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Accounting For Assets Question Paper
Accounting For Assets
Course:Bachelor Of Commerce
Institution: Kenyatta University question papers
Exam Year:2010
KENYATTA UNIVERSITY
UNIVERSITY EXAMINATIONS
FIRST SEMESTER EXAMINATIONS FOR BACHELOR OF COMMERCE
BAC 200:ACCOUNTING FOR ASSETS
INSTRUCTIONS:
ANSWER QUESTION ONE AND ANY OTHER TWO:
1.a)The main o objective of financial reporting is to provide useful information useful .Describe the qualitative characteristics of useful accounting information(8mks)
b)Distinguish between depletion and amortization as applied in tear and wear of assets and non current assets(2mks)
c)Outline the aspects included in acquisition of land(3mks)
d)Butewa company manufacturers sell various types of juices to grocery chains.The company's fiscal year ended 31st December 2008 is given below
TRIAL BALANCE
ACCOUNT TITLE DR. CR
Cash 30,000,000
Account receivable 40,000,000
Allowance for uncollected accounts 3,000,000
Prepaid rent 2,000,000
Prepaid insurance 0
Supplies 1,500,00
Inventory 60,000,000
Interest receivables 20,000,000
Accumulated depreciation 30,000,000
Account payable 28,000,000
Wages payable 0
Notes payable 50,0000,000
Interest payable 0
Unearned revenue 0
Returned earnings 24,500,000
Capital stock 60,000
Sales revenue 148,000,000
Interest revenue 0
Cost of goods sold 70,000,000
Wages expenses 18,900.000
Rent expenses 11,000,000
Depreciation expenses 0
Interest expenses 0
Supplies expenses 1,100,000
Insurance expenses 6,000,000
Bad debts expense 3,000,000
TOTALS 343,500,000 343,500,000
Additional information:
1.Depreciation of the equipment for the year is ksh. 10,000
2.The company estimates that of the ksh.40,000 in account receivable outstanding at the year end,5500 probably will not be collected,
3.Employee wages are paid t twice a month on 22nd for wages earned from 1 st through the 15th and on the 7 Th of the following month for wages earned from December 16 Th through December 31st 2008 were 1,500,000
4.On October 1st 2008, butewa borrowed ksh 50,000 from local bank and signed a note.The note required interest to be paid annually on September 30th at 12%The principal is due in 10 years
5.On march,1 2008 the company lent a supplier ksh. 20,0000,000 and a note was signed requiring the principal at 10% to be paid on 28 Th February 2009.
6.ksh. 800,000 of suppliers remained on hand at December 31st 2008
7.On April 1, 2008 the company paid an insurance company ksh 6,000,000 for a two year fire insurance policy.The entire ksh.6,000,000 was debited to insurance expense
8.A customer paid Butewa ksh.2,000,000 in December for kh.1,500,000 of juices to be manufactured and delivered in January 2009.Butewa credited sales revenue.
9.On December 1,2008,ksh 2,000,000 rent was paid to the owner of the building.The payment represented rent for December and January ,at ksh. 1,000,000 per month.
REQUIRED.
a)prepare the necessary journal entries to record the adjusting entries
Enter the unadjusted balances from the trial balance into a T- account and post the necessary adjustment. (17mks)
Q2.A)Explain three factors that have to be established to determine the process of cost allocation(6mks)
b)East Africa industries company purchased a machine of 1m,The company expects the useful life of the machine to be 5 years.During that time the machine will produce 500,000 units.The anticipated residue value i s 1,000,000.The machine was disposed o f 5 years of use.The actual production during the 5 years of the asset life was
YEAR UNITS PRODUCED
1 100,000
2 110,000
3 105,000
4 80,000
5 65,000
REQUIRED:
i)Determine the depreciation of the machine using:
a)Declining balance method if the depreciation rate is 20%p.a(4mks)
b)Sum of the years digit(SYD)METHOD(6mks)
C)Assigning of receivables and factoring of accounting receivables(4mks)
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