- The trial balance extracted from the books of Benard Masita as at 30 September 2010 failed to
agree. The debit difference of Sh. 442,000 was posted...(Solved)
The trial balance extracted from the books of Benard Masita as at 30 September 2010 failed to
agree. The debit difference of Sh. 442,000 was posted to a suspense account. An income
statement was prepared which showed a gross profit and a net profit of Sh. 1,985,000 and
Sh.1,229,000 respectively. Upon investigations, the following errors were discovered:
1. A purchase of Sh 150,000 on credit was correctly posted to the suppliers account but was
completely omitted from the purchases day book.
2. Sales amounting to Sh. 250,000 to Samuel Njuguna were erroneously credited to his account.
The sales account had been correctly posted.
3. Salaries paid for the month of September 2010 amounting to Sh. 230,000 were recorded in
the salaries account as Sh 320,000.
4. Purchases of office stationery for Sh. 125,000 were erroneously debited to purchases account.
5. A payment of Sh.45,000 to Daniel Olunya, a creditor, was erroneously debited to the account of
Alois Olunya, another creditor.
6. An entry of Sh.21,000 for returns outwards was made in error in the sales day book instead of
in the purchases return day book.
7. A bad debt of Sh 22,500 is yet to be written off.
8. Goods valued at Sh220,000 were taken for personal use but no entry had been made in the
books.
9. A discount received of Sh.59,000 was correctly entered in the cashbook but posted to the
discounts allowed account.
Required:
i) A fully balanced suspense account.
ii) Statement of corrected gross profit.
iii) Statement of corrected net profit.
Date posted: May 16, 2019. Answers (1)
- Distinguish between "allowance for bad and doubtful debts" and "bad debts"(Solved)
Distinguish between "allowance for bad and doubtful debts" and "bad debts"
Date posted: May 16, 2019. Answers (1)
- Pata Transport Limited (PTL) was incorporated on 1 June 2006 and on the same day bought its first
lorry; KB099S for Sh. 9,000,000.
On 1 April 2007,...(Solved)
Pata Transport Limited (PTL) was incorporated on 1 June 2006 and on the same day bought its first
lorry; KB099S for Sh. 9,000,000.
On 1 April 2007, the company bought its second lorry KB 120T FOR Sh 12,000,000.
On 1 June 2008, the company bought a third lorry KB 340X for Sh. 6,000,000.
On 1 October 2008, lorry KB 099S was involved in an accident and was written off. The
insurance compensation paid to PTL by the insurers was Sh. 2,600,000.
On 31 December 2009,lorry KB 340X broke down and was traded in with a new lorry registration KB
419Y valued at Sh. 8,000,000.PTL; paid cash amounting to Sh. 5,400,000 for the lorry.
On 1 Apri12010, a van KB 890B was purchased for Sh 4,800,000.
Depreciation on motor vehicles is to be provided at the rate of 10% per annum on a straight line basis.
The policy of the company is to provide depreciation on a pro rata basis.
On 1 January 2009, the company decided to change its depreciation rate from 10% to 15% per annum.
The change was effected on motor vehicles that were in use retrospectively; that is from the year of
purchase. An adjusting entry was to be made in the accounts for the year ended 31 December 2009.
All lorries were comprehensively insured.
Assume the year end for PTL IS 31 December.
Required:
i) Motor vehicles account for the five years ended 31 December 2006,2007,2008,2009 and 2010.
ii) Provision for depreciation account for the same years stated in (b) (i) above
iii) Disposal of motor vehicles account
Date posted: May 16, 2019. Answers (1)
- Jabali Ltd. started its operations on 1 January 2008. The company acquired several items of plant
for its use. The amounts for the plant acquisitions, disposals...(Solved)
Jabali Ltd. started its operations on 1 January 2008. The company acquired several items of plant
for its use. The amounts for the plant acquisitions, disposals and depreciation far the years 2008, 2009
and 2010 are shown below.
The amounts for the year 2011 have not yet been computed.
Plant movement extracts for the years ended:
Additional information:
1. Disposals took place at the beginning of the financial years as follows:
Date of disposal for the year ended Plant cost Sales
31 December proceeds
Sh'000' Sh'000'
Disposal of plant A 2010 15,000 8,000
Disposal of plant B 2011 30,000 21,000
2. Plant A and plant B were sold and replaced on the same date when plant C and plant D
were acquired. Plant D cost Sh.50 million while the value of plant C is to be derived.
3. Depreciation is charged at 20% on reducing balance.
Required:
(i) Extract of the plant movement schedule for the years ended 200S. 2009, 2010 and 2011
(ii) Profit or loss arising on disposal of plant A and plant B.
Date posted: May 16, 2019. Answers (1)
- You have just been employed by Best Way Ltd as a trainee accountant. Your first exercise is to
check the transactions in the company’s cash book,...(Solved)
You have just been employed by Best Way Ltd as a trainee accountant. Your first exercise is to
check the transactions in the company’s cash book, check entries in the bank statement, update
the cash book and make any amendments as necessary after which you will prepare a bank
reconciliation statement at the end of the month.
The company’s cash book and bank statement for the month of March 2013 are provided below;-
Required;
A bank reconciliation statement as at 31 March 2013
Date posted: May 16, 2019. Answers (1)
- Explain the following methods of measurement of elements in financial statements:
i) Historical cost.
ii) Net realisable value.
iii) Present value.(Solved)
Explain the following methods of measurement of elements in financial statements:
i) Historical cost.
ii) Net realisable value.
iii) Present value.
Date posted: May 16, 2019. Answers (1)
- Distinguish between ‘purchased goodwill’ and ‘non-purchased goodwill’(Solved)
Distinguish between ‘purchased goodwill’ and ‘non-purchased goodwill’
Date posted: May 16, 2019. Answers (1)
- The following balances were extracted from the books of Furahia Enterprises for the month of
September 2013:
Sh.
Debit balance (1 September 2013): Sales ledger 14,280,000
Purchases ledger 1,920,000
Credit...(Solved)
The following balances were extracted from the books of Furahia Enterprises for the month of
September 2013:
Sh.
Debit balance (1 September 2013): Sales ledger 14,280,000
Purchases ledger 1,920,000
Credit balance (1 September 2013): Sales ledger 1,680,000
Purchases ledger 6,720,000
Credit notes received from suppliers 1,860,000
Debt collection expenses 480,000
Interest charged on customers' overdue accounts 384,000
Customers dishonoured cheques 1,260,000
Bad debts written off 720,000
Receipts from customers 1,280,000
Interest charged by creditors on overdue accounts^ 588,000
Payment to creditors 7,680,000
Contra settlements 390,000
Credit notes issued to customers 270,000
Credit sales 17,340,000
Cash sales 3,240,000
Cash purchases 2,160,000
Credit purchases 7,440,000
Discounts, allowed 1,080,000
Discounts received 690,000
Balances as at 30 September 2013:
Sales ledger (credit) 1,110,000
Purchases ledger (debit) 1,050,000
Required;
i) Sales ledger control account for the month ended 30 September 2013.
ii) Purchases ledger control account for the month ended 30 September
Date posted: May 16, 2019. Answers (1)
- The property, plant and equipment balances of Matatizo Ltd. comprised the following as at 1
January 2013:
The company uses the straight line method of depreciation on...(Solved)
The property, plant and equipment balances of Matatizo Ltd. comprised the following as at 1
January 2013:
The company uses the straight line method of depreciation on assets as follows:
• 10% per annum for plant and machinery.
• 20% per annum for motor vehicles.
Additional information:
1. It is the company's policy to make a depreciation charge proportionate to the period of usage of the
asset.
2. An item of machinery bought on 1 July 2009 for Sh.10,080.000 was sold on 1 April 2013
at Sh.6,000,000.
3. From the year ended 31 December 2013, the management of the company decided to charge
depreciation on buildings at a rate of 2.5% per annum. The buildings were all completed on 1 July
2009.
4. On 1 January 2013, a vehicle purchased on 1 May 2010 for Sh.12,600,000 was traded in at a value
of Sh.7,320,000 in part exchange for a new vehicle costing Sh.18,000,000.
5. Included in machinery is an old machine which originally cost Sh.13, 500,000 and which was
already fully depreciated and not expected to yield any material amount on either use or resale.
6. On 30 June 2013, a machine costing Sh.13, 500,000 was purchased from a vendor who had used it
for three years. The vendor had bought the machine at Sh.18,000,000. Another machine costing
Sh.10,500,000 was purchased on 1 August 2013.
Required:
A schedule showing the movement of property, plant and equipment for the year ended 31 December
2013.
Date posted: May 16, 2019. Answers (1)
- The following is a summary of the cash book of Azimio Ltd. for the year ended 31 May 2014:
Subsequent investigations reveal that:
1. A page of...(Solved)
The following is a summary of the cash book of Azimio Ltd. for the year ended 31 May 2014:
Subsequent investigations reveal that:
1. A page of the receipt side of the cash book has been under cast by Sh.200, 000.
2. The following transactions appearing on the bank statement have not yet been entered in the cash
book:
- Dividend received on a trade investment Sh.1, 147,000.
- Hire purchase repayments for 12 months at Sh.55, 000 per month.
- Interest for the half year to 30 November 2014 on a loan of Sh.20, 000,000 at 11 percent per
annum.
3. Bank charges of Sh. 143,000 shown on the bank statement have not yet been entered in the cash
book.
4. A cheque received from a customer for Sh.180, 000 was returned by the bank unpaid and no entry
has been made in the cash book for this transaction.
5. The company owes Sh.430, 000 for electricity consumed in the month of May 2014.
6. A cheque for Sh.82, 000 has been debited to the company's account in error by the bank.
7. A cheque drawn for Sh.98, 000 has been entered in the cash book as Sh.89, 000 and another
one-drawn for Sh.230, 000 has been entered as a receipt.
8. A transposition error occurred in the opening balance of the cash book. The opening
balance should have been brought down as Sh.850, 000 instead of Sh.805, 000.
9. Cheques paid to suppliers totalling Sh.630, 000 have not yet been presented at the bank, while
deposits totaling Sh.580, 000 made on 31 May 2014 have not yet been credited to the company's
account.
10. The balance as per the bank statement is an overdraft of Sh.870, 000.
Required:
(i) Adjusted cash book balance.
(ii) Bank reconciliation statement as at 31 May 2014.
Date posted: May 16, 2019. Answers (1)
- Define a sequence control structure.(Solved)
Define a sequence control structure.
Date posted: May 15, 2019. Answers (1)
- Citing an example in each case, briefly explain four types of bookkeeping errors which are
not disclosed by a trial balance(Solved)
Citing an example in each case, briefly explain four types of bookkeeping errors which are
not disclosed by a trial balance
Date posted: May 15, 2019. Answers (1)
- Highlight six types of errors that could be reflected in a trial balance.(Solved)
Highlight six types of errors that could be reflected in a trial balance.
Date posted: May 15, 2019. Answers (1)
- Explain five challenges facing organizations that use computerized accounting software(Solved)
Explain five challenges facing organizations that use computerized accounting software
Date posted: May 15, 2019. Answers (1)
- Highlight six applications of accounting software packages.(Solved)
Highlight six applications of accounting software packages.
Date posted: May 15, 2019. Answers (1)
- Highlight four accounting tasks performed by accounting software packages(Solved)
Highlight four accounting tasks performed by accounting software packages
Date posted: May 15, 2019. Answers (1)
- Identify five benefits of customized accounting software.(Solved)
Identify five benefits of customized accounting software.
Date posted: May 15, 2019. Answers (1)
- Explain four qualities of useful accounting information with reference to the International Account(Solved)
Explain four qualities of useful accounting information with reference to the International Account
Date posted: May 15, 2019. Answers (1)
- Explain the following accounting assumptions
i) Accrual
ii) Going concern(Solved)
Explain the following accounting assumptions
i) Accrual
ii) Going concern
Date posted: May 15, 2019. Answers (1)
- Explain the following accounting concepts.
i) Consistency
ii) Materiality
(Solved)
Explain the following accounting concepts.
i) Consistency
ii) Materiality
Date posted: May 15, 2019. Answers (1)