COUNCIL FOR LEGAL EDUCATION

BOOKKEEPING AND ACCOUNTS

NOVEMBER 2014 TIME : THREE HOURS

ANSWER ALL QUESTIONS 100 MARKS

JOURNAL ENTRIES ARE NOT REQUIRED UNLESS SPECIFICALLY

REQUESTED

QUESTION 1

Explain how the bookkeeper would record each of the following transactions in the books of
a legal practitioner.

(a) Payment to a client of the sum of $4 000 being collections made from the clients’
debtors. (4)
(b) Receipt of notification from the bank that a cheque for $60 received from a client and
which the firm had deposited into the trust current account at the bank had been
returned by the bank marked “refer to drawer”. (4)
(c) Payment to the deputy sheriff of the sum of $90 being the deputy sheriff’s charges for
the month for services rendered on behalf of the firm’s clients, Aaron and Banda.
(4)
(d) The receipt of the sum of $60 being payment from a client in settlement of fees
previously raised by the firm. (4)
(e) The purchase of a calculator to be used to calculate trust account balances. (2)
[18]

QUESTION 2

The books of a legal practitioner reflect that as at the end of the month, the firm was holding
$1 700 on behalf of clients A ($600), B ($400) and C ($700). The client debtors were
A ($350), C ($900) and D ($200). Funds were then transferred to the business account via
the transfer journal to settle clients’ indebtedness to the firm.

You are required to prepare the transfer journal entry and to thereafter make the necessary
entries in the ledger to record the above transactions.
[10]

1
QUESTION 3

Lesy and Tamu are equal partners in a law firm. The following balances were extracted from
their books at the end of their financial year end, the 31 December 2013.

$ $
Business creditors 400 Library 4 000
Practising certificate fees 800 Bank overdraft 1 622
Rent 700 Capital Lesy 5 000
Trust current account 3 600 Capital Tamu 7 000
Buildings 5 000 Trust savings 500
Fees 3 600 Client debtors 3 560
Employees salaries 910 Trust creditors 4 396
Business savings 1 000 Revenue stamps 20
Interest on trust savings 72 Drawings : Tamu 500
Partner’s salary 1 500

You are required to prepare the profit and loss account and the profit and loss appropriation
account (the income statement) together with the balance sheet (the statement of financial
position) of the partnership as at 31 December 2013 after taking into account the following
adjustments.

(a) A payment of $60 had been made to City Engineers for services rendered on behalf of
a client. Payment had been made out of the trust current account in error. The
client’s business account had been correctly debited.
(b) A client had paid an amount of $308 to be deposited on his behalf pending the
settlement of an offer that he had made to a creditor. The money had been paid into
the business account although the ledger entry was made in the client’s trust account.
(c) The rent paid includes a payment of $100 for the month of January 2014.
(d) Account had not been taken of revenue stamps to the value of $5 which had been
affixed to process issued on behalf of a client.
(e) Of the interest received on the trust savings, $18 is due to the compensation fund.
(f) Tamu is to be charged interest on drawings amounting to $30.
[22]

QUESTION 4

You are a legal practitioner practising in Gweru.

You instruct your correspondent in Shurugwi to institute action on behalf of your clients
Bright and Nozipho who are owed money by debtors, namely Charle and Sabelo who both

2
reside in Shurugwi. You are not holding any funds on behalf of your two clients. Some
weeks later, you receive the following statement from your correspondent to which is
attached a cheque for $2 450.

Collected from Charle (on behalf of Bright) $2 500

Collected from Sabelo (on behalf of Nozipho) $ 30
Summons fees (Bright v Charle) $ 40
Summons fee (Nozipho v Sabelo) $ 40

Cheque attached $2 450

You raise your own fees (via the fees book) of $50 for attendances in the Bright matter and
$25 for attendances in the Nozipho matter and you make the necessary adjustments in your
books after which you (i) transfer funds from the trust account to your business account to
settle Bright’s indebtedness to yourself, (ii) you pay Bright the balance due to him, (iii) you
receive a sum of $35 from Nozipho in settlement of her indebtedness to you.

YOU ARE REQUIRED to enter the above transactions in your books of accounts.
[20]

QUESTION 5.

On 2 October 2014, your client Manku gives you instructions to register a company on his
behalf. She pays you a deposit of $200. From your trust account you pay the Registrar of
Companies $20 being the fee for the search and reservation of the name of the company.

On 8 October you are advised by the Registrar that the name of the company has been
reserved. You immediately pay the Registrar the sum of $60 from the business account being
the registration free. On 30 October you raise a fee of $100 for your attendances in the
matter and you transfer funds from the trust account to offset Manku’s indebtedness to you.
You then refund Manku the balance standing to the credit of her account.

YOU ARE REQUIRED to record the above transactions in your trust and business ledger and
to thereafter balance your accounts.

[15]

3
QUESTION 6

The credit balance in Zodwa’s business account as shown in the business cash book as at
30 September 2014 was $920. The bank statement as at that date reflected a debit balance of
$1 300. An examination of the records revealed the following.

a. Cheques totalling $340 issued during the month of September had not yet been presented
for payment.
b. Interest in the sum of $80 had been credited to the account by the bank.
c. A cheque for $170 received during September from a customer had been returned by the
bank marked “Refer to Drawer”.
d. Ledger fees of $70 had been charged by the bank.
e. The bank had debited a trust cheque for $260 against the account in error.
f. A deposit of $300 made on 30 September 2014 had not been entered on the bank
statement.

YOU ARE REQUIRED to adjust the cash book and to thereafter prepare the bank
reconciliation statement as at 30 September 2014. [15]

END OF QUESTION PAPER