revalue the land and buildings
atGH180,000, thus bringing the value into line with the current prices.
(6) Wages owing at 31 December 2004 amounts to GH150.
(7) Depreciation is to be provided on plant and machinery at 10% on cost.
(8) General expenses (GH11,900) include an insurance premium (GH200) which relates to
the period 1 April 2004 to 31 March 2005.
(9) The provision for doubtful debts is to be 2.5% of debtors.
(10) The directors wish to provide for
(i) a final ordinary dividend of 5%
(ii) a final preference dividend.

Requirement
Prepare a trading and profit and loss account for Alhaji Lankan Ltd for the year ended 31 December
2004 and a balance sheet at that date in a form suitable for internal use.

Question 54: Alfa and Omega Company Ltd
The Alfa and Omega Co. Ltd, a retail business, has an authorized share capital of 200,000 GH1
ordinary shares and 250,000 8% GH1 redeemable preference shares.
(a) The trail balance of the company at 31 December 2005 (after preparing the profit and loss
account) was as follows.
Provision for depreciation: GH
Fittings 75,000
Vehicles 187,000
Goodwill at cost 60,000
Issued share capital:
100,000 GH1 ordinary shares 100,000
250,000 8% GH1 redeemable preference shares 250,000
Trade debtors and prepayments 85,000
Land and building at valuation (cost GH220,000) 270,000
Capital redeemable reserve 150,000
Fitting at cost 175,000
Motor vehicles at cost 397,000
Trade creditors and accruals 48,000
Short-term investments (market value GH43,000) 39,000

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Stock at 31 December 2005 148,000
Revaluation reserve 50,000
Undistributed profit at 1 January 2005 73,000
Interim dividends paid:
Ordinary 5,000
Preference 10,000
The directors wish to:
(i) transfer GH25,000 to general reserve
(ii) provide for a 5% final ordinary dividend, and the final preference dividend

Requirement
(a) Prepare for internal use the appropriation account of the Alfa and Omega Co Ltd for the
year ended 31 December 2005 and a balance sheet at that date. (Ignore taxation).
(b) Write a short response to the following questions based on the above accounts.
(i) When can the company issue the balance of its share capital?
(ii) How could the goodwill have arisen?
(iii) Assuming that the company had the cash, what is the maximum amount which could
be distributed by way of dividend?
(iv) Why should the market value of the ordinary shares differ from their book value?
(v) What is significance of the share premium account?

Question 55: Egue Kportufe Garages Ltd
Egue Kportufe Ltd was formed on 1 January 2007 to operate a garage business. The following
information relates to the first years activities:
(1) On 1 January 2007 100,000 ordinary shares of 25p each were issued fully paid at 35p each.
The proceeds were used to purchase freehold land.
(2) On 1 January 2007 a 15% debenture stock was issued at par raising GH4,000. Interest is
payable on 1 January annually in arrears.
(3) On 31 December 2007 a plot of land with an apportioned cost of GH5,000 on 1 January
2007 was sold for GH8,000; the remainder of the land was revalued at GH42,000 for
inclusion in the accounts.
(4) A stock of tyres costing GH1,000 had been omitted from the stocktaking on 31 December
2007. Of this stock tyres costing GH600 were expected to realise GH7,500 but the
remaining tyres were defective and were expected to realise between GH100 and GH150.
(6) There is a legal claim outstanding against the company for faulty workmanship and the
probable cost is expected to be in the region of GH300 to GH500.
(6) On 1 July 2007 a 1 for 10 bonus issue was made.
(7) The board of directors has recommended
- the payment of an ordinary dividend of 3p per share, and
- the transfer of GH4,000 to debenture redemption reserve.
(8) The draft trading profit for the year before and making any adjustments relating to be
forgoing was GH14,550.

Page61

Requirements
(a) Write up an adjusted profit and loss and appropriation account for the year ended 31
December 2007.
(b) Prepare an extract of the balance sheet as at that date (suitably classified insofar as the
information permits) to show shareholders funds.
(c) Draft a note for a director with no technical understanding of accounting explaining:
- the nature and purpose of each reserve at the year-end, and
- the return on capital employed for the year.

Question 56: ZoomVultures Ltd, Developers of Cleaning Products
(a) On 1 April 2004 ZoomVultures Ltd was incorporated. A bank account was opened and
GH350 paid for formation expenses.
(b) Details of the company and of shares issued are as follows.
Directors Cyril Suleman Garibah, Georgio Ekegey and Mrs Gloria C. Garibah
Secretary Mrs Doris Ekegey
Business The takings on of cleaning contracts and the development and sale of cleaning
liquids and polishes
Share Authorised - GH15,000 in shares of GH1 each; Issued - see below.
Shareholders No of shares Price Receipts paid into
bank account
GH
C S Garibah 3,000 par 3,000
G Ekegey 3,000 par 3,000
Mrs Garibah 500 par 500
Mrs Ekegey 500 par 500
Various relatives 3,000 GH1, 20 3,600
(c) On 1 October 2004 the company bought a window-cleaning business for GH8,250. The
tangible assets consisted of ladders and sundry equipment valued at GH1,200 and vehicles
at GH4,050. No liabilities were taken over. The reputation established by the business
purchased is likely to be benefit to ZoomVultures Ltd over the two years to 1 October 2006
(d) In February 2005 a defective polisher seriously damaged a customers flooring. The claim
for damages (not covered by insurance) was settled in May 2005 for GH2,750.
(e) Apart from those arising fro the information given in (a) to (d) above, the companys
transactions for the year to 31 March 2005 are set out below.
(i) Receipts and debtors Received and Debtors at 31
Paid into bank March 2005
GH GH
Amount received and outstanding under cleaning contracts:
For quarter years ended before and on
31 March 2005 99,000 6,150
For quarter year ending 30 April 2005 8,400 2,400
For quarter year ending 31 May 2005 12,000 5,400
(Note that all contacts provide for
quarterly instalments payable in advance)

Page62
Window cleaning receipts 13,165 -
Sales of liquid and polishes 21,060 1,385
(ii) Payments and creditors Paid out Creditors at 31
of bank March 2005
GH GH
Large electrical polishers 20,500 -
Small items of cleaning equipment 4,750 -
Wages, PAYE and National Insurance 74,660 2,905
Administrative and property costs 10,075 220
Purchases of liquids and polishes 15,030 910
Secretarys fees 4,000 -
Accountancy charges 650 250
Audit fee - 800
(f) The directors have not drawn any remuneration during the year but it is proposed that
directors fees for the year totalling GH21,000 should be provided.
(g) A dividend of 25p per share is proposed for the year to 31 March 2005.
(h) Corporation tax is to be provided on the basis of 30% of the net trading profit of the year.
(i) At 31 March 2005 there were the following stocks of cleaning liquids and polishes.
Cost Net realizable Value
GH GH
Liquids X and Y 1,485 2,125
Liquid Z 750 325
Polish 1,820 3,140
(j) The large electrical polishers are expected to have a four year life and to have a residual
value of GH500. The total cost of ladders and all small items of equipment are to be
depreciated at 33
1
/
3
% based on cost and in use at the year-end.

Requirement
Prepare for internal use a trading and profit and loss account for the year ended 31March 2005,
together with a balance sheet at the date.

Question 57: Motorway J umpers Transportations
Motorway Jumpers Ltd is a general transport company. It also provides storage facilities which
customers can hire on a long-term or short-term basis.
At 31 December 2005 the companys ledger included the following lists of balances.
Assets: GH
Premises (note 5) 675,300
Vehicles 1,141,700
Plant and machinery 203,200
Stock (closing) of repair materials, fuel oil etc 154.031
Trade debtors:
Storage 15,503
Haulage 131,480
Bank 42,356

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Cash 7,063

Liabilities:
Provisions for depreciation at 1 January 2005:
Premises 117,800
Vehicles 472,400
Plant and equipment 51,100
Trade creditors (note 1) 125,607
Ordinary share capital (note 3 and 4) 800,000
6% preference share capital (note 4) 50,000
General reserves 40,000
Profit and loss account at1 January 2005 46,823
Revenues: Storage rentals:
Long-term contracts 151,260
Casual 29,752
Haulage charges 1,734,611
Expenses:
Wages, salaries and related charges (note 5) 581,826
Rates 62,500
Power, heat and light 86,330
Repairs:
Vehicles 91,413
Other (note 5) 156,494
Diesel oil, etc 179,809
Postage, stationery, telephone 25,605
Insurance 21,480
Debenture interest 4,500
Sundry expenses 11,273
Other
Suspense account (debit balance) (notes 1, 2 and 3) 82,490
Notes at 31 December 2005
(1) In September 2005 a consignment of avocados was delayed in transit due to the negligence
of the transport manager. Motorway Jumpers Ltd was transporting these goods for Wayo
Boomboom Farms Ltd. As a result the entire consignment deteriorated to such an extent that
it had to be destroyed on arrival at its destination.
The total cost of this loss, which has been assessed at GH84,680, has been claimed from
the company by Wayo Boomboom Farms Ltd. It has been debited to suspense account and
temporally credited to trade creditors prior to being settled in contra at 31 December 2005.
The claim is not covered by the companys insurance policy.
(2) In October 2005 one of the vehicles was seriously damaged in an accident. Repairs costing
GH37,810 were carried out in the companys own vehicles workshops. The cost has been
held in suspense account pending the outcome of the claim under the insurance policy. This
has now been agreed in full.
(3) On 1 September 2005 the company had declared a 1 for 20 bonus issue of ordinary shares
(which do not rank for dividend until 2006). The amount involved has been appropriated out
of general reserve and credited to suspense account.

Page64
(4) The issued share capital consists of 6% preference shares of GH1.00 per share and
ordinary shares of GH0.50 per share. The directors have recommended payment of the
preference dividend and an ordinary dividend of GH0.075 per share.
(5) During 2005 the company had extended one of its warehouses and used its own labour and
materials in the construction. The amounts expended are included in the above list under
wages (GH52, 00) and repairs other (GH148,000).
(6) Depreciation is provided on a straight-line basis on the cost of fixed assets held at the end of
each financial year and assuming no residual value. Assumed asset lives are:
Premises 50 years
Vehicles 5 years
Plant 8 years
(7) The companys liability for corporation tax for the year 2005 has been estimating at
GH90,000.
(8) Adjustments, not yet posted to the accounts, should be made for
GH
Storage rentals (long-term contracts) prepaid by customers 13,644
Power charges accrued 5,005
Telephone rentals prepaid 207
Telephone calls accrued 548
Rates prepaid 16,730
Wages accrued 10,834
Insurance prepaid 1,747

Requirement
(a) Open the suspense account and post the entries needed to eliminate the opening debit
balance.
(b) Prepare for internal use the profit and loss account for Motorway Jumpers Ltd for the year
ended 31 December 2005 and balance sheet at that date.

Question 58: Amazing Freddy Company Ltd
Amazing Freddy Ltd has an authorized share capital of 800,000 ordinary shares of 50p each.
The trial balance extracted from the books of account of the company as at 31 March 2001 showed
the following position:
GH000 GH000
Accumulated depreciation at 1 April 2000 927
Administrative expenses 273
Bank overdraft 76
Bank interest 12
Creditors 231
Debtors 169
Distribution costs 155
Interim dividend paid 16
Fixed assets at cost:
Freehold property 1,440
Plant and machinery 765
Furniture and fittings 264

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Debenture loan 94
Debenture loan interest 14
Retained profit at 1 April 2000 591
Purchases 2,454
Rent received 28
Sales 3,320
Share capital 400
Stocks at 1 April 2000 112
Corporation tax 7
5,674 5,674
You also obtain the following information.
(1) Stocks at 31 March 2001 have been valued at GH176,000.
(2) Freehold property, plant and machinery, and furniture and fittings are written off on a
straight line basis over periods of forty year, four years and eight years respectively. None
of the assets has been fully depreciated. Depreciation has not yet been provided for the
current year.
(3) The companys debtors included an amount of GH14,000 relating to an overseas customer
who is currently in liquidation. The directors wish to make provision for the full amount of
the debt as an administration expense.
(4) A revenue grant received on 1 April 2000 of GH45,000 covering a five year period has
been incorrectly credited in full against the cost of plant and machinery.
(5) Corporation tax of GH56,000 is (based on 33%) to be provided for the year. The balance
on the corporation tax account has resulted from an over-provision for tax payable in the
previous year.
(6) The directors proposed a final dividend for the year of 3p per ordinary share.

Requirement
Prepare the profit and loss account of Amazing Freddy Ltd for the year ended 31 March 2001, in a
form suitable for presentation to members. An accounting policies note should be included,
together with notes on operating profits, taxation, dividends and reserves.

Question 59: Cazmil Public Limited Company (Plc)
Cazmil plc is a company with an authorised share capital of GH1 each. The company prepares its
accounts to 31 March each year and the preliminary trial balance, before final adjustment, shows
the following position as at 31 March 2005.
GH GH
Ordinary share capital, issued and fully paid 200,000
Retained profit at 1 April 2004 61,000
6% debenture stock (secured on leasehold factory) 60,000
Leasehold factory
Cost at 1 April 2004 200,000
Accumulated depreciation at 1 April 2004 76,000
Plant the machinery
Cost at 1 April 2004 80,000
Accumulated depreciation at 1 April 2004 30,000
Addition in year 10,000

Page66

Creditors and accrued expenses 170,000
Stock at 31 March 2005 160,000
Debtors 100,000
Prepayments 80,000
Profit for year (subject to any items in the following notes) 111,000
Sale proceeds of plant 12,000
720,000 720,000
You ascertain the following.
(1) Annual depreciation is calculated as follows:
Leasehold factory 2% on cost
Plant and machinery 20% reducing balance on NBV at 1 April 2004 plus addition
less disposals in the year
(2) The lease of a factory is a long lease.
(3) The debenture stock is repayable at par by six equal annual amounts starting on 31
December2005
(4) A dividend of 20% is proposed.
(5) Plant disposed of originally cost GH16,000 with accumulated depreciation of GH3,200.

Requirement
Prepare the balance sheet at 31 March 2005, in a form suitable for publication.
An accounting policies note is required, together with notes on fixed assets, debtors, creditors, share
capital and reserves

Question 60: Suleman Garibah Company Ltd
You are presented with the following summarised trial balance of Suleman Garibah Ltd in respect
of the year ended 31 March 2005. GH GH
Ordinary share capital (25p shares) authorized and issued 100,000
Plant and machinery: Cost 307,400
Depreciation 84,600
Debtors 52,030
Creditors 38,274
Stock of finished goods 61,070
Profit and loss b/f 45,910
Cash at bank 41,118
Cash in hand 126
Sales 998,600
Interim dividend paid 2,500
9% debenture stock 2009 75,000
Cost of sales 800,000
Administrative expenses 100,000

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1,364,244 1,364,244
The following final adjustments are required.
(1) The provision for doubtful debts is to be adjusted to 5% of the debtors figure. The charge is
to be included in administrative expenses.
(2) Corporation tax on the current years profits is estimated at GH31,200, the rate of the tax
being 33%.
(3) Depreciation at 10% of cost is to be provided. The charge is to be included in cost of sales.
There have been no additions or disposals of fixed assets during the year.
(4) The directors proposed a dividend o\rate of 3 pesewas per share.
(5) Interest for the year to 31 March 2005 was paid on 1 April 2005. No accrual has been made.
(6) Included in administrative expenses is a charge for GH4,000 for auditors remuneration.
Requirement
As far as the above information permits prepare, in a form suitable for presentation to members, a
profit and loss account for the year ended 31 March 2005 and a balance sheet as at that date.
Include notes on turnover, profit, taxation, dividends, assets, stocks, creditors, share capital and
reserves.

Question 61: Gasu Quofie Plc Farm Equipments
Gasu Quofie plc has traded for many years as a manufacturer of farm machinery. The trial balance,
after the preparation of the draft trading and profit and loss account for the year ended 31 October
2004, was as follows:
Dr Cr
Freehold land and buildings: GH GH
Cost 124,000
Accumulated depreciation at 31 October 2004 64,000
Plant and machinery: Cost 860,000
Accumulated depreciation at 31 October 2004 309,478
Stock at 31 October 2004:
Raw materials 57,128
Finished goods 33,347
Trade investment 8,600
Ordinary shares of 50p each (fully paid) 200,000
15% Preference shares of GH1 each (fully paid) 120,000
12% Debentures 2010 70,000
Profit and loss account, unappropriated balance, 1 November 2003 304,942
Net profit for year to 31 October 2004 192,900
Dividend from trade investment 1,520
Interim ordinary dividend 6,000

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1,481,940 1,481,940

(1) Certain items which the bookkeeper, Mr Sarpong, was unable to deal with were posted to a
suspense account which is made up as follows.
GH
Proceeds of issue of 120,000 ordinary shares of 50p 90,000
Sale of trade investment 12,400
102,400

(2) The provision for doubtful debts is to be adjusted to 5% of the trade debtors.
(3) Certain stocks of finished goods costing GH12,000 (and included in the GH33,347
above) are considered obsolete. The expected net realizable value is GH2,700.
(4) The board of directors has made the following recommendations.
(i) The payment of the preference dividend for the year.
(ii) The payment of an ordinary dividend of 10p per share.
(5) During the year a reputable firm of chartered surveyors, Freaks & Tweaks, revalued the land
by GH15,000 (original cost GH23,000). The directors wish to incorporate this into the
accounts. There have been additions of plant and machinery during the year of GH25,000
but no other movements.
The following depreciation was charged for the year.
Freehold land and buildings GH2,500
Plant and machinery GH27,937
(6) The corporation tax charges for the year ended 31 October 2004 is estimated at GH15,200.
This has not been paid at the year-end and is included in trade creditors.
(7) The authorised share capital is as follows.
15% preference shares 200,000 at GH1 each
Ordinary shares 750,000 at 50p each
Requirement
As far as the information permits prepare a balance sheet as at 31 October 2004 in a form suitable
for presentation to members. Include notes on assets, stocks, creditors, share capital and reserves.


Page69
CHAPTER 6 FUNDAMENTAL ACCOUNTING CONCEPTS
Question 62: Nature and Purpose of SSAPs

What is the nature and purpose of Statements of Standards Accounting Practice and Financial
Reporting Standards?

Question 63: Fundamental Accounting Concepts
SSAP 2 names four fundamental accounting concepts which underlie the preparation of accounts.

Requirement
Describe these concepts and give an example of the application of each.

Question 64: Freddys Conner, Bepos and Jargoos
During the examination of the financial records of various company clients you find the following
material items:
(a) The profit and loss account of Freddys Conner Ltd for the year ended 30 June 2003 has
charged therein GH16,400, being general rates payable for thee year commencing 1 April
2003, and GH15,000 being rent paid for the quarter to 30 September 2003.
(b) In the accounts for the year ended 31 May 2003, Bepos Ltd has included in sales
GH40,000 which represents goods sent to customers on a sale or return basis.
(c) On 31 August 2003 Jargoos Ltd has stocks and work in progress in the balance sheet at cost,
including apportioned overheads, amounting to GH110,000. Information available
indicates that sales have been falling rapidly in the last six months following the
introduction to the market of a rival product of improved specification and lower price. The
company has an issued share capital of GH20,000 and a debit balance on reserves of
GH2,500 on 31 August 2003.

Requirement
Write short memoranda to the directors of each of the above companies explaining the fundamental
accounting concepts involved and the adjustment, if any, to their accounts which you consider
necessary.

Question 65: Needs of Accounts Users
Who uses accounts? Do their needs vary with the size of concern?

Question 66: Atongo, The Science Student
Atongo has never heard of accounting concepts, and would certainly not know what to do with
them if he came across them.


Page70
Requirement
Prepare notes for a meeting with Atongo in order to explain to him which of the fundamental
accounting concepts would cause you to make adjustments to the accounts of his business in the
following circumstances. Give your reasons.
(Assume that each circumstance is separate from and not dependent on the others.)
(a) He has no idea what his electricity bill will be for the last two months of the financial year,
since he has not yet received it. He proposes to account only for what has already been paid.
(b) His cash register will last for years and he is willing either to write it off completely in the
year of purchase or to carry it as a fixed asset at cost price in the balance sheet. He cannot
see any point in any half-way-house between the two.
(c) At the latest year-end, 31 December 2004, he had several large outstanding orders for
prunes, which did not arrive until two days after the year-end. He dispatched them to the
customers on the same day, and considers them to be sales for the year 2004 rather than
2005.
(d) Atongos assistant, Hotman, has left and has opened a cut-price supermarket a few streets
away from his shop. Customers are flocking to Hotman and the bottom is falling out of
Atongos market. Much of his stock has passed its sell-by dates.

Question 67: J orgbenue Gee Plc
The following information relates to government grants received and receivable by Jorgbenue Gee
plc, who operates children recreation centre in Manchester UK.

Employment grant
This is grant of 3,000 towards employment costs incurred during 2007. The grant has not yet been
received but the conditions for receipt have been met.

Capital grant
A grant of 60,000 was applied for in 2007 to help finance the acquisition of new game machines
costing 200,000. The machinery was acquired on 31 March 2007 and is expected to last for ten
years, after which it will have a residual value of 20,000. Straight line depreciation is to be
charged from the date of acquisition. The grant was received on 30 September 2007.

Requirement
State how each of these grants should be accounted for in accordance with SSAP 4 Accounting
treatment of government grants in the financial statements for the year ended 31 December 2007.

Question 68: Principles of SSAP 9
SSAP 9 lays down the principles to be followed by enterprises relating in particular to valuations.

Requirements
(a) Describe the fundamental accounting concepts that have been applied to the valuation of
stock in the recommendations in SSAP 9.
(b) Explain how SSAP 9 requires the following to be dealt with.
(i) Overheads.
(ii) The determination of the lower of costs and net realizable value.

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(iii) The identification of costs of stocks where there are large numbers of identical
items.
What are the disclosure requirements of SSAP 9 and the Companies Act 1985 of England in respect
of stocks?

Question 69: Monallissa Ltd, A Processing Company
Monallissa plc processes and sells a single product. Purchases of raw material during the year were
made at a regular rate of 1,000 tons at the beginning of each week. The price was GH100 per ton
on 1 January 2007 and was increased to GH150 per ton on 1 July 2007 remaining constant from
then until the end of the year, 31 December 2007. In addition to this price a customs duty of GH10
per ton was paid throughout the year, and transport from the docks to the factory cost GH20 per
ton.

Variable costs of processing were GH25 per ton and the fixed production costs were GH30,000
per week. One ton of raw material is processed into one ton of finished product and sold, at a
delivered price of GH240 per ton. Average delivery costs to customers were GH7.50 per ton.

At the beginning of the year there were no stocks and at the end of the year there were 5,000 tons of
raw material and 2,000 tons of finished product. It is expected that the costs and prices current at 31
December 2007 will continue during 2008.

Requirements
(a) Draft an accounting policy statement on stock for the company to include in its annual
accounts.
(b) Calculate the value of stock at 31 December 2008 using the FIFO basis under SSAP 9.

Question 70: Logba Young Plc
Your client, Logba Young plc, wishes to defer development costs where possible and has asked for
your advice on what procedures to set up in order to identify any relevant costs.

Requirement
Write a letter to the Finance Director of Logba Young plc which addresses his concerns

Question 71: Suzzy Selase Gee Study Notes
Your office has agreed to employ Suzzy Selase Gee, an eighteen-year-old student, between school
and university for a few months in the summer vacation in order to assist with some clerical work
and to find out what accountancy is all about.

You are asked to spend some time with her and to take her through a set of accounts, using a public
company client as your example. After a first look at the accounts, Madeline has expressed
particular interest in
- the nature and purpose of a set of accounts
- the difference between fixed assets and current assets

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- the nature of debentures.
Requirement
Prepare notes for your session with Madeline, bearing in mind that she should learn as much as
possible rather than receiving bare answers to her questions

Question 72: Accounting Terminologies as per SSAP2
(a) It is fundamental to the understanding and interpretation of financial accounts that those
who use them should be aware of the main working assumptions on which they are based,
of the various alternative methods which are available to apply such assumptions, and of the
method selected as being most appropriate for adoption in the circumstances of the
business.

Requirement
In the context of the above quotation, discuss the steps which have been taken by the
Accounting Standards Board (in statement of standard Accounting Practice No 2) to
standardize terminology and to promote improvement in the quality of information
disclosed. Your discussion should be illustrated by reference to the valuation by a limited
company of stocks on hand at the end of an accounting period.

(b) A shareholder in a limited company is disgusted because the company has paid such a small
dividend.
He shows you the balance sheet, saying Just look at the other balances available for
dividend. He indicates the following items.
(i) Share premium account GH200,000
(ii) Fixed asset replacement reserve GH50,000
(iii) Contingencies reserve GH85,000
Requirement
Advise him concisely on the availability of the above balances for dividend declaration.

Question 73: Benjamin K Onimangbori Queries
Benjamin K Onimangbori has been sent to Ghana by his father to set up a subsidiary of the family
paint company. You act as his accountant and have sent him a draft of the accounts for the year
ended 30 September 2007.

Unfortunately his business studies degree has not covered the essentials of accountancy, and he has
written to you with the following queries.
(1) I always thought that accountancy was all about debits and credits, and that debits were
bad things to have and credits were good. But I see from what you call my trial balance
that my premise, my inventory are all called debits. Whats wrong with them?
(2) I just cant get used to your English way of writing off my inventory. You have written all
those stocks of psychedelic paint down to zero and I can understand that: no one wants it
nowadays. But you havent written anything off the spare parts for the new Let-us-Spray
gun which we manufacture: they havent moved at all because the product is so new. If it
hasnt moved, why not write it off?

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(3) Apparently VAT means value added tax. I cant figure how it works. If our sales are
greater than our purchases, the VAT we charge on sales is greater than the VAT we pay on
purchases. So how come we owe the Internal Revenue instead of them owing us?

Requirement
Write a letter in reply, answering the queries in language which a layman can understand.
(Write as from a firm, using a fictitious name and address.)

Question 74: Fundamental Accounting Concepts SSAP2
Explain the difference between a fundamental accounting concept, an accounting base and an
accounting policy.
Illustrate your answer in the context of the following areas.
(a) Tangible fixed assets
(b) Stocks
(c) Hire purchase contracts


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CHAPTER 7 CASH FLOW STATEMENTS

Question 75: Darryl Amfic Company Ltd
The financial statements of Darryl Amfic Ltd at 30 June were as follows.
2007 2006
GH GH GH GH
Fixed Assets
Building: cost 22,000 12,000
depreciation (4,000) (1,000)
18,000 11,000
Plant & machinery: cost 5,000 5,000
depreciation (2,250) (2,000)
2,750 3,000
20,750 14,000
Current Assets:
Stock 16,000 11,000
Debtors 9,950 2,700
Bank and cash - 25,950 1,300 15,000
Creditors: amounts falling due within 1 year:
Bank overdraft 11,000 _
Tax creditor 1,800 1,000
Accrual for interest 700 200
(21,500) (12,200)
Creditors amounts falling due after 1 year
Loan (6,000) (10,000)
19,200 6,800

GH GH
Represented by
Ordinary share capital 3,000 3,000
Profit and loss account 16,200 3,800
19,200 6,800

2008 2007
Profit and loss account (extracts) GH GH
Opening profit 15,400 5,900
Interest charge (1,000) (1,400)
Profit before tax 14,400 4,500
Taxation (2,000) (1,500)

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Retained profit for the year 12,400 3,000
Machinery of net book value GH250 was sold at the beginning of 2007 for GH350. This
machinery had originally cost GH1,000. In recent years, no dividends have been paid.
Requirement
Prepare a cash flow statement, with notes, for the year ended 30 June 2007.

Question 76: GBEBSUK Ltd
The following are the summarized accounts of GBEBSUK Ltd.
Balance sheets at 31 December
2006 2007
Fixed assets: GH000 GH000 GH000 GH000
Plant and Machinery 2,086 2,103
Fixtures and Fittings 1,381 1,296
3,467 3,399
Current assts
Stock 1,292 1,952
Debtors 1,763 2,086
Cash 197 512
3,252 4,550
6,719 7,949
Less Creditors: Due within one year:
Proposed dividends 132 154
Taxation 257 312
Trade creditors 899 903
(1,288) (1,369)
5,431 6,580
Capital and reserves:
Share capital 4,200 4,500
Share premium 800 900
Profit and loss account 431 1,180
5,431 6,580

Profit and loss account for the year ended 31 December 2007
GH000 GH000
Profit before taxation 1,381
Taxation (310)
Profit after taxation 1,071
Less Dividends: Paid 168
Proposed 154
(322)
Retained profit 749
Profit and loss account b/f 431

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Profit and loss account c/f 1,180

You are informed that
(1) Plant and machinery with a net book value of GH184,000 was disposed of for
GH203,000, whilst a new item of plant was purchased for GH312,000
(2) Fixtures and fittings with a net book value of GH100,000 were disposed of for
GH95,000; depreciation provided on fixtures and fittings amounted to GH351,000.

Requirement
Prepare a cash flow statement, with notes, for the year ended 31 December 2007.

Question 77: Kojo Agyeman Motor Component Plc
Kojo Agyeman Motor components plc has prepared the summarized accounts as set out below.
Profit and loss accounts for the years ended 30 April 2007 2006
GH000 GH000
Turnover 74,680 69,937
Cost of sales (51,595) (47,468)
Gross profit 28,085 22,469
Distribution and administration costs (17,581) (16,920)
Operating profit 5,504 5,549
Premium on redemption of debentures (100) _
Taxation (2,634) (1,093)
Retained profits 1,920 3,696
Balance sheets at 30 April 2007 2006
GH000 GH000 GH000 GH000
Fixed assets at cost or valuation, less depreciation 30,946 25,141
Currents assets
Stocks and work in progress 16,487 15,892
Debtors 12,347 8,104
Investments at cost 7,100
Cash at bank 863 724
36,797 24,720
Less Creditors falling due within one year (6,767) (5,105)
Net current assets 30,030 19,615
Total assets less current liabilities 60,976 44,756
Less Creditors falling due after one year (3,250) (4,250)
57,726 40,506
Share capital - GH1 ordinary shares 13,000 10,000
Share premium account 12,500 5,000
Revaluation reserve 7,450 2,650

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57,726 40,506
Notes relating to the accounts
(1) Fixed asset analysis 2007 2006
GH000 GH000
Freehold land and buildings 25,100 19,780
Plant and equipment 5,846 5,361
30,946 25,141

(2) Depreciation has not been provided on freehold land buildings. During the year a
professional revolution taking account of additions during the year has been
incorporated in the books of account. There were no disposals during the year.
(3) Additions to plant and equipment during the year totalled GH1,365,000 at cost. There were
no disposals.
(4) Creditors falling due within one year
2007 2006
GH000 GH000
Trade and other creditors 3,451 3,387
Taxation 2,796 1,238
Dividends 520 480
6,767 5,105

Taxation provided at 30 April 2006 was settled at a figure lower than the amount provided.
(5) Creditors falling due after more than one year relate to 9% deep discount debentures which
pay no interest. The stock redeemed during the year was redeemed at premium of 10%
which was provided out of the share premium account.
(6) During the year the company made a rights issue of shares on the basis of 3 new shares for
every 10 shares held at a price of GH3.50 per share. Pending the purchase of new plant,
part of the proceeds of the issue has been invested.
(7) All the investments were due to mature six months after the date of purchase.

Requirement
Prepare a cash flow statement, with notes, for the year ended 30 April 2007.

Question 78: Selikem Garibah Plc
The summarized accounts of Selikem Garibah plc for the year ended 31 March 2002 are set out
below.
(a) Profit and loss account
GH000
Profit 100
Taxation (40)
60
Proposed dividend (25)

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Retained profit 35

(b) Balance sheet
At 31 march At 31 March
2001 2002
GH000 GH000 GH000 GH000
Fixed assets:
210 Cost 250
(105) Depreciation (160)
105 90
Current assets
330 Stocks and debtors 390
67 Bank 52
397 442
Less Current liabilities
150 Creditors 140
35 Taxation 40
20 Dividend 25
(205) (205)
192 237
297 Total net assets 327

Representing
Share capital
70 70,000 GH1 ordinary shares
100,000 GH1 ordinary shares 100
- Share premium 15
177 Distributable reserves 212
50 Debentures -
297 327

(c) Notes to accounts
(i) The debentures were redeemed during the year at a total premium of GH4,000
which was written off against the premium received on the issue of additional GH1
ordinary shares.
(ii) Fixed assets with a cost of GH28,000 were sold during the year for each of
GH6,000. This sale results in an under-provision for depreciation of GH10,000
which was charged against profits.

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An enthusiastic trainee has been asked to prepare a cash flow statement for the year. This he has
done in the form set out below. He says Ive used all the information given in the accounts and my
statement balances it must be right!

Cash flow statement produced by trainee
GH000
Cash inflows
1 Net profit 60
2 depreciation 55
3 Increase in issued share capital 30
4 Sale of fixed assets 6
5 Share premium 19
170
Cash outflows
6 Dividends 20
7 Taxation charge 40
8 Decrease in books value of fixed assets (15)
9 Loss on sale of fixed assets 10
10 Stocks and debtors 60
11 Bank 15
12 Creditors (10)
13 Redemption of debentures 50
170
Requirement
Prepare an amended statement in the form required by FRS 1.

Question 79: Nzinga Chipolopolo Plc
The summarized balance sheet of Nzinga Chipolopolo Plc at 31 December 2007 and 2008 are as
follows
2008 2007
GH GH
Issued share capital 150,000 100,000
Share premium 35,000 15,000
Debentures 30,000 70,000
Creditors 48,000 34,000
Bank overdraft - 14,000
Corporation tax payable 33,000 21,500

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Proposed dividends 15,000 7,500
Depreciation:
Plant and machinery 54,000 45,000
Fixtures and fittings 15,000 13,000
421,000 334,000

2008 2007
GH GH
Freehold property at cost 130,000 110,000
Plant and machinery at cost 151,000 120,000
Fixtures and fittings at cost 29,000 24,000
Stock 51,000 37,000
Debtors 44,000 42,800
Government stock 4,600 -
Cash at bank 11,400 200
421,000 334,000
The following information is relevant:
(a) There had been no disposal of freehold property in the year.
(b) A machine tool which had cost GH8,000 (in respect of which GH6,000 depreciation had
been provided) was sold for GH3,000, and fixtures which had cost GH5,000 (in respect
of which depreciation of GH2,000 had been provided) were sold for GH1,000. Profits and
losses on those transactions had been dealt with through the profit and loss account.
(c) The profit and loss account charge in respect of tax was GH22,000.
(d) The premium paid on redemption of debentures was GH2,000, witch has been written off
to profit and loss account.
(e) The proposed dividend for 2007 had been paid during the year.
(f) Interest received during the year was GH450. Interest charged in the profit and loss
account for the year was GH6,400. Accrued interest of GH440 is included in creditors at
31 December 2007 (nil at 31 December 2008).
Requirement
Prepare a cash flow statement for the year ended 31 December 2008, together with notes as
required by FRS 1.

Question 80: J une J uly Engineering Business
(a) June Sena and July Segbefia are partners in a precision engineering business, trading as
June July and manufacturing a selective range of machine tools. As a result of the general
recession, business had slumped and the partners had to decide whether to retract or whether
to go for expansion by re-equipping with the latest machinery which would give them a
wider range of marketable products. Encouraged by the probability of some new Ministry of
Defence contracts, the partners took the latter course of action and during the year ended 31
December 2002 have injected a further GH50,000 of capital into the partnership business.
(b) A summary of the partnership balance sheet at 31 December 2002, together with
comparative figures at 31 December 2001, is as set out below:

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GH GH GH GH
2001 Fixed assets (notes 1 & 2) 2002
Plant, equipment, vehicles, fittings and
84,430 and furniture at cost 110,505
(18,070) Less Aggregate depreciation (24,262)
66,360 86,243
18,000 Trade investments at cost 14,500
84,360 100,743

Current assets
42,655 Stocks work in progress at cost 63,798
13,828 Debtors 21,599
7,733 Bank 4,682
64,216 90,079
(23,224) 40,992 Less Creditors due in 1 year (27,341) 62,738
125,352 163,481

Partners accounts
June July Total
100,000 Capital 90,000 60,000 150,000
25,352 Current (note 3) 12,439 1,042 13,481
125,352 102,439 61,042 163,481

(c) Notes to balance sheet summary
(1) Plant and equipment
Assets costing GH15,000 were sold during the year for GH4,200. The
depreciation over-provided at the date of sale totalled GH1,700.
(2) Trade investments
These represent shares in a company which is controlled by relatives of Bob Steele
and which is one of Sterons main suppliers. These shares are held by the
partnership as a permanent investment, but during the year shares costing GH3,500
were sold to a relative for GH6,750.
(3) Current accounts analysis
June July Total
GH GH GH GH GH
Balance at 1 January 2002 16,555 8,797 25,352
Shares of net profit for
year to 31 Dec 2002 30,500 26,105 56,605
47,055 34,902 81,957
Less Drawings
Cash 24,626 26,280
Tax payments 7,540 5,720
Private proportion
of car expenses 2,450 1,860
(34,616) (33,860) (68,476)

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Balance at 31 Dec 2002 12,439 1,042 13,481
(d) July Segbefia is not very good with figures. He says During the year 2002 we raised
between us a further GH50,000 of capital. I cant understand what weve done with it: at
the end of the year our bank balance was lower than it was at the previous year-end and we
owed more to creditors. I know weve bought a lot of new equipment but this doesnt seem
to account for GH50,000.
Requirement
Prepare a cash flow statement for the year ended 31 December 2002. Drawings should be treated as
a return on investment.


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CHAPTER 8 FINANCIAL STATEMENTS ANALYSIS AND
INTERPRETATION
Question 81: Divine Nooque Voluntaries Ltd
Divine Nooque Voluntaries Ltd manufactures brass tubas. You have been asked by a client to
investigate the company with a view to a possible takeover and replacement of the product with
plastic electronic tubes.
You have managed to obtain copies of the last two years accounts (for the years ended 31
December 2007 and 2006). The profit and loss account and balance sheet for these years are set out
below:
Profit and loss accounts
2007 2006
GH000 GH000 GH000 GH000
Turnover 4,500 3,750
Cost of sales (1,800) (1,200)

Distribution costs 900 900
Administrative expenses 1,350 1,355
(2,250) (2,235)

Operating profit 450 315
Interest payable (300) (150)

Profit before taxation 150 165
Taxation (75) (81)
Profit after taxation 75 84
Dividends (36) (60)

Retained profit for year 39 24
Retained profit b/f 36 12
Retained profit c/f 75 36

Balance sheets
2007 2006
Fixed assets: GH000 GH000 GH000 H000
Land and buildings
Cost 2,100 1,500

Depreciation (180) (150)
1,920 1,350
Plant and machinery
Cost 1,350 900
900 600


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Other equipment
Cost 750 600
390 360
3,210 2,310
Current assets
Stocks 192 111
Debtors 180 120
Cash at bank and in hand 45 60
417 291
Creditors Amounts falling due within one year:
Bank overdraft 138 78
Taxation payable 75 81
(312) (255)

Net current assets 105 36
Total current assets less current liabilities 3,315 2,346

Creditors Amounts falling due after one year:
10% debentures (900) (450)
2,415 1,896
Capital and reserves: Share capital
Ordinary shares of GH1 each 2,100 1,500
8% redeemable preference shares of GH1 each 240 360
2,340 1,860
Profit and loss account 75 36
2,415 1,896
Notes
(1) During 2007 some plant, which had cost GH250,000 and had been depreciated by
GH180,000, was sold for GH100,000.
(2) Included in trade creditors is closing accruals for interest of GH20,000 (GH10,000 in
2006).
(3) Included in trade creditors is a creditor for plant purchases of GH10,000.

Requirements
(a) Prepare a cash flow statement, with notes, for the year ended 31 December 2007.
(b) Using appropriate accounting ratios, compare the companys profitability and short term
liquidity for the years 2007 and 2006, and indicate what further information you would need
to back up your comments.


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Question 82: Gloria Suleman Ltd
The following are the balance sheets of Gloria Suleman Ltd at 31 December 2002 and 2001.
2002 2001
Fixed assets: GH000 GH000 GH000 GH000
Land and buildings 70 60
Plant and equipment 40 50
110 110
Current assets:
Stock 77 61
Debtors 60 65
Cash at bank 28 14
165 140

Creditors falling due within one year
Creditors and accruals (100) (70)
65 70
175 180
Share capital
Ordinary GH1 shares 120 100
175 180
Requirement
Calculate for each year the current and quick ratios, and suggest reasons for the changes from 2001
to 2002.

Question 83: GeeBee Fashionable Trading Company Ltd
GeeBee Fashionable ltd is a retail trading company specialising in ladies fashion-wear.
Detailed profit and loss accounts for the years ended 31 December 2004 and 2005 show the
following.
31 Dec 2004 31 Dec 2005
GH GH GH GH
Sales 120,000 150,000
Opening stock 36,000 39,000
Purchases 83,000 136,000
119,000 175,000
Less closing stock (39,000) (62,500)
(80,000) (112,500)
Less Wages and salaries 15,000 16,000
Rates 500 500
Telephone 240 260
Light and heat 400 420
Delivery van expenses 640 250
Repairs and renewals 320 1,000
Bank interest 42 125
Bank commission 45 52

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Audit fee 300 350
Loan interest 100 100
Bad debts 145 2,350
Legal charges 20 100
Depreciation 600 650
(18,352) (22,157)
21,648 15,343

Requirement
Write a short report to the directors commenting on the results shown and the comparison with the
previous year.

Question 84: Brad Pitts Business Ventures
John Doe has provided his son, Brad Pitt, with all the capital required in the setting up of a business
on 1 April 2005 and its subsequent development. Brad has now produced the following
summarized accounts as a basis for discussing the progress of the business with his father.
Trading and profit and loss accounts
Year ended 31 March
2006 2007
GH000 GH000
Sales 100 140
Cost of sales (60) (90)

Gross profit 40 50
Less expenses (32) (51)
Net profit/Net (loss) 8 (1)

Balance sheets
At 1 April At31 March At 31 March
2005 2006 2007
GH000 GH000 GH000
Fixed assets 70 70 80

Net current assets
Stock 5 7 8
Debtors - 11 24
Bank balance/ (overdraft) 13 2 (4)
Less Creditors (3) (5) (8)
15 15 20
Net capital employed 85 85 100

Brad is keen for his father to increase the capital employed in the business and has drawn his
fathers attention to the following matters revealed in the accounts.
(1) A GH15,000 increase in net capital employed can be linked with a GH40,000 increase in
the sales during the past year.

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(2) The rate of stock turnover during the past year has been 12 as compared with 10 in the
previous year.
(3) The increase in fixed overheads last year is due to the renting of larger premises. However,
these new premises would be adequate for a turnover of GH200,000.
John Doe is not pleased with the results of his sons business. He can easily obtain employment
offering a salary of GH10,000 per annum and Brad Pitt can obtain 10% from a bank deposit
account.

Requirements
(a) Calculate for each of the years ended 31 March 2006 and 2007 four financial ratios which
draw attention to matters which could give John Doe cause for concern. State clearly the
formula or basis for each ratio used.
(b) Outline three reasons for closing the business and one reason in favour of its continuance.

Question 85: Kantamanto Scrap Metal Merchants
Kantamanto, who carries on business as a scrap metal merchant, is seriously short of liquid funds.
He is unable to introduce further capital into the business from his own resources and the bank is
not willing to increase its present unsecured lending.
His draft balance sheet at 31 December 2001 was as follows.
GH GH GH
Fixed assets
Freehold premises at cost 8,000
Plant and machinery 4,000
12,000
Current assets
Stock 16,000
Debtors 6,000
22,000
Creditors: amounts falling due in less than one year
Bank overdraft (unsecured) 8,000
(12,000)
10,000
22,000
Capital account
Balance at 1 January 2001 24,000
28,000
Less Drawings (6,000)
22,000

Requirement
Write a short letter to Kantamanto commenting briefly on his position as shown by his balance
sheet and setting out five ways in which he might be able to improve the liquidity of the business.


Page88
Question 86: Richard Branson Ltd
The following information has been extracted from the accounts of Richard Branson Ltd.
Profit and loss account for the year to 30 April 2006 2005 2006
GH000 GH000
Turnover (all credit sales) 7,650 11,500
Less Cost of sales (5,800) (9,430)
Other expenses (150) (170)
Loan interest (50) (350)
Profit after taxation 1,650 1,550
Taxation (600) (550)
Profit after taxation 1,050 1,000
Dividends (all ordinary shares) (300) (300)
Retained profits 750 700

Balance sheet at 30 April 2006 2005 2006
GH000 GH000
Fixed assets:
Tangible assets 10,050 11,350
Current assets:
Stocks 1,500 2,450
Cash 900 50
3,600 6,300
Creditors- Amounts falling due within one year (2,400) (2,700)
Net current assets 1,200 3,600
Total assets less current liabilities 11,250 14,950
Creditors Amounts falling due after more than one year:
Loans and other borrowings (350) (3,350)
10,900 11,600
Capital and reserves:
Called-up share capital 5,900 5,700
10,900 11,600
During the year to 30 April 2006 the company tried to stimulate sales by reducing the selling price
of its products and by offering more generous credit terms to its customers

Requirements
(a) Calculate six accounting ratios, specifying the basis of your calculations, for each of the two
years to 30 April 2005 and 2006 which will enable you to examine the company
(b) From the information available to you, including the ratios calculated in part (a) of the
question, comment upon the companys results for the year to 30 April 2006 under the
heads of profitability and efficiency.


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Question 87: Dansoman Control Ltd
The summarized accounts of Dansoman Control Ltd for the year ended 31 December 2007 and 31
December 2006 are as follows.
Balance sheets
13 December 2007 31 December 2006
GH000 GH000 GH000 GH000
Ordinary shares of GH1 each fully paid 300 200
Share premium account 200 150
12% secured debentures (redeemable
on 31 December 2008) 100 100
Unsecured loan 25 35
Bank overdraft 40 -
Profit and loss reserves 243 230
Undistributable reserves 270 210
Creditors 102 105
Plant replacement reserve 80 60
1,360 1,090

Freehold land and buildings
Cost (2006) or valuation (2007) 190 130
Plant and machinery
Cost 240 110
Accumulated depreciation 90 40
150 70
Trade investment - 15
Trade debtors 350 360
Current asset investments 80 60
Stock 590 375
Balance at bank - 80
1,360 1,090

Profit and loss account
31 December 2007 31 December 2006
GH000 GH000 GH000 GH000
Sales 2,200 2,000

Trading profit 220 200
Surplus on disposal of trade investment 5
Debenture interest 12 12
Dividends paid 180 153
Plant replacement 20 20
(212) (185)
Retained profit 13 15
There were no disposals of plant and machinery.
The bank has already indicated that the overdraft limit cannot be increased beyond GH40,000.


Page90
Requirements
(a) Prepare a cash flow statement for the year ended 31 December 2007

(b) Outline three ways in which the liquidity position could be improved
(c) Outline the possible advantages and disadvantages of each alternative.

Question 88: Kafui Akpoblu Diamonds Retailers
Kafui Akpoblu has been in retail business for some years as a quality jeweller.
Kafui is having trouble with his bank manager who is concerned at the fact that substantial business
bank balances at 31 July 2005 have been replaced by a bank overdraft at 31 July 2006. The
overdraft is secured by the business assets but the manager says that these assets are of adequate
value only for as long as the business remains a going concern. The overdraft is now at much the
same level as it was at 31 July 2006.

Kafui has tried to reassure the manager by telling him that despite a difficult year, gross profit
margin has been maintained and, by drastic economies, it has been possible to prevent any
substantial increases in overheads so that net profit for the year to 31 July 2006 has increased by
GH1,000 as compared with the figure for the previous year. The manager, who has the accounts
for the previous year, says that if this is the case he can only think that Kafui has substantially
increased his personal drawings from the business.
You are acting as Kafuis accountant and, although you are not yet in a position to complete the
accounts for the year to 31 July 2006, an approximate and reasonably reliable summary of the result
and position is as follows:

Trading summary
2005 2006
GH GH GH GH
137,780 Sales 148,000
6420 Opening stock 7,950
97,080 Purchases 112,910
103,500 120,860
7,950 Less Closing stock 17,260
(95,550) (103,600)
42,230 Gross profit 44,400
(30,110) Expenses and depreciation (31,240)
12,120 13,160


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Balance sheet summary
2005 2006 2005 2006
GH GH GH GH
Fixed assets Capital account
30,970 At cost 35,680 29,610 Opening balance 33,370
(15,360) Depreciation (19,340) 12,120 Net profit 13,160
15,610 16,340 41,730 46,530
Current assets (8,360) Drawings (9,090)
7,950 Stock 17,260
10,500 Debtors 17,110 33,370 37,440
Bank 3,830 Loan account -
1,230 Current account - Creditors due within
8,000 Deposit account - one year:
6,090 Trade creditors 8,450
- Bank overdraft 4,820
43,290 50,710 43,290 50,710

Notes
(i) Closing stock at the end of each year can be regarded as representative of average stock
carried during each year.
(ii) No fixed assets were sold during the year.
(iii) Trade creditors include an amount of GH700 still outstanding in respect of the purchase of
fixed assets.
(iv) For both current and previous year, sales accrued more or less evenly over the year.
Kafui gives you the following information.
(1) For some years one of his main wholesalers supplied him with a substantial volume
of high-class bracelets and rings on a sale or return basis. The wholesalers
business was taken over by a large group in August 2005 with the result that this
practice ceased. Kafui thinks that the loss of this facility has almost doubled the
value of his average stock.
(2) In order to maintain the level of sales, Kafui has been forced to allow a longer period
of credit to the majority of his customers, all of whom have cash flow problems.
(3) In September 2005 Kafuis brother Bibio died. Many years ago Bibio had lent the
business a substantial sum to help it over a bad period and had resisted Kafuis
recent attempts to pay off the balance of the loan as he liked to retain some
interest. However, when Bibio died Kafui was obliged to repay the outstanding
balance to the executors.
(v) Kafuis shop front had remained unchanged for nearly fifty years. It looked out of place in
the modernized high street and GH4,000 was spent on a new front and showcase in July
2006. Kafui says that this improvement has helped trade, as sales in August 2006 showed a
very good increase over those for August 2005.
(vi) As from 1 October 2006 Kafui has come to an arrangement with some of his major watch
and clock suppliers that they will guarantee delivery of small numbers of standard lines
within seven days of receipt of order. Kafui estimates that this will reduce his stock level by

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some GH3,500. He is also proposing to allow a cash discount to customers which should
reduce average debtors by about 10%.

Although he realizes that you will not be in a position for some two or three weeks to send the
accounts for the year ended 31 July 2006, Kafui has asked you to write now to the bank manager
to get him out of my hair.

Requirement
Write a letter to the bank manager of Windows Bank Ltd which;
(a) Set out briefly the salient points of the trading results shown by the draft accounts for the
year ended 31 July 2006
(b) Includes a concise, annotated cash flow statement explaining how the overdrawn situation
has arisen. Treat drawings as a return on investment.
(c) Indicates the changes and the reasons for the changes, which have taken place in the ratios
relating to stock, debtors and current assets, and
(d) Reassures the manager about the future of the business.

Question 89: Gee Marketing Ltd
The directors of Gee Marketing Ltd have presented you with the following summarized draft
accounts.
Balance sheets
31 October
2005 2006
GH000 GH000
Ordinary share capital (GH1 shares) 740 940
Share premium account - 100
Loans 320 150
Current taxation 470 602
Bank overdraft - 766
2,353 3,733
31 October
1905 2006
GH000 GH000
Plant and machinery
Cost 2,700 3,831
Accumulated depreciation (748) (1,125)
1,952 2,706
Stock 203 843
Debtors 147 184
Cash at bank 51 -
2,353 3,733

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Profit and loss account for the year ended 31 October 2006
GH000 GH000
Profit before tax 1,195
Corporation tax (602)
Profit after tax 593
Ordinary dividends:
Paid 90
Proposed 170
260
Retained profit 333
You further ascertain the following.
(1) The only loan raised during the year was a five year bank loan amounting to GH65,000.
(2) Depreciation charged during the year amounted to GH401,000.
(3) During the year plant which originally cost GH69,000 was disposed of for proceeds of
GH41,000.
(4) During the year the company offered 200,000 shares by way of rights to existing
shareholders.
The managing director has come to you with the following comment. in spite of a record
trading profit of GH1,195,000 we ended up with an overdraft of GH766,000. I just cannot
understand it.

Requirement
Write a letter to the managing director explaining the reason for the overdraft. Your answer should
include a cash flow statement.

Question 90: GBEWAA & Co Architectural Engineers
Gilbert, Gbelewu and Wagba are in practice as architects in a firm known as GBEWAA & Co.
On the night of 29 September 2005 there was a disastrous fire in their offices which virtually
destroyed all their past and present financial records. These had been primarily maintained on
diskettes which were not locked away in fire-proof cabinets.
Only two reports survived. One is a copy of a draft balance sheet at 31 August 2005 and the second
is a draft cash flow statement for the year ended 31 August 2005.

It is now important to reconstruct the firms balance sheet at 31 August 2004, and you have been
asked to do this from the documents and information available, which are given in (a), (b) and (c)
below:


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(a) Balance sheet at 31 August 2005
Cost GH Depn GH GH
Fixed assets:
Cars 48,000 15,000 33,000
Equipment 36,500 11,475 25,025
Office furniture 19,600 10,920 8.680
104,100 37,395 66,705
Current assets
Stocks of stationery, etc 4,730
Debtors for fees 19,105
Cash at bank 14,060
80,680
Less Creditors due within one year:
Fees received in advance 14,200
(40,400)
40,280
106,985
Capital accounts:
Gilbert 30,000
Gbelewu 20,000
Wagba 16,000
66,000
10% Loan Account - Gilbert 11,500
Current accounts:
Gilbert 18,520
Gbelewu 8,905
Wagba 2,060
29,485
106,985

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(b) Cash flow statement for the year ended 31 August 2005
GH GH GH
Net cash inflow from operating activities (note 1) 68,625
Returns on investments and Servicing of finance
Interest paid (credited to Gilberts loan account) 1,500
Drawings 39,515
Net cash outflow from returns on investments and servicing of finance (41,015)
Investing activities:
Sale of car 13,000
Purchase of fixed assets:
Car 21,000
Equipment 6,500
Office furniture 3,600
(31,100)
Net cash outflow from investing activities (18,100)
Net cash inflow before financing 9,510
Financing :
Capital introduced Wagba 6,000
Repayment of loan Gilbert (3,500)
Net inflow from financing 2,500
Increase in cash and cash equivalents 12,010

Notes to be cash flow statement
(1) Reconciliation of operating profit to net cash inflow from operating activities
GH
Operating profit 49,500
Depreciation charge 20,395
Decrease in debtors 5,755
Increase in stocks (780)
Increase in work in progress (3,505)
Decrease in trade creditors (4,440)
Increase in fees in advance 1,700
68,625
(2) Analysis of changes in cash and cash equivalents during the year
GH
Balance at 1 September 2004 2,050
Net cash inflow 12,010
Balance at 31 August 2005 14,060
(3) Other information
(i) The firm s profits are shared in the ratio of Gilbert 3, Gbelewu 2 and Wagba
1, after allowing a partners salary of GH6,000 to Wagba. No interest is
allowed or charged on capital and current balances.


Page96
(ii) Cars and office furniture are depreciated at 20% of the assets in use at the
year-end, and equipment at 15% of cost of the assets in use at the year-end.
(iii) The car sold during the year cost GH18,000 and the sale gave rise to an
under provision for depreciation for of GH1,400) which was written off to
profit and loss
(iv) Cash drawings by partners were as follows.
GH
Gilbert 16,000
Gbelewu 14,550
Wagba 8,885
39,515
Requirement
Prepare a draft balance sheet at 31 August 2004 in the same format and with the same detail as the
balances sheet at 31 August 2005.


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REVISION QUESTIONS
Question 91: Bamboozer Ltd, Wholesale Groceries
(1) Bamboozer Ltd was formed on 1 December 2006 to carry on business as wholesale grocers.
(2) Proper accounts records have been maintained for trading transactions but all capital
receipts and some capital payments have been credited and debited to one account in the
computerized nominal ledger.
(3) The balances standing on the companys computer records at 30 November 2007, after
preparation of a draft trading and loss account, are as set out below.
The following fixed assets were bought during the year.
Cost Depn
GH GH GH
Freehold depots 240,000 11,250
Office and warehouse equipment 59,375 11,875
Vehicles 112,000 28,000
411,375 (51,125)
Total Written down value 360,250
Trading profit for the year after depreciation 299,325
Creditors 55,675
Stocks at cost 195,444
Audit fee payment on account 2,000
Provisional bad debt provision 1,500
Cash at bank 22,706 Dr
Capital receipts and payments account 319,500 Cr
Depreciation rates are based on the cost of assets in use at the year-end.
(4) The share register has been written up properly and records of GH1 ordinary shares, issued
at a price of GH2 per share, as follows.
No. of shares issued
Thierry Akolatse 80,000
Jasinta Akolatse 30,000
Ransford Akolatse 15,000
Others 35,000
Authorized share capital is GH300,000 in GH1 ordinary shares.
(5) Cash has been received for all shares issued with the following exceptions.
(i) Thierry Akolatse has been issued with 10,000 of his 80,000 shares in recognition of
the goodwill attracting to his name after long experience in the trade.

(ii) Ransford Akolatse owed GH5,000 in respect of his shares at 30 November 2007
but this was received in December 2007.
(6) Preliminary and formation expenses totalled GH3,000 and this has been debited to the
capital receipts and payment account, together with an initial payment of GH1,400 and
three monthly instalments (out of twenty-four) of GH500 each on computers bought under
a hire purchase agreement, for receiving orders and rationalizing distribution. The

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computers, which can be classified as office equipment, had a cost excluding credit charges
of GH11,000.
(7) The remaining credit balance on capital receipts and payments account represents moneys
lent to the company by Jasinta Akolatse carrying interest (not yet provided for) at 10% per annum
from 1 December 2006 and repayable on 1 January 2009.
(8) Adjustments are also required for the following matters:
(i) Directors remuneration of GH55,000 of the year has been fixed but not yet paid or
provided for.
(ii) The full audit fee for the year is GH4,600.
(iii) The bad debt provision is to be adjusted to 1% of trade debtors.
(iv) A dividend of 10p per share on all shares in issue is proposed.
(v) Provision is to be made of GH56,850 for corporation tax.
Requirements
Prepare the profit and loss account for the year ended 30 November 2007 and balance sheet at that
date.

Question 92: J AK WAWAA and J J R BOOM Veterinary Services
(1) John Akuffour Wawaa and John Jrakpata Boom, both former leaders of their various
Universities, are recently-qualified veterinary surgeons. From 1 October 2006 theyve been
in practice separately but sharing the same premises. The premises are rented by JJR
BOOM and it was agreed that JAK WAWAA should pay GH3,000 per annum for the use
of his surgery in JJR BOOMs premises.
(2) On 30 September 2008 JAK WAWAA and JJR BOOM felt that they enjoyed a good
relationship and would therefore enter into partnership together retrospectively from 1
October 2007. You have been asked to prepare the partnership accounts. For the year ended
30 September 2008 JAK WAWAA and JJR BOOM have each prepared, from their
respective practice bank statements, a cash at bank account but neither has been able to
agree the closing bank balance with the balance shown by the bank statements.
(3) Cash at bank accounts
JAK WAWAA JJR BOOM
GH GH GH GH
Capital introduced 4,000 5,000
Fees received 38,265 40,126
Premises 3,000
42,265 48,126
Drugs and other medical supplies purchased 5,269 4,978
Property costs rent, rates, repairs, heat, etc 3,000 6,455
Receptionist net salary (note (i)) 3,200 3,200
Payments to Internal Revenue for receptionists
PAYE and National insurance 1,000 1,000
Surgery equipment, furniture and fittings 4,562 5,983
Printing, stationery, tel. and office sundries 1,795 1,973
Travelling costs (note (ii)) 3,784 4,128
Medical books and professional subscriptions 555 678
Drawings on account of profit 17,000 18,500

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(40,165) (46,895)
Closing balance 2,100 1,231
Notes to the cash at bank accounts
(i) The cost of the receptionist has been shared equally. Her gross salary for the year,
together with the employers national Insurance contributions, totalled GH8,800.

(ii) JAK WAWAA feels that 25% of his travelling costs represented private motoring
and JJR BOOM puts his percentage at 33
1
/
3
%.
(4) You have now prepared bank reconciliation statements as given below.
JAK WAWAA JJR BOOM
GH GH
Balances per ledger account 2,100 1,231
Less: Cheque for fees dishonoured on
presentation (irrecoverable) (1,220) -
880
Add Interest credited in bank accounts 163 214
Balances per bank statements 1043 1,445
Less: Cheques drawn but not presented
Drug purchases (642) (398)
Property costs - (246)
401 801
Add: Fees banked but not yet credited
In bank statements 1,164 1,310
1,565 2,111
Notes
(i) Interest credited is to be transferred to partners current accounts.
(ii) At 30 September 2008 the separate bank accounts were closed off and a new joint
account opened.
(5) At 1 October 2007 JAK WAWAA and JJR BOOM owned cars and equipment which have
been used in their practices. The agreed values at 1 October 2007 were as follows.
JAK WAWAA JJR BOOM
Equipment GH2,060 GH3,020
Motor cars GH7,970 GH9,246
(6) In the partnership accounts depreciation is to be provided
- at 25% on car valuations
- at 20% on the valuations plus additions of equipment, furniture and fittings in use at
the year-end
(7) The outstanding figures at 30 September 2008, as supplied to you by JAK WAWAA and
JJR BOOM, were as follows.
JAK WAWAA JJR BOOM
GH GH
(i) Debtors for fees 3,650 4,012
(ii) Creditors for drugs 1,020 708
(iii) Creditors for property costs - 246
(iv) Stocks of drugs and medical supplies, at cost 495 535
(iv) Prepaid professional subscriptions 120 131

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Notes
(1) You discover that items (i), (ii) and (iii) have been arrived at by considering only the
figures of receipts and payments entered in the cash at bank accounts.
(2) A provision of GH500 in respect of accountancy charges would be appropriate.
(8) All the relevant figures relating to the two practices should be merged in arriving at the
partnership profit and in preparing the partnership balance sheet. It is agreed, however, that
the bad debt of GH1,220, although it is to be charged in the profit and loss account, is to be
borne
4
/
5
by JAK WAWAA and
1
/
5
by JJR BOOM, the necessary adjustment being made
through their current accounts.

(9) The partnership agreement, to take effect from 1 October 2007, provides
- for interest on capital at 10% per annum
- for basic annual partnership salaries of GH9,000 for JAK WAWAA and
GH11,000 for JJR BOOM
- for the balance of profit to be equally, and
- for separate capital and current accounts to be maintained for each partner.
Requirements
(a) Prepare the profit and loss account for the partnership for the year ended 30 September
2008.
(b) Produce a partnership balance sheet at the date.

Question 93: Suame Magazine International Garages Conglomerate
(a) Suame Magazine International was formed on 1 December 2007 to acquire several
businesses operating in the garage and car sales sector.
(b) For the year ended 30 November 2008 a draft profit and loss account has been prepared, and
the balances remaining in the books after the drafts are set out in (c) below.
(c) Balances at 30 November 2008
Reference to notes
Set out in (d) below GH000
Suspense account (i) 1,850
Trading profit (ii) 940
Fixed assets (iii) 1,360
Investments (iv) 105
Stocks at cost (v) 772
Trade debtors (vi) 768
Trade creditors and accruals 695
Interim dividend paid (vii) 40
Finance charges 178
Cash at bank 262
(d) Notes to balances given (c) above
(i) Suspense account
GH000 GH000
Combination of issued share capital (4,000,000 issued
25p shares at 45p each) and loans from directors
repayable on 1 January 2010 2,055
Less: Formation costs 160

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Expenses of share issue 45
(205)
1,850
Trading has been arrived at before charging depreciation and finance charges, and before making
certain provisions.
Provision for fees and tax is to be made as follows.
GH000
Directors fees 40
Auditors fees 29
Corporation tax 128
(iii) Fixed asset details
GH000
Land and buildings at acquisition cost 760
Equipment at acquisition cost 250
Goodwill at acquisition cost 150
1,160
Equipment bought during the year 200
1,360

Land and buildings were revalued on 4 May 2008 at GH1m. The directors have
received the permission of the shareholders and the High Court that goodwill should
be written off immediately against revaluation reserve.
Depreciation is to be provided as follows on the valuation/cost of assets in use at the
year-end.
Land and buildings at 10% per annum
Equipment at 20% per annum
Investments must be written down to GH75,000 and shown under current assets.
Stocks at cost include two veteran cars.
Cost Net realizable value
GH000 GH000
Car 1 75 126
Car 2 50 40
Debtors include GH65,000 for a Rolls Royce sold to a customer as a veteran car but
which has now proved to be a clever reproduction put together in 2001. The customer
wishes to keep the car but claims that the cars market value is GH25,000, and it is clear
that the company will have to accept this valuation. The customer has paid a deposit of
GH10,000.
The directors proposed a final dividend of 2.5p per share. The directors wish to maintain the
maximum permissible fund of distributable profits,
Requirement
Prepare a balance sheet of Suame Magazine International Garages at 30 November 2009.

Question 94: Logba Angry Lions Plc, Wholesaler of Alcoholic
Beverages
(a) Logba Angry Lions plc trades as a wholesaler of wines, sprits, soft drinks, etc. for the year
ended 29 February 2008 a draft trading and profit and loss account has been prepared,

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subject to adjustment and a list of balances has been extracted from the books as shown in
(b) below.

(b) List of balances at 29 February 2008
Share capital: GH000 GH000

Authorized GH2m in GH1 ordinary shares fully
Issued (at 1 March 2007) GH1 ordinary shares fully paid 1,000
Retained profits at 1 March 2007 246
Profit per draft accounts for the year ended 29 February 2008
- before taxation and dividend 404
10% debentures issued 1 March 2007 40
Fixed assets (see (c)) 949
Stocks at cost 322
Debtors (see (d)) 229
Creditors including value added tax 91
Taxation account balance at 1 March 2007 87
Audit fee due for the year ended 28 February 2007 20
Proposed dividend for the year ended 28 February 2007 100
Cash at bank nos. 1 and 2 accounts 178
Net debits on no 2 bank cash book items not posted (see (e)) 310
1,988 1,988
(c) Fixed assets
(i) A breakdown of the total figure is as follows.
GH000 GH000
Freehold premises at 29 February 2008
Land cost 450 -
Buildings cost and depreciation 330 100
Fittings, vehicles and equipment cost and depreciation 480 211
1,260 311
(311)
949
(ii) The land valued at 29 February 2008 by Paabobo & Co, a chartered valuer, at GH420,000.
The decrease in value, thought to be permanent, is due to the adverse effect of planning
developments in the area.
(iii) Warehouse equipment costing GH50,000 was scrapped in January 2008 with a nil realised
value. The equipment still stands in the books at a nominal written down value of
GH2,000.

(d) Debtors
The following are the details of debtors.
GH000
Trade debtors 200
Loans to managers - GH6,000 repayable on 1 January 2008,

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GH8,000 on 1 February 2009 and GH12,000 on July 2009 26
Prepayments 3
229

(e) No 2 bank account
This account is maintained for what are regarded as special items. An analysis is given below.
GH000 GH000
Payments
In final settlement of taxation for the year ended 28 February 2007 89
Audit fee for the year ended 28 February 2007 20
Debentures redeemed in full on 2 February 2008 at 12.5% premium 45
Directors fees for the year ended 29 February 2008 112
Dividend for the year ended 28 February 2007 (see (f)) 50
(316)
Receipts
Transfers from no 1 bank account 320
Loans repaid by managers 6
326
10
(f) Dividend for the year ended 28 February 2007
Shareholders were given the option to take shares valued at GH2.50 each in lieu of cash
dividend. Under this option shares were issued in respect of 50% of the total dividend due,
and was payable in July 2007.
(g) Goods on sale or return
A consignment of wines was received from a suppler on 15 February 2008 on sale or
return terms. The pro forma invoice (GH20,000 plus 17.5% VAT) was, in error, put
through the books as a normal purchases novice. At 29 February 2008 the goods were
included in stock at cost, but in March 2008 were sent back to the supplier as not being
acceptable.
(h) Provisions
In addition to adjustments arising from the information given above, provision still has to be
made at 29 February 2008 for the following.
GH000
(i) Audit fee 24
(ii) Corporation tax 82
(iii) Dividend of 10p per share on all shares in issue at 29 February 2008
(iv) Doubtful debt provision equivalent to 1% of debtors (no opening provision)

Requirement
Prepare a computation of the final figure of retained profits at 29 February 2008 and a balance sheet
of the company at that date. Work to the nearest thousand cedis.
Note that the company wishes to maintain the maximum balance of distributable reserves.


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Question 95: GeeMarketing & Co, Partners in Furniture & Equipment
GeeMarketing & Co is a partnership business trading as retailers of garden furniture and
equipment. Because of the pressures of substantial expansion, financial accounts have not been
prepared for the past two years. Memorandum management accounts have however, been prepared
for each year.

A summary of the balances in the financial books is given below. At 31 July 2007 the ledger
accounts for sales, purchases, selling and administrative costs, and partners drawings were ruled
off and the figures shown for the year ended 31 July 2008 are therefore those for the year itself and
not cumulative figures for the two years.
Year ended 31 July
2007 2008
GH GH
Sales 325,880 894,650
Goods purchased 250,570 740,680
Selling and administrative costs 37,430 92,310
Fixed assets accumulated cost 50,590 95,630
Cash at bank 35,450 64,440
Drawings by partners 20,000 50,000
Stock at cost at 1 August 2006 24,260

Depreciation of fixed assets - accumulated balance
at 1 August 2006 15,600
Partners accounts (three partners) total balance
at 1 August 2006 100,000
The following additional information is available.
(a) Closing stocks, at cost, are
2007 GH30,420
2008 GH55,380
(b) Depreciation is to be charged as follows.
2007 GH10,120
2008 GH19,130
(c) At each year-end there were no creditors for selling and administrative costs.
(d) For the last trading period of ach year (twelve weeks) sales and purchases were
Sales Purchases
2007 GH96,480 GH75,180
2008 GH337,000 GH269,600
The figures of trade debtors and trade creditors at each year-end can be taken as being part
of the sales and purchases for the last trading period.
(e) Mr Gee, the senior partner, has made the following comments.
(1) My partners and I are, of course, gratified by the very substantial increase in
turnover which has been achieved in the year ended 31 July 2008. We feel that this
has been due to a number of factors, which include:
(i) considerable efforts made by our sales staff
(ii) keener terms offered to customers

Page105
(iii) the fact that residents in our trading areas seem to have become more garden
conscious
(iv) the obtaining of certain municipal contracts.

We do not understand, however, the apparent drop in gross profit percentage which
is shown by the management accounts and which will presumably be reflected also
in the financial accounts. We do not think that there has been any material change in
the type of goods sold. I know that in July 2007 the prices throughout the range of
goods we buy increased by 15%, and prices then remained relatively stable during
2007/08. However, this should not have affected gross profit percentage as
immediately the increases came into force we increased selling prices by the
additional cost. For example, when the cost of a garden table increased from
GH200 to GH230, I ensured that the selling price of the table was also increased
by GH30. I suppose the decrease in profit percentage is due partly to the
considerable increase in the volume of sales, and partly to the increase in the
inventories of stock held at the year-end. However, the management accounts show
that the net profit percentage has apparently not decreased as substantially as the
gross profit percentage.
(2) We are worried, despite the increase in sales, by the rise in the figure of debtors at 31
July 2008 as compared with the end of the previous year, and in view of the
considerable increase in the value of stock inventories we are also concerned about
our rate of stock turnover.
(3) The fact that our bank balance at 31 July 2008 is larger than it was at 31 July 2007 is
due presumably to the fact that the cash flowing from profit was more than sufficient
to cover the increase in stock and debtor inventories, to finance the substantial
purchases of showroom and distributive equipment, and to allow for increased
drawings by partners.
Requirement
Write a report to Mr Gee which incorporates a summarized trading and profit and loss account for
the year ended 31 July 2008 and a balance sheet at that date, together with comparative figures for
the year ended 31 July 2007. The report should comment, with percentages, ratios and figures as
necessary, on the validity of the three observations made by Mr Gee and should also include any
other comments together with requests for further information which you feel to be essential.

Question 96: Desmond and Tootoo Dental Practices
Desmond and Tootoo are dentists working in the private sector. On 1 October 2007 they took the
lease of an Accra property to be shared by them for the purposes of their separate practices.
The terms of their agreement are set out below.
(a) They would contribute equally to the initial property costs.
(b) Thereafter, all communal property costs would be paid by Desmond but would be borne
equally between them. Tootoo would make appropriate monthly payments on account to
Desmond, with a balancing payment immediately after each year-end.
(c) In consideration of the work involved in accounting for the communal costs, Tootoo could
bear two-fifths of Desmonds accountancy charges.
(d) Communal property costs are defined as:
(i) rent and rates;

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(ii) heat, light and telephone;
(iii) cleaning and maintenance;
(iv) gross salary of receptionist, together with employers National Insurance
contributions;
and are to be accounted for on an accruals basis
(e) Subject to the terms set out above, each dentist would have his own surgery and would carry
on his practice quite independently.

You are acting for Desmond and are now required to complete his accounts for the year 30
September 2008. The relevant information is set out below:
(i) Initial property costs
GH
Renovations 16,000
Architects fees 1,880
Furniture for reception office and waiting room 4,500
Rates to 1 April 2008 2,870
25,250

(ii) Trail balance extracted from Desmonds books at 30 September 2008
GH GH
Desmond capital introduced 16,000
Fees receivable 55,190
Salaries net payments
Receptionist 4,304
Desmonds dental nurse 5,060
Payments t Internal Revenue PAYE and National
Insurance 5,555
Share of initial property costs 12,625
Payments to finance company 5,880
Debtors for fees billed 5,240
Rates to 1 October 2008 3,660
Rent one year 18,000
Cleaning and maintenance 4,086
Received on account from Tootoo 16,500
Medical supplies and services of dental technicians 6,910
Heat, light and telephone 3,120
Desmond drawings 12,000
Bank balance 1,250
87,690 87,690
(iii) Details of salaries
Gross salary Employers
Per annum National
Insurance
Per annum
GH GH
Receptionists 6,250 762

Page107
Desmonds dental nurse 7,500 915

(iv) Equipment bought by Desmond for his surgery details of hire purchase agreement
dated 30 September 2007
GH
Cost of equipment 7,800
Deposit paid (3,000)
4,800
Financing charges 960
Balance 5,760

Balance to be settled by twenty-four equal monthly instalments of GH240.

(v) Desmonds creditors at 30 September 2008
GH
Heat, light and telephones total amount 510
Medical supplies 1,875
Accountancy charges total bill 600
Internal Revenue for PAYE and National Insurance to be calculated
(vi) Work in progress
Desmond has computed the cost of work performed for patients but not yet billed at
GH3,760.
(vii) Depreciation, etc
Surgery equipment - to be depreciation at 25% per annum
Furniture - to be depreciation at 20% per annum
Desmond feels that his share of renovations (including architects fees) should be spread
over the first three of his practice.

Requirement
Prepare Desmonds profit and loss account for the year ended 30 September 2008 together with a
balance sheet at the date.

Question 97: Confidence Foofoos Restaurateurs
Regina and Reynold Confidence are in partnership as restaurateurs. The restaurant, trading as
Confidence Foofoos Brasserie occupies rented premises, and the financial year under review
ended on 31 October 2007.

There is a service charge of 10% to all bills. Some customers add further amounts or even cash
(which is handed in by employees). In order to save bookkeeping, a compromise agreement has
been reached with employees to the effect that all takings as recorded shall be deemed to include
gratuities of 12.5%. Periodical distributions of deductions from distributions of the gratuity pool are
made and at Christmas 2006, as a wages bonus, the business added GH3,000 to the pool.
Distributions are included in PAYE records, when made, and the total of deductions from
distributions during the year per records was GH12,060. At 31 October 2006 the pool had been
fully distributed. This was not the case on 31 October 2007. Gross wages for the year totalled
GH88,625 with employers National Insurance contributions of GH8,015.

Page108

The pairs are generous supporters of the National Football and in June 2007 they donated to a CAN
2008 Tournament bazaar, as raffle prizes, 100 vouchers entitling each winner to a free meal at the
restaurant of a retail value of GH40 per voucher if vouchers were presented by 31 December 2007.
It is estimated that the cost of the meal offered to voucher holders is GH20. By 31 October 2007
60% of the vouchers had been redeemed. From past experience the pairs know that in all 90% of
the vouchers are likely to be presented. The cost of this gift should be shown in the accounts as a
transfer from cost of sale to donations.

The partnership agreement does not provide for interest on capital or partners salaries but, as chef,
Regina is entitled to a partners bonus of 3% of gross profit (sales less direct cost of food and
drink sold) and Reynold, who manages the dining room, is entitled to a bonus of 5% of net profit
after charging Reginas bonus, but before charging any hygiene and fire items listed below/ the
balance of profits is shared: Regina 40%, Reynold 60%.

Stocks of foodstuffs and alcohol at 31 October 2007, at cost, totalled GH22,955.

Alterations to the premises costing GH5,800 have been carried out to meet recommendations
made by visiting fire and hygiene inspectors. This cost, not yet paid or provided for, is to be written
off over two years in equal instalments and borne by the partners equally.

Current accounts for partners are not maintained. Depreciation is provided on cost of assets at the
following rates, time apportioned for period of ownership
- Kitchen equipment 20%
- Furniture and fittings 15%
No depreciation has yet been charged for the current year.
The trial balance extracted from the books at 31 October 2007 is set out below.

GH GH
Foodstuffs and alcohol Takings inclusive of gratuities 649,440
Stocks at cost at 1 Nov 2006 19,493 Due to Internal Revenue at
Purchasers during the year 325,982 1 Nov 2006 for PAYE and SSNIT 3,865
Wages paid net 72,199 Creditors at 31 Oct. 2007 22,191
Payments to Internal Revenue for Accumulated depreciation at
PAYE and SSNIT 32,604 I Nov 2006
Distribution (net) made out of Kitchen equipment 13,918
Gratuities pool 45,666 Furniture and fittings 8,364
Property costs rent, rates, heat, Partners accounts at 1 Nov 2006
light, repairs, etc 55,781 Regina Confidence 19,640
Advertising 5,687 Reynolds Confidence 21,190
Laundry 4,198
Credit card charges 2,795
Secretarial agency charges and
Office expenses 5,777
Sundry restaurant expenses 2,110
Debtors at 31 Oct 2007 3,900
Kitchen equipment
Cost at 1 Nov 2006 45,600

Page109
Additions on 1 May 2007 6,500
Furniture and fittings
Cost at 1 Nov 2006 25,400
Cutlery, crockery, linen, utensils, etc
Cost at 1 Nov 2002 20,100
Purchased during year
Replacements 4,622
Additional items 3,250
Drawings on account
Regina Confidence 15,250
Reynold Confidence 17,750
Bank balance 23,944
738,608 738,608
Requirements
(a) Prepare the trading and profit and loss account for the year ended 31 October 2007.
(b) Prepare the balance sheet at 31 October 2007.

Question 98: KINGDOM Furniture Assemblies
KINGDOM Ltd imports self-assembly furniture for resale to retailers and direct to the public.
During the year ended 31 December 2003 the companys bookkeeper was injured in an accident.
Due to his absence on convalescence, only the personal ledgers and the cash book were maintained.
You have been provided with the following available information.
(1) The balance sheet of KINGDOM Ltd as on 31 December 2002 is as follows.
Cost Depn
GH GH GH
Fixed assets
Land 25,000 - 25,000
Buildings 142,000 27,500 114,500
Fixtures and fittings 21,405 11,214 10,191
Motor vehicles 24,690 18,690 6,000
213,095 57,404 155,691
Current assets:
Stock 237,423
Debtors 195,115
Cash in hand 2,150 441,736
Creditors: amounts falling due within one year
Proposed dividend payable 20 June 2003 12,050
259,953 181,783
337,474

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Creditors: amounts falling due after one year
Debenture stock (100,000)
237,474
Share capital
Ordinary shares of 50p 150,000
10% preference shares 10,000
160,000
237,474
(2) During the year ended 31 December 2003 the following trading transactions took place.
GH
Cash sales 427,042
Receipts from debtors 1,007,401
Payment for purchases of goods 928,213
Overhead expenses paid 207,410
Wages and salaries paid 204,111
Debenture interest paid 29 June 2003 5,000
(3) Depreciation, on the trading balance method, is to be provided at annual rats of 4% on the
buildings, 15% on the fixtures and fittings and 25% on the motor vehicles.
(4) On 1 June 2003 the company acquired a van on hire purchase under terms which provided
for the payment of a deposit of GH1,000 and 24 monthly instalments of GH200,
commencing on 30 June 2003. The cash price of the van was GH5,200. The only other
movement in fixed assets was the scrapping of the old van which originally cost GH1,960
and had accumulated depreciation on the date of disposal of GH1,699.
(5) On 31 December 2003
(i) stock had a cost of GH247,628
(ii) debtors amounted to GH189,400
(iii) creditors amounted to GH258,107
(iv) cash in hand amounted to GH1,945
(6) On 30 June 2003, following payment of the half-years interest, the debenture stock was
redeemed at a discount of 14%.

(7) The dividend on the preference shares was paid during the year, and a final dividend of 12p
per ordinary share is to be provided.

Requirements
(a) Prepare cash and bank accounts for the year ended 31 December 2003.
(b) Prepare the trading and profit and loss account for internal use for the year ended 31
December 2003 giving as much information as possible to management.
Notes are not required although a reserves movement note should be included.


Page111
Question 99: Alongays Double Glazing
Alongay is a double-glazing salesman based in Cape Coast and is currently reviewing his business
results for the year ended 31 December 2005. He is comparing them with those of Class Glass Ltd,
a company engaged in the same trade.

The chairman of Class Glass Ltd receives an annual salary of GH12,000 for duties very similar to
those performed by Alongay in his business. Summaries of the accounts for 2005 for Alongay
(trading under the name Longs Amazing Glazing) and Class Glass Ltd are as follows.

Trading and profit and loss accounts for the year ended 31 December 2005
Longs Amazing Class
Glass
Glazing Ltd
GH000 GH000
Turnover 90 150
Less Cost of sales (48) (80)
Gross profit 42 70
Administrative expenses 12 37
Sales and distribution expenses 15 25
Debenture interest - 3
(27) (65)
Net profit 15 5

Balance sheets as at 31 December 2005
Longs Amazing Class
Glazing Glass
GH000 GH000
Fixed assets 60 50
Current assets
Stock 28 56
Debtors 22 69
Balance at bank 6 10
56 135
Creditors falling due within one year
Trade creditors (16) (25)
Net current assets 40 110
100 160
Capital account 100
Ordinary share capital 80
Retained earnings 50
10% debenture stock 100 160


Page112

Requirement
Write a letter to Alongay in which you
(a) Calculate five appropriate ratios comprising the financial position and results of Longs
Amazing Glazing with those of Class Glass Ltd and briefly comment on each ratio
(b) Outline three distinct reasons why a comparison of the amount of profit earned by different
business should be approached with great care.

Use fictitious names and addresses if possible.

Question 100: Amfic Yingors Garages
You have just met Amfic Yingor in the pub. He has a small garage business and his accountant has
just finished preparing the accounts for his first year of trading. He says that he cannot understand
all the fuss made about balance sheets and accounts, for all that really matters is how much money
there is in the bank.

Requirement
Prepare notes for a meeting with Amfic later in the week which include
- a list of those likely to use Amfic Yingors accounts
- an explanation of the reasons for preparing balance sheet
- a response to Amfics comments that all that really matters is how much money there is in
the bank.

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