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Hbc2104:Introduction To Accounting Ii Question Paper
Hbc2104:Introduction To Accounting Ii
Course:Bachelor Of Commerce
Institution: Meru University Of Science And Technology question papers
Exam Year:2010
QUESTION ONE (25 MARKS) The following is a trial balance of Bete enterprises, a manufacturing firm as at 30th June 2010.
Shs Shs
Sales 4,434,000 Purchases of raw materials 2,190,000 - Carriage outwards 49,000 - Wages and salaries 1,458,000 - Rates and insurance 108,000 - Sundry expenses 365,000 - Stock at 1.7.09 Raw materials 414,000 - Finished goods 180,000 - Motor vehicles expenses 144,000 - Fixed assets at cost Factory premises 1,200,000 - Plant and machinery 300,000 - Motor vehicles 72,000 - Accumulated depreciation 1.7.09 Factory premises 168,000 Plant & machinery 108,000 Motor vehicles 30,000
Debtors and creditors 48,000 54,000 Bank overdraft - 84,000 Profit balance 1.7.2009 - 370,000 capital - 1,280,000 6,528,000 6,528,000
Additional Notes: 1. For the year ended 30th June 2010, the following expenses are to be apportioned between manufacturing and trading units, as indicated below. Expense Manufacturing Trading Rates and Insurance 2/3 1/3 Sundry expenses 3/5 2/5 Vehicles expenses 2/3 1/3 Salaries & wages 2/3 1/3 2. Stock at 30th June 2010 - Raw materials Shs504,000 - Finished goods Shs222,000
3. Provision for depreciation is to be made on a straight-line basis as follows. - Factory premises 5% - Plant and machinery 10% - Motor vehicles 25% 4. Factory manufactured goods are to be transferred to the trading unit at cost plus 10% mark up.
Required: Prepare (a) Income statement for Bete enterprises for the year ended 30th June 2010. (b) Statement of financial position (Balance sheet) as at 30th June 2010.
QUESTION TWO (20 MARKS)
Ahmed, Babu, and Tuju are partners sharing profits and losses in the ratio 2:1:2. Trial balance of the partnership as at 31st December 2009 was as follows
Dr Cr Shs Shs Capital Accounts Ahmed - 13,000,000 Babu - 10,300,000 Tuju - 9,500,000
Sales and Purchases 5,000,000 10,000,000 Debtors & creditors 2,000,000 800,000 Returns 400,000 200,000 Office expenses 1,000,000 - Current Accounts Ahmed - 500,000 Babu - 400,000 Tuju 200,000 - General expenses 700,000 - Bad debts 200,000 - Provision for bad and Doubtful debts - 200,000 Rent and rates 200,000 - Salaries and wages 900,000 Land & buildings 33,500,000 Plant and machinery 3,000,000 Provision for depreciation Land and buildings - 1,000,000 Plant and machinery - 1,500,000 Motor vehicles - 500,000 Drawings Ahmed 500,000 Babu 400,000 Tuju - - Carriage inwards 500,000 Bank 400,000 15% Bank loan, 5yr - 1,000,000 48,900,000 48,900,000
Additional notes:
1. Stock as at 31.12.09 Shs1,000,000. 2. Provision for bad and doubtful debts to be decreased to 8%. 3. Accrued general expenses amounted to Shs80,000. 4. Prepaid insurance amount to Shs50,000. 5. Tuju took goods worth Shs100,000 during the year. No record nor adjustments had been made in the books of accounts. 6. Included in the salaries and wages account Shs200,000 per year. Partnership deed allowed Tuju to take Shs200,000 each per year as salary. 7. Interest on capital to be made at 15%, interest on drawings to be charged at 20% 8. Interest on bank loan had not been paid as at 31.12.09. 9. Depreciation on non-current assets is to be provided as follows: - Land and buildings 5% on cost. - Plant and machinery 20% on reducing basis
- Motor vehicles 25% on cost.
Required: prepare
(a) Income statement for the partnership for the year ended 31.12.09 (5 Marks) (b) Profit appropriation Account for the year ended 1.12.2009 (5 Marks) (c) Partners current account. (5 Marks)
QUESTION THREE (15 MARKS)
Nuru Ltd offered 100,000 ordinary shares of Shs20 each for public subscription at Shs25 per share payable as follows.
Shs
1.8.2010 application 6
5.9.2010 allotment (including premium 12
2.10.2010 first and final call 7
Applications were received for 150,000 ordinary shares, applications for 50,000 shares were rejected and their monies refunded. The remaining shares were allotted on prorata basis. All allotment was made and monies received. Call was made and monies received except for Mr. Ndii, who had been allotted 2,000 shares. All efforts to have Mr Ndii pay up for calls in arrears were unsuccessful. The directors resolved that shares be forfeited and be reissued.
On 5.11.10 the forfeited shares were reissued at shs15 per share and monies were received in full. All transactions were done through the Bank Account.
Required:
(a) Ledger Accounts to record the above transactions. (10 Marks) (b) Highlight five advantages of a company as a form of business over partnerships and sole proprietorships. (5 Marks)
QUESTION FOUR - (10 MARKS)
The following accounts balances were extracted from a Meru College, a Public Institution of Higher learning as at 30th June 2010.
Shs (000) Income from investments 3,000 Land 640,000 Buildings 560,000 Motor vehicles 20,000 Plant & Machineries 20,000 Furniture & fittings 25,000 Equipments & computers 10,000 Receipts-Kitchen meals sales 4,500 Sports and recreation expenses 2,500
Kitchen meals expenses 3,000 Library books 20,000 2,100 Printing and stationeries expenses 29,200 Grants from GoK 88,400 Sales of grass to farmers-receipts 300 Receipts – sales of farm produce 3,800 Farm expenses 2,100 Subscriptions to periodicals 1,500 Miscellaneous receipts 3,100 Administration and overhead expenses 54,300 Tuition fees 400,000 Certificate issue fees 400 Staff salaries and allowances 365,000 Receipts – rent of hostels 3,600 Hostels upkeep expenses 1,600 Repairs and maintenance 2,500 Medical expenses and drugs 17,500
Notes:
1. The following amounts were outstanding as at 30.6.2010 Shs(000)
Investment income 1,750
Tuition fees 38,000
Administration & overhead expenses 2,700
2. Prepaid periodicals subscriptions as at 30.6.10 amounted to Shs500,000 3. Grants from GoK to be treated as income for the year ending 30.6.2010 4. On 16.6.10, government (GoK) directed that half of all fees outstanding in all public institutions of higher learning by 30.6.10 be written off. No adjustments had been made in the books of the college with respect to this directive. 5. College management decided to provide for bad and doubtful tuition debts at 10% as at 30.6.10, debtors outstanding. 6. Depreciation of non-current assets to be provided as follows, on cost. Buildings 1% Furniture and fittings 5% Library books 10% Equipment and Computers 15% Motor vehicles 10%
Required: Prepare (a) Income and expenditure account for the financial year ended 30.6.10. (7 Marks) (b) Statement of financial position as at 30.6.10. (3 Marks)
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