Open University of Mauritius

FOUNDATION COURSE [OUfc009 ]

EXAMINATIONS FOR: May/June 2016

MODULE: Accounting I [OUfc009111]

DURATION: 2 HOURS

READING TIME: 10 Minutes

INSTRUCTIONS TO CANDIDATES

1. This question paper consists of THREE questions.

2. Attempt ALL questions.

3. Answer each question on a fresh page.

4. Total marks: 100

This question paper contains THREE (3) questions and 6 pages.

Page 1 of 6
QUESTION 1 (35 MARKS)

Plastic Limited produces plastic bags for local and regional markets. An extract of the
ledgers revealed the following information:-

$
Direct factory wages 225000
Inventories 1 June 2015: Raw materials 90000
Work-in-progress 13000
Finished bags @ transfer price 80500
Sales: Local market 860000
Regional markets 140000
Direct manufacturing expenses 22000
Provision for unrealized profit 1 June 2015 10500
Bad debts written off 1250
Rent, rates and insurance (75% Factory and 25% Office) 20000
Purchases of raw materials 470000
Carriage on purchases 9000
General Office expenses 28750
Factory repairs and renewals 10000
Depreciation charges for the year: Plant and Machinery 25000
Vehicles 12000
Office equipment 5000
Factory light and power 35000
Discount received 16000
Office salaries and wages 64000
Additional information on 31 May 2016:
(a) Inventories: Raw materials 100000
Work-in progress 14000
Finished goods at transfer price 40250
(b) Finished products are transferred to warehouse at cost
plus 15%

Page 2 of 6
Required:

(i) To prepare manufacturing account for the year ended 1 May 2016.
(ii) To prepare the Provision for unrealized Profit Account.
(iii) To complete the Income Statement for the year ended 31 May 2016.

QUESTION 2 (35 MARKS)

R. Re and D. Duit are partners sharing profit sor losses in the ratio 4:1.

Statement of financial position on 31 May 2016.

Financed by:

Fixed capital accounts: R. Re 80000

D. Duit 40000 120000

Current accounts: R. Re 5800

D. Duit (4000) 1800

Loan Accounts: R.Re 15000

D, Duit 5000 20000

141800
Net assets

Non-current assets

Property 90000
Vehicles 22000
Office Equipment 8000 120000

Current Assets

Inventory 25000
Trade receivables 16000 41000

Current Liabilities

Trade payables 7000

Other payables 2000
Bank 10200 (19200)

141800
======

Page 3 of 6
Due to liquidity crisis, the partners agreed to dissolve the partnership.

An auctioneer was appointed to supervise the disposal of assets and other

administrative duties.

(i) Property was sold for $100000.

(ii) R.Re retained the vehicles for $18500 and D Duit kept the other non-current
asset for $6000.
(iii) Collections from receivable amounted to $10600 and trade payables accepted
$6400 in full settlement.
(iv) Inventory realized $20500 and cost of dissolution expenses incurred $1800.
(v) Both loans were transferred to respective capital accounts.
(vi) Other payables settled in full.

Required

(a) To prepare partnership’s realization account.

(b) To prepare partners’ capital and current accounts.
(c) To prepare the firm bank account.

Page 4 of 6
QUESTION 3 – PART A (10 Marks)

The following information is provided to you.

Dr Plant and Machinery Account

2005 $ 2005 $

Jan 1 Bank 60000 December 31 Balance c/d 70000

July 1 Cash 10000 _____
70000 70000
===== =====
2006 $ 2006 $

Jan 1 Balance b/d 70000 December 31 Balance c/d 70000

70000 70000
===== =====

2007 $ 2007 $

Jan 1 Balance b/d 70000 December 31 Balance c/d 120000

April 1 Bank 20000
October 1 XYZ Ltd 30000 _____
120000 120000
===== =====
2008

Jan 1 Balance b/d 120000

The firm provides depreciation charges at 20% per annum under straight line method.

Required:

To prepare the provision for depreciation account for the year ended 31 December
2005, 31 December 2006 and 31 December 2007.

Page 5 of 6
QUESTION 3 - PART B ( 20 MARKS)

Mr Mowell and S Sowell are partners of a professional group. Their partnership

agreement provides for:-

a) Interest on capital accounts a 8% per annum.

b) Salaries to partners: Mr Mowell: $12000 and S Sowell: $9000 per year

respectively.

c) Profits or losses shared in the proportions 3/5ths and 2/5ths respectively.

The following balances remained in the books after the completion of their Income
Statement on 31 May 2016.
$
Fixed Capital accounts : M Mowell 75000
S Sowell 50000

Partners’ Current Accounts: M Mowell 3300 Cr

S Sowell 3300 Dr

Drawings Accounts : M Mowell 28500

S Sowell 12500

Net Profit for the period ending 31 May 2016 amounted $41000.

Required:

(i) To prepare the partnership’s appropriation account for the year ended 31 May
2016.

(ii) To prepare partners’ current accounts for the current period.

Page 6 of 6