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Fundamental Of Accounting Ii Question Paper
Fundamental Of Accounting Ii
Course:Bachelor Of Commerce
Institution: Kenyatta University question papers
Exam Year:2010
KENYATTA UNIVERSITY
UNIVERSITY EXAMINATIONS 2009/2010
FIRST SEMESTER EXAMINATION FOR THE DEGREE OF BACHELOR OF
COMMERCE AND BACHELOR OF EDUCATION
BAC 101:
FUNDAMENTAL OF ACCOUNTING II
DATE: Monday, 28th December, 2009
TIME: 11.00 a.m. – 1.00 p.m.
------------------------------------------------------------------------------------------------------------
INSTRUCTIONS:
1. Answer
ALL the questions.
2.
Show the workings as completely as possible.
Question One
Lawrence and Ngigi are partners sharing profit and losses equally. The following is a
trial balance of their partnership as at June 2008.
LAWRENCE
&
NGIGI
PARTNERSHIP
TRIAL
BALANCE
AS
AT
30TH JUNE 2008
Dr.
Cr.
-
Building
(at
cost
75,000)
50,000
-
Fixtures
at
cost
11,000
- Provision for depreciation : fixtures
3,300
-
Debtors/Creditors
16,243
11,150
- Cash at Bank
677
- Stock (1st
June
2008) 41,979
- Sales/Purchases
85,416 123,650
- Carriage outwards
1,288
Page 1 of 4
--------------------------------------------------------------------------------
- Discount allowed
115
- Loan interest 4,000
- Office expenses 2,146
- Salaries & wages 18,917
- Bad debts
503
- Provision for bad debts 400
- Loan from J. Prince
40,000
- Capital : Lawrence
35,000
- - Ngigi
29,000
- Current accounts : Lawrence 1,306
Ngigi 298
- Drawings : Lawrence 6,400
Ngigi 5,650
_________
244,604
244,604
======
========
Additional Information
i) Stock
30th June 200850,340
ii)
Expenses to be accrued : Office expenses Sh. 96
Wages Sh. 200
iii)
Depreciation fixtures 10% on reducing balance basis, buildings sh.1000
iv)
Reduce provision for bad debts to Shs.320
v)
Partnership salary : Lawrence sh. 800 not yet entered in the books.
vi)
Interest on drawings : Lawrence sh. 180
Ngigi sh. 120
vii) Interest
on
capital
account balances at 10%
Required:
i)
Prepare a trading profit and loss account and appropriation account for the year
ended 30th June 2008
ii)
Prepare the final balance sheet at this date.
iii)
Prepare the partnership capital account (fluctuating)
(30 marks)
Page 2 of 4
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Question Two
George Thuo Ltd issued a prospectus offering for sale of 400,000 ordinary shares of
shs.15 each at shs.17.50 per share. The shares were payable at shs. 8 on application, sh.8
(including the premium) on allotment and the balance on the final call.
Application for 600,000 shares were received and the company decided to reject
application for 100,000 shares, and allotted the shares to the applicants on the basis of 8
shares for every 10 applied for. Application monies were returned to the unsuccessful
applicants and all monies due on allotment and call were received on the due dates.
Received:
a)
Make the necessary journal entries for the transaction
(7 marks)
b)
Post the appropriate accounts to record the above transactions
(8 marks)
c)
Show the extract entries which would appear in the balance sheet of George Thuo
Ltd
after
the
final
call.
(5
marks)
Question Three
On 1st Jan. 2008, Wandabwa Club had the following assets
Cash
20,000
Snack bar stock
80,000
Club house buildings 125,000
During the year to 30th Dec 2008, the club received and paid the following amounts.
Receipts Payments
Subscriptions 2008 35,000
Rent and Rates
15,000
Subscriptions 2009 3,800
Extension to club house 80,000
Snack bar income
60,000
Snack bar purchases
37,500
Visitors fees 6,500
Secretariat expenses 2,400
Loan from bank 55,000
Interest on loan 2,600
Competition fees 8,200 Snack bar expenses 6,000
Games equipment 20,000
Additional Information
i)
The snack bar stock on 31st Dec 2008 was valued Ksh. 90,000
Page 3 of 4
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ii)
the games equipment should be depreciated by 20%
Required:
a)
Prepare an income and expenditure account for the year ended 31st Dece 2008.
(12 marks)
b)
Prepare a balance sheet as at 31st
Dec.
2008
(8
marks)
Question Four
a)
Explain the significance of the following ratios in decision making.
i)
Gross
profit
to
sales
(2
marks)
ii)
Current Ratio
(2 marks)
iii)
Return
on
Investment
(2
marks)
b)
What potential problems arises for the internal analysts from the use of the
balance sheet figures in the calculation of financial ratios
(5 marks)
c)
Outline and explain the main advantages of cash flow statements to a business
(5 marks)
d)
Briefly explain the following terms
i)
Prime cost
(1 mark)
ii)
Work
in
progress
(1
mark)
iii)
Manufacturing
profit
(2
marks)
Page 4 of 4
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