W1-2-60-1-6
JOMO KENYATTA UNIVERSITY
OF
AGRICULTURE AND TECHNOLOGY
University Examinations 2014/2015
FIRST YEAR FIRST SEMESTER EXAMINATION FOR
THE CERTIFICATE/DIPLOMA IN BUSINESS ADMINISTRATION
HCB 0102: INTRODUCTION TO ACCOUNTING I
DATE: AUGUST 2014 TIME: 1½ HOURS
INSTRUCTIONS: ANSWER QUESTION ONE (COMPULSORY) AND ANY OTHER TWO QUESTIONS
Question One (20 Marks)
- State and explain any five users of accounting information. (5 Marks)
- Write up the following transactions in the books of S. Pink and extract a trial balance: (15 Marks)
| March 1: | Started business with cash £1,000 |
| March 2: | Bought goods on credit from A. Clicks £296 |
| March 3: | Paid rent by cash £28 |
| March 4: | Paid £1,000 of the cash of the firm into Bank account |
| March 5: | Sold goods on credit to J. Simpson £54 |
| March 7: | Bought stationery £15 paying by cheque |
| March 8: | Cash sales £49 |
| March 14: | Goods returned by us to A. Clicks £17 |
| March 17: | Sold goods on credit to P. Lutz £29 |
| March 20: | Paid for repairs to the building by cash £18 |
| March 22: | J. Simpson returned goods to us £14 |
| March 27: | Paid A. Clicks by cheque £279 |
| March 28: | Cash purchases £125 |
| March 29: | Bought a motor vehicle paying by cheque £395 |
| March 30: | Paid motor vehicle expenses in cash £15 |
| March 31: | Bought fixtures £120 on credit from R. Wasl |
Question Two (20 Marks)
- Explain the term “Bank reconciliation” and state reasons for its preparation.(4 Marks)
- b) Ssematola, a sole trader received his bank statement fro the month of June 2001. At that date, the bank balance was Kshs. 706,500 whereas his cashbook balance was Kshs. 2,366,500. His accountant investigated the matter and discovered the following discrepancies:
1) Bank charges of Kshs. 3,000 had not been entered in the cash book.
2) Cheques drawn by Ssematola totaling Kshs. 22,500 had not yet been presented to the bank.
3) He had not entered receipts of Kshs. 26,500 in his cashbook.
4) The bank had not credited Mr. Ssematola with receipts of Kshs. 98,500 paid into the bank on 30th June 2001.
5) Standing order payments amounting to Kshs. 62,000 had not been entered into the cashbook.
6) In the cashbook Ssematola had entered a payment of Kshs. 74,900 as Kshs. 79,400.
7) A cheque for Kshs. 15,800 from a debtor had been returned by the bank marked “refer to drawer” but had not been written back into the cashbook.
8) Sssematola had brought forward to opening cash balance of Kshs. 329,250 as a debit balance instead of credit balance.
9) An old cheque payment amounting to Kshs. 44,000 has been written back in the cashbook but the bank had already honored it.
10) Some of Ssematola customers had agreed to settle their debts by paying directly into his bank account. Unfortunately, the bank had credited some deposits amounting to Kshs. 832,500 to another customers account. However, acting on information from his customers Ssematola had actually entered the expected receipts from the debtors in his cashbook.
Required:
(i) A statement showing Ssematola adjusted cashbook balance as at 30th June 2001. (10 Marks)
(ii) A bank reconciliation statement as at 30th June 2001. (6 Marks)
Question Three (20 Marks)
From the following trial balance of P. Boones draw up a trading and profit and loss account for the year ended 30th September 2002 and a statement of financial position as at that date. (20 Marks)
| Dr. | Cr. | |
| Stock 1st October 1998 | 23,680 | |
| Carriage outwards | 2,000 | |
| Carriage inwards | 3,100 | |
| Returns inwards | 2,050 | |
| Returns outwards | 3,220 | |
| Purchaser | 118,740 | |
| Sales | 186,000 | |
| Salaries and wages | 38,620 | |
| Rent | 3,040 | |
| Insurance | 780 | |
| Motor expenses | 6,640 | |
| Office expenses | 2,160 | |
| Lighting and heating expenses | 1,660 | |
| General expenses | 3,140 | |
| Premises | 50,000 | |
| Motor vehicles | 18,000 | |
| Furniture and fittings | 3,500 | |
| Debtors | 38,960 | |
| Creditors | 17,310 | |
| Cash at bank | 4,820 | |
| Drawings | 12,000 | |
| Capital | 126,360 | |
| 332,890 | 332,890 |
Stock as at 30th September 2002 was 29,460
Question Four (20 Marks)
- State and explain any six errors not disclosed by a trial balance. (12 Marks)
- The Chief Accountant of Jitegemee Ltd has encountered difficulties while accounting for fixed assets and the related depreciation in the company’s draft accounts for the year ended 30th April 2000. He has decided to seek your professional advice and presented the following balances of fixed assets as at 1st May 1999:
| Acquisition cost
Kshs. |
Accumulated deprecation
Kshs. |
Depreciation rate
% |
|
| Furniture | 900,000 | 300,000 | 12.5 |
| Trucks | 3,525,000 | 1,470,000 | 25 |
| Plant and machinery | 7,387,500 | 4,462,500 | 10 |
| Land | 2,775,000 | – | Nil |
| Buildings | 2,925,000 | 292,500 | 2.5 |
The following additional information was also available:
1) It is the company’s policy to write off cost of the assets using the above percentages on cost.
2) Depreciation is fully charged in the year of acquisition and none in the years of disposal.
3) A three year old machine acquired for Kshs. 187,500 was sold for Kshs. 15,750.
4) It has been decided to adjusted and charge depreciation on buildings at 4%.
5) A used delivery truck purchased three years ago for Kshs. 248,250 was traded in during the year at a value of Kshs. 157,500 in part exchange of the new delivery truck costing Kshs. 450,000.
6) Land, buildings and machinery were acquired for Kshs. 1,350,000 from a company that went out of business. At the time of acquisition Kshs. 90,000 was paid to have the assets revalued by a professionally qualified valuer. The revaluation indicated the following market values:
| Land | Kshs. 900,000 |
| Building | Kshs. 600,000 |
| Machinery | Kshs. 300,000 |
Required:
A schedule of movement of fixed assets as requested by the Chief Accountant for inclusion in the company’s accounts for the year ended 30th April 2000. (8 Marks)
