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Acct 430Advanced Accounting I Question Paper
Acct 430Advanced Accounting I
Course:Advanced Accounting I
Institution: Kenya Methodist University question papers
Exam Year:2012
KENYA METHODIST UNIVERSITY
END OF 2ND TRIMESTER 2012(EVENING) EXAMINATIONS
SCHOOL : BUSINESS AND ECONOMICS
DEPARTMENT : ACCOUNTING AND FINANCE
UNIT CODE : ACCT 430
UNIT TITLE : ADVANCED ACCOUNTING I
TIME: 2 HOURS
Instructions:
Answer question ONE and any other TWO.
Question One
Discuss the objectives of branch accounting.
(5mks)
Highlight the features of a joint venture agreement and discuss the difference between a joint venture and a partnership.
(7mks)
Banerjee and Mukherjee agreed to import timber into their country. On 1st July, 1994, they opened a joint bank account with Ksh. 25,000 towards which Banerjee contributed sh 15000 and Mukherjee contributed sh 10,000. They agreed to share profits and losses in proportion to their cash contributions. They remitted sh 20000 to their agent to pay for timber purchased and later sh 2,100 commissions in settlement of his account. Freight, insurance and dock charges amounted to sh 28,740 which enabled them to repay themselves with cost originally advanced (no account to be taken of interest). They then decided to close the venture and Mukherjee agreed to take over the timber unsold for sh. 1260 which is to be deducted from his share of profit.
Required:
Prepare the necessary accounts showing the amount of cash available for division by way of profits and how the same is divisible between Banerjee and Mukherjee. Assume separate set of books are maintained. (18mks)
Question Two
The following is a balance sheet of H-ltd and its subsidiary S-ltd as at 31st March 04
Assets H-LTD S- LTD Liabilities H - LTD S - LTD
Good will 100,000 200,000 Capital: full paid shares of 10 each 1,500,000 500,000
Freehold property 900,000 300,000 General Reserve 290,000 120,000
plant and machinery shares in Sltd 40,000 shares of 10 each @ cost 470,000 - plant and loss account 240,000 105,000
stock in Trade 150,000 50,000 bills payable 20,000 5,000
sundry debtors 180,000 80,000
Bank balance 70,000 10,000
Bills receivable 30,000 10,000
Total 2,300,000 800,000 2,300,000 800,000
Additional information
1. On the date of acquisition of the shares of S-LTD by H-LTD, the undistributed reserve and profits of S-ltd were sh. 50,000 and sh. 40,000 respectively
2. Debtors of H LTD includes sh 18,000 from S ltd
3. Bills receivable of S-ltd includes sh. 5,000 due from H- ltd
4. The stock of S-ltd includes goods purchased from H- ltd at sh 15000 which includes profit charged by H-ltd at 331/3 on cost.
5. H-ltd and S-ltd have all proposed a dividend of 12% for 12% for the year 2003 – 04 but no effect has been given for the same in the accounts.
6. In the case of H-Ltd there was a Contingent liability of sh. 20,000 in respect of bills discount
Required
Prepare a consolidated balance sheet of H- ltd and S-Ltd. (20mks)
Show your workings
Question Three
Discuss the concept of hire purchase contract and explain the legal provision regarding hire purchase contract.
(5mks)
A trader sells five refrigerators on hire purchase system during the accounting period 1998. From the following details; prepare
General trading account.
(7mks)
Hire purchase trading A/C to show the total profit made by him during the year. Show your workings.
(8mks)
Cost price 3000 each
Cash price 4000 each
Hire purchase price 5000 each
Cash down payment 1000 each
Total instalment due 200 each
Instalments received 55
Total instalments due 60
The trader is also making cash sales of regrigirators besides hire purchase sales. Total purchases amount to sh 35000, cash sales sh 25,000 and stock of refrigerators in the shop sh 5,000.
Question Four
Discuss five main features of a consignment transaction.
(5mks)
On 1st April 1996, Aditya mills ltd consigns 500 pieces of shirting costing Ksh. 5000 to Birla stores the consignee is entitled to 5% selling commission and 1% del-credere commission. The following expenses were incurred by the consignor
Carriage out sh 200
Insurance sh. 100
Freight sh. 150
Adtya mills ltd draws a bill of exchange for sh. 2000 on Birla stores, which was duly accepted by them. It was discounted for sh. 1950 on 31st may 96, Bula stores sent the account sales which showed that they have sold goods for sh. 7500 and paid expenses amounting sh 150. For sh 7500 and paid expenses amounting sh. 150 stock in consignees hand on 31st may 96 was valued at sh 1500. Bila stores enclosed a sight draft with the account sales for the net amount due to Aditya mills ltd.
Required
Pass journal enties and ledger accounts in the books of the consignor. (15mks)
Question Five
Ram accepted on 1st April 98 a bill for Ksh. 10,000 drawn by shyam at 3 months. Shyam immediately discounted the bill with the banker at 7% ram failed to meet the bill in due time and at his request, shyam renewed it for 3 months by adding 12% interest to the amount of Shyam’s furnishing security. Ram endorsed 2 of his customers bill for sh 7000 and sh 5400 due on 20th Augst and 10th sept 98 respectively. Shyam discounted all the three bills at 7% with the bankers but on the due date the 2nd customers bill was dishonored. Ram became bankrupt.
Required
Pass journal entries in the books of shyam.
(10mks)
Open ledger account to record the transactions.
(10mks)
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