UNIVERSITY OF THE COMMONWEALTH CARIBBEAN

SCHOOL OF BUSINESS & MANAGEMENT

End of Module Examination

 FALL  SPRING  SUMMER

CENTRE :

MODULE : ACT100 FINANCIAL ACCOUNTING

DATE :

TIME :

DURATION : 2 HOURS

INSTRUCTIONS:

1. Please read all instructions carefully before attempting any question.

2. THIS PAPER REPRESENTS 40% OF YOUR TOTAL GRADE.
3. ATTEMPT ALL QUESTIONS.
4. THIS PAPER HAS FOUR (4) QUESTIONS. MANAGE YOUR TIME CAREFULLY.
5. ALL QUESTIONS MUST BE ANSWERED IN THE BOOKLET PROVIDED
6. PLEASE ENSURE THAT YOU NUMBER YOUR QUESTIONS CORRECTLY.
7. WRITE CLEARLY THE NUMBER OF THE QUESTION ON EACH OF THE RELEVANT
PAGES.
8. WHERE QUESTIONS HAVE MULTIPLE PARTS, ALL PARTS MUST BE ANSWERED.
9. START THE RESPONSE TO EACH QUESTION ON A NEW PAGE.

Write your REGISTRATION NUMBER clearly on each page of your answer booklet.
DO NOT WRITE YOUR NAME.
NB. Your script will not be marked if it has your name.
DO NOT TURN OVER UNTIL YOU ARE TOLD TO DO SO

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 ANSWER ALL QUESTIONS

Question 1

Andy and Angela are operators of the AA Wholesale in Downtown, Kingston. They share profits
in the ratio 2:1 respectively. On January 1, 2016 the following balances were extracted from the
books of the partnership:
Detail Current Capital Account
Account
Andy 400,000 (Cr) 3,500,000 (Cr)
Angela 750,000 (Dr) 2,250,000 (Cr)
The partnership records also revealed the following information:
(i) The partnership profits for the financial year ending December 31, 2016 amounted to
$6,350,000.
(ii) Interest on drawings is to be charged at 8% per annum, while partners are to receive
6% per annum on their capitals.
(iii) Partners are to receive salaries as follows: Andy, $800,000 per annum; and Angela
$700,000 per annum.
(iv) Cash drawings for the year were: Andy $680,000 and Angela $520,000.
Required:
(a) The partners’ capital accounts as at January 1, 2016. (2 marks)
(b) The partners’ current accounts as at December 31, 2016. (8 marks)
(c) The Profit and Loss Appropriation Account for the period ending December 31, 2016.
(9 marks)
(d) Andy and Angela want you to tell them the difference between limited and unlimited
liability. (3 marks)
(e) State the three (3) conditions which must be present for a partnership relationship to exist
between Andy and Angela. (3 marks)

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Question 2

Hypeton Social Club caters for students who attend colleges in the Corporate Area and St.
Catherine. The club engages its members in the purchase and sale of national memorabilia to
supplement its income. Proceeds from the clubs activities are used to fund the operations of the
National Golden Age Home. On January 1, 2016 the club had the following balances: Motor van
$2,500,000; furniture $400,000; debtors for memorabilia $500,000; electricity owing $6,000;
secretary’s subsistence paid in advance $14,000; creditors for memorabilia $1,100,000.
For the financial year ending December 31, 2016 the secretary of the club provided the following
information in relation to the club’s activities:
Payments $ Receipts $
Electricity 180,000 Members subscriptions 1,300,000
Party stock 600,000 Sale of memorabilia 4,600,000
Purchase of memorabilia 2,800,000 Refreshment, etc. sale 1,350 ,000
Refreshments, etc. 680,000 Receipts from parties 1,200,000
Secretary’s subsistence 196,000 Miscellaneous income 300,000
Stationery 150,000
Rent 190,000

Notes:
(ii) On December 31, 2016 the club owed $4,000 for electricity, while $15,000 rent related to
January 2017.
(iii) The opening cash balance on January 1, 2016 was $508,000. There was no opening or
closing stocks of memorabilia.
Required:
(a) The Accumulated Fund Statement as at January 1, 2016. (8 marks)
(b) The Receipts and Payments Account for the year ending December 31, 2016. (8 marks)
(c) The Income & Expenditure Account for the financial year. (9 marks)

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Question 3

Associated Distributors Ltd utilizes financial ratio analysis to develop strategies to improve the
company’s performance. . For the financial year ending December 31, 2016 the following
information was extracted from the company’s final accounts and balance sheet:

Details $
Cost of sales 15,000,000
Closing stock 3,000,000
Net sales 30,000,000
Accounts receivable 6,000,000
Opening stock 4,500,000
Operating expenses 8,250,000
Accounts payable 5,000,000
Cash 4,500,000

Required:
(a)
(i) Gross profit percentage. (3 marks)
(ii) Net profit percentage. (2 marks)
(iii) Current ratio. (2 marks)
(iv) Liquid ratio. (2 marks)
(v) Working capital. (2 marks)
(vi) Average stock. (2 marks)
(vii) Stock turnover. (2 marks)
(viii) Average/debtors collection period (2 marks)

(b) Explain to Associated Distributors Ltd the purpose of the following ratios and the
meaning of the results calculated in part (a):
(i) Current Ratio. (2 marks)
(ii) Liquid ratio. (2 marks)
(iii) Stock turnover. (2 marks)
(iv) Debtors collection period. (2 marks)

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Question 4

Elegant Productions Ltd is a limited liability company. The company’s financial year runs from
January to December. On December 31, 2016 the following Trial Balance was extracted from the
company’s books:
Trial Balance for period ending December 31, 2016
Details/Accounts Dr $’000 Cr $,000
Buildings at cost 8,500
Buildings, accumulated depreciation, January 1, 2016 850
Plant at cost 2,700
Plant, accumulated depreciation, January 1,2016 1,350
Bank balance 1,000
Revenue 22,000
Net purchases 14,000
Inventory, January 1, 2016 2,000
Cash 300
Accounts payable 3,200
Accounts receivable 4,800
Administrative expenses 3,900
Allowance for receivables, January 1, 2016 150
Retained earnings, January 1, 2016 1,700
Equity shares, $1 each 4,850
Share premium 1,100
36,200 36,200

Notes:

(1) The allowance for receivables is to be adjusted to 5% of trade receivables. The allowance for
receivables is treated as an administrative expense.
(2) Plant is depreciated at 10% per annum using the reducing balance method and buildings are
depreciated at 6% per annum straight line.
(3) Closing inventory was counted and valued at $1,450,000.
(4) $100,000 paid for fuel costs related to the succeeding financial year. Fuel costs are included
in administrative expenses.
Required:
(a) Prepare the statement of profit or loss for the financial period. (13 marks)
(b) Prepare the Balance Sheet of Elegant Productions Ltd for the year ending
December 31, 2015 (12 marks)

END OF QUESTION PAPER