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Acct 430: Advanced Accounting 1 Question Paper
Acct 430: Advanced Accounting 1
Course:Business Administration.
Institution: Kenya Methodist University question papers
Exam Year:2015
KENYA METHODIST UNIVERSITY
END OF 1''st ''TRIMESTER 2015 (PT) EXAMINATION
SCHOOL : BUSINESS AND ECONOMICS
DEPARTMENT : ACCOUNTING FINANCE & INVESTMENT
UNIT CODE : ACCT 430
UNIT TITLE : ADVANCED ACCOUNTING 1
TIME: 2 HOURS
INSTRUCTIONS:
Answer question One and any other Two
Question One
List FIVE differences between a consignment and a sale.
(10marks)
A firm sells its products in containers purchased at shs.20 each. Customers are charged at shs. 24 per container and are allowed shs. 16 for each containers returned in good time. For stock taking purposes, all containers in the factory and in the hands of customers repetition are valued at kshs. 14 each. From the following information, draw up the container stock account and containers suspense account for year ended 31st December 2008:
Containers
In the factory at 1st Jan. 2008 9000
With customers at 1st Jan (Returnable) 7,200
With customers at 31st Dec 2008 (Returnable) 5,800
Purchased during the year ended 31st Dec. 2008 12,000
Sent to customers during the year 20,000
Returned back by customers during the year 13,600
(20marks)
Question Two
Briefly define the following accounts:
General accounts or vote (GAV)
The exchequer account
Paymaster General Account (PMG)
Appropriation account
Revenue account.
(10marks)
The approved estimates and actual details of the ministry of culture and social services for the year 2006/2007 were as follows:-
(Shs.000
Gross estimated expenditure 640,000
Estimated Appropriation in Aid 40,000
Drawings from Exchequer 530,000
Gross expenditure 480,000
Actual appropriations in aid 30,000
Prepare:
i) The General account of vote
ii) The exchequer account
iii) Pay master general account. (10marks)
Question Three
On 1st Jan 2003, Hassan and Kamau entered into a joint venture to buy and sell goods. It was agreed that Hassan should receive a commission of 2% on all loses from bad debts. Profit and losses were to be shared equally. The following transactions took place:
2nd Jan: Hassan purchased goods for shs. 680,000, paying shs. 480,000 in cash and accepted two brills of exchange, one for shs 80,000 and
the for shs. 120,000.
3rd Jan: Hassan sent to Kamau goods which had cost shs. 275,000 and Kamau transferred shs 350,000 to Hassan in cash.
9th Jan: Hassan sold goods to Otieno for shs 42,000 and to Wafula for shs. 25,000 and they accepted bills of exchange for the amounts
respectively due from them. Hassan endorsed both bills to Kamau
charges of shs. 2,000.
3rd Feb: Hassan sold goods for shs. 180,000. On delivery, the customer
rejected goods invoiced at shs. 9,000 and these goods were
collected by Kamau who sold them to another customer for shs.
11,000.
11th Feb: Otieno met his bill but Wafula`s bill was dishonoured. Wafula
could not meet his debt and it was written off as a bad debt.
5th March: Kamau paid the bill for shs. 80,000 which had been accepted by
Hassan and Hassan paid the second bill for shs. 120,000.
20th March: Hassan sold the remainder of the goods in his possession for shs. 291,000 and Kamau`s sales on the same date amounted to shs. 340,000. Bad debts (apart from the amount due from Wafula)
were shs. 4,200 of which shs. 3,000 was in respect of sales by Hassan.
On april 30th 2003, the venture was closed. Kamau took over the stock in his possession at a valuation of shs. 50,000 and the sum required to settle accounts between the ventures was paid by the relevant venturers.
Prepare the relevant venture accounts which would appear in the books of Hassan and Kamau for the period ended 30th April 2003 and the memorandum of joint venture a/c. (20marks)
Question Four
Five years ago, Mobiletex Ltd leased a patent for the manufacture of a gadget used in mobile phones from Quickcom Ltd. The lease agreement provided for payment of royalty at the rate of shs. 50 per gadget sold with a minimum royalty of shs. 250,000 per annum. Royalties were payable on 15th March following the end of the financial year on 31st December. Short workings arising in any year were recoverable within the following 2 years of operation. Mobiletex Ltd. Subleased the patent to Handphone Ltd. A royalty of shs. 60 per gadget produced with a minimum rent of payment of royalties at the end of each financial year on 31st December. Given below is information about the number of gadgets produced by both companies in the 1st 5 years of operations:-
Year ended Mobitex Ltd Handphone Ltd
31st Dec Production Sales Production Sales
(units) (units) (units) (units)
2007 1,800 1,600 800 500
2008 2,500 2,600 1,100 1,200
2009 3,500 3,600 3,000 2,500
2010 4,200 4,000 3,900 4,200
2011 6,000 5,000 4,200 4,000
Prepare the following accounts:
Royalty expenses payable account.
(4marks)
Quickcom Landlord account.
(3marks)
Short workings recoverable account.
(3marks)
Royalty income receivable account.
(4marks)
Handphone sub-tenant account.
(3marks)
Short-workings allowable account.
(3marks)
Question Five
Muthoni, Njeri and Wangechi are in partnership sharing profits and losses in the ratio of 2:1:1. The balance sheet of the firm as at 30th Aprial 2009 was as follows:
Shs. Shs. Shs. Shs.
Capital accounts Fixed Assets:
Muthoni 360,000 Land & Buidings
Njeri 180,000 at cost 540,000
Wangechi 180,000 720,000 Furniture & Fittings 90,000
less: Depreciation 30,960 59,040
599,040
Current liabilities: Current Assets:
Bank o/d 11,700 Stock 144,000
Creditors 49,500 61,200 Debtors 38,160 182,160
781,200 781,200
On 30th April 2009, it was agreed to dissolve the partnership and as Njeri is continuing in business on her own account agreed to take over the furniture and fittings, stocks and debtors at valuations of shs. 54,000, shs. 180,000 and shs. 36,000 respectively. She also agrees to acquire the land and building at a cost of shs. 965,000 and obtains a bank loan of shs. 700,000 which is paid to the partnership. The balance owning by Njeri is charged against Muthoni`s capital account as the two partners have agreed that Njeri will repay the loans to Muthoni over a period of 2 years at an interest rate of 15% p.a. realization expenses amounting to shs. 10,700 are paid in cash and creditors of the firm are paid in full.
Prepare the ledger accounts of the partnership in order to close of the books as at 30th April 2009. (20marks)
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