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Bac 410: Public Sector Accounting Question Paper
Bac 410: Public Sector Accounting
Course:Bachelor Of Commerce
Institution: Kenyatta University question papers
Exam Year:2010
KENYATTA UNIVERSITY
UNIVERSITY EXAMINATIONS 2009/2010
INSTITUTE OF OPEN LEARNING
EXAMINATION FOR THE DEGREE OF BACHELOR OF COMMERCE
BAC 410: PUBLIC SECTOR ACCOUNTING
=================================================================
DATE:
TUESDAY 20TH JULY 2010
TIME: 2.00 P.M. - 4.00 P.M.
INSTRUCTIONS
Answer any FOUR questions.
Q.1
The following transactions relate to Meru town for the year ending June 30th 2009.
i)
During the fiscal year 2009 the town levied property taxes of kshs. 154,000,
of which it collected kshs. 120,000 prior to June 30th 2009, and kshs 5,000
over each of the next six months. It is estimated that kshs 4,000 will be
uncollectible.
ii)
In August 20, 2009, it received kshs 12,000 from the central government for
sales taxes collected on its behalf. The payment was for sales made in June
that businessmen were required to remit to the state by July 15th.
iii)
In April the town was awarded a state training grant of kshs 40,000 for the
period June 1st , 2009, through May 31st, 2010. In 2009 the town received the
entire kshs 40,000 but spent only 32,000. The town must return to the state
the amounts that were not used to cover allowable training costs.
iv)
The town requires each vendor who sells in its “farmer’s market” to obtain an
annual permit. The funds generated by the sale of these permits are used to
maintain the market. The permits, which cover the period from June 1
through May 31, are not refundable. In May 2009 the town issued kshs 3,600
of permits.
Page 1 of 7
v)
On June 1, 2009, with kshs 5000 in funds available for temporary investment,
the town acquired two-year, 6% Treasure bonds. The bonds pay interest
upon maturity. On June 30th, the market value of the bond was kshs. 5,400.
vi)
Several years earlier the town received a donation of a parcel of land, upon
which it expected to build. During fiscal 2009 it opted to sell the land for
kshs 135,000. When it acquired by the town, the land had a market value of
kshs 119,000.
Required:
Prepare summary journals entries to reflect their impact on year-end fund
financial statement prepared on a modified accrual basis.
(25 marks)
Q.2
The General Fund trial balance of the Town of Kwale as of January 1, 2007 was
follows:
Debits Credits
Kshs
Kshs
Cash
20,000
Taxes Receivable -
77,200
Delinquent
Estimated uncollectible taxes
9,200
delinquent
Accounts payable
16,000
Fund Balance - Reserved for
8,000
encumbrance
Fund balance - Unreserved
______
64,000
97,200
97,200
The following data pertain to General Fund operations for the town of Kwale for the
fiscal year ended December 31st, 2007.
Page 2 of 7
i)
Budget adopted
Revenues
Kshs
Property taxes
420,800
Fines, Forfeits, and Penalties
160,000
Miscellaneous Revenues
20,000
600,800
Expenditures and Other Financing users
Public safety
390,000
General government
120,000
Culture and Recreation
54,000
Transfers out
30,000
594,000
ii)
Encumbrances outstanding at the end of 2006 were reestablished.
iii)
Property taxes were levied at an amount that would result in revenues of kshs
420,800 after deduction of 4% of the tax levy as uncollectible.
iv)
Purchase orders issued in 2007:
Kshs.
Public Safety
152,000
General Government
80,000
Culture and recreation
54,000
286,000
v)
Cash collection and transfers:
Kshs
Delinquent taxes
39,200
Current taxes
368,000
Fines, Forfeits, and penalties
154,000
Miscellaneous Revenues
20,000
Transfers in
18,000
599,200
Page 3 of 7
vi)
Purchase orders issued in 2007 were filled in the following amounts
Estimated
Actual
Kshs
Kshs
Public safety
148,000
148,000
General Government
80,000
80,000
Culture and Recreation
54,000
54,000
282,000
282,000
vii)
Purchase orders issued in 2006 in the following amounts were filled in 2007.
Estimated
Actual
Kshs
Kshs
Public safety
8,000
8,200
viii) Addition accounts payable for salaries and wages (not encumbered)
Kshs
Public Safety
230,000
General Government
40,000
270,000
ix)
Accounts paid amounted to kshs 570,000; the transfer out, kshs
30,000, was made in cash.
Required:
i)
Prepare for the General Fund of the town of kwale a balance sheet of
December 31st, 2007, and a statement of Revenue, Expenditure, and changes
in fund balance for the year ended December 31, 2007.
(25 marks)
Page 4 of 7
Q.3
a)
Explain the meaning of the following terms as used in public sector
accounting.
i)
Internal service funds
ii)
Inter fund transfers
iii)
Non exchange transaction
iv)
Enterprise funds
v)
Encumbrances
(15 marks)
b)
i)
How do government account for capital projects funds.
(5 marks)
ii)
How should Exchange transactions be accounted for?
(5 marks)
Q.4
a)
The following revenue collected during 2008/2009 in respect of Revenue head
150-080 - Miscellaneous Taxes was follows:
Item
Estimated Receipts Actual Receipts
Kshs
kshs
901 - Hotel accommodation
7,850,000
10,100,000
902 - Entertainment tax
1,225,000
1,120,000
903 - Betting / Casino tax
460,000
620,000
904 - Rates and Pools tax
5,500
31,200
905 - Stamp duty
4,225,000
4,690,800
13,765,000
16,562,000
Addition information available:
i)
Payments to the exchequer during the year ksh 17,616,500.
ii)
Balance of revenue on hand kshs 624,000
iii)
Balance of revenue collected in 2008/2009 but which had not been paid to the
Exchequer as at 30th June 2008 amounted to kshs 1,678,500.
Page 5 of 7
iv)
Arrears of revenue as at 30th June 2009.
Item
2007/2008
2008/2009
Total
Kshs
Kshs
Kshs
Hotel accommodation
20,000
86,700
106,700
Races/ Pools tax
-
55,000
55,000
Stamp duty
-
140
140
416,000
178,000
594,000
436,000
319,840
755,840
The arrears of revenue are not accrued in the accounts.
Required:
a)
A statement of Revenue for the year 2008/2009.
(15 marks)
b)
Reasons for material differences between estimated receipts and actual
receipts.
(5 marks)
c)
Statement of arrears of Revenue as at 30th June 2009.
(5 marks)
Q.5
Githunguri Giant Milk Co-Operative Union has six societies: Kiambu, Kiamwangi,
Kwamaiko Gaturi, Githambo and Kamacharia.
The union receives milk from the societies and markets the milk on their behalf.
The union pays each society a uniform fixed price per litre/kg of milk delivered to
the Union. Nevertheless, each society has a standard percentage and if the society
provides in excess of its standard percentage, it incurs a penalty . The penalty is for
each kg/litre in excess of the agreed quantity. It is calculated at twice the profit per
kilogram of output earned by the union in that year.
The proceeds of the penalties are divided among the societies who produce less than
their standard percentages, prorata to their deficiencies.
Page 6 of 7
The unions profits for the year are distributed in proportion to the actual output for
each year. The respective standard percentages and the actual output of milk for
2005 were as follows:
Standard percentage Actual output
(in thousands
of kilograms)
Kambui
25
3,000
Kiamwangi
10.0
900
Kwamaiko
15.0
1,500
Gaturi
17.5
1,500
Githambo
27.5
2,500
Kamacharia
5.0
600
The accountant of the union presented the following balances from the books as
at 31st December, 2005.
Kshs
Kshs
Sales
430,000,000
Bad debts
1,250,000
Purchase from
375,000,000
members
General expenses
3,000,000
Due for purchases -
Kiamwangi
2,000,000
Gaturi
250,000
2,250,000
The stock balances were kshs 1,000,000 and kshs 250,000 at 1st January 2005 and 31st
December 2005 respectively.
Required as at 31st December 2005:
a)
The union’s Revenue Account.
(5 marks)
b)
Revenue distribution Account.
(8 marks)
c)
The Penalty Account.
(5 marks)
d)
A statement showing the amount due to or by each member society.
(7 marks)
Page 7 of 7
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