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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 (30 MARKS)
Tiomin ltd holds a lease of minerals from Kitui municipality ltd for a period of 40 years from 1 October 2011. under this lease, there is payable a royalty of sh.100 per tonne merging in a minimum rent of sh.20,000 per year payable ½ yearly on 30th September and 31st march. They granted a sub-lease for 20 years from 1 April 2012 to latex ltd for a royalty of sh. 150 per tonne merging in a minimum rent of sh15, 000 per half year, payable yearly on 31 March and 30th September.
Tiomin are entitled to recoup short workings from Kitui municipality Ltd throughout the lease term, but the sub-please allows LATEX Ltd to recoup short workings only out of excess workings in any of the three half-years immediately following that in which short workings accrued:
The mining work was as follows:
By tiomin By latex
Half year ended: (tones) (tones)
31 March 2012 50 -
30 September 50 50
31 March 2013 200 60
30 September 300 60
31 March 22, 2012 250 120
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Required: show the necessary accounts in the books of TIOMI Ltd.The books are balanced each year on 31st March. (15 Marks)
QUESTION TWO (10 MARKS) Unique Corporation had the following transactions in 6% government stock between 1ST September 2010 and 31st July 2012 and all these transactions are assumed cum-interest except those marked s ex-interest. Interest is payable ½ yearly on 1st February and 1st August. Unique Corporation closes its books on 30th June every year.
1-9-10 purchased ash, 10, 9000 stock at 101.50
1-10-10 purchased sh. 25, 0000 stock at 101
1-11-10 sold sh.15, 000 stock at 103.25
1-1110 purchased sh. 5,000 stock at 103
15-1-11 sold sh. 10, l000 stock at 105 ex-unit
1-3-11 sold sh. 4,000 stock at 102.5
15-7-11 purchased sh. 5,000 stock at 101.25 ex-unit
1-11-11 purchased sh. 5,000 stock at 102
15-1-12 sold sh. 1 5,000 stock at 103
1-7-12 purchased sh. 2,000 stock at 102
Required: Write up the investment account n the books of the corporation for the two years ended 30th June 2011 and 30th June 2012 transferring the relevant amounts to the P and Land recording the remaining transactions. (10 Marks)
QUESTION THREE (15 MARKS)
LG Ltd forward on 1 January 2011, 100 bicycles to Alfred and Co. of Nairobi to be sold on behalf of LG Ltd the cost of 1 bicycle was sh. 2,500 but the invoice price was sh. 3,000 LG Ltd incurred sh. 10,000 on freight and insurance and received sh. 100,000 as advance from SONY and co.
SONY and Co paid sh. 5,000 for carriage inwards sh.4, 000 as rent and sh. 3,000 as insurance; and by 30th June 1998 had disposed of 80 bicycles for sh. 250,000. SONY and Co is entitled to a commission on sales at 5% of SONY and Co remitted the balance due from them by bank draft.
Required:
Write up the ledger accounts in the books of both parties (15 Marks)
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QUESTION FOUR (15 MARKS)
a. What is the basic principle involved in accounting for Hire Purchase Transactions? Describe how that principles in accommodated by two of the accounting methods commonly used to account for Hire Purchase Transactions. b. Juma Koko and Kimo were in partnership, sharing profits and losses, Juma 60%, Koko 30% and Limo 10%. The partnership deed provided the following. i. Interest at the rate of 10% per annum shall be allowed on fixed capital accounts balances. Interest will not be allowed on current accounts but 8% per annum is to be charged on any debit balance at the start of the year. ii. Good will is to be valued at the average annual profits for the three years immediately preceding the balance sheet date.
The follow
balances on
At 31 Dec 2005 current account at 31 Dec 2005
Sh. Sh.
Juma 180,000 50,000 cr
Koko 90,000 10,000 cr
Limo 30,000 12,000cr
The partners agreed to take Namu a son of Juma into partnership as on 1 January 2006 and on of sh. 30,000. He is to receive a salary of sh. 15,000 per annum in addition to his shared of the profit. Juma personally guaranteed than sh. 30,000 per annum.
Profit sharing ratios are to be Juma, 30%, Koko 30%, Limo 30% and Namu10%. Agreed profits for goodwill purpose for the past four years are as follows.
Sh.
2005 163,370
2004 102,550
2003 107,580
2002 141,640
No account for goodwill is to be maintained n the books, adjusting entries for transactions between the partners being made n their current accounts. The draft accounts for the year ended 31 December 2006m before taking into account Nas salary or interest on
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63,000, Koko sh. 49,000, Limo sh.49, 000 and Namu (including salary) sh. 21,930.
Required:
i. A statement showing the sharing of profit for the year ended 31 December 2006 ii. therein the entries necessary upon admission of Namu as a partner. (15 Marks)
QUESTION FIVE (15 MARKS)
During the year ended 31 December 2008, Nyumba investment Ltd purchased and sold investments as follows: i. 31st March purchased 10,000 5% debentures of sh. 100 each of asbestors Ltd at 97, brokerage and stamp duty amounting to sh. 25,600. Interest is payable on the debentures on 1st July and 1st January. ii. 1st March purchased 10,000 6% cumulative preference shares of sh. 100 each of bricks Ltd at 95, brokerage and stamp duty being sh. 24, 200. Dividends are payable on 30th June and 31st December. iii. 1st July sold sh. 600,000 debentures of asbestors Ltd at 99 less brokerage and stamp duty, which came to sh. 3,600. iv. 1st October purchased a further 4,000 6% cumulative preference shares of sh. 100 each of bricks Ltd at 90, brokerage and stamp duty being sh. 8,600.
Required:
Write the ledger accounts of the two investments for the year 2008. (15 Marks)
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