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Hbc2211:Advanced Accounting I Question Paper
Hbc2211:Advanced Accounting I
Course:Bachelor Of Commerce
Institution: Meru University Of Science And Technology question papers
Exam Year:2012
QUESTION ONE (25 MARKS)
(a) Discuss the difference between sales and consignment. ( 5 Marks) (b) Latex Ltd acquired a truck on 1 January, 2010 for 1,291,500. The cash price of these units was 900,000. The deal was financed by Stanbic Bank, and the terms of the hire purchase contract required a deposit of 300,000 on delivery, followed by 3 instalments on 31 December, 2010, 2011 and 2012 of 330,000.330,000, and 331, 500 respectively. The true rate of interest was 30% per annum. Required: prepare the appropriate accounts in the books of Latex Ltd to record the above transactions. Accounts after the end of 2012 need to be prepared. Depreciation is to be charged on vehicles at 20% per annum, using straight line method. (15 Marks)
QUESTION TWO ( 20 MARKS) Karimi has negotiated with Auma for a licence to manufacture and sell weighing scales patented as ‘Wellscale’ Auma is the registered owner of the patent. The agreement provides for a royalty to be paid to Auma of sh. 250 for each unit sold in a year, subject to a minimum of sh. 2,500,000 per year. The shortfall in any year can be recouped form any excess of royalties over the minimum sum in the following year. Karimi sold 8000 weighing scales in 2006 and 11000 in 2007. From the beginning of 2008, Karimi issued a sublicence to Ruto for the manufacture and sale of the same units, on the terms
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of a royalty of sh. 300 each, a minimum sum of sh. 1,500,000 per year and the right to recover any shortfall for a year from an excess in the following year.
The sales volumes for the following two years were:
Karimi ruto 2008 12000 3000 2009 14000 4000 Required: The accounts in Karimi’s books for each of the four years 2006, 2007, 2008 and 2009 indicating the amounts to be transferred to the profit and loss account each year and the amounts carried forward at the end of each year.
Assume that all amounts due were received or paid in the appropriate year. ( 25 Marks)
QUESTION THREE ( 20 MARKS)
Kigen and Njoroge were partners in business sharing profits and losses in the ration of 2/3 for Kigen and 1/3 for Njoroge. Interest on fixed capitals was allowed at rate of 10% per annum but no interest was charged or allowed on current accounts. Accounts are made annually to 31 March
On 30 September, 2010, Mutua was admitted as a partner and from date, profits and losses we shared in the ratio of 2/5 for Kigen 2/5 for Njoroge and 1/5 for Mutua. For the purpose of these changes the value of the goodwill was to be maintained in the books, adjusting entries for transactions between the parties being made in their current accounts.
On 1 October, 2010, Mutua paid sh. 90,000 into the firm of which it was agreed Sh. 60,000 should comprise his fixed capital and balance be credited to his current account. No adjusting entries have been made yet to record the admission of the new partner. The following trail balance was extracted from the books of the partnership as at 31 March, 2011.
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Shs. Shs. Leasehold premises 150,000 Fixed capital: Purchases 432,000 Kigen 65,000 Motor vehicles at cost 164,000 Njoroge 56,000 Bank balance 24,6000 Current accounts: Debtors 64,400 Kigen 34,400 Rent and rates 8,400 Njoroge 22,000 Stock 1 April 2010 96,000 Cash introduced: Mutua 90,000 Salaries (including partners drawings 149,600 Sales 800,000 Furniture and fittings at cost 58,000 Creditors 84,500 Selling and distribution 52,400 Accumulated depreciation: Motor vehicles 37,800 - Furniture and fittings 9,700 1,199,400 1,199,400
Required: (a) The Trading and Profit and Loss Accounts for the year ended 31 March 2011. ( 5 Marks) (b) Partners’ current accounts in columnar form. ( 5 Marks) (c) Balance sheet as at 31 March 2011. ( 5 marks)
QUESTION FOUR ( 20 MARKS) Sameer Traders Ltd. sells most of its goods through consignees. One of the consignees is Bidco Enterprises Ltd who operated in Kampala. Bidco Enterprises Ltd is entitled to a commission no 5% on sales. Given below are the transactions carried out between Sameer Traders Ltd. And Bidco Enterprises Ltd for the three months ended 31 October, 2002.
August - Consignment of 500 bicycles each costing Sh. 4000 was sent to Bidco Enterprise Ltd. - Sameer Traders Ltd. Paid packing costs Shs. 80,000, freight sh. 100,000 and insurance Sh. 40,000. - Bidco Enterprises Ltd. Paid carriage-in costs of Sh. 18,000 from the railway station to the trading premises.
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- Bidco enterprises Ltd. Also paid Sh. 12,000 with respect to offloading the bicycles.
September:
- Bidico enterprises Ltd. Sold 300 bicycles at Sh. 6000 each and paid carriage out-costs of Sh. 30,000. - In order to sell the remaining 200 bicycles , they were fitted with head lamps at a total cost of Sh. 50,000. The amount being paid by Bidco Enterprises Ltd. - Bidoc Enterprises Ltd paid storage cost of Sh. 18,000 and advertisement costs of Sh. 20,000.
October
- Bidco Enterprises Ltd sold 160 bicycles at Sh. 6,500 each. - Bidco enterprises Ltd. Sent account sales to Sameer Traders Ltd. Accompanied by a cheque for sh. 2,150,000 after deducting its commission and payments on behalf of the consignor the balance remaining as a debt due to Sameer Trader Ltd. - Sameer Traders Ltd, prepare separate trading and profit and loss accounts for consignments sales made through each consignee.
Required:
(a) In the books of Sameer Traders Ltd: (i) Consignment out account. ( 5 Marks) (ii) Trading and profit and loss account for the three months ended 31 October 2002 ( 5 Marks)
(b) Sameer Traders Ltd.s account in the books of Bidco Enterprises Ltd. ( 5 Marks)
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