lOMoARcPSD|21093424 Financial Accounting Fundamentals fundermentals of accounting (University of Ghana) Studocu is not sponsored or endorsed by any college or university Downloaded by patrick Akpanya (akpanyap@gmail.com) lOMoARcPSD|21093424 QUESTION 1 The trial balance of Bright Morning Ltd has been provided for the year ended 31 December, 2012 as follows: DR CR GHC GHC Buildings 160,000 Stated capital 250,000 Bank 23,000 Sales 260,000 Trade receivables 30,000 Trade payables 24,600 Plant & machinery 190,000 Accumulated depreciation on plant & machinery 80,000 Purchase of raw materials 96,000 Selling expenses 9,000 Administrative expenses 2,600 Distribution expenses 16,200 Factory wages 13,000 Factory expenses 9,200 Rates 5,600 Inventory: 01/01/2012 Raw materials 22,000 Work-in-progress 17,000 Finished goods 21,000 ______ 614,600 614,600 You are provided with the following additional information: (1) Inventory at 31 December, 2012: - Raw materials GHC 16,600 - Work-in-progress 20,000 - Finished goods 24,000 (2) Rates of GHC1,600 had been prepaid (3) Provide for depreciation on cost as follows: Building - 3% Plant & machinery - 10% Required: Prepared the Income Statement for the year ended 31 December, 2012 and a Statement of Financial Position as at that date. 20 marks ICAGP1.10513 Page 1 of 5 Downloaded by patrick Akpanya (akpanyap@gmail.com) lOMoARcPSD|21093424 QUESTION 2 You are given the following as the summary of the bank account of Precious Enterprise for the year ended 31 December 2012. Balance (1/1/2011) Receipts from receivables Investment income GHC 9,700 Payment to creditors for goods 56,000 Rent 3,000 Insurance Salary Drawings Sundry expenses _____ Balance c/d 68,700 GHC 30,400 2,000 1,500 6,000 11,300 800 16,700 68,700 Cash sales amounted to GHC15,000 out of which the following payments were made: GHC Wages 5,600 Purchases 5,500 Drawings 2,000 Sundry expenses 300 The following additional information is given: Inventory Trade payables Trade receivables Insurance prepaid Rent prepaid Sundry expenses owing 31/12/2011 7,850 12,600 17,300 1,100 700 400 31/12/2012 9,200 14,000 15,800 900 1,000 700 You are required to prepare the following: (i) Trade Receivables Control Account (ii) Trade Payables Control Account (iii) Income Statement for the year ended 31 December, 2012. 20 marks QUESTION 3 The statement of the financial position of Obiba Brokeman given below did not agree and the balance of GHC26,940 was entered in the suspense account. ICAGP1.10513 Page 2 of 5 Downloaded by patrick Akpanya (akpanyap@gmail.com) lOMoARcPSD|21093424 Obiba Brokeman Statement of Financial Position As At 30th June, 2012 Furniture & Fittings Delivery Van Cost Depreciation Net Book Value GHC GHC GHC 90,000 36,000 54,000 12,000 6,000 6,000 102,000 42,000 60,000 Current Assets Inventory Accounts receivable Cash at bank Current Liabilities Accounts payable Net current asset Net assets 6,000 12,000 300 18,300 7,200 11,100 71,100 Financed By: Capital Add net profit for the year Suspense account 12,000 32,160 26,940 71,100 Upon investigations, the following errors were discovered: (i) Accounts payable had been understated by GHC6,000. (ii) The sales figure for the period was understated by GHC540. (iii) The closing inventory amounted to GHC7,200 but the amount stated in the statement of financial position was the beginning inventory. (iv) A loan from the Country Bank of GHC3,000 was credited to the income statement. (v) Discount allowed of GHC600 had been credited to the income statement and discount received of GHC900 had been debited to the income statement. (vi) Drawings of GHC6,000 had been debited to the income statement. (vii) A new delivery van costing GHC3,000 had been debited to the delivery van running expenses. It is the policy of Obiba Brokeman not to charge depreciation in the year of purchase. (viii) The balance on the allowance for bad debts account of GHC1,080 as at 1 July 2011 had been credited to the income statement account, the bad debt allowance should have been made equal to 10% of account receivables as at 30th June 2012. ICAGP1.10513 Page 3 of 5 Downloaded by patrick Akpanya (akpanyap@gmail.com) lOMoARcPSD|21093424 (ix) Depreciation is charged on the furniture and fittings at the rate of 20% per annum on cost, and on delivery van at the rate of 50% on the reducing balance. The depreciation for the year to 30th June 2012 had been correctly charged to the income statement for the year but no adjustments had been made elsewhere. You are required to prepare: (i) A statement correcting the net profit for the year. (ii) The corrected statement of financial position as at 30th June 2012. 20 marks QUESTION 4 (6 marks) (a) State three (3) purposes of Accounting Information. (b) Identify four (4) users who have stake in Accounting Information and state their information needs. (8 marks) (c) Explain the following Accounting Concepts. (i) Going Concern (ii) Prudence (6 marks) (Total: 20 marks) QUESTION 5 The cash book of Adjoa Shikishiki Ltd for the year ending 31st December 2012 is as follows: Opening balance Receipts: Cheque No. 248296 from Billy Ham Cheque No. 188098 from Global Express Cheque No. 155812 from Agba Ltd Cheque No. 394504 from Morris Ltd Cheque No. 112001 from Dunenyo Farms Payments Cheque No. 182306 to Alfa Ltd Cheque No. 182307 to Baba Ali Cheque No. 128908 to Mawuko Ltd Cheque No. 182309 to Bonsu Ltd Cheque No. 182310 to Srodae Co. Closing balance ICAGP1.10513 GHC 4,962 166,239 277,065 4,860 349,270 200,000 150,205 200,000 4,305 300,000 295,695 GHC 1,002,396 950,205 52,191 Page 4 of 5 Downloaded by patrick Akpanya (akpanyap@gmail.com) lOMoARcPSD|21093424 Investigations of the records for the period revealed the following information: (i) A dividend of GHC400 on shares in GT2 Ltd was paid direct to bank account and no entry was made in the company’s cash book. (ii) An amount of GHC4,887 received from a customer by credit transfer during the period had not been recorded in the cash book. (iii) Bank charges of GHC1,356 shown in the bank statement had not been entered in the cash book. (iv) Standing orders entered in the bank statement had been omitted from the cash book in respect of rates to the Oman District Assembly, of GHC3,456 and insurance of GHC450. (v) Cheque No. 182308 paid to Mawuko Ltd had not been presented at the bank and cheque No. 155812 from Agba Ltd and deposited into the bank account had not been credited to the company’s account. (vi) A cheque for GHC714 had been debited to the company’s account in error by the bank. You are required to prepare a Bank Reconciliation Statement as at 31st December 2012 together with a corrected Cash Book. 20 marks ICAGP1.10513 Page 5 of 5 Downloaded by patrick Akpanya (akpanyap@gmail.com)
