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Daa 101 Introduction To Accounting Ii Question Paper

Daa 101 Introduction To Accounting Ii

Course:Diploma In Business Management

Institution: Kca University question papers

Exam Year:2014

UNIVERSITY EXAMINATIONS: 2013/2014
STAGE III ORDINARY EXAMINATION FOR THE DIPLOMA IN
BUSINESS MANAGEMENT
DAA 101 INTRODUCTION TO ACCOUNTING II
DATE: APRIL 2014
TIME: 1 1/2 Hours
INSTRUCTION: Answer any THREE questions
QUESTION ONE: (20 MARKS)
Mutate Johnson is a manufacturer. His trial balance at 31 December 2012 is as follows:
Kshs.
Delivery vans expenses
Lighting and heating:
8,800
Factory 36,100
Office 7,450
Manufacturing wages
General expenses:
360,500
Factory 40,500
Office 9,700
Sales representatives commission
58,440
Purchase of raw materials
Rent:
286,050
Factory 30,500
Office 13,500
Machinery(cost Kshs. 200,000)
143,000
Office equipment(cost Kshs. 45,000) 41,000
Office salaries 88,700
1
Kshs.
Accounts receivable
171,000
Accounts payable
47,000
Bank
80,710
Sales
974,000
Van (cost Kshs. 34,000)
31,000
Inventory at 31 December 2011:
Raw materials 66,300 Finished goods 206,500 Drawings 121,000 Capital ........... 779,750
1,800,750 1,800,750
Additional information:
(i) Inventory at 31 December 2012: Raw materials Kshs. 72,550; finished goods Kshs. 222,450;
work-in-progress Kshs. 65,000.
(ii) Depreciate machinery Kshs. 15,000; Office equipment Kshs. 3,000; Van Kshs. 6,000.
(iii) Manufacturing wages due but unpaid at 31 December, 2012 Kshs. 2,750; office rent prepaid
Kshs. 700.
Required:
Prepare the manufacturing account and income statement for the year ending 31 December 2012
and the balance sheet as at that date.
QUESTION TWO: (20 MARKS)
The following are the statements of financial position of Mugai Company as at 31 December
2006 and 31 December 2007.
STATEMENTS OF FINANCIAL POSITION
31.12.2006
31.12.2007
Non-current assets
Premises at cost
25,000
Current assets
2
28,000
Inventory 12,500 12,850
Accounts receivable 21,650 23,140
Cash and bank balances
4,300
Total assets
38,450
5,620
41,610
63,450 70,410
(11,350) (11,120)
52,100 59,290
Opening balances b/d 52,660 52,100
Add: Net profit 16,550 25,440
69,210 77,540
(17,110 (18,250)
52,100 59,290
Current liabilities
Accounts payable
Net assets
Financed by:
Capital
Less: Drawings
Total capital
Required:
Prepare a statement of cash flow for Mugai Company for the year ended 31 December 2007.
QUESTION THREE: (20 MARKS)
Doyo and Haifa are in partnership as lecturers and tutors. Interest is to be allowed on capital and
on the opening balances on the current accounts at a rate of 5% per annum and Doyo is to be
given a salary of Kshs. 360,000 per annum. Interest is to be charged on drawings at 5% per
annum (see notes below) and the profits and losses are to be shared Doyo 60% and Haifa40%.
The following trial balance was extracted from the books of the partnership at 31 December,
2010.
Kshs.
Kshs.
Capital account – Doyo 1,000,000
Capital account – Haifa 1,500,000
Current account – Doyo 80,000
Current account – Haifa 100,000
3
Drawings – Doyo 340,000
Drawings – Haifa 400,000
Sales- goods and services
10,835,000
Purchases of textbooks for distribution
5,836,600
Returns inwards and outwards 16,000
Carriage inwards 63,000
Staff salaries
6,600
2,823,000
Rent 50,000
Insurance – general 20,000
Insurance – public indemnity 30,000
Compensation paid due to Haifa error 200,000
General expenses 190,000
Bad debts – written off
23,000
Fixtures and fittings – cost
1,480,000
Fixtures and fittings – depreciation
240,000
Accounts receivable and accounts payable
2,750,000
Cash
468,000
8,000
14,229,600
14,229,600
Additional Notes:
1) An allowance for doubtful debts is to be created of Kshs. 30,000
2) Insurances paid in advance at 31 December, 2009 were General Kshs. 1,000; Professional
Indemnity Kshs. 2,000.
3) Fixtures and fittings are to be depreciated at 10% on cost.
4) Interest on drawings Doyo Kshs. 11,000, Haifa Kshs. 21,000
5) Inventory of books at 31 December, 2010 was Kshs. 30,000.
Required:
Prepare an income statement together with an appropriation account at 31 December, 2010
together with a statement of financial position as at that date.
4
QUESTION FOUR: (20 MARKS)
State and briefly explain distinguishing features between the following accounting items:
(i) Cash basis of accounting and accrual basis of accounting. (4 Marks)
(ii) Materiality and substance over form (4 Marks)
(iii)An income and expenditure account and profit and loss account (4 Marks)
(iv) A Statement of Affairs and balance sheet (4 Marks)
(v) Interest on capital and interest on drawings (4 Marks)
QUESTION FIVE (20 MARKS)
A Bell has kept records of his business transactions in a single entry for, but he did not realize
that he had to record cash drawings. His bank account for the year 2008 is as follows:
Kshs.
Balance 1.1.2008
Receipts from debtors
Loan from F Tung
Kshs.
92,0000 Cash withdrawn from bank
9,420,000 Trade accounts payable
1,260,000
6,300,000
250,000 Rent
320,000
Insurance 190,000
Drawings 1,100,400
Sundry expenses
82,000
......... Balance 31.12.2008
9,762,000
430,000
9,762,000
Records of cash paid were: Sundry expenses Kshs. 18,000; Trade accounts payable Kshs.
131,000. Cash sales amounted to Kshs. 154,000.
The following information is also available:
31.12.2007 31.12.2008
Kshs. Kshs.
19,400 27,200
Trade accounts payable 730,000 810,000
Accounts receivable 920,000 1,140,000
Cash in hand
5
Rent owing
- 34000
Inventory
460,000
2,420,000
Van (at valuation)
40,000
550,000
Insurance paid in advance
36,000
2,710,000
Required:
Draw up an income statement for the year ending 31 December 2008, and a statement of
financial position as at that date. Show all of your workings.
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Daa 101 Introduction To Accounting Ii Question Paper

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