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    CAT 2 Urgent DBM Evening

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    Collins Wandati
    This document contains instructions and questions for a Principles of Accounting exam. Question One involves preparing a bank reconciliation statement based on various discrepancies between a cash book and bank statement. It also involves correcting accounting errors, including journal entries, a suspense account, and recalculating net profit. Question Two requires correcting and completing a trial balance, preparing an income statement and statement of financial position for a small business based on additional information provided.

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    CAT 2 Urgent DBM Evening

    Uploaded by

    Collins Wandati
    12 views3 pages
    This document contains instructions and questions for a Principles of Accounting exam. Question One involves preparing a bank reconciliation statement based on various discrepancies between a cash book and bank statement. It also involves correcting accounting errors, including journal entries, a suspense account, and recalculating net profit. Question Two requires correcting and completing a trial balance, preparing an income statement and statement of financial position for a small business based on additional information provided.

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    CAT 2 Urgent Dbm Evening

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    This document contains instructions and questions for a Principles of Accounting exam. Question One involves preparing a bank reconciliation statement based on various discrepancies between a cash book and bank statement. It also involves correcting accounting errors, including journal entries, a suspense account, and recalculating net profit. Question Two requires correcting and completing a trial balance, preparing an income statement and statement of financial position for a small business based on additional information provided.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    12 views3 pages

    CAT 2 Urgent DBM Evening

    Uploaded by

    Collins Wandati
    This document contains instructions and questions for a Principles of Accounting exam. Question One involves preparing a bank reconciliation statement based on various discrepancies between a cash book and bank statement. It also involves correcting accounting errors, including journal entries, a suspense account, and recalculating net profit. Question Two requires correcting and completing a trial balance, preparing an income statement and statement of financial position for a small business based on additional information provided.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 3

    STRATHMORE INSTITUTE

    DIPLOMA IN BUSINESS MANAGEMENT

    CAT TWO

    UNIT CODE: DBM 1103 TITLE: PRINCIPLES OF ACCOUNTING (EC & FT)

    Instructions
    1. Candidates should attempt ALL questions.
    2. This is individual and not group cat.
    3. Write the solutions in an A4 fullscap clearly indicating your registration number
    4. The solutions should be submitted in class on or before the start of the class
    5. Late submission will not be accepted
    6. ALL workings should be shown CLEARLY.

    Question One
    a) On 31st May 2022, the cash book (Bank Column) of Look traders had a debit balance of shs.
    125,000 while on the same date, the bank statement had a credit balance of Kshs. 597,000
    On comparison the following discrepancies were revealed:
    i. A cheque of Kshs 82,500 paid to a creditor had been recorded as Ksh. 28,500 in the cash book.
    ii. A cheque of Kshs 92,000 from a debtor was dishonoured by the bank
    iii. Bank charges amounted to kshs 2,000.
    iv. Direct deposits from customers amounted to Kshs. 300,000.
    v. Cheques amounting to Kshs. 245,000 were deposited but not yet credited by the bank.
    vi. Dividends received by the bank were Kshs. 145,000
    vii. Un-presented cheques amounted to Kshs, 420,000
    Required: Prepare a bank reconciliation statement as at 31st May 2022. (5 Marks)
    b) A bookkeeper extracted a trial balance on 31 December 2020 that failed to agree by Sh.330,000,
    a shortage on the credit side of the trial balance. A suspense account was opened for the
    difference.
    In January 2021, the following errors made in 2020 were found:
     Sales daybook had been undercast by Sh.100, 000.
     Sales of Sh.250, 000 to J Church had been debited in error to J Chane account.
     Rent account had been undercast by Sh.70, 000.
     Discounts received account had been undercast by Sh.300, 000.
     The sale of a motor vehicle at book value had been credited in error to Sales account for
    Sh.360,000.
    Required:
    I) Show the journal entries necessary to correct the errors. (3 marks)
    II) Draw up the suspense account after the errors described have been corrected. (3 marks)
    III) If the net profit had previously been calculated at Sh.7, 900,000 for the year ended 31
    December 2020, show the calculations of the corrected net profit. (4 marks)

    Question Two
    Joyce Onyango operates a small retail busisness and has not employeed an accountant. She relies on her
    limited accounting knowledge. Below is the trial balance she prepared for the year ended 30 Th June
    2021.
    Dr ( shs.000) Cr. ( shs.000)
    Buildings at cost 31,000
    Fixtures at cost 6,000
    Motor vehicles at cost 13,000
    accumulated depreciation
    Fixtures 1800
    Motor vehicles 3250
    Buildings 2,400
    Carriage outwards 440
    Carriage inwards 310
    Returns inwards 900
    Returns outwards 1100
    Discount allowed 600
    Discount received 1,200
    Accounts payable 3,400
    Accounts receivable 7,050
    Telephone and Postage 390
    Stationary 210
    Office expenses 420
    Transport 1,930
    Rent receivable 1,400
    Bank 1640
    Insurance 225
    Bad debts 325
    Inventory on 1st July 2020 4,100
    Salaries & wages 6,000
    Inventory on 30th June 2021 6,080
    Capital 24,000
    Purchases 35,200
    Sales 74,285
    Drawings 3,095
    115875 115,875
    Additional information
    1. During the year ended 30Th June 2021 Joyce had taken goods worth sh 1,200,000 for personal
    use. This was not recorded in the books of accounts.
    2. As at 30th June 2021 prepaid insurance amounted to sh. 75,000 while outstanding salaries and
    wages amounted to sh. 660,000.
    3. Rent receivable accruing as at 30th June 2021 amounted to sh. 600,000.
    4. Allowance for doubtful debts is to be maintained at a rate of 5% of the accounts receivable.
    5. Depreciation is to be provided for as follows:
    Fixed assets Rate P.a Method
    Buildings 5% Straight line
    Fixtures 10% Straight line
    Motor vehicle 15% Reducing balance
    Required
    (i) Corrected trial balance as at 30th June 2021 ( 5 Marks)
    (ii) Income statement for the year ended 30Th June 2021 ( 5 Marks)
    (iii) Statement of Financial position as at 30Th June 2021 ( 5 Marks)

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