SECTION B ‘Answer ALL questions in this section, QUESTION 1 For each of the follo. (Assets = Li ies + Capital) and the double entries required. (70 MARKS) (10 MARKS) wing transactions, show the effects on the accounting equation ‘Transactions ‘Double entries Effects on the accounting equation |Example: The proprietor paid $6000 toa creditor |Dr Accounts Payable | Decrease abilities from his own bank account, ICr Capital \increase capital (@) Bought goods for $3,300 from a supplier on credit. () (2) (b) Received part of the amount owing from a customer by cheque for 2600. @ @ \(c) An equipment purchased for office use was out of order. The owner retured the equipment to the supplier %) © and obtained a cash refund of $9,000. |) Received a loan from China bank of $70,000 in cash. ” (8) \(e) The owner introduced a motor van costing $50,000 to the business as YY (10) additional capital,QUESTIO) na (MARKS) ‘The financial year for Jenn; i mt waits yy ends on 31 December each year. The following non-cUrre Schedule was prepared on 31 December 2021; Xr ae “Acwusiion | Con] Enimaied | Depreciation | Enimaied | Depreciaion Date Disposal | Method Useful oe ‘ae Litas Depreiion Rate = r 2020 2021 Fumit i nite Jj Jan2019 | ooo | (2) | Supa | years | 15:000 @ Mot (4) SLY | 1 apr2020 | 200,000) - om | & @ 5 6) Fumie | 1 july 2020 | 200 years | 2,000 6 Motor Cony Y | 1 sepzoat | 380000] - | Sepen® | (7) Bee Famine | jyoy20n1 | sao | 1000 | Ste” | oveas | > Q Additional information: (This the company's policy to charge a full year’s depreciation on non-current assets purchased in the first half of the financial year. |For non-current assets purchased in the second half of the financial year, a half year’s depreciation is charged. (ii) On November 2021, the company spent $1,500 to extend the useful life of Furniture C and $1,000 for the maintenance of this asset for the two years ended 31 December 2022. These amounts had been included in the cost of Furniture C at 31 December 2021 REQUIRED: Compute the correct amount/depreciation rate for items (1) to (8) in the table above.(11 MARKS) QUESTION 3 bank statement of John Wong On the date of the financial year ended 31 January 2020, the 's in the cash book showed a credit balance of $5,300. An examination of the bank column: ‘and the bank statement disclosed the following: ; did not (He paid the following cheques into the bank on 31 January 2020, but they di appear in the bank statement: ‘Cheque Number s 20110 5,500 20345 2,800 ; ier, but |i was found that a cheque No 20110 dated 31 May 2019 was paid to @ sop hhad not been shown on the bank statements on 31 January 2020. It is the Practice not to honour cheques outstanding for more than six months. Gi) A direct deposit of $1,700 from May was paid directly to John’s aecount. (iii) A standing order payment for electricity fee of $2,100 had not been entered in the ‘cash book. (iv) Bank charges of $20 had been entered in the bank statement. (¥) A lodgement of $6,300 on 31 January 2020 was not recorded by the bank until 2 February 2020. (vi) Kelly's cheque of $3,730 was retuned by the bank marked ‘refer to drawer’ but this ‘had not been entered in his eash book. (vii) The bank received dividend income of $350 but it had not been entered in the cash book. (viii) An autopay was made by the bank for an insurance of $700. (ix) John had entered a sales proceeds $1,300 as $1,050 in his cash book. (x) The company had instructed the bank to transfer $2,000 from the savings account to the current account. The bank had mistakenly made the transfer in reverse. REQUIRED: (@) Show the necessary adjustment in the cash book. (7.5 marks) () Prepare a bank reconciliation statement as at 31 January 2020 commencing with adjusted cash book balance. G5 marks) 2 ofaQUESTION 4 RKS) Abby and Bobb: is y are 5 follows, Partners sharin, it io of 22 i ollowing terms are included inti prneeneeee ae recamn Interest i imerest in partners’ capital is 8% per annum, son IMeFest on partners” drawings is charged at 10% per annum. ‘Abby is entitled to an annual salary of $60,000. ‘The ji ae folowing balances were extracted from the books of the partnership as at 31 December Dr cr “ s $s Capital accounts: Abby 150,000 Bobby 300,000 ‘Current accounts: Abby 43,000 Bobby 27,000 Partners’ salary : Abby 20,000 9% bank loan 280,000 Inventory 84,000 Accounts receivable 250,000 ‘Accounts payables 126,000 Net profit forthe year 165,000 Drawings : Abby (withdrawn on 1 March 2013) 18,000 Bobby (withdrawn on 1 September 2013) 12,000 Additional information: (Interest on the 9% bank loan for the quarter ended 31 December 2013 had not been paid or provided for. (ii) During the year, goods invoiced at $20,000 were sent to a customer on a sale-or-return basis, These goods had been marked up at 25% on cost and recorded as sales for the year, Asat31 December 2013, only 80% of these goods were accepted by the ‘customer. REQUIRED: (a) Prepare a statement to calculate the partnership's adjusted net profit for the year ended 31 December 2013. (2 marks) (b) Prepare the partnership's appropriation account for the year ended 31 December 2013, (4 marks) (c) Update the partners’ current accounts in columnar form as at 31 December 2013. (S marks) 13 of a(10 MARKS) QUESTION 5 in the ratio ing profits and losses inthe rai Chu and Yam have been in partnership for many years, _ Bos was drafted a follows: ©f3:2, The statement of financial position as at 31 Decemt s 782,000 Property, net 266,600 Inventory 230,000 Trade receivables 41,400 Coat “T2000 Capital: Chu Ue Yam “ Bank loan 15,000 Trade payables — $55,000, 1,320,000 On I January 2016, Mak was admitted asa new partner onthe following terms: (Chu, Yam and Mak should profits and losses inthe ratio of 3: 1. (i) Goodwitt was to be valued at $150, 000. No goodwill account was to be ‘maintained in the books. Property and inventory were to be: Fevalued at $2,020,000 and $133,200 respectively. (iv) Only 99% of the accounts Teceivables were expected to be collectible. o Professional fees of $26,200 were paid in cash for the revaluation of assets, (wi) The inital capital of the new partnership would be $1,500,000, to be Contributed by Chu, Yam and Mak in the ratio of 40%, 35% and 25% respectively. Any surplus or deficit would be adjusted through partners’ admission or withdrawal of cash. REQUIRED: (a) Prepare the following accounts: (@ revaluation account for the admission of Mak (25 marks) capital accounts of the partners as at | January 2016 in columnar form, showing the admission of Mak. (5.5 marks) (b) Give two factors that affect the value of goodwill of a company, (marks)(20 MARKS) een 30 April 2021 failed to agree and the difference was posted raft net profit for the year ended 30 April 2021 amounted to Sut sequent checking ofthe records revealed the following: (©) ‘Sales journal had been overcast by $1,000. ) Pi 'urchases from $2,500 Winnie had been credited in error to Minnie account. i) Sass of goods to Donald $212 was correctly entered in the sales day book but entered ‘in the personal account as $412. (wy) nse vvan purchased for company use $2,100 and was debited to the purchases Qa (¥) A private purchase of $570 had been included in the business purchases. (vi) A credit note received from Pluto for $480 both had been entered as $840. $700 discounts allowed had been credited to discounts received account. (vit) Closing inventory was overstated by $360. (ix) An amount of $300 received from the sale of old equipment used in business (with a cost $48,000 and a zero net book value) had been debited to the bank account and ‘eredited to the sales account. No other entries had been made. (x) A payment of $750 for motor expenses had been entered in the machinery account. Depreciation had been charged on machinery at 10% per annum on cost. REQUIRED: (a) Prepare the necessary journal entries to correct the above. (Narrations are not required.) (12.5 marks) (2.5 marks) (b) Draw up the suspense account (©) Prepare a statement to correct the draft net profit for the year ended 30 April 2021. (5 marks)SUGGESTED aNsiERS, (SSE1.21-22) SECTION A 1 > — See mek [eto feta [ote To a o_2i [23 [33 [aa [2s [26 x 2 oto Tato tah ao [p SECTION B (70 MARKS) QUESTION 1 (10 MARKS) For each of the fotlowi ti Linbils y S UBNSACtions, show the effects onthe ting equation (Assets ~ Liabilities + Capital) andthe dees centres rene meen ‘Transactions Double entries Effects on the Example accounting equation |The proprietor paid $6000 toa creditor from |Dr A f (ccownts Payable | Decrease liabilities {his own bank account, Cr Capital |Increase capital a) 2) ro} Bought goods for $3,300 from a suppict |Dr Purchases Increase as on credit. (Cr Trade Payable Increase liabilities ; (a (o (e) Received par ofthe amount owing from |De Bank increase assets ‘sustamer by chegus for $2,600." (cr Trade Receivable (sae io (6 (¢) An equipment purchased for office use |Dr Cash Increase assets ‘was out of order. The owner retumed the [Cr Equipment |Decrease assets. ‘SQuipment to the supplier and obtained a | ‘sash refund of $9,000. Le | |(d) Received a loan from China bank of [Dr Cash ‘$70,000 in cash. |Cr Loan from China Bank o le) The owner introduced a [Dr Motor Van costing $50,000 tothe business as [Cr Capital additional capital :QUESTION 2 ‘The financial year for Jo nny ends on 31 December ench year. (8 MARKS) ‘The following non-current assets schedule . ‘Was prepared on 31 December 2021 von-Curren | Acgul _ a ‘eaution [Cont —T Emad Breeton [ Tainned | Perego" Disporat | Method | Useful Expenses Vale Life Annual Depreciation | | Furit s s 3020 | 2021 mitre | Tyan 2019] ron G00"[ (ry [Sila | vee 15,000 | @) ‘Motor | TApr 2020 | 200,000 0000 @ oe 1000 |= Reducing: | 10% “ voles Saono | 18,000 2s Farre [Tuy a020 |) |z000 | mise | $900 2000 | 322,000 line 4,000 Motor | 1 Sept2021 | 380,000 | - Reducing- | (720% e 38,000 Ley balance Furniture | TNov2021 | 64 00 Siraight> | TOyears | @ a go00 | 1 Susioh oo QUESTION 3 (11 MARKS) sam Wong Cash Book (bank column) $s | 2020 $ Balance b/f 11,550 | Jan 31 (i) Bank charges 20 (batancing figure) 31 (i) Trade Payables: 5,500} 31. (ili) Blectricity: 2,100 Stale cheque Standing order 31 (iy May: Dect deposit 1,700) 31 (wi) Kelly 3,730 31. (vil) Dividend income 350 Dishonoured cheque 31 Gx) Error (1,300-1,050) 250/31 700 31 Balance eff 12,800 19,350 19350 (7.5 marks) ) Bank reconciliation statement as at 31 January 2020 5 Balance as per corrected cash book 12,800 ‘Add (i) Unpresented cheque (20345) 2,800 15,600 Less (v) Lodgement not banked 6,300 (x) Transfer in reverse (2,000 x 2) 4,000_ 10,300 Balance as per Bank Statement 5,300 (B.S marks)(11 MARKS) QUESTION 4 2013 @) Abby and Bobby ded 31 December 2013 _ Statement showing the calculation fit forthe yet en p 165,000 Net Prof | 3200, Closing inventory understated (20,000x1/5x4/5) 168,200 Less apatges om bak loan (i) (280,000x9%x2/12) 10,300 "DAdiustment for goods send on sale-orretur basis 157,900. (20,000x1/5) —— (marks) (b) Abby and Bobby Profit and loss appropriation account for the year ended 31 December? 2013, Net Profit B : 157,900 Interest on Drawings: Abby (18,000x10%x10/12) 1,500 Bobby (12,000x10%x4/12) ——400_1,900_ 159,800 Less Partner's Salaries: Abby 60,000 Interest on Capital: Abby (150,000x8%) 12,000 Bobby (300,000x8%) 24,000 36,000 96,000 63,800 Balance of profit shared: Abby (2/5) 25,520 Bobby (3/5) 38,280 63,800 —38:280_63,800_ (4 marks) mG} Current Abb; Bobby Abby | Bobby 2013 $s $s 2013 s s Dec31 Balance b/d 43,000 =| Dec31 Balance b/d =| 27,000 31 Drawings 18,000 | 12,000 31 Net Profit 25,520 | 38,280 31 Interest on Drawings 1,500 400 31 Interest on Capital 12,000 | 24,000 31 Balance e/d 15,020 | 76,880 31 Partner's Salaries 40,000 (60,000-20,000) 77,520 | 89,280 77.520 |" $9.280_QUESTION 5 (10 MARKS) (Chu, Yam and Mak 2016 Revaluation Jan 1 tnventory 2016 1 e320 133,400] Jan Property 1,238,000 lowance for Doul (2,020,000-782,000) 1 BBECaOAoRisg 20 ash: Profesi 1 Capa om Fees 26200 Profit on revaluation Sets) 645,660. ‘am 2/5) 430.440 _ 1,076,100 1.238.000, aor, (25 masks) Copitl ane Chu Yam ‘Mak | 2016 Chu Yam ‘Mak f s [os 7s Ts |S fant Capita: - 25000 | Jan 1 Balance bid | 705,000 | 45,000 | - Goodwill 1 Revaluation: | 645.660 | 430.440 | - Adjustment Tet 1 Cash 165,660 | ~ : 1 Capital: 15,000 000 1 Balance cfd | 600,000 | $25,000 | 375.000 ‘Goodwill achsment 1 Gah 05s0_| sonao0 Tae [UT Tae 5 09 [a0 (6.5 matks) siners Before After Gain/Loss | capital u Gi) 90,000 | (3/6) 75,000 | Loss 15,000 cr am (25) 60,000 | (2/6) 50,000 | Loss 10,000 Cr Mak (6) 25,000 | Gain 25,000 Dr 150,000. (b) Factors affecting the value of goodwill: 2 Reputation | Quality of goods and services 1 Quality of employees and management 2 Customer loyalty + Relationship with suppliers : (marks) Geographical location(20 MARKS) QUESTION 6 Disney Company ota) Journal Dr Cr Date Particulars $ $ 2000 1,000 Apr 30(i| sates es ‘Suspense 00 iy | Minne 2s 2,500 Winnie (ii) | Suspense @raiay oe oo Donald (i 100 Ww Meee aT : 2,100 () | Drawings | 570 Purchase 570 (vi) Returns Outwards (840-480) 360 Pluto 360 (vii) | Discounts Received 700 Discounts Allowed 700 ‘Suspense 1,400 Trading 360 Inventory 360 (ix) | Accumulated Depreciation 48,000 Sates 300 Equipment 48,000 Profit and Loss: Profit on Disposat 300 @& Motor Expenses 750 Machinery 750 Accumulated Depreciation 7s Profit and Loss ede 15 (12.5 marks)fb)___ Suspense : 2021 2021 ca al ip 2,200) Apr30_ (i) 1,000 aoe (vii) Discounts Received 700 — (vi) Discounts Allowed —_700_ 2,400 7,400 (2.5 marks) (c)__ Statement of calculated ofcoreced net profit forthe year ended 30 Apri 2021 Net Profit bif ‘ 38,230 Add (v)Purchases overcast 2,100 (¥) Drawings in form of Purchses $70 (ix) Profit on Disposat 300 (x) Depreciation on Machinery 15|_3 38 Less (Sales overcast 1,000 (vi) Returns Outwards overstated 360 Discounts Allowed understated 700 Discounts Received overstated 700 (viii) Closing inventory overstated 360 (x) Motor Expenses understated 750 Corrected Net Profit