May 2012

SECTION I
Answer the THREE questions in this section.
DR CR
$
Bank overdraft 26 500
Cash on hand 3 200
Provision for bad debts 8 200
Bad debts 5 000
Accounts receivable ! 000
Accounts "a#able 5 200
$on%&ter' loan (5 000
Carria%e in)ards 3 600
Carria%e out)ards 500
Co''issions received 6 200
Rent "aid *2 000
+,ui"'ent at cost !0 000
Accu'ulated de"reciation -e,ui"'ent. 30 500
/otor vehicle at cost 68 000
Accu'ulated de"reciation-'otor vehicle. *5 00
0alaries 0 000
1nventor# *6 800
Purchases ( 600
0ales *25 000
/iscellaneous e2"enses 36 000
Returns out)ards 3 600
Returns in)ards 2 800
Ca"ital 5* 200
00 !00 00 !00
-a. Pre"are the corrected trial balance for 3eav# /etal +nter"rise sho)in% clearl# the correct
a'ount for Ca"ital4 -*3 'arks.
GO ON TO NET !AGE
-b. 5ou are "resented )ith the follo)in% da# books6
Sa"es #ay $oo%
20** A'ount
* 0e"te'ber 74 Plu'ber $ ( 200
0e"te'ber 84 3enr# $ *50
*3 0e"te'ber 84 3enr# $ 2 *00
20 0e"te'ber 74 Plu'ber $ * 3!6
$* 86
Returns 1n)ards Book
20** A'ount
3 0e"te'ber 74 Plu'ber $* 000
! 0e"te'ber 84 3enr# $* !50
$2 !50
Cash Book
#isc Cash $an% #isc Cash $an%
20** $ $ $ $ $ $
* 0e"t Bal b9d 2 65 *0 500 25 0e"t Rent (00
0e"t 74 Plu'ber *00 5 *00 25 0e"t :a%es 2 500
2 0e"t 84 3enr# 60 6 00
30 0e"t Bal c9d * !5 *! *0
*60 2 65 2* 60 2 65 2* 60
i4 Post the infor'ation fro' the book in the "ersonal account of 74 Plu'ber and balance
the account4 -3 'arks.
ii4 Pre"are the Debtors Control Account and an# other account in the ;eneral $ed%er for
the 'onth of 0e"te'ber4 - 'arks.
Tota" 20 &ar%s
GO ON TO NET !AGE
2. <he 0ales $ed%er of == Paradise sho)ed the follo)in% balances at 3* Dece'ber 20*04
Account <itle A'ount
>at $e)is $ 850
=eb 0teven $3 600
Anna <o'as $ 50
/r == has decided to )rite off these three receivables as bad debts4
'a( -i. Pre"are the ?ournal entr# on "a%e 5 of ==@s ?ournal to )rite off thee three
receivables4 'Narrati)e require*( '+ &ar%s(
<he re'ainin% receivables totalled $28 320 at 3* Dece'ber 20*04 /t == believes that
*0A of these outstandin% receivables are $1B1$5 to beco'e bad debts4
-ii. Pre"are the ?ournal entr# )ith a narrativeC to create the Provision for Doubtful
Debts Account4 ', &ar%s(
Dn 3* Dece'ber 20**C /r ==@s receivables A-TER bad debts totalled $25 0004 3e
decided to use the sa'e rate of *0A as the "revious #ear in accountin% for doubtful
debts4
-iii. Dra) u" the Provision for Doubtful Debts Account for the <:D #earsC * =anuar#
20*0 to 3* Dece'ber 20**C to sho) the chan%e in the "rovision4 Balance the
account at the end of +AC3 #ear4 '. &ar%s(
'/( -i. 0tate D>+ reason )h# ad?ust'ents are 'ade to financial state'ents
'1 &ar%(
-ii. 1dentif# Dne conce"t )hich %uides ad?ust'ents to financial state'ents4
'1&ar%(
-iii. +2"lain ho) the conce"t identified in -b. -ii. above %uides ad?ust'ents 'ade to
financial state'ents4 '2 &ar%s(
Tota" 20 &ar%s.
GO ON TO NET !AGE
3. -a.4 84 Cheese'an is "re"arin% his su''ar# accounts for the 'onth ended 3* Au%ust 20**4
3e finds the follo)in% errors )hich 'a# or 'a# not affect the su''ar# of the bank account
entries in the Cash Book4
A "urchase of $303C "aid b# che,ueC )as recorded in both accounts as a "urchases of
%oods valued at $330
A che,ue for $6( sent to creditor R 0ant had been recorded in R4 0ant@s account D>$54
A che,ue received fro' C4 0a'nah for $2!0 )as debited in 0a'nah@s account and
credited in the Cash Book4
-i. Pre"are the ?ournal entries to correct the errors above4 'Narrati)es not
require*.( '+ &ar%s(
-ii. 84 Cheese'an records the follo)in% fi%ures in his su''ariEed Cash Book B+FDR+ correctin%
the relevant errors6
Su&&ari0e* Cash $oo% '/an% co"u&ns on"y(
1or the &onth en*e* 21 Au3ust2011
4
D"enin% balance * 560
Recei"ts 8 !*0
*0 (0
Pa#'ents -( !00.
Closin% Balance 2 5(0
Be%innin% )ith the incorrect balance of $2 5(0C correct the su''ariEed Cash Book for
the relevant errors %iven above4 'Show a"" wor%in3s( '. &ar%s(
'/( <he follo)in% infor'ation is recorded in +1<3+R the bank state'ent or in
84 Cheese'an@s Cash Book but >D< both4
$
Bank Char%es *20
0tandin% order for vehicle insurance 600
Che,ue dated 30 Au%ust 20*0 sent to su""lier 5(0
Che,ue returned sta'"ed G1nsufficient FundsH 3!0
Direct de"osit fro' debtors 500
De"osit to bank on 3* Au%ust 20** !00
<he Band state'ent for the 'onth ended 3* Au%ust 20** sho)s a balance of $5 6804
-i. 7sin% the corrected su''ariEed Cash Book balance fro' a -ii. aboveC dra) u"
an u" dated Cash Book for the 'onth ended 3* Au%ust 20**4 '. &ar%s(
-ii. 0tartin% )ith the u"dated Cash Book balanceC dra) u" a Bank Reconciliation 0tate'ent
for 84 Cheese'an for the 'onth ended 3* Au%ust 20**4 '2 &ar%s(
Tota" 20 Mar%s
;D D> <D >+I< PA;+
SECTION II
Answer ant T5O questions in this section.
4 P and ; are t)o sole trade rs )ho decided to trade under the "artnershi" na'e R; +nter"rise4
<he follo)in% are a list of balances for +AC3 trader before the for'ation of the "artnershi"4
P ;
$ $
+,ui"'ent * 000 /otor 8ehicles 8 000
Pa#ables 6 000 0tationer# ( 00
1nventor# *2 600 Pre'ises 60 000
Receivables 3 00 Cash * 300
Cash *0 000 /ort%a%e 3 000
$oose tools * 800
Bank overdraft 5 800
-a. -i. Pre"are individual o"enin% entries as at * /a# 20*2 to record +AC3 sole trader@s
contribution to the "artnershi"4 '+ &ar%s(
-ii. Pre"are a classified su''ariEed Balance 0heet for P; +nter"riseC as at * /a# 20*2C
usin% the order of "er'anence4 '+ &ar%s(
-b. <he t)o "artners antici"ate a "rofit of $!! 000 at the end of the first #ear@s tradin%C but have not
#et decided )hat "rofit&sharin% ratio to ado"t4
Calculate +ach "artner@s share of "rofit under the follo)in% sche'es6
-i. 1n ca"ital sharin% ratio -2 'arks.
-ii. 1n the ratio 36( -2 'arks.
Show a"" wor%in3s.
-c. $ist <:D featuresC other than "rofit sharin% ratioC that should be included in P and ;@s
"artnershi" a%ree'ent4 -2 'arks.
Tota" 20 &ar%s
;D D> <D >+I< PA;+
54 -a. +2"lainC in D>+ sentence the 'eanin% of +AC3 of the follo)in% state'ents6
-i. <he o)ners of a cor"oration benefit fro' li'ited liabilit#4
-ii. Farris $ondonC a shareholderC )ants to kno) )hat the Board of Aries $i'ited
does
-iii. <he Re%istrar of Co'"anies has received the docu'ents re,uired to start u" the
ne) cor"oration4 '2 &ar%s(
-b. Aries $i'ited has an authoriEed share ca"ital of 200 000 one dollar -$*. Drdinar#
0hares and *00 000 one dollar-$. 8A Preference 0hares4 Dn * A"ril 20**C the follo)in%
balances )ere listed in its book6
4
*65 000 Drdinar# 0hares J $* +AC3 *65 000
83 000 8A Preference 0hares J $* +AC3 83 000
*0A Debentures * 000
Dn A"ril 20**C Aries $i'ited
1ssued the re'ainin% Drdinar# and Preference shares for cash and
bu#s back $2* 000 in debentures )ith the cash received
Draft ;eneral =ournal to record
i. <he issue of the re'ainin% ordinar# shares at $*45 +AC3 '. &ar%s(
ii. the issue of the re'ainin% "reference shares at $*400 +AC34 '2 &ar%s(
iii. the reduction in debentures4 '2 &ar%s(
Narrati)es not require*.
-c. Dther balances found on the books include6
$
Profit and $oss Account before interest on debentures !0 000
Retained earnin%s 0 *00
;eneral reserve 5* 500
Dn 3* /a# 20**C the directors a%reed to the follo)in%6
Pa# the interest due on the re&ainin3 debentures
<ransfer $5* 500 to %eneral reserve
Provide for the dividend to all holders of Preference 0hares
Provide for a dividend of *2A to all holders of Drdinar# 0hares
Pre"are the A""ro"riation Account for Aries li'ited for the #ear ended 3* 'a# 20**4 '+ &ar%s(
Tota" 20 &ar%
;D D> <D >+I< PA;+
64 0i'on $on% 'akes decorative concrete orna'ents4 3e recorded the follo)in% infor'ation
about his 'anufacturin% o"erations for the #ear ended 3* Dece'ber 20**4
$
1nventor# at =anuar# 20**
Direct 'aterials 6 500
1ndirect 'aterials 00
:ork&in&"ro%ress *2 500
Finished %oods 5 000
1nventor# at 3* Dece'ber 20**
Direct 'aterials 8 000
:ork&in&"ro%ress *5 *00
Finished %oods 38 00
Dther ite's recorded )ere as follo)s6
Purchases of direct 'aterials (0 *00
Purchases of indirect 'aterials 6 200
Returns out)ards of direct 'aterials 2 500
<rans"ortation cost on direct 'aterials * 000
Factor# )a%es 5! 000
0u"ervisors salaries *2 600
Direct e2"enses 6 800
Factor# "o)er 5 (00
;eneral factor# e2"enses *3 000
Annual de"reciation on factor# e,ui"'ent and buildin% 3 500
Note 6 708 to trans9ortation cost re"ates to *irect &ateria"s an* 108 to in*irect &ateria"s.
-a. Calculate the follo)in% cost for 0i'on $on%6
-i. Direct 'aterials consu'ed - 'arks.
-ii. 1ndirect 'aterials used -3 'arks.
-b. Pre"are the /anufacturin% Account for 0i'on $on% for the #ear ended 3* Dece'ber
20**
0ho) clearl# the
cost of direct 'aterials consu'ed
"ri'e cost
factor# overheads
cost of "roduction -** 'arks.
-c. Calculate the cost of %oods sold -2 'arks.
Tota" 20 &ar%s
;D D> <D >+I< PA;+
( $ionto)n Co&o"erative )as for'ed to "roduce souvenirs for the boo'in% tourist 'arket4 <he
co&o"erative started )ith a share ca"ital of $55 000 in $* shares4 <he co&o"erative is no) t)o #ears old
and records the follo)in% infor'ation for the first t)o #ears of o"eration4
21 #ece&/er 2010 21 #ece&/er 2011
4 4
Cost o1 sa"es 2: 000 :1 000
Sa"es +0 000 270 000
E;9enses 21 000 ,< 000
Cre*itors 2 200 , <00
=oans to &e&/ers > 120 200
Interest *ue 1ro& &e&/ers > 2 100
=oan 1ro& Co>o9erati)e ?nion $an% > 100 000
Equi9&ent > ,0 000
!orta/"e sta""s > , .00
In)entory . 100 27 200
$an% <0 .00 12< ,00
<he co&o"erative "aid out dividends of *0K "er share in its first #ear of o"eration and transferred the
re'ainder to a /e'bers@ +ducation Fund4
'a( Pre"are the 1nco'e state'ent and the A""ro"riation Account for $ionto)n Co&o"erative for the #ear
ended 3* Dece'ber 20*04 '< &ar%s(
'/( Durin% the second #ear of o"erationC $ionto)n Co&o"erative be%an lendin% 'one# to 'e'bers )ho
)ished to start their o)n s'all business4
-i. 1dentif# the t#"e of co&o"erative under )hich $ionto)n )as classified in the o"eration of its
a. first #ear
b. second #ear
-ii. >a'e D>+ co''ittee that $ionto)n is $1B+$5 to use to carr# out its business4
-iii. 0tate D>+ "ur"ose of the /e'bers@ +ducation Fund4 ', &ar%s(
'c( For the #ear ended 3* Dece'ber 20**C the Board of Directors records a sur"lus of $*5( 5004 <he board
"lans to
transfer $32 600 to the /e'bers@ +ducation Fund4
Pa# out $2( 500 in dividends
leave the re'ainder as undistributed "rofits
Pre"are a classified Balance 0heet for $ionto)n Co&o"erative for the #ear ended 3* Dece'ber 20**
-second #ear of o"eration. takin% the a""ro"riation of the sur"lus into consideration4 '10 &ar%s(
Tota" 20 &ar%s
EN# O- TEST