DEPARTMENT OF ACCOUNTANCY INTERMEDIATE FINANCIAL ACCOUNTING AC 208 FINAL EXAMINATION DATE: JUNE 2004 TIME ALLOWED: 4 HOURS TOTAL

MARKS: 100

INSTRUCTIONS Answer all the questions on this paper. QUESTION 1 2 3 4 5 TOPIC Issuing of Shares Partnership Leases Cash Flow Statement Definitions TOTAL MARKS MARKS 40 20 10 20 10 100

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QUESTION 1

(40 MARKS)

Chete Private Limited decided to issue 10 000 ordinary shares of $1 each to the Public on the 31 December 2000 as follows: On Application On Allotment On 1st Call On 2nd Call $ 0.25 0.30 0.30 0.15 1.00

The company received 30 000 share applicants with application money. The Directorate allotted one for every three shares received with all unsuccessful applicants being refunded their dues. All applicants paid their dues except for one who failed to pay the first and second installments on the 100 shares allotted to him. The shares were forfeited and reissued to Chido for $100. REQUIRED: (i) (ii) (iii) (iv) (v) (vi) (vii) Application and Allotment Account. 1st Call Account 2nd Call Account Bank Account Forfeiture and Reissue Account Chidos Account Balance sheet of Chete after the Issue (20 MARKS) (5 marks) (4 marks) (4 marks) (4 marks) (2 marks) (3 marks) (15 marks)

QUESTION 2

Partnership Dete and Rand was sold to a newly formed company called Lloyd Private Limited. The company took over the following assets and liabilities at 31 December 2000 at the following values: Freehold property Plant Fixtures Stocks Debtors Creditors $ 40 000 15 000 10 000 20 000 30 000 16 000

The company paid its purchase consideration of $150 000 by offering 150 000 ordinary shares of $1 each to Dete and Rand. The two parties were sharing profits equally.

REQUIRED: (i) (ii) (iii) Open Books of Lloyd in the Journal Book as at 31 December 2000. (5 marks) Show the essential Ledger Book records for the company (5 marks) Compile Lloyds Balance Sheet as at 31 December 2000 (10 marks)

QUESTION 3

(10 MARKS) (10 marks)

State any five differences between an operating lease and a Finance lease?

QUESTION 4

(20 MARKS)

The following is the financial information of Chakupaidenga for the year ended 31 December 2001 Chakupaidenga Profit and Loss Account for Year Ended 31 December 2001 $ Turnover Raw materials consumed Staff costs Depreciation Loss on Disposal Operating profit Interest payable Profit before tax Taxation Dividend Profit retained for year Balance b/d Balance c/d 70 000 94 000 118 000 18 000 $ 720 000

300 000 420 000 28 000 392 000 124 000 268 000 72 000 196 000 490 000 686 000

Chakupaidenga Balance Sheet as at 31 December 2001 and 2000 31/12/2001 $ 1 596 000 318 000 1 278 000 ________ 24 000 76 000 48 000 148 000 1 426 000 Employed Capital Ordinary Share Capital Share premium Profit and Loss Long-term loans Current Liabilities Trade creditors Taxation Dividends 360 000 36 000 686 000 1 082 000 200 000 ________ 12 000 102 000 30 000 144 000 1 426 000 31/12/2000 $ 1 560 000 224 000 1 336 000 ________ 20 000 58 000 56 000 134 000 1 470 000 340 000 24 000 490 000 854 000 500 000 ________ 6 000 86 000 24 000 116 000 1 470 000

Fixed Assets (at cost) Depreciation Current Assets Stock Trade debtors Bank

During the year the company paid $90 000 for a new machinery. REQUIRED: Prepare a Cash Flow Statement for Chakupaidenga for the year ended 31 December 2001, using the Indirect Method, QUESTION 5 (a) (b) (10 MARKS) (5 marks) (5 marks)

What is a change in equity statement? Give five points. State five purposes of Compiling a Cash Flow Statement for an entity?

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