UNIVERSITY COLLEGE OF THE CARIBBEAN

Incorporating Institute Of Management Sciences &

Institute Of Management & Production
A Member of the Commonwealth & OAS Consortia of Universities

School of Business & Management

Department of Professional Studies
Bachelor of Science Degree
in
Business Administration with a major in Production & Operations
Management
End of Module Examination
CE TRE : Worthington Avenue, Mandeville, Mobay and Online

MODULE : Financial Accounting [ACT 100]

DATE : APRIL 15, 2013

TIME : 6:00 PM
DURATIO : 3 Hours

I STRUCTIO S:
1. Please read all instructions carefully before attempting any question.
2. This paper consists of ten (10) printed pages and two (2) Sections A & B
3. Answer all questions from Section A (compulsory) and any THREE (3) questions from
Section B.
4. The total marks for this Paper is 100 percent.
• All questions must be answered in the answer booklet provided
• Please ensure that you number your questions correctly.
• Clearly write the number of the question on each of the relevant pages.
• Where questions have multiple parts, all parts must be answered.
• Start the response to each question on a new page.

Write your REGISTRATIO UMBER clearly on each page of your answer

booklet.
DO OT WRITE YOUR AME.
B. Your script will not be marked if it has your name.
DO OT TUR OVER U TIL YOU ARE TOLD TO DO SO

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 Section A-Compulsory (40%)
Question 1
Patsy, Bertie and Curtis operate the People’s Barbecue Corner. Profits and losses are
shared in the ratio Patsy 0.5, Bertie 0.20 and Curtis 0.30. On December 31, 2011 the
following Trial Balance was extracted from the partnership books and presented to you
who recently graduated from the University College of the Caribbean.
Trial Balance as at December 31, 2011
Details/Accounts Dr $ Cr $
Purchases 10,100,000
Cash at Bank 18,000,000
Discounts 200,000 300,000
Bad debt 250,000
Motor vehicles 7,500,000
Accumulated depreciation 01/01/11 1,500,000
Carriage inwards 400,000
Carriage outwards 180,000
Premises 15,000,000
Accumulated depreciation premises 01/01/11 4,500,000
Commission 1,860,000
Inventory as at 01/01/11 4,000,000
Insurance 300,000
Electricity 350,000
Drawings: Patsy 400,000
Bertie 300,000
Curtis 200,000
Salaries 3,000,000
Cash in hand 650,000
Returns outward 100,000
Capital Accounts: Patsy 13,000,000
Bertie 7,000,000
Curtis 9,000,000
Bad debt recovered 500,000
Accounts receivable 3,000,000
Provision for bad and doubtful debts 30,000
Stationery 120,000
Office furniture and fittings 1,800,000
Current Accounts: Patsy 500,000
Bertie 200,000
Curtis 280,000
Accounts payable 2,000,000
Sales 25,120,000
Rent receivable 600,000
Telephone 220,000
Returns inward 120,000
66,290,000 66,290,000

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 otes:
(i) $100,000 paid for carriage inwards relates to January 2012.
(ii) Inventory as at December 31,2011 was valued at $5,000,000
(iii) Depreciation is to be provided for as follows: Motor vehicles 20% Reducing
Balance; Premises 10% Straight Line; Office Furniture and Fittings 5%
Straight Line.
(iv) $50,000 was outstanding for electricity on December 31, 2011.
(v) $120,000 of the rent received relates to the first quarter of 2012.
(vi) The provision for bad and doubtful debt should be adjusted to 1½% of
accounts receivable.
(vii) Insurance of $60,000 relates to the succeeding period.
(viii) Partners are charged 10% interest on drawings and interest on capital is paid
at 5% per annum.
(ix) Partners are to be paid annual salaries as follows: Patsy $500,000; Bertie
$300,000 and Curtis $250,000.
Required:
(a) The partnership Trading and Profit and Loss Account for the year ending
December 31, 2011. (12 marks)
(b) The partners Profit and Loss Appropriation Account for the financial year ending
December 31, 2011. (8 marks)
(c) The partner’s Current Accounts (11 marks)
(d) A Balance Sheet as at December 31, 2011. (9 marks)

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 Section B-Answer any three questions (20% each)
Question 2

On January 1st, 2013 KerryAnn Powell commenced working as a Senior Accounting

Clerk at Best Care Inc and earns a basic salary of $1,800,000 p.a. The company has an
approved pension scheme for which the employees can either contribute 5% or 10%
monthly to this pension fund while the company pays 5%. The contributions to the
pension scheme are based on the employee’s monthly basic salary. KerryAnn receives a
traveling allowance of $20,000 per month, and during each month she works an agreed
20 hours of overtime payable at a rate of $250 per hour. The following are the other
voluntary deductions from her salary:
1. $13,000 monthly for a motor vehicle loan repayment based on an arrangement with
her bankers BOC.
2. 10% contribution to the company’s pension scheme.
3. $8,500 monthly for credit union dues paid to CF Credit Union Ltd.

Based on the information provided you are required to compute the following for
KerryAnn for January 2013 (Show all workings):
A. Gross Pay. (3.5 Marks)
B. Statutory income. (3.5 Marks)
C. ED Tax contribution for the employee and NHT contribution for the employee and
employer. (1.5 Marks)
D. P.A.Y.E. (3.5 Marks)
E. Total deductions for the employee. (5.5 Marks)
F. Net pay (2.5 Marks)

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Question 3

On Jan 1 2012, the Ocho Rios Social Club had the following assets and liabilities:
$
Cash at bank 400
Bar stock 1,600
Equipment 25,000
Prepaid subscriptions 500

The following is the receipts and payments account for the year ended December 31,
2012

Receipts $ Payments
$
Subscriptions 7,000 rent and rates 3,000
Bar sales 12,000 wages 5,000
Donations 11,000 bar purchases 7,500
Profits from dance 3,500 equipment 4,000
Miscellaneous expenses 240
Repairs to equipment 280

Additional information:

a. All equipment should be depreciated at 10% per annum.

b. Subscriptions owing at December 31, 2012, $700.
c. Bar stocks at December 31, 2012 $2000.
d. Rent prepaid at December 31, 2012, $350.
e. $1,200 of the wages relate to the bar.

Required:

A. A bar Trading Account for the year ended December 31, 2012. (5 marks)
B. An Income and Expenditure Account for the year ended December 31, 2012 (10 marks)
C. Calculate the Accumulated Fund at Jan 1, 2012 (5 marks)

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Question 4
You are a trainee accountant at The National Accounting Institute, having landed your
first job after graduating from the University College of the Caribbean. The following list
of balances was extracted from the books of the ABC Co. Ltd and presented to you.
List of Balances ABC Company Ltd as at December 31, 2011

Details/Accounts $
Sales 400,000
Purchases of direct raw materials 88,000
Direct wages 97,500
Indirect wages 13,000
Rent and rates 30,000
Heating and lighting 28,200
Insurance 2,100
Direct expenses 15,000
Office salaries 34,300
Carriage inwards on direct materials 7,670
Carriage outwards 1,680
Motor van expenses 4,000
Purchases of indirect materials 4,500
Discount received 2,065
Socks as at January 1,2011: Direct raw materials 7,500
Work in Progress 12,000
Finished goods 18,000
Indirect materials 2,500
otes:
(a) Stocks as December 31, 2011: Direct raw material, $8,750; Work in Progress,
$10,500; Finished goods, $16,000; Indirect materials, $2,000.
(b) The following expenses were accrued as at December 31, 2011: Rent, $2,500 and
Heating and Lighting, $1,800.
(c) The following expenses were prepaid as at December 31, 2011: Rates, $7,000 and
Insurance, $600.
(d) Expenses are to be apportioned as follows: Rent and rates, Factory 75%, Office
25%; Heating and lighting, Factory 2/3, Office 1/3; Insurance, Factory 0.90,
Office 0.1; Motor van expenses, Factory 50%.
(e) Provide for depreciation as follows: Factory building, $2,000; Plant & Machinery,
$7,000; Office machinery and equipment, $2,500; Motor vans, $5,000.

Required:

Prepare Manufacturing, Trading and Profit and Loss Accounts for the year ended
December 31, 2011. (20 marks)

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Question 5

The following information was extracted from the books of Campbell’s Ltd.
2012
January 1 Balances b/f
Debtors Dr $40,000 Cr $700
Creditors Dr 5,000 Cr $35,000
Totals 31 December:
Credit Sales 150,000
Cash Sales 80,000
Credit Purchases 85,000
Cash Purchases 50,000
Return Inwards 4,000
Purchases Return 1,500
Discounts Allowed 1,300
Discounts Received 800
Bad Debts 3,500
Refunds to Credit Customers 600
Interest on Overdue Suppliers Accounts 2,000
Payments to Creditors 67,000
Receipts from customers (ALL) 190,000
Dishonored cheques from customers 8,000
Set off between sales and purchases ledger 1,800

December 31 balances: Debtors Dr? Cr $100

Creditors Dr $500 Cr?
Required:
a. Prepare the Sales Ledger Control Account at December 31st 2012. (8 marks)
b. Prepare the Purchases Ledger Control Account at December 31st 2012. (7 marks)
c. State two purposes of Control Accounts.( 2 marks)
d. Briefly outline three errors which will not be detected by Control Accounts. (3
marks)

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Question 6

George Giscombe does NOT maintain a complete set of accounting records. However,
he provided you with the following information:

George Giscombe
Dr Summarized Bank Account for the year ending December 31, 2001 Cr

Balance b/f 20,000 Wages and Salaries 35,000

Receipts from debtors 190,000 Drawings 4,650
Electricity 12,000
Insurance 6,000
Bank charges 900
Payment to creditors 92,500
General expenses 15,000
Telephone 8,000
Balance c/d 35,950
210,000 210,000

January 1, 2001 December 31, 2001

Creditors 24,000 28,000
Prepaid telephone 1,000 1,400
Debtors 18,000 21,000
Insurance owing 5,000 8,000
Stock 16,000 27,000
General expenses owing 1,800 3,000
Motor van at cost 35,000 35,000

Provision for depreciation on motor van is to be based on 10% on the straight line
method.

Required:

(a) Prepare for George Giscombe the Trading and Profit and Loss Accounts for the
financial year ending December 31, 2001. ( 10 marks)
(b) Prepare George Giscombes’ Balance Sheet as at December 31, 2001. ( 10 marks)

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Question 7

Max Magic the general manager of a leading private bank is about to consider you for
employment within his organization but is desirous of test your knowledge on the use of
financial ratios. He is aware that you have just graduated from The University College of
the Caribbean where you did Financial Accounting as one of the many courses and is of
the view that you can impress him by providing the answers he desires. He has presented
you with the following information:
$
1. Net profit 10,000
2. Sales 160,000
3. Opening stock 14,000
4. Closing stock 10,000
5. Cost of sales 120,000
6. Current assets 50,000
7. Current liabilities 10,000

In your effort to impress Max you are required to do the following calculation and also to
explain/interpret each ratio based on the answer obtained (show all workings):

A. Gross profit margin (4 Marks)

B. Net profit margin (4 Marks)
C. Current ratio (4 Marks)
D. Quick ratio (4 Marks)
E. Inventory turnover (4 Marks)
F. Purchases (4 marks)

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Question 8

The following information relates to Express Plc. for the year ended 31 December 2012
$
Inventory at Jan 1 2012 170,000
Debenture interest 15,000
Sales 990,000
Wages and salaries 155,800
Purchases 460,000
General distribution expenses 82,600
General administrative expenses 133,500
Motor vehicles at cost:
Distributive 80,000
Administrative 120,000
Machinery at cost:
Distributive 90,000
Administrative 130,000
Bad debts 5,400
Retained profits at December 31, 2011 203,600
Interest received on bank deposit 5,900
Rent 16,000

Additional Information:
1. Inventory as at 31 December 2012, $155,100
2. Corporation tax for the year $76,300
3. Depreciation is to be provided as follows:
Machinery 10% on cost
Motor vehicles 5% on cost
4. Wages and salaries are to be apportioned as follows:
Distribution 40%
Administrative 60%
5. Rent should be apportioned as follows:
Distribution 30%
Administrative 70%
6. $5,000 was transferred to general reserves

Required:

(a) Prepare Express Plc. Income Statement for the year ending December 31, 2012.
(16 marks)
(b) From your answer to (a) list four items that the company would be required to
include in its published accounts under the Companies’ Act. (4 marks)

E D OF QUESTIO PAPER

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