COLLEGE OF BUSINESS EDUCATION

DAR ES SALAAM CAMPUS

TNC/TFC OCTOBER 2019 BBSE II

END OF SEMESTER EXAMINATION

SUBJECT: INTERMEDIATE ACCOUNTING

PAPER CODE: ACU 07311

DATE: 3.03.2021

Time Allowed: 3 HOURS

Instructions:

a) This paper consists of FIVE questions, attempt all.

b) Do not write or draw on the question paper
c) Cellular phones are not allowed in the examination room
d) All questions carry equal mark
Question one – 20 marks
The objective of financial statements is to provide information about financial position,
performance and changes in financial position of an entity that is useful to a wide range of
users in making economic decisions. On the other hand qualitative characteristics of financial
statements are attributes that make information provided therein useful to users of that
information.
Required:

a) State five potential users of company published financial statements and briefly
explaining for each one their likely information needs from those statements. (10
marks)

b) Briefly discuss five qualitative characteristics of financial information distinguishing

between fundamental and enhancing characteristics. (10 marks)
Question Two
Atim and Adongo are in partnership sharing profits and losses equally. The following trial
balance was as at 30th June 2018.
Particulars DR (Tshs. "000") CR (Tshs. "000")
Buildings (75,000) 50,000
Fixtures at cost 11,000
Acc. Depreciation - Fixtures 3,300
Debtors/Creditors 16,243 11,150
Cash 677
Stock 30 June 2017 41,979
Sales 123,650
Purchases 85,416
Carriage outwards 1,288
Discount allowed 115
Interest on loan 4,000
Office expenses 2,416
Salaries & Wages 18,917
Bad debts 503
Provision for bad debts 400
Long-term loan 40,000
Capital accounts:
Atim 35,000
Adongo 29,500
Current accounts:
Atim 1,306
Adongo 298
Drawings:
Atim 6,400
Adongo 5,650
244,604 244,604

Additional information
i. Stock on 30th June 2018 was Tshs.56,340,000
ii. Accrued expenses;
 Office expenses Tshs. 96,000
 Wages Tshs. 200,000
iii. Depreciate fixtures at 10% per annum on reducing balance. Depreciation on buildings
was Tshs. 1,000,000.
iv. Provision for bad debts is to be decreased to Tshs. 320,000
v. Interest on drawings was Tshs. 180,000and Tshs. 120,000
vi. Interest on capital balance is to be provided for at 10%
vii. Partnership salary of Tshs. 800,000 for Atim is not yet paid.
You are required to prepare:

a) Statement of Profit or Loss for Atim & Adongo partnership for year ended 30 th
June 2018
b) Statement of financial position as at 30th June 2018

Question Three – 20 marks

East, South and North were in partnership sharing profits and losses in the ratio of 3:2:1
respectively. The partnership was dissolved on 30 th June, 2018 when the position was as
follows:

East,South & North Partnership

Statement of Financial Position as at 30.06.2018
Liabilities Tshs'000' Assets Tshs.'000'
Capitals:
East 140,000 Cash in hand 38,000
South 70,000 Sundry Debtors 449,000
North 14,000 Stock in Trade 112,000
Current a/c
East 6,000
South 24,000
North 5,000
South's Loan 10,000
Reserves 120,000
Creditors 210,000
599,000 599,000

Realizations and expenses were as follows:

Date Realization Expenses
Tshs.'000' Tshs.'000'
31.07.2018 84,000 7,000
31.08.2018 126,000 5,400
30.09.2018 170,000 4,900
31.10.2018 97,000 3,500
30.11.2018 35,500 3,500
The stock was completely disposed off and amounts due from debtors were realized, the
balance being irrecoverable.
Required:

a) Identify and explain the key issues that should be covered in a partnership agreement
when setting up a partnership. (5 marks)
 b) Prepare a statement showing the piecemeal distribution of cash according to maximum
loss method applying the ruling in Garner vs Murray case when required. (15 marks)

Question Four – 20 marks

Rosee Limited invited applications for 10,000 ordinary shares of Tshs.10 each payable as
follows:

Tshs.2 per share on application

Tshs. 3 per share on allotment

Tshs. 2.50 per share on 1st call to be paid 1st April, 2018

Tshs. 3.50 per share on final call to be paid by 30 th April 2018.

Applications were received for 13,400 shares. Applications for 1,400 shares were rejected and
their application money refunded in full on 1 st February. The other applications were allotted
shares on the same date, on a pro-rata basis, excess amounts received on application being
retained towards allotment money.

As at 15th April, 2018, 300 shares were in arrears for the allotment money and a further 100
shares in arrears for the 1st call only. The Directors decided on this date to forfeit all shares for
both allotment money and the call. Two thirds of the shares so forfeited were reissued on 5 th
May, 2018 at Tshs. 9.50 each.

Required;
a) Prepare journal entries to record the above transactions in the books of Rosee Limited.

(15 marks)
b) Prepare an extract of the statement of financial position (extract) as at 5 May, 2018.
th

(5
marks)
Question Five

MM limited makes agricultural machinery for sale to major suppliers in the industry. The
following figures were extracted from its trial balance at 31 March 2018.

Details Tshs,'000'
Sales 2,200,000
Purchases of Raw Materials 650,000
Carriage inwards 40,000
Carriage outwards 100,000
Sales returns 80,000
Purchase returns 60,000
Manufacturing labour costs 200,000
Factory supervision laour costs 75,000
Office salaries 108,000
Other costs:
Heating and Lighting (factory Tshs. 132000 and Admin offices
Tshs.33,000) 165,000
Rent and Insurance (factory Tshs. 98,000 and admin offices
Tshs. 24,000) 122,000
Factory Machinery at cost 1,000,000
Accumulated depreciation of factory machinery 400,000
Delivery vehicles at cost 300,000
Accumulated depreciation of vehicles 100,000
Office machinery at cost 120,000
Accumulated depreciation office machinery 80,000
Opening inventories at 1st April 2018:
: Raw Materials 175,000
: Work in Progress 425,000
: Finished Goods 115,000

At 31 March 2018, the following information was also available:

1. Raw materials, Work in progress and Finishing goods balances as at 31 March, 2018
were as follows:
 Raw materials Tshs. 147,000,000
Work in progress Tshs. 392,000,000
Finished Goods Tshs. 138,000,000

2. Accruals and prepayments at 31 March 2018 were as follows:

 Heating and lighting accrued (factory Tshs. 12,000,000 and Administation offices
Tshs. 3,000,000)
 Rent prepaid (factory Tshs.18,000,000 and administration offices Tshs.
4,000,000)

3. Depreciation is to be calculated as follows:

 Factory machinery, 10 percent, straight line.
 Delivery vehicles, 20 percent, reducing balance.
 Office machinery, 25 percent, reducing balance.

4. Delivery vehicles are used entirely for delivery of finished goods.

Required:

a) Prepare the manufacturing account of MM Limited for the year ended 31 March 2018.
(10
marks)
b) Prepare the statement of profit or loss of MM Limited for the year ended 31 March 2018.
(10
marks)