Documents

Financial Accounting Atc 1

Description
acc
Categories
Published
of 3
All materials on our website are shared by users. If you have any questions about copyright issues, please report us to resolve them. We are always happy to assist you.
Related Documents
Share
Transcript
    ACHIEVERS COLLEGE OF PROFESSIONALS LTD P.O BOX 1532  –   60100 EMBU.  Telephone 0202052834; 072 - 606 888 Email: achieverscollege@yahoo.com SEPTEMBER 2012 ATC 1, ICTT 1, CICT AND CCP FINANCIAL ACCOUNTING Answer ALL questions TIME: 3HRS QUESTION ONE  (a)   Differentiate between “capital reserves” and “revenue reserves”  (4 Mks) (b)   The following trial balance was extracted from the books of Undugu ltd as at Sh. 000 sh. 000 Purchases/sales 20,640 35,200 Carriage inwards 580 Carriage outwards 1,360 Discounts 560 1,460 Salaries and wages 2920 Advertising expenses 880 Rent and rates 1,800 Electricity 940 Insurance 420 Salesmen’s commission  850 Directors slaries 2,100 Repairs and maintenance 350 Interim dividend paid 600 Fixtures and fittings at cost 4,080 Provision for depreciation on fixtures and fittings (1 January 2004) 1,660 Motor vehicles at cost 2,440 Provision for depreciation ton motor vehicles (1 January 2004) 1,020 Share capital (sh. 10 par value) 6,000 Stock (1 January 2004) 6,300 Trade debtors /trade creditors 9,200 4,200 Profit ad loss account balance (1 January 2004) 2,140 Share premium account 2,500 Balance at bank 840 General reserve. 1,000 56,020 59,020 Additional information: 1.   Prepayments and accruals as at 31 December 2004 were as follows: Prepayments Accruals Sh sh. Wages 120,000 Insurance 80,000 Commission to sales men 20,000 Auditors remuneration 280,000 2.   Depreciation is to be provided for as follows: -   Fixtures and fittings  –   10% per annum using the straight line method -   Motor vehicle  –   25% per annum using the reducing balance method. 3.   Stock as at 31 December 2004 was valued at sh. 7,280,000 4.   A final dividend at sh. 3 per share is proposed by the directors  5.   Corporation tax is to be charged at 30% on the reported profit for the year. 6.   A provision for doubtful debts is to be made at 2.5% of the debtors balance. Required : (i)   Trading and profit and loss and appropriation account for the year ened 31 December 2004 (10 Mks) (ii)   Balance sheet as at 31 December 2004. (6 Mks) QUESTION TWO   Nzombo , Mambo and Pima are in partnership sharing profit and losses in the ration 3:2:1 respectively. The following is the trial balance of the partnership as at 31 December 2004. Sh. Sh. Capital account  Nzombo 234,000 Mambo 156,000 Pima 78,000 Cash in hand 32,500 Current accounts  Nzombo 9,100 Mambo 6,500 Pima 3,900 Debtors and creditors 299,000 455,000 Provision for depreciation Motor vehicle 104,000 Land and building 156,000 Land and building (at cost) 780,000 Motor vehicle(cost) 260,000 Office expenses 52,000 Purchases 1,105,000 Rates 52,000 Sales 1,950,000 Selling expenses 182,000 Stock (1 Jan. 2004) 260,000 Provision for doubtful debts(1 January 2004) 13,000 Drawings  Nzombo 52,000 Mambo 39,000 Pima 39,000 3,159,000 3,159,000 Additional information 1.   Stock as at 31 December 2004 was valued at sh. 390,000 2.   Depreciation on ifxed assets was to be provided on a straight line basis as follows: Motor vehicle - 20% per annum, Land and building - 5% per annum 3.   The amount owing for selling expenses as at 31 December 2004 was sh. 23,015 4.   Prepaid rate as at 31 December 2004 amounted to sh. 26,000 5.   A bad debt of sh. 6,500 was to be written off 6.   Provision for doubtful debts was to be made at 5% of the outstanding debtors as at 31 December 2004. 7.   According to the partnership agreement, appropriations were to be made as follows:  Nzombo was to be allowed a salary of sh. 78,000 per annum Interest on fixed capital was to be paid at 10% per annum  No interest was to be allowed or charged on current accounts and partners drawings. Required: (a)   Partnership trading profit and loss and appropriation accounts for the year ended 31 December 2004. (10 Mks) (b)   Partners current accounts for the year ended 31 December 2004 bringing down balance as at this date (5 Mks) (c)   Partnership balance sheet as at 31 December 2004. (5 Mks)    QUESTION THREE (a)   Briefly explain the following (i)   Error of principle (3 Mks) (ii)   Error of commission (3 Mks) (b)   Joshua Mwalo operates a small hardware shop. He extracts a trial balance at the end of every month. The trial balance extracted as at 30 April 2005 did not balance the credits exceeding the debtors by sh. 184,320. Upon further investigation, the following errors. Were discovered. 1.   A balance of sh. 10,440 on a debtors accounts had been omitted from the schedule of debtors , the total of which was entered as debtors in the trial balance. 2.   The receipts side of the cash book had been under cast by sh. 72,900 3.   A credit note for sh. 21,480 received f from a supplier had been posted to the wrong side of his account. 4.   A computer purchased for sh. 144,000 had been written off to general expenses. 5.   A debtor whose past debts had been the subject of a provision, paid sh. 87,720 to clear his account. His personal account had been credited but he cheque had not yet been recorded in the cash book. 6.   An electricity bill amounting to sh. 8,240 which had not yet been accrued was discovered in a filing tray. 7.   The totals in the sales day book had been carried forward as sh. 948,780 whereas the correct amount was sh. 978,480. Required: (i)   Journal entries to correct the above errors (10 Mks) (ii)   Suspense account to clear the difference between the totals of each of the debt and credit sides (4 Mks) QUESTION FOUR (a)   Explain why the balance according to an entitys cash book may sometimes differ from the one shown on its bank statement. (b)   The summary of the bank column of the cash book of Evano Company ltd for the year ended 31 December 2004 was as follows: Sh. Opening balance 239,830 Receipts 48,209,310 48,449,140 Payments 45,896,575 Closing balance 2,552,565 Upon further investigation of the accounting records, the following matters were discovered. 1.   Standing orders in respect of the following items, had been entered in the bank statement but had been omitted form the cash book. Hire purchase of equipment  –   sh. 13,920 per month Annual insurance premium - sh. 21,750 2.   A cheque drawn for sh. 23,900 had been entered in the cash book as sh. 29,300 3.   Cheque paid to suppliers amounting to sh. 208,075 had not yet been presented to the bank and cheques  paid into the bank amounting to sh. 234,900 on 31 December 2004 had not yet been credited to the companys account. 4.   Bank charges of sh. 65,540 had been entered in the cash book and the receipt side of the cash book had  been overcast by sh. 29,000 5.   A cheque for sh. 34,510 had been debited tot eh company’s bank account by mistake.  6.   A direct transfer from a creditors account amounting to sh. 11,125 had not been recorded in the cash  book. Required (i)   Corrected cash book as at 31 December 2004 (8 Mks) (ii)   Bank reconciliation statement as at 31 December 2004. (6 Mks) QUESTION FIVE  (a)   What are books of srcinal entry? Give a comprehensive discussion of five books of srcinal entry (10 Mks) (b)   State six objectives of financial accounting (6 Mks) (c)   Explain the context of a partnership agreement (4 Mks)

12sept

Jul 22, 2017

Cg plan v01

Jul 22, 2017
We Need Your Support
Thank you for visiting our website and your interest in our free products and services. We are nonprofit website to share and download documents. To the running of this website, we need your help to support us.

Thanks to everyone for your continued support.

No, Thanks