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Accounting Question Paper

Accounting

Course:Bachelor Of Commerce

Institution: Jomo Kenyatta University Of Agriculture And Technology question papers

Exam Year:1

W1-2-60-1-6
JOMO KENYATTA UNIVERSITY
OF
AGRICULTURE AND TECHNOLOGY

University Examinations 2012/2013
EXAMINATION FOR THE DEGREE OF BACHELOR OF COMMERCE

HPS 2202/HBC 2104: FINANCIAL ACCOUNTING II

DATE: AUGUST, 2012 TIME: 2 HOURS

INSTRUCTIONS: Answer Question ONE and Any Other TWO questions.

Question One

a) Explain what is meant by the terms:

i. Revenue expenditure. [2 marks]
ii. Capital expenditure. [2 marks]

b) Give one example of:

i. Revenue expenditure [1 mark]
ii. Capital expenditure [1 mark]

c) The following information is available for a business run by Paul Simiyu for the year ended 31 December 2011.

Current sales
Gross profits
Net profit
Average stock
Capital
Average Debtors Kshs.
650,000.00
227,500.00
143,000.00
21,125.00
357,500.00
75,000.00

Required:

Calculate for the year 2011

i. Gross profit ratio [2 marks]
ii. Net profit ratio [2 marks]
iii. Rate of stock turnover [2 marks]
iv. Debtors collection period in days [2 marks]

Jane is a treasurer of her own local Tennis club.

i. Name two accounts which Jane would present to the club at the annual General meeting. [4 marks]

ii. Name ONE source of funds available to the club to finance an extension to the clubhouse. [2 marks]

e) Harry and Barry are in partnership. Their not profit for the year was ksh.462,000. Harry started with a balance of ksh.160,000 on 1st January 2011. In his capital account and invested a further ksh.20,000 on 1st January. Barry’s capital account balance on 1st January 2011 was ksh.40,000 with no further investment during the year.

Partnership salaries: Harry ksh.24,000
Barry ksh.30,000

Profits and losses are shared by the partners in the ratio of their capital balances at the end of the year.

Required:

Prepare the profit and loss appropriation account for the partnership for the year ended 31 December 2011. [4 marks]

f) State the two documents which must be lodged with the registar of companies when a public limited company is formed. [3 marks]

g) State and explain the components of a cashflow statement. [2 marks]

Question Two

The following balances were taken from the books of Mumias Unga Ltd for the year ended 31 December 2010 after the trading account had been prepared.

Ksh “000” Ksh. “000”
Dr Cr
Gross profit 706
Insurance 73
Wages and salaries 200
Provision for doubtful debts 8
(at 1 April 2009)
Premises (at cost) 1,120
Fixtures and fittings (at cost) 120
Provision for dep. On fixtures (as at April 2009) 40
Stock at 31 March 2010 164
Debtors 100
Creditors 66
Profit and loss account (at 1 April 2009) 32
Bank 75
10% Debentures (2020) 400
500,000 ordinary shares of ksh. 1 each 500
100,000 8% preference shares of ksh.1 each 100
1,852 1,852

Additional information:

1. Insurance includes a prepayment of 5000 for next year.
2. Wages and salaries due but unpaid amount to ksh.20,000.
3. Depreciation is to be provided on fixtures and fittings at 10% on cost.
4. The provision for doubtful debts is to be increased to ksh.10,000.
5. Corporation Tax of ksh.91,000 is to be provided on Net profit.
6. Debentures interest to be paid in full.
7. The Directors propose:

i. Preference share dividend should be paid in full.
ii. Ordinary share dividend of 12% should be paid.

Required:

i. Prepare the profit and loss and appropriation of available profits for the year ended 31 March 2010. [10 marks]

ii. The statement of financial position. [10 marks]

Question Three

The following information is available for Golf club for the year ended 31 December 2010 on 1 January 2010 the clubs assets and liabilities were as follows:

Ksh.
Club house ad hall at cost 175,000
Golf equipment at cost 9,500
Bar stock 4,500
Bank overdraft 8,250

Required:

a) Calculate the Accumulate Fund at 1 January year 2010. [4 marks]

The following receipt and payments arose during the year:

Receipts
Subscriptions
Bar sales
Sale of dinner ticket
Income from fundraising

Payments
Bar purchases
Bar wages
Dance expenses
Purchases of Golf Equipment
Electricity
General expenses
Ksh.
12,500
52,300
2,500
70,000

25,000
12,000
2,650
1,200
1,500
1,250

43,700

1. Depreciation is charged on Golf equipment at the rate of 20% on cost. No depreciation is charged in the year purchase.
2. Bar stock at 31 December 2010 were valued at ksh.3,700.
3. Members awed the club ksh.2,500 in subscription.

Required:

i. Prepare a statement showing the profit or loss on the Bar. [6 marks]

ii. The income and expenditure Account for 31 December 2010 showing clearly the profit on loss on dance. [10 marks]

Question Four

a) A, B and C have been trading as equal partners having capital contributions of ksh.500,000, ksh.400,000 and ksh.300,000 respectively as at 1st January 2011. On the same date B decided to leave the partnership and A and C were to continue trading as partners sharing profits in the ratio of 2:1. The total amounts due to B could not be paid immediately and thus the remaining partners agreed with B that they will pay 25% of the total due in cash and the balance will be left as a loan earning interest at a rate of 8% per annum. Meanwhile goodwill has agreed at ksh.180,000 and B had a credit balance on his current account of ksh.40,000. Goodwill was not to be retained in the books.

i. Prepare partners capital account to record the retirement of B. [10 marks]
ii. The following information was extracted from Rivatex Ltd.

Net profit
Working capital adjustment
issue of share capital
purchase of machinery
bank loan raised ksh.
10,000
5,000
80,000
100,000
15,000

Required:

Prepare the cashflow statement according to the IAS. [4 marks]

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