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Introductions To Accounting I Question Paper
Introductions To Accounting I
Course:Bachelor Of Commerce
Institution: Kca University question papers
Exam Year:2010
UNIVERSITY EXAMINATIONS: 2009/2010
FIRST YEAR EXAMINATION FOR THE DEGREE OF BACHELOR OF
COMMERCE
CAA 100 INTRODUCTIONS TO ACCOUNTING I
DATE: AUGUST 2010 TIME: 2 HOURS
INSTRUCTIONS: Answer question ONE and any other TWO questions
QUESTION ONE
The following trial balance was extracted from the books of Ken Nyamweya a sole trader as at 31
December 2009:
Shs Shs
Capital 5,920,000
Drawings 1,200,000
Trade debtors 1,808,400
Trade creditors 2,169,000
Sales 8,892,600
Purchases 4,188,400
Stock- 1 January 2008 2,533,300
Sales returns 144,700
Purchases returns 218,800
Cash at hand 56,800
Balance at bank 1,056,400
Warehouse expenses 640,000
Discounts allowed 90,200
2
Discounts received 170,400
Office salaries 600,000
Office lighting 188,800
Rates 108,200
Motor vehicles (cost) 1,280,000
Freehold premises (cost) 2,600,000
Fixtures and fittings 576,000
General expenses 142,400
Insurance 28,000
Provision for bad debts 50,000
Motor vehicle expenses 150,400
Bad debts written off 28,800 _________
17,420,800 17,420,800
Additional information
1. Stock as at 31 December 2009 was valued at Shs 1,760,000
2. Depreciation on fixtures and fittings and the motor vehicle is to be provided at the rate of 5% and
10% per annum on cost respectively.
3. Rates prepaid as at 31 December 2009 amounted to Shs 25,600
4. unexpired insurance as at 31 December 2009 was Shs 4,000
5. provision for bad debts as at 31 December 2009 is to be made at 2 ½ % of the trade debtors
Required:
a) Trading profit and loss account for the year ended 31 December 2009.
[20 Marks ]
QUESTION TWO
On 31 December 2008, Kiarie balanced his accounts and found that his debtors were Shs 1,680.
Included in this figure were irrecoverable debts of Shs 8,400 owed by Michael Otieno and Shs 11,200
owed by K Kiige which j. Kiarie decided to write off. In addition, J. Kiarie decided to create a
provision for doubtful debts of 15% of the remaining debtors.
3
In the following year, ended 31 December 2009 debtors to Shs 1,400,000 and no bad debts were
written off but J. Kiarie maintained the provision for bad debts at 15% of the current debts.
Required:
Show for each year ended 31 December 2008 and 2009
i) Bad debts written off account [4 Marks]
ii) Provision for doubtful debts account [4 Marks]
iii) Appropriate entries in the profit and loss account [3 Marks]
iv) The balance sheet entries on 31 December 2008 and 31 December 2009 [4 Marks]
QUESTION THREE
Keith Nyongesa operates a small hardware shop. He extracts a trial balance at the end of every
month. The trial balance extracted as at 30 April 2010 did not balance, the credits exceeding the
debits by Shs 184,320. Upon further investigation the following errors were discovered:
1. A balance of Shs 10,440 on debtor’s account had been omitted from the schedule of debtors.
The total of which was entered as debtors in the trial balance.
2. The receipts side of the cash book had been undercast by Shs 72,900
3. A credit note for Shs 21,480 received from a supplier had been posted to the wrong side of his
account.
4. A computer purchased for Shs 144,000 had been written off to general expenses.
5. A debtor whose past debts had been the subject of a provision, paid Shs 87,720 to clear his
account. His personal account had been credited but the cheque had not yet been recorded in the
cash book.
6. An electricity bill amounting to Shs 8,240 which had not yet been accrued, was discovered in a
filing tray.
7. The totals in the sales day book had been carried forward as Shs 948,780 whereas the correct
amount was Shs 978,480.
4
Required:
(i) Journal entries to correct the above errors. (10 Marks)
(ii) Suspense account to clear the difference between the totals of the debit and credit sides.
(5 Marks)
QUESTION FOUR
a) Write short notes on the following
(i) Importance of bank reconciliation statement [2 Marks]
(ii) Separate entity concept [2 Marks]
(iii) Going concern concept [1 Mark]
b) The balances and transactions affecting the control accounts of Kopesha Ltd. For the month of
November 2009 are listed below:
Shs
Balances on 1 November 2009
Sales ledger 9,123,000 (debit)
211,000 (credit)
Purchases ledger 4,490,000 (credit)
88,000 (debit)
Transactions during November 2009
Purchase on credit 18,135,000
Allowances from suppliers 629,000
Receipts from customers by cheque 27,370,000
Sales on credit 36,755,000
Discount received 1,105,000
Payments to creditors by cheque 15,413,000
Contra settlements 3,046,000
Bills of exchange receivable 6,506,000
5
Allowances to customers 1,720,000
Customer’s cheques dishonoured 489,000
Cash received from credit customers 4,201,000
Refunds to customers for overpayments 53,000
Discounts allowed 732,000
Balances on 30 November 2009
Sales ledger 136,000 (credit)
Purchases ledger 67,000 (debit)
Required:
The sales ledger and purchases ledger control accounts for the month of November 2009 and shows the
respective debit and credit closing balances on 30 November 2009 [10 Marks]
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