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Bbm 125 Question Paper

Bbm 125

Course:Bachelor Of Business Management

Institution: Mount Kenya University question papers

Exam Year:2011

Instructions:
1. This paper has two parts: Section ‘A’ and Section ‘B’.
2. Section ‘A’ has ONE question which is COMPULSORY and carries 30 marks.
3. Section ‘B’ has THREE questions of which you are required to attempt ANY TWO.
4. The TWO questions in Section ‘B’ carry a total of 40 marks.
SECTION A :( 30 MARKS)
1. a. List the differences between receipts and payments account and an income and expenditure
accounts. (5mks)
b. Briefly explain the limitations of ratio analysis. (5mks)
c. The following balances were extracted from the trial balance of kalota Ltd on 31 March
2011.
Paid up share capital sh.
Ordinary shares 400,000
6% preferences shares. 100,000
General reserves 40,000
Unappropriated profit 1st April 2010 15,000
Net profit for the year ended 31st March 2011. 160,000
The directors propose to:
(i) Transfer shs 350,000 to General reserves.
(ii) Pay the dividend due on preference shares
(iii)Pay a 10% dividend on the ordinary share.
Prepare profit and loss appropriation account. (10mks)
d. on 1st January, 2010 the assets of Songa Mbele Owino were as follows: cash in hand sh
480; debtor shs 9120; stock sh 18540 ; and fixed assets shs 18,000.
At the same date his creditors amounted to sh 7,350 and he owned his banks sh 10,800. At
31st December, 2010 his bank overdraft and his creditors had been reduced by shs 10,000 and
shs 2,220 respectively. His cash in hand was sh 1,600, debtors sh 8400; stock sh 12,920 andthe fixed assets increased by 4,000. During the year songa Mbele had taken drawing
amounting to sh 14,000 and had brought in shs 7,000 additional capital.
Required:
Calculate songa mbele’s profit or loss for the year (10 marks)
2. Rui, Jembe and China are in partnership sharing profit and losses in the rations 3:2:1
respectively.The trial balance of the partnership at 31st December, 2009 was as follows:
Shs shs
Capital accounts:- Rui 2,400,000
Jembe 1,920,000
China 1,440,000
Current accounts:- Rui 96,000
Jembe 52,800
China 29,040
Drawing Rui 1,022,600
Jembe 729,600
China 484,840
Bad debtors provision at 1 January, 2009 31,200
Debtors and creditors 3,479,000 1,105,400
Shop fixtures at cost 1,680,000
Office furniture at cost 7,200
Stock at 1st January,2009 1,262,400
Purchases 10,644,400
Sales 14,755,200
Carriage inwards 61,000
Returns inwards and outwards 76,800
Rents, rates & insurance 805,000
General expenses & salaries 2,007,840
Carriage outwards 149,760
Bank overdraft 376,800
Selling expenses 23,040
Provision for depreciation
Shop fixtures at 1 January, 2009 240,000
Furniture at 1st January, 2009 24,000
22,498,280 22,498,280
The following further information is provided
a. Stock at 31st December,2009 was shs 1,948,800
b. Rates paid in advance amounted to shs. 42,240
c. Depreciation was to be provided at 10% on shop fixtures and 20% on furniture both on cost.
d. Shs 2760 owed in respect of selling expenses.
e. Some bad debt amounting to shs 7200 are to be written off.
f. Bad debts provision is to be increased tosh s 80,640.
g. The partnership deed provides:-
(i) China is to receive an annual salary of shs. 240,000
(ii) Interest of 5% is to be allowed on fixed capital.
(iii) Interest 2.5% is to be charged on drawing regardless of when the withdrawal is made.
(iv) No interest is allowed on current accounts
Required:
a. Trading, profit and loss and appropriation accounts for the year ended 31st December, 2009.
(10mks)
b. The partner’s current accounts. (4mks)
c. Balance sheet as at 31 December, 2009 (6mks)
3. Vijana ni sasa players society was formed on 1 April 2009 with a membership of 40. The society
rules provide that each member must pay an enhance fee of sh. 2000 on the date of joining. Annual
subscription is shs 30,000 per member.
At the end of the first year on 31st March, 2010, the treasurer of the society provided the following
information:
a. All members had paid their subscriptions for the year except three members.
b. Six members had in addition to the current year, paid subscription for the year commencing 1
April, 2010.
c. Some acting costumes were purchased for shs 225,000 by cash during the year. These are
expected to be used by the society for at least five years after which their value would have
been depreciated by equal annual amounts to Zero.
d. Total petty expenses for various plays cost sh 3,500.
e. A raffle to argument the society’s funds raised shs . 360,000. The printing of raffle tickets cost
shs 42,000.
f. A dance conducted during the year raised shs. 684,000. The dance expenses cost shs 87,000
g. Hire of theatre rooms cost shs 120,000 per evenings. The rooms were used on eight
occasions. Payment has yet to be made for two of the occasions.
h. Salary paid for the workers amounted to shs. 600,000 while secretarial expenses paid were
shs, 270,000.
Required
(i) A receipt and payments account for the year ended 31st March, 2010. (7mks)
(ii) An income and expenditure account for the year ended 31st March, 2010. (7mks)
(iii) A balance sheet as at 31st March, 2010. (6mks)
4. The following information is extracted from the books of sweet mama company for the year ended
31st December, 2010.
shs
Opening stocks: Raw materials 350,000
Finished products 250,000
Closing stocks:- raw materials 280,000
Finished products 450,000
Salaries: sales department 140,000
Office and General 100,000
Purchase of raw material 700,000
Carriage: - inwards 30,000
Outwards 40,000
Power and light – factory 16,000
- Office and General 4,000
Direct wages 160,000
Sales 170,000
Required
Prepare a statement to show
(i) Cost of raw materials used
(ii) Cost of goods manufactured
(iii) Cost of goods sold
(iv) Profit or loss made during the year. (20mks)
5. Moseti Mokaya is a Tuk Tuk dealer in Ngata county. The following are his comparative statements
of comprehensive income and statements of financial position for the years ended 31st June, 2009
and 31st June 2010.
Statements of comprehensive income for the year ended 31st June.
2009 2010
Sh Sh Sh sh
Sales 69,300 95,700
Less:- cost of sales
Opening inventory 2,750 5,500
Purchases 55,000 80,900
Carriage inwards 5,500 6,000
63,250 92,400
Less: closing inventory 5,500 11,000
57,750 81,400
Gross profit 11,550 14,300
Less: expenses 5,500 6,600
Finance costs - 5,500 1,100 7,700
Net profit 6,050 6,600
Statements of financial position as at 31st June
2009 2010
Non- current assets Sh. Sh. Sh. Sh.
Property, plant and machinery 10,230 11,110
Current assets
Inventory 5,500 11,000
Trade receivable 11,550 26,400
Cash at bank 550 -
17,600 37,400
Equity and liabilities
Capital 12,980 15,510
Net profit for the year 6,050 6,600
Less:-drawings 3,520 3,960
2,530 2,640
15,510 18,150
Non- current liabilities
bank loan 11,000
Current liabilities
Trade payables 12,320 18,260
Bank overdraft - 1,100
12,320 19,360
27,830 19,360
Additional information
a. All sales and purchases are on credit.
b. During the year ended 31st June , 2010, Moseti Mokaya adopted a sales strategy of reducing
the selling prices and offering extended credits terms to his customers.
c. Assume a 365 day year.
Required
For the year ended 31st June, 2009 and 31st June 2010 compute the following ratios:
(i) Inventing turnover in days. (2mks)
(ii) Mark – up . (2mks)
(iii) Margin. (2mks)
(iv) Net profit margin. (2mks)
(v) Return on capital employed. (2mks)
(vi) Acid test ratio. (2mks)
(vii) Account receivable collect period (2mks)
(viii) Gearing ratio (2mks)
(ix) Account payable turnover. (2mks)
(x) Current ratio.

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