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    DBM 611 Financial Accounting

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    Collins Abere
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    DBM 611 Financial Accounting

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    Original Title

    DBM 611 Financial Accounting (2) (5)

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    13 views3 pages

    DBM 611 Financial Accounting

    Uploaded by

    Collins Abere
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    Copyright:

    © All Rights Reserved
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    Download as pdf or txt
    of 3

    FINANCIAL ACCOUNTING: DBM 611

    1. a) Identify four circumstances that may lead to dissolution of a partnership. (4 marks)

    b) Faith, Monica and Betty started on 1st January 2019 in partnership with capital of sh.
    1,200,000 sh. 1,000,000 and sh. 400,000 respectively. They share profits in the ratio of
    5:4:1 respectively and were entitled to interest of 5% p.a. on their capital. Betty is entitled
    to salary of sh. 120,000 p.a. and a commission of 15% on profit in excess of sh. 600,000
    p.a. Drawings for the year were Faith, sh. 400,000 Monica sh. 360,000 and Betty sh.
    400,000. The net profit for the year was sh. 1,650,000

    Required:
    i) Profit and loss appropriation account for the year ended 31st Dec 2019.
    (8 marks)
    ii) Partners’ current account for the year ended 31 December 2019. (8 marks)
    st

    2. The following information relates to Maziwa Ltd for the year ended 31st Dec 2019.

    Dr. (sh.) Cr. (sh)


    Issued share capital 1,950,000
    10% debentures 510,000
    Freehold land 1,550,000
    Fixtures and fittings (cost) 1,150,000
    Motor vehicle (cost) 1,300,000
    Accounts Receivables 425,000
    Accounts Payables 350,000
    Purchases 1,429,500
    Sales 2,290,000
    Administrative expenses 62,500
    Bad debts 36,500
    Inventory (1/1/2019) 162,500
    Debenture interest 25,500
    Salaries and wages 225,000
    Directors remunerator 105,000
    Insurance 15,000
    Bank 238,500
    Depreciation
    Fixtures and fittings 750,000
    Motor vehicle 625,000
    Revenue reserves 200,000
    Generate reserves 50,000

    1 DBM611/1D2D7M
    6,725,000 6,725,000

    Additional information:-
    i) Closing inventory was valued at sh 172,500
    ii) Corporation tax sh 75,000
    iii) Provide depreciation for fixtures and fittings at 5% p.a. on straight line basis and
    Motor vehicles at 10% p.a. on reducing balance.
    iv) Director’s propose a dividend of 5% to ordinary shareholders and transfer of sh.
    15,000 to general reserve
    v) Salaries were outstanding at sh. 12,750 and insurance paid in advance was sh.
    12,750 and insurance paid in advance was sh. 2,250
    Required: Prepare;
    a) Income statement for the year ended 31/12/19. (12 marks)
    b) Statement of financial position 31/12/2019 (8 marks)

    3. a) Examine five limitations of financial accounting. (10 marks)

    b) Expound on the meaning of the following accounting concepts.


    i. Going concern concept (2 marks)
    ii. Historical cost concept (2 marks)
    iii. Matching principles (2 marks)
    iv. Materiality concept (2 marks)
    v. Business entity concept (2 marks)

    4. The following transactions relates to Wambura a sole trader for the month of December
    2019.
    Dec 1st Started business with cash sh. 300,000
    nd
    Dec 2 Deposited food in cash sh. 100,000
    th
    Dec 5 Bought food in cash sh. 100,000
    th
    Dec 6 Paid salaries sh. 20,000 cash
    Dec 7th Paid electricity by cheque sh. 30,000
    th
    Dec 10 Withdrew sh. 36,000 for personnel use in cash
    th
    Dec 15 sold food worth sh. 160,000 and paid in cheque.
    Dec 20th Sold goods sh. 144,000 on credit to Serah

    Required:-
    a) Record the above transactions in the relevant ledger accounts (15 marks)
    b) Extract a trial balance. (5 marks)

    5. The trial balance of Amina traders failed to agree to a debit figure sh. 21,000 as at
    31/12/2019. The following errors were discovered later.
    i) Goods sold for cash sh. 1,000,000 were not entered in the books.
    ii) Drawings by cheques sh. 50,000 were recorded in the bank account only.

    2 DBM611/1D2D7M
    iii) A cash sale of sh. 500,000 was debited in the sales account and credited in the
    cash account.
    iv) Purchases were overcast by sh. 10,000
    v) Rates were over cash by sh. 19,000
    vi) A credit purchase of sh. 26,500 was recorded in the book as sh. 17,500
    Required: prepare;
    a) Journal entries to correct the above errors. (14 marks)
    b) Suspense account duly balanced. (6 marks)

    6. a) The following transactions relate to XYZ traders for the month of September, 2019

    Balances 1/9/19 Sh.


    Sales ledger 320,000 (cr)
    1,910,000 (dr)
    Purchases ledger 1,110,000 (cr)
    400,000 (dr)
    Credit purchases 7,840,000
    Credit sales 10,800,000
    Cheques from customers 5,600,000
    Cash from customers 2,400,000
    Cheques payment to creditors 3,500,000
    Cash payment to creditors 1,240,000
    Bad debts written off 134,000
    Discount received 240,000
    Discount allowed 170,000
    Returns inwards 260,000
    Returns outwards 420,000
    Contra entry 500,000
    Refund to debtors 140,000
    Dishonoured cheques 276,000
    Balances 30/9/19 -
    Sales ledger 290,000
    Purchases ledger 250,000

    Required:-
    i) Sales ledger control account (8 marks)
    ii) Purchases ledger control account (6 marks)
    b) Describe three methods of providing for depreciation. (6 marks)

    3 DBM611/1D2D7M

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