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CARIBBEAN EXAMINATIONS COUNCIL

CARIBBEAN SECONDARY EDUCATION CERTIFICATE@
EXAMINATION
PRINCIPLES OFACCOUNTS
Paper 02 - General Proficiency

3 hours

READ THE FOLLOWING INSTRUCTIONS CAREFULLY.

l. AnswerALL questions in Section I and TWo questions from Section II.

2- write your answers in the spaces provided in this answer booklet.

3. Do NOT write in the margins.

4. Show ALL working clearly.

5. You may use a silent, non-programmable calculator to answer questions.

6- You are advised to take some time to read through the paper and plan your answers.

7. If you need to rewrite any answer and there is not enough space to do so on the
original page, you must use the extra lined page(s) provided atthe back of this
booklet. Remember to draw a line through your originar answer.

8. If youuse the extra page(s) you MUST write the question number clearly in
the box provided at the top of the extra page(s) and, where relevant, include
the question part beside the answer.

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO.

Copyright @ 2015 Caribbean Examinations Council

All rights reserved.

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 -4-

SECTION I

Answer the THREE questions in this section.

Write your answers in the spaces provided in this booklet.

l. (a) J. Lampjack who has been in business for several years as a sole proprietor provided you
with the followine information:

3l December 2015

Equipment l 30 000

Bank overdraft 3 700

Loan ($50 000 due for repayment by March 2016) 200 000

Fixtures and fittings l8 000

Cash 2 t00

Inventory 13 500

Land and building 250 000

Accounts payable 6 t00

Term deposit (3 months) 5 000

Accounts receivable 4 200

Using the order of permanence, draw up a classified Statement of Financial Position

(Batance Sheet) for J. Lampjack as at 3l December 2015 in the space provided on page 5.

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(12 marks)

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(b) The table below shows the opening balances at the beginning of November forAssets,
Liabilities and Capital for St Jude's business.

Transaction Assets Liabilities Capital

Opening balance $600 000 $400 000 s200 000

(i) Bought motor vehicles costing $12 000 on

credit. + 12 000 +12 000

(ii) The owner took goods costing $500 for

his personal use.

(iii) Bought goods for $900 on credit from R James.

(iv) Paid mortgage of $l 500 by cheque.

(v) The owner settled an amount of $15 000

owed by the business to U. Long from his
personal savings.

(vi) Bought office furniture costing $3 500.

The owner made a down payment of $500
by cheque and promised to pay the balance
in three monthlv instalments.

Closing balance (including example)

Complete the table above to show the effect of EACH transaction on the opening balances.
Use plus (+) and minus (-) signs appropriately. Transaction (i) is done for you.
(8 marks)

Total20 marks

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, Cassie and Kacie entered into a partnership on I January 2015.

Capital Invested Drawings Made During the Year

Cassie $142 000 s2s 000

Kacie $r 28 000 $22 000

The partners agreed that:

. Each partner should receive Interest on Capital of | 0 per cent per annum.

. Interest on Drawings should be charged at 7 per cent per annum.

. Kacie is to receive an annual salary of $25 000.

. Remaining profits or losses should be shared in the ratio of 3:2 respectively.

The following additional information is available:

. The partnership made a Net Income of $55 000 during the year ended 3 1 Decembet 2015.

(a) In the space provided on page 9, prepare the Profit and Loss Appropriation Account for
the partners for the year ended 3l December 2015.

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Using the form provided on page 11, prepare the paftners'CurrentAccounts in columnar
style. (10 marks)

(c) Explain the significance of the balance on EACH partner's Current Account.

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Total20 marks

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(iii) Using the form provided below, prepare and close the DiscountAllowed Account. .:riii---
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(2 marks)

(iv) What is the significance of the balance remaining in Mr Martinez's bank account
at month end?

(l mark)

(b) List and calculate the total value of Revenue Expenditure in the month of May for
Mr Martinez.

(2 marks)

Total20 marks

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NOTHING HAS BEEN OMITTED.

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SECTION II
Answer any TWO questions in this section.

Write your answers in the spaces provided in this booklet.

4. on I January 2013 the Gargar Mell company showed a balance of $l2 000 in its Provision for
Bad and Doubtful Debts Account. Gargar Mell Company provides for Bad and Doubtful Debts
of 5o/o of its year end Accounts Receivable.

Accounts Receivable at the end of two years were as follows:

3l December2013 s270 000

3 | December 2014 $2s5 000

(a) (i) Starting with the balance on I January 2013, prepare the Provision for Bad and
Doubtful Debts Account for the two years ended 3l December 2014.

Show dates appropriately and balance the account at the end ofeach year.

Date Details $ Date Details $

(7 marks)

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(ii) Prepare a Balance Sheet extract for Gargar Mell Company for 2014 showing the
effect of the provision on Accounts Receivable.

(3 marks)

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(b) The Gargar Mell Company maintains separate ledger accounts for Rent Expenses and
Commission Revenue. During the year ended 3 | December 2015, Gargar Mell Company
recorded the followins information:

I January 2015 Prepaid Rent $600

30 June 201 5 Rent paid $5 000

30 November 2015 Rent paid $5 000

Rent Expense is $12 000 peryear.

Using the form below, prepare the Rent ExpensesAccount forthe year ended 3 | December
2015.

Date Details $ Date Details $

(6 marks)

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(c) Gargar Mell Company was owed $2 500 in Commission Revenue on I January 2015.
During the year an amount of $14 000 was received and deposited into the company's
bank account. At the end of the year there were no amounts outstanding or received in
advance for Commission Revenue.

(i) Under which heading in the Balance Sheet of the previous year would the $2 500
have been recorded?

(l mark)

( ii) Using the form below, prepare the Commission Revenue account for the vear
ending 3l December 2015.

Date Details $ Date Details s

(3 marks)

Total20 marks

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5. Derek Davis, the sole proprietor of DD's Jam Shoppe, started trading on I January 2015 r#.;
and provides you with the following list of balances which was extracted from his books on
31 March 2015.

Inventory on 3l March 2015 was valued at | 654

Bank 6 875

Cash 699

Accounts Receivable 450

Accounts Payable | 922

Fixtures, Fittings and Equipment 7 780

Premises 25 000

Capital 32 484

Transportation Out 396

Discounts t60 185

Wages and Salaries 4 750

Utilities (including water rates) l 180

Rent Revenue 3 000

Loan 2 560

Gross Income 8 793

Additional information at 3l March 2015:

. Fixtures, Fittings and Equipment is to be depreciated at20%o per annum, using the straight
line method.

One employee has not yet been paid his wages of $900.

The Water Company has a credit of $ 160 for payment received in advance.

Mr Davis rents part of his shop premises to a tenant, who owes Sl 500 in rent for the month
of March.

Interest is to be calculated on the Loan at the rate of l5Yo per annum.

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(a) Using the form provided below, prepare an Income Statement (Profit and LossAccount)
forthe quarter ended 3l March 2015, for DD's Jam Shoppe, beginning with the Gross
lncome.

(ll marks)

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(b) Using the information provided on page 20 for DD's Jam Shoppe: i-*-:i
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(3 marks)

(ii i) Calculate the Working Capital. (Show workings.)

(2 marks)

Total20 marks
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6. Intergalactic Voyages is a limited company. On I April 2015, the following information is available.

Ordinary Shares Preference Shares

Authorized Share Capital 500 000 at $1.00 each 200 000 8 per cent at
$2.50 each

Issued Share Capital 300 000 at $1.50 each 100 000 8 per cent at
$2.50 each

$400 000 6 per cent Debentures were also issued for cash.

All shares and debentures were fully subscribed and paid up.

(a) Using the form provided below, prepare the journal entry to record the issue ofthe shares
and anotherjournal entry to record the issue ofdebentures.

Date Particulars Debit Credit

(9 marks)
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(b) At the end of one year's trading, the company reported a Net Operating Profit of
$576 000. The directors proposed the following:

(i) Pay dividends to all shareholders, including dividends of 55 cents per share
to ordinary shareholders

(ii) Transfer $180 000 to General Reserve

Using the form provided below, prepare the Appropriation Account for lntergalactic
Voyages Company Ltd for the year ended 3l March 2015.

(7 marks)

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(c) How did the issue of debentures affect the Net Operating Profit and by how much? (Show
working clearly.)

(2 marks)

(d) List any FOUR steps in the accounting cycle.

(2 marks)

Total20 marks

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7. Mark Blue prepared the following Trial Balance for The Blue Co-operative for the year ended 3l
December 2015.

The Blue Co-operative

Trial Balance for January to December 2015

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Patronage refund 4 000 lte'.i

Discounts received 5 500

Loan interest received 360 000

Premises at cost 270 000

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lnventory 76 000 :.8:
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Provision for depreciation Premises 60 000
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Cash 5 800

Equipment at cost I l0 000

Accounts receivable 3s 000

Rent received in advance l2 000

Loan 108 000

Provision for depreciation Equipment 29 000

-
Bank Interest eamed 700

Members honoraria 3 400

Capital 107 000

Suspense 23 400

715 900 715 900

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(a) Prepare a corrected Trial Balance for "The Blue Co-operative" for the year ending
3l December 2015.

(10 marks)

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F. Phil recently started business with $22 000 in the bank and recorded the following
transactions for the month of July 2015.

2May Bought equipment for $7 000 paying by cheque

6 May Paid rent of$l 200 by cheque

8 May Bought goods on credit from S. Sampson for $3 500

12May Sold goods on credit to M. Long for $2 100

l3 May Bought equipment on credit from Furniture & Things for $2 500

22 May Paid S. Sampson $3 500 by cheque

29 May Paid Furniture & Things $l 500 by cheque

Starting with the opening bank balance, post the above transactions to the appropriate
accounts in the relevant ledgers.

Name ofAccount Name of Ledger

Date Details $ Date Details $

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Name of Account Name of Ledger

Date Details $ Date Details $

Name of Account Name of Ledger

Date Details $ Date Details $

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Name of Account Name of Ledger

Date Details $ Date Details $

Name of Account Name of Ledger

Date Details $ Date Details $

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Name of Account Name of Ledger

Date Details $ Date Details $

Name of Account Name of Ledger

Date Details $ Date Details $

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Name ofAccount Name of Ledger

Date Details $ Date Details $

Name ofAccount Name of Ledger

Date Details $ Date Details $

(10 marks)

Total20 marks

END OF TEST

IFYOU FINISH BEFORE TIME IS CALLED, CHECK YOUR WORK ON THIS TEST.

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EXTRA SPACE

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Question No.

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EXTRA SPACE

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Question No.
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