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Caa 202: Advanced Accounting I Question Paper
Caa 202: Advanced Accounting I
Course:Bachelor Of Commerce
Institution: Kca University question papers
Exam Year:2009
1
UNIVERSITY EXAMINATIONS: 2008/2009
SECOND YEAR STAGE III EXAMINATION FOR THE DEGREE OF
BACHELOR OF COMMERCE
CAA 202: ADVANCED ACCOUNTING I
DATE: APRIL 2009 TIME: 2 HOURS
INSTRUCTIONS: Answer all questions
QUESTION ONE
a) Discuss the circumstances under which goodwill should be valued. (5 marks)
b) Nakumatt Supermarket with head office in Nairobi operates a branch in Mombasa. The trial
balance as at 31 March 2008 was:
Head Office (HO) Branch Mombasa
Nairobi (Shs.) (Shs.)
Debits:
Fixed assets (Written sown values) 38000 15400
Stocks at 1st April 2007:
HO (at Cost) 28000
Branch (at transfer price) 17000
Debtors 17448 3904
Bank and Cash 30614 5768
Purchases 195900
Remittances to Nairobi 112860
Goods from Nairobi (at transfer
Price) 69940
General expenses 34000 20000
Mombasa branch current account 126532
470494 244872
Credits:
Goods to Mombasa (at transfer
Price) 71540
Remittances from Mombasa 112380
Sales 194020 119400
2
Creditors 16234 540
Nairobi Current Account 124932
Capital 1st April 2007 74620
Provision for unrealized profit
On stock 1st April 2007 1700
470494 244872
Additional Information:
a) Nairobi invoices goods supplied to Mombasa branch at cost plus one ninth.
b) At 31 March 2008 Shs.
Stocks at HO (at Cost) 25400
Stocks at Branch (at transfer Price) 9600
Stocks in transit (at transfer Price) 1600
Cash in transit to HO 480
c) Provide for Depreciation on fixed assets at 20% per annum on the reducing balance.
Required:
Prepare a Trading, Profit and loss Account for the year ended 31 March 2008 and Balance
Sheet at that date for
i) HO (5 marks)
ii) Branch (5 marks)
iii) The business as a whole (5 marks)
iv) Post and balance both Current Accounts (5 Marks)
(Total marks 25)
QUESTION TWO
a) Distinguish between surplus capital method and loss absorption Capital method of partnership
dissolution (8 marks)
b) The balance sheet of Tom, Dick and Harry who share profits and losses in the ratio 5:3:2
representatively was as follows:
3
TOM DICK AND HARRY
BALANCE SHEET AS AT 31 DECEMBER 2008
Shs Shs
Capital
Tom 7000 Property 42000
Dick 14000 Goodwill 3000
Harry 18000 Bank 5000
Trade Creditors 11000
50000 50000
The partners decided to dissolve the partnership on 1 January 2009. The assets were to be realized and
the net proceeds distributed among the partners in such a way that no partner would find it necessary
to repay any amount he has already received.
Realization Carrying Amount Proceeds
1st February 2009 Sh. 13000 Shs. 9000
2nd March 2009 Sh. 29000 Shs. 33000
Required
Prepare in a columnar statement showing the distribution of cash among the partners as well as their
capital account, Bank account and Realization account using surplus capital method. (17 marks)
QUESTION THREE
a) Briefly explain the difference between the statement of affairs and deficiency or surplus
account (6 marks)
b) A and B are in partnership and file their petition in bankruptcy as at 31 march 2008. The
following are the particulars of the joint and separate estates of the firm and particulars of A
and B.
Firm A B
Liabilities
Capital
A 160000 - -
B 120000 - -
Creditors 600000 40000 160000
Preferential Creditors 40000 - -
Mortgage on Building 160000
Bank overdraft 200000
Excess of Assets
Over liabilities - 240000 80000
1280000 280000 240000
4
Assets
Debtors 120000 -
Stock 400000 -
Furniture 40000 40000 40000
Buildings 280000 - -
Investment - 80000 80000
Plant 400000 - -
Cash 40000 - -
Capitals A and B - 160000 120000
1280000 280000 240000
Bank overdraft was secured by second charge on buildings and B personal guarantee and B’s
investment as collateral security. Estimated realizable values are:
Firm’s Assets
Building Sh. 220000 Plant sh. 80000
Furniture shs. 20000 Stock sh. 160000
Debtors: Good Sh.40000 Doubtful sh. 40000(Realizable Value sh. 20000),
Bad sh. 40000
A’s Assets Furniture sh. 20000
Investments sh. 60000
B’s Assets furniture sh.20000
Investment shs. 400000
Required
Statement of affairs and Deficiency Accounts of the joint estate and private estates of partners
(19 marks)
(Total 25marks)
QUESTION FOUR
a) Explain the concept of accounting for business combination. (5 marks)
b) Describe the two main methods of business combination. (20 marks)
(Total 25 marks)
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