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Baf1201 Financial Accounting I Cat

The document provides information about several accounting questions and tasks: 1. It describes errors found in the trial balance of Makutano Traders and asks to prepare journal entries to correct the errors and a corrected trial balance. 2. It asks about the differences between a petty cashbook and three-column cashbook, importance of bank reconciliation, and provides adjusted cashbook and bank reconciliation tasks. 3. It asks about advantages of control accounts and provides a task to prepare sales and purchases ledger control accounts. 4. It provides accounting transactions for a dental clinic and asks to prepare journal entries and ledger accounts, and explain errors that violate trial balance equality. 5. It asks about accounting concepts

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517 views5 pages

Baf1201 Financial Accounting I Cat

The document provides information about several accounting questions and tasks: 1. It describes errors found in the trial balance of Makutano Traders and asks to prepare journal entries to correct the errors and a corrected trial balance. 2. It asks about the differences between a petty cashbook and three-column cashbook, importance of bank reconciliation, and provides adjusted cashbook and bank reconciliation tasks. 3. It asks about advantages of control accounts and provides a task to prepare sales and purchases ledger control accounts. 4. It provides accounting transactions for a dental clinic and asks to prepare journal entries and ledger accounts, and explain errors that violate trial balance equality. 5. It asks about accounting concepts

Uploaded by

cyrus
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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BAF1201 FINANCIAL ACCOUNTING I CAT

QUESTION ONE

The following trial balance of Makutano Traders prepared as at 31st March, 2017 failed to agree
and the differences were placed in a suspense account.
Dr Cr
Sh. Sh.
Sales 900,
000
Purchases 700,000
Returns inwards 10,000
Debtors and Creditors 40,000 50,000
Cash 25,000
Capital
187,000
Drawings 64,000
General expenses 230,000
Furniture 80,000
Motor vehicle 270,000
Suspense Account 282, 000
1,419,000 1,419,000

The following errors were subsequently discovered:


i. Furniture bought for sh. 30,000 was entered in the purchases account.
ii. Sales were undercast by sh. 18,000
iii. Goods returned by a customer worth sh. 3,000 had not been posted to the account of the
debtor
iv. Cash drawings of sh. 5,000 were omitted from the books.
v. Goods bought on credit for sh. 12,000 were entered in the account of a creditor as sh. 21,000.
vi. A personal motor vehicle worth sh. 270,000 was converted to business use during the year but
was only recorded in the motor vehicles account.

Prepare:
i Journal entries to correct the above errors (6 Marks)
ii Suspense account duly balanced (4 Marks)
iii Corrected Trial Balance as at 31st March, 2017. (10 Marks)

QUESTION TWO
(a) Differentiate between a petty cashbook and a three-column cashbook. (5 marks)
(b) Briefly explain why it is important for a business entity to prepare a bank reconciliation
statement. (3 marks)
(c) You have recently been employed in a medium size company and deployed in the accounts
department. Your head of section has given you the following extract from the cashbook for the
month of April 2018:
Sh. Sh.
Receipts during the month 2,938,000 Balance brought forward 1,522,000
(1.4.2018)
Balance carried forward 1,108,000 Payments during the month 2,524,000
(30.4.2018)
4,046,000 4,046,000

The head of section further informs you that all receipts are banked intact and all payments are made by
cheque. On investigation, you discover the following:
1. Bank charges and commissions amounting to Sh. 272,000 entered on the bank statement had not
been entered in the cashbook.
2. Cheques drawn amounting to Sh. 534,000 had not been presented to the bank for payment.
3. Cheques received totaling Sh. 1,524,000 had been entered in the cashbook and paid into the bank,
but had not been credited by the bank until May 2018.
4. A cheque for Sh. 44,000 had been entered as a receipt in the cashbook instead of a payment.
5. A cheque for Sh. 50,000 had been debited by the bank by mistake.
6. A cheque received for Sh. 160,000 had been returned unpaid. No adjustment had been made in
the cashbook.
7. All dividends receivable are credited direct to the bank account. During the month of April 2018.
Dividends totaling Sh. 124,000 were credited by the bank and no entries had been made in the
cashbook.
8. A cheque drawn for Sh. 12,000 had been incorrectly entered in the cash book as Sh. 132,000.
9. The balance brought forward should have been Sh. 1,422,000.
10. The bank statement as at 30 April 2018 showed on overdraft of Sh. 2,324,000.

Required:
(i) The adjusted cashbook as at 30 April 2018. (6 marks)
(ii) Bank reconciliation statement as at 30 April 2018. (6 marks)

QUESTION THREE
(a) Explain the advantages of maintaining control accounts. (6 marks)
(b) The following balances were extracted from the books of BRAN Ltd. for the month of April 2019:

Sh.’000
Debit balances (1 April 2019): Sales ledger 1,428,000
Purchases ledger 10,500
Credit balances (1 April 2019): Sales ledger 40,500
Purchases ledger 553,800
Discounts received 142,500
Discounts allowed 209,700
Purchase (including cash purchases of Sh.152,000) 1,334,000
Cash sales 618,000
Credit sales 2,068,200
Credit notes issued to customers for returned goods 75,000
Sales ledger debit balances off-set against purchases ledger 36,900
Payment to creditors 1,159,200
Interest charged by creditors on overdue accounts 69,000
Receipt from customers 1,578,000
Bad debts written off 37,200
Customer’s unpaid cheques 26,100
Interest charged to customers on overdue accounts 96,100
Debt collection expenses charged to debtors 10,800
Credit notes received from suppliers 26,700
Balances as at 30 April 2019: Purchases ledger (debt) 14,400
Sales ledger (credit) 50,700

Required:
(i) Sales ledger control account for the month ended 30 April 2019. (7 marks)
(ii) Purchases ledger control account for the month ended 30 April 2019. (7 marks)

QUESTION THREE
Dr. Mwenda, opened a dental clinic on 1st August 2020. The business transactions for August
are shown below:
Aug. 1 Dr. Mwenda invested Shs250,000 cash in the business in exchange for 1,000 shares of
capital stock.
Aug. 4 Land and a building were purchased for Shs320,000. Of this amount, Shs85,000 applied
to the land, and Shs235,000 to the building. A cash payment of Shs100,000 was made at the time
of the purchase, and a note payable was issued for the remaining balance.
Aug. 9 Medical instruments were purchased for Shs62,000 cash.
Aug. 16 Office fixtures and equipment were purchased for Shs30,000.
Dr. Mwenda paid Shs5,000 at the time of purchase and agreed to pay the entire remaining
balance in 15 days.
Aug. 21 Office supplies expected to last several months were purchased Shs3,500 cash.
Aug. 24 Dr. Mwenda billed patients Shs2,500 for services rendered. Of this amount, Shs1,200
was received in cash, and Shs1,300 was billed on account (due in 30 days).
Aug. 27 A Shs500 invoice was received for several newspaper advertisements placed in August.
The entire amount is due on September 8.
Aug. 28 Received a Shs400 payment on the Shs 1,300 account receivable recorded August 24.
Aug. 31 Paid employees Shs2,700 for salaries earned in August.
A partial list of account titles used by Dr. Mwenda includes:
Cash
Notes Payable
Accounts Receivable
Account Payable Office Supplies Capital Stock Medical Instruments Service Revenue Office
Fixtures and Equipment Advertising Expense Land Salary Expense Building Instructions a.
i) Prepare journal entries for each transaction. (9 Marks)
ii) Post each transaction to the appropriate ledger accounts. (11 Marks)

b) Explain five errors that violate the equality of a trial balance totals (10 Marks)

QUESTION FOUR

a) Explain the accounting concepts (7 Marks)


b) Explain three errors not revealed by the agreement of a trial balance (6Marks)
c) John Safari commenced transportation business on 1 January 2015. On That date he
purchased a motor vehicle for sh.3,000,000 in cash. On January 2017 he purchased another
motor vehicle for sh 4,000,000 in cash. John Safari provides depreciation at the rate of 25% per
annum on straight line method.
Required:
i) The Motor Vehicle Account,
ii) Depreciation Account
iii) Provision for Depreciation Account For the three years ended 31st December 2017. (12 Marks)

QUESTION FIVE
The following is a summary of the amounts received and paid by XYZ social Club for the year
ended 30th June 2018 Sh.

Subscriptions received 9,500


Bar sales 95,000
Rents Paid 6,000
Bar Purchases 86,000
Sale of raffle tickets 3,000
Donations received 4,000
Raffle prizes given out 1,200
Sale of refreshments 3,200
Electricity expenses 10,400
Repair of equipment 4,000
Cost of refreshments 2,600
New chairs for the bar 4,000

The following additional information is also available:


(i) Bank Balance on July 2018 was sh.12, 000
(ii) The payment for electricity of sh.10, 400 include sh.1, 0000 for the previous year;
there is also an amount of sh.3, 000 due at 30th June 2018 but not yet paid.
(iii) Bar stocks: 1st July 2018 sh.3, 000 30th June 2018 sh.4, 000
(iv) Rent paid caters for five quarters ending 30th September 2018
(v) At July 2018 the club owned freehold property valued at sh.600, 000 and furniture
and equipment valued at sh.240, 000.
(vi) Subscriptions received included sh.300 paid in advance for the following year. In the
previous year sh.400 was received for the current year’s subscriptions.
(vii) Bank balance as at June 2018 was sh.12, 375

REQUIRED: (a) The accumulated fund as at 1st July 2018 (2 marks)

(b) Income and expenditure Account for the year ended 30th 2018 (6 marks)
(c) Statement of financial position as at 30th June 2018 (4 marks)

(d) What are main principal differences between receipts and payment accounts and income and
expenditure accounts (8 marks)

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