INSTRUCTIONS:
Time Allowed – 50 Minutes
Attempt ONE (1) Question
Statements without proper Columns will not be marked.
QUESTION ONE
The following is the trial balance for Shipolopolo, a limited liability company, for the year to 31 st
December 2022.
Purchases
Equipment (Cost and depreciation)
Vehicles (Cost and Depreciation)
10% Long term investment
20% Loan (repayable in 2030)
Bank Overdraft
Distribution Costs
Inventory at 1 January 2022
Trade receivables and payables
Ordinary Share Capital
Preference Share Capital
Retained Earnings
Revenue
Goodwill
Finance costs
General Reserves
Share premium
Administrative costs
Interim Dividends
Suspense
Dr
732,000
567,000
830,000
600,000
Cr
102,000
200,000
640,000
32,500
29,400
52,000
283,000
351,000
500,000
300,000
79,400
872,000
256,000
45,000
238,600
132,000
49,600
40,000
3,384,000
36,500
3,484,000
Additional Information
1) Closing stock was K65,000.
2) Depreciation policy is to depreciate equipment at 15% on a reducing balance method and
Vehicles at 25% on cost. All assets are depreciated on a pro-rata basis in their year of
acquisition and disposal.
3) The following errors occurred during the recording of transactions:
- A cash receipt of K6,500 was debited twice to the cash account.
- A discount received of K15,000 was debited to the discounts allowed account in error.
The other legs of the double entries for the above errors were done correctly.
4) Final dividends proposed and approved is 10% of ordinary shares.
5) On the 30th of June 2022, a motor vehicle that had initially costed K40,000 on the 1st of
January 2020 was sold for K23,000.
6) Directors’ remuneration for the year was K34,000.
7) Bad debts of K6,300 to be written off.
Required: Draw up a set of financial statements (except for a Cash Flow Statement) for the year
ended 31st December 2022.
30 Marks
1
QUESTION TWO
The following is the trial balance for Chipo and Ula’s Partnership for the year to 31st December 2022
sharing profits and losses equally.
Sales and Sales Returns
Premises
Buildings
Motor Vehicles
Depreciation balance b/d; Buildings
Motor
Vehicles
Partner’s salaries (Chipo)
10% Long term loan (From Ula)
Capital
Loan interest
Discounts Allowed
Carriage Outwards
Inventory at 1 January 2022
Trade receivables and payables
Provision for Doubtful debts
Bank
Current accounts balance b/d; Chipo
Ula
Capital
Purchases
Insurance
Wages
Office Expenses
Drawings
Dr
6,000
200,000
240,000
429,100
Cr
219,000
140,000
347,000
10,000
150,000
860,000
15,000
9,500
16,900
46,300
164,000
225,000
3,000
432,000
8,000
6,400
452,000
698,000
30,000
34,800
26,000
40,000
2,404,000
2,404,000
Additional Information
1) The value of stock using a First-In-First-Out assumption at 31 st December was
K55,000
2) Partner Chipo hired out one of the partnership’s vans to a friend that was taking a trip
to the farm that is 300 kilometres way round trip. Rentals fee for the van was agreed
at K10 per kilometre. This payment has not yet been received.
3) The capital opening balance is made of K250,000 and K175,000 partners Chipo and
Ula’s contributions respectively. Interest on capital is 10%.
4) The allowance for doubtful debts is to be increased to K5,000. The trade receivables
above include a customer that was owing K14,000 but he has been declared bankrupt.
5) The drawings figure as per trial balance above are partner Chipo’s drawings made on
the 30th of June 2022. It is company policy to charge Interest on drawings of 8% on a
pro-rata basis.
6) Depreciation is 10% and 20% on Buildings and Motor Vehicles on cost respectively.
Required: Draw up a set of financial statements for the year ended 31st December 2022 showing
clearly the entries in the Current Accounts of partners.
30 Marks
2