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  • Explain three functions of each of the following parliamentary committees in the context of public sector accounting: (i) Committee of ways and means (ii) Public Accounts committee(Solved)

    Explain three functions of each of the following parliamentary committees in the context of public sector accounting: (i) Committee of ways and means (ii) Public Accounts committee

    Date posted: October 3, 2022.  

  • XYZ Limited is in the process of computerizing its accounting system. A critical component of this task is the creation of a database for non-current...(Solved)

    XYZ Limited is in the process of computerizing its accounting system. A critical component of this task is the creation of a database for non-current assets. Required: Advise XYZ Ltd on the features of a suitable accounting package and the information that would form the database for the non-current assets

    Date posted: October 3, 2022.  

  • The following trial balance was extracted from the books of Mali Ltd, a manufacturing company, as at 31 December 2010 ...(Solved)

    The following trial balance was extracted from the books of Mali Ltd, a manufacturing company, as at 31 December 2010 Sh. "000" Sh. "000" Inventories as at 1 January 2010: Raw materials 21,000 Finished goods 38,900 Work in progress 13,500 Wages: Direct 180,000 Factory 145,000 Sale of scrap raw materials 35,000 Royalties 7,000 Carriage inwards 3,500 Purchases of raw materials 370,000 Machinery (Cost sh. 280,000,000) 230,000 Computers (Cost sh. 20,000,000) 12,000 General factory expenses 31,000 Lighting 7,500 Factory power 13,700 Sales 1,000,000 Administrative salaries 44,000 Sales representative salaries 30,000 Commission on sales 11,500 Rent 12,000 Insurance 4,200 General administrative expenses 13,400 Bank charges 2,300 Discount allowed 4,800 Carriage outwards 5,900 Accounts payables 64,000 Ordinary share capital (sh. 10 each) 360,000 10% Debentures 60,000 Buildings 111,000 Accounts receivables 142,300 Balance at bank 76,800 Cash in hand 1,500 Allowance for doubtful debts 6,500 Retained profits (1 January 2010) 10,300 Debenture interest 3,000 1,535,800 1,535,800 Additional information 1. Rent, insurance and light expenses are to be apportioned between factory, office and distribution as follows: Factory Office Distribution % % % Rent 70 30 - Insurance 60 10 30 Lighting 80 20 - 2. Allowance for doubtful debts is to be maintained at 5% and bad debts of sh. 3,500,000 are to be written off. 3. Inventories as at 31st December 2010 were valued as follows: Sh. Raw materials 14,000,000 Finished goods 42,000,000 Work-in-progress 15,500,000 4. Accrued rent and general administrative expenses as at 31 December 2010 amounted to sh. 1,200,000 and sh. 1,500,000 respectively. 5. Prepaid insurance as ta 31 December 2010 amounted to sh. 360,000 6. A provision for corporation tax amounting to sh. 25,340,000 is to be made. 7. Depreciation is to be provided as follows Asset Rate per annum Machinery 12.5% on reducing balance basis Computers 15% on straight line basis Ignore depreciation on buildings 8. The directors propose to pay a dividend of sh. 0.50 per share Required: (a) Manufacturing, trading and income statement for the year ended 31 December 2010. (b) Statement of financial position as at 31 December 2010

    Date posted: October 3, 2022.  

  • The following assets and liabilities were extracted from the books of Jipemoyo Sport Club as at 31 March: ...(Solved)

    The following assets and liabilities were extracted from the books of Jipemoyo Sport Club as at 31 March: 2010 2011 Sh. Sh. Investment at cost 500,000 400,000 Sports Equipment 60,000 68,000 Furniture 40,000 36,000 Subscription in arrears 18,000 12,000 Subscription in advance 15,000 30,000 Bar Inventory 12,000 22,000 Bar payables 3,000 13,000 Stock of stationary 2,000 1,000 Accrued rates 1,500 2,500 Prepaid insurance 1,400 3,400 The summary of receipts and payments account for the year ended 31 March 2011 was as follows: Receipts Sh. Bank balance (1 April 2010) 25,000 Bar takings 360,000 Donations 80,000 Subscriptions 280,000 Income from investment 40,500 Annual dinner sales 140,000 Entry fees 75,000 Proceeds from sale of investment 125,000 1,125,500 Payments Ground maintenance 40,500 Staff salaries 239,000 Bar payables 120,000 New Equipment 20,000 Subscriptions refunded to members 2,000 Bar man's wages 120,000 Stationary 30,000 Annual dinner costs 80,000 Rates 8,000 Insurance 24,000 Bank balance (31 March 2011) 442,000 1,125,500 1. Included in the subscriptions received during the year of sh. 280,000 is sh. 15,000 being arrears for the year ended 31 March 2010. It is the policy of the club to write off subscriptions arrears owing for more than twelve months. 2. During the year, an investment with cost of sh. 100,000 was sold for sh. 125,000. The clubs accountant recorded only the receipt of proceeds from sale of investment in the books of accounts. Required: (i) Bar income statement for the year ended 31 March 2011 (ii) Subscriptions accounts (iii) Income and expenditure for the year ended 31 March 2011

    Date posted: October 3, 2022.  

  • In accounting for inventories, it is important to understand the composition of inventories and how to value the inventories in the financial statements. Required: (i) Explain the...(Solved)

    In accounting for inventories, it is important to understand the composition of inventories and how to value the inventories in the financial statements. Required: (i) Explain the term inventories. (ii) Describe how you would measure the value of inventories. (iii) Outline the component costs of inventories.

    Date posted: October 3, 2022.  

  • Enock Safari is a photographer and does not keep a complete set of accounting records. An extract of his receipts and payments for the year...(Solved)

    Enock Safari is a photographer and does not keep a complete set of accounting records. An extract of his receipts and payments for the year ended 31 December 2010 was as follows Sh. 000 Sh. 000 Receipts Cash in hand (1 January 2010) 3,000 Balance at bank ( 1 January 2010) 420,600 Cash sales 658,000 Credit sales 592,000 rent received from sub-letting 10,400 Sale of Equipment (Book value sh. 6,000) 2,000 Additional capital introduced 30,000 Income tax refund (personal) 5,000 Cash from bank 243,600 259,000 1,705,600 Payments Purchases for resale 844,000 General expenses 12,000 40,000 rent and rates 59,000 Wages 112,000 personal drawings 130,000 Income tax (personal) 60,000 Cost of new equipment 32,000 Cash withdrawn 243,600 Balance at Bank ( 31 December 2010) 427,000 Cash in hand (31 December 2010) 5,000 259,000 1,705,600 Additional information 1. Inspection of the credit sales invoice books showed that customers owed sh.250,000 on 1 January 2010 and sh.323,600 0n 31 December 2010. The amounts did not include goods withdrawn by Enock Safari for personal use. 2. Examination of the paid invoices for purchases disclosed trade payables of sh.190,000 as at 1 January 2010 and sh.212,000 as at 31 December 2010. 3. Enock Safari estimated that he had withdrawn goods for his own domestic use which cost sh.5,200 during the year and had not paid for them. 4. As at 1 January 2010, equipment on which depreciation is charged at 5% per annum stood at sh.114,000. 5. Inventory as at 1 January 2010 was valued at sh.190,000 and sh.180,000 as at 31 December 2010. Required: (a) Income statement for the year ended 31 December 2010. (b) Statement of financial position as at 31 December 2010

    Date posted: October 3, 2022.  

  • Alice, Bibianne and Christine have been in partnership for several years sharing profits and losses in the ratio of 2:2:1 respectively after charging interest on...(Solved)

    Alice, Bibianne and Christine have been in partnership for several years sharing profits and losses in the ratio of 2:2:1 respectively after charging interest on capital at the rate of 10% On 1st April 2010, Christine retired from the partnership. Alice and Bibianne agreed to continue with the partnership and to share profits and losses equally after charging interest on capital at the rate of 10% per annum. For the purpose of retirement of Christine from the partnership, Land and Buildings were revalued at sh. 2,000,000 and furniture and fittings at sh. 3,000,000. Goodwill of the partnership was valued at sh. 1,200,000 on 1st April 2010 The partners agreed that goodwill was to be written off immediately. The relevant adjustments relating to the above transactions had not been made when the following trial balance as at 30 September 2010 was extracted from the books of the partnership. Sh. "000" Sh. "000" Capital Alice 800 Bibianne 700 Christine 600 Current Accounts Alice 200 Bibianne 200 Christine 100 Drawings Alice 180 Bibianne 140 Christine 180 Inventory (30 September 2010) 500 Land and Buildings 1,500 Furniture and fittings 400 Motor vehicles 800 Accounts receivables 470 Accounts payables 200 Prepaid insurance 50 Accrued electricity 20 Bank balance 1,000 Net profit for the year 2,400 5,220 5,220 Additional information 1. Assume the net profit accrued evenly throughout the year 2. Christine agreed to take on her retirement one of the motor vehicles at book value of sh. 400,000 and the balance due to her to be paid in cash Required: (a) Income statement for the year ended 30 September 2010 (b) Partner’s current accounts (c) Partner’s capital accounts (d) Statement of financial position as at 30th September 2010

    Date posted: October 3, 2022.  

  • The following information was obtained from the books of Nairobi water fund for the financial year ended 30th June 2011 1. Payment of sh. 3,000,000 was made...(Solved)

    The following information was obtained from the books of Nairobi water fund for the financial year ended 30th June 2011 1. Payment of sh. 3,000,000 was made to the members 2. Administrative salaries amounted to sh. 400,000 while other administrative expenses amounted to sh. 500,000 3. Total contributions received from members were sh. 4,800,000 4. The total investments in the fund amounted to sh. 12,000,000 which earned interest of sh. 2,400,000 5. On 30th June 2010, the fund account had a credit balance of sh. 10,800,000 while the paymaster general account had a debit balance of sh. 2,00,000 Required: (i) Income statement for the year ended 30th June 2011 (ii) Statement of financial position as at 3oth June 2011

    Date posted: October 3, 2022.  

  • In the context of not-for-profit organizations, explain the following terms (i) Honorarium (ii) Subscription (iii) Legacy(Solved)

    In the context of not-for-profit organizations, explain the following terms (i) Honorarium (ii) Subscription (iii) Legacy

    Date posted: October 3, 2022.  

  • Highlight six types of report that could be generated by an accounting package (Solved)

    Highlight six types of report that could be generated by an accounting package

    Date posted: October 3, 2022.  

  • Mashariki Enterprises provided the following details of assets and liabilities as at 1st June 2010. The cost details were obtained from the invoice files while...(Solved)

    Mashariki Enterprises provided the following details of assets and liabilities as at 1st June 2010. The cost details were obtained from the invoice files while others were obtained verbally from the managing director who was the proprietor Asset Cost/Valuation Date of acquisition Depreciation Sh. "000" Equipment and furniture 2,300 1-Sep-2008 10 % per annum Buildings 26,000 1-Jan-2005 5 % per annum Land 3,400 1-Jan-2005 nil Motor Vehicles 1,600 1-May-2010 20 % per annum Bank balances 1,000 Trade receivables 1,380 Opening inventory 1,800 Prepaid insurance 450 Cash 120 Trade payables 1,100 Bank Loan 2,400 Accrued sundry expenses 2,600 The policy of the firm is to provide full depreciation in the year of purchase and non in the year of disposal, using the straight-line method The following is a summary of receipts and payment for the year ended 31st May 2011 Bank Cash Bank Cash Sh. "000" Sh. "000" Sh. "000" Sh. "000" Sale of Equipment 200 Rent 2,000 Receipts from debtors 13,000 Donations 250 Sales 4,150 Supplier of goods 5,000 Furniture 900 Salaries and wages 1,400 Stationary 300 Motor vehicles 400 Bank loan 600 Drawings 200 Sales commission 150 Insurance 1,200 Bank charges 120 Sundry expenses 2,800 Interest on loan 240 Additional information 1. The following balances were available as at 31 May 2011 • Prepaid insurance sh. 250,000 • Accrued salaries Sh. 150,000 2. Equipment with a cost of Sh. 300,000 was disposed of during the year 3. Closing inventory was valued at sh. 1,200,000 4. Trade receivables as at 31st May 2011 were sh. 1,150,000 while trade payables were sh. 1,250,000 Required: (a) Income statement for the year ended 31 May 2011 (b) Statement of financial position as at 31 May 2011

    Date posted: October 3, 2022.  

  • (a) The following information relates to the property, plant and Equipment of Annex construction Limited as at 1 st October 2010: Asset Cost Accumulated Depreciation Estimated useful life...(Solved)

    (a) The following information relates to the property, plant and Equipment of Annex construction Limited as at 1 st October 2010: Asset Cost Accumulated Depreciation Estimated useful life (years) Sh. "000" Sh. "000" Sh. "000" Freehold Land 60,000 - - Buildings: Factory 150,000 30,000 50 :Office premises 180,000 30,000 45 Plant and Machinery 475,000 365,000 10 Computers 295,000 85,000 4 Motor Vehicles 50,000 35,000 4 Furniture and Fittings 100,000 40,000 5 Additional information 1. None of the assets was fully depreciated as at the end of the year 2. The following assets were acquired on 1st April 2011 Sh. “million” Plant and Machinery 100 Computers 8 Motor Vehicles 28 3. On 1st April 2011, Motor vehicles with a cost of sh. 6,000,000 were disposed of for sh. 2 million. The cumulative depreciation on the Motor vehicles as at 1st October 2010 was sh. 5 million. 4. Freehold Land and Buildings were revalued on 2nd October 2010 as follows Sh. “million” Freehold Land 400 Buildings: Factory 240 : Office Premises 150 5. Depreciation is provided on a prorate basis from the date of acquisition using the straight-line method 6. Assume nil residue value for the assets Required: (a) The company’s property, Plant and Equipment movement schedule for the year ended 30th September 2011 (b) Define an intangible asset (c) Outline four ethical issues that guide accountants while executing their duties

    Date posted: October 3, 2022.  

  • Chungala limited is a public company incorporated to trade on recycled products. The accountant presented the finance manager the following financial statements for the years...(Solved)

    Chungala limited is a public company incorporated to trade on recycled products. The accountant presented the finance manager the following financial statements for the years 2010 and 2011 Sh. "millions" Sales 9,348 Cost of sales (5,688) Gross profits 3,660 Distribution costs (1,128) Administrative expenses (1,200) Operating profit 1,332 Gain on disposal 20 interests paid (60) Profit before tax 1,292 Income tax expense (304) Profit after tax 988 Dividends (300) Retained profits for the year 688 Retained profits brought forward 1616 Retained profits carried forward 2,304 Chungana Ltd Statement of financial position as at 30 September 2011 2010 Sh. "million" Sh. "million" Non-Current Assets Plant and Equipment 6,400 5,200 Motor Vehicles 2,400 1,600 8,800 6,800 Current Assets Inventory 300 240 Accounts receivables 124 100 Bank balances 216 140 640 480 Total assets 9,440 7,280 Equity and Liabilities Ordinary Share Capital (sh. 10 each) 5,200 4,800 Share premium 880 320 Retained profits 2,304 1,616 8,384 6,736 Non-Current Liabilities Long term loan 320 80 Current Liabilities Accounts payables 96 56 Taxation 480 320 proposed dividends 160 88 736 464 Total capital and Liabilities 9,440 7,280 Additional Information 1. During the year, plant worth sh. 2,200,000 was acquired and Motor vehicles which had cost sh. 200,000,000 were disposed of. 2. The book values of the plant and Equipment and Motor Vehicles comprise Plant and Equipment Motor Vehicles 2010 2012 2010 2012 Sh. Million Sh. Million Sh. Million Sh. Million Cost 6,120 7,700 1,920 2,880 Accumulated depreciation (920) (1,300) (320) (480) Net Book Value 5,200 6,400 1,600 2,400 3. Administration expenses comprise Sh. Million Depreciation Plant and equipment 840 Motor Vehicles 300 Others 60 1,200 4. Gain on disposal comprises Sh. Million Gain on disposal of Plant and equipment 40 Loss on disposal of Motor Vehicles (20) 20 Required: Statement of cash flows for the year ended 30th September 2011 in conformity with the requirements of International Accounting Standard (IAS 7), “Statement of Cash flows”

    Date posted: October 3, 2022.  

  • The following trial balance was extracted from the books of Malezi Ltd as at 31st October 2011: ...(Solved)

    The following trial balance was extracted from the books of Malezi Ltd as at 31st October 2011: Sh. "000" Sh. "000" Buildings (Cost) 10,000 Plant and Equipment (Cost) 1,400 Motor Vehicles (Cost) 320 Accumulated Depreciation (1 November 2010) Buildings 4,000 Plant and Equipment 480 Motor vehicles 120 Cash at Bank 100 Inventory (1 November 2010) 2,200 Administrative expenses 2,206 Distribution costs 650 Suspense 1,500 Retained earnings 360 Trade receivables 876 Purchases 4,200 Dividends paid 200 Sales revenue 11,752 Value added Tax (VAT) Payable 1,390 Trade payables 1,050 Share premium 500 Ordinary Shares of sh. 100 each 1,000 22,152 22,152 Additional information 1. Inventory as at 31st October 2011 was valued at sh. 1,600,000 2. Depreciation is to be provided as follows Assets Rate per annum Buildings 5 % on straight line Plant and Equipment 20 % on reducing balance Motor vehicles 25 % on reducing balance Depreciation is to be charged to administration expenses 3. The directors do not propose payment of dividends 4. An allowance for bad debts of sh. 76,000 is to be made relating to a customer who was declared bankrupt. A further allowance for doubtful debts of 5 % is to be made with respect to the trade receivables as at 31st October 2011 5. The suspense account of sh. 1,500,000 relates to 10,000 new ordinary shares which were issued at par value of sh. 150 each on 1st October 2011 Required: (a) Statement of comprehensive income for year ended 31st October 2011 (b) Statement of financial position as at 31st October 2011

    Date posted: October 3, 2022.  

  • The estimates and expenditure details relating to the ministry of Youth and social services for the year 2010/2012 were as follows Code Details ...(Solved)

    The estimates and expenditure details relating to the ministry of Youth and social services for the year 2010/2012 were as follows Code Details Original estimates Actual expenditure Sh. "millions" Sh. "millions" 010 Personal emoluments 288 324 050 House allowances 54 46.8 080 Passage and leave 18 16.2 115 Travelling expenses 79.2 82.8 140 Electricity and water 21.6 23.4 221 Purchase of Equipment 180 144 640 Appropriation-in-Aid 54 43.2 Supplementary estimates authorized during the year were as follows 010 Personal emoluments Sh. 28.8 million (increased) 115 Travelling expenses Sh. 7.2 million (reduced) Required: Appropriation account for the year ended 30June 2011, showing the net surplus to be surrendered to the exchequer

    Date posted: October 3, 2022.  

  • In the context of public sector accounting, explain the following terms: (i) Vote book (ii) Trust fund (iii)Capital project fund(Solved)

    In the context of public sector accounting, explain the following terms: (i) Vote book (ii) Trust fund (iii)Capital project fund

    Date posted: October 3, 2022.  

  • Outline five components of a computerized accounting system.(Solved)

    Outline five components of a computerized accounting system.

    Date posted: October 3, 2022.  

  • The financial statements of Wendani Limited for the year ended 31st January 2011 and 31st January 2012 are given below Statement of financial position as at...(Solved)

    The financial statements of Wendani Limited for the year ended 31st January 2011 and 31st January 2012 are given below Statement of financial position as at 31st January 2011 2012 Sh. '000' Sh. '000' Assets Non-Current Assets (Net Book Value) 11,000 14,000 Current Assets Inventory 2,000 3,000 Trade receivables 2,500 2,800 Bank balance - 500 4,500 6,300 Total Assets 15,500 20,300 Equity and Liabilities Capital and Reserves 1,000,000 ordinary shares of sh. 10 each 10,000 10,000 Revenue Reserves 3,000 4,100 13,000 14,100 Non-Current Liabilities 8% debentures - 5,000 Current Liabilities Trade payables 1,500 1,200 Bank Overdraft 1,000 - 2,500 1,200 Total Capital and Liabilities 15,500 15,300 Income Statement for the year ended 2011 2012 Sh. '000' Sh. '000' Sales 20,000 28,000 Cost of sales (15,000) (21,000) Gross profits 5,000 7,000 Administrative expenses (3,800) (4,600) Finance costs - (400) Net profit 1,200 2,000 Inventory as at 1st February 2010 was sh. 5,000,000 Required: For each year, compute the following (i) Gross profit margin (ii) Inventory turnover (iii) Return on Equity (iv) Return on assets (v) Acid test ratio (vi) Current ratio (vii) Financial leverage (b) Comment on the liquidity of the company

    Date posted: October 3, 2022.  

  • Explain three reasons why the amount of cash flows of a business entity might differ from the profits generated by the business entity during the same...(Solved)

    Explain three reasons why the amount of cash flows of a business entity might differ from the profits generated by the business entity during the same period

    Date posted: October 3, 2022.  

  • The following assets and liabilities were extracted from the books of Sparrows Sports Club as at 31st March: ...(Solved)

    The following assets and liabilities were extracted from the books of Sparrows Sports Club as at 31st March: 2011 2012 Sh. '000' Sh. '000' Equipment 18000 16000 Furniture and fittings 1200 1000 Subscription in arrears 130 100 Subscription in advance 600 500 Inventory of stationary 15 5 Bar inventory 3500 ? Cash at Bank 1000 ? Petty cash 25 15 Bar payables 700 1000 Accrued electricity 30 40 The summary of receipts and payments for year ended 31st March 2012 was as follows: Receipts Payments Sh. 000 Sh. 000 Subscriptions 4,400 Bar takings 20,000 Entry fees 390 Bar payables 13,700 petty cash 180 New equipment 2,000 Cash refund to members 200 Electricity and water 400 Barman's wages 1,600 Bar glasses 100 Repairs and maintenance 300 Rates and insurance 160 Honoraria to treasurer 290 Additional information 1. The club maintains a uniform gross profit margin of 25% on bar sales 2. The bar glasses are considered as revenue expense 3. The bar man is entitled to an annual bonus of 10% of bar net profit after charging the bonus 4. The petty cash was used to buy stationary only 5. Subscriptions received during the year included sh. 400,000 being arrears of previous year. It’s the policy of the club to write off arrear of more than one year Required: (a) Bar income statement for the year ended 31st March 2012 (b) Subscriptions account (c) Income and expenditure account (d) Statement of financial position as at 31st March 2012

    Date posted: October 3, 2022.  

  • Ababu and Babu are partners in a bookshop business sharing profits and losses in proportion of 2/5 and 3/5 respectively. The trial balance extracted from...(Solved)

    Ababu and Babu are partners in a bookshop business sharing profits and losses in proportion of 2/5 and 3/5 respectively. The trial balance extracted from the books of the partnership as at 30th April 2012 was as follows: Sh. Sh. Capital accounts Ababu 4,225,000 Babu 2,600,000 Drawings Ababu 585,000 Babu 520,000 Trade payables 832,000 Office furniture (Net Book Value) 325,000 Accounts receivables 2,632,500 Rent 243,750 Postage and telephone 276,250 Gross profit 4,628,000 Bank 910,000 Salaries and wages 1,706,250 Printing and stationary 80,600 Commission paid 325,000 Insurance 130,000 Motor Vehicles (Net Book Value) 1,680,900 Plant and machinery (net Book Value) 2,275,000 Capital (Chango) 585,000 Current Accounts Ababu 130,000 Babu 104,000 Cost of sales 5,674,500 Cash 341,250 Inventories (30th April 2012) 812,500 5,674,500 18,648,500 18,648,500 Additional information 1. The partners agreed to admit Chango as a partner on 1 February 2012. Prior to admission, Chango was a manager in the firm earning a salary of sh. 228,930 per annum which has been accounted for proportionately 2. Chango brought in capital of sh. 585,000 in cash and was thereafter entitled to 1/5th of the firm’s profits. The balance to be shared in the old profit sharing ratio. Chango was to stop receiving salary but was granted a minimum share of profit equal to his salary 3. Chango was also to bring his personal vehicle valued at sh. 325,000 for use in the business 4. Insurance paid in advance and rent outstanding as at 30th April 2012 were sh. 32,500 and sh. 24,050 respectively 5. Bad debts of sh. 32,500 arising before Chango’s admission was to be written off 6. A provision of 1% of outstanding debtors was to be maintained from the date of changes admission 7. Depreciation was to be provided as follows Asset Rate Office Equipment 15% on reducing balance Motor vehicles 20% on book value Plant and machinery 10% on Book value 8. Partner’s goodwill on admission of Chango’s admission was agreed at sh. 650,000 and is not to be retained in the books 9. No interest was to be allowed on capital or charged on drawings Required: (i) Income statement for the year ended 30th April 2012 (ii) Partner’s current accounts (iii) Partner’s capital accounts

    Date posted: October 3, 2022.  

  • “Contemporary organizations are striving to adopt professional ethics in their operations.” Identify the common barriers to the successful adoption of ethical standards in business practice.(Solved)

    “Contemporary organizations are striving to adopt professional ethics in their operations.” Identify the common barriers to the successful adoption of ethical standards in business practice.

    Date posted: October 3, 2022.  

  • Jitahidi limited was incorporated in the year 2010 and specializes in the manufacturing of electric cables branded “Nyaya”. The following trial balance was extracted from...(Solved)

    Jitahidi limited was incorporated in the year 2010 and specializes in the manufacturing of electric cables branded “Nyaya”. The following trial balance was extracted from the books of the company as at 30th April 2012. Sh. '000' sh. '000' Inventories (1st May 2011) Raw materials 6,000 Work in progress 7,000 Finished Goods 8,000 Purchases of raw materials 82,000 Sales 184,700 Trade receivables and payables 9,000 6,000 Bank balance 5,200 Carriage inwards 3,000 Direct Labor 16,000 Provision for unrealized profits 1,600 Electricity and water 9,600 Rates and insurance 5,200 Distribution costs 2,000 Administrative expenses 1,880 Land (cost) 45,000 Buildings (cost) 125,000 Plant and machinery (cost) 20,000 Motor vehicles (cost) 16,000 Equipment (cost) 10,000 Accumulated depreciation (1 May 2011) Buildings 5,000 Plant and machinery 8,000 Motor vehicles 4,000 Equipment 6,000 15% debentures 8,000 Interest on debentures paid 1,200 Ordinary shares of sh. 20 each 100,000 Share premium 10,000 Retained earnings 38,780 372,080 372,080 Additional information 1. Inventories as at 30th April 2012 were as follows: Sh. ‘000’ Raw materials 7,200 Work in progress 2,000 Finished goods 9,500 Raw materials included damaged items costing sh. 600,000 which could realize sh. 500,000 after incurring an additional cost of sh. 100,000 2. Sales included goods worth sh. 500,000 sent on sales or return basis to a customer. The customer has not confirmed. The cost price was sh. 300,000 and no record has been made. 3. It’s the policy of Jitahidi limited to transfer the finished goods to trading at cost plus a mark-up of 25% 4. Accrued electricity as at 30th April 2012 amounted to sh. 400,000 while prepaid insurance was sh. 200,000 5. Depreciation is charged on a straight-line basis as follows Asset Rate per annum Buildings 2% Plant and machinery 20% Motor vehicles 25% Equipment 20% 6. Costs are allocated as follows Factory (%) Distribution Costs (%) Administration expenses (%) • Depreciation Buildings 80 10 10 Plant and machinery 100 - - Equipment - 50 50 Motor vehicles - 60 50 • Rates and insurance 60 20 20 • Electricity and water 60 20 20 7. A provision for corporation tax amounting to sh. 14,350,000 is to be made Required: Manufacturing account and income statement for the year ended 30th April 2012

    Date posted: October 3, 2022.  

  • (a) In relation to public sector accounting, explain the following concepts: (i) Fund accounting. (ii) Commitment accounting. (iii) Cash accounting. (b) The following balances were extracted from the records...(Solved)

    (a) In relation to public sector accounting, explain the following concepts: (i) Fund accounting. (ii) Commitment accounting. (iii) Cash accounting. (b) The following balances were extracted from the records of Ben Juma, a sole trader as at 31 March: 2011 2012 Sh. “000” Sh. “000” Land and Buildings 2,000 2,000 Equipment 800 640 Furniture and Fittings 400 320 Motor Vehicles 1,000 750 Inventory 600 ? Trade receivables 900 1,200 Prepaid rates 30 40 Bank 270 2,605 15% bank loan 2,000 1,000 Trade payables 450 500 Accrued electricity 50 80 Additional information 1. Total sales amounted to sh.60,000,000, while purchases amounted to sh.42,200,000. There were no cash sales nor cash purchases. 2. Total discount allowed and discount received amounted to sh.160,000 and sh.150,000 respectively. Bad debts written-off during the year amounted to sh.40,000 3. During the year, Ben Juma purchased a new equipment costing sh.100,000. 4. The following expenses were paid by cheque during the year: Sh. “000” • Staff salaries 6,035 • Rates, insurance and electricity 3,880 • Interest on loan 150 5. On 30 September 2011, Ben Juma repaid part of the loan by cheque of sh.1,000,000. 6. Ben Juma did not maintain records on cash withdrawn from the bank for personal use, so the deficit in bank is due to personal drawings. 7. Ben Juma makes a uniform gross profit to cost of sales of 3/7 every year. Required: (i) Income statement for the year ended 31 March 2012. (ii) Statement of financial position as at 31 March 2012.

    Date posted: September 30, 2022.  

  • (a) Outline four reasons for developing accounting standards. (b) The following balances were included in the statement of financial position of Big Movers Limited as at...(Solved)

    (a) Outline four reasons for developing accounting standards. (b) The following balances were included in the statement of financial position of Big Movers Limited as at 1st July 2011: Cost Accumulated depreciation Net book value Sh. “000” Sh. “000” Sh. “000” Land 40,000 - 40,000 Buildings 22,000 8,000 14,000 Plant and Machinery 16,000 6,000 10,000 Motor Vehicles 6,000 2,000 4,000 During the year ended 30 June 2012, the following transactions took place: 1. On 1 January 2012, a plant that had cost sh.3,000,000 and had a cumulative depreciation of sh. 2,300,000 as at 30 June 2011 was sold for sh.500,000. A new plant was then purchased at a cost of sh.4,000,000. 2. On 1 January 2012, a professional valuer was engaged and the buildings were revalued at sh.34,000,000. 3. On 1 April 2012, a motor vehicle was purchased at sh.300,000. Part of the purchase price was settled by exchanging another motor vehicle at an agreed value of sh.120,000 and the balance paid for in cash. The trade-in-vehicle had cost sh.200,000 and had a book value of sh.100,000 as at 30 June 2011. The company charges depreciation at the following rates Asset Rate per annum Land - Buildings 2% on cost Plant and machinery 15% on cost Motor vehicles 20% on cost A proportionate charge is made in the year of purchase, sale or revaluation of an asset. Required: (i) Building account. (ii) Provision for depreciation on building account. (iii) Plant and machinery account. (iv) Provision for depreciation on plant and machinery account. (v) Motor vehicle account. (vi) Provision for depreciation on motor vehicle account. (vii) Property, plant and equipment movement schedule for the year ended 30 June 2012.

    Date posted: September 30, 2022.  

  • (a) Summarize three advantages and three disadvantages of computerized accounting system. (b) Alpha Limited offered 200,000 ordinary shares for subscription at sh.10 par value. The shares...(Solved)

    (a) Summarize three advantages and three disadvantages of computerized accounting system. (b) Alpha Limited offered 200,000 ordinary shares for subscription at sh.10 par value. The shares were payable as follows: • On application - sh.2.00 • On allotment - sh.3.00 • First call - sh.2.50 • Second and final call - sh.2.50 Applications were received for 280,000 shares The directors allotted the 200,000 shares as follows 160,000 shares - full allotment 80,000 shares - allotted 40,000 shares 40,000 shares - rejected The money paid on application by unsuccessful applicants were refunded. However, it is the company’s policy to retain excess application money for the partially successful applicants. The excess application money is used to reduce the allotment money due. All the monies on both calls were received except for 5000 shares. These shares were forfeited and later reissued as fully paid at sh.9 each. Required: Ledger accounts to record the above transactions.

    Date posted: September 30, 2022.  

  • The financial statements of Platinum Limited for the year ended 31 October 2012 were as follows: Platinum Limited Income Statement for the year ended 31 October, 2012 ...(Solved)

    The financial statements of Platinum Limited for the year ended 31 October 2012 were as follows: Platinum Limited Income Statement for the year ended 31 October, 2012 Sh. "000" Sales 22,977 Cost of sales (16,326) Gross profit 6,651 Distribution cost (1,125) Administration expenses (2,376) Operating profit 3,150 Interest received 225 Interest paid (675) Profit before tax 2,700 Income tax expense (1,260) Profit for the period 1,440 Platinum Limited Statement of Financial Position as at 31 October 2012 2011 Assets Sh. "000" Sh. "000" Sh. "000" Sh. "000" Non-current assets Property, plant and Equipment: Cost 6,480 5,355 Depreciation (3,060) 3,420 (2,610) 2,745 Intangible assets 2,250 1,800 Investments - 225 5,670 4,770 Current Assets Inventory 1,350 918 Trade receivables 3,510 2,835 Short term investments 450 - Bank balance 18 5,328 9 3,762 Total Assets 10,998 8,532 Equity and Liabilities Equity Share capital (sh.100 ordinary shares) 1,800 1,350 Share premium account 1,440 1,350 Revaluation reserve 900 819 Retained earnings 2,340 6,480 1,620 5,139 Non-Current liabilities Long-term loan 1,530 450 Current Liabilities Trade payables 1,143 1,071 Bank overdraft 765 882 Tax payable 1,080 2,988 990 2,943 Total Equity and liabilities 10,998 8,532 Additional information: 1. The proceeds from the sale of non-current assets investment amounted to sh. 270,000 2. Equipment with an original cost of sh.765,000 and a net book value of sh.405,000, were sold for sh.288,000 during the year 3. 4,500 ordinary shares of sh.100 each were issued during the year at a premium of sh.20 per share. 4. Dividends totaling sh.720,000 were paid during the year. Required: Statement of cash flows for the year ended 31 October 2012, in accordance with the requirements of International Accounting Standard (IAS) 7, “statement of cash flows”.

    Date posted: September 30, 2022.  

  • (a) Briefly explain why goodwill should be paid under the following circumstances: (i) By a partner on admission to a partnership. (ii) To a partner on retirement...(Solved)

    (a) Briefly explain why goodwill should be paid under the following circumstances: (i) By a partner on admission to a partnership. (ii) To a partner on retirement from a partnership. (b) Abdi, Bob and Caleb are in partnership sharing profits and losses equally after allowing for interest on capital at 5% per annum to the partners and a salary to Bob of sh.30,000 per month. The trial balance of the partnership as ta 31 September 2012 was as follows: Sh. "000" Sh. "000" Capital accounts: Abdi 3,500 Bob 3,000 Caleb 2,000 Current accounts: Abdi 300 Bob 400 Caleb 300 Drawings: Abdi 400 Bob 500 Caleb 300 Sales 30,000 Inventory (1 October 2011) 4,000 Purchases 20,300 Operating expenses 7,400 Loan: Bob (interest at 10% per annum) 2,000 Caleb (interest at 10% per annum) 3,000 Land 2,000 Buildings 6,000 Plant and Machinery (cost) 8,000 Accumulated depreciation (30 September 2012) 5,000 Accounts receivable/accounts payable 5,000 4,300 Cash at bank 100 53,900 53,900 Additional information: 1. Closing inventory as at 30th September 2012 was valued at sh.3,400,000 2. Interest on partner’s loan had not been paid. 3. Sales included credit sales of sh.700,000 in respect of two items sold on the basis of confirmation by the customer. The items had cost sh.200,000 each. 4. On 1 April 2012, the terms of the partnership agreement were changed. The new terms provided for: • Profit sharing ratio of 5:3:2 for Abdi, Bob and Caleb respectively. • Interest on capital at 5% per annum • Salaries of sh.15,000 per month for Bob and Caleb. 5. For the purpose of the change, goodwill was valued at sh.1,200,000 and was to be written off immediately while the land and buildings were valued at sh.3,000,000 and sh.7,400,000 respectively. Required: (i) Income statement and appropriation account for the year ended 30 September 2012. (ii) Partner’s current accounts. (iii) Statement of financial position as at 30 September 2012.

    Date posted: September 30, 2022.  

  • (a) Explain the following terms as used in the context of public sector accounting: (i) Public accounts committee (PAC). (ii) Appropriation-In-Aid (AIA). (iii) Public Investment committee (PIC). (b) The...(Solved)

    (a) Explain the following terms as used in the context of public sector accounting: (i) Public accounts committee (PAC). (ii) Appropriation-In-Aid (AIA). (iii) Public Investment committee (PIC). (b) The approved estimates and actual expenditure details for the ministry of Gender and Culture for the financial year ended 30 June 2012 were as follows: Vote no. Details Approved estimates Actual expenditure Sh. "000" Sh. "000" S001 Travelling and accommodation 32,100 31,200 S004 Commuter allowances 8,400 7,200 S010 Passage and leave expenses 80,120 75,600 S120 Communication expenses 6,110 5,880 S121 Staff development 10,120 8,440 S124 Vision 2030 flagship 7,150 7,850 S144 Purchase of computers 12,140 10,940 S300 Appropriation-In-Aid 6,000 14,500 S184 Personnel emoluments 241,800 212,300 S200 Miscellaneous expenses 34,480 32,150 S210 Transport expenses 8,300 7,900 S215 Housing allowance 41,300 37,200 The ministry made four equal withdrawals from the Exchequer of sh.110,000,000 each. Required: (i) Paymaster general account. (ii) The Exchequer account. (iii) General account of Vote (iv) Statement of Assets and liabilities as at 30 June 2012

    Date posted: September 30, 2022.  

  • The following is a receipt and payment account as reported by the treasurer of Mambula Sports Club for the year ended 31 December 2012. Receipts ...(Solved)

    The following is a receipt and payment account as reported by the treasurer of Mambula Sports Club for the year ended 31 December 2012. Receipts Sh. "000" Balance at 1 January 2012: Bank 3,000 Cash in hand 400 Subscription received 9,600 Canteen sales 2,700 Donation (for purchase of bus) 2,000 Dinner dance ticket sales 1,800 Bank interest 360 Investment income 600 20,460 Payments Canteen purchases 2,010 Water and electricity 270 Sports Equipment 2,000 Canteen attendant wages 300 Canteen expenses 150 Secretary's honoraria 4,500 Training fee 1,500 Grounds man (field) wages 1,200 Field maintenance and repairs 540 Dinner dance expenses 900 Transport and travelling expenses 1,260 Closing balance (31 December 2012): Bank 3,000 Cash in hand 2,830 20,460 The balances of assets and liabilities as at 31 December 2011 and 2012 were as follows: 2011 2012 Sh. "000" Sh. "000" Sports equipment 2,400 ? Club house at cost 9,200 9,200 Furniture and Fittings at cost 1,800 1,800 Canteen stock 600 750 Subscription in arrears 720 840 Subscription in advance 540 1,380 Water bills outstanding 90 220 Canteen creditors 270 360 Accumulated depreciation: Sports equipment 840 ? Furniture and Fittings 540 ? Investment 2,400 2,400 Additional information: 1. Subscriptions money received related to the following periods: Year Sh. "000" 2011 600 2012 7,620 2013 1,380 It is the policy of the club to write-off subscription in arrears after 12 months 2. Depreciation is to be charged on the cost of assets in existence at the end of the financial year as follows: • Furniture and Fittings at 10% per annum • Sports Equipment at 20% per annum 3. During the year, sports equipment was sold for sh.600,000 to club members on credit. These equipment had cost sh.1,200,000 and had been used for two years. 4. Cash sales for the canteen on the last day of the year amounting to sh.300,000 were omitted in the records as well as on the cash reported. Required: (a) Canteen income statement for the year ended 31 December 2012. (b) The club’s income and expenditure account for the year ended 31 December 2012. (c) Statement of financial position as at 31 December 2012.

    Date posted: September 30, 2022.