Introduction To Accounting Ii Question Paper
Introduction To Accounting Ii
Course:Bachelor Of Commerce
Institution: Kca University question papers
Exam Year:2010
UNIVERSITY EXAMINATIONS: 2009/2010
FIRST YEAR EXAMINATION FOR THE DEGREE OF BACHELOR OF
COMMERCE
CAA 101 : INTRODUCTION TO ACCOUNTING II-Day& Evening
DATE: AUGUST 2010 TIME: 2 HOURS
INSTRUCTIONS: Answer question ONE and any other TWO questions
QUESTION ONE
(i) Define the following terms
a) Direct wages
b) Prime cost
c) Interest on drawings
d) Subscriptions (7 Marks )
(ii) The following balances were extracted from the books of Alphax Ltd. as at 30th September 2009:
Authorized and issued share capital: 100,000 ordinary shares of Sh.25 each 25,000,000
Loan from ABC bank 600,000
Prepaid rent 30,000
Buildings at cost 2,625,000
Fixtures at cost 287,500
Motor vehicles at cost 1,562,500
Share premium 400,000
Profit and loss account (credit) 329,075
2
Stock in hand 350,200
Bank and cash balance 355,625
Sundry debtors 148,750
General reserve 150,000
Sundry creditors 228,000
Proposed dividend 125,000
Accumulated depreciation to date:
Buildings 550,000
Fixtures 93,750
Motor vehicles 383,750
Required:
Balance sheet of Alphax Ltd. As at 30 September 2009, using the above information
[13 Marks]
Total 20 Marks
QUESTION TWO
The following balances were extracted from the books of Bidii limited, a furniture manufacturing
company, as at 30th April 2008:
Sh.’000’
Factory machinery (cost) 28,000
Office equipment (cost) 2,000
Accumulated depreciation (1 May 2007)
Factory machinery 5,000
Office equipment 800
Trade receivables 15,000
Trade payable 16,000
Cash and bank balances 2,300
Bank loan 11,000
Inventories (1 May 2007): Raw materials 4,000
Work in progress 16,400
3
Finished goods 11,250
Carriage inwards 1,200
Carriage outwards 700
Purchases - raw material 84,000
Electricity 3,000
Rent and rate 6,600
Factory wages 19,900
Office salaries 5,200
Sales commission to selling agents 1,400
Sales of finished goods 140,000
Ordinary share capital 30,000
Retained earnings 5,000
Directors emoluments 9,100
Provision for unrealized profit 2,250
Additional Information
1. On 20 January 2008, the company paid 600,000 being rent for the period of 1 January 2008 to
30 June 2008.
2. As at 30 April 2008, accrued factory wages and office salaries amounted to 600,000 and
100,000 respectively
3. Inventories as at 30 April 2008 were valued as follows
Sh.’000’
Raw material 5,400
Work in progress 17,000
Finished goods 8,000
4. Depreciation is to be provided for factory machinery using the straight line method over the
useful life of seven years while the office depreciation using the reducing balance method at the
rate of 25% per annum.
5. A provision of Sh1, 000,000 should be made for bad and doubtful debts.
6. Electricity is to be apportioned between the factory and the office in the ratio 4:1 respectively
while rent and rates is to be apportioned between the factory and the office in the ratio 3:1
respectively.
4
7. It is the company policy to transfer goods manufactured from the factory to the warehouse at
cost plus 25%
Required
i. Manufacturing, trading and profit and loss account for the year ended 30 April 2008.
(12 Marks)
ii. Balance sheet as at 30th April 2008 ( 8 Marks)
Total 20 Marks
QUESTION THREE
The following trial balance was extracted from the books of James and John as at 30 June 2008
Sh Sh
Capital accounts: James 1,200,000
John 960,000
Current accounts: James 48,000
John 26,400
Drawings: James 216,000
John 168,000
Shop fittings and fixtures (costs) 840,000
Office furniture (cost) 36,000
Provisions for depreciation:
Shop fittings and fixtures 120,000
Office furniture 12,000
Debtors and creditors 1,739,520 552,720
Stock as at 1 July 2007 631,200
Purchases and sales 5,322,240 7,377,600
Carriage inwards 30,480
Returns inwards and returns outwards 38,400 13,920
Insurance 76,080
Rent and rates 326,400
General expenses 155,520
Staff salaries 848,400
Carriage outwards 74,880
5
Provision for doubtful debts 15,600
Bank overdraft 188,400
Advertising 11,520 -------------
10,514,640
===========
10,514,640
========
Additional Information
1 Stock as at 30 June 2008 was valued at sh. 974,400.
2 Rates paid in advance as at 30 June 2008 amounted to sh.21,120.
3 The provision for doubtful debts is to be increased to sh 40,320.
4 Depreciation to be provided as follows:
Shop fittings and fixtures – 10% per annum on straight-line basis.
Office furniture - 20% per annum on straight-line basis
5 James is to earn a salary of sh.120,000 per annum
6 Interest is to be allowed as follows:
On fixed capitals – 5% per annum
On drawings – 2 ½ % per annum
7 Profits and losses are shared between James and John in the ratio of 5:3 respectively.
Required
i) Trading and profit and loss and appropriation accounts for the year ended 30 June
2008. (10 Marks)
ii) Partners’ current accounts as at 30 June 2008. (4 Marks)
iii) Balance sheet as at 30 June 2008. (6 Marks)
(Total 20 Marks)
QUESTION FOUR
Although Janet Lambert has run a small business for many years, she has never kept adequate
accounting records. However a need to obtain a bank loan for the expansion of the business has
necessitated the preparation of ‘final’ accounts for the year ended 31st August 2009. As a result, the
following information has been obtained after much careful research:
6
1. Janet Lambert’s business assets and liabilities are as follows:
As at 1 September2008 31 August 2009
shs shs.
Stock in trade 8,600 16,800
Debtors for sale 3,900 4,300
Creditors for purchase 7,400 8,900
Rent prepaid 300 420
Electricity accrued due 210 160
Balance at Bank 2,300 1,650
Cash at hand 360 330
2. All takings have been banked after deducting the following payments:
Cash drawings – Janet Lambert has not kept a record of cash
Drawings but suggest these will be in the region of 8,000
Casual labor 1,200
Purchase of goods for resale 1,800
3. Bank payments during the year ended 31August 2009 have been summarized as follows
Purchases 101,500
Rent 5,040
Electricity 1,390
Delivery cost (to customers) 3,000
Casual labor 6,620
4. It has been established that a gross profit of 33 1/3% on cost has been obtained on all goods
sold.
5. Despite her apparent lack of precise accounting records, Janet Lambert is able to confirm that
she has taken out of the business during the year under review goods for her own use costing
sh. 600
Required:
a) Prepare a computation of total purchases for the year ended 31August 2009. (4 Marks)
b) Prepare a trading and profit and loss account for the year 31 August 2009 and a balance sheet
as at date. ( 16 Marks)
(Total 20 Marks)
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