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Bac 200 Accounting For Assets Question Paper
Bac 200 Accounting For Assets
Course:Bachelor Of Commerce
Institution: Kenyatta University question papers
Exam Year:2011
KENYATTA UNIVERSITY
UNIVERSITY EXAMINATIONS 2010/2011
INSTITUTIONAL BASED PROGRAMME
DECEMBER SESSION EXAMINATION FOR THE DEGREE OF BACHELOR OF
EDUCATION
BAC 200: ACCOUNTING FOR ASSETS
DATE: Friday 29th April, 2011
TIME: 11.00 a.m. – 1.00 p.m.
___________________________________________________________________________________
INSTRUCTIONS
Answer ALL questions.
1.
The following information pertaining to the cash transactions and bank account of Ching Ltd for
October 2010 has been presented to you.
a)
Cash balance per accounting records 31st Oct.
sh. 2,520,460
b)
Cash balance per bank statement 31st Oct.
2,115,000
c)
Bank service charge for October
2,400
d)
Debit memo for safe deposit fees
600
e)
Deposit of Oct 31 not recorded by bank until Nov 1
540,000
f)
Outstanding cheques Oct. 31
48,000
g)
Interest on Kengen Ltd bonds on Oct 31 not recorded in the
accounting records (matures 2020)
12,000
h)
Proceeds from note receivable
25,000
i)
Cheque no 4321 to a creditor entered in the accounting records as
sh.64,374 deducted in the bank statement in the correct amount
64,734
j)
Cheque by Chung Ltd deducted by bank for Ching’s account in error 60,000
k)
Cheque from Aspen Ltd returned by bank marked RD
45,000
l)
Deposit recorded as sh 320,000 by the bank; recorded correctly in the
accounting records
230,000
m)
Cheque from a debtor recorded as sh 4,000 by the company; recorded
corrected by the bank
24,000
Page 1 of 3
Required
(i)
The updated cashbook as at 31.10.2010.
[11 marks]
(ii)
Bank reconciliation statement as at 31.10.2010.
[9 marks]
2.
The following details were extracted from the records of Panga Ltd during the month of
February, 2011.
Date
3rd
Opening Stock
500 @
40
5th
Purchases
300 @
42
8th
Sales
400 @
50
13th
Purchases
300 @
46
20th
Sales
250 @
52
22nd
Purchases
350 @
47
25th
Sales
120 @
60
27th
Sales
150 @
65
Required
Compute the value of ending inventory using the periodic and perpetual inventory system under
the following:
(i)
FIFO method
(ii)
LIFO method
(iii)
Weighted average method.
[20 marks]
3.
The accountant of Salina Company was hired at the beginning of the current year. At the end of
the year, before making any adjusting entries, the accountant prepared a trial balance which
included the following account balances:
Dr
Cr
Accounts receivable
Sh 3,000,000
Notes receivable
300,000
Allowance for doubtful accounts
60,000
Sales
18,300,000
Sales returns and allowances
88,500
Sales discounts
155,400
Page 2 of 3
Required
Prepare an appropriate adjusting entry at the end of the current year to provide for estimated
doubtful accounts under each of the following independent assumptions:
(a)
Salina’s experience indicates that 80% of all sales are credit sales and that on average 3%
of gross credit sales prove uncollectible.
(b)
An analysis of the aging of accounts receivable indicate that potential uncollectible
accounts (including notes receivable) at the end of the year amount to sh 250,000.
(c)
Salina’s policy is to maintain an allowance for doubtful accounts equal to 5% of
outstanding trade receivables, including notes receivable from customers.
(d)
The allowance for doubtful accounts is increased by 2% of gross sales.
[15 marks]
4.
(a)
Define the following terms and give an example of each,
(i)
tangible asset
(ii)
natural resource
(iii)
intangible asset
[6 marks]
(b)
On 1st January year 2 Tang company acquired equipment costing sh 1,000,000. The
equipment had an estimated economic life of five years and net residual value was
estimated at sh 100,000. Tang estimates that the equipment can product 10, 000 units in
its first year. Production was estimated to decline by 1,000 units a year over the
remaining economic life of the equipment:
Required:
Compute the depreciation expense for each of the five years under the following methods:
(i)
Sum of years digits.
(ii)
Output method
[9 marks]
……………………..
Page 3 of 3
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