- Ababu and Babu are partners in a bookshop business sharing profits and losses in proportion of 2/5 and 3/5 respectively. The trial balance extracted from...(Solved)
Ababu and Babu are partners in a bookshop business sharing profits and losses in proportion of 2/5 and 3/5 respectively. The trial balance extracted from the books of the partnership as at 30th April 2012 was as follows:
Sh. Sh.
Capital accounts
Ababu 4,225,000
Babu 2,600,000
Drawings
Ababu 585,000
Babu 520,000
Trade payables 832,000
Office furniture (Net Book Value) 325,000
Accounts receivables 2,632,500
Rent 243,750
Postage and telephone 276,250
Gross profit 4,628,000
Bank 910,000
Salaries and wages 1,706,250
Printing and stationary 80,600
Commission paid 325,000
Insurance 130,000
Motor Vehicles (Net Book Value) 1,680,900
Plant and machinery (net Book Value) 2,275,000
Capital (Chango) 585,000
Current Accounts
Ababu 130,000
Babu 104,000
Cost of sales 5,674,500
Cash 341,250
Inventories (30th April 2012) 812,500
5,674,500
18,648,500 18,648,500
Additional information
1. The partners agreed to admit Chango as a partner on 1 February 2012. Prior to admission, Chango was a
manager in the firm earning a salary of sh. 228,930 per annum which has been accounted for proportionately
2. Chango brought in capital of sh. 585,000 in cash and was thereafter entitled to 1/5th of the firm’s profits. The balance to be shared in the old profit sharing ratio. Chango was to stop receiving salary but was granted a minimum share of profit equal to his salary
3. Chango was also to bring his personal vehicle valued at sh. 325,000 for use in the business
4. Insurance paid in advance and rent outstanding as at 30th April 2012 were sh. 32,500 and sh. 24,050
respectively
5. Bad debts of sh. 32,500 arising before Chango’s admission was to be written off
6. A provision of 1% of outstanding debtors was to be maintained from the date of changes admission
7. Depreciation was to be provided as follows
Asset Rate
Office Equipment 15% on reducing balance
Motor vehicles 20% on book value
Plant and machinery 10% on Book value
8. Partner’s goodwill on admission of Chango’s admission was agreed at sh. 650,000 and is not to be retained in the books
9. No interest was to be allowed on capital or charged on drawings
Required:
(i) Income statement for the year ended 30th April 2012
(ii) Partner’s current accounts
(iii) Partner’s capital accounts
Date posted: October 3, 2022. Answers (1)
- Jitahidi limited was incorporated in the year 2010 and specializes in the manufacturing of electric cables branded “Nyaya”. The following trial balance was extracted from...(Solved)
Jitahidi limited was incorporated in the year 2010 and specializes in the manufacturing of electric cables branded “Nyaya”. The following trial balance was extracted from the books of the company as at 30th April 2012.
Sh. '000' sh. '000'
Inventories (1st May 2011)
Raw materials 6,000
Work in progress 7,000
Finished Goods 8,000
Purchases of raw materials 82,000
Sales 184,700
Trade receivables and payables 9,000 6,000
Bank balance 5,200
Carriage inwards 3,000
Direct Labor 16,000
Provision for unrealized profits 1,600
Electricity and water 9,600
Rates and insurance 5,200
Distribution costs 2,000
Administrative expenses 1,880
Land (cost) 45,000
Buildings (cost) 125,000
Plant and machinery (cost) 20,000
Motor vehicles (cost) 16,000
Equipment (cost) 10,000
Accumulated depreciation (1 May 2011)
Buildings 5,000
Plant and machinery 8,000
Motor vehicles 4,000
Equipment 6,000
15% debentures 8,000
Interest on debentures paid 1,200
Ordinary shares of sh. 20 each 100,000
Share premium 10,000
Retained earnings 38,780
372,080 372,080
Additional information
1. Inventories as at 30th April 2012 were as follows:
Sh.
‘000’
Raw materials 7,200
Work in progress 2,000
Finished goods 9,500
Raw materials included damaged items costing sh. 600,000 which could realize sh. 500,000 after incurring an additional cost of sh. 100,000
2. Sales included goods worth sh. 500,000 sent on sales or return basis to a customer. The customer has not confirmed. The cost price was sh. 300,000 and no record has been made.
3. It’s the policy of Jitahidi limited to transfer the finished goods to trading at cost plus a mark-up of 25%
4. Accrued electricity as at 30th April 2012 amounted to sh. 400,000 while prepaid insurance was sh. 200,000
5. Depreciation is charged on a straight-line basis as follows
Asset Rate per annum
Buildings 2%
Plant and machinery 20%
Motor vehicles 25%
Equipment 20%
6. Costs are allocated as follows
Factory (%) Distribution Costs (%) Administration expenses (%)
• Depreciation
Buildings 80 10 10
Plant and machinery 100 - -
Equipment - 50 50
Motor vehicles - 60 50
• Rates and insurance 60 20 20
• Electricity and water 60 20 20
7. A provision for corporation tax amounting to sh. 14,350,000 is to be made
Required:
Manufacturing account and income statement for the year ended 30th April 2012
Date posted: October 3, 2022. Answers (1)
- (a) Briefly explain why goodwill should be paid under the following circumstances:
(i) By a partner on admission to a partnership.
(ii) To a partner on retirement...(Solved)
(a) Briefly explain why goodwill should be paid under the following circumstances:
(i) By a partner on admission to a partnership.
(ii) To a partner on retirement from a partnership.
(b) Abdi, Bob and Caleb are in partnership sharing profits and losses equally after allowing for interest on capital at 5% per annum to the partners and a salary to Bob of sh.30,000 per month.
The trial balance of the partnership as ta 31 September 2012 was as follows:
Sh. "000" Sh. "000"
Capital accounts: Abdi 3,500
Bob 3,000
Caleb 2,000
Current accounts: Abdi 300
Bob 400
Caleb 300
Drawings: Abdi 400
Bob 500
Caleb 300
Sales 30,000
Inventory (1 October 2011) 4,000
Purchases 20,300
Operating expenses 7,400
Loan: Bob (interest at 10% per annum) 2,000
Caleb (interest at 10% per annum) 3,000
Land 2,000
Buildings 6,000
Plant and Machinery (cost) 8,000
Accumulated depreciation (30 September 2012) 5,000
Accounts receivable/accounts payable 5,000 4,300
Cash at bank 100
53,900 53,900
Additional information:
1. Closing inventory as at 30th September 2012 was valued at sh.3,400,000
2. Interest on partner’s loan had not been paid.
3. Sales included credit sales of sh.700,000 in respect of two items sold on the basis of confirmation by the customer. The items had cost sh.200,000 each.
4. On 1 April 2012, the terms of the partnership agreement were changed. The new terms provided for:
• Profit sharing ratio of 5:3:2 for Abdi, Bob and Caleb respectively.
• Interest on capital at 5% per annum
• Salaries of sh.15,000 per month for Bob and Caleb.
5. For the purpose of the change, goodwill was valued at sh.1,200,000 and was to be written off
immediately while the land and buildings were valued at sh.3,000,000 and sh.7,400,000 respectively.
Required:
(i) Income statement and appropriation account for the year ended 30 September 2012.
(ii) Partner’s current accounts.
(iii) Statement of financial position as at 30 September 2012.
Date posted: September 30, 2022. Answers (1)
- (a) Explain the following terms as used in the context of public sector accounting:
(i) Public accounts committee (PAC).
(ii) Appropriation-In-Aid (AIA).
(iii) Public Investment committee (PIC).
(b) The...(Solved)
(a) Explain the following terms as used in the context of public sector accounting:
(i) Public accounts committee (PAC).
(ii) Appropriation-In-Aid (AIA).
(iii) Public Investment committee (PIC).
(b) The approved estimates and actual expenditure details for the ministry of Gender and Culture for the
financial year ended 30 June 2012 were as follows:
Vote no. Details Approved estimates Actual expenditure
Sh. "000" Sh. "000"
S001 Travelling and accommodation 32,100 31,200
S004 Commuter allowances 8,400 7,200
S010 Passage and leave expenses 80,120 75,600
S120 Communication expenses 6,110 5,880
S121 Staff development 10,120 8,440
S124 Vision 2030 flagship 7,150 7,850
S144 Purchase of computers 12,140 10,940
S300 Appropriation-In-Aid 6,000 14,500
S184 Personnel emoluments 241,800 212,300
S200 Miscellaneous expenses 34,480 32,150
S210 Transport expenses 8,300 7,900
S215 Housing allowance 41,300 37,200
The ministry made four equal withdrawals from the Exchequer of sh.110,000,000 each.
Required:
(i) Paymaster general account.
(ii) The Exchequer account.
(iii) General account of Vote
(iv) Statement of Assets and liabilities as at 30 June 2012
Date posted: September 30, 2022. Answers (1)
- The following is a receipt and payment account as reported by the treasurer of Mambula Sports Club for the year ended 31 December 2012.
Receipts ...(Solved)
The following is a receipt and payment account as reported by the treasurer of Mambula Sports Club for the year ended 31 December 2012.
Receipts Sh. "000"
Balance at 1 January 2012: Bank 3,000
Cash in hand 400
Subscription received 9,600
Canteen sales 2,700
Donation (for purchase of bus) 2,000
Dinner dance ticket sales 1,800
Bank interest 360
Investment income 600
20,460
Payments
Canteen purchases 2,010
Water and electricity 270
Sports Equipment 2,000
Canteen attendant wages 300
Canteen expenses 150
Secretary's honoraria 4,500
Training fee 1,500
Grounds man (field) wages 1,200
Field maintenance and repairs 540
Dinner dance expenses 900
Transport and travelling expenses 1,260
Closing balance (31 December 2012):
Bank 3,000
Cash in hand 2,830
20,460
The balances of assets and liabilities as at 31 December 2011 and 2012 were as follows:
2011 2012
Sh. "000" Sh. "000"
Sports equipment 2,400 ?
Club house at cost 9,200 9,200
Furniture and Fittings at cost 1,800 1,800
Canteen stock 600 750
Subscription in arrears 720 840
Subscription in advance 540 1,380
Water bills outstanding 90 220
Canteen creditors 270 360
Accumulated depreciation:
Sports equipment 840 ?
Furniture and Fittings 540 ?
Investment 2,400 2,400
Additional information:
1. Subscriptions money received related to the following periods:
Year Sh. "000"
2011 600
2012 7,620
2013 1,380
It is the policy of the club to write-off subscription in arrears after 12 months
2. Depreciation is to be charged on the cost of assets in existence at the end of the financial year as follows:
• Furniture and Fittings at 10% per annum
• Sports Equipment at 20% per annum
3. During the year, sports equipment was sold for sh.600,000 to club members on credit. These equipment had cost sh.1,200,000 and had been used for two years.
4. Cash sales for the canteen on the last day of the year amounting to sh.300,000 were omitted in the records as well as on the cash reported.
Required:
(a) Canteen income statement for the year ended 31 December 2012.
(b) The club’s income and expenditure account for the year ended 31 December 2012.
(c) Statement of financial position as at 31 December 2012.
Date posted: September 30, 2022. Answers (1)
- QUESTION TWO
Kate and John formed a partnership business to sell Chinese motorbikes in Mombasa city sharing profits and losses in the ration of 3:1 respectively....(Solved)
QUESTION TWO
Kate and John formed a partnership business to sell Chinese motorbikes in Mombasa city sharing profits and losses in the ration of 3:1 respectively. On 1 April 2012, Kate contributed sh.15,000,000 and John sh.5,000,000 which was immediately deposited in a newly opened bank account of the partnership.
Additional information:
1. Sales proceeds banked during the year amounted to sh.109 million.
2. The cashier had paid the following expenses from sales proceeds before banking the balance:
• Rent of go downs and offices at sh.100,000 per month.
• Office running expenses at sh.10,000 per week.
• Casual wages at sh.4,000 per week.
• Local transport at sh.7,000 per week.
• Partners were allowed to draw salaries per month as follows: Kate sh.30,000 per month.
John sh.36,000 per month.
The partners made all their drawings for the year.
Assume there are 52 weeks in the financial year ended 31 March 2013.
3. The partnership paid the following amounts through the bank:
In Shillings:
Purchase of furniture and fittings 128,000
Purchase of computers 900,000
Staff salaries and wages per month 100,000
Purchases 96,000,000
Drawings (per month):
Kate 100,000
John 80,000
Licenses and clearing charges 1,920,000
Bank charges (per month) 3,000
Telephone per month 8,000
Freight charges 576,000
Electricity bill 10,000
4. Analysis of transactions revealed that:
• Accounts receivable amounting to sh.900,000 were outstanding at the year end.
• Inventory of motorbikes at the year end at cost was sh.8,700,000.
• Included in the inventory of motorbikes above are motorbikes which cost sh.1,100,000 but which can
now be sold for sh.800,000 only, because of impairment in value in the go down.
• The telephone and electricity bills for the month of March 2012 were paid on 3 May 2012.
• Accounts payable for purchases amounting to sh.600,000 were unpaid at the year end.
5. The partners are entitled to 10% interest on their fixed capitals per annum.
6. Depreciation is to be provided on furniture and fittings and computers at the rate of 12.5% and 20% per annum on cost respectively.
Required:
(a) Income statement and profit and loss appropriation account for the year ending 31 March 2013.
(b) Statement of financial position as at 31 March 2013.
Date posted: September 30, 2022. Answers (1)
- Explain four considerations that management should take into account in choosing the basis of cost apportionment.(Solved)
Explain four considerations that management should take into account in choosing the basis of cost apportionment.
Date posted: May 16, 2019. Answers (1)
- In relation to a manufacturing concern, Explain the term "cost apportionment".(Solved)
In relation to a manufacturing concern, Explain the term "cost apportionment".
Date posted: May 16, 2019. Answers (1)
- Outline two advantages of an income and expenditure account as compared to a receipts and
payments account.(Solved)
Outline two advantages of an income and expenditure account as compared to a receipts and
payments account.
Date posted: May 16, 2019. Answers (1)
- The following is the summary of the cashbook of Mbedodo Football Club for the year ended 30 June
2011:
Additional information:
1. The assets of the club on...(Solved)
The following is the summary of the cashbook of Mbedodo Football Club for the year ended 30 June
2011:
Additional information:
1. The assets of the club on 1 July 2010 were as follows:
Sh. '000'
Land 650,000
Gymnasium and equipment 250,000
Bar inventory 10,800
Prizes in hand 4,800
2. Bar supplies owing amounted to Sh. 4,200,000 on 1 July 2010
3. On 30 June 2011 the bar inventory was Sh. 9,600,000, prizes in hand - Sh. 2,400,00 and
Sh. 5,640,000 was owing for bar supplies.
4. The secretary is to receive a leave allowance of 5% of his basic salary. It was also agreed that
the bar manager should receive aSh. 500,000 bonus for increased sales during the year.
5. From the register of members, it appeared that unpaid subscriptions as at 30 June 2011
totaled Sh. 5,100,000. Subscriptions received during the year included Sh. 2,550,000 in
respect of the previous year and Sh. 1,700,000 in respect of the year starting 1 July 2011.
6. Interest earned on the deposit with the SACCO for the year ended 30 June 2011 amounted to Sh.
1,750,000
7. The rent paid was for fifteen months up to 30th September 2011
8. The gymnasium and equipment are to be depreciated at the rate of 10% per annum on straight
line basis
Required;-
a) Income and expenditure account for the year ended 30 June 2011
b) Statement of financial position as at 30 June 2011
Date posted: May 16, 2019. Answers (1)
- Differentiate between "receipts and payments account" and "income and expenditure account".(Solved)
Differentiate between "receipts and payments account" and "income and expenditure account".
Date posted: May 16, 2019. Answers (1)
- Explain three reasons why in many organisations the cash flow for a given period differs from the
profit realised by the organisation in the same period.(Solved)
Explain three reasons why in many organisations the cash flow for a given period differs from the
profit realised by the organisation in the same period.
Date posted: May 16, 2019. Answers (1)
- Discuss three categories of financial ratios(Solved)
Discuss three categories of financial ratios
Date posted: May 16, 2019. Answers (1)
- Summarise three limitations of ratio analysis.(Solved)
Summarise three limitations of ratio analysis.
Date posted: May 16, 2019. Answers (1)
- Highlight six purposes of public sector accounting.(Solved)
Highlight six purposes of public sector accounting.
Date posted: May 16, 2019. Answers (1)
- The following were the approved estimates and actual expenditure for the Ministry of health for
the financial year ended 30 June 2013:
Drawings from the Exchequer during...(Solved)
The following were the approved estimates and actual expenditure for the Ministry of health for
the financial year ended 30 June 2013:
Drawings from the Exchequer during the financial year ended 30 June 2013 amounted to
Sh.127, 500,000.
Required:
(i) General account of vote.
(ii) Exchequer account.
(iii) Paymaster general account.
Date posted: May 16, 2019. Answers (1)
- Uzuri County Council authorised the construction of a city hall on 1 July 2012. The hall was
expected to cost Sh. 160,000,000. The project was to...(Solved)
Uzuri County Council authorised the construction of a city hall on 1 July 2012. The hall was
expected to cost Sh. 160,000,000. The project was to be financed as follows:
Sh. 80,000,000 from a 6.5% bond issue.
Sh. 64,000,000 from a government grant.
Sh. l6,000,000 from the general fund.
The following transactions and events took place during the year ended 30 June 2013:
1. The county council transferred Sh. 16,000,000 from the general fund to the city hall capital
fund. The capital project fund was for the purpose of construction of the city hall.
2. Planning and architects fees amounting to Sh.6,400,000 were paid.
3. The contract was awarded for Sh. 152, 000,000.
4. The 6.5% bonds were sold for Sh. 80,320,000 and the amount of the premium transferred to
the debt service fund.
5. The contract was certified 50% complete and an invoice for Sh.76,000,000 was received from
the contractor.
The contractor was paid the invoiced amount less 10% retention
Required:
i) Journal entries to record the above transactions.
ii) Statement of revenue and expenditure of the capital project fund for the year ended 30 June
2013.
iii) Statement of financial position of the capital project fund as at 30 June 2013.
Date posted: May 16, 2019. Answers (1)
- The following were the estimates and actual expenditure of Barani Ministry of Youth and Sports for
the financial year ended 30 June 2012.
Drawings from the exchequer...(Solved)
The following were the estimates and actual expenditure of Barani Ministry of Youth and Sports for
the financial year ended 30 June 2012.
Drawings from the exchequer during the financial year ended 30 June 2012 amounted to
Sh.226,000,000
Required;
a) General account of vote
b) Exchequer account
c) Paymaster general (PMG) account
d) Appropriation account for the year ended 30 June 2012
e) Statement of assets and liabilities as at 30 June 2012
Date posted: May 16, 2019. Answers (1)
- The following details relate to the approved estimates and actual expenditure of a certain
government ministry for the financial year ended June 2012.
Required;-
Appropriation account for the...(Solved)
The following details relate to the approved estimates and actual expenditure of a certain
government ministry for the financial year ended June 2012.
Required;-
Appropriation account for the year ended 30 June 2012.
Date posted: May 16, 2019. Answers (1)
- Explain the following terms in the context of public sector accounting:
i) Commitment accounting
ii) Fund accounting(Solved)
Explain the following terms in the context of public sector accounting:
i) Commitment accounting
ii) Fund accounting
Date posted: May 16, 2019. Answers (1)