Hbc2103:Introduction To Accounting Ii Question Paper
Hbc2103:Introduction To Accounting Ii
Course:Bachelor Of Commerce
Institution: Meru University Of Science And Technology question papers
Exam Year:2011
QUESTION ONE (20 MARKS)
The following balances have been extracted from the books of Maua manufacturers a small scale manufacturing enterprise as at 31 December 2008.
Stock as at 1 January 2008: Raw materials 7000 Work in progress 5000 Finished goods 6900 Purchase of raw materials 38000 Direct labour 28000 Factory overheads: Variable costs 16000 Fixed costs 9000 Administrative expenses: Rent and rates 19000 Lighting 6000 Stationery and postage 2000 Staff salaries 19380 Sales 192000 Plant and machinery: At cost 30,000 Provision for depreciation 12000 Motor vehicles (for sales deliveries): At cost 16000 Provision for depreciation 4000
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Creditors 5500 Debtors 2800 Drawings 11500 Balance at bank 16600 Capital at 1 January 2008 48000 Provision for unrealized profit and 1 January 2008 1380 Motor vehicle costs 4500
Additional information:
(i) Stock at 31 December 2008 were as follows: Sh`000` Raw materials 9000 Work in progress 8000 Finished goods 10350 (ii) The factory output is transferred to the trading account at cost plus 25% of factory profit. (iii)Depreciation is provided at the rates shown below on the original cost of fixed assets held at the end of financial year. Plant and machinery 10% p.a Motor vehicles 25% p.a (iv) Amounts accrued at 31December 2008 for direct labour amount to Ksh3,000,000 and rent and rates prepaid at 3 December 2008 amounted to Sh2,000,000.
REQUIRED
(a) Manufacturing, trading and profit and loss account for the year ended 31 December 2008. (12 Marks) (b) Balance sheet as at 31 December 2008. (8 Marks)
QUESTION TWO (10 MARKS)
The following information relates to Wario, Parl and Hosea Partners for the year ended 31 December 2008. You are required to draw up a partnership profit and loss appropriation account for the year ended 31 December 2008 .
(i) Net profit Ksh450,000 (ii) Interest to be charged on capital: Wario Ksh2500, Parl Ksh1000 and Hosea Ksh3000 (iii)Interest to be charged on drawings Wario Sh1000, Parl Ksh1200 and Hosea Ksh950. (iv) Salaries to be credited: Parl Ksh12000, Hosea Ksh10000 per year (v) Profit to be shared: Wario 50%, Parl 30% and Hosea 20% (vi) Curve account: balance brought forward Wario Cr Ksh20,000, Par Dr Ksh12000 and Hosea Cr Ksh2000.
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(vii) Capital account: balance brought forward: Wario Ksh160,000, Parl Ksh90,000 and Hosea Ksh40,000 (viii) Drawings: Wario Ksh9200, Parl Ksh8000 and Hosea Ksh16000.
QUESTION THREE (20 MARKS) The following balances were extracted from the books of Watu Traders Ltd as at 30th September 2010.
Shs
Ordinary shares of Sh20, fully paid 600,000 8% preference shares Shs20, fully paid 100,000 Shares premium 80,000 6% Bank Loan, 5yr 100,000 Trade creditors 148,000 Trade debtors 330,000 Sales 4,800,000 Purchases 4,220,000 Discounts allowed 5,000 Discounts received 13,000 Freehold buildings: At cost 500,000 Accumulated Depreciation 50,000 Stocks 1.10.2009 420,000 Returns outwards 80,000 Salaries and wages 130,000 Administrative expenses 56,000 Selling and distribution expenses 167,000 Bad debts written off 4,000 Provision for doubtful debts 18,000 Profit and loss account 1.10.2009 362,000 Good will 160,000 Bank overdraft 25,000
Additional Notes
1. Depreciation policy is 2% on cost of freehold buildings and 10% on cost of fixtures and fittings. 2. Trade debtors balance includes Shs10,000 from make who had been declared bankrupt and it has been decided that it be written off. 3. Provision for doubtful debts as at 30.9.10 is to be 5% of trade debtors. 4. Salaries and wages prepaid as at 30.9.10 amounted to Sh4,000.
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5. Shs7000 had accrued as administration expenses. 6. Interest on Bank loan had not yet been paid. 7. Stock as 30.9.10 amounted to Sh560,000 8. Company Directors propose that the preference share dividend paid and a dividend of 10% on the ordinary shares be paid, after charging 20% tax on profits.
REQUIRED
(a) Income statement for the period ended 30.9.2010. (10 Marks) (b) Statement of financial position as at 30.9.20101. (10 Marks)
QUESTION FOUR (20 MARKS)
(a) State and briefly explain any three distinguishing features between: (i) A receipt and payment account (ii) Income and expenditure account (6 Marks) (b) The accountant of Tupendane Sports club has extracted the following information. From the books of account for the year ended 31 March 2011.
Receipts Shs Payment Shs
Bal. b/forward 288,000 Salaries and wages 254,000 Subscriptions: New equipment 565,000 Year 2009/200 249,000 Repairs and Maintenance 124,000 2010/2011 2,050,000 Office expenses 415,000 2011/2012 194,000 printing and stationery 168,000 Dinner dance 723,000 Purchase of beverages 497,000 Beverage sales 657,000 Dinner dance expenses 315,000 Investment income 400,000 Refund and subscription 45,000 Sports prizes 25,000 Transport 248,000 Investment 1,500,000 Bal C/forward 405,000__ 4,561,000 4,561,000 Balances as at: 31 March 2010 31 March 2011 Furniture and fittings Sh240,000 - Equipment (net) 690,000 - Investment at cost 3,500,000 - Subscription in arrears 300,000 375,000 Salaries accrued 68,000 72,000 Stock of beverages 162,000 184,000 Subscription in advance 85,000 -
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Additional information
1. Subscription in arrears are written off after twelve months 2. Depreciation is provided for on reducing balance method at 10% and 20% p.a on furniture and fittings and equipment respectively. 3. Investments, which had cost Sh500,000 were sold on 30 March 2011, for Sh625000. No entries have been made in the books in this respect.
REQUIRED
(a) Income and expenditure accounts for the year ended 31 March 2001 (8 Marks) (b) Balance sheet as at 31 March 2011. (6 Marks)
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