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- QUESTION TWO
Kate and John formed a partnership business to sell Chinese motorbikes in Mombasa city sharing profits and losses in the ration of 3:1 respectively....(Solved)
QUESTION TWO
Kate and John formed a partnership business to sell Chinese motorbikes in Mombasa city sharing profits and losses in the ration of 3:1 respectively. On 1 April 2012, Kate contributed sh.15,000,000 and John sh.5,000,000 which was immediately deposited in a newly opened bank account of the partnership.
Additional information:
1. Sales proceeds banked during the year amounted to sh.109 million.
2. The cashier had paid the following expenses from sales proceeds before banking the balance:
• Rent of go downs and offices at sh.100,000 per month.
• Office running expenses at sh.10,000 per week.
• Casual wages at sh.4,000 per week.
• Local transport at sh.7,000 per week.
• Partners were allowed to draw salaries per month as follows: Kate sh.30,000 per month.
John sh.36,000 per month.
The partners made all their drawings for the year.
Assume there are 52 weeks in the financial year ended 31 March 2013.
3. The partnership paid the following amounts through the bank:
In Shillings:
Purchase of furniture and fittings 128,000
Purchase of computers 900,000
Staff salaries and wages per month 100,000
Purchases 96,000,000
Drawings (per month):
Kate 100,000
John 80,000
Licenses and clearing charges 1,920,000
Bank charges (per month) 3,000
Telephone per month 8,000
Freight charges 576,000
Electricity bill 10,000
4. Analysis of transactions revealed that:
• Accounts receivable amounting to sh.900,000 were outstanding at the year end.
• Inventory of motorbikes at the year end at cost was sh.8,700,000.
• Included in the inventory of motorbikes above are motorbikes which cost sh.1,100,000 but which can
now be sold for sh.800,000 only, because of impairment in value in the go down.
• The telephone and electricity bills for the month of March 2012 were paid on 3 May 2012.
• Accounts payable for purchases amounting to sh.600,000 were unpaid at the year end.
5. The partners are entitled to 10% interest on their fixed capitals per annum.
6. Depreciation is to be provided on furniture and fittings and computers at the rate of 12.5% and 20% per annum on cost respectively.
Required:
(a) Income statement and profit and loss appropriation account for the year ending 31 March 2013.
(b) Statement of financial position as at 31 March 2013.
Date posted: September 30, 2022. Answers (1)
- Mary Atieno, a sole proprietor, operates a business but does not observe the double entry rule of book-keeping.
The following balances were extracted from her books...(Solved)
Mary Atieno, a sole proprietor, operates a business but does not observe the double entry rule of book-keeping.
The following balances were extracted from her books as at 31 October 2011.
Sh. "000"
10% loan 6,000
Freehold property at cost 6,000
Motor Vehicles (net book value) 7,500
Furniture and Fittings (net book value) 2,400
Trade receivables 5,000
Allowance for doubtful debts 250
Accruals 150
Trade payables 3,800
Bank overdraft 600
Inventory 3,900
The following transactions relate to the financial year ended 31 October 2012
1. Discounts received and discount allowed amounted to sh.400,000 and sh.700,000 respectively.
2. Bad debts of sh.200,000 were written off. The allowance for doubtful debts is to be maintained at 5% of the trade receivables at the end of the financial year.
3. The following transactions were processed through the bank account.
Sh. "000"
• Cash sales 7,200
• Cash purchases 2,400
• Proceeds from the sale of a motor vehicle 1,200
• Collection from trade receivables 18,900
• Payment to suppliers 19,400
• Loan repayments (30 April 2012) 1,000
• Purchase of furniture 2,000
• Drawings 600
• Interest on loan 300
• General expenses 350
• Electricity expenses 650
• Salaries and wages 1,600
4. The business makes a normal gross profit margin of 25% on selling price.
5. Motor vehicles are depreciated at the rate of 20% per annum on a reducing balance basis. A full year’s
depreciation was provided on a motor vehicle which was disposed of in the course of the year. The motor
vehicle had been bought at sh.2,500,000 and had am accumulated depreciation of sh.1,220,000 at the time of
disposal.
6. Furniture is depreciated at the rate of 10% per annum on cost effective from the date of purchase. The
additional furniture was purchased on 1 May 2012 while the cost of the furniture at the beginning of the year
was sh.4,000,000.
7. Sales and purchases were all on credit and amounted to sh.20,800,000 and sh.19,000,000 respectively.
8. Accrued electricity expenses as at 31 October 2012 amounted to sh.190,000
Required:
(a) Income statement for the year ended 31 October 2012.
(b) Statement of financial position as at 31 October 2012.
Date posted: September 30, 2022. Answers (1)
- Explain four considerations that management should take into account in choosing the basis of cost apportionment.(Solved)
Explain four considerations that management should take into account in choosing the basis of cost apportionment.
Date posted: May 16, 2019. Answers (1)
- In relation to a manufacturing concern, Explain the term "cost apportionment".(Solved)
In relation to a manufacturing concern, Explain the term "cost apportionment".
Date posted: May 16, 2019. Answers (1)
- Outline two advantages of an income and expenditure account as compared to a receipts and
payments account.(Solved)
Outline two advantages of an income and expenditure account as compared to a receipts and
payments account.
Date posted: May 16, 2019. Answers (1)
- The following is the summary of the cashbook of Mbedodo Football Club for the year ended 30 June
2011:
Additional information:
1. The assets of the club on...(Solved)
The following is the summary of the cashbook of Mbedodo Football Club for the year ended 30 June
2011:
Additional information:
1. The assets of the club on 1 July 2010 were as follows:
Sh. '000'
Land 650,000
Gymnasium and equipment 250,000
Bar inventory 10,800
Prizes in hand 4,800
2. Bar supplies owing amounted to Sh. 4,200,000 on 1 July 2010
3. On 30 June 2011 the bar inventory was Sh. 9,600,000, prizes in hand - Sh. 2,400,00 and
Sh. 5,640,000 was owing for bar supplies.
4. The secretary is to receive a leave allowance of 5% of his basic salary. It was also agreed that
the bar manager should receive aSh. 500,000 bonus for increased sales during the year.
5. From the register of members, it appeared that unpaid subscriptions as at 30 June 2011
totaled Sh. 5,100,000. Subscriptions received during the year included Sh. 2,550,000 in
respect of the previous year and Sh. 1,700,000 in respect of the year starting 1 July 2011.
6. Interest earned on the deposit with the SACCO for the year ended 30 June 2011 amounted to Sh.
1,750,000
7. The rent paid was for fifteen months up to 30th September 2011
8. The gymnasium and equipment are to be depreciated at the rate of 10% per annum on straight
line basis
Required;-
a) Income and expenditure account for the year ended 30 June 2011
b) Statement of financial position as at 30 June 2011
Date posted: May 16, 2019. Answers (1)
- Differentiate between "receipts and payments account" and "income and expenditure account".(Solved)
Differentiate between "receipts and payments account" and "income and expenditure account".
Date posted: May 16, 2019. Answers (1)
- Explain three reasons why in many organisations the cash flow for a given period differs from the
profit realised by the organisation in the same period.(Solved)
Explain three reasons why in many organisations the cash flow for a given period differs from the
profit realised by the organisation in the same period.
Date posted: May 16, 2019. Answers (1)
- Discuss three categories of financial ratios(Solved)
Discuss three categories of financial ratios
Date posted: May 16, 2019. Answers (1)
- Summarise three limitations of ratio analysis.(Solved)
Summarise three limitations of ratio analysis.
Date posted: May 16, 2019. Answers (1)
- Highlight six purposes of public sector accounting.(Solved)
Highlight six purposes of public sector accounting.
Date posted: May 16, 2019. Answers (1)
- The following were the approved estimates and actual expenditure for the Ministry of health for
the financial year ended 30 June 2013:
Drawings from the Exchequer during...(Solved)
The following were the approved estimates and actual expenditure for the Ministry of health for
the financial year ended 30 June 2013:
Drawings from the Exchequer during the financial year ended 30 June 2013 amounted to
Sh.127, 500,000.
Required:
(i) General account of vote.
(ii) Exchequer account.
(iii) Paymaster general account.
Date posted: May 16, 2019. Answers (1)
- Uzuri County Council authorised the construction of a city hall on 1 July 2012. The hall was
expected to cost Sh. 160,000,000. The project was to...(Solved)
Uzuri County Council authorised the construction of a city hall on 1 July 2012. The hall was
expected to cost Sh. 160,000,000. The project was to be financed as follows:
Sh. 80,000,000 from a 6.5% bond issue.
Sh. 64,000,000 from a government grant.
Sh. l6,000,000 from the general fund.
The following transactions and events took place during the year ended 30 June 2013:
1. The county council transferred Sh. 16,000,000 from the general fund to the city hall capital
fund. The capital project fund was for the purpose of construction of the city hall.
2. Planning and architects fees amounting to Sh.6,400,000 were paid.
3. The contract was awarded for Sh. 152, 000,000.
4. The 6.5% bonds were sold for Sh. 80,320,000 and the amount of the premium transferred to
the debt service fund.
5. The contract was certified 50% complete and an invoice for Sh.76,000,000 was received from
the contractor.
The contractor was paid the invoiced amount less 10% retention
Required:
i) Journal entries to record the above transactions.
ii) Statement of revenue and expenditure of the capital project fund for the year ended 30 June
2013.
iii) Statement of financial position of the capital project fund as at 30 June 2013.
Date posted: May 16, 2019. Answers (1)
- The following were the estimates and actual expenditure of Barani Ministry of Youth and Sports for
the financial year ended 30 June 2012.
Drawings from the exchequer...(Solved)
The following were the estimates and actual expenditure of Barani Ministry of Youth and Sports for
the financial year ended 30 June 2012.
Drawings from the exchequer during the financial year ended 30 June 2012 amounted to
Sh.226,000,000
Required;
a) General account of vote
b) Exchequer account
c) Paymaster general (PMG) account
d) Appropriation account for the year ended 30 June 2012
e) Statement of assets and liabilities as at 30 June 2012
Date posted: May 16, 2019. Answers (1)
- The following details relate to the approved estimates and actual expenditure of a certain
government ministry for the financial year ended June 2012.
Required;-
Appropriation account for the...(Solved)
The following details relate to the approved estimates and actual expenditure of a certain
government ministry for the financial year ended June 2012.
Required;-
Appropriation account for the year ended 30 June 2012.
Date posted: May 16, 2019. Answers (1)
- Explain the following terms in the context of public sector accounting:
i) Commitment accounting
ii) Fund accounting(Solved)
Explain the following terms in the context of public sector accounting:
i) Commitment accounting
ii) Fund accounting
Date posted: May 16, 2019. Answers (1)
- Explain three roles of the International Public Sector Accounting Standards Board (IPSASB).(Solved)
Explain three roles of the International Public Sector Accounting Standards Board (IPSASB).
Date posted: May 16, 2019. Answers (1)
- Explain the meaning of the following terms in relation to Public Sector Accounting:
i) Appropriation-In-Aid
ii) Paymaster general
iii) General Account of Vote
iv) Exchequer Account(Solved)
Explain the meaning of the following terms in relation to Public Sector Accounting:
i) Appropriation-In-Aid
ii) Paymaster general
iii) General Account of Vote
iv) Exchequer Account
Date posted: May 16, 2019. Answers (1)
- The Ministry of Finance estimated the revenue from licences for the year ended 30 June 2010 to be
follows:
During the year, the treasury introduced a new...(Solved)
The Ministry of Finance estimated the revenue from licences for the year ended 30 June 2010 to be
follows:
During the year, the treasury introduced a new vote head 018, second hand clothes licences
under supplement estimate number 1.The estimated revenue from this vote head was Sh450
million. The actual revenue during the year was as follows:
Additional information:
1. The balance of revenue from licences as at 1 July 2009 was Sh. 325 million.
2. As at 30 June 2010, the amount of revenue from licences due to the Exchequer was Sh124 million
Required:
Statement of revenue for the year ended 30 June 2010.
Date posted: May 16, 2019. Answers (1)
- Highlight the importance of using accounting standards as the basis for preparing financial
statements.(Solved)
Highlight the importance of using accounting standards as the basis for preparing financial
statements.
Date posted: May 16, 2019. Answers (1)