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Caa 101: Introduction To Accounting Ii Question Paper

Caa 101: Introduction To Accounting Ii

Course:Bachelor Of Commerce

Institution: Kca University question papers

Exam Year:2009

1
UNIVERSITY EXAMINATIONS: 2008/2009
FIRST YEAR STAGE II EXAMINATION FOR THE DEGREE OF
BACHELOR OF COMMERCE
CAA 101: INTRODUCTION TO ACCOUNTING II
DATE: APRIL 2009 TIME: 2 HOURS
INSTRUCTIONS: Answer question ALL questions
QUESTION ONE
Furahia Manufacturers Ltd is in the business manufacturing and selling small components to the
motor assemblers. The following trial balance was extracted from its books as at September 30, 2008:
Dr Cr
Shs Shs
Authorized and issued share capital 20,000 ordinary shares of
Shs. 10 each 200,000
Share premium 50,000
General reserves 120,000
Profit and loss account 104,405
Interim dividends paid 16,000
Cash 33,570
Accounts receivable and payable 132,000 58,235
Freehold property, at cost (Land 75,000) 125,000
Plant at cost 130,000
Accumulated plant depreciation 62,000
Motor vehicle -at cost 53,000
Accumulated depreciation on motor vehicles 30,500
Fixtures and fittings –at cost 39,700
Accumulated depreciation –fixtures and fittings 11,790
Inventories, October 1, 2007
Raw materials 34,055
Work in process 57,660
Finished goods 108,345
Provision for doubtful debts 6,860
2
Bad debts 4,895
Rates and insurance 9,215
Wages 108,370
Factory power 22,560
Light and water 16,280
Maintenance –plant 10,970
Salaries 90,000
Returns –inwards and outwards 1,345 3,170
Advertising 8,580
Transport expenses 23,045
Bank charges 2,925
General expenses 29,150
Purchases and sales 917,380 1,224,620
15% Debentures 100,000
Discounts received 2,465
1,974,045 1,974,045
Additional information:
i) Provision for doubtful debts is to be adjusted to a figure equal to 10% of accounts
receivable
ii) Depreciation is to be provided for the year using the reducing balance method and applying
rates of 15% on plant, 25% on motor vehicles and 10% on fixtures and fittings. Building is
to be depreciated at the rate of 4% using the straight line method
iii) Light and water, insurance and general expenses are to be apportioned in the ratio of 4:1
between factory and administration
iv) As at September 30, 2008:
Shs
Electricity and water accrued 770
Rates and Insurance prepaid 990
Inventories were valued at:
Raw materials 139,255
Work in process 82,450
Finished goods 123,135
v) Debenture interest has not yet been paid
vi) The directors wish to provide for a final dividend which will increase the dividend for the
year up to Shs. 2 per share
Required:
a) A manufacturing account (7 Marks)
b) Income statement account for the period ended September 30, 2008 (7 Marks)
c) A statement for retained earnings as at September 30, 2008 (3 Marks)
d) Balance sheet for the year as at September 30, 2008 (8 Marks)
(Total 25 Marks)
3
QUESTION TWO
a) The treasurer of Nyota Sports Club has prepared the following receipts and payments
account for the year ended December 31, 2008
Receipts and payments account for the year ended December 31, 2008
Receipts Shs Payments Shs
Balance at bank 1.1.08 25,200 Rent of rooms 25,000
Subscriptions 138,200 Wages of caretaker 25,000
Entrance fees 15,000 Purchase of sports
Sale of refreshments 228,000 equipment 84,000
Sale of dance tickets 89,400 Refreshment supplies 199,200
Dance expenses 61,500
Secretary’s expenses 36,000
_______ Balance at bank 31.12.08 65,100
495,800 495,800
The following additional information is provided:
As at December 31, 2007;
i.) Assets: Furniture Kshs. 288,000; sports equipment Kshs.114,000; subscriptions in arrears
Kshs.8,400
ii.) Liabilities: Accrued rent Kshs.18,000; subscriptions in advance Kshs.13,200
As at December 31, 2008;
i.) Assets: Furniture Kshs. 259,200; sports equipment Kshs.156,000; subscriptions in arrears
Kshs.10,500
ii.) Liabilities: Accrued rent Kshs.36,000; accrued wages Kshs.7,500; subscriptions in advance
Kshs.5,400.
Required:
a) Accumulated fund [5 Marks]
b) Income and expenditure account for the year ended 31st December 2005 [10 Marks]
c) Balance Sheet [6 Marks]
4
b) State and explain three differences between receipts and payments accounts and income and
expenditure account (4 Marks)
[Total 25 Marks]
QUESTION THREE
The following trial balance was extracted form the books of Anne and Betty as at 30 June 2008
Sh Sh
Capital accounts: Anne 1,200,000
Betty 960,000
Current accounts: Anne 48,000
Betty 26,400
Drawings: Anne 216,000
Betty 168,000
Shop fittings and fixtures (costs) 840,000
Office furniture (cost) 36,000
Provisions for depreciation:
Shop fittings and fixtures 120,000
Office furniture 12,000
Debtors and creditors 1,739,520 552,720
Stock as at 1 July 2007 631,200
Purchases and sales 5,322,240 7,377,600
Carriage inwards 30,480
Returns inwards and returns outwards 38,400 13,920
Insurance 76,080
Rent and rates 326,400
General expenses 155,520
Staff salaries 848,400
Carriage outwards 74,880
Provision for doubtful debts 15,600
Bank overdraft 188,400
Advertising 11,520 -------------
10,514,640
===========
10,514,640
========
Additional Information
1 Stock as at 30 June 2008 was valued at sh. 974,400.
2 Rates paid in advance as at 30 June 2008 amounted to sh.21,120.
3 The provision for doubtful debts is to be increased to sh 40,320.
4 Depreciations to be provided as follows:
Shop fittings and fixtures – 10% per annum on straight-line basis.
Office furniture -20% per annum on straight-line basis
5
5 Betty is to earn a salary of sh.120,000 per annum
6 Interest is to be allowed as follows:
On fixed capitals – 5% per annum
On drawings – 2 ½ % per annum
7 Profits and losses are shared between Anne and Betty in the ratio of 3:2 respectively.
Required
i) Trading and profit and loss and appropriation accounts for the year ended 30 June
2008. (10 Marks)
ii) Partners’ current accounts as at 30 June 2008. (6 Marks)
iii) Balance sheet as at 30 June 2008. (9 Marks)
QUESTION FOUR
The summarized financial statements of Baraka Enterprises Ltd. are as follows:
Income statements for the year ended 30
September:
2003
Sh.’000’
2004
Sh.’000’
Sales
Cost of sales
Gross profit
Administrative expenses
Debenture interest
Net profit
20,000
(15,000)
5,000
(3,800)
-
1,200
28,000
(21,000)
7,000
(4,600)
(400)
2,000
Balance Sheet as at 30 September:
2003
Sh.’000’
2004
Sh.’000’
Assets:
Non-current assets (net book value)
Current assets:
Inventories
Trade and other receivables
Balance at bank
Total assets
11,000
2,000
2,500
-
4,500
15,500
14,000
3,000
2,800
500
6,300
20,300
Equity and liabilities:
Capital and reserves:
Issued and fully paid
1,000,000 ordinary shares of Sh.10
10,000
10,000
6
Required:
For each year, calculate and comment on the following:
(i) Gross profit margin [3 Marks]
(ii) Inventory turnover [3 Marks]
(iii) Return on equity [4 Marks]
(iv) Return on assets [4 Marks]
(v) Acid test ratio [4 Marks]
(vi) Current ratio [3 Marks]
(vii) Financial leverage [4 Marks]
[Total: 25 Marks]
each
revenue reserves
Non-current liabilities:
8% debentures
Current liabilities:
Trade and other payables
Bank overdraft
Total equity and liabilities
Stock as at 1 October 2002 was
Sh.5,000,000
3,000
13,000
-
1,500
1,000
2,500
15,500
4,100
14,100
5,000
1,200
-
1,200
20,300

Caa 101: Introduction To Accounting Ii Question Paper

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