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1980
SECTION I
Answer all THREE questions in this section.
1.
The following information pertains to Jack and Jill who entered into a business
partnership on August 1, 1979 as sellers of fresh fruit. They agreed to share
profits in the ratio of 5: 3 respectively.
Trial Balance on July 31, 1979
Purchases
Petty Cash
Creditors
Office Salaries
Stock (August 1, 1978)
Current Accounts
Jack
Jill
Bank Overdraft
Rent and Electricity
Furniture
Debtors
Provision for Bad Debts (August 1, 1978)
Discounts
Selling Expenses
Water Rates
Sales
Carriage Inwards
Sales Returns
Bank Interest
Capital Accounts
Jack
Jill
$
51 490
42
$
6 100
5 180
6 200
4 500
3 000
1 000
1 100
920
4 000
200
1 900
250
340
315
66 096
320
214
35
3 000
2 500
79 351
79 351
Additional Notes
(i)
It was decided to write $80 off debtors as bad debts and reduce the
provision for bad debts to $250.
(ii)
(iii)
It had been agreed during the year that as from February 1, 1979 profits
and losses should be divided equally (it is assumed that profits accrues at
an even rate month by month)
(iv)
(v)
It was agreed to allow Jack $100 and Jill $160 for expenses incurred on
behalf of the business during the trading period
(vi)
(vii)
The Trading and Profit and Loss Accounts for the year ended July 31,
1979 and Statement of Assets and Liabilities as at that date.
You are required:
(i)
(ii)
2.
$37 (dr)
$85 (cr)
$108 (dr)
$60 (dr)
On September 15, $120 was paid for insurance of which $32 was a
prepayment for the new financial year.
(ii)
$280
$230
$150
$210
The annual rent of $650 is paid quarterly in advance on March 31, June
30, September 30 and December 31.
(iv)
(a)
(b)
Starting with the opening balances write up the four accounts for the year
taking care to show the appropriate transfers to the Profit and Loss
Account at the end of the year.
(c)
How your you interpret a debit and credit balance in the accounts you
have worked.
(24 marks)
SECTION II
Answer any TWO questions in this section.
(a)
(b)
Define the terms current assets and current ratio as used in accounts.
Prepare a table to show
(i)
(ii)
to indicate no effect
to indicate a decrease
3.
TotalUltimate Effect
Current Assets
Current Ratio
Merchandise is
purchased on credit
(ii)
(iii)
(iv
(v)
(vi)
(vii)
(viii)
A wholly depreciated
asset is retired
(ix)
on Net Profit
On August 1 you prepared a Sales Ledger Control Account to verify the work of
the Sales Ledger Clerks. The following data is available:
July 1 (Beginning of Accounting year)
Debtors $6 000
Month of July
$
5 000
Sales
Returns
150
4 500
Discount deductions
80
30
45
(a)
Show what the account looked like at the end of the exercise.
(b)
Later in the month (August 25) the Sales Ledger Clerks had balance
$4 800. On the night on which the balances were computed burglars stole
most of the goods, the sales ledger, sales day book and sales invoices.
You, however, have the following data so far for the month:
$
5 000
45
30
Using a continuation of the above Control Account find the Sales (less
returns) August 1 25.
(c)
From the final accounts on July you find that the stock was valued
at $3 000 and the Gross Profit is normally one-firth of sales. Purchases of
goods from July 1 to August 25 amounted to $8 000. The value of the
goods left on the floor by the burglar was $250. If you claimed on your
insurance company and it offered you $6 000 as compensation for goods
stolen, what would be your reaction?
(d)
5.
(a)
(c)
6 000
550
35 000
Factory Wages
15 000
Rent and Insurance
600
Electricity
80
580
Work-in-progress
700
Finished Goods
3 000
1 200
Factory Salaries
1 900
200
500
Work in progress
700
Finished Goods
3 000
(24 marks)
6.
The balances on the books of the Golden Age Club at 31 March 19-8 were as
follows:
Accumulated Fund
Furniture at March 31, 19-7
$
262
84
54
29
89
20
36
Restaurant Takings
1 616
Bar Takings
1 305
Billiard Takings
256
515
Interest on Deposit
1 078
822
349
Wages
623
179
175
Sundry Expenses:
Insurance
Other Expenses
100
34
134
13
91
283
74
175
You are required to prepare separate Trading Accounts for the Restaurant and
Bar and Income and Expenditure Account for the year to March 31, 1978
together with Balance Sheet at that date after making adjustments for the
following:
The staff wages due are estimated at $275 of which $250 is to be charged to
restaurant and $25 to the Bar.
Stocks at March 31, 19-8
Restaurant
Bar
$3
$29
Depreciation
Furniture
Fixtures
Billiard Table and Accessories
10%
5%
15%
(24 marks)