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Hbc2115:Intermediate Accounting I Question Paper
Hbc2115:Intermediate Accounting I
Course:Bachelor Of Commerce
Institution: Meru University Of Science And Technology question papers
Exam Year:2012
QUESTIONONE (30 MARKS)
The following assets information was extracted from Geta Ltd on 1.4.2011.
Assets Value ksh.
Short term investments 900,000
Land and buildings 15,000,000
Motor vehicles 1,000,000
Machineries 1,750,000
Furniture and fittings 250,000
Equipments 500,000
Goodwill 450,000
Patents 2,000,000
Copyright 540,000
Stocks 2,500,000
Bank 230,000
Deferred research and
Development costs 460,000
2
Debtors 820,000
Software 1,240,000
Long term investment 1,360,000
29,000,000
List and:
a. Compute as at 1.4.2011 i. -currdent assets. (3 Marks) ii. (3 Marks) iii. (3 Marks) iv. (3 Marks) b. Highlight four reasons why organization should account and keep records of their assets. (4 Marks) c. Explain the following as used in accounting for assets i. Real assets (2 Marks) ii. Financial assets held to maturity (2 Marks) iii. Useful economic life of an arrest. (2 Marks) iv. Amortization of assets (2 Marks)
QUESTION TWO (15 MARKS)
The trial balance of Zama Ltd as at 31.3.2011 showed the following related to its noncurrent assets and depreciation.
Sh. Sh.
Buildings 10,500,000
Plant and machinery 4,205,000
Motor vehicles 3,620,000
Goodwill 2,000,000
Patents 1,500,000
Provision for depreciation 1.4.10
Buildings 1,510,000
Plant and machinery 1,175,500
Motor vehicles 2,002,300
3
During the year, a motor vehicle which had cost sh.500, 000 and on which depreciation of sh. 3o00, 000 had been charged was sold for sh.250, 000. The company depreciation/ amortization policy on assets is as follows:
Good will and patents 10% on cost.
Buildings 2% on cost
Plant and machinery 15% on reducing balance.
Motor vehicles 25% on cost.
Required:
a. on account as at 31.3.2011. (7 Marks) b. Disposal account for year to 31.3.11 (3 Marks) c. Balance sheet ,assets section as at 31.3.011 (5 Marks)
QUESTION THREE (15 MARKS)
a. Explain two causes of difference between balance as per bank statement and the balance as per the cash book ( bank column) (2 Marks) b. The following information relates to the sales and purchases of product k, for the period January to May 2011, at Kega enterprises.
PURCHASES SALES
Date quantity amount Date quantity amount cartons sh. cartons sh. 2.1.11 200 100,000 15.2.11 400 300,000 8.2.11 400 200,800 25.4.11 600 480,000 15.3.11 600 300,600 14.4.11 400 210,200 25.5.11 500 410,000 20.5.11 500 260,000 The enterprise expenses for the period amounted to sh. 100,000. Required: i. Determine the value of closing stock as at 31.5 .2011. using FIFO method ( 3 Marks) ii. Determine the net profit for the five months period ended 31st May 2011. (5 Marks) iii. Highlight likely challenges to be encountered when valuing closing stocks of a supermarket. ( 3 Marks)
QUESTION FOUR (12 MARKS)
On 1.9.2010 Mwema Ltd paid sh. 20,000,000 to Shah Brokers together with an order to purchase 200 sh.100, 000 bonds in Kakuzi ltd and in addition sh. 20,000 as brokerage fees
4
shah bought the bonds the same day. Kakuzi bonds were couponated at 10%, 5 year, interest payable semi annually, on 31. 8 and 28.2. Mwema Ltd closes their books on 31st December.
Other transactions
1. On 1.5.2011 Mwema Ltd sold 120, sh. 100,000 Kakuzi bonds at 104% plus accrued interest and paid sh. 30,000 as brokerage fees. 2. On 1.8.2011 Mwema Ltd sold the remaining 80 sh. 100,000 Kakuzi bonds at 102% plus the accrued interest paying sh. 20,000 as brokerage fees.
Required:
a. Journal entries to record Mwema Ltd investment in Kakuzi bonds on 1.9.2010. (2 Marks) b. Journal entries to record interest upon closure of books on 31.12.2010. (2 Marks) c. Journal entries to record the first receipt of interest on 28.2.2011. (2 Marks) d. Compute the gains or losses realized on partial sales of (disposal) of short term investments in Kakuzi bonds on 1. 5.2011 and on 1.8.2011. (4 Marks) e. Journal entries to record the transactions in (iv) above. (2 Marks)
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