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Fundamentals Of Accounting 2 Question Paper
Fundamentals Of Accounting 2
Course:Bachelor Of Commerce
Institution: Kenyatta University question papers
Exam Year:2014
KENYATTA UNIVERSITY
ACCOUNTING &FINANCE DEPARTMENT
BAC101: FUNDAMENTALS OF ACCOUNTING 2
C.A.T 1
Abel, Bob, and Chris are partnership sharing profit and losses in the ratio 4:3:2 respectively after crediting themselves with a 5% interest on capital and a salary of sh.15,000, 25,000 and 35,000 per month respectively .Their trial balance for the year ended 31/12/13 is as follows:
Sh”000 s h” 000
Plant and machinery 6000
Motor vehicle 5000
Furniture and fittings 3000
Sales 13,000
Stock1/1/13 1,500
Purchases 4,500
Discount 500 1000
Provision for bad debts 500
Debtors 4,000
Creditors 3000
Cash 4,000
Rent and rates 500
Electricity and water 400
Provision for depreciation:
Plant and machinery 2000
Motor vehicle 1000
Furniture and fittings 100
Bad debts 400
Returns 500 1,200
Salaries and wages 1,000
Drawings: Abel 1000
Bob 500
Chris 200
Genera expenses 1,000
Capital accounts: Abel 5,400
Bob 3,000
Chris 2,000
Additional information:
1. Stock at 31/12/13 was sh. 1,250,000
2 .Salaries and wages in arrears amount to sh.325, 000 while rent and rates paid in advance is sh.150,000
3. General Expenses paid in advance amount to sh.220, 000 while electricity and water in arrears is sh.10000
4.Depreciation is to be provided as follows:
i. Plant and machinery 15% on cost
ii. Motor vehicles 25% on cost
iii. Furniture and fittings 10% on cost
5. provision for bad and doubtful debts is to be maintained at 15% of debtors.
6. Interest on drawings is to be charged at 10%
7. Chris retired on 31/12/2013 and the following was agreed
i. Abel and Bob are to continue in partnership
ii. Asset values:
Plant and machinery sh.3, 600,000
Motor vehicles 3,100,000
Furniture and fittings 2,400,000
Stock 1,700,000
Good will 2,000,000
8. Chris was to be paid cash of sh.500, 000 and take a motor vehicle valued at sh.400, 000.The balance of the amount due is to be treated as a loan to the partnership at an interest of 15% p .a .
9. The profit and loss sharing ratio is 3:2 for Abel and Bob respectively.
10. Goodwill is to be written off in the new partnership.
Required:
i. Partnership trading profit and loss account
ii. Partners profit and loss appropriation account
iii. Relevant accounts to effect the partnership change
iv. Balance sheet after retirement
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