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Bac 101 Question Paper
Bac 101
Course:Bachelor Of Commerce
Institution: Kenyatta University question papers
Exam Year:2012
KENYATTA UNIVERSITY
UNIVERSITY EXAMINATIONS 2011/2012
SECOND SEMESTER EXAMINATION FOR THE DEGREE OF BACHELOR OF
COMMERCE
BAC 101: FUNDAMENTALS OF ACCOUNTING II
DATE:
Tuesday 27th March 2012
TIME:
8.00a.m – 10.00a.m
______________________________________________________________________
INSTRUCTIONS
ANSWER ALL QUESTIONS
SHOWALL YOUR WORKINGS
Question One
Similock Limited issued 40,000 equity shares of Kshs. 10 each as at premium of Kshs. 2.50
payable as follows,
Kshs. 2.00 on application
Khs 4.50 on allotment (including premium)
Kshs. 6.00 on calls
Owing to heavy over subscription allotment was made as follows;
a) Application for 23,000 shares (in respect of application for 200 or more) were allotted
10,560 shares.
b) Application for 48,000 shares (in respect of application for 2000 or more) were allotted
14,200 shares
c) In respect of the remaining applicants that is for those who applied for 25,400 shares
allotment of 15,240 shares on pro-rata basis.
Excess application money was adjusted against subsequent dues and the final surplus was
refunded.
Page 1 of 6
A to whom 300 shares were allotted failed to pay the allotment money. B who was allotted
450 shares failed to pay the call money. Those shares were forfeited. 500 shares of the
forfeited were re-issued to C at Kshs 9.00 per share.
Required
i)
Journal entries to record the above
[10marks]
ii)
The necessary ledger accounts including the balance sheet.
[10marks]
Question Two
A and B are partners sharing profit and losses in the ratio 3:2. The following was their balance
sheet as at 31st December 2011.
BALANCE SHEET
Assets
Kshs
Liabilities
Kshs.
Building
1,020,000
Capital A
1,120,000
Plants
840,000
B
640,000
Stocks
346,000
Net profit
244,000
Debtors
263,000
Creditors
480,000
Bank
375,000
Loan
360,000
2,844,000
2,844,000
They decided to admit C into the partnership on the following conditions
i)
C was to bring in Kshs. 5000,000 as his capital
ii)
Goodwill was valued at Kshs. 160,000 and was to be written off.
iii)
The following assets were revalued
Building 2,200,000
Plants
600,000
Stock
300,000
iv)
Provision for doubtful debts was to be charged at 15% off debtors
v)
Creditors was valued at Kshs 520,000 and investments amounting to Kshs. 300,000
non mentioned in the books was to be taken into account.
vi)
A and B to be credited with 5% interest in capital
Page 2 of 6
vii)
The loan was repaid in full
viii) The new profit sharing ratio between A, B and C would be 5:3:2.
Required:
i)
Profit and loss appropriation account.
[5marks]
ii)
Partners capital account.
[10marks]
iii)
Balance sheet after admission of partner C
[5marks]
Question Three
a) State FIVE limitations of using accounting ratios to evaluate a business enterprises
performance.
[5marks]
b) The summarized financial statement of Bidii Enterprise Limited for the year ended 30
September and 2010 were as follow:
Income statement for the ended 30th September
2009
2010
Shs: “000”
Shs: “000”
Sales
60,000
80,000
Cost of sales
(45,000)
(57,600)
Gross profit
15,000
22,400
Operating expenses
(5,000)
(7,400)
Profit from operation
10,000
15,000
Interest payable
(1,000)
(2,000)
Net profit before tax
9,000
13,000
Balance Sheets as at 30 September
Non-current assets at cost
70,000
72,000
Accumulated depreciation
(17,500)
(10,800)
52,500
61,200
Current assets:
Stock
18,000
20,000
Trade debtors
20,000
21,000
Page 3 of 6
Prepaid expenses
4,000
3,800
42,000
44,800
Total assets:
94,500
106,000
Equity and Liabilities:
Capital and reserves:
2,000,000 ordinary shares of
Shs. 20 each
40,000
40,000
Share premium
5,500
5,500
General reserves
8,000
9,000
Retained earnings
7,000
8,500
60,500
63,000
Long-term liability:
10% debentures
10,000
20,000
Current liabilities:
Trade creditors
16,000
17,000
Bank overdraft
8,000
6,000
24,000
23,000
Total equity and liabilities
94,500
106,000
Required
For each year, calculate the following ratios
i)
Gross profit to sales
[2marks]
ii)
Return equity
[2marks]
iii)
Return on capital employed
[2marks]
iv)
Current ratio
[2marks]
v)
Gearing ratio
[2marks
Question Four
a) Explain the importance of a cashflow statement to an enterprise. [5marks]
b) PQR Enterprise Limited, a paper manufacturing company, extracted the following
balance sheets as at 31st March
Page 4 of 6
Assets
2009
2008
Non-current assets
Shs: “000”
Shs: “000”
Freehold land
3,640
3,400
Plant and Equipment
14,210
6,200
Motor vehicles
2,940
5,580
20,790
15,180
Current Assets
Inventory
2,700
2,370
Account receivable
3,030
2,460
Prepaid expenses
930
510
Cash at bank
600
930
7,260
6,270
Total Assets
28,050
21,450
Equity and liabilities
Capital and reserves
Ordinary share capital
10,200
6,900
Share premium
4,950
1,650
General reserves
1,290
840
Revaluation reserves
1,500
1,260
Retained profits
4,500
3,540
22,440
14.190
Non-current liabilities:
Commercial papers
1,800
3,450
Current liabilities
Account payable
2,046
1,680
Taxation
264
330
Proposed dividends
1,350
1,020
Bills payable
150
780
3,810
3,810
Total and liabilities
28,050
21,450
Page 5 of 6
Additional information
i)
During the year, the company spent shs. 9,700,000 in the purchase of an item
of equipment and expansion of plant. The company also disposed a Motor
vehicle with a net book value of shs. 1,620,000 and realized shs. 1,480,000
The depreciation charge on motor vehicle during the year was shs. 1,020,000.
ii)
The company paid shs 362,000 being interest on commercial paper, The
interest was charged to the profit and loss account.
iii)
The current tax expenses for the year ended 31st March 2009 amounted to
shs. 420,000.
iv)
The directors propose to pay a dividend of shs. 1,350,000 for the year ended
31st March 2009.
Required
Cash flow statement for the year ended 31st March 2009. In conformity with IAS7 (cash
flow statement).
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