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Advanced Financial Accounting 1 Question Paper

Advanced Financial Accounting 1

Course:Bachelor Of Business Admnistration

Institution: Kenya Methodist University question papers

Exam Year:2012

ACCT 430
DEPARTMENT OF BUSINESS ADMINISTRATION
ACCT 430 – ADVANCED FINANCIAL ACCOUNTING
November 2012
Question I
A, B and C have been partners for several years, sharing profits and losses in the ratio 2:2:1. They decided
to dissolve the firm on 31 October 2002, on which date the balance sheet was as follows:
Balance Sheet as at 31 October 2002
ASSETS Ksh Ksh
Non Current Assets
Property plant and equipment:
? Land and buildings 150,000
? Plant and machinery 77,200
? Fixtures and fittings 17,000
? Motor vehicles 8,000
252,200
Goodwill 100,000
352,000
CURRENT ASSETS
Stock 64,000
Debtors 59,000
Cash 160
123,160
475,360
EQUITY AND LIABILITIES
Capitals: A 100,000
B 60,000
C 40,000
200,000
Current accounts A 40,000
DLM Assignment – ACCT 430
B 30,000
70,000
270,000
NON CURRENT LIABILITIES
Loan – A 20,000
CURRENT LIABILITIES
Creditors 57,000
Bank overdraft 128,360
185,360
475,360
1) The assets were duly sold and monies received as follows:
2002
November 17th: Freehold land and buildings Sh 259,000
December 19th: Debtors (Part) Sh 30,000
Stock (Part) Sh 20,000
2003
January 23rd: Plant and machinery Sh 51,000
Fixtures and fittings Sh 12,000
Motor vehicles Sh
5,000
March 18th: Stock (Remainder) Sh 36,000
Debtors (Remainder) Sh 42,000
2) Provision was made for dissolution expenses Sh 2,400.
3) As soon as sufficient money was available to pay all outstanding creditors, this was done, discounts
being received amounting to Sh 1,000.
4) Dissolution expenses amounted to Ksh 3,400, and these were paid on 31 March 2003.
Required:
a) Statements showing how the dissolution proceeds would be distributed to partners; ignoring the
ruling in Garner Vs Murray.
b) Prepare the creditors account, realization account, capital accounts and cashbook
DLM Assignment – ACCT 430
Question 2
A and B are partners in a business. A runs a head office in Mombasa and B runs a branch in Malindi.
Separate books are maintained for the head office and the branch. Profits and loses are shared equally.
The trial balances as at 30th June 2002 were as follows:
Head Office Branch
Sh Sh Sh Sh
Property plant and equipment (NBV) 760,000 308,000
Stocks at 1 July 2001:
- Head office at cost 560,000
- Branch at transfer price 340,000
Goods sent to branch/from head office 1,430,800 1,398,800
Debtors 348,960 78,080
Sales 3,880,400 2,388,000
Bank and cash 612,280 115,360
Purchases 3,918,000
Remittances 2,247,600 2,257,200
General expenses 680,000 400,000
Branch current a/c/ Head office current a/c 2,530,640 2,498,640
Creditors 324,680 10,800
Capital at 1 July 2001 (held equally) 1,492,400
Provision for unearned profit ________ 34,000 _______ _______
9,409,880 9,409,880 4,897,440 4,897,440
Notes:
a) Mombasa invoices goods to Malindi at cost plus one ninth
b) At 30th June 2002:
? Stocks at head office at cost Sh 508,000
? Stocks at the branch at transfer price Sh 192,000
? Stocks in transit at transfer price Sh 32,000
? Cash in transit to head office Sh 9,600
Required:
DLM Assignment – ACCT 430
a) Prepare an incomes statement for the year ended 30th June 2002 and a balance sheet as at that
date, separately for
? The head office
? The branch
? The combined entity (25 marks)
b) Post and balance both current accounts. (10 marks)
Question 3
During the month of March 2001, a manufacturing firm advertised in the local press that it had bonded
goods which were to be auctioned. On reading the advertisement, Mr. Michael Karanja and Mr. Joseph
Abuya agreed to pool their resources together and participate in the auction. They agreed to share the
joint venture profits and losses, Karanja and Abuya in the ratio of 3:2 respectively.
Karanja sent Abuya a cheque of Sh.2,400,000 on 15 March 2001 to provide him with funds for Karanja’s
participation in the joint venture.
Karanja and Abuya successfully bought goods and managed to sell all of the goods purchased by the end
of April 2001. Their cash transactions appeared as follows:
Karanja
Sh.
Abuya
Sh.
Sales
Traveling expenses
Advertising
City Council charges
Salaries and wages
Sundry expenses
Purchases
Telephone expenses
Insurance
Transportation of goods.
3,840,000
392,400
123,600
102,000
57,600
70,800
1,920,000
33,700
12,300
157,000
2,520,000
555,600
109,200
84,000
78,100
34,800
1,320,000
28,900
11,200
121,500
Settlement between Karanja and Abuya was done by cheque on 30 April 2001.
DLM Assignment – ACCT 430
Required:
(a) Memorandum joint venture account. (6 marks)
(b) Joint Venture account with Abuya in Karanja’s ledger. (7 marks)
(c) Joint Venture account with Karanja in Abuya’s ledger (7 marks)

Advanced Financial Accounting 1 Question Paper

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