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Acct 117 Principles Of Accounting Ii Question Paper
Acct 117 Principles Of Accounting Ii
Course:Principles Of Accounting
Institution: Kenya Methodist University question papers
Exam Year:2014
KENYA METHODIST UNIVERSITY
END OF 2NDTRIMESTER 2014 (PT) EXAMINATION
SCHOOL : BUSINESS AND ECONOMICS
DEPARTMENT : ACCOUNTING FINANCE AND INVESTMENT
UNIT CODE : ACCT 117
UNIT TITLE : PRINCIPLES OF ACCOUNTING II
TIME: 2 HOURS
INSTRUCTIONS: Answer Question ONE and any other TWO Questions
Question One
State and discuss qualities of useful financial information. || (8marks)
Name and explain SIX accounting concepts of principles. || (12marks)
Ali Hassan runs a second-hand function business from a shop which he rents. He does not keep complete accounting records, but is able to provide you with the following information about his financial position at 1st January 2009 stock of furniture sh. 32,100, trade debtors sh. 26,430. Trade creditors sh. 15,980, motor vehicle sh. 51,000, shop fittings sh. 42,000. Motor vehicle expenses owing sh. 4,320. He also provided the following summary of his bank account for the year ended 31st Dec 2009.
Balance of 1st January 2009 24,200 Payments to trade creditors 221,770
Cheques received from Electricity 10,900
Trade debtors 448,460 Postage 3,600
Cash sales 39,210 Rent 20,000
Adverts 14,300
Shop fittings 25,500
Insurance 9,460
Motor Vehicle Expenses 21,160
Drawings 167,430
Balance as at 31/12/09 17,730
511,870 511,870
All cash and cheques received were paid into the bank account immediately. You find that following must also be taken into account
Depreciation is to be written off the motor vehicle at 20% and off the shop fittings at 107, calculated on the book values at 1st January 2009 plus additions during the year.
At 31/12/09 motor vehicle expenses owing were sh. 2910 and insurance paid in advance was sh. 1770
Included in the amount paid for shop fittings were a table bought for 3,000, which Ali Hassan resold during the year at cost, some wooden shelving (cost sh. 2,500), which Ali Hassan used in building an extension to his house.
Other balance at 31/12/2009 were
Trade debtors 40,120
Trade creditors 24,450
Stock of furniture 40,630.
Required:
For the year ended 31/12/2009 prepare Ali Hassan`s income statement and balance sheet. (10marks)
Question Two
Outline FIVE components of the financial report of an entity. (5marks)
You have been provided with the following information relating to Mtwapa Manufacturers for the year ended 31st December 2013.
Trial Balance as on 31st December 2003
Dr. Cr.
Stock of raw materials 1/1/13 21,000
Stock of finished goods 1/1/13 38,900
Work in progress 1/1/13 13,500
Wages directed sh. 180,000; indirectedksh 145,000 325,000
Royalties 7,000
Carriage inwards can raw materials 3,500
Purchase of raw materials 370,000
Plant & Machinery (cash sh 280,000) 230,000
Furniture (cost sh 20,000) 12,000
General factor expenses 31,000
Lighting 7,500
Factory power 13,700
Administrative salaries 44,000
Sales 30,000
Commision on sales 11,500
Rent 12,000
Insurance 4,200
General Administration Expenses 13,400
Bank charges 2,300
Discount allowed 4,800
Carriage outwards 5,900
Sales Representative salaries 1,000,000
Debtors and creditors 142,300 125,000
Bank 568,000
Cash 1,500
Drawings 20,000 296,800
Capital as at 1/1/13
1,421,800 1,421,800
Notes at 31/12/13
Stock of raw materials Ksh. 24,000 stock of finished goods Ksh. 40,000 work in progress kshs. 15,000.
Lightning, rent and insurance are to be apportioned: factory 4/5, administration 1/5.
Depreciation on plant and machinery and furniture at 20% and 10% respectively per annum on cost.
Required:
Prepare a manufacturing account for the year ended 31/12/13. (8marks)
Income statement of Mtwapa Manufacturers for the year ended 31/12/13 and statement of financial position on the same date.
(12marks)
Question Three
Name and explain FIVE items that are included in the partnership deed.
(7marks)
Tashly, Elsy and Genshire who are in partnership sharing profits and losses in the ratio of 2:2:1, have decided to dissolve the partnership on 30th September 2010 at which date their statement of financial position was as below:
Tashly, Elsy and Genshire
Statement of Financial Position
As at 30th September 2010.
Sh. 000 Sh. 000
Non-current Assets (Net
Freehold property 30,000
Equipment 15,000 45,000
Current Assets
Stock 8,000
Debtors 4,500
Cash at Bank 2,100 14,600
Total Assets 59600
Liabilities and Equity
Capital Accounts
Tashly 39,000
Elsy 13,000
Genshire 2,000 54,000
Current Accounts
Tashly 700
Elsy (300)
Genshire 200 600
Current Liabilities
Creditors 3,000
Loan-Elsy 2,000 5,000
Total Liabilities of Equity 59,600
Additional information:
The partners are unable to sell the business as a going concern and disposal of assets separately for the following sums:
Sh.000
Freehold 31,000
Stock 2,900
Part of the equipment was taken over by Tashly at an agreed valuation of sh. 16.4 million and the rest of the equipment was disposed off for sh4.8 million.
Debtors paid in full and creditors gave discounts totaling to Ksh. 100,000. Dissolution expenses totaled Ksh. 800,000.
Required:
Prepare the following account relating to the dissolution of the partnership:
The realization account
The bank account
The capital accounts of the partners. || || || || (18marks)
Question Four
Following is the summarized financial statement of Fortcom Ltd. Trading, profit and loss account for the year ended 30/6/2008.
Shs. 000
Sales 2,640
Cost of sales 1,585
Gross profit 1055
Gain on disposal of motor vehicle 12
Admin Expenses (182)
Selling and Administration costs (244)
Interest Expense (56)
Profit before tax 585
Income tax expense (410)
Profit for the period 175
Statement of financial position as at 30/06/2008
2008 2007
Non-current Assets: Sh. 000 Sh. 000
Land and buildings (vateation) 1,800 1,500
Motor vehicles – NBV 640 360
2,440 1,860
Current Assets:
Stock 180 105
Debtors 450 435
Cash & Bank Balance 76 -
3,146 2,400
Capital & Liabilities
Ordinary share capital 1,600 1,400
Retained profits 280 150
Renovation reserve 300 -
Share premises 120 -
Current liabilities
Creditors 270 420
Accrued interest 16 -
Tax payable 160 90
Bank overdraft 40
Non-current liabilities:
16% Bonds 400 300
3,146 2,400
Additional Information:
Land and buildings were professionally valued by Ali and sons valuers on 30/6/2008 Sh. 1.5 million.
Administration expenses include depreciation charge on motor vehicles amounting to sh. 54,000. During the year, a vehicle with a book value of sh. 80,000 was disposed off for sh. 92,000.
Required:
Prepare a statement of cash flows for Fortcom Ltd for the year ended 30/6/2008.
Question Five
Clearly distinguish between the following income and expenditure accounts and the receipts and payments account. || || (6marks)
The following is the receipts and payments account of the Eillilopclup for the year ended 31st December, 2011.
Kshs. ’000’ Kshs. ’000’
Bank balance 31/12/10 102 Bar creditor 4,434
Entrance fees 42 Wages 416
Subscriptions 365 Heating & lighting 186
Bar sales 5,227 Postage & stationary 33
Sale of investments 70 Insurance 18
General expenses 46
New fixtures & fittings 450
Balance at bank 31/12/11 775
6,486 6,486
The following information is also available:
31/12/10 31/12/11
Ksh.(000) Ksh.(000)
Bar stock at cost 272 315
Creditors for bar purchases 306 358
Rent due 18 36
Heating and lighting expense due 16 19
Subscription due from member 25 40
Subscription recovered in advance - 35
Insurance paid in advance 5 7
On 31/12/10, the club held investments which cost Ksh. 500,000 during the year ended 31/12/11; these were sold for ksh 750,000.
Furniture was valued at Ksh. 300,000 on 31/12/10, depreciation of furniture is to be provided for at the rate of 10% per annum, including the new furniture.
Required:
Prepare a statement of affairs as at 31/12/2010 to determine the accumulated fund. || || || || || || || (5marks)
Prepare the bar trading account to determine the surplus from bar operations. || || || || || || || || (2marks)
Prepare an income and expenditure account for the year ended 31/12/2011 and a statement of financial position as on that date.
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