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Principles Of Accounting Ii Question Paper

Principles Of Accounting Ii

Course:Bachelor Of Business Administration

Institution: Kenya Methodist University question papers

Exam Year:2012

1
DEPARTMENT OF BUSINESS ADMINISTRATION
ACCT 117: PRINCIPLES OF ACCOUNTING II
Due Date: November 2012

QUESTION ONE
Abott is operating a merchandising business as a sole trader. He has not kept adequate records.
Your examination of the available record reveals the following information;
Receipts and Payments for the year ended 31 December 2011
Cash Receipts
Collection from trade debtors 820,000
Cash sales 615,000
Interest 8,200
Rent 82,000
Disposal of fixtures and fittings 410,000
Cash Payments
Trade creditors 984,000
Insurance 20,500
Salaries 184,500
General expenses 57,400
Drawings 172,200
New fixtures and fittings 369,000
Balances on 31 December 2010 2011
sh. sh.
2
Cash at bank 41,000 188,600
Trade creditors 164,000 184,500
Salaries accrued 20,500 30,750
Rent received in advance 16,400 10,250
Trade debtors 274,700 369,000
Accrued interest earned 4,100 12,300
Stock 522,750 615,000
Prepaid insurance 12,710 17,425
Land and buildings 996,300 996,300
Fixtures and fittings (net) 1,230,000 1,066,000
Additional information
? Discounts allowed and discounts received amounted to sh. 16,400 and sh. 18,450
respectively.
? During the year, returns outwards were sh. 20,500 while returns inwards were sh. 41,000.
? Bad debts written off during the year amounted to sh. 10,250.
? Provision for doubtful debts is to be established and maintained at 5% of trade debtors.
? An item of fixtures and fittings was sold for cash at sh. 82,000 above book value.
Required
The Income statement and Statement of financial position for the period 31 December 2011
(20 marks)
QUESTION TWO
The following balances remained in the books of Brick Ltd as at 30 April 2012 after the
preparation of the income statement.
Share capital, authorized and issued: sh.
2,400,000 sh. 20 Ordinary shares 48,000,000
800,000 8% sh. 20 preference shares 16,000,000
Stock – 30 April 2012 33,540,800
3
Account receivable and prepayments 10,880,000
Accounts payable and accruals 5,488,800
Balance at bank 3,118,400
10% debentures 6,400,000
General reserve 11,200,000
Bad debts 136,000
Gross profit for the year 32,603,200
Salaries and wages 11,280,000
Rates and insurance 564,000
Postage and telephone 248,000
Water and electricity 486,400
Debenture interest 320,000
Directors’ fees 1,000,000
General expenses 1,243,200
Motor vehicles (cost sh. 11,640,000) 2,270,000
Office fittings and equipment (cost sh. 17,856,000) 10,976,000
Land and buildings at cost 52,880,000
Profit and loss account – 1 May 2011 9,700,800
Additional information
1. A bill for sh. 219,000 in respect of electricity for the period up to 30 April 2012 has not been
accrued.
2. The amount for insurance includes a premium of sh. 120,000 paid in January 2012 to cover
the company for six months, February to July 2012.
3. Office fittings and equipment are to be depreciated at 15% per annum on cost and motor
vehicles at 20% per annum on cost.
4. Provision is to be made for:
Directors fees - sh. 2,000,000
Audit fee - sh. 480,000
The outstanding debenture interest
4
5. The directors have recommended that a sum of sh. 800,000 be transferred to general reserves,
the preference dividend be paid and a 10% ordinary dividend be paid.
Required
Income Statement, Statement of Changes in Equity and Statement of Financial Position as at 30
April 2012. (20 marks)
QUESTION THREE
The following is the trial balance of Arnold and Betty who traded in partnership at 31/12/2011.
sh. sh.
Capital account 1/1/2011
Arnold 15,000,000
Betty 5,000,000
Current account 1/1/2011
Arnold 1,500,000
Betty 2,500,000
Sales 75,000,000
Stock 1/1/2011 15,000,000
Wages and salaries 7,250,000
Rent 2,500,000
Sundry expenses 1,500,000
Heat and light 600,000
Trade debtors and creditors 7,000,000 5,750,000
Distribution cost 2,650,000
Drawings
Arnold 3,500,000
Betty 4,500,000
Bank balance 2,250,000
Equipment at cost 5,000,000
Accumulated depreciation 2,000,000
Purchases 55,000,000
5
106,750,000 106,750,000
Additional information
a) The closing stock was valued at sh. 20,000,000.
b) Depreciation on the equipment of sh. 750,000 be written off for the period ended
31/12/2011.
c) Accrued wages amounted to sh. 250,000 while prepaid rent was sh. 500,000.
d) Arnold took goods costing sh. 170,000 for personal use. No entry has been made in the
books.
e) The partnership agreement provided that;
o Profits and losses be shared equally.
o Annual salary for Arnold is sh. 1,000,000 and for Betty it is sh. 2,000,000.
o Interest on capital is allowed at 5% per annum
o The interest on drawings for Arnold is sh. 100,000 and for Betty sh. 150,000.
Required
The income statement including the appropriation account
The current accounts
The statement of financial position for the period ended.
(20 marks)

Principles Of Accounting Ii Question Paper

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