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Bac 101: Fundamentals Of Accounting Ii Question Paper
Bac 101: Fundamentals Of Accounting Ii
Course:Bachelor Of Commerce
Institution: Kenyatta University question papers
Exam Year:2013
KENYATTA UNIVERSITY
UNIVERSITY EXAMINATIONS 2012/2013
SECOND SEMESTER EXAMINATIONS FOR THE DEGREE OF BACHELOR OF
COMMERCE
BAC 101: FUNDAMENTALS OF ACCOUNTING II
DATE: FRIDAY 5TH APRIL, 2013 TIME: 4.30 P.M-6.30P.M
INSTRUCTIONS
Answer ALL Questions
Question One(20 marks)
a) XYZ Ltd needs to raise funds for purchase of new processing equipments. Its directors resolve to issue 5 million ordinary shares (of sh. 10 par value) at a price of sh. 12.50 each payable as follows:
b) On application sh. 2.50
On allotment sh. 5.00(including premium)
On first call sh. 2.50
On 2nd call sh. 2.50
Applications were received for 6 million shares. Applicants for 200000 shares were rejected and their application refunded. The excess money retained for successful applicants was to be carried forward for utilization for purposes of allotment. The allotment money due was received in full. All money due on 1st and second calls was received except for 100,000 shares by Kioko. These shares were forfeited and later re-issued at sh. 9 each.
Required
i. Ledger entries to record above transactions (10 marks)
ii. Balance sheet as at the end of the period (6 marks)
iii. Differentiate between receipt and payment account and income and expenditure accounts (4 marks)
Question Two (20 marks)
The following balances have been extracted from the books of Limuru dealers, a small scale manufacturing enterprises as at 31.12.2011
sh. “000”
Stocks as at 1st January: Raw Materials 7,000
Work in progress 5,000
Finished goods 6,900
Purchases of raw materials 38,000
Direct labour 28,000
Factory overheads: Variable 16,000
Fixed 9,000
Administrative expenses: Rent and rates 19,000
Lighting 6,000
Stationery and postage 2,000
Staff salaries 19,380
Sales 192,000
Plant and machinery at cost 30,000
Provision for depreciation 12,000
Motor vehicles (for sale deliveries) at cost 16,000
Provision for depreciation 4,000
Creditors 5,500
Debtors 28,000
Drawings 11,500
Balance at bank 16,600
Capital at 1st January 2011 48,000
Provision for unrealized profit at 1st 1,380
January 2011
Motor vehicle running cost 4,500
Additional Information;
i. The stocks at 31.12.201
Shs. “000”
Raw materials 9,000
Work in progress 8,000
Finished goods 10,350
ii. The factory output is transferred to the trading account at factory cost plus 25% of factory output
iii. Depreciation is provided at the rate shown below on the original coast of a fixed asset held at the end of each financial year:
Plant and machinery 10%
Motor vehicle 25%
iv. Amounts accrued as at 31.12.2011 for direct labour amounted to shs. 3,000,000 and rent and rates prepaid at 31.12.2011 amounted to shs. 2,000,000
Required
a) Manufacturing, trading and profit and loss account for the year ended 31.12.2012 (12 marks)
b) Balance sheet as at 31.12.2011 (8 marks)
Question Three (10 marks)
The following financial statements have been availed to you by the Chief Executive of April showers ltd.
April Showers Ltd
Income statement for the year ended 31.12.2011
sh sh
Sales 850,000
Less: Cost of sales
Opening stock 99,500
Purchases 559,500
659,000
Less: Closing stocks (149,000) (510,000)
Gross profit 340,000
Less expenses
Selling and distribution
Depreciation 30,000
Administrative expenses 10,000
Earning before interest and taxes 135,000 (175,000)
Interest 165,000
Earnings before tax (15,000)
Tax @50% 150,000
Less ordinary dividend 75,000
(0.75 per share) 75,000
Retained profit for the year ended (15,000)
60,000
April Showers Ltd
Balance Sheet as at 31 December 2011
Non Current assets shs Issued share capital
Land and buildings 250,000 (20000 share of shs. 10) 2000000
Plant & Machinery 80,000 90000
330,000 Reserve 60000
Current assets Retained profit 10000
Inventory 149,000 Long term 130000
Debtors 75,000 Current liabilities
Less provision (4,000) 71,000
Cash 30,000
580,000 580,000
Additional note
Cash purchases amount to 14,250
Assume that beginning debtors were shs. 89,000
Requiered
Compute the following Accounting Ratios and interpret them
i) Quick Ratio/Acid Test Ratio
ii) Debt Equity Ratio
iii) Stock turn over
iv) Debtors turnover
v) Earnings Per Share (EPS) (10 marks)
Question Four (20 marks)
The following list of balances as at 30 September 2009 has been extracted from the books of Brick and Stone, trading in partnership, sharing the balance profits and losses in the proportions 3:2 respectively
£
Printing, stationery and postages 3,500
Sales 322,100
Stock in hand at 1 October 2008 23,000
Purchases 208,200
Rent and rates 10,300
Heat and light 8,700
Staff salaries 36,100
Telephone charges 2,900
Motor vehicle running cost 5,620
Discounts allowable 9,500
Discounts receivable 370
Sales returns 2,100
Purchases returns 6,100
Carriage inwards 1,700
Carriage outwards 2,400
Fixtures and fittings: at cost 26,000
Provision for depreciation 11,200
Motor vehicles at cost 46,000
Provision for depreciation 25,000
Provision for doubtful debts 300
Drawings: Brick 24,000
Stone 11,200
Current account balance at 1 October 2008:
Brick 3,600 credit
Stone 2,400 credit
Capita; account balances at 1 October 2008
Brick 33,000
Stone 17,000
Debtors 9,300
Creditors 8,400
Balance at bank 7,700
Additional Information:
1. £ 10,000is to be transferred from Brick’s capital account to a newly opened Brick Loan Account on 1 July 2009.
Interest at 20 per cent per annum on the loan is to be credited to Brick
2. Stone is to be credited with a salary at the rate of £12,000 per annum from 1 April 2009
3. Stock in hand at 30 september 2009 has been valued at cost at £ 32,000
4. Telephone charges accrued due at 30 September 2009 amounted to £400 and rent of £600 prepaid at that date.
5. During the year ended 30 September 2009 Stone has taken goods costing £1,000 for his own use.
6. Depreciation is to be provided at the following annual rates on the straight line basis
Fixtures 10%
Motor vehicles 20%
Required
a) Prepare income statement and appropriation account for the year ended 30 September 2009. (8 marks)
b) Prepare the statement of financial position as at 30 September 2009 which should include summaries of the partner’s capital and current accounts for the year ended on that date. (12 marks)
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