Mr. Ancentus Okwengo is the sole proprietor of a small business. The following trial balance
was extracted from his books at 31 March 2000.(Solved)
Mr. Ancentus Okwengo is the sole proprietor of a small business. The following trial balance
was extracted from his books at 31 March 2000.
Additional information:
1. Closing stock on 3 1 March
2000 was Sh.2, 008,000.
Loose tools at valuation
Sh.384, 000.
2 .Provision is to be made for the following amount
owing on 3 1 March 2000: Electricity and power
Sh.192,000.
3. Payments in advance on 31 March
2000 were as follows: Van licenses
Sh.2,520 and rates Sh.13,800.
4. Depreciation on plant and machinery and delivery vans is to be provided at the rate of
20% and 25% respectively on cost at the end of the year.
5. Bad debts amounting to Sh.26,000 are to be written off and the provision for
doubtful debts is to be 10% of trade debtors.
Required:
A ten-column worksheet for the year ended 31 March 2000.
Date posted: November 16, 2018. Answers (1)
The trial balance of Zach Ltd. as at 31 December 1999 was as follows:(Solved)
The trial balance of Zach Ltd. as at 31 December 1999 was as follows:
Additional information:
1. Stock at 31 December 1999 was Sh.360,000.
2. Sales returns of Sh.20,000 have been entered in the sales day book as if they were sales.
When this error was discovered, the debtors account had been corrected but the sales figure
was not rectified.
3. 5000 new shares were issued during the year at Sh.32. The proceeds have been credited to
the suspense account.
4. A fully depreciated plant which cost Sh.200,000 was sold during the year. No other entries except
bank have been made. The remaining balance on the suspense account after (2 and 3) above
represents the sale proceeds.
5. A debtor of Sh.20,000 has been declared bankrupt. A general provision is required at 5% of
debtors.
6. Rates of Sh.30,000 paid in December covering half year to 31 March 2000 have not been
entered in the books.
7. Debenture interest has not been paid.
8. Depreciation on plant is at 10% on cost and buildings at 2% on cost.
9. The directors propose to pay a dividend of Sh.2 per share and transfer Sh.20,000 to the
general reserve.
10. Corporation tax at a rate of 32'/2% on profits is estimated to be Sh.90,000.
Required:
(a)Suspense account for the year ended 3I December 1999
(b)Trading,profit and loss account for the year ended 31 December 1999.
(c) Balance sheet as at 31 December 1999.
Date posted: November 15, 2018. Answers (1)
a) Internal control systems are designed, amongst other things, to prevent error and...(Solved)
a) Internal control systems are designed, amongst other things, to prevent error and misappropriation.
Required:
Describe the errors and misappropriations that may occur if the following are not properly controlled: (i) Receipts paid into bank accounts;
ii)Payments made out of bank accounts; (iii) Interest and charges debited and credited to bank accounts.
(b) A book-selling company has a head office and 25 shops, each of which holds cash (banknotes, coins, and credit card vouchers) at the balance sheet date. There are no receivables. Accounting records are held at shops. Shops make returns to head office and head office holds its own accounting records. Your firm has been the external auditor to the company for many years and has offices near to the location of some but not all of the shops.
Required:
List the audit objectives for the audit of cash and state how you would gain the audit evidence in relation to those objectives at the year-end.
c) The external auditors of companies often write to companies’ bankers asking for details of bank balances and other matters at the year-end.
Required:
Explain why auditors write to companies’ bankers and list the matters you would expect banks to confirm.
Date posted: May 11, 2018. Answers (1)