University of Rwanda
College of Business and Economics
School of Business
BBA/Bsc First years 1st Semester 2018/019
Module: ACC1131: Introduction to Financial Accounting Handout of Questions
Contents
Tutorial Questions…………………………………………………………………………………………...1
One: Introduction to accounting…………………………………………………………………………..…2
Two: Double entry concepts…………………………………………………………………………………2
Three: Bank reconciliations ........................................................................................................................ 113
Four: Adjustments: Accruals, Prepayments, Bad and Doubtful debts and Depreciation ............................. 15
Five: Financial Statements of Sole traders.................................................................................................... 23
Six: Errors ..................................................................................................................................................... 26
Seven: Control accounts ............................................................................................................................... 28
Revision Questions ...................................................................................................................................... 28
Paper one ................................................................................................................................................... 30
Paper two .................................................................................................................................................. 32
Paper three ................................................................................................................................................ 34
Paper four .................................................................................................................................................. 33
Paper five .................................................................................................................................................. 36
Paper six .................................................................................................................................................... 37
Paper seven ............................................................................................................................................... 39
Paper Eight ................................................................................................................................................ 41
Paper Nine ................................................................................................................................................. 43
Paper Ten .................................................................................................................................................. 50
Paper Eleven .......................................................................................................................................... 51
Paper twelve……………………………………………………………………………………........….. 53
Paper thirteen ............................................................................................................................................56
Tutorial Questions
One: Introduction to accounting
Q1.State the user needs for each of the following
a. Government and its agencies
b. Lenders
c. Owners and prospective investors
Q2.State and briefly describe the four qualitative characteristics of accounting information
Q3.Define the following giving examples;
a. Double entry concept
b. Business entity concept
c. Going concern concept
d. Accruals concept
e. Prudence concept
Q4.“Businesses can be classified in a number of ways” Describe the different types of businesses
according to their ownership.
1
Double entry concepts
Question 1. Write up below transactions in books of accounts
02/17 owner starts in business with capital of FRw10,000 comprising
FRw9,000 in the bank and FRw1,000 in cash
03/17 buys office equipment for FRw2,500, paying by cheque
05/17 obtains a loan of FRw2,000 by cheque from a friend Kazungu
06/17 buys factory machinery for FRw8,000, paying by cheque
09/17 buys office equipment for FRw2,000 on credit from Mutara Office
Supplies
2
Q5.
The table below sets out the accounting equation of Mbindo business. The columns show the accounting
equation after a series of transactions that have taken place over the different dates.
You are to compare each set of adjacent columns, i.e. 01/10 with 04/10 with 10/10, and so on, and state,
with figures, what accounting transactions have taken place in each case.
Date 01/10
04/10
10/10
14/10 17/10 20/20 25/10 31/10
FRw
FRw
FRw
FRw
FRw
FRw
FRw
FRw
Assets
Office equipment
– 15,000 15,000 15,500 15,500 15,500 15,500 15,500
Machinery
–
–
–
– 6,000 6,000 6,000 6,000
Bank
17,000
2,000 17,000 17,000 11,000 13,000 3,000 1,000
Cash
11,000 11,000 11,000 10,500 10,500 10,500 10,500 12,500
Liabilities
Loan
–
– 15,000 15,000 15,000 15,000 5,000 5,000
28,000 28,000 28,000 28,000 28,000 30,000 30,000 30,000
Capital
Q6.From the extended accounting equation, what is the profit or loss from the following given information
for each of the businesses of Abiento, Bye, Chao and Dan?
Abiento
Bye
Chao
Dan
FRw
FRw
FRw
FRw
Capital (Net assets) at beginning of year
186,000 235,500
0 567,000
Capital (Net assets) at end of year
274,000 201,400 254,000 423,000
During the year:
Cash taken by owner
68,000
16,000
45,000 170,000
Additional capital introduced by owner
50,000 125,000 200,000
0
Goods taken by the owner
20,000
0
10,000
25,000
Q7.
The following are the business transactions of Peter for the month of October 2006:
1 Oct Started in business with capital of FRw70,500 in the bank
4 Oct Bought a machine for FRw40,000, paying by cheque
6 Oct Bought office equipment for FRw20,250, paying by cheque
11 Oct Paid rent FRw4,000, by cheque
12 Oct Obtained a loan of FRw30,500 from a friend, Grace, and put the money into the bank
15 Oct Paid wages FRw5,000, by cheque
18 Oct Commission received FRw12,000, by cheque
20 Oct Drawings FRw2,500, by cheque
25 Oct Paid wages FRw4,500, by cheque
You are to:
Show the accounting equation after each transaction
Q8.
A Thompson commenced business on 1 February 2007, paying FRw500,000 into a business bank account.
During the next two months the following transactions took place. All payments are made by cheque and
all receipts are banked.
February
FRw
1 Bought goods for resale
150,000
5 Paid rent
50,000
10 Sales
290,000
3
22 Paid for advertising
25,000
26 A Thompson's drawings
100,000
27 Sales
240,000
March
2 Bought goods for resale
100,000
5 Paid rent
50,000
14 Received a loan, Lock
450,000
16 Sales
330,000
23 A Thompson's drawings
75,000
26 Sales
180,000
29 Paid for advertising leaflets
30,000
You are required to:
(a) Write up the bank account, balancing at the end of March
(b) Write up all the other accounts and balance the accounts at the end March
(c) Extract a trial balance as at 31 March 2006
Q9.
Uwamwezi has the following assets and liabilities as on 30 November 2002:
Creditors FRw39,500; Equipment FRw115,000; Motor vehicle FRw62,900; Stock FRw61,500; Debtors
FRw57,700;Cash at bank FRw72,800 and Cash in hand FRw400.
Compute the balance on the capital account as at 30 November 2002.
During the first week of December 2009, Jump:
a. Bought extra equipment on credit for FRw13,800.
b. Bought extra stock by cheque FRw5,700.
c. Paid creditors by cheque FRw7,900.
d. Received from debtors FRw8,400 by cheque and FRw600 by cash.
e. Put in an extra FRw2,500 cash as capital.
You are to draw up a balance sheet as on 7 December 2009 after the above transactions have been
completed.
Q10. The following account balances were extracted from the books of Gaudence (who is the proprietor
of a fabric shop) at the end of her financial year 30 April 2005:
Account balances as at 30 April 2005
FRw
Sales
30,000
Purchases
15,700
Shop fittings
13,000
Capital
15,000
Opening inventory
4,700
Bank
610
Cash
100
Shop wages
4,420
Accounts receivable
120
Drawings
3,500
Accounts payable
2,030
Light and heat
260
Rent
4,500
Insurance
120
In preparing the year-end accounts, the following should be accounted for:
4
The inventory at the end of the year was valued at FRw4,400
You are required to:
(a) Prepare Gaudence's List of account balances as at 30 April 2005
(b) Prepare Gaudence's Income statement for the year ended 30 April 2005
(c) Draft Gaudence's Balance sheet as at 30 April 2005
Q11.
For each transaction below, show the names of the accounts which will be debited and credited:
(a) Bought goods on credit from Armscott Limited
(b) Sold goods on credit to Orion Limited
(c) Paid the carriage charge, by cheque, to deliver the goods to Orion Limited
(d) Bought a photocopier for use in the business on credit from Office Products Limited
(e) Returned unsatisfactory goods to Armscott Limited
(f) Orion Limited returned unsatisfactory goods
(g) Paid the amount owing to Armscott Limited by cheque
(h) Received a cheque from Orion Limited for the amount owing
Q12.
The following are the business transactions of Weston Traders for the month of May 2007:
1 May Started in business with capital of FRw75,000 in the bank
3 May Bought goods, FRw10,000, paying by cheque
4 May Sold goods, FRw7,500, a cheque being received
6 May Bought shop fittings for FRw20,000, paying by cheque
7 May Bought goods, FRw12,500, on credit from Bristol Supplies Limited
10 May Paid rent, FRw7,500, by cheque
12 May Sold goods, FRw15,000, on credit to Gordano Giftware
14 May Returned goods, FRw1,500, to Bristol Supplies Limited
16 May Paid wages, FRw15,000, by cheque
18 May Paid the amount owing to Bristol Supplies Limited by cheque
21 May Gordano Giftware returned goods, FRw2,500
24 May Paid rent, FRw7,500, by cheque
26 May Sold goods, FRw5,500, a cheque being received
28 May Received a cheque from Gordano Giftware for the amount owing
You are to record the transactions in the books of account balance the accounts and extract a trial balance.
Q13.
You are to enter the following transactions, completing the double entry in the books for the month of May 2002.
May 1
Started business with FRw2,000,000 in the bank.
“
2
Purchased goods FRw175,000 on credit from M Rooks.
“
3
Bought furniture and fittings FRw150,000 paying by cheque.
“
5
Sold goods for cash FRw275,000.
“
6
Bought goods on credit FRw114,000 from P Scot.
“
10
Paid rent by cash FRw15,000.
“
12
Bought stationery FRw27,000, paying in cash.
“
18
Goods returned to M Rooks FRw23,000.
“
21
Lent off part of the premises receiving rent by cheque FRw5,000.
“
23
Sold goods on credit to U Foot for FRw77,000.
“
24
Bought a motor van paying by cheque FRw300,000.
“
30
Paid the month’s wages by cash FRw117,000.
“
31
The proprietor took cash for himself FRw44,000.
Q14.
Write up the following transactions in the books of S Pink:
2009
March 1
Started business with cash FRw1,000,000.
“
2
Bought goods on credit from A Cliks FRw296,000.
5
“
“
“
“
“
“
“
“
“
“
“
“
“
“
3
4
5
7
11
14
17
20
22
27
28
29
30
31
Paid rent by cash FRw28,000.
Paid FRw1,000,000 of the cash of the firm into a bank account.
Sold goods on credit to J Simpson FRw54,000.
Bought stationery FRw15,000 paying by cheque.
Cash sales FRw49,000.
Goods returned by us to A Cliks FRw17,000.
Sold goods on credit to P Lutz FRw29,000.
Paid for repairs to the building by cash FRw18,000.
J Simpson returned goods to us FRw14,000.
Paid A Cliks by cheque FRw279,000.
Cash purchases FRw125,000.
Bought a motor vehicle paying by cheque FRw395,000.
Paid motor expenses in cash FRw15,000.
Bought fixtures FRw120,000 on credit from R west.
Q15.
The following transactions took place during the month of May 2009
May
1 Started firm with capital in cash of FRw250,000.
2 Bought goods on credit from the following persons: R Kelly FRw54,000; PCombs FRw87,000; J Role
FRw25,000; D Mobile FRw76,000; I. Sims FRw64,000.
4 Sold goods on credit to: C Blanes FRw43,000; B Long FRw62,000; F Skin FRw176,000.
6 Paid rent by cash FRw12,000.
9 C Blanes paid us his account by cheque FRw43,000.
10 F Skin paid us FRw150,000 by cheque.
12 We paid the following by cheque: J Role FRw25,000; R Kelley FRw54,000.
15 Paid carriage by cash FRw23,000.
18 Bought goods on credit from P Combs FRw43,000; Mobile FRw110,000.
21 Sold goods on credit to B Long FRw67,000.
31 Paid rent by cheque FRw18,000.
Q16.
You are to enter the following transactions, completing double entry in the records of Collins for the month
of June 2007 balance off all the accounts, and then extract a trial balance as on 30 June 2009:
June 2009
1
Started business with FRw100,000 in the bank and FRw30,000 cash
1
Bought goods on credit from: Chichi FRw40,000; Mardi FRw181,800 Lundi FRw134,400
2
Bought shop fittings by cheque FRw24,000
3
Bought shop fittings on credit from Manumetal Ltd FRw57,500
5
Paid insurance by cash FRw8,800
6
Bought motor van paying by cheque FRw320,000
7
Sold goods for cash FRw14,000
7
Sold goods on credit to: Gregory FRw45,000; Padstow Ltd FRw24,600;Edward FRw8,000
8
Bought office stationery FRw18,000 on credit from Anny Papeterie
9
Paid rent by cheque FRw7,500
10
Paid rates by cheque FRw25,000
11
We returned goods to Mardi FRw16,800
12
Paid Anny Papeterie FRw18,000 by cheque
13
Sold goods on credit to Pillot FRw22,000; Padstow Ltd FRw15,400; Kay & Edwards Ltd
FRw27,000
14
Goods returned to us by Gregory FRw4,000
15
Paid wages by cash FRw12,000
16
Loan from Clayton by cheque FRw50,000
17
Gregory paid us the amount owing by cheque
20
We have overpaid insurance. A refund of FRw800 received by cheque
21
Paid motor expenses by cash FRw5,500
23
Paid wages by cash FRw12,000
6
25
26
28
29
30
Cheques received from Pillot FRw22,000; Padstow Ltd FRw10,000 (as part payment)
Some of shop fittings were unsuitable and were returned to Manumetal Ltd FRw2,500
Paid Mardi FRw118,800 by cheque
Paid rent by cheque FRw7,500
Collins took drawings by cheque FRw20,000.
Q17.
Record the following for the month of January, balance of all the accounts, and then extract a trial balance
as at 31 January 2009:
Jan 2009
1
Started business with FRw305,000 cash
2
Put FRw208,000 of the cash into a bank account
3
Bought goods for cash FRw15,000
4
Bought goods on credit from: Clothier FRw36,000; Burton FRw49,000; Hill FRw11,000; Small
FRw34,000
5
Bought stationery on credit from Swift Ltd FRw17,000
6
Sold goods on credit to: S. Willis FRw90,000; T. Beeley FRw 150,000; C. Howard FRw190,000;
P. Pearson FRw160,000
8
Paid rent by cheque FRw5,500
10
Bought fixtures on credit from Mallik Ltd FRw48,000
11
Paid salaries in cash FRw12,000
14
Returned goods to: M. Burton FRw4,000; T. Hill FRw6,000
15
Bought motor cycle by cheque FRw70,000
16
Received loan from J. Hawks by cheque FRw60,000
18
Goods returned to us by: S. Willis FRw2,000; C. Howard FRw4,000
21
Cash sales FRw9,000
24
Sold goods on credit to: T. Beeley FRw10,000; P. Pearson FRw34,000; J. Smart FRw11,500
26
We paid the following by cheque: M. Burton FRw45,000; T. Hill FRw5,000
29
Received cheques from: J. Smart FRw11,500; T. Beeley FRw25,000
30
Received a further loan from J. Hawks by cash FRw20,000
30
Received FRw50,000 cash from P. Pearson.
Q18. The following invoices, in respect of purchases of goods for resale, have been received:
2007
FRw
2 January Daystar
85,000
10 January Moonlight
122,600
14 January Cossy
91,200
18 January Dayster
100,900
25 January Moonlight
46,100
28 January Dayster
22,700
30 January Cossy
101,300
Required:
(a) rule up the purchases day book and enter the above invoices in it
(b) total the purchases day book for the month
(c) open the suppliers accounts and the purchases account
(d) post the necessary entries from the day book to these accounts
Q19.
Thomas, a sole trader, has the following purchases and sales on credit
for the month of February 2007.
7
Feb 2007
1
Purchased from Samba FRw62,000,
4
Purchased from Miller FRw79,000,
8
Sold to Tamba FRw47,000,
12 Purchased from King FRw67,000,
17 Sold to Robinson FRw59,000,
23 Sold to Williams FRw44,000,
Required:
(a) Enter the above transactions in the Purchases Day Book and the
Sales Day book of Thomas and post to the personal accounts
concerned.
(b) Total the two Day Books, posting the totals to Purchases
Account and Sales Account.
Q20.
George, a sole trader, has the following transactions during the month of October 2005.
3
Purchased on credit from Textiles Ltd goods FRw50,000, linen less 10 per cent trade discount
6
Sold on credit to Harold Church goods FRw40,000, less 5 per cent trade discount
10
Purchased on credit from Newtown Warehouse Ltd goods FRw65,000, no trade discount
13
Purchased on credit from Textiles Ltd goods FRw80,000, less 5 per cent trade discount
19
Sold on credit to Ambrose Richards cotton goods FRw30,000, less 10 per cent trade discount
25
Sold on credit to Harold Church woollen goods FRw38,000 no trade discount.
Required:
Prepare the Purchases Day Book and Sales Day Book of George Hart and record therein the above
transactions.
Q21.
F. Bolton is selling the following items, the recommended retail prices as shown: white tape FRw1,000 per
roll, green baize at FRw400 per metre, blue cotton at FRw600 per sheet, black silk at FRw2,000 per dress
length. He makes the following sales:
May 200_
1
To Grant: 3 rolls white tape, 5 sheets blue cotton, 1 dress length black silk. Less 25 per cent trade
discount.
4
To Grav, 6 rolls white tape, 30 metres green baize. Less 33⅓ per cent trade discount.
8
To Huphes.: 1 dress length black silk. No trade discount.
20
To Bradshaw, I0 rolls white tape, 6 sheets blue cotton, 3 dress lengths black silk, 11 metres green
baize. Less 25 per cent trade discount.
31
To Clough: 12 rolls white tape. 14 sheets blue cotton. 9 metres green baize. Less 33⅓ per cent
trade discount.
You are to (a) Enter them up in the Sales Journal, post to the personal accounts, (b) transfer the total to the
Sales Account in the General Ledger.
Q22.
Write up a two-column cashbook from the following:
Nov 2006
1
Balances brought forward from last month: Cash FRw165,000; Bank FRw2,164,000
8
2
3
4
5
6
7
9
11
12
14
16
20
28
30
Cash Sales FRw605,000
Took FRw500,000 out of the cash till and paid it into the bank
Matthews paid us by cheque FRw217,000
We paid for postage stamps in cash FRw60,000
Bought office equipment by cheque FRw189,000
We paid Little by cheque FRw50,000
Received rates refund by cheque FRw72,000
Withdrew FRw250,000 from the bank for business use
Paid wages in cash FRw239,000
Paid motor expenses by cheque FRw57,000
Lawrence lent us FRw200,000 in cash
Norman paid us by cheque FRw 112,000
We paid general expenses in cash FRw22,000
Paid insurance by cheque FRw74,000.
Q23.
A two-column cash book is to be written up from the following, carrying the balances down to the
following month:
Jan 2007
1
Started business with FRw40,000 in the bank
2
Paid for fixtures by cheque FRw6,600
4
Cash sales FRw2,250
5
Paid rent by cash FRw1,400
6
Thomas paid us by cheque FRw 1,880
8
Cash sales paid direct into the bank FRw3,080
10
Kramer paid us in cash FRw3,000
12
Paid wages in cash FRw2,750
14
Walters lent us FRw5,000 paying by cheque
15
Withdrew FRw2,000 from the bank for business use
20
Bought stationery paying by cash FRw600
20
We paid Flowers by cheque FRw 1,660
28
Cash Drawings FRw1,000
30
Scott paid us by cheque FRw2,770
31
Cash Sales FRw660.
Q24.
James is a sole trader who enters all his cash and bank transactions in a three-column
cashbook. His transactions for the month of October 2006 are as follows:
1
Balances brought forward: Cash in hand FRw22,000; Cash at bank FRw627,000
4
Paid to Adams by cheque FRw71,000 being in full settlement of a debt of
FRw75,000 less FRw4,000 discount
6
Received from Edwards a cheque for FRw42,000 being in full settlement of his debt
of FRw45,000 less FRw3,000 discount
11
16
23
25
30
Received from Thompson FRw51,000 in cash being in full settlement of his debt of
FRw56,000 less FRw5,000 discount
Paid into the banking account the sum of FRw48,000 from cash
Paid to Layton by cheque FRw63,000 being in full settlement of a debt of
FRw70,000 less FRw7,000 discount
Drew cheque for FRw30,000 for office cash
Paid wages in cash FRw27,000.
9
Required:
(i)
Draw up the three column cash book for the month of October carrying down the
balances of cash in hand and cash at bank.
Q25.
George White is a sole trader who records his cash and bank transactions in a three-column cashbook. His
transactions for the month of October 2006 were as follows:
1
Cash at bank FRw422,000; Cash in hand FRw37,000
5
Received a cheque for FRw66,000 from G. Robinson in full settlement of a debt of FRw70,000.
6
Paid by cheque FRw47,000 the amount due to F. Green FRw50,000 being allowed FRw3000
discount
14
Received cash FRw48,000 from W. Jones. This was in full settlement of an amount of FRw51,000
due from Jones
18
Paid into bank the sum of FRw44,000.
21
Paid cash FRw23,000 to H. Small in full settlement of a debt of FRw25,000
25
White drew a cheque for FRw65,000 in favour of G. Gibson. This was in full settlement of the
amount due to Gibson, which was FRw70,000
27
Drew cheque for FRw30,000 in favour of self. The cash obtained was placed in White's cash box
29
Paid salaries in cash FRw21,000.
Required:
(a)
Record the above transactions in White's cashbook and, at the close of business on 31 October
2006, carry down the balances. The discount columns should be totalled.
(b)
State to which accounts in the ledger the discount totals should be entered and post the amounts.
Q26.
From the following details write up a three-column cash book, balance off at the end of the month, and
show the relevant discount accounts as they would appear in the general ledger:
Mar 2007
1
Balances brought forward:
Cash in hand FRw211,000
Cash at bank FRw3984,000
2
We paid each of the following accounts by cheque, in each case we deducted a 5 per cent discount:
Adams FRw80,000; Bibby FRw260,000; Clarke FRw440,000
4
Potts pays us a cheque for FRw98,000
6
Cash Sales paid direct into the bank FRw49,000
7
Paid insurance by cash FRw65,000
9
The following persons pay us their accounts by cheque, in each case they deducted a discount of
2½ per cent: Smiley FRw160,000; Turner FRw640,000; Pimlott FRw520,000
12
Paid motor expenses by cash FRw100,000
18
Cash Sales FRw98,000
21
Paid salaries by cheque FRw120,000
23
Paid rent by cash FRw60,000
28
Received a cheque for FRw500,000 being a loan from Godfrey
31
Paid for stationery by cheque FRw27,000.
Q27.
Simon Hunt is a sole trader who keeps his petty cash on the imprest system-the imprest amount being
FRw35,000. His petty cash transactions for the month of March 2007 were as follows:
1
Petty cash in hand FRw4,730
1
Petty cash restored to imprest amount
4
Paid wages FRw5,450
8
Cost of telegrams FRw2,190
10
Bought foolscap paper FRw2,480
10
11
Paid wages FRw5,600
15
Cost of postage stamps FRw2,250
18
Paid wages FRw5,300
23
Paid to Smith, a creditor, FRw2,800
25
Paid wages FRw5,700
29
Bought envelops FRw1,370.
Required..
Draw up the petty cash book for the month of March 2007, giving also the entry, on 1 April 2007, restoring
the petty cash to the imprest amount.
Note.. Your analysis columns should be for: (a) Wages; (b) Postage and telegrams; (c) Stationery; (d)
Ledger.
Q28.
Wilson is a sole trader who keeps his petty cash on the imprest system. The imprest amount is FRw40,000
and the transactions for the month of May 2007 are as follows:
May 2007
2
Petty cash in hand FRw4,970
2
Petty cash restored to the imprest amount
4
Postage stamps purchased FRw2,100
5
Paid wages FRw5,170
9
Purchased envelops FRw1,880
12
Paid wages FRw5,330
16
Paid to J. Bishop, a creditor, FRw3,550
19
Paid wages FRw5,200
23
Cost of telegrams FRw3,160
26
Paid wages FRw5,440
31
Purchased stationary FRw4,370.
Required:
(i)
Draw up the petty cash book for the month of May 2007. The analysis columns should be as
follows:
(a)
Postages and telegrams
(b)
Wages
(c)
Stationery
(d)
Ledger.
(ii)
Balance the petty cash book on 31 May, and show the restoration of the cash to the imprest amount
on 1 June.
Q29.
You operate a petty cash book with an imprest of FRw15,000. The following expenses, supported by
vouchers, were paid out of the petty cash:
Voucher Nos
31
3 February Postage FRw1,000
32
5 February Travelling expenses FRw650
33
9 February Cleaner's wages FRw2,500
34
12 February Stationery FRw720
35
15 February Postage FRw1,000
36
18 February Travelling expenses FRw730
37
20 February Cleaner's wages FRw2,500
38
24 February Stationery FRw475
39
26 February T B Collins, a creditor FRw390
40
27 February Miscellaneous FRw415
41
27 February Postage FRw1,000
42
28 February Cleaner's wages FRw2,500
11
At 1 February you had a balance of FRw1,826 and received cash on that date to make up the figure to the
imprest amount.
Required:
Draw up the petty cash book for the month of February, including the balancing and the amount paid on 1
March 2007 to make up the imprest figure. The analysis column headings are postage, travelling expenses,
stationery, wages, miscellaneous and ledger.
Q30.
Show the journal entries necessary to record the following items:
Apr 2007
1
Bought fixtures on credit from Harper FRw180,900
4
We take FRw50,000 goods out of the business stock without paying for them
9
We now return FRw2,800 worth of the goods taken by us on 4 April back into stock. We do not
take any money for the return of the goods
12
Lucas owes us FRw50,000. He is unable to pay his debt. We agree to take some office equipment
from him at the value and so cancel the debt
18
Some of the fixtures bought from Harper, FRw6,500 worth, are found to be unsuitable and are
returned to him for full allowance
24
A debt owing to us by Beamish of FRw6,800 is written off as a bad debt
30
Office equipment bought on credit from Secam for FRw219,000.
Q31.
You are to show the journal entries necessary to record the following items:
(i)
2007 May 1 Bought a motor vehicle on credit from Kicukiro Garage for FRw679,000
(ii)
2007 May 3 A debt of FRw3,400 owing from Norris was written off as a bad debt
(iii)
2007 May 8 Some of the office furniture bought by us for FRw49,000 was returned to the supplier
Mutara enterprises, as it was unsuitable. Full allowance will be given us
(iv)
2007 May 12 We are owed FRw 15,000 by Clegg. He is declared bankrupt and we receive FRw39
in full settlement of the debt
(v)
2007 May 14 We take FRw4,500 goods out of the business stock without paying for them
(vi)
2007 May 28 Some time ago we paid an insurance bill thinking that it was all in respect of the
business. We now discover that FRw7,600 of the amount paid was in fact insurance of our private
house
(vii) 2007 May 29 Bought machinery FRw98,000 on credit from BrazAfrica.
Q32.
On 1 May 2007 the financial position of Carol was as follows:
FRw
Freehold premises
405,000
Fixtures and fittings
102,500
Bank overdraft
20,800
Cash in hand
6500
Inventory in hand
1,320
Loan
100,000
Trade account receivable
1,600
Trade account payable
2,700
You are required to:
Make a journal entry for the above showing clearly the capital of Carol on 1 May 2007.
Q33. Mr J Ockey commenced trading as a wholesaler stationer on 1 May 2009 with a capital of
FRw5,000.00 with which he opened a bank account for his business.
During May the following transactions took place.
May 1 Bought shop fittings and fixtures from store fitments Ltd for FRw2,000.00
May 2 Purchased goods on credit from Abel FRw650.00
May 4 Sold goods on credit to Bruce FRw700.00
May 9 Purchased goods on credit from Green FRw300.00
12
May 11Sold goods on credit to Hill FRw580.00
May 13Cash sales paid into bank account FRw200.00
May 16Received cheque from Bruce in settlement of his account
May 17Purchased goods on credit from Kay FRw800.00
May 18Sold goods on credit to Nailor FRw360.00
May 19Sent Cheque to Abel in settlement of his account
May 20Paid rent by cheque FRw200.00
May 21Paid delivery expenses by cheque FRw50.00
May 24Received from Hill FRw200.00 on account
May 30Drew cheque for personal expenses FRw200.00 and assistant wages FRw320.00
May 31Settled the account of Green.
Required
a)
b)
c)
d)
Record the transactions in the books of prime entry.
Post the entries in the ledger accounts
Balance the ledger accounts where necessary
Extract a trial balance as at 31 May 2000.
Three: Bank reconciliations
Q34.
You are preparing accounts for Sylvia Abati for the year to 30 November 2006. At that date, the bank
current account in Sylvia’s nominal ledger had a credit balance of FRw15,503, while the bank statement
showed cash at bank of FRw3,628.
You have obtained the following information from an examination of Sylvia’s records:
(i) A cheque paid to a supplier for FRw4,595 has been recorded in the nominal ledger as FRw5,495.
(ii) Cheques written by Sylvia in November totalling FRw22,865 were presented at the bank in
December.
(iii)
A lodgement for FRw5,634 made on 29 November was credited on the bank statement on 2
December.
(iv) A customer’s cheque for FRw400 which had been lodged on 18 November was not honoured by the
drawer’s bank. Sylvia’s bank had debited the cheque on her statement on 25 November.
(v)
Standing orders with a total value of FRw3,600 had been debited on the bank statement during the
year, but had not been included in Sylvia’s records.
(vi) Included on the current account statement is a lodgement for FRw5,000. This should have been
credited to Sylvia’s deposit account.
Required:
(a) Show the nominal ledger bank account including the necessary correcting entries.
(b) Prepare a bank reconciliation statement as at 30 November 2006.
(c) State the amount of the bank balance, which will be reported in Sylvia’s Balance Sheet as at 30
November 2006, indicating whether it will be reported as an asset or a liability.
Q35.
J. Mbaraga’s cash book showed a debit balance of FRw117,009.70 on 31 March 2009. His bank
statement showed a credit balance of FRw38,257.30 on the same date. A careful examination of the two
records revealed that the difference was due to the following:
1. Bank charges amounting FRw1,711.50.
2. The bank had paid FRw5,339.50 to Mbaraga’s insurance company as per standing order.
3. David Ndakho who was Mbaraga’s tenant had paid rent FRw14,500 direct into Mbaraga’s bank
account.
4. Cheques for FRw43,275.00 deposited by Mbaraga on 29 March were returned unpaid but no entry
had been made in the cash book to record the return.
5. Cheques totaling FRw149,088.40 deposited by Mbaraga on 29 March were credited by the bank
on 2 April.
13
6. Cheques totaling FRw134,402.00 issued by Mbaraga to his creditors did not appear on the bank
statement. One of these cheques for FRw6,420.00 is dated 3 September 2000.
7. A cheque for FRw8,240.00 issued by Mbagala, another customer at the bank, was wrongly debited
by the bank in the Mbaraga’s bank account.
8. The cashier, in totaling the cash book pages, overstated the debit balance of the cash book by
FRw20,000.00.
Required:
a) Adjustment of the cashbook balance.
b) A bank reconciliation statement as at 31 March 2009.
Q36.
The bank columns in the cashbook for June 2017 and bank statement for that month for C Gatero are as
follows:
Cashbook
FRw
FRw
June 01 Balance b/f
237,900 June 05 Blake
15,000
June 07 Green
15,800 June 12 Gray
43,300
June 16 Silver
9,300 June 16 Stephens
8,800
June 28 Brown
30,700 June 29 Golf Club
5,700
June 30 Black
62,400 June 30 Balance c/f
283,300
356,100
356,100
Bank statement for the month of June 2017
Debit
Credit
Balance
FRw
FRw
FRw
June 01 Balance b/f
237,900
June 07 Cheque
15800
253,700
June 08 D Blackness
15,000
238,700
June 16 Cheque
9300
248,000
June 17 Gray
43,300
204,700
June 18 Stephens
8,800
195,900
June 28 Cheque
30700
226,600
June 29 UDT standing order
4,400
222,200
June 30 Johnson : trader’s credit
9000
231,200
June 30 Bank charges
7,000
224,200
Required
(a) Write the cashbook up to date to take the above into account, and then
(b) Draw up a bank reconciliation statement as on 30 June 2017
14
Q37. The following are extracts from the cashbook and the bank statement of J Richards. You are
required to:
a) Write the cashbook up to date, and state the new balance as on 31 December 2009, and
b) Draw up a bank reconciliation statement as on 31 December 2009.
2009
Dec 1
Dec 7
Dec 22
Dec 31
Dec 31
Dr
Balance b/d
J Map
J Cream
K Wood
M Barrett
Cashbook
FRw 2009
Cr
1,740 Dec 8 A Dailey
88 Dec 15
R Mason
73 Dec 28
G Small
249 Dec 31
Balance c/d
178
2,328
FRw
349
33
115
1,831
2,328
Bank Statement
2002
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dr
FRw
1
7
11
20
22
31
31
Balance b/d
Cheque
A Dailey
R Mason
Cheque
Credit transfer: J Walters
Bank charges
Cr
FRw
88
349
33
73
54
22
Balance
FRw
1,740
1,828
1,479
1,446
1,519
1,573
1,551
Four: Adjustments: Accruals, Prepayments, Bad and Doubtful debts
Q38.
Insurance was paid of FRw 81,000 for the year from 01 September 2006. For the year ended 31 March
2007, how much is the Insurance expense and the prepaid amount at year end?
Q39. During 2006, B, a limited liability company, paid a total of $60,000 for rent, covering the period
from 1 October 2006 to 31 March 2007.
What figures should appear in the company’s financial statements for the year ended 31 December
2006?
Q40. Define a ‘prepaid expense’ and ‘accrued income’ and how should they be adjusted for at the end of
the year?
Q41. A company receives rent for subletting part of its office block.
Rent, receivable quarterly in advance, is received as follows:
Date of receipt
Period covered
$
1 October 2005
3 months to 31 December 2005 7,50030 December 2005
31 March 2006
7,500
15
4 April 2006
30 June 2006
9,000
1 July 2006
30 September 2006 9,000
1 October 2006
31 December 2006 9,000
What figures, based on these receipts, should appear in the company’s financial statements for the year
ended 30 November 2006?
Q42. Gatera’s year ended on 30 June 2007. Write up the ledger accounts, showing the transfers to the
financial statements and the balances carried down to the next year for the following:
a) Stationery: Paid for the year to 30 June 2003 $85,500; Inventory of stationery at 30 June 2002
$29,000; at 30 June 2003 $34,500
b) General expenses: Paid for the year to 30 June 2003 $59,000; Owing at 30 June 2002 $6,400;
Owing at 30 June 2003 $9,000
c) Rent and rates (combined account): Paid in the year to 30 June 2003 $389,000; Rent owing at 30
June 2002 $20,500; Rates owing 30 June 2003 $36,000
d) Motor expenses: Paid in the year to 30 June 2003 $475,000; Owing as at 30 June 2002 $18,000;
Owing as at 30 June 2003 $37,500
e) Gatera earns commission from the sales of one item. Received for the year to 30 June 2003
$85,000; owing at 30 June 2002 $8,000; Owing at 30 June 2003 $14,500
Q43.
Determine the subscription for the year from the following information
FRw
Rental income received in cash
4,300,000
Rental income accrued b/f
432,000
Rental income prepaid b/f
315,000
Rental income accrued c/f
231,000
Rental income prepaid c/f
250,000
Q44.
Determine the stationery expense for the year from the following information
Stationery
FRw
Amount paid in cash and cheques
5,340,000
Accrued b/f
630,000
Stationery inventory b/f
410,000
Accrued c/f
550,000
Stationery inventory c/f
360,000
Q45. A company receives rent from a large number of properties. The total received in the year ended 30
September 2006 was $481,200.The following were the amounts of rent in advance and in arrears at 30
September 2008 and 2009:
31 Sept 2008
31 Sept 2009
$
$
Rent received in advance
21,525
23,400
Rent in arrears (all subsequently received)
15,900
13,800
What amount of rental income should appear in the company’s income statement for the year ended 31
September 2009?
Q46. At 31 March 2008 a company had oil in hand to be used for heating costing $8,200 and an unpaid
heating oil bill for $3,600.
At 31 March 2009 the heating oil in hand was $9,300 and there was an outstanding heating oil bill of
$3,200. Payments made for heating oil during the year ended 31 March 2009 totalled $34,600.
Based on these figures, what amount should appear in the company’s income statement for heating oil
for the year?
16
Q47.
The following account balances were extracted from the books of Gaudence (who is the proprietor of a
fabric shop) at the end of her financial year 30 April 2017:
Account balances as at 30 April 2017
FRw
Sales
30,000
Purchases
15,700
Shop fittings
13,000
Capital
15,000
Opening inventory
4,700
Bank
610
Cash
100
Shop wages
4,420
Accounts receivable
120
Drawings
3,500
Accounts payable
2,030
Light and heat
260
Rent
4,500
Insurance
120
In preparing the year-end accounts, the following should be accounted for:
(i) The inventory at the end of the year was valued at FRw4,400
(ii) Light and heat accrued FRw360
(iii)Rent prepaid FRw 400
You are required to:
(a) prepare Gaudence's List of account balances as at 30 April 2017
(b) prepare Gaudence's Income statement for the year ended 30 April 2017
(c) draft Gaudence's Balance sheet as at 30 April 2017
Q48.
The following account balances were extracted from the books of Mbundiko who is the proprietor of a
computer store, at the end of her financial year 31 March 2017:
Account balances as at 31 March 2017
FRw
Sales
608,000
Purchases
314,000
Shop fittings
260,000
Equipment
60,000
Capital
290,000
Opening Inventory (1 April 2016)
94,000
Bank
12,200
Cash
1,900
Shop wages
92,000
Commission income
60,000
Accounts receivable
2,300
Drawings
70,000
Accounts payable
45,500
Returns out
3,500
Light and heat
5,200
Rent expense
85,000
Carriage in
600
Insurance
1,800
Returns in
8,000
In preparing the year-end accounts, the following should be accounted for:
17
(i) The inventory at the end of the year was valued at FRw8,800
(ii) Insurance prepaid amounted to Frw400
(iii)Shop wages accrued FRw6,700
(iv) Commision income prepaid FRw 4,600
You are required to:
(a) prepare Mbundiko's List of account balances as 31 March 2007 (Before adjustments)
(b) prepare Mbundiko's List of account balances as 31 March 2007 (After adjustments)
(c) prepare Mbundiko's Income statement for the year ended 31 March 2007
(d) draft Mbundiko's Balance sheet as at 31 March 2007
Q49.
From the following account balances extracted from the books of Adolph,who owns a restaurant, you are
required to prepare the List of account balances as at 30 April 2007, the income statement for the year
ended 30 April 2007 and the balance sheet as at that date.
Account balances as at 30 April 2007
FRw
Capital
75,000
Fixtures and fittings
95,000
Motor cycle
32,000
Opening inventory
2,000
Cash
450
Bank overdraft
4,300
Bank loan (repayable in 2009)
30,000
Purchases
190,250
Sales
300,000
Accounts payable
5,000
Loan (repayable on 30 December 2007)
1,000
Wages
46,000
Rental income
24,000
Drawings
25,000
Carriage out
1,000
Carriage in
600
Returns in
400
Returns out
400
Rent expense
29,800
General expenses
17,200
You should also take the following additional information into account:
(i) Closing inventory at 30 April 2007 was FRw1,600
(ii) Interest on loans unpaid amounted to FRw 2,700
(iii)Rent expense accrued FRw1,200
(iv) Rental income accrued FRw3,400
(v) General expense prepaid FRw2,400
Q50.
In a new business during the year ended 31 December 2002 the following debts are found to be bad, and
are written off on the dates shown:
30 April
H Gordon
FRw1,100
31 August
D Bellamy Ltd
FRw640
31 October
J Alderton
FRw120
On 31 December 2002 the schedule of remaining debtors, amounting in total to FRw68,500, is examined,
and it is decided to make a provision for doubtful debts of FRw2,200.
You are required to show:
a. The Bad Debts Account, and the Provision for Doubtful Debts Account.
18
b. The charge to the Profit and Loss Account.
c. The relevant extracts from the Balance Sheet as at 31 December 2002.
Q51.
A business started trading on 1 January 2001. During the two years ended 31 December 2001 and 2002
the following debts were written off to the Bad Debts Account on the dates stated:
31 August 2001
30 September 2001
28 February 2002
31 August 2002
30 November 2002
W Best
S Avon
L J Friend
N Kelly
A Oliver
FRw850
FRw1,400
FRw1,800
FRw600
FRw2,500
On 31 December 2001 there had been a total of debtors remaining of FRw405,000. It was decided to make
a provision for doubtful debts of FRw5,500.
On 31 December 2002 there had been a total of debtors remaining of FRw473,000. It was decided to make
a provision for doubtful debts of FRw6,000.
You are required to show:
i.
The Bad Debts Account and the Allowance for Doubtful Debts Account for each of the two years.
ii.
The relevant extracts from the Balance Sheet as at 31 December 2001 and 2002.
Q52.
For the business of H. Potter, a -grocer, classify the following between" 'Capital' and 'Revenue’
expenditure:
a) Repairs to meat slicer.
b) New tyre for van.
c) Additional shop counter.
d) Renewing sign writing on shop.
e) Fitting partitions in shop.
f) Roof repairs.
g) Installing thief detection equipment.
h) Wages of shop assistant.
i) Carriage on returns outwards.
j) New cash register.
k) Repairs to office safe.
l) Installing extra toilet.
Q53.
For the business of J. James, wholesale chemist, classify the following between 'Capital' and 'Revenue'
expenditure:
a) Purchase of an extra motor van
b) Cost of rebuilding warehouse wall, which had fallen down.
c) Building extension to the warehouse.
d) Painting extension to warehouse when it is first built.
e) Repainting extension to warehouse three years later than that done in (d).
f) Carriage costs on bricks for new warehouse extension.
g) Carriage costs on purchases.
h) Carriage costs on sales.
i) Legal costs of collecting debts.
j) Legal charges on acquiring new premises for office.
k) Fire insurance premium.
l) Costs of erecting new machine.
Q54. Determine the total capital expenditure and total revenue expenditure for a business of making
flour from ‘imyumbati’
(4 marks)
19
Purchase price of machine
Freight and insurance in transit from Uganda
Custom duties and taxes at Magerwa
Installation and testing at the Kimironko market
Fuel to run the engine
Insurance for the year
Maintenance
Total
FRw
186,000
74,000
50,000
20,000
68,000
15,000
64,000
477,000
Q55.
A company starts in business on 1 January 2002. You are to write up the motor cars account and the
accumulated depreciation account for the year ended 31 December 2002 from the information given
below. Depreciation is at the rate of 20 per cent per annum straight line. Using the basis of one month’s
ownership needs one month’s depreciation.
1 January 2008 Bought two motor vans for FRw12,000,000 each
1 July 2008 Bought one motor van for FRw14,000,000
Q56.
A company starts in business on 1 January 1999, the financial year end being 31 December.
You are to show:
a. The plant account.
b. The provision for depreciation account.
c. The balance sheet extracts for each of the years 1999, 2000, 2001, 2002.
The machinery bought was:
1999 1 January
1 plant costing FRw8,000
2000 1 July
2 plant costing FRw5,000 each
1 October
1 plant costing FRw6,000
2002 1 April
1 plant costing FRw2,000
Depreciation is at the rate of 10 per cent per annum, using the straight-line method, plant being depreciated
for each proportion of a year.
Q57. SFB acquired a photocopier with the following details
 Date of acquisition: 01 January 2006
 Cost: FRw 1,200,000
 Estimated residual value: FRw200,000
 Estimated useful life: 5 Years [250,000 copies]
[1] Calculate depreciation using each of the following methods each of the four years from 2006 to 2009
(a) Straight line method
(b) Reducing balance method 30%
(c) Sum of digits method
(d) Unit of production method assuming the number of copies as follows:
2006
2007
2008
2009
80,000
40,000
20,000
50,000
[2] Assume that SFB disposed the photocopier at the end of 2009 FRw350,000 cash
Show the journal entries for the disposal and disposal account assuming that the reducing balance basis
was used.
Q58. Kitchenware provided you the following information as regards to their utensils for the year ended
30 April 2010
Valuation at the start of the year FRw 320,000
Acquisition during the year FRw 90,000
20
Proceeds from sale of old utensils FRw 25,000
Valuation at the end of the year FRw300,000
Determine the amount of depreciation for the year using revaluation method
Q59. Sogem acquired a motor vehicle for FRw 5,000,000 on 01 June 2007. Sogem depreciates motor
vehicles at 20% per annum straight line method. The vehicle was sold for FRw3,200,000 on 31
December 2009 Sogem has 31 March as year end.
[1] Calculate depreciation for each of the years ended 31 March 2008, 2009 and 2010 under the following
assumptions
a) Pro-rata basis
b) Full years depreciation in the year of acquisition and none in the year of disposal
c) Full years depreciation in the year of acquisition and proportional depreciation in the year of
disposal
d) Proportional depreciation in the year of acquisition and no depreciation in the year of disposal
[2] Show the disposal account assuming pro-rata basis is used
Q60. A business buys a machine on 31 August 2005 for FRw440,000. It has an expected useful life of
seven years and an estimated residual value of FRw20,000. On 30 June 2009, the machine is disposed
of for FRw180,000. The business’s year-end is 31 December. Its accounting policy is to charge
depreciation using the straight line method with a proportionate charge in the years of acquisition and
disposal.
Calculate the profit or loss on the disposal of the machine.
Q61. The plant and machinery at cost account of a business for the year ended 30 June 2009 was as
follows:
Plant and machinery – cost
2008
FRw
2008
FRw
1 July Balance
240,000
30 Sept. Disposal account
60,000
2009
2009
1 Jan Cash – purchase of plant
160,000
30 Jun Balance
340,000
400,000
400,000
The company’s policy is to charge depreciation at 20% per year on the straight-line basis, with
proportionate depreciation in the years of purchase and disposal.
What should be the depreciation charge for the year ended 30 June 2009?
Q62.
OCIR had the following balances as at 01/04/2009
Cost FRw
Accumulated depreciation FRw
Motor vehicles
10,300,000
4,100,000
During the year the following transaction took place:
1. On 30/09/2009 motor vehicle that cost FRw3,600,000 with net book value of FRw500,000 was
returned to Rwanda motors the supplier. Rwanda motors accepted it at a trade in value of
FRw400,000 for another new motor vehicle for FRw3,000,000 OCIR paying the difference in cash.
2. The depreciation policy is as follows
 Motor vehicles: 20% Straight line basis
 Proportionate depreciation is charged in the year of acquisition and disposal
Required:
a) Motor vehicles at cost account
b) Accumulated depreciation – Motor vehicles
c) Disposal of motor vehicles account
Q63. Simon depreciates his machinery at a rate of 20% per annum on a reducing balance basis. He
provides a full year’s depreciation in the year an asset is acquired, and none is made in the year of
disposal. At 1 November 2008, the cost of Simon’s machinery was FRw1,400,900, and the net book
value was FRw940,570.
21
During the year to 31 October 2009, a machine which had cost FRw350,000 and had been depreciated
for four years was traded in for a new machine. The new machine cost FRw500,000, and the trade in
value was FRw140,000. At 31 October 2009 the balance of the cost of the new machine was still
outstanding.
Required:
a) Machinery at cost account
b) Accumulated depreciation – Machinery
c) Disposal of machinery account
Q64.
Cotraco had the following balances as at 01April 2009 the start of the year.
Cost FRw
Accumulated depreciation FRw
Equipment
840,000
210,000
Motor vehicles
7,600,000
4,100,000
During the year the following transactions took place:
3. Equipment was acquired during the year for FRw170,000 cash
4. Motor vehicle that cost FRw3,600,000 with carrying amount of FRw500,000 was sold to Rwanda
motors the supplier, for FRw450,000, and another new motor vehicle bought for FRw4,000,000
Cotraco paying the difference in cash.
5. The depreciation policy is as follows
 Equipment: 15% Reducing balance basis
 Motor vehicles: 20% Reducing balance basis
 Full years depreciation is charged in the year of acquisition and none in the year of disposal
Required:
a) Equipment at cost account
b) Motor vehicles at cost account
c) Accumulated (provision for) depreciation – Equipment
d) Accumulated depreciation(provision for) – Motor vehicles
e) Disposal of motor vehicles account
Q65. At 31 December 2008 Quantum, a business, owned land that cost FRw4,000,000 and a building
that cost FRw8,000,000 on 1 January 1999. The building was being depreciated at two per cent per
year while the land was not depreciated. On 1 January 2009 a revaluation to FRw10,000,000 was
recognized for the building and to FRw5,000,000 for the land. At this date the building had a remaining
useful life of 40 years. What is the depreciation charge for the year ended 31 December 2009 and the
revaluation reserve balance as at 1 January 2009?
Q66.
The following balances appear in the accounting records of Sandrine, at 30 June 2009:
FRw
Land and buildings:
cost
10,000,000
accumulated depreciation at 1 July 2008
3,600,000
Plant and equipment:
cost
6,000,000
accumulated depreciation at 1 July 2008
3,200,000
The company’s land and buildings were revalued at 1 July 2008. The revaluation has not yet been reflected
in the balances given above. Details:
Cost
Accumulated
Net book
Revalued
FRw
Depreciation FRw Value FRw
Amount FRw
Land
4,000,000
–
4,000,000
5,000,000
Buildings
6,000,000
3,600,000
2,400,000
4,000,000
Depreciation charges for the year, based on revalued amounts:
 Buildings FRw200,000
 Plant and equipment FRw1,200,000
22
Required:
a) Land and buildings - revalued account
b) Plant and equipment - cost account
c) Accumulated (provision for) depreciation – buildings
d) Accumulated depreciation (provision for) – Plant and equipment
e) Revaluation reserve account
Five: Financial Statements of Sole traders
Q67.
The following are account balances for Karungu s.a.r.l as at 31/10/2019
FRW
600,000,000
Cash at Bank
500,000,000
Cash at hand
973,000,000
Capital
200,000
Drawings
100,000,000
Loan to be repaid in 2022 – I&M Bank
1,000,000
Insurance expense
500,000
Interest expense
3,500,000
Creditors (accounts payable)
2,800,000
Debtors (accounts receivable)
8,000,000
Office Equipment (cost)
45,000,000
Motor van (cost)
4,000,000
Accumulated depreciation – Office equipment
23,000,000
Accumulated depreciation – Motor van
100,000
Stock (inventory), 01/11/2018
20,000
Discount received
5,600,000
Purchases
30,000
Discount allowed
60,000,000
Sales
50,000
Sales returns
200,000
Rent expense
20,000
Carriage out
60,000
Purchases returns
80,000
Transport in
Additional information:
1)
Inventory (Stock), 31/10/2019 FRw25,000
2)
Insurance is prepaid FRw 100,000
3)
Interest payable is FRw 200,000
4)
Accrued rental income of FRw 250,000
5)
Depreciation is 10% straight line for office equipment and 20% reducing balance method for
motor vehicles
Required: Prepare for Karungu s.a.r.l
a) A trial balance (list of account balances) as at 31st October 2019, (before adjustments)
b) A income statement (trading, profit and loss account) for year ended 31st October 2019
c) A balance sheet as at 31st October 2019
Q68. The following List of account balances was extracted from the books of Paula Murekatete, a retail
grocer, at the end of her financial year 31 March 2009.
List of account balances as at 31 March 2009
FRw
23
Capital
128,500
Accounts receivable
6,000
Accounts payable
4,000
Drawings
38,000
Cash in hand
100
Bank overdraft
4,630
Sales
168,000
Purchases
96,000
Opening Inventory
6,400
Sales returns
1,000
Carriage inwards
400
Carriage outwards
700
Purchases returns
900
Discount received
250
Discount allowed
380
Premises (cost)
187,000
Fixtures and fittings (at cost)
20,000
Accumulated depreciation - Premises
8,000
Accumulated depreciation - Premises
57,000
Loan to be repaid in 2013
6,000
Rates
3,700
Closing inventory (balance sheet)
6,800
Closing inventory (Income statement)
6,800
Insurance
1,200
Interest expense
800
Commission income
5,600
Wages and salaries
21,200
Adjustment required:
1)
Wages accrued amounted FRw3,400
2)
Commission income prepaid FRw 600
3)
Insurance expense prepaid FRw500
4)
Interest expense unpaid FRw1200
5)
Depreciation of Fixtures and fittings is 15% straight line and on Premises 5% straight line
You are required to prepare:
(a) Trial balance as at 30 march 2009 (before the adjustments)
(b) The Income statement for the year ended 30 March 2009 and
(c) The Balance sheet as at 30 March 2009.
Q69.
The following are the account balances of the business of Agnes as at 30 June 2019.
Frw
Capital
959,000
Drawings
22,000
Loan from Ecobank (to repay 2025)
35,000
Accounts payable
8,000
Loan from Amasezerano (to repay Dec 2019)
15,000
Bank overdraft
3,000
Carriage out
16,000
Carriage in
40,000
Returns in
43,000
Returns out
15,000
Discount allowed
10,000
Discount received
6,000
Salaries and wages
245,300
Advertising expense
14,000
24
Maintenance and repairs
130,400
Electricity and water
30,700
Interest expenses
35,600
Interest income
14,000
Rental income
80,000
Opening inventory
31,000
Purchases
493,000
Sales
950,000
Cash
7,000
Short term investment
43,000
Accounts receivable
60,000
Bad debts
14,000
Accumulated depreciation-Equipment
40,000
Accumulated depreciation-Furniture and fittings
25,000
Allowance for doubtful debt
35,000
Equipment (cost)
350,000
Furniture and fittings (cost)
120,000
Land and buildings
480,000
Additional information:
1. The closing inventory was FRw23,000
2. Interest income accrued amounted to FRw14,000
3. Rental income received in advance FRw10,000
4. Cash power (electricity) paid for in advance FRw5,000 and water bill unpaid FRw11,000
5. Allowance for doubtful debt to be reduced to FRw30,000
6. The depreciation for equipment is 5% reducing balance basis and for furniture and fittings is 5% straight
line. No depreciation for land and buildings.
Required:
a) Trial Balance before adjustments
b) Income statement for the year ended 30 June 2019
c) B
d) alance sheet as at 30 June 2019
Q70.
The account balances extracted from the books of Susan as at 31 July 2009
25
FRw
900,000
850,000
240,000
163,000
50,000
40,000
13,000
160,000
6,500
4,600
52,200
4,500
60,000
14,500
300,000
560,000
1,050,000
70,000
60,000
180,000
25,000
11,500
14,000
3,500
5,600
9,500
44,000
7,000
4,000
36,800
29,800
76,000
30,000
8,000
Capital
Buildings (cost)
Furniture (cost)
Equipment (cost)
Accumulated depreciation – Buildings
Accumulated depreciation – Furniture
Accumulated depreciation – Equipment
Long term investment
Discount received
Discount allowed
Opening inventory
Cash
Accounts receivable
Bank overdraft
Loan (repayable in 2011)
Purchases
Sales
Accounts payable
Loan (repayable on 30 December 2009)
Salaries and Wages
Drawings
Interest income
Rent income
Carriage out
Carriage in
Electricity and water
Insurance
Returns in
Returns out
Interest expense
Rent expense
General expenses
Bad debts
Allowance for doubtful debt
Notes
7
7
7
1
3
2,4
5
6
8
Adjustment required
(Notes):
1)
Closing
inventory at
31 July 2009
was
FRw60,600
2)
Water bill
accrued
amounted
FRw1,400
3)
Interest
income
accrued FRw
6,600
4)
Electricity
expense
prepaid
FRw1,500
5)
Interest
expense
unpaid
FRw10,000
6)
Rent expense
accrued
FRw2,200
7)
Depreciation:
Buildings 5% Straight
line basis;
Furniture 10%
Reducing
balance basis;
Equipment –
20%
Reducing
balance basis
8)
The
allowance for
doubtful debt
is to be adjusted to FRw10,000
You are required to prepare:
(a) Susan’s Income statement for the year ended 31 July 2009
(b) Susan’s Balance sheet as at 31 July 2009
Six: Errors
Q71.
(i)
(ii)
(iii)
(iv)
(v)
(vi)
Give the journal entries needed to record the corrections of the following. Narratives are required.
Extra capital of FRw 100,000 paid into the bank had been credited to Sales account.
Goods taken for own use FRw 70,000 had been debited to General Expenses.
Private insurance FRw 8,900 had been debited to Insurance account.
A purchase of goods from Kelly FRw 857 had been entered in the books as FRw 58,700.
Cash banked FRw 39,000 had been credited to the bank column and debited to the cash column in
the cashbook.
Cash drawings of FRw 40,000 had been credited to the bank column of the cashbook.
26
Returns inwards FRw 16,800 from Carthy had been entered in error in Charlton’s account.
A sale of a motor cycle FRw 100,000 had been credited to Motor Expenses.
. The following errors were discovered in the accounts for the year ended 31 December 2009
Vehicle repairs of FRw240,000 were debited to the Motor vehicles account
Insurance expense of FRw 60,000 was debited in the maintenance expense account
Purchase on credit from Samsung FRw47,000 was credited in Purchases account and debited in
Sumsung account
(iv) The debit side of Bank account was overcast by FRw26,000 while the sales account had been
overstated by the same amount.
(v)
Purchases invoice of FRw23,000 from Rigotech was discovered under the office tray unrecorded
(vi) Purchase of Machinery for FRw560,000 was debited in the fuel and electricity account
(vii) Payment by cheque for acquisition of furniture for FRw352,000 was debited in the bank account
and credited in the furniture account.
(viii) Cash sales of 142,000 was recorded in both accounts as FRw124,000
Prepare journal entries to correct these errors
(vii)
(viii)
Q72.
(i)
(ii)
(iii)
Q73.
A bookkeeper extracted a list of account balances on 31 December 2009 that failed to agree by FRw3,300,
a shortage on the credit side of the list of account balances. A suspense account was opened for the
difference.
In January 2010 the following errors made in 2009 were found:
(i) Sales daybook had been undercast by FRw1,000.
(ii)
Sales of FRw2,500 to Church had been debited in error to Chane account.
(iii)
Rent account had been undercast by FRw700.
(iv) Discounts received account had been under cast by FRw3,000.
(v)
The sale of a furniture at book value of FRw 2,000 had been credited in error to Sales account
FRw3,600.
You are required to:
a) Show the journal entries necessary to correct the errors.
b) Draw up the suspense account after the errors described have been corrected.
c) If the net profit had previously been calculated at FRw79,000 for the year ended 31 December
2009, show the calculations of the corrected net profit
Q74. .
Uwamwiza had extracted the list of account balances which did not agree by a figure of FRw51,000,
credit totals exceeding debit totals. She went ahead and prepared the income statement for the year ended
30 September 2009 which showed a profit of FRw1,030,000.
After going through the accounts, she discovered the following errors.
(i)
The discount allowed total for the month of June 2006 of FRw 47,500 was credited in the discount
received account, otherwise the specific entries in the accounts receivable was right.
(ii) A sales invoice to Mucuruzi of FRw 52,000 was discovered under the office table unrecorded.
(iii) A credit note issued by the entity to Mujenzi of FRw4,700 was debited in Mujenzi’s account and
credited in the returns in account.
(iv) Purchases of FRw33,000 by cheque was debited in the equipment account.
(v)
Rent expense of FRw 77,000 was debited in the insurance expense account.
(vi) Payment by cheque of FRw21,000 for advertisement was debited in both accounts.
(vii) The returns in daybook was overcast by FRw 44,000
Required:
(a) Prepare the journal entries with narratives to correct these errors
(b) Prepare the suspense account after correcting the errors
(c) Prepare a statement of corrected profit or loss for the period
Q75.
27
William Ndirimbo, in business as a dealer in hardware goods, found that his List of account balances at 30
September 2009 did not agree and accordingly opened a suspense account and placed the difference of
FRw 6,020 on the debit side. A subsequent search revealed the following errors:
1. Goods returned by Maniraguha FRw1,240 had been credited to his account and entered in the returns
outwards book.
2. A cheque for FRw470 received from Jambi had been dishonoured and posted in error from the cash
book to the general expenses account. Ndirimbo had no intention as yet of treating the debt as
irrecoverable.
3. Ndirimbo had taken goods, value FRw20,200 at cost, for his personal use: no entry had been made in the
books.
4. A credit note for FRw8,500 in respect of goods returned to Ameki color a supplier had been incorrectly
credited to both sales account and returns outwards account.
5. A payment by cheque of FRw45,000 for having the computer installation serviced had been posted to
the computer asset account.
Required:
(i) Journal entries correcting these errors/omissions, including narrations.
(ii) The suspense account
(ii) A statement of corrected profit if the profit reported was FRw 265,000
Seven: Control accounts
Q76. Poesha Limited keeps sales and purchases control accounts in the General Ledger. The
transactions for the month ended 30 April 2010 were as follows:
FRw
Credit balances on 1 April 2010
-Sales ledger
154,000
-Purchases ledger
569,000
Debit balances on 1 April 2010
-Sales ledger
956,000
-Purchases ledger
196,000
Credit balances on 30 April 2010
-Sales ledger
178,000
Debit balances on 30 April 2010
Purchases ledger
189,000
Credit purchases
2,450,000
Credit sales
4,563,000
Cheques received from accounts receivable
3,140,000
Cash received from accounts receivable
1,367,000
Cheque payments to accounts payable
1,994,000
Cash payments to accounts payable
352,000
Bad debts written off
68,000
Discounts received
104,000
Discounts allowed
169,000
Contra entry to sales ledger from purchases ledger
234,000
Refunds to accounts receivable
62,000
Returns outwards
138,000
Returns inwards
231,000
Required Sales ledger and purchases ledger control accounts for the month ended 30 April 2010.
Q77.
a) Define control accounts?
b) List four reasons for preparing control accounts.
c) Janet had the following information for the month of May 2010 regarding transactions of sales and
purchases.
FRw
Debtors opening debit balance
840,000
Creditors opening credit balance
646,000
Debtors opening credit balance
42,000
28
Creditors opening debit balance
Total Sales (30% in cash)
Total Purchases (40% cash)
Bad debts
Allowance for doubtful debts
Cash received from debtors
Cash paid to creditors
Cheques received from debtors
Cheques paid to creditors
Cash Refund to debtors
Returns inwards
Discounts received
Interest charged on overdue debtors
Returns outwards
Discounts allowed
Debtors cheques dishonoured
Contras
Creditors closing debit balance
Debtors closing credit balance
Required: Prepare control accounts for the month of May 2010 for Janet
38,000
4,800,000
3,500,000
130,000
150,000
400,000
500,000
2,400,000
1,200,000
89,000
52,000
45,000
145,000
43,000
15,000
140,000
53,000
23,000
35,000
Q78.
a) Define control accounts and state four reasons of maintaining control accounts
b) Sambimana operates a business in town. The following information was obtained for the month of
March 2010
FRw
Accounts receivable (Debtors)balance 01 March (Debit)
522,000
(Credit)
23,000
Accounts payable balance (Creditors) 01 March (Debit)
20,000
(Credit)
323,400
Credit sales
1,450,000
Cash sales
310,000
Cheque refund to customers
20,000
Dishonoured cheque
110,000
Allowance for doubtful debts
47,000
Cash received from customers
400,000
Cheques received from customers
830,000
Discount allowed
68,000
Returns inwards
10,000
Bad debts
14,800
Credit purchases
930,000
Cash purchases
125,000
Cheque refund by suppliers
13,600
Cheques paid to suppliers
480,000
Cash paid to suppliers
120,000
Discount received
55,600
Returns outwards
14,700
Contras
33,000
Accounts payable (Creditors) balance 31 March (Debit)
16,000
Accounts receivable (Debtors) balance 31 March (Credit)
42,000
Required:
Control accounts for the month of March 2010
29
(a) The balances and transactions affecting the control accounts of MUKUU Ltd. for the month of
November 2019 are listed below:FRw
Balances on 1 November 2019:
Sales ledger
9,123,000 (debit)
211,000 (credit)
Purchases ledger
4,490,000 (credit)
88,000 (debit)
Transactions during November 2019:
Purchases on credit
18,135,000
Allowances from suppliers
629,000
Receipts from customers by cheques
27,370,000
Sale on credit
36,755,000
Discount received
1,105,000
Payments to accounts payable by cheques
15,413,000
Contra settlements
3,046,000
Bills of exchange receivable
6,506,000
Allowances to customers
1,720,000
Customers cheques dishonoured
489,000
Cash received from credit customers
4,201,000
Refunds to customers for overpayments
53,000
Discounts allowed
732,000
Balances on 30 November 2019
Sales ledger
136,000 (credit)
Purchases ledger
67,000 (debit)
Required:
The sales ledger and purchases ledger control accounts for the month of November 2019 and show the
respective debit and credit closing balances on 30 November 2019
Revision Questions
Paper one
Question One (25 marks)
(a) State three disadvantages for incomplete records/single entry
(6 marks)
(b) The following is a summary of Yambi’s bank account for the year ended 31st December 2009:
FRw
FRw
Balance 1st Jan. 2008
5,000,000 Payment to creditors
20,000,000
Receipts from debtors
35,000,000 Rent
12,000,000
Balance 31st Dec. 2009
6,220,000 Insurance
5,400,000
Office expenses
5,270,000
Drawings
3,550,000
46,220,000
46,220,000
Additional information available:
Inventory
Trade payables
Trade receivables
Rent prepaid
As at 31st
As at 31st
December 2008
December 2009
FRw
FRw
22,000,000
17,000,000
5,300,000
5,000,000
12,000,000
19,000,000
20,000
50,000
30
Insurance owing
Machinery at valuation
150,000
4,700,000
200,000
4,350,000
All of the business takings have been paid into the bank with the exception of FRw5,600,000. Out of this,
Max paid wages of FRw2,500,000,drawings of FRw600,000 and purchase of goods FRw2,500,000.
Required:
Prepare the income statement and balance sheet for the year ended 31st December 2009. (19 marks)
Question Two (25 marks)
a) Define control accounts and state any two reasons of maintaining control accounts (3 marks)
b) Senga operates a business in town. The following information was obtained for the month of March
2010
Accounts receivable (Debtors)balance 01 March (Debit)
Accounts payable balance (Creditors) 01 March (Debit)
Credit sales
Cash sales
Cheque refund to customers
Dishonored cheque
Cash received from customers
Cheques received from customers
Discount allowed
Returns inwards
Bad debts
Credit purchases
Cash purchases
Cheque refund by suppliers
Cheques paid to suppliers
Cash paid to suppliers
Discount received
Returns outwards
Contras
Accounts payable (Creditors) balance 31 March (Debit)
Accounts receivable (Debtors) balance 31 March (Credit)
Required:
Control accounts for the month of March 2010
FRw
800,000
20,000
1,450,000
310,000
20,000
110,000
400,000
830,000
68,000
10,000
14,800
930,000
125,000
13,600
480,000
120,000
55,600
14,700
33,000
16,000
42,000
(22 marks)
Question Three (25 marks)
a) Briefly state reason for suspense account
(3 marks)
b) The following errors were discovered in the accounts for the year ended 31 December 2009
(i) Machinery repairs of FRw240,000 were debited to the Machinery cost account
(ii) Insurance expense of FRw 60,000 was debited in the maintenance expense account
(iii)Purchase on credit from Sygon FRw98,000 was credited in Purchases account and debited in Sygon
account
(iv) The debit side of Bank account was overcast by FRw77,000 while the sales account had been
overstated by the same amount.
(v) Purchases invoice of FRw130,000 from Upstore was discovered under the office tray unrecorded
(vi) Acquisition of Machinery for FRw800,000 was debited in the fuel and electricity account.
(vii) Payment by cheque for acquisition of machinery for FRw300,000 was debited in the bank
account and credited in the Machinery cost account
(viii) Cash sales of FRw142,000 was recorded in both accounts as FRw124,000
Required: (Note:All machinery is depreciate machinery at 20% on cost)
31
Prepare journal entries to correct these errors (No narratives)
(22 marks)
Question Four (25 marks)
ABC Industries had the following balances for the year ended 31 May 2010
FRw
Purchase of raw materials
8,400,000
Inventory cost on 01 June 2009:
Work-In-Progress
350,000
Raw materials
130,000
Finished goods
600,000
Factory wages and salaries
1,400,000
Factory direct expenses
800,000
Inventory cost on 31 May 2010:
Work-In-Progress
200,000
Raw materials
190,000
Finished goods
800,000
Rent of factory
1,200,000
Rent of offices and showroom
400,000
Factory machinery cost
12,000,000
Office equipment cost
4,300,000
Furniture cost
850,000
Factory managers salary
1,300,000
Accumulated depreciation
Factory machinery
4,500,000
Office equipment
1,200,000
Furniture
350,000
Marketing expenses
250,000
Factory fuel, electricity and water
1,600,000
Other administration expenses
460,000
Additional information:
1. Accruals and prepayment
 Electricity prepaid FRw250,000
 Office Rent accrued FRw140,000
 Factory wages unpaid FRw60,000
2. Depreciation is provided on straight line basis as follows
 Factory machinery 25%
 Office equipment 20%
 Furniture10%
 50% of the furniture is used in the factory while the rest is used in the offices
Required: Prepare:
a) Manufacturing account for the year ended 31 May 2010
(15 marks)
b) Income statement for the year ended 31 May 2010
(10 marks)
Paper two
Question One (Total: 25 marks)
a) Briefly describe the following errors
(i) Error of omission
(3 marks)
(ii)
Error of commission
(3 marks)
(iii)
Error of original entry
(3 marks)
b) Give the journal entries needed to record the corrections of the following. Narratives are not
required.
(i) Extra capital of FRw 140,000 paid into the bank had been credited to sales account.
32
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
Goods taken for personal use FRw 70,000 had been debited to general Expenses.
Personal insurance FRw 80,000 had been debited to Insurance account.
A purchase of goods from Socobico FRw 85,000 had been entered in the accounts as FRw
58,000.
Cash banked FRw 39,000 had been credited to the bank column and debited to the cash column
in the cashbook.
Cash drawings of FRw 40,000 had been credited to the bank column of the cashbook.
Returns inwards FRw 16,800 from Sandrine had been entered in error in Andrine’s account.
A sale of a motor cycle FRw 700,000 had been credited to Motor Expenses.
(16 marks)
Question Two (Total: 25 marks)
a) Briefly describe the imprest system of maintaining the petty cash book
(3 marks)
b) Differentiate between a bad debt and bad debt recovered
(4 marks)
c) Define prime cost
(3 marks)
d) Sogistar manufactures bags for use at the regional markets. The following information was
provided for the year ended 31 July 2010
FRw
Raw materials used
2,000,000
Direct factory wages
1,300,000
Royalties for bags design
400,000
Other factory overheads
10,000,000
Opening Inventory:
Work in progress
350,000
Finished goods (at valuation)
900,000
Closing Inventory:
Work in progress
500,000
Finished goods (at valuation)
1,100,000
Sales
31,500,000
Additional information
1. Goods are transferred from the factory to the warehouse at a mark up of 25%
2. The factory manager is entitled to 20% of the profit before the commission (this had not been
included in the other factory overheads)
Required:
(i) Prepare the manufacturing account (showing clearly the prime cost, manufacturing cost, Manufacturing
profit and transfer value)
(10 Marks)
(ii) Prepare extract of the income statement (showing clearly the gross profit/loss from trading,
Manufacturing profit and increase/ decrease in allowance for Unrealized profit on closing inventory)
(5 Marks)
Question Three (Total: 25 marks)
c) Define and briefly describe how matching concept is applied to depreciation (3 marks)
d) Briefly define the straight line and reducing balance methods of depreciation (4 marks)
e) Sambiri provided the following information from the books of original entry and the ledgers
FRw
Debtors opening debit balance
400,000
Debtors opening credit balance
30,000
Creditors opening debit balance
10,000
Creditors opening credit balance
200,000
Total Sales (80% on credit)
1,700,000
Total Purchases (50% on credit)
1,000,000
Discount received
30,000
33
Discount allowed
Returns in
Returns out
Dishonoured cheque
Increase in allowance for doubtful debts
Cash and cheques received from debtors
Cash and cheques paid to suppliers
Cash Refund to debtors
Contras
40,000
3,000
2,000
75,000
327,000
350,000
200,000
15,000
80,000
Required
(i) Sales ledger control account
(ii)
Purchases ledger control account
(18 marks)
Paper three
Q 1 Trocom provided the following information about their non-current assets at 31 May 2009
Cost/Valuation
Accumulated
FRw
depreciation FRw
Land and building (Land:FRw1,200,000)[cost]
4,500,000
660,000
Utensils [Valuation]
870,000
A. Transactions made during the year ended 30 June 2010:
1. The Land and buildings were revalued at 31 May 2009 resulting to surplus of FRw600,000 for land and
FRw800,000 for building.
2. Acquisition of utensils FRw230,000 and tools disposed FRw50,000. Valuation at 30 June 2010
FRw900,000
B. Depreciation policy:
3. Buildings useful life 50 years, nil residual value and straight line method
4. Revaluation method
Required:
a) Calculate the depreciation for year ended 30 June 2010 for:
(i) Buildings
(3 marks)
(ii)
Utensils
(3 marks)
b) Prepare the following accounts for the year ended 30 June 2010
(i) Land and buildings – revalued
(2 marks)
(ii)
Accumulated depreciation – buildings
(2 marks)
(iii)
Revaluation reserve
(2 marks)
c) Briefly describe the following methods of depreciation
(i) Unit of production
(1 mark)
(ii)
Revaluation method
(1 mark)
(iii)
Sum of digits
(1 mark)
Q2. Donji’s trial balance did not balance by a figure of FRw418,000 debit exceeding the credit. Profit
reported amounted to FRw 3,200,000
After going through the accounts, the following errors were found
1. A credit note of FRw47,000 from Rotorwa a supplier had been debited in Returns out and credited
in Rotorwa
2. Cash sales of FRw23,000 was debited in both accounts
3. Disposal proceeds of cash FRw300,000 for furniture was debited in cash and credited in Suspense.
The furniture had a carrying amount of FRw450,000.
4. Discount allowed of FRw52,000 was debited in discount received account
5. Purchases daybook and returns in daybook were each overcast by FRw36,000
Required:
a) Journal entries for the correction of the errors (no narratives)
(8 marks)
34
b) Suspense account
c) Statement of corrected profit
d) Briefly describe the error of commission
(2½ marks)
(4 marks)
(½ mark)
Paper four
Question One
Sogis manufactures bags for use at the regional markets. The following information was provided for the
year ended 31 July 2010
FRw
Raw materials used
2,000,000
Direct factory wages
1,300,000
Royalties for bags design
400,000
Other factory overheads
10,000,000
Opening Inventory:
Work in progress
350,000
Finished goods (at valuation)
900,000
Closing Inventory:
Work in progress
500,000
Finished goods (at valuation)
1,100,000
Sales
32,000,000
Additional information
3. Goods are transferred from the factory to the warehouse at a mark up of 25%
4. The factory manager is entitled to 20% of the profit before the commission (this had not been
included in the other factory overheads)
Required:
(iii)
Prepare the manufacturing account (showing clearly the prime cost, manufacturing cost, Manufacturing
profit and transfer value)
(5 Marks)
(iv) Prepare extract of the income statement (showing clearly the gross profit/loss from trading,
Manufacturing profit and increase/ decrease in allowance for Unrealized profit on closing inventory)
(2 ½ Marks)
Question two
Sambiri provided the following information from the books of original entry and the ledgers
FRw
Debtors opening debit balance
840,000
Debtors opening credit balance
42,000
Total Sales (50% in cash)
4,800,000
Bad debts
130,000
Increase in allowance for doubtful debts
150,000
Cash and cheques received from debtors
400,000
Cash Refund to debtors
89,000
Interest charged on overdue debtors
145,000
Debtors cheques dishonoured
140,000
Contras
53,000
Debtors closing credit balance
35,000
The total of debtors closing debit balances in the sales ledger showed FRw3,035,200
After investigation of the accounts, the following errors were discovered:
(i) An invoice to a customer of FRw45,000 was entirely omitted from the sales daybook.
(ii)
An invoice for FRw6,400 was posted as FRw4,600 in the customer’s account.
(iii)
A credit note for FRw6,500 was entered on the debit side of the customer’s account.
Required
a) Sales ledger control account (before the adjustment of the errors (i) (iii) and (iii)) (5½ marks)
b) Adjusted sales ledger control account
(½ mark)
35
Paper five
Question One
Sogistar manufactures bags for use at the regional markets. The following information was provided for
the year ended 31 July 2010
FRw
Raw materials used
2,000,000
Direct factory wages
1,300,000
Royalties for bags design
400,000
Other factory overheads
10,000,000
Opening Inventory:
Work in progress
350,000
Finished goods (at valuation)
900,000
Closing Inventory:
Work in progress
500,000
Finished goods (at valuation)
1,100,000
Sales
31,500,000
Additional information
1. Goods are transferred from the factory to the warehouse at a mark up of 25%
2. The factory manager is entitled to 20% of the profit before the commission (this had not been
included in the other factory overheads)
Required:
(i) Prepare the manufacturing account (showing clearly the prime cost, manufacturing cost, Manufacturing
profit and transfer value)
(5 Marks)
(ii) Prepare extract of the income statement (showing clearly the gross profit/loss from trading,
Manufacturing profit and increase/ decrease in allowance for Unrealized profit on closing inventory)
(2 ½ Marks)
Question Two [25 marks]
(a)
(i) Give three advantages by using Control accounts
(3 marks)
(ii) The financial year of the Better Trading Company ended on 30 April 2011. You have been
asked to prepare a Total Accounts Receivables account and a Total Accounts payables account
in order to produce end of year figures for accounts receivable and accounts payables for the
draft final accounts.
You are able to obtain the following summary information for the financial year from the books of
original entry:
FRw
Sales – cash
3,448,900
– credit
2,681,870
Purchases – cash
144,400
– credit
4,966,000
Total receipts from customers
6,005,700
Total payments to suppliers
5,039,700
Discounts allowed
55,200
Discounts received
35,100
Refunds given to cash customers
50,700
Balance in the sales ledger set off against balance in purchases ledger
700
Bad debt written off
7,800
Increase in the allowance for doubtful debts
9,000
36
Credit notes issued to credit customers
41,400
Credit notes received from credit suppliers
14,800
According to the audited financial statements for the previous year, accounts receivable and accounts
payable as at 1 May 2010 were FRw 265,550 and FRw 434,500 respectively.
Required:
Draw up the Ledger controlaccounts for accounts receivable and accounts payable (7 marks)
(b)
(i)
Explain three reasons of preparing bank reconciliation statements (3 marks)
(ii)
The following is a summary of a cash book as presented by George Ltd for the month of
October 2011.
Cash book
Receipts
1,469,000 Balance b/d
761,000
Balance c/d
554,000 Payments
1,262,000
Total
2,023,000 Total
2,023,000
All receipts are banked and all payments are made by cheque. On investigation you discover:
(1) Bank charges of FRw 136,000 entered on the bank statement have not been entered in the cash
book.
(2) Cheques drawn amounting to FRw 267,000 had not been presented to the bank for payment.
(3) Cheques received totaling FRw 762,000 had been entered in the cash book and paid into the bank
but had not been credited by the bank until 3 November 2011.
(4) A cheque for FRw 22,000 for sundries had been entered in the cash book as a receipt instead of as a
payment.
(5) A cheque received from K. Jones for FRw 80,000 had been returned by the bank and marked ‘no
funds available’ no adjustment has been made in cash book.
(6) A standing order for a business rates installment of FRw 150,000 on 30 October 2011 had not been
entered in cash book.
(7) All dividends received are credited directly to the bank account. During October amounts totaling
FRw 62,000 were credited by the bank but no entries were made in the cash book.
(8) A cheque drawn for FRw 66,000 for stationery had been incorrectly entered in the cash book as
FRw 60,000
(9) The balance brought forward in the cash book should have been FRw 711,000 not FRw 761,000
Required
1. Show the adjustments required in the cash book
(7 marks)
2. Prepare a bank reconciliation statement as at 31 October 2011
(5 marks)
Question Three [25 marks]
a) “Agreement of Trial Balance is a conclusive proof of the accuracy of accounting records”. You
heard Michele say this in one of the conversations you had after an accounting class.
Required:
i. Do you agree or disagree with the above statement of Michele?
(2 marks)
ii. Support your answer with suitable examples of errors.
(7 marks)
b) On going through the Trial Balance of OMEGA Company, you find that the debit is in excess by
FRw 150,000. This was credited to “Suspense Account”. On a close scrutiny of the books, the
following mistakes were noticed:
1) The rent expense account has been cast in excess by FRw 475,000.
2) The sales account has been totaled short by FRw 100,000.
3) One item of purchase of FRw 25,000 has been posted from the day book to the ledger as FRw
250,000.
4) The sales return of FRw 100,000 from Mr John, a customer, has not been recorded in the sales
return account, but credited in John’s account.
5) A cheque of FRw 500,000 issued to the Supplier (creditor) towards his dues has been wrongly
debited to the purchases account.
37
6) A credit sale of FRw 50,000 has been credited to the sales and also to the Sundry Debtors’
Account.
Note: Before rectification of the above mistakes the income statement of OMEGA Company,
showed a net loss of FRw 975,000.
Required:
(i)
Pass the necessary journal entries to correct the above mistakes
(6 marks)
(ii)
Prepare the “Suspense Account” as it would appear in the ledger (6 marks)
(iii) Prepare a statement of corrected net profit for the period.
(4 marks)
Question Four [25 marks]
a) In accounting for Non-Profit-Oriented Organizations, Subscriptions owing at the end of accounting
period are treated as an asset. However, some organizations do not include subscriptions which
have owed for a long time in their balance sheets as assets. They argue by saying that some
members can lose interest in the organization and go somewhere else. As a result, no need to
include unpaid subscriptions in the balance sheet as asset.
Required:
(i)
Are these organizations correct or not on their treatment of subscriptions owing?
(2 marks)
(ii)
Support your answer with the necessary accounting principle(s)
(3 marks)
b) The receipts and payments account of the Kicukiro Academy Football Club for the year ended 31st
March, 2011, was as under:
Receipts
FRw
Payments
FRw
Balance b/d (1.4.2010)
48,000 Purchase of Balls
80,000
Subscriptions received
246,000 Tournament Fees
10,000
Interest
2,000 Affiliation Fees
2,000
Sale of furniture
10,000 Rent of playground
5,000
Donations for Club Building
60,000 Refreshment Expense
4,000
Travelling Expenses
30,000
Investment Purchased
100,000
Salaries
12,000
Miscellaneous Expenses
8,000
Balance c/d (31.3.2011)
115,000
366,000
366,000
Additional Information:
1. The subscriptions received include FRw 10,000, outstanding subscriptions for the year 2009-2010.
Subscriptions for the year 2010-2011 amounting to FRw 16,000 is still outstanding from members.
Some members have paid subscriptions for the year 2011-2012 amounting to FRw 8,000 which is
included in the subscriptions received.
2. Interest accrued but not received FRw 500
3. The book value of the furniture sold was FRw 14,000
4. The rent of playground: FRw 6,000 and salary FRw 5,000 for the year 2010-2011 are still
outstanding and rent of playground of the year 2009-2010: FRw 1,000 has been paid during this
year.
5. There is stock of balls with the club valued at FRw 4,000 as on 31st March, 2011.
Required:
(i)
Prepare the Club’s Income and Expenditure Account for the year ended 31st March, 2011
(10 marks)
(ii)
Prepare the Subscriptions Account
(5 marks)
(iii) Prepare a Balance Sheet of the Club as on 31st March, 2011
(5 marks)
Question Five [25 marks]
a) How can manufacturing accounts contribute to the relevance and understandability of financial
information?
(2 marks)
38
b) Illustrate with suitable examples the following terms in manufacturing accounts
(i) Factory overheads
(2 marks)
(ii) Prime cost
(2 marks)
(iii)Work in progress
(2 marks)
c) Serge manufactures plumbing materials. For the year ended 31 October 2011 the following
balances were extracted.
FRw
Inventories as at cost 1 November 2010
Raw materials
1,260,000
Work in progress
1,140,000
Finished goods
525,000
Purchases of raw materials
9,600,000
Direct expense
645,000
Direct labour
1,800,000
Factory overheads:
Electricity and fuel
240,000
Rent
1,350,000
Other expenses
Transport
300,000
Printing
150,000
Foreman salaries
750,000
Machinery cost
1,350,000
Accumulated depreciation –machinery
180,000
Additional information
i.
Inventories as at cost 31 October 2011 were as follows
Raw materials
FRw1,310,000
Work in progress
FRw1,256,000
Finished goods
FRw610,000
ii.
Depreciation is to be provided at 10% reducing balance basis for plant and machinery
iii. Amounts accrued as at 31 October 2011 for direct labour amounted to FRw360,000 and direct
expense prepaid as at 31 October 2011 amounted to FRw45,000
iv.
The other expenses are to be apportioned to the Manufacturing and administration expenses as
follows
Expense:
Manufacturing % Administration %
Transport
60
40
Printing
30
70
Foreman salaries
70
30
Required:
Manufacturing account for the year ended 31 October 2011
(17 marks)
Paper six
Question One
(a) Briefly define the following terms
(2 marks)
(i) Business entity concept
(ii)
Substance over form concept
(iii)
Going concern concept
(iv) Relevance of financial information
(b) Logistico provided you the following financial information as at 01 September 2012 for his shop.
Logistico, Statement of financial position
As at 01 September 2012
FRw
Assets
39
Non-current assets
Equipment and furniture
Machinery
Total non-current assets
Current assets
Inventory
Receivables
Cash
Total current assets
Total assets
Equity and Liabilities
Capital at beginning (01/09/2012)
1,500,000
4,200,000
5,700,000,
2,000,000
3,400,000
80,000
5,480,000
11,180,000
7,280,000
Current liabilities
Payables
1,800,000
Short term loan
1,400,000
Bank overdraft
700,000
Total equity and liabilities
11,180,000
During the month of September 2012 the following transactions took place
1. Received a loan from BeeKey FRw3,000,000 (to be repaid back in 2015) and bought a vehicle with
the amount paid to Akagera motors.
2. Owner took personal television (equipment) and put it in the shop FRw 600,0000.
3. Sold inventory that cost FRw 800,000 for FRw 1,100,000 received in cash and deposited it in the
business bank account.
4. Paid a supplier (included in payables) by cheque FRw200,000.
5. Owner took FRw10,000 cash for personal use
Required:
(i) State the effects of each of the above transactions on the balance sheet items (remember the
accounting equation always hold to be true)
(3 marks)
(ii)
Prepare the Statement of financial position after all the transactions stated above 31 September
2012.
(5 marks)
(Total 10 marks)
Question Two
(a) Briefly describe each of the following terms
(2 marks)
(i) Credit Note
(ii) Debit Note
(iii) Sales Invoice
(iv) Imprest system
(b) The following transactions took place during the month of March 2012 in the business of Miss.
Jannice
March
1st
Started business with capital in cash of FRw250,000 and in bank of 350,000
nd
2
Bought goods on credit from the following persons: G. Brusse FRw74,000; Peter FRw93,000;
J.Liliane FRw35, 000;
th
4
Sold goods on credit to: Brain FRw83,000; Castle FRw48,000; Tom FRw182,000,
th
6
Paid rent by cash FRw12,000.
th
9
Returned goods to the following: G. Brusse 14,000; J.Liliane 5,000
th
10
Tom paid us FRw150,000 by cheque.
12th We paid G. Brusse and Peter the amount owing by cheque.
15th Paid carriage by cash FRw23,000.
40
18th
Bought goods on credit from Peter FRw43,000; J Liliane FRw110,000.
st
21
The following returned goods to us: Brain FRw17,000; Castle 10,000
st
31
Jannice took cash from the business for his personal use FRw18,000
Required:
(i) Prepare sales daybook, purchases daybook, returns inwards daybook, and returns outwards
daybook
(2 marks)
(ii) Post the relevant transactions in sales ledger and purchases ledger only, completing double entry in
the records of Miss Jannice for the month of March 2012 and balance off the accounts, (6marks)
(Total 10 marks)
Question Three
(a) Explain three reasons of preparing bank reconciliation statements
(3 marks)
(b) On 31 August 2012 the Bank column of Ngoboka Cash book showed a balance of FRw4,500,000. The
bank statement as at 31 august 2012 showed a credit balance of FRw8,850,000 on the account. You
checked the bank statement with the cash book and found that the difference was due to the following.
1. A standing order to CORAR insurance for FRw 600,000 had been paid by the bank
2. Bank interest receivable of FRw 720,000 had been credited in the bank statement only
3. Bank charges of FRw 90,000 had been debited in the bank statement.
4. A credit transfer of FRw 780,000 form KB ltd had been paid direct into the bank account
5. Tom’s deposit account balance of FRw 4,200,000 had been transferred into his bank current
account
6. A returned cheque of FRw 210,000, dishonored by Hope, had been entered on the bank statement
only
It was also found out that two cheques payable to Ndamage FRw 750,000 and Mugisha FRw870,000 had
been entered in the cash book but had not been presented for payment. In addition a cheque for FRw
2,070,000 had been paid into the bank on 31/08/2012 but had not been credited on the bank statement until
2 September 2012.
Required:
(i) Starting with the cash book balance and write the cash book up to date
(ii) Draw up a bank reconciliation statement as on 31 August 2012.
(4 marks)
(3 marks)
(Total 10 marks)
Paper seven
Question One (10 marks)
a) In respect to adjustments to financial statements;
(i) How are bad debts dealt with differently from doubtful debt?
(1 mark)
(ii)
State how prepaid income affects profit/loss and assets/liabilities
(1 mark)
(iii)
Increase of an expense due to accrual affects which item in the balance sheet
(½ mark)
b) On checking the draft accounts for the year to 31 October 2012 prepared by Landies you note that she
has not made adjustments for the following items:
1. Her rent income account includes a receipt of FRw 2,700,000 for the 9 months to 31 January 2013 and
an amount received FRw 2,250,000 on 01 September 2011 for 9 months to 30 April 2012.
2. Water and electricity has only been paid up to 30 September 2012 for FRw 1,080,000. The last invoice
included in Landies’ records was for the three months to that date and was for FRw 150,000. A bill of
FRw240,000 was paid included in the amount stated that related to the year ended 31 October 2011.
3. Trade receivables of FRw 3,400,000 includes a balance of FRw 300,000 due from a customer who has
gone out of business. Landies does expect to receive only of FRw 100,000 in respect of this balance.
You have calculated that an allowance of FRw 140,000 in respect of the remaining balances is
required. Landies had an allowance from previous year of FRw 170,000.
Required: Prepare the
(i) Extract of the income statement for the year ended 31 October 2012 and
(4 marks)
41
(ii)
Extract Statement of financial position as at 31 October 2012.
(3½ marks)
Question two (10 marks)
a) Explain briefly capital expenditure and three causes of depreciation
(2 marks)
b) Mugisha a transportation business man owns motor vans and has a financial year end of 31st December.
On 1st January 2011, the cost of his motor vans was FRw 8,000,000 with a net book value of FRw
3,800,000. On 1st April 2011, Mugisha’s business acquired another motor van at a cost of FRw
3,000,000 cash. On 15th April 2011, a motor van which had a cost of FRw 4,500,000 and had been
depreciated for 3 years was traded in for a brand new motor van that cost FRw 7,600,000. The trade in
value was FRw 2,500,000. At 31st December 2011 the balance of the cost of the new motor van was
still due. On 31st October 2011, the motor van which had been purchased on 1st April 2011 was sold for
FRw 1,500,000.
The business’ policy is to charge depreciation at the rate of 20% per annum on reducing balance method.
The company charges full year depreciation in the year of acquisition and none in the year of disposal.
Required.
(8 marks)
(i) Motor van cost account for the year ended 31st December 2011
(ii)
Accumulated depreciation - Motor van for the year ended 31st December 2011
(iii)
Disposal for Motor van account for the year ended 31st December 2011
Question three (10 marks)
a) Describe any two errors that are not revealed by the trial balance;
(1 mark)
b) Kinyaneza had extracted the list of account balances which did not agree by a figure of FRw 40,000,
debit totals exceeding credit totals. She went ahead and prepared the income statement for the year
ended 31 October 2012 which showed a profit of FRw 7,830,000.
After going through the accounts, she discovered the following errors.
(ix) Payment by cheque of FRw 210,000 for advertisement was debited in both accounts.
(x)
For the month of October 2012 the discount allowed total of FRw 730,000 was credited in the
discount received account and discount received total and FRw 540,000 was debited in discount
allowed account, otherwise the specific entries in the accounts receivable accounts and accounts
payable accounts was right.
(xi) A credit note issued by the business to Kinyanga (customer) of FRw 120,000 was debited in
Kinyango’s (supplier) account and credited in the returns out account.
(xii) Purchases of FRw 400,000 by cheque was debited in the Furniture account. Furniture is depreciated
at 10% on cost with full year’s depreciation in the year of acquisition.
Required:
(d) Prepare the journal entries to correct these errors (no narratives)
(6 ½ marks)
(e) Prepare the suspense account
(1 mark)
(f) Prepare a statement of corrected profit or loss for the period
(1 ½ marks)
Question four (10 marks)
a) State any two reasons for preparation of control accounts
(1 mark)
b) Peter and Sons Company had the following information relating to sales on credit for the month of
June 2012.
FRw
Sales ledger at the start of the month (total debit balances)
3,816,000
Sales ledger at the start of the month (total credit balances)
22,000
Cheques received
6,239,000
Sales
7,090, 000
Cash received
104,000
Interest charged by Peter and Sons due to delayed receipts
50,000
Bad debts written off
306,000
Increase in allowance for doubtful debts
450,000
Cheques dishonored
29,000
42
Return inwards
664,000
Cash refunded to the customer due to over payment of their account
37,000
Discount allowed
298,000
Sales ledger at the end of the month (total debit balances)
3,559,000
Sales ledger at the end of the month (total credit balances)
40,000
Required: Prepare sales ledger control account for the month of June 2011 for Peter and sons (5 marks)
c) From the following determine the manufacturing cost, transfer value and increase or decrease in
unrealized profit
(4 marks)
FRw
Purchases or raw materials
10,000,000
Direct labour
4,000,000
Factory overheads before factory manager’s commission
5,000,000
Manufacturing profit before factory manager’s commission
1,100,000
Opening inventory: Raw materials cost
440,000
Opening inventory: Work in progress cost
140,000
Closing inventory: Raw materials cost
380,000
Closing inventory: Work in progress cost
100,000
Opening balance of unrealized profit on inventory
14,000
The factory manager is entitled to 10% commission of manufacturing profit after the commission.
10,000 tanks (finished goods) were transferred from the factory and the finished goods inventory
included 2,000 tanks.
Paper Eight
Question One (10 marks)
c) Give brief description of ;
(iv) Accrued income?
(½ mark)
(v)
Prepaid expense
(½ mark)
(vi) Bad debt
(½ mark)
(vii)
Doubtful debt
(½ mark)
d) On checking the draft accounts for the year to 31 October 2012 prepared by Nyagahene you note that
he had the following information:
Cash Book Accrued b/f
Prepaid b/f
Accrued c/f Prepaid
c/f
Rental income
5,300,000
400,000
540,000
680,000
310,000
Electricity and water
720,000
25,000
56,000
33,000
70,000
Cash Book Balance b/f
Balance c/f
2011
2012
Account receivable
4,300,000
850,000
630,000
Allowance for doubtful debts
140,000
88,000
Bad debts
53,000
22,000
Returns in
15,000
Discount received
3,000
Cash sales
900,000
Cash purchases
2,200,000
Inventory
660,000
890,000
Required: In respect of the above information prepare the;
(iii)
Extract of the income statement for the year ended 31 October 2012 and
(4½ marks)
(iv) Extract Statement of financial position as at 31 October 2012.
(3½ marks)
Question two (10 marks)
c) Explain briefly the steps of disposal of non-current assets
(2 marks)
d) Land Mark heavy machinery had the following machinery balances as at the 01 October 2011.
43
Registration Cost FRw
Residual value FRw Useful life Years
Acquisition Date
BB123
80,000,000
10,000,000
10
01 June 2007
YF367
50,000,000
5,000,000
10
01 May 2006
UK111
17,000,000
Nil
8
01 January 2010
OP654
5,000,000
Nil
5
01 October 2010
During the year ended 30 September 2012:
Land Mark sold YF367 in an auction for FRw25,000,000 cash and paid the amount together with
OP654 traded in for allowance of FRw2,000,000 thereby receiving a new machinery PP333.
The business’ policy on depreciation is that they charge full year depreciation in the year of acquisition and
none in the year of disposal.
Required.
(8 marks)
(iv) Machinery cost account for the year ended 30th September 2012
(v)
Accumulated depreciation - Machinery for the year ended 30th September 2012
(vi) Disposal for Machinery account for the year ended 30th September 2012
Question Three
(c) Differentiate between bank statement and bank reconciliation statements
(2 marks)
(d) On 31 October 2012 the bank column of Fancy’s cash book showed a credit balance of FRw
2,100,000. There was a different amount of closing balance in the bank statement. You checked the
bank statement with the cash book and found that the difference was due to the following.
7. A standing order to MTN for monthly internet of insurance for FRw 224,000 appeared in the bank
statement only
8. Dividends received from Bank of Kigali of FRw 120,000 had been credited in the bank statement
only
9. Bank charges and commission of FRw 140,000 appeared in the bank statement alone.
10. A credit transfer of FRw 414,000 from Summy a customer appeared in the bank statement alone
11. The bank had debited FR155,000 in error in the Fancy’s account
12. Total of FRw 450,000 was the unrepresented cheques and FRw850,000 un-credited cheques
13. A payment to a supplier by cheque of FRw231,000 was shown in the cashbook as payment of cash
and the cheque had aready been debited in the bank statement
Required:
(iii) Update and correct the cashbook
(iv) Prepare a bank reconciliation statement as on 31 October 2012.
(5 marks)
(3 marks)
Question four (10 marks)
d) Differentiate between error of principle and error of commission
(2 marks)
e) LoRistics provided the following information relating to purchases and accounts payables month of
October 2012.
FRw
Purchases ledger at the start of the month (total debit balances)
815,000
Purchases ledger at the start of the month (total credit balances)
10,300,000
Total amount for Cheques paid
6,239,000
Purchases (10% cash and the rest on credit)
7,090, 000
Cash paid
104,000
Interest charged suppliers due to delayed payments
50,000
Amounts written off by suppliers
15,000
Contra with account receivables
450,000
Cheques returned and replaced with equivalent cheques
29,000
Return outwards
664,000
Cash refunded by suppliers due to over payment
37,000
Discount received
298,000
Purchases ledger at the end of the month (total debit balances)
720,000
44
The purchases ledger at the end of the month (total credit balances) FRw8,900,000. It was realized that
the returns out daybook had been undercast by FRw32,000.
Required: Prepare purchases ledger control account for the month of Octob 2011 for LoRistics
(8marks)
Paper Nine
Question One [Total: 25 marks]
a)
Two of the enhancing qualitative characteristics of information contained in the IASB’s
Conceptual Framework for Financial Reporting are understandability and comparability.
Required:
Explain the meaning of the above characteristics in the context of financial accounting and
reporting
(2 marks)
b) Rossy travel and tours is a travel agency and tourists services business in Kigali and Musanze.
It has been operating for the last 10 years and has been preparing financial statements using
Generally Accepted Accounting Principles (GAAP) in Rwanda. Sometimes the business operates
in the East African countries. Recently they were advised by their Auditors to start using
International Financial Reporting Standards (IFRS’s) in accounting and financial reporting.
Indicate to Rossy travel and tours what accounting standards are and any 3 possible advantages it
may have in using IFRS rather than local GAAP.
(4 marks)
c) In the context of IAS 16 Property, plant and Equipment (PP&E) briefly explain the concept of
revaluation of non-current assets (revaluation model) (1 mark)
d)
Simotwa had the following balances for PP&E
Balances as at 01 December 2011
Land
Buildings
Equipment
Cost/Revalued FRw
7,600,000
56,000,000
17,400,000
Accumulated depreciation FRw
0
(16,000,000)
(4,400,000)
Carrying amount FRw
7,600,000
40,000,000
13,000,000
1. On 01 December 2011, Land and buildings were revalued to FRw 11,500,000 and FRw
48,000,000 respectively. The remaining useful life of the building at that date was 20 years and
the residual value was estimated to be FRw 8,000,000
2. Equipment included the opening balance, that cost FRw 5,600,000 and had carrying amount
FRw 1,400,000 was sold for FRw 1,000,000 and the cash used to acquire another equipment
from Sogisi that cost FRw 2,900,000. The difference (cost and cash paid for new equipment)
was still outstanding at the end of the year.
3. Depreciation for Equipment is 10% reducing balance with full year’s depreciation in the year
of acquisition and no depreciation in the year of disposal
Required:
(i) Calculate depreciation for the year ended 30 November 2012 for Buildings and Equipment
(4 marks)
(ii) Prepare the following accounts for the year ended 30 November 2012
 Land (revalued) account
(2 marks)
 Building (revalued) account
(2 marks)
 Equipment cost account
(4 marks)
 Accumulated depreciation – Building account
(3 marks)
 Accumulated depreciation – Equipment account
(3 marks)
Question Two [Total: 25 marks]
a) Various users exist for financial statements. What user needs may lenders and suppliers have
for financial statements
(2 marks)
b) Explain the purpose of the Statement of financial position (or Balance sheet)
(1 mark)
c) State how prepaid expense and decrease of allowance for doubtful debt affects profit/loss and
assets/liabilities
(4 mark)
45
d) The following account balances were extracted from the books of Clodia at the end of her
financial year 30 November 2012:
FRw
FRw
Sales
5,400,000
Purchases
2,826,000
Shop fittings cost
2,340,000
Accumulated depreciation – shop
240,000
fittings
Capital
3,060,000
Opening inventory
846,000
Bank as per cashbook
90,000
Cash
18,000
Shop wages
792,000
Accounts receivable
456,000
Drawings
630,000
Accounts payable
90,000
Carriage in
36,000
Carriage out
27,000
Maintenance and repair
135,000
Commission income
180,000
Electricity and water
144,000
Rent income
126,000
Insurance
810,000
Allowance for doubtful debt
54,000
9,150,000
9,150,000
1.
2.
3.
4.
5.
6.
7.
While preparing the financial statements, the following should be accounted for:
The closing inventory cost and net realizable amount was FRw 910,000 and FRw 890,000
respectively.
Bank interest income accrued FRw 80,000 was only shown in the bank statement.
Electricity prepaid and water unpaid amounted FRw 20,000 and FRw 13,000 respectively.
Rent income received in advance for the month of December 2012 amounted to FRw 16,000
An account receivable with a balance of FRw 71,000 included in the figure above had died
before year end and the relatives had promised to only pay FRw 45,000 and no more.
Due to the possibility of some receivables becoming bad, the allowance for doubtful debt was
to be adjusted to FRw 50,000
Depreciation on shop fitting is to be at 10% straight line basis
Required:
(i) Income statement for the year ended 30 November 2012
(ii) Balance sheet as at 30 November 2012
(10 marks)
(9 marks)
Question Three [Total: 25 marks]
a)
(i) What are the reasons which cause bank statement balance and the cashbook balance not to be the
same as at a given date?
(3 marks)
(ii) Why is it important to prepare the bank statement at the end of each month?(2 marks)
b) The following relates to the information extracted from the records of Mr. SHARAMA for the
month ended 30th November 2012
Mr. Sharama
46
CASHBOOK (Bank column only)
Date
Details
Amount(FRw)
st
Nov. 01
Bal b/d Adjusted
420,000
Nov. 09th
M. Paul
50,000
th
Nov. 15
D. Peter
220,000
Nov. 29th
T. Sankara
80,000
Nov. 30th
M. COLO
85,000
Date
Nov. 05th
Nov. 10th
Nov. 17th
Nov. 28th
Nov. 28th
Nov. 30th
Nov. 30th
855,000
Details
A.Jane 04
C. David 05
U. Wilson 06
B. Paul 07
M. Alphonse 08
Petty Cash 09
Bal c/d
Amount(FRw)
80,000
130,000
40,000
120,000
80,000
40,000
365,000
855,000
The Bank Statement showed Mr. SHARAMA’s account as follows:
Date
Details
Debit
Credit
Balance
st
Nov. 1
Starting Balance
440,000
Nov 2nd
Cheque - Kroli
70,000
510,000
rd
Nov 3
Lobito 03
90,000
420,000
Nov. 8th
A.Jane 04
80,000
340,000
th
Nov. 10
Cheque – M Paul
50,000
390,000
Nov. 10th
C. David 05
130,000
260,000
th
Nov. 17
Cheque – D Peter
220,000
480,000
Nov. 19th
U.Wilson 06
40,000
440,000
th
Nov. 29
Standing order - EWSA
100,000
340,000
Nov. 29th
Bank charges
35,000
305,000
Nov. 30th
Transfer –Fanusi
75,000
375,000
th
Nov. 30
Sharama - 09
40,000
335,000
Additional information:
1. Bank interests on Sharama’s fixed deposit account of FRw 25,000 has not been included in the
bank statement and the cash book. Interests on fixed deposit account are normally transferred to
the clients’ current accounts at the end of the month.
2. The Bank has transferred an amount of FRw 75,000 to the account of Mr. Sharama, a sum
which should have been transferred to the account of Mr. Cacana (another client of the bank).
Required:
(i) Adjusted cashbook
(5 marks)
(ii) Bank reconciliation statement for the month of November 2012
(5marks)
c)
(i) What are the benefits for preparation of control accounts
(2 marks)
(ii) Lambert had the following information relating to sales for the month of November 2012.
FRw
Opening receivables debit balances
3,217,000
Opening receivables credit balances
85,000
Cheques received
8,869,000
Sales (20% on cash sales)
15,000, 000
Cash received from receivables
804,000
Interest charged by Lambert due to delayed receipts from receivables
50,000
Bad debts written off
306,000
Increase in allowance for doubtful debts
450,000
Cheques from receivables dishonoured
29,000
Return inwards
534,000
Cash refunded to the customer due to over payment of their account
88,000
Discount allowed
520,000
Contra with accounts payables accounts
33,000
Closing receivables debit balance
?
Closing receivables credit balances
40,000
47
Required: Prepare sales ledger control account for the month of November 2012 for Lambert
(8 marks)
Question Four [Total:25 marks]
a) In respect of manufacturing accounts and with relevant examples, differentiate direct costs
from indirect costs
(3 Marks)
b) Why would the amounts from manufacturing account be taken to income statement at
transfer value rather than production/manufacturing cost? Which accounting concept/principle
requires the recognition of Allowance for Unrealized Profit (UP)? (3 Marks)
c) Kanyota is a manufacturer of banana juice operating in the Eastern province. His business has
been operating at a profit for the last three years. On 30th November 2012, he provided you with
the following balances as reported by his cost accountant, who normally presents information in a
vertical format.
FRw
Sales
9,890,400
Purchases of raw materials
4,372,000
Carriage inwards
58,000
Plant and machinery, at cost
980,000
Office equipment, at cost
385,000
Rent (FRw 75,000 per month)
600,000
Electricity and water
134,400
Wages and salaries:
Factory Direct labour
491,100
Factory Indirect labour
240,000
Administrative staff
910,150
Repairs to machinery
18,928
Other production expenses
326,400
Other administrative expenses
198,685
Additional information:
1. Some raw materials were unsuitable for production and were returned to the supplier: FRw
50,000
2. Depreciation was to be provided for:
 Plant and machinery
15% on cost
 Office equipment
20% on cost
3. Electricity and water include a water bill amounting to FRw 40,000 relating to the year ending
31st December 2012.
4. Rent was in arrears/outstanding at the end of the period (30th November 2012).
5. The cost accountant reported that electricity & water and rent were common expenses shared
between factory and administration departments on 40% and 60% basis respectively
6. Factory manager (Mugabo) is entitled to 20% of the profit after commission.
7. Goods are transferred to warehouse at a mark-up of 20%
8. The values of stocks were as follows:
Items
1st December
30th November
30th November
30th November
2009
2010
2011
2012
Raw materials
10,000Kg @
12,000Kg @
15,200Kg
14,500Kg @
FRw 125/unit
FRw 125/unit
@FRw 132/unit FRw 150/unit
Work in progress
FRw 1,200,000 FRw 1,150,000 FRw 986,000
Finished goods (at
FRw 2,850,000
FRw 2,520,000 FRw 2,100,000 FRw 1,950,000
valuation)
Required: Prepare
48
(i) Manufacturing account for the year ending 30th November 2012 (showing clearly Prime cost,
Manufacturing cost, manufacturing profit and transfer value)
(8 Marks)
(ii) Income statement for the year ending 30th November 2012 (showing clearly the gross profit/loss
from trading, manufacturing profit, increase or decrease in UP)
(6 Marks)
(iii) Allowance for UP account for each of the three years ended 30th November 2010, 2011&2012
(5 Marks)
Question Five [Total: 25 marks]
a) Some errors do not affect the trial balance and therefore totals in the trial balance will
agree/equal. However some errors do affect the trial balance and in this case, the trial balance
total will not agree/equal. As a student of trying to explain to a business person in town, briefly
explain any four (4) errors which affect the trial balance.
(4 marks)
b) What is the purpose of preparing a suspense account during correction of errors (1mark)
c) Barbara a dealer in stationary business had extracted a trial balance which did not agree. After
going through the accounts she discovered that the following errors were committed;
1. A sale on credit of FRw 221,000 to John had been recorded in the accounts as FRw 212,000.
2. Commission received of FRw 267,000 had erroneously entered in the sales account
3. A cheque received from Thomas of FRw 770,000 had been entered on the credit side of her
cash book and the debit side of Théoden account another customer.
4. A purchase of goods of FRw 189,000 had been entered in error on the debit of the Drawings
account
5. A cheque for FRw 470,000 received from Manzi had been dishonored and posted in error
from the cash book to the general expenses account. She had no intention as yet of treating the
debts irrecoverable.
6. She had taken goods, worth FRw 20,200 at cost, for his personal use and no entry has been
made in the books.
7. She issued a credit note to Bosco of FRw 4,700,000 and was debited in Bosco’s account and
credited in the returns in account.
8. Rent expense of FRw 77,000 was debited in the insurance expense account.
9. Completely omitted from the books is payment to a creditor Samson by cheque FRw 530,000
10. A cheque of FRw 150,000 paid to James had been correctly entered in cash book but not
entered in James’s account
Required: Prepare journal entries needed to correct the above errors (Including narratives).
(20 marks)
Question Six [Total: 25 marks]
a) Why is it important to prepare a statement of affairs for an entity
(1 mark)
b) Differentiate between income and expenditure account from receipts and payments account
in accounting for non-profit making entities
(3
marks)
c) Muhoza a business man in Gikondo operating a retail business but he does not know how to
maintain full accounting records. He requires your expertise and he has provided you with
the following summary of his bank statements for the year ended 30th November 2012
Receipts
FRw
Payments
FRw
Balance 1st December 2011
250,000
Payment to suppliers
520,000
Cash sales banked
1,418,000
Fuel and parking
59,000
expenses
Cheques from customers
1,110,000
Wages and salaries
250,000
Short term Loan
500,000
Electricity and water
64,000
Balance 30th November 2012
350,000
Insurance
50,000
Drawings
45,000
Rent
400,000
49
Motor van
2,240,000
3,628,000
3,628,000
The following balances shows Muhoza’s other assets and liabilities for the financial year ended at
30th November 2012
1st December 2011
30th November 2012
FRW
FRW
Motor Van at cost
850,000
?
Furniture at cost
700,000
700,000
Accounts receivables
410,000
1,120,000
Prepaid Insurance
5,000
6,000
Cash
37,500
55,000
Accrued rent
35,000
50,000
Inventory
120,000
200,000
Accounts payable
70,000
100,000
Additional Information
1. The loan was for a year taken on 1st September 2012 at 20% interest per year
2. All cash sales have been paid into the bank except FRw 96,000 out of which FRw 30,000
were payment for wages, drawings FRw 15,000 and purchases FRw 51,000
3. At 1st December 2011 the accumulated depreciation for Motor Van and furniture amounted
to FRw 320,000 and FRw 175,000 respectively.
4. Motor Van is to be depreciated at 10% reducing balance and furniture 20% straight line.
5. On 30th November 2012 Muhoza received FRw 700,000 as commission income from his
tenant whom they share office with and banked it. It is not included in the above summary
from bank statements.
6. During the year 30th November 2012 Water bills accrued amounted t o FRw 5,300.
7. Muhoza charges full year depreciation in the year of acquisition for assets acquired.
Required.
Prepare for Muhoza’s business
(i) Statement of affairs as at 1st December 2011
(4 marks)
(ii) Income statement for year ended 30th November 2012 and (10 marks)
(iii)
Statement of financial position for the year ended 30th November 2012. (7 marks)
Show all your workings.
Paper Ten
Question One [Total: 10 marks]
a) Explain the purpose of the following documents in a business:
Purchase order; Delivery note; Sales Invoice; Credit note; Debit note
(2 ½ marks)
b) From the following transaction details for the business of Gashongi for the month of December
2011
(iii) Write up and balance off a three column cash book for December 2011 (6 ½ marks)
(iv) Post the discounts amount to relevant accounts in the general ledger. (1 mark)
Date Transaction
1
Balance brought forward, Cash FRw 620,000; Bank FRw 7,142,000
2
The following paid the accounts by cheque in each case deducting 5% cash discount(all
amounts are pre-discount): George FRw 260,000; Peter FRw 320,000; Tom FRw 420,000
Paid rent by cheque FRw 430,000
Filip lent us paying by cheque FRw 5,000,000
4
6
50
8
10
12
15
18
21
24
25
29
31
We paid the following accounts by cheque in each case deducting 2½% cash discount (all
amounts are pre-discount): -Ronald FRw 720,000; Grace FRw 960,000;
Leonard FRw 1,600,000
Paid motor expenses in cash FRw 81,000
Julius pays his account by cheque FRw 88,000 by deducting FRw2,000 cash discount(the
amount is after discount)
Paid wages in cash FRw 580,000
The following paid their accounts by cheque, in each case deducting 5% cash discount(all
amounts are pre-discount): Adam FRw 540,000; Bob FRw 700,000; Tom FRw 520,000
Cash withdrawn from the bank FRw 400,000 for business use
Cash drawings FRw 200,000
Paid Walter his account of FRw 160,000, by cash FRw 155,000 having deducted FRw
5,000 cash discount
Bought fixtures paying by cheque FRw 720,000
Received commission by cheque FRw 120,000
Question Two [Total: 10 marks]
a) Various users exist for financial information. Amongst the financial information available for users
are the balance sheet and income statement which show the financial position and financial
performance respectively. Describe the user needs each of the following may have of the two
financial statements. Employees; Government; Owners (1 ½ marks)
b) The following account balances were extracted from the books of Simbi at the end of her financial
year 31 December 2011:
FRw
FRw
Sales
5,400,000
Purchases
2,826,000
Shop fittings cost
2,340,000
Accumulated depreciation – shop fittings
240,000
Capital
3,060,000
Opening inventory
846,000
Bank as per cashbook
90,000
Cash
18,000
Shop wages
792,000
Accounts receivable
456,000
Drawings
630,000
Accounts payable
90,000
Carriage in
36,000
Carriage out
27,000
Maintenance and repair
135,000
Commission income
180,000
Electricity and water
144,000
Rent income
126,000
Insurance
810,000
Allowance for doubtful debt
54,000
9,150,000
9,150,000
While preparing the financial statements, the following should be accounted for:
51
(iv) The closing inventory cost and net realizable amount was FRw910,000 and FRw890,000
respectively
(v) Bank interest income accrued FRw80,000 was only shown in the bank statement.
(vi) Electricity prepaid and water unpaid amounted FRw20,000 and FRw13,000 respectively.
(vii)
Rent income received in advance for the month of January 2012 amounted to FRw16,000
(viii)
An account receivable with a balance of FRw71,000 included in the figure above had died
before year end and the relatives had promised to only pay FRw45,000 and no more.
(ix) Due to the possibility of some receivables becoming bad, the allowance for doubtful debt was to be
adjusted to FRw50,000
(x) Depreciation on shop fitting is to be at 10% straight line basis
You are required to:
(1) Simbi's Income statement for the year ended 31 December 2011
(4 ½ marks)
(2) Simbi's Balance sheet as at 31 December 2011
(4 marks)
Paper Eleven
Section - A : (Attempt any 3 questions from Section - A / 15 Marks )
Question - 1 ( 5 Marks )
a) Various users exist for financial information. Amongst the financial information available
for users are the balance sheet and income statement differentiate the two. Differentiate
the needs that employees, customers and owners may have of the two financial
statements. (3Marks)
b) Differentiate between Capital expenditure and Revenue expenditure
Question - 2 ( 5 Marks )
(2 Marks)
a) Explain the significance of preparing Control Accounts
(1½ Marks)
b) Mention any three causes of depreciation
(1½ Marks)
c) Accounting has often been called the language of business. To what extent would you agree
with this? ................................................................................................................(2 Marks)
Question - 3 ( 5 Marks )
During the year ended 31 December 2013 the following debts are found to be bad, and are written
off on the dates shown:
31 March, John Rwf 14,500; 30 August, Steven Rwf 12,400 and 30 November, Peter Rwf 20,500
On 31 December 2013 there had been a total of debtors remaining of FRw750,000. It was decided
to make a provision for doubtful debts of FRw10,500.
You are required to show:
(i) The Bad Debts Account and the Allowance for Doubtful Debts Account for the year. (2 Marks).
(ii) The relevant extract from Income statement for the year ended 31 December 2013 and the
Balance Sheet extract as at 31 December 2013..............................................................3 Marks).
Question - 4 ( 5 Marks )
Enter the following transactions in the ledger of A Baker.
i. May 1 started in business with £1,500 in the bank and £500 cash.
ii. May 2 Purchased goods of £1,750 from C Dunn, agreeing credit terms of 60 days.
iii. May 3 Bought fixtures and fittings for the bakery for £150, paying by cheque.
iv. May 6 Bought goods on credit from E Farnham for £115.
v. May 10 Paid rent of £300 paying cash.
vi. May 12 Bought stationery – cash book and invoices – for £75 – paying by cash.
vii. May 14 Sold goods on credit, value £125, to G Harlem.
viii. May 20 bought an old van for deliveries for £2,000 on credit from I Jumpstart.
52
ix.
x.
xi.
May 30 Paid wages of £450 net for the month by cheque, Inland Revenue deductions of £75 to be
paid in the following month.
May 31 Summarised cash sales for the month and found them to be £2,500. Took a cheque for
£500 as own wages for the month. Banked £2,000 out of the cash sales over the month.
May 31 closing stock was £500.
Section - B : Compulsory Questions No: 5 & 6 - ( 30 Marks )
Question - 5 (15 Marks)
The following account balances were extracted from the books of Juru at the end of her financial
year 30 June 2014:
Particulars
Debit (Rwf)
Credit (Rwf)
Purchases and Sales
1,413,000
2,700,000
Land
1,000,000
Shop fittings cost
1,170,000
Accumulated depreciation – shop fittings
120,000
Capital
2,530,000
Opening inventory
423,000
Bank as per cashbook
45,000
Cash
9,000
Shop wages
396,000
Accounts receivable and Accounts payable
228,000
45,000
Drawings
315,000
Carriage in
18,000
Carriage out
13,500
Maintenance and repair
67,500
Commission income
90,000
Electricity and water
72,000
Rent income
Insurance
Allowance for doubtful debt
63,000
405,000
5,575,000
27,000
5,575,000

a)
b)
c)
d)
e)
f)
The following should be accounted for year ended at 30th June 2014:
The closing inventory lower of cost and net realizable amount was FRw445,000
Bank interest income of FRw 40,000 was only shown in the bank statement.
Electricity prepaid and water unpaid amounted FRw10,000 and FRw 6,500respectively.
Rent income received in advance for the month of July 2014 amounted to FRw8,000
A credit note relating to returns inwards from receivables of Rwf 28,000 was found unrecorded.
An account receivable with a balance of FRw35, 500included in the figure above had died before
year end and the relatives had promised to only pay FRw22, 500 and no more.
g) The allowance for doubtful debt was to be adjusted to FRw25,000
h) Depreciation on shop fitting is to be at 10% straight line basis, Land is not depreciated.
You are required to:
i.
Juru's Income statement for the year ended 30 June 2014
( 7 ½ Marks )
ii.
Juru's Balance sheet as at 30 June 2014
(7 ½ Marks )
Question - 6 (15 Marks)
a) Give and explain any 4 Steps in preparing a bank reconciliation statement (5 marks)
b) The following is a cash book (bank column) and bank statement for Jane with Eco-bank in
June 2014.
53
Date
01/6/2014
02/6/2014
10/6/2014
14/6/2014
16/6/2014
28/6/2014
30/6/2014
30/6/2014
Particulars
bal b/f
Betty
Kk ltd
Fred
Bosco
Shallon
Rose
Paul
Cash book (bank column)
Amount (frw)
Date
Particulars
80,000
07/6/2014 Jones
60,000
08/6/2014
Peter
24,000
11/6/2014
Loic
10,000
17/6/2014
bob
4,000
28/6/2014
Benson
34,000
28/6/2014
Henry
13,000
30/6/2014
Moses
2,000
30/6/2014
Keth
30/6/2014
Joyce
30/6/2014
bal c/f
227,000
Bank statement
(Frw)
Debit
Credit
Balance
Amount (frw
32,000
40,000
30,000
14,000
6,000
4,000
2,000
1,000
4,000
94,000
227,000
Transactions
1/6/2014
Bal b/f
80,000
5/6/2014
Betty
60,000
140,000
8/6/2014
Jones
32,000
108,000
10/6/2014 Peter
40,000
68,000
13/6/2014 Loic
30,000
38,000
14/6/2014 KK Ltd
24,000
62,000
16/6/2014 Fred
10,000
72,000
18/6/2014 Bob
14,000
58,000
20/6/2014 Ruterana
18,000
76,000
25/6/2014 Standing order(EWASA
2,000
74,000
26/6/2014 Credit Transfer
16,000
90,000
(Mugabo)
30/6/2014 bank charges
200
89,800
A cheque written to Benson on 28/6/2014 was dishonored by the bank.
Required: i. Write up the cash book to date and the new balance as on 30/06/2014.
( 5 Marks)
ii. Prepare Jane`s bank reconciliation statement for the month ended 30/6/2014 ( 5 Marks)
Section - C : (Attempt any 2 questions from Section - C / 30 Marks )
Question - 7 (15 Marks)
The trial balance of Mary as at 31 December 2013 showed a difference which was posted to a suspense
account. Draft final accounts for the year ended 31 December 2013 were prepared showing a net profit
of Rwf 934,400. The following errors were subsequently discovered.
a) A payment of Rwf 2,950 for telephone charges had been entered on the debit side of the telephone
account as Rwf 3,950.
b) The sales journal had been undercast by Rwf 40,000
c) Repairs to a machine, amounting to Rwf 3,780, had been charged to Machinery account.
d) Sales of Rwf 5,900 to B. Jane had been debited to D. Janet manufacturing Ltd.
e) Rwf 28,000, being rent received from Atlas Ltd, had only been entered in the cash book.
f) Purchases from P. Leeds, amounting to Rwf 7,650, had been received on 31/12/2013 and included
in the closing stock at that date, but the invoice had not been entered in the purchases journal.
Required
i. Give the journal entries necessary to correct the above errors. ( 10 Marks )
ii. Show the effect of each of these adjustments on the net profit in the draft accounts and the correct
profit for the year ended 31/12/2013.
( 5 Marks )
Question - 8 (15 Marks)
54
Logas provided the following information about its accounts receivable for the year ended 31May 2014
Rwf
Accounts Receivable opening debit balances
2,500,000
Accounts Receivable opening credit balances
420,000
Allowance for doubtful debt
188,000
Sales (90% on credit and the rest cash sales)
19,310,000
Discount allowed
60,000
Returns inwards
210,000
Receipts (Cash and cheques) from receivables
14,600,000
Bad debt written off
55,000
Refunds in cash to customers with credit balances
130,000
Accounts Receivables closing credit balances
260,000
Additional information:
a) A sales invoice of Frw 100,000 during the year was discovered unrecorded
b) Additional bad debts to be written off Frw 12,000
c) A contra settlement of Frw120,000 was agreed with a customer who is also a supplier
d) The bank statement showed a dishonored cheque of Frw 45,000 from a customer
Required: Prepare sales ledger/Accounts receivable control account for the month. ( 15 Marks )
Question - 9 (15 Marks)
COMPUTEX runs a computer school. It has many computers some of which have got old due to changes
in technology. The following information relates to some computers.
The first computer was bought on 2/3/1991 at 2,000,000frw. The second computer was bought on 4/6/1992
at 3,000,000frw and the third computer was bought on 30/9/1993 at 4,000,000frw.The first computer that
was bought on 2/3/1991 was sold on 5/10/1994 for 1,200,000 and the second computer that was bought on
4/6/1992 was sold on 10/1/1995 for 1,800,000frw.All computers are expected to last for ten years at the
end of which they would have zero scrap values. It is the company policy to charge full depreciation in the
year of purchase and non in the year of disposal, using straight line method of depreciation. The financial
year runs from 1st January to 31st December. All transactions were on cash basis.
Required;
a) Computers account. ( 5 Marks );
b) Disposal of computers account( 5 Marks )
c) Accumulated depreciation account( 5 Marks )
Paper Twelve
Assignment 1
c) Explain the purpose of the following in a business:
Trial balance; Returns inwards; Returns outwards; discount received; Discount allowed(2 ½ marks)
d) From the following transaction details for the business of Ganza for the month of March 2012
(v) Write up and balance off a three column cash book for March 2012
(6 ½ marks)
(vi) Post the discounts amount to relevant accounts in the general ledger. (1 mark)
2012
March
1
Balance brought forward, Cash Rwf 211,000; Bank Rwf 3,984,000
2
We paid the following accounts by cheque in each case deducting 5% discount: Adams
Rwf 80,000; Bob Rwf 260,000; Clarke Rwf 440,000
Peter paid rent by cheque
Rwf 98,000
Cash sales paid direct into the bank Rwf 49,000
4
6
55
8
10
12
15
18
21
24
25
29
31
The following persons paid us their accounts by cheque in each case deducting 2½% cash
discount (all amounts are pre-discount): - Ronald Rwf 160,000; Grace Rwf 640,000;
Leonard Rwf 520,000
Paid stationery by cash Rwf 65,000
Paid motor expenses by cash, Rwf100,000
cash sales Rwf 98,000
Paid for insurance by cheque Rwf 120,000;
Cash withdrawn from the bank Rwf 650,000 for business use
Cash drawings Rwf 20,000
Paid Walter his account of Rwf 160,000, by cheque Rwf 155,000 having deducted Rwf
5,000 cash discount
Bought fixtures paying by cheque Rwf 220,000
Received a cheque for Rwf 500,000 being a loan from Godfrey
Assignment 2
Various users exist for financial statements. What user needs may lenders and suppliers have for financial
statements
(1 marks)
e) State how prepaid expense and decrease of allowance for doubtful debt affects profit/loss and
assets/liabilities
(1 marks)
f) The account balances extracted from the books of Susan as at 31 July 2012
Notes
FRw
Capital
900,000
Buildings (cost)
850,000
Furniture (cost)
240,000
Equipment (cost)
163,000
Accumulated depreciation – Buildings
50,000 7
Accumulated depreciation – Furniture
40,000 7
Accumulated depreciation – Equipment
13,000 7
Long term investment
160,000
Discount received
6,500
Discount allowed
4,600
Opening inventory
52,200 1
Cash
4,500
Accounts receivable
60,000
Bank overdraft
14,500
Loan (repayable in 2013)
300,000
Purchases
560,000
Sales
1,050,000
Accounts payable
70,000
Loan (repayable on 30 December 2012)
60,000
Salaries and Wages
180,000
Drawings
25,000
Interest income
11,500 3
Rent income
14,000
Carriage out
3,500
Carriage in
5,600
Electricity and water
9,500 2,4
Insurance
44,000
Returns in
7,000
Returns out
4,000
56
Interest expense
36,800 5
Rent expense
29,800 6
General expenses
76,000
Bad debts
30,000
Allowance for doubtful debt
8,000 8
Adjustment required (Notes):
9)
Closing inventory at 31 July 2012 was FRw60,600
10)
Water bill accrued amounted FRw1,400
11)
Interest income accrued FRw 6,600
12)
Electricity expense prepaid FRw1,500
13)
Interest expense unpaid FRw10,000
14)
Rent expense accrued FRw2,200
15)
Depreciation: Buildings - 5% Straight line basis; Furniture 10% Reducing balance basis;
Equipment – 20% Reducing balance basis
16)
The allowance for doubtful debt is to be adjusted to FRw10,000
You are required to prepare:
(c) Susan’s Income statement for the year ended 31 July 2012(4marks)
(d) Susan’s Balance sheet as at 31 July 2012(3marks)
Paper Thirteen : Final Examination Date: 29th December 2015
Section - A: (Attempt any 3 questions from Section - A / 15 Marks)
Question - 1 (5 Marks)
a) Write short notes on the following:
i) Objectives of financial statements
ii) Users of financial statements
b) Explain some advantages of financial accounting to a business
c) Briefly state reason for suspense account
(1 Mark)
(1 Mark)
(1½ Marks)
(1½ Marks)
Question - 2 (5 Marks)
d) State three disadvantages for incomplete records/single entry
(1½ Marks)
e) Differentiate between Capital expenditure and Revenue expenditure
(2 Marks)
f) Define control accounts and state reasons of maintaining control accounts (1½ Marks)
Question - 3 (5 Marks)
a) A business has compiled the following information for the year ended 31 October 2009:
Opening inventory
386,200
Purchases
989,000
Closing inventory
422,700
The gross profit as a percentage of sales is always 40%
Based on these figures, what is the sales revenue for the year?
(3 Marks)
b) An accountant as any other human being can make errors while recording accounting
transactions, some of those errors may easily be revealed through the list of account
balances while others are not revealed by the same list of balances. Describe any two errors
that are not revealed by the trial balance.
(2 mark)
57
Question - 4 (5 Marks)
Given: capital Rwf1,920,000, cash at bank Rwf 600,000, cash at hand Rwf 120,000, Accounts
receivables Rwf140,000, Inventories Rwf150,000, Accounts payables Rwf 90,000, Loan from BPR
Rwf 100,000, Noncurrent asset Rwf1,100,000, prepaid expense Rwf 80,000, accrued expense Rwf
80,000.
Required:
i) Construct the Accounting equation (3Marks)
ii)
Briefly justify the statement that an accounting equation justifies the concept of double entry
system (2 Marks)
Section - B: Compulsory Questions No: 5 & 6 - (30Marks)
Question - 5 (15 Marks)
Given below is a cash book and bank statement of PRIMEX enterprise of November 2015
Dr
Cash BOOK (bank column)
Cr
November 2015:
(Frw,000)
(Frw,000)
1st Balance b/f
3rd Murisa
11th MINI Ltd
14th Mwesigye
17th Twahirwa
28th Stella
30th Mate
30th Jesca
40,000
30,000
12,000
5,000
2,000
17,000
6,500
1,000
7th Muganwa
9th Penzi
12th Okambo
17th Bosa
29th Jacob
29th Henry
30th Mariza
30th Magret
30th Sibomana
16,000
20,000
15,000
7,000
3,000
2,000
1,000
500
2,000
Bank Statement
Dr (,000)
1/11/2015
6th Murisa
8th Muganwa
11th Penzi
14th Okambo
15th MINI Ltd
16th Mwesigye
18th Bosa
20th Credit Memo from Lena
25th Standing order (WASAC)
26th Credit Memo (Geoffrey)
30th Bank charges
Cr (,000)
30,000
16,000
20,000
15,000
12,000
5,000
7,000
9,000
1,000
8,000
100
Balance (,000)
40,000
70,000
54,000
34,000
19,000
31,000
36,000
29,000
38,000
37,000
45,000
44,900
Additional information
i) Cheque dated 29th November 2015 to Jacob was dishonored.
ii) Cheque from Twahirwa that was banked on 17th November 2015 was dishonored
Required:
Prepare a bank reconciliation statement of ALPHA enterprise for the period ended 31/11/2015 (20 marks)
58
Question - 6 (15 Marks)
The following trial balance was extracted from books of Mr Gashugi on the 31 December 2011.
Details
Debit (RWF 000)
Credit (RWF 000)
Bank
63,000
Capital
1,308,000
Cash
6,000
Creditors
75,000
Debtors
54,000
Drawings
24,000
Fixtures
48,000
Motor Expenses
78,000
Motor Vehicles
93,000
Repairs to fixtures
12,000
Premises
1,200,000
Purchases
300,000
Salaries
375,000
Sales
900,000
Stock 1/1/11
30,000
TOTAL
2,283,000
2,283,000
You are provided with the following additional information: (Ignore depreciation)
Stock at 31 December 2014 is RWF 45,000.
You are required to:
Prepare the trading Profit & Loss account for the year ended 31 December 2014 and the Balance as at 31
December 2014.
After preparing the Trading Profit & Loss account and balance sheet for 31 December 2014 the following
information came to light:
i. A motor vehicle purchases for RWF 42,000 had been entered in the motor expenses account in
error
ii. Included in premises is RWF 15,000 posted from Repairs to Premises in error
iii. Motor expenses included a charge of RWF 5,000 incurred by Mr Gashugi personally ( annual
holiday)
You are also required to:
a) Prepare journals to correct these errors
b) Prepare the Trading Profit & Loss account for the year ended 31 December 2014 and
Balance Sheet at 31 December 2014 after journals.
c) Explain what is impact journalizing these adjustments had on both Trading Profit & Loss
account and the Balance Sheet for Mr Gashugi
Section - C: (Attempt any 3 questions from Section - C / 30 Marks)
Question - 7 (10 Marks)
ALPHA GARAGE runs a Garage school. It has many vehicles some of which have got old. The following
information relates to some vehicles.
The first vehicle bought on 2/3/1991 at frw 3,000,000 was sold on 5/10/1994 for frw 2,000,000. The
second vehicle bought on 4/6/1992 at frw 4,000,000 was sold on 10/1/1995 for
frw 2,400,000.
And the third vehicle was bought on 30/9/1993 at frw 5,000,000.
All vehicles are expected to last for ten years at the end of which they would have zero scrap values. It is
the company policy to charge full depreciation in the year of purchase and none in the year of disposal,
59
using straight line method of depreciation. The financial year runs from 1st January to 31st December. All
transactions were on cash basis.
Required:
a) Vehicles account. (5 Marks)
b) Disposal of vehicles account (5 Marks)
Question - 8 (10 Marks)
The following balances were extracted from the cash book and ledger of Mukasa’s business on 31/5/2013
From the Ledger
Creditors
Debtors
Rent
Electricity
Capital
Loan
Drawings
From the Cash Book
Cash
Bank (credit as per cash book)
Rwf
3,000,000
7,000,000
500,000
300,000
5,000,000
2,000,000
500,000
5,000,000
3,300,000
During the month of June 2013, the following transactions occurred:
June 1 Bought goods on credit for 6,500,000Rwf
June 2 Sold goods on credit for 8,000,000Rwf
June 4 Received a cheque of 5,000,000Rwf from a debtor and banked it
June 7 Paid creditors 1,500,000Rwf cash and 500,000Rwf by cheque.
June 10 Rejected and returned goods worth 300,000Rwf to a creditor
June 12 A debtor rejected and returned goods worth 100,000Rwf
June 14 Banked 1,500,000Rwf cash
June 16 Paid rent cash 400,000Rwf and 800,000Rwf by cheque and electricity 250,000Rwf
June 20 Withdrew 1,000,000Rwf from the bank and put it into the cash box for payment of cash expenses
June 22 Paid 2,000,000Rwf by cheque in respect of retiring the loan
June 25 fearing the consequences of the land bill, he sold land inherited from his father for 10,000,000 Rwf
cash. He used 5,000,000Rwf for his marriage ceremonies and the rest of the money he put into his business
June 27 Received cash of 100,000Rwf and a cheque of 2,000,000Rwf from a debtor and banked
both cash and the cheque
June 30 Used business cash of 300,000Rwf for a social evening with his friends at a club
Required
1. Prepare Mukasa’s ledger accounts and (5 Marks)
2. cash book properly balanced on 30/6/2013. (5 Marks)
(Ignore subsidiary ledgers; put all accounts into one ledger since they are few).
Question - 9 (15 Marks)
The receipts and payments account of the Kicukiro Academy Football Club for the year ended 31 st March,
2011, was as under:
Receipts
FRw
Payments
FRw
60
Balance b/d (1.4.2010)
Subscriptions received
Interest
Sale of furniture
Donations for Club Building
48,000
246,000
2,000
10,000
60,000
Purchase of Balls
Tournament Fees
Affiliation Fees
Rent of playground
Refreshment Expense
Travelling Expenses
Investment Purchased
Salaries
Miscellaneous Expenses
Balance c/d (31.3.2011)
366,000
80,000
10,000
2,000
5,000
4,000
30,000
100,000
12,000
8,000
115,000
366,000
Additional Information:
1. The subscriptions received include FRw 10,000, outstanding subscriptions for the year 2009-2010.
Subscriptions for the year 2010-2011 amounting to FRw 16,000 is still outstanding from members.
Some members have paid subscriptions for the year 2011-2012 amounting to FRw 8,000 which is
included in the subscriptions received.
2. Interest accrued but not received FRw 500
3. The book value of the furniture sold was FRw 14,000
4. The rent of playground: FRw 6,000 and salary FRw 5,000 for the year 2010-2011 are still
outstanding and rent of playground of the year 2009-2010: FRw 1,000 has been paid during this
year.
5. There is stock of balls with the club valued at FRw 4,000 as on 31st March, 2011.
Required:
(i)
Prepare the Club’s Income and Expenditure Account for the year ended 31st March, 2011
(ii)
Prepare the Subscriptions Account
(iii) Prepare a Balance Sheet of the Club as on 31st March, 2011
61