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Centre Number Candidarc Number

ZIMBABWE SCHOOL EXAT{INATIONS COUI\CIL

General Certificate of Education Advanced Level

ACCOUNTING 9T97/2
PAPER 2 Structured Questions

JUNE 2014 SESSION t hour 30 minutes

Candidates answer on the question paper

Additional materials:
No additional materials are required

TIME t hour 30 minutes

INSTRUCTIONS TO CANDIDATES
Write your name, Centre number and candidate number in the spaces at the top of this page.

Answer all questiors.

\\'rite your answers in the spaces provided on ihe question paper. If you require exta paper,
ask the supervisor for supplementary answer paper.
FOR EXAMTNER'S USE
II{F'ORMATION T"OR CAT.{DIDATES I
The number of marks is given in brackets [ ] at the end of
j
each question or part question.

You may use a calculator. 3

TOTAL

This question paper consists of 12 printed pages.

Copyright: Zimbabwe School Examinations Council, J2014'
@ZIMSEC J2014 [Turll over
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Sharma Ltd had the following motor vehicles on 1 January 2010: it*
lf-rrrrirg'g
Registration Date of
Purchase
Cost
$
lu*
Number

BJ 119 i January 2007 18 000

BJ 720 I July 2007 20 000
CD 481 1 October 2008 25 000

During the year ended 3 1 Decemb er 2070, the following transactions occurred:

(i) on 1 January vehicle BJ 119 was sold for $7 700 cash and replaced by
DX248 which was bought from Mike l{arris for $30 000 cash'

(ii) On I April vehicle BJ 72A was traded in and replaced bi' DX 996'
Mike Harris offered a trade-in allowance of $8 700 and allorved
Sharma one month's credit. The cost of DX 996 rvas $30 000'

Shanna depreciates motor vehicles al20oh per annum on cost'

(a) For the ycar ended 31 December 2010, Prepare:

(i) the Motor Vehicles Account,

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(i0 the Provision for depreciation Account,

(iii) the Disposal Account.

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method
(b) Give two reasons to justify sharma's use of the straight line
to depreciate motor vehicles'

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losses in
Barbara, Lynn and Norma are in partrership, sharing profitl and
the ratio 3:i:1 respectivell'. They provide the following information:

$ $
Non-current(fi xed) assets 103 000
Current assets
Inventory (stock) 16 500
Trade receivables (debtors) 18 500
Bank 20 000 55 000
u&000
Caoital accounts
Barbara 60 000
Lynn 50 000
Norma 40 000 150 000

Current liabiiities
Trade payables (creditors) 8 000
i58 000

Norma decided to retire on 31 December 2010. The partners agreed

to the foliowing:

(i) Non-current assets were to be revalued at $150 000' /

(ii) Inventory was valued at $16 000.

(iiD Trade receivables were valued at $17 000.

(iv) Goodwill was valued at $15 000 but was not to appear in the
books of account.

(") Norma was to be paid $i5 000 from the bank account and have
the remaining balance due to her transferred to a 10% loan
account.

(vi) Barbara and Lynn were to continue in business, sharing profits

and losses in the ratio 3:2 respectively.

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(a) Explain why the partners revalued their assers on 31 December 2010. Brlnlnil'a
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(b) Give one reason why Barbara and Ly'nn decided not to keep goodwill
in their books.

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(c) Prepare the Revaluation Account on 31 December 2010.

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(d) Prepare the Capital Accounts in columnar form. i,*

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(e) Prepare the Statement of Financial Position (Balance Sheet) of Barbara

and Lynn at 31 December 2010, follou'ing Norma's retirement.

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Hearthrobe Ltd provides the folloriing infonnation:

Statement of Financial Position (Balance Sheet) as at December 2010.

s
Non-current assets 1 600 000
Current assets 300 000
1 j00_000

Eouitv
Ordinary shares of $0,50 each 800 000
10% $1 Redeemable preference shares 200 000
Share premium 250 000
Revaluation reserye 1 50 000
Retained earnings 400 000
I 800 000
Current liabilities r00 000
l-9!0_000
On 31 December 2010, Hearthrobe Ltd made a rights issue of 400 000
ordinary shares at a premium of l0 cents per share. Immediately after the
rights issue. a bonus issue of one ordinary share for every five (including
rights issue shares) held was made. The company maintains roserves in their
most flexible form.

(a) State two advantages of a rights issue over a public issue ordinary
share.

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(b) Prepare the statement of Finaneiai Position (Balance sheet) of ir.

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Hearthrobe Ltd immediately after the above transactions are completed.

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The Statement of Financiai Position (Balance Sheet) of Hearthrobe Ltd on

31 Decernb er 7Al2 appeared as follows:
s
Non-cwrent assets 2 000 000
Cwrent assets 600 000
2600_000
Equitv
Ordinary shares of $0,50 each 1 400 000
10% $1 Redeemable preference shares 200 000
Share premium 300 000
Retained earnings 500 000
2 400 000
Cunent liabili-ties. 200 000
2_600_000

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On i.Ianuary 2013,itwas decided to redeem all the preference shares

at $1,15 each. The shares had originally been issued at $1,10 each.
In order to provide funds for the redemption, Hearthrobe Ltd issued a
further 250 000 ordinary shares at 60 cents each.

(c) Preparejournal entries to record the above transactions.

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(d) Explain when and why a capital Redemption Reserve is created.

4 Noni supplies the foilo*'ing budgeted information relating to her business:

Aug Sept Oct Nov Dec

s$ s S S

Sales 70 000 80 000 80 000 85 000 78 000

Purchases 40 000 42 000 44 000 48 000 38 000
General
expenses 25 000 24 000 25 000 26 000 26 000

The foilowing wiil appli'' in the period ending 31 December.

(i) A neu'computer will be purchased for $4 500 cash in October.

(ii) Old computers with a book value of $400 \irill be sold for $500 cash
in November.

(iii) 60% of sales will be on credit.

(iv) 7Ao/o of paf in the rnonth following the sale. The

eredit customers
remainder pay in the month after that, except for 2%o of total medit
customers who never pay at all.

(v) 30% of purchases will be for cash,

(ri) Credit suppliers are paid two months after purchase.

(vii) General expenses are paid as incrured.

(viii) The cash balance at 1 October will be $750.

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11

Itra
F-nnltd.
(a) Prepare a cash budget for each of the three months to 3l December. lur

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(b) calculate the value of trade receivables at 31 December. 1,.

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(c) Explain the term pr incipal budget factor '

121

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ZIJMIB. ABWE SCHOOL EXAMII{ATIOI{S C OUI{CIL
General Certificate of Education Advanced Level

ACCOUNTII{G 9197 t3
PAPER 3 Case Study

NOVEMBER 2O1O SESSION 2 hours 30 minutes

Additional materials:
- Answer paper

TII\{E 2 hours 30 n:inutes

INSTRUCTIONS TO CANDIDATES

Write your name, Centre number and candidate number in the spaces provided on the answer
paper/answer booklet.

Answer all questions.

Write your answers on the separate answer paper provided.

Ifyou use rnore than one sheet ofpaper, fasten the sheets together.

INFORMATION FOR CANDIDATES

The number of marks is given in brackets [] at the end of each question or part question.
All accounting statements are to be presented in good sty le. Workings should be sho'a,n.

You should read the Instructions at the top of page 2 before answering the questions.

You may use a calculator.

The businesses in this question paper are intended to be fictitious.

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This question paper consists of 8 printed pages.

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OZIMSEC N2O IO
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Instructions

Each scenario in this case studY describes an event in the life of a business and is follorved by a
question. Answer all questions. You are advised to answer the questions in the order in which
they are set.

Scenario 1

C.G.N. Ltd operates Taguta Social Club for its employees. The club's assets and liabilities on
31 May 2006 arc shown in table 1 below.
Table I

Assets $(000) Liabilities $(ooo)

Buildings at cost 40 000 Bar suppliers 6 400

Pool tables 3 000 Subscriptions in advance 400
Motor vehiiles 10 000
Investments 4 500
Subscriptions due 500
Bar stock -7 000
Bank 2 500

The following are the club's receipts and payments for the year ended 31 May 2007:

Receipts $(ooo) Payments $(ooo) i1

Subscriptions 24 000 Dance expenses 2 500
Annual dahce 3 000 Competition prizes 950
Competition entries 1 400 Bar stock 26 500
Bar sales 58 700 Bar wages 17 000
'i
Pool tables takings 6s0 Groundsman's wages 5 000
Donation 6 000 Maintenance 2200
Deposit account 6 000
Motor vehicle 30 000

Additional information

(i) The following balances exist at 31 May 2A07:

$(000)
Bar stock 5 400
Subscriptions in arrears 650
Subscriptions in advance 7AA
Creditors for bar stock . 3 200
Wages due to groundsman 1 500

(ii) Pool tables are to be depreciated at25Yo per annurn using the reducing balance method,

(iii) Subscriptions orving on 31 May 2006 were considered irecoverable and are to be
written off.
t '
(iv) q?5n 000 *,ec
'rfh $250 OOO
Bar stock wor.th was conqirlererl obsolete ar
considered ohsolete and is no longel;a*e6f {

.'--'
 (\, Investments earn dividends at the rate of 10% per annum.

(vi) A trade-in of $ l5 000 000 was allowed when a new motor vehicle was purchased.
This transaction took place on I June 2006 and a full year's depreciation at20Yo is
to be charged.

(vii) The donation of $6 000 000 received at the end of May 2007 was,placed in a bank
deposit account. The interest is to be used in future years to pay for an annual prize
called the Taguta People's Prize.

, Questionl | .

Prepare

(a) the club's bar trading and profit and loss account for the year ended 31 May 2007,L61

(b) the income and expendit*. u.rornt for the year ended 3l May 2007 , t13]

(c) the balance sheet as at 31 May 2007. [11]

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Scenario 2

2007'
The directors of C.G.N. Ltd prepare a cash flow statement for the year ended 31 March

Table 2 below shows the draft cash flow statement.

Table 2
$

Net profit for the year 145 000

Adjustrnents for items not involving
the movement of cash.
Depreciation 96 500
Inuease in provision for bad debts 1 000
97 500
242 500
Changes in working caPital
Increase in stock (170 000)
Increase in debtors (35 000)
Decrease in creditors ( e 000)
(214 ooo)
Dividends paid (120 000)
Net cash outflow from oPerations (e1 s00)
Investing activities
Purchase of freehold properly (160 000)
(160 000)
Net cash outflow from investing activities

Financing activities
Issue ofordinary shares 200 000
Loan repayment (50 000)
150 000
Decrease in cash and bank (101 s00)
Add opening cash and bank balance 20 000
Closing cash and bank balance &u00

Additional information

(D Stock in trade at 31 March 20A7 has been included in the draft accounts at net realisable
value of $ 1 89 000 whereas its cost was $ i 60 000.

(ii) On 30 September 2006,four vehicles were sold for $10 000 each and four new vehicles
were bought at atotal cost of $170 000. The vehicles sold were bought by the company on
1 April ZdO+ for $92 000, their estimafed residual value at that date being $20 000 and
expicted disposal date 31 March 2008. The only entry so far in the company's books
relating to those transactions is apayment of $155 000 cash and $15 000 is still due' The
new motor vehicles are to be depreciated at20oh per affIum on cost.

(iii) A bonus issue of shares in February 20A7 of 20 000 ordinary shares qf $1 each were treated
as rights issue in the books.

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 (iv) The provision for doubtful debts at 31 March 2007 is to be $3'400 not $2 500 as shown in
the draft accounts.

(v) Cash sales of $3 000 took place on 30 March 20A7 and the cash was banked on the same
day. These transactions were recorded in the company's books as having taken place on I
April2007

(vi) Goods costing $7 000 bought on credit on 31 March were included in the stock figure and
no other enties were made.

Question 2

(a) Prepare a corrected cash flow statement for the year ended 31 March 2007. [17]

(b) State four differences between a profit and loss account and a cash flow statement. t8]

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 Scenario 3

C.G.N. Ltd purchases a partnership.

Mike and Matamba were in partnership sharing profits and losses in the ratio 2: 1. The
partnership's balance sheet at 30 April 2006 is shown in table 3 below.

Table 3

$
Fixed assets
Freehold land 15 000
1

1
Freehold buildings 20 000
i

l Equipment 18 000
l
53 000
Current assets
Stock l1 000
:
Debtors 6 000
Bank 2 000
19 000
Less Current liabilities
Creditors 3 000 16 000
69!00
!- Capital accounts : Mike 60 000
Matamba 35 000 95 000

Less Drawings: Mike 18 000

Matamba i2 000 _ 30 000
6s 000
Loan from Mike at t0%
' 4000
69!00

Additional information

(i) C.G.N. Ltd offered to purchase the partnership. The offer was based on the
following revaluation of assets:
$
land
Freehold 20 000
buildings
Freehold 16 000
Equipment 15 000
Stock 9 000
Debtors 5 000

The bank account would not be taken over.

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