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Agbm 313: Financial Accounting 2 Question Paper
Agbm 313: Financial Accounting 2
Course:Bachelor Of Science Of Agricultural Economics
Institution: Egerton University question papers
Exam Year:2008
Egerton University
University Examinations
Njoro Campus
Second Semester 2007/2008
Department Of Agricultural Economics And Business Management
Third Year Examination For The Award Of Bachelor Of Agricultural Economics And Agribusiness Management
Agbm 313: Financial Accounting 2
Stream: Y3S2 Agec & Agbm Time: 2 Hrs
Day: Monday, 3.00-5.00 Date: 09/06/08
Instructions
Attempt all questions
Question 1
Akinyi, Bosire, ceptumo and Doreen voluntarily decided to dissolve and liquidate their partnership of running the students centre. Their financial position was as follows:
Akinyi, Bosire, ceptumo and Doreen
Balance sheet as at 31/12/0x
Assets Liabilities
Total assets 53,100 liabilities 4, 500
Capitals
Akinyi 15,300
Bosire 13,500
Cheptumo 12,600
53, 100 Doreen 7,200 53, 100
The first realization brought in 27, 000 for assets carried in the books at 30, 600. The liabilities were paid. Finally the remaining assets were sold for Kshs. 8, 100.
Required:
Show the accounts necessary to liquidate the partnership including the distribution of cash to the partners. (assume there were no liquidation costs) (20 marks)
Question 2
a) A company had the following assets at the end.
Land and buildings 450, 000
Machinery and equipment 180, 000
Furniture and fittings 95, 000
Stocks 72, 000
Debtors 2,500, 000
Motor vehicles 260, 000
As a strategic move, the company decides to sell some assets which are not in the core business. They engage the services of a professional firm to value the assets. The valuation by Musangi & Company was as follows;
Land and buildings 2, 280, 000
Machinery and equipment 750, 000
Furniture and fittings 60, 000
Stocks 43, 000
Debtors 180, 000
Required:
i. Prepare journal entries to give effect to the revaluation. (7 marks)
ii. Show the assets accounts and any other relevant accounts (7 marks)
iii. Explain how you would treat the revaluations reserve (6 marks)
Question 3
a. Majimbo Limited issued 2000,000 ordinary shares with a par value of Kshs.10 each to the public at a price of Ksh. 25 per share payable as follows:
On application 18
(Including premium)
On allotment 2
1st call 3
2nd and final call 2
Applications were received for 3,000,000 shares. Applications of 1,000,000 shares were rejected using the Majimbo system and application monies refunded. All other applicants were obtained and shares applied for. One applicant, a Mr. Mururu was allotted 2,000 shares but failed to pay for the second and final call. The directors decided to forfeit these shares.
Required:
i. Journal entries (with explanations) to record above transactions (10 marks)
ii. The necessary ledger entries and accounts duly balanced (10 marks)
Question 4
Explain the circumstances under which partners may decide;
i. To pay interest on capital
ii. To charge interest on drawings
iii. To pay salaries to partners
iv. To revalue assets
v. To charge goodwill to an incoming partner (10 marks)
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