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Caa 304-A : Specialised Accounting Techniques Question Paper
Caa 304-A : Specialised Accounting Techniques
Course:Bachelor Of Commerce
Institution: Kca University question papers
Exam Year:2009
1
UNIVERSITY EXAMINATIONS: 2009/2010
THIRD YEAR STAGE 2 EXAMINATION FOR THE DEGREE OF
BACHELOR OF COMMERCE
CAA 304-A : SPECIALISED ACCOUNTING TECHNIQUES
(EVENING CLASS)
DATE: DECEMBER 2009 TIME: 2 HOURS
INSTRUCTIONS: Answer Question ONE and Any other TWO Questions
QUESTION ONE (25 marks)
a) Distinguish between:-
i) Sales system and stock system
ii) Hire purchase and rental in respect of accounting for hire purchase sales. (8 Marks)
b) NABII Ltd commenced business on 1st January 2008. They sell refrigerators, all of one
standard type, on hire purchase terms. The hire purchase price (including interest) is
Sh.12,000 for each refrigerator. Customers are required to pay an initial deposit of Sh.3,000,
followed by twelve monthly installments of sh.750 each. The cost of each refrigerator to
NABII Ltd, is Sh.8,000. The following trial balance was extracted from NABII Ltd’s books as
on 31st December 2008.
2
Trial Balance
DR CR
Sh Sh
Ordinary share capital 1,000,000
Fixed Assets 100,000
Purchases 4,000,000
Cash Collected from Customers 2,400,000
Wages and salaries 120,000
General expenses 15,000
Creditors 250,000
Bank overdraft 590,000
Bank charges 5,000
4,240,000 4,240,000
400 Refrigerators were sold on hire purchase terms during 2008. A dividend of 10% was
proposed by the directors. The annual accounts are prepared on the basis of taking credit for
profits (including interest) in proportion to cash collected from customers.
Required:
Prepare the hire purchase trading account, and profit and loss account for the year 2008 and
balance sheet as on 31st December 2008. (17 Marks)
QUESTION TWO (25 marks)
a) Define the following terms used in container account
i) ‘Charge-out’ price
ii) ‘Credit back’ price
iii) ‘Hire profit’ (9 Marks)
b) Kamau and Wafula were partners in a joint venture sharing profits and losses in the ratios
3:2 respectively. Kamau supplies goods to the value of Sh, 50,000 and incurs expenses
amounting to Sh.40,000 and his expenses amount to Sh.3,000. Wafula sells goods on behalf
of the joint venture and realizes Sh.120,000. Wafula settles his account by bank draft.
Required:
i) Joint venture accounts as these would appear in the books of Kamau and
Wafula. (12 Marks)
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ii) A memorandum joint venture account. (4 Marks)
QUESTION THREE (25 marks)
a) Explain the main features of consignment account. (10 Marks)
b) ABC Ltd. of Mombasa sent 1,000 cases of medicines to XYZ Ltd of Dar-es-Salaam at
Shs.1,000 per case. Expenses on the consignment incurred by the consignor amounted to
sh.30,000. XYZ Ltd were working as del credere agents. Their ordinary commission was 5%
and del credere commission 7 ½%. XYZ Ltd. paid by cheque sh.200,000 as an advance to
ABC Ltd. immediately on receipt of the consignment.
After six months, an “account sales” was received by ABC Ltd. giving the following
information:-
1. Sales proceeds of 750 cases Sh.1,200,000.
2. Stock of unsold goods in hand 250 cases.
3. Commission charged at agreed rates of 5% and 7 ½% del credere.
4. Consignee’s expenses amount to Sh.50,000.
5. A bill of exchange was sent by XYZ Ltd. for the amount due to ABC Ltd. along
with the account sales. This bill was discounted immediately by ABC Ltd. for
Sh.780,000.
Assuming that ABC Ltd. have to close their books on the receipt of above account
sales, show the following entries:-
i) Ledger accounts in the books of ABC Ltd. (8 Marks)
ii) Consignor’s account in the books of XYZ Ltd. (7 Marks)
QUESTION FOUR (25 marks)
a) Explain the accounting treatment in the following cases
i) Bonus issue
ii) Rights issue of rights shares are bought by holder
iii) Rights issue if rights are sold by the holder
(10 Marks)
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b) On 31st January 2009, the premises of ABC Ltd were destroyed by a fire as a result of which
stock was also burnt and the business of the company was disorganized until 31st May 2009.
The Company’s insurance policy covers the following:
Sh.
Stock 450,000
Building
Loss of profit (Including standing charges) 600,000
Period of indemnity: Six months 200,000
The summarized Profit and loss Account for the year ended 31st December 2008 is as follows
Turnover 1,500,000
Less: Cost of sales:
Opening stock 309,375
Purchases 1,359,375
1,668,750
Less closing stock 393,750 1,275,000
Gross profit 225,000
Less:
Standing charges (insured) 125,625
Variable expenses 60,000 185,625
Net profit 39,375
The transactions for the month of January 2009 were as under
Sh
Turnover 75000
Payments to creditors 80,010
Trade creditors:
Balance as on January 2009 113,000
Balance as on January 2009 115,490
Stock salvaged 5,940
The reduction in turnover during the period of dislocation amounted to sh. 135,000 as compared with
the turnover of period corresponding to the previous period.Building was worth sh. 750,000 on the date
of fire and three quarters of its value was lost by fire.
Required
Insurance claim for
5
Loss of stock
Loss of profit
Loss of building (15 Marks)
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