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TEST CODE 0123.90tO

SECONDARY EDUCATION CERTIFICATEEXAMINATION

( 17 MAY 2010 (a.m.) )

4. Silent electronic calculators may be used, but ALL necessary workings should beclearly shown.

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Inventories

Accruals

Fixtures and FittingsBank

CapitalLoan (repayable April 2010)

Debtors

Mortgage (repayable 2015)Land and Building

Cash

Creditors

Motor vehicles .

$

75000

8000

30000

38000

3390005000

70000

145000

250000

15000

41000

60000

(a) (i) Prepare Peter Jones' classified Balance Sheet as at March 31, 2010, using theorderofpermanence. (10 marks)

(b) The following transactions which occurred during the year were not recorded byMr Jones.

On the work sheet provided, show the effect of the above transactions on the

accounts. The first transaction has been done for you. (7 marks)

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Angel and K arissa are in partnership, sharing profits and losses in the ratio 3:2. Int

on drawings is charged at the rate of 5% per annum and interest on capital is lO%annum. Angel and Karissa receive salaries of $15 000 and $8 000 respectively. Somthe Current Account entries for the partners for the period ended December 31, 2009

set out below.

Angel Karissa Angel Karissa$ $ $

Balance bid 1 700 Balance bid 3000

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Drawings 14000 18 000 Interest o~capital 2500 3500

Salary 15000 8000~-~._- --~-

Share of profit 12300 8200

(i) Calculate and enter the interest on drawings to be charged to EACH partner.(3 ma

(iii) State the significance of BOTH balances brought down as at December 31,20

(2 ma

(iv) State ONE possible reason why Angel and Karissa earn different salaries.

(1ma

(b) From the information in your Current Accounts, prepare the Appropriation of PrAccount for Angel and Karissa for the year ended December 31,2009, showing clethe net profit ofthe partnership. (10 ma

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Khalel, theowner ofKhalel's Gardening Centre, kept only single entries of his transactions.On J anuary 31, 2010, he provided his bank manager with the following information butcould not answer a number of questions.

February 01, 2009 J anuary 31,2010$ $

Property at cost 40000 40000

Motor van value at year encL 9000 7000

Inventory 4000 5600

Accounts receivable (debtors) 1475 2300

Accounts payable (creditors) 925 850

Cash - 1240 2360

Prepaid water rates 400 500

Electricity owing 210 110

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The bank manager gave several reasons why this method was not very helpful. He also

advised Khalel about using different methods toconvert his records to double entry records., ,

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ii Prepare aStatement ofAffairs asatFebruary 01,2009, toconvert KhaleI's GardeningCentre's single entry records. (5 marks)

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1. All sales were made on credit. Debtors paid $32 600 by cheque during the

Theaccount of onedebtor for $75 had been written off asbad debt.

3. In addition to other liabilities, Khalel borrowed $2000 fromhis sister onFeb

01,2009. This istobepaid byJune 30, 2010. Theinterest ratewas 5%per an

but neither theloan nor the interest duehad been recorded.

(i) PrepareaSalesTotaL(Control)Account forKhalel's Gardening Centretocalc

thetotal C~editSales for theperiod ended January 31, 2010.

(ii) Prepare an Income Statement for Khalel's Gardening Centre for the year e

January 31,2010. ---------- (9 m

(iii) Inwhich classification section ofthe Balance Sheet should Khalel recordthe

fromhis sister?

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4. Cancun Guest House Limited rents comfortable rooms and serves breakfast to its guests. The

company was started through the issue of the following:

$

Net Profit for the year 83520

Stock of breakfast supplies 5000

Stock of sheets, towels etc. at cost (purchased December 01,2008) 22000

Accounts payable 13430

Property and tools at cost 365000

Provision for depreciation - Property and tools (at 1Dec. 2008) 109500

Petty cash 1200

Bank 20480

General reserve-

8000

Retained earnings (Dec. 2008) 13830,

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2. The stock of sheets, towels and similar items are depreciated over two years before the

replaced.

Transfer of $15 000 to the General Reserve- Full dividend on all Preference Shares

50% dividend on Ordinary Shares

(a) Prepare theAppropriation Account of the company for the year ended November 30,

(Show all workings) (7 m

(b) Prepare a classified Balance Sheet as at Noverilber-JO;2009,-for Cancun Guest H

Limited. (13 m

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5. Jeans and Things is a medium-sized factory which makes teens' clothing. At the end of the

accounting year, December 31, 2009, the following information was available.

Stocks at January 01, 2009:Raw materialsWork in progress

Finished goodsRent and ratesMachinery at cost

Administrative expenses

Factory wages

Factory salariesSelling and distribution expensesPurchases of raw materialsCarriage inwards on raw materialsReturns outwards

Carriage outwards

Factory insuranceSalesStocks at December 31, 2009:

Raw materials

Work in progress

Finished goods

33500

7300

82770

12300

500000

25230

135000

72 500

43820

247,330

1500

3000

1000

15000

725650 '

13220

6900

95240

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J oe Mukram owns and operates a tyre shop in Fast Town. During the month of October 20

recorded the following information:

Date Transaction Value

October 01 Opening Balance 150 @ $25

October 10 Purchased 200@ $27

OCtober 15 -Sold 230 @ $50

October 21 Purchased 500 @ $30

October 26 Sold 400@$50

October 31 Sold 120 @ $55

Using the stock form provided, determine--the value of the-tyres remaining in stOctober 31, 2009. J oe Mukram uses the LIFO method of stock valuation.

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IdentifY ONE internal user of accounting information andstatehowthis information

is used by that user. (2 marks)

(ii) IdentifY ONE external user of accounting information andstatehowthis informationis used by that user. (2 marks)

(ii) Three brothers operating abusiness where the action of one brother is binding onthe other two brothers.

(iv) Groups of consumers or producers form an organisation to provide services to itsmembers.

(v) An organisation, operated by members, to provide services to members and isoften financed by donations, fund-raising- and subscriptions. (5 marks)

Each of the transactions below violates an accounting concept or principle. State theconcept or principle that is being violated.

(i) Credit sales made inMarch of20 10were not recorded until themoney wasreceivedin May 2010.

(ii) Due to the banlauptcy of Mr Dragon, a debtor, the business is likely to lose$20 000. Management refuses to write off this amount as a bad debt or to createaprovision for bad debts.

In order to report higher profits for the financial year, management has changedfrom the straight line method of depreciation to the reducing balance method.

Mr Lumberj ackpaid theinsurance forhis private house and recorded it asabusinessexpense. (4 marks)