THE UNITED REPUBLIC OF TANZANIA

PRESIDENT’S OFFICE, REGIONAL ADMINISTRATION AND

LOCAL GOVERNMENT

FORM SIX SPECIAL SCHOOLS JOINT EXAMINATION

CODE: 153/2 ACCOUNTANCY 2

Time: 3:00 HRS Monday 04-March-2024 AM

INSTRUCTIONS

1) This paper consists of sections A and B with a total of eight (8) questions.
2) Answer all questions in section A and three (3) questions from section B.
3) Section A carries forty (40) marks and section B carries sixty (60) marks
4) Non programmable calculators may be used.
5) Cellular phones and any unauthorized materials are not allowed in the examination room.
6) Write your Name/Examination Number on every page of your answer
sheets/booklet(s).

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 SECTION A (40 marks)
Answer all questions in this section. Each question carries ten (10) marks.

1. a) Describe what is meant by an audit procedure

b) Explain any two uses and limitations of audit program.

2. During the month ended 31st January 2020, the two employee of Maji ya ugoko sports
club worked the hours shown below;
Employee name Hourly rate (TZS) Hours worked for the month
Gwamaka Green 720 188
Shaweji Khamisi 660 150

The firm pays overtime at one and a half times the regular rate for the extra hours beyond
40 hours in a week; employees’ earnings are subject to the following terms;
i. Employees have a guaranteed minimum pay based on 40 weekly hours at the
regular hourly pay;
ii. PAYE is deducted at the rate of 20% on any amount in excess of TZS 50,000 Gross
pay;
iii. NSSF contribution is at the rate of 10% of the employee’s basic pay
Use the information given to:
a) Determine basic pay, gross pay and net pay for each employee
b) Outline any four objectives of payroll accounting

3. KIMBUNGA Ltd is a manufacturing company that manufactures a soft drink called

Kinywaji. During the month of January, 2019, it manufactured 500,000 bottles full of
Kinywaji, the cost associated with this level of production were direct materials TZS
10,000,000; direct labour TZS 1,350,000; direct expenses TZS 2,000,000; variable
overheads TZS 1,120,000 and fixed over heads expenses for the year ended 31st December,
2019 were estimated to be TZS 1,400,000; revenue is TZS 200 per bottle of kinywaji.
Using the information provided:
a) Prepare a cost statement showing marginal cost and profit or loss for the month of
January, 2019.
b) Calculate the break-even point in number of bottles and revenue.
c) Show that a break-even point total revenue is equal to total cost. Use the values
calculated in (b)

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 4. NGEDEMA Ltd sales goods in containers which are charged to customers at TZS 200 each
container, containers are credited with TZS 125 for each container returned within four
months. On 31st December 2019 there were 1,580 containers in the company’s premises
and 5,520 containers the time limit for the return of which had not expired were held by
customers.
During 2020, Ngedema ltd purchased containers 8,700 containers for TZS 150 each.
26,460 Containers were charged to customers and 23,720 Containers were returned to
customers and Credited to them. On 31st December 2020 customers held 6,000 containers
the time limit for the return of which had not expired. For the purpose of annual accounting
for Ngedema ltd all stocks of containers on the company’s premises to and returnable
containers on the possession of customers are valued at TZS 100 each.
From the given information show the containers stock account and container’s
suspense account

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 SECTION B (60 marks)
Answer three (3) questions from this section. Each question carries twenty (20) marks.
5. Ndemas, Alex and Sele have been in partnership for some years, sharing profits or losses
in the ratios 2:2:1. On 30th October, 2000 the following statement of financial position was
produced:
STATEMENT OF FINANCIAL POSITION AS AT 30TH OCTOBER, 2000.
TZS TZS TZS
Non-current assets:
Motor van 10,000,000
Less: Depreciation 3,000,000 7,000,000

Current assets:
Stock 2,500,000
Debtors 10,500,000 13,000,000
20,000,000
EQUITY AND LIABILITIES:
Capital: Ndemas 2,000,000
Alex 2,000,000
Sele 1,000,000 5,000,000
Current liabilities:
Creditors 8,500,000
Bank overdraft 6,500,000 15,000,000
20,000,000

Despite making good profits during recent years, the partnership had become increasingly
dependent on one credit customer, and to retain this customer, the partnership had gradually
increased the credit limit until he owed the partnership TZS 9,000,000. It has now being
discovered that this customer is insolvent and that he is unlikely to repay any of the money
owed by him to the partnership. Reluctantly Ndemas, Alex and Sele have agreed to dissolve
the partnership on the following terms:
i. The Motor van will be sold for TZS 4,000,000 except for certain motor van with a
book value of TZS 2,500,000 which will be taken over by Ali at the agreed
valuation of TZS 3,500,000.
ii. The debtors, except for the main credit customers, are expected to pay their
accounts in full.
iii. The stock is to be sold for TZS 2,000,000.
iv. The costs of dissolution will be TZS 400,000 and discounts received from creditors
will be TZS 250,000. Sele is unable to meet his liability to the partnership out of
his personal funds.
Use the given information to:
a) Prepare the realization account.
b) Prepare the capital accounts to the partners recording the dissolution of partnership.

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 6. Komanya entered into an agreement to purchase a machine from Kombania Logistics under
hire purchase on 1st July 2019. The agreement provides that, Komanya should pay twelve
quarterly instalment of TZS 475,000 each. The cash price of the machine in a normal sale
was set at TZS 4,800,000 whereas under hire purchase the price went up. The first
instalment was paid on the date of purchase and the rest of the instalments were met on due
dates without failure.
Komanya provides depreciation at the rate of 20% per annum and closes the books on 31st
December each year.

Using the interest suspense method of charging interest on hire purchase, prepare in the
books of Komanya the following; -
(a) Machinery account at cost
(b) Hire vendor account
(c) Hire purchase interest suspense account

7. Chiding Ltd issued 100,000 ordinary shares of TZS 200 each payable by installments as
follows: TZS 50 on application, TZS 50 on allotment, TZS 40 on first call, TZS 30 0n
second call and TZS 30 on the third and final call.
Applications were received for 145,000 shares. The directors decided to reject applications
for 45,000 shares and the money received in respect of these shares was refunded. The
following shareholders failed to pay the amounts due on their shares as shown in the
following table:

Name Shares held Amounts not paid

Mr. Kaunda 200 1st , 2nd and 3rd
Mr. Khatami 400 2nd and 3rd
Mr.Mafisango 600 3rd

With the exception of Mr. Kaunda, Khatami and Mafisango, all the shares holders paid
their dues as scheduled. The directors then forfeited the shares from Mr. Kaunda, Khatami
and Mafisango and re-issued them to Mr. Medium as fully paid up for TZS 220 per share.
Use the information provided to prepare the following accounts: Bank, Ordinary shares
Application, ordinary shares Allotment, 1st Call, 2nd Call, 3rd call, Ordinary share capital,
Forfeited shares, Re issued shares and Ordinary share premium.

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 8. Mr. Burton developed software package for Payroll Accounting. He granted Mr. Joshua a
licence for 7 years to use the software and sell the same to Ministry of Finance on the
following terms;
1. Mr. Joshua should pay to Mr. Burton a royalty of TZS 5 for each software package
sold with a minimum annual payment of TZS 50,000. Account should be settled on
31st December.
2. In any year the royalty amounted to less than TZS 50,000 Mr. Joshua should have
the right to deduct the deficiencies from the royalty’s payable in excess of that sum
in the two following years. The numbers of packages sold were as follows;
TZS
st
Year ended 31 December, 2010 8,000
st
Year ended 31 December, 2011 9,000
st
Year ended 31 December, 2012 11,000
st
Year ended 31 December, 2013 18,000
Use the above information to prepare;
a) Royalties Account
b) Short workings Account
c) Mr. Burton’s Account in the books of Mr. Joshua which are closed annually on 31st
December.

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