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Bcom 111: Principles Of Accounting Ii Question Paper
Bcom 111: Principles Of Accounting Ii
Course:Bachelor Of Commerce
Institution: Chuka University question papers
Exam Year:2013
CHUKA
UNIVERSITY
UNIVERSITY EXAMINATIONS
EMBU CAMPUS
FIRST YEAR EXAMINATION FOR THE AWARD OF DEGREE OF
BACHELOR OF COMMERCE
BCOM 111: PRINCIPLES OF ACCOUNTING II
STREAMS: BCOM Y1S2 TIME: 2 HOURS
DAY/DATE: FRIDAY 19/4/2013 2.30 P.M. – 4.30 P.M.
INSTRUCTIONS:
Answer Question ONE and any other TWO questions.
Show all your workings.
Do not write on the question paper.
QUESTION ONE
The following is a summary of cash book as presented by George Ltd for the month of October:
£ £
Receipts 1.469 Balance b/f 761
Balance
c/d 554 1,262
2,023
===== 2,023
=======
All receipts are banked and payments are made by cheque.
On investigation you discover:
Bank charges of £136 entered on the bank statement have not been entered in the cash book.
Cheques drawn amounting to £267 had not been presented to the bank for payment.
Cheques received totaling to £762 had been entered in the cash book and paid into the bank, but had not been credited by the bank until 3 November.
A cheque for £22 for sundries had been entered in the cash book as a receipt instead of as payment.
A cheque received from K. Jones for £80 had been returned by the bank and marked ‘No funds available’. No adjustment has been made in the cash book.
A standing order for a business rates instalment of £150 on 30 October had not been entered in the cash book.
All dividends received are credited directly to the bank account. During October amounts totaling £62 were credited by the bank but no entries were made in the cash book.
A cheque drawn for £66 for stationery had been incorrectly entered in the cash book as £60.
The balance brought forward in the cash book should have been £711, not £761.
Required:
Show the adjustments required in the cash book. [5 marks]
Prepare a bank reconciliation statement as at 31 October. [5 marks]
Explain what is meant by incomplete records and set out three features which
Characterize incomplete records. [8 marks]
John is a sole trader who prepares his financial statements annually to 30 April. His summarized balance sheets for the last two years are shown below.
Balance Sheets as at 30 April
2008 2009
Shs Shs Shs Shs
Non-current assets 15,500 18,500
Less provision for depreciation -1,500 -1,700
14,000 16,800
Current assets
Inventory 3,100 5,900
Trade accounts receivable 3,900 3,400
Bank 1,500 ____-____
8,500 9,300
Total assets 22,500 26,100
Current liabilities
Trade accounts payable 2,000 2,200
Bank overdraft ____-______ 900
-2,000 -3,100
Net assets 20,500
======= 23,000
=======
Capital account:
Balance at 1 May 20,000 20,500
Add Net profit for the year 7,000 8,500
Additional capital introduced ___-___ 2,000
27,000 31,000
Less drawings -6,500 -8,000
Total capital 20,500
====== 23,000
======
John is surprised to see that he now has an overdraft, in spite of making a profit and bringing in additional capital during the year.
Required:
Draw up a suitable financial statement which will explain to John how his overdraft has arisen. [7 marks]
“Statements of cash flows have many uses other than the legal need for some companies to prepare them.” Discuss this stamen. [5 marks]
QUESTION TWO
State FOUR advantages of using imprest system of petty cash. [2 marks]
E.W is a manufacturer. His trial balance at 31 December is as follow:
£ £
Delivery van expenses 1,700
Lighting and heating: Factory 7,220
Office 1,490
Manufacturing wages 72,100
General expenses: Factory 8,100
Office 1,940
Sales reps: commission 11,688
Purchase of raw materials 57,210
Rent: Factory 6,100
Office 2,700
Machinery (cost £40,000) 28,600
Office equipment (cost £9,000) 8,200
Office salaries 17,740
Accounts receivable 34,200
Accounts payable 9,400
Bank 16,142
Sales 194,800
Van (cost £6,800) 6,200
Inventory at 31 December 2001:
Raw materials 13,260
Finished goods 41,300
Drawings 24,200
capital ________ 155,950
360,150
======= 360,150
======
Prepare the manufacturing account and income statement fo the year ending 32 December 2002 and a balance sheet as at that date. Give effect fo the following adjustments:
Inventory at 31 December 2002: raw materials £14,50; finished goods £44,490.
There is no work-in-progress.
Depreciate machinery £3,000; office equipment £600; van £1,200.
Manufacturing wages due but unpaid at 31 December 2002 £550; office rent prepaid £140. [18 marks]
QUESTION THREE
The following are summaries of the cashbook and bank accounts of Scholes who does not keep his books using the double entry system.
Bank summary Shs Shs
Balance on 1st January 2004
Receipts
Debtors 260,000 301,000
Cash banked 41,000 381,000
Payments
Trade creditors 185,000
Rent 14,000
Machinery 75,000
Wages 61,000
Insurance 14,500
Debtors (Dishonoured cheques) 2,500
Loan interest 3,000 355,000
Balance on 31st December 2004 26,000
=======
Cash Summary Shs Shs
Balance on 1 January 2004 3,000
Receipts
Cash sales 140,000
Debtors 4,000 144,000
147,000
Payments
Drawings 95,000
Repairs 3,000
Electricity 7,500
Cash banked 41,000 146,500
Balance on 31st December 2004 500
=======
During the year, the following took place
Shs
Bad debts written off 4,000
Discount received 3,500
Goods withdrawn by Stella Orwa for own use 3,000
Credit note issued 12,000
The following additional information is a available
1st January 31st January
Shs Shs
Stock 41,000 32,000
Machinery 126,000
Rent prepaid 2,000 159,000
Rent owing 2,500
Debtors 63,000 50,000
Creditors 24,000 25,000
Loan from bank at 10% 50,000 50,000
Loan interest owing 1,000
Required:
(i) Calculate the values of Scholes’s capital on 1st January 2004. [4 marks]
(ii) Prepare the trading profit and loss account for the year ended 31st December
2004. [10 marks]
Control accounts are used mainly for accounts receivable and accounts payable.
Explain:
Why it may be appropriate to use control accounts. [3 marks]
The advantages of using them. [3 marks]
QUESTION FOUR
John and Jimmy are in partnership sharing profits in the ratio 3:2. The following is their trial balance as at 30 September 2009.
Dr Cr
Shs Shs
Buildings (cost shs 210,000) 160,000
Fixtures at cost 8,200
Provision for depreciation: Fixtures 4,200
Accounts receivable 61,400
Accounts payable 26,590
Cash at bank 6,130
Inventory at 30 September 2008 62,740
Sales 363,111
Purchases 210,000
Carriage outwards 3,410
Discount allowed 620
Loan interest: P Prince 3,900
Office expenses 4,760
Salaries and Wages 57,809
Bad debts 1,632
Allowance for doubtful debts 1,400
Loan from P Prince 65,000
Capital: John 100,000
Jimmy 75,000
Current accounts: John 4,100
Jimmy 1,200
Drawings: John 31,800
Jimmy 28,200 __________
640,601
======= 640,000
=========
Required:
Prepare an income statement and profit and loss appropriation account for the year ending 30th September 2009 keeping into consideration the following additional information:
Inventory, 30th September, shs 74,210
Expenses to be accrued: office expenses shs 215; wages 720
Depreciate fixtures 15% on reducing balance basis, buildings shs 5,000
Reduce provision for doubtful debts to shs 1,250
Partnership salary: shs 30,000 for John. Not yet entered
Interest on drawings: John shs 900, Jimmy shs 600
Interest on capital account balances at 5 per cent [6 marks]
The following is a summary of the receipts and payments of M Rotary Club during the year ended 31 July 2009.
M. Rotary Club
Receipts and Payments Account for the year ended 31 July 2009
£ £
Cash and bank balances
b/d 210 Secretarial expenses 163
Sales of competition
tickets 437 Rent 1,402
Visiting speakers’
Members subscriptions 1,937 expenses 1,275
Donations 177 Donations to charities 35
Refund of rent 500 Prizes for competitions 270
Balance c/d 13 Stationery and printing 179__
3,324
===== 3,324
======
The following valuations are also available:
as at 31 July 2008 2009
£ £
Equipment (original cost £1,420) 975 780
Subscriptions in arrears 65 85
Subscriptions in advance 10 37
Owing to suppliers of competition
prizes 58 68
Inventory of competition prizes 38 46
Required:
Calculate the value of the accumulated fund of the M. Rotary Club as at 1 august 2008. [2 marks]
Reconstruct the following accounts for the year ended 31 July 2009:
v the subscriptions account [2 marks]
v the competition prizes account. [2 marks]
Prepare an income and expenditure account for M. Rotary Club for the year ending 31 July 2009 and a balance sheet as at that date. [8 marks]
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