Code of the Name of the Module Date of Exam Time of Exam DURATION

Module

FA1 BBA122 Financial Accoun�ng 1 21/11/2024 09 3 HOURS

You are advised to read the following before answering the examina�on ques�ons.

1. Read each of the ques�ons carefully before you answer.

2. Number the answers to the ques�ons clearly before answering.

3. Answer all parts of a ques�on in one place in a con�nuous manner.

4. Please write as clearly as possible as illegible handwri�ng cannot be marked.

This paper contains two parts; Sec�on A and Sec�on B. Sec�on A is compulsory with a total of 20
marks. Sec�on B contains 6 ques�ons of 20 marks each. Answer 4 ques�ons only from Sec�on B
Q1 Compulsory

Lamoudi has an accoun�ng year end of 31 December.

On 1 April 2013 he paid $1200, by cheque, for a year’s insurance star�ng on that date.

On 1 April 2014 he paid $1440, by cheque, for insurance for twelve months to 31 March 2015.

REQUIRED

(a) Prepare Lamoudi’s insurance account for the year ended 31 December 2014. Balance the

account and bring down the balance on 1 January 2015.

b) Abdoulaye withdrew $200 from the bank for personal use.

REQUIRED: State how this is recorded in the books of account.

c) Farhad and Ali are traders. On 1 January 2015 Farhad owed Ali $300. The following transac�ons took
place.

5. January Ali sold goods, $250, to Farhad.

8. January Farhad returned half of the goods bought on 5 January.

19 .January Farhad paid the amount owed on 1 January, by cheque, having deducted 3% cash discount.

REQUIRED

1) Prepare Farhad’s account in the books of Ali. Balance the account and bring down the
balance on 1February 2015.
d)Complete the following table. Name the document sent by Ali to Farhad on 5 January and on 8
January and state his reason for sending each document.

e) Complete the following table. Name the book of prime (original) entry in which Ali would record the
transac�ons listed.
f) During February 2015 the following transac�ons took place.

1 Took out long term bank loan, $10 000.

2 Bought delivery van, $8000, paying by cheque.

3 Bought inventory, $300, from John on credit.

4 Sold goods for cash, $80 (cost $50).

REQUIRED

Complete the following table to show the double entry needed to record each transac�on.

SECTION B

Answer only 4 ques�ons from this sec�on

Q2 (20 MARKS) (USE A SEPARATE ANSWER SHEET)

Ben and Tom Panesar formed a partnership on 1 February 2014.

The following informa�on is available.
1. On 1 February 2014 Ben contributed $90 000 capital and Tom contributed $60 000. On 1
August 2014 Ben contributed a further $10 000 capital.
Interest on capital is allowed at the rate of 3% per annum.
2. Tom was to be en�tled to an annual salary of $9000 per annum for the first four months of
the first financial year. A�er that date the salary was to increase to $12 000 per annum.
3. During the year ended 31 January 2015 Ben’s drawings amounted to $9800 and Tom’s
drawings amounted to $20 800.
4. Interest on drawings for the year ended 31 January 2015 amounted to $490 for Ben and
$1040 for Tom.
5. Profits and losses are shared 2/3 to Ben and 1/3 to Tom.
6 .On 1 February 2014 Tom made a loan of $15 000 to the business. The loan is repayable on
31 January 2020.
Loan interest of 4% per annum is to be credited to Tom’s current account.
7.The profit for the year ended 31 January 2015 (a�er loan interest) was $27 920.
REQUIRED
(a) Prepare the profit and loss appropria�on account for the year ended 31 January 2015.

Q3 (20 MARKS)

Kuda Maposa maintains a pety cash book using the imprest system.

REQUIRED

(a) State one advantage of the imprest system of pety cash.

_____________________________________________________________________________

_____________________________________________________________________________

On 1 March 2015 the balance of Kuda Maposa’s pety cash book was $100 which was equal to the

amount of the imprest.

Her transac�ons for the month of March 2015 were as follows.

March 6: Paid for postage costs 13

11 Bought tea and coffee 5

14 Purchased sta�onery 27

18 Paid T Masuka, a credit supplier 15

21 Received refund for damaged sta�onery 10

26 Paid window cleaner 12

29 Paid P Zhonga, a credit supplier 16

REQUIRED

(b) Enter these transac�ons in Kuda Maposa’s pety cash book on the page opposite.

Balance the pety cash book and bring down the balance on 1 April 2015
(c) (i) State the amount required to restore the imprest on 1 April 2015.

___________________________________________________________________

(ii) Name the account which would be credited with this amount.

__________________________________________________________________

(iii) Name the ledger account in which the transac�on of 21 March would be recorded.

__________________________________________________________________

Q4 (20 MARKS)

On 31 January 2015 David Jones balanced his cash book and brought down a debit balance of
$114 on 1 February. The bank statement showed a credit balance of $154 on 31 January 2015.

A comparison of the cash book and the bank statement revealed the following.

1. Items appearing only in the cash book

Cash from sales paid into the bank on 28 January 235

Cheque paid to M Sharp, a credit supplier 490.

2. Items appearing only on the bank statement

Bank charges 62

Cheque received from K Taylor, a credit customer, dishonoured 143

Insurance premium paid by standing order 40

Interest on deposit account paid directly into the bank 130

3. The total of the debit side of the cash book had been overcast 100

REQUIRED

(a) Update the cash book of David Jones. Bring down the updated bank balance on 1 February 2015
(c) (i) State whether the cash book balance or the bank statement balance should be shown in

David Jones’ statement of financial posi�on at 31 January 2015.

________________________________________________________________________

________________________________________________________________________

(ii) Give a reason for your answer in (i).

________________________________________________________________________

________________________________________________________________________

(d) State two reasons why David Jones’ bank manager would be interested in his financial

statements.

1_________________________________________________________________________

______________________________________________________________________________

2_________________________________________________________________________

___________________________________________________________________________

Q5 (20 MARKS)

Amina is a trader. Her financial year ends on 31 December.

The totals of her trial balance on 31 December 2016 did not agree. Amina entered the
difference in a suspense account and prepared dra� financial statements.
The following errors were later discovered.
1 One page of the sales journal had been undercast by $1000.
2 Repairs to office equipment, $484, had been treated as capital expenditure.
3 The total of the sales returns journal, $960, had been credited to the purchases returns
account in the ledger.
4 The bank balance, $1500, had been treated as a bank overdra� in the trial balance.
5 A credit note received from AK Stores for $210 had been correctly entered in the purchases
returns journal but had been credited to the account of the supplier as $120.
REQUIRED (a) Prepare the journal entries to correct errors 3–5. Narra�ves are not required.
Q6 (20 MARKS)

Esme provided the following informa�on.

At 1 January 2014 $

Trade payables 7 000

Trade receivables 9 500

For the year ended 31 December 2014

Sales (all credit) 95 100

Sales returns 1 050

Purchases (all credit) 63 600

Purchases returns 1 950

Receipts from credit customers 92 750

Payments to credit suppliers 59 000

Refund to credit customer 450

Discount allowed 2 100

Discount received 850

Bad debt writen off 300

Addi�onal informa�on at 31 December 2014

1 Esme owed $100 to a supplier who also owed $180 to Esme. It was agreed to record this as a setoff
in the control accounts.

2 Esme owed $50 to a credit customer who had overpaid.

REQUIRED

(a) Prepare the sales ledger control account and the purchases ledger control account for

the year. Balance the accounts and bring down the balances on 1 January 2015.
Q7 (20 MARKS) (USE A SEPARATE ANSWER SHEET)

Zamtrade, a limited liability company, operates a chain of wholesale grocery stores. Its first
account balances at 30 June 2023 was as follows:

K000' K000'
Sales Revenue 13,600
Purchases 8,100
Inventory 1 July 2022 1,530
Distribution Costs 1,460
Administrative Costs 1,590
Interest on loans 50
Dividends Paid: 480
Final for the year ended 30 June 2022 360
Interim for the year ended 30 June 2023 1,510
Land at cost
Buildings:
Cost 8,300
Accumulated Depreciation at 30 June 2022 1,020
Office Equipment:
Cost 1,800
Accumulated Depreciation at 30 June 2022 290
Motor Vehicles:
Cost 1,680
Accumulated Depreciation at 30 June 2022 620
Trade Receivables 810

Allowance for doubtful debts 18

Cash at Bank 140
Trade Payables 820
10% Loan 1,000
Called up share capital- ordinary shares of 25 each 1,200
Share premium account 2,470
Accumulated profits 30 June 2022 6,772
27,810 27,810

The following additional information is available:

1. Closing inventory was 1,660,000
2. Trade balances totalling 6,000 are to be written off and the allowance for doubtful
debts increased to 30,000. It is the company’s practice to include the charge for bad
and doubtful debts in administration expenses in the income statement.
3. Accruals and prepayments:

K000' K000'
Distribution Costs 60 120
Administration Expenses 70 190
Interest on Loans 0 50
 4. In early July 2023 the company received invoices for credit purchases totalling
18,000 for goods delivered before 30 June. These invoices have not been included in
the accounts payable at 30 June 2023.

It was also found that credit sales invoices totalling 7,000 for goods delivered to
customers before 30 June 2023 had mistakenly been dated in July 2023 and thus
excluded from sales for the year and from accounts receivable at the year end.

The goods received had been included in the year end inventory figure given at (1)
above and the goods sold had been excluded from it. No adjustment to the inventory
figure is therefore required.

5. Depreciation should be provided as follows:

Land 0
Buildings 2%
Office Equipment 15%
Motor Vehicles 25%

Depreciation is calculated using the straight-line method for all asset classes.
Required:
1. Prepare the company’s income statement for the year ended 30 June 2023 (12
marks)
2. Prepare the company’s statement of financial position at 30 June 2023 (12 marks)
3. Prepare the Statement of Changes in Equity at 30 June 2023 (6 marks)
Note: Ignore taxation
Q8 (20 MARKS) (USE A SEPARATE ANSWER SHEET)

Sharp Ltd proves the accuracy of its receivables and payables ledgers by preparing monthly
control accounts. At 1st September 2023 the following balances existed in the company’s
accoun�ng records, and the control accounts agreed:

Debit Credit

Receivables Ledger Control Account 188,360 2,140

Payables Ledger Control Account 120 89,410

The following are the totals of the transac�ons which took place during September 2023, as
extracted from the company’s records.

Credit sales 101,260

Credit Purchases 68,420

Sales Returns 9,160
Purchases Returns 4,280

Cash Received from customers 91,270

Cash paid to suppliers 71,840

Cash discounts allowed 1,430

Cash discounts received 880

Irrecoverable Debts written off 460

Refunds to customers 300

Contra Settlements 480

At 30 September 2023 the balances in the receivables and payables ledgers, as extracted
totalled:

Debit Credit
To be
Receivables Ledger Balances ascertained 2,680
 To be
Payables Ledger Balances 90 ascertained

An ini�al atempt to balance the two ledgers showed that neither of them agreed with their
control accounts. The differences were found to be due to the following:
a) A credit balance of 680 had been omited when lis�ng the receivables ledger
balances.
b) A contra setlement of 500 had not been included in the totals of transac�ons
prepared for the control accounts.
c) A new employee had mistakenly entered five copy sales invoices into the purchases
daybook as if they had been purchase invoices and entered the amount to new
payables ledger accounts. The total of these invoices was 1,360.
d) A 20-kwacha cash refund to a customer was made from pety cash and has not been
included in the summary of transac�ons given above. The 20 Kwacha was entered to
the receivables ledger as if it had been a cash receipt from the customer and this
resulted in a 40-kwacha credit balance on the account, which was s�ll outstanding at
30th September 2023.
When these errors had been corrected both control accounts agreed with the ledgers.
Required:
Prepare the receivables and payables ledger control accounts for the month of September
2023 a�er these errors are corrected, and hence ascertain the missing totals of the ledger
balances as indicated above (debit balance in receivables ledger and credit balance in
payables ledger).