partnership question.

1. The following had been extracted from the books of Allert and Wildman who have been in
partnership as manufactures for several years.

Partners' Capital Account at January 1, 2008:

$
Allert 120 000
Wildman 80 000

Partners' Current Account at January 1 , 2008

Allert 5 000
Wildman (300)

Partners' Drawings for the year ended December 31, 2008

Allert 7 000
Wildman 4 800

Net profit for the year ended December . 31 2008 : $72 500

The partnership agreement between Allert and Wildman provides for the following:

1. Partners are to receive interest at a rate of 10% per annum on their opening capital
account balances.

2. Interest at a rate of 5% per annum is to be paid on partners' drawings during the year.

3. Wildman is to receive a partnership salary of $1 000 per month.

4. The balance of the net profit or loss is to be shared between partners in proportion to
their capital accounts' balances.

Required :

(a) Prepare the partnership Profit and Loss Appropriation account for the year ended
December 31 , 2008 ( 8 marks )

(b) Prepare the Current Account for the partnership as at December 31 2008. ( 10 marks )

(c) State ONE disadvantage of being a general partnership. ( 1 mark )

(d) Calculate the amount of the net profit due to EACH partner based on the principles of the
partnership Act of 1890. ( 1 mark )

Total 20 marks

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2. (a) State whether the following statements about accounting are True (T) or False (F)

i. Accounting records business activities that cause changes in money value.

ii. Accounting reports are useful for good decision-making.

iii. Government tax agencies use accounting information to compute taxes.

iv. Accounting can ensure that profits are made.

v. Business qualities such as reliability and good services can be accounted for.
( 5 Marks )

(b) At the end of November 2007, Rennie Joseph used the General Journal on to make
entries for the following transactions.

1. Recorded $200 as provision for depreciation on blenders for the month.

2. Recorded $150 as prepaid electricity expense.
3. Recorded $210 as commissions earned but not yet received.
4. Recorded $1 005 as a bad debt on the account of Meera Taylor.
5. Sold an ice crusher for $430 to Walter Xavier who paid by cheque.

i. Indicate which of the above transaction wound normally be entered in another

book of original entry.
( 1 mark )
ii. Prepare the General Journal of Rennie Joseph as at November 30 , 2007
( 10 marks )

(c) Over the next sis months, Rennie Joseph incurred the following payments by debit card:
$
December 1, 2007 Rates prepaid bought forward 200
January 1, 2008 Quarter year’s rates paid by cheque 600
March 31, 2008 Half year's rates paid 1 200

Prepare the rates Account in the books of Rennie Joseph for the six-month period
ending May 31, 2008, showing the amount to be transferred to the Profit and Loss
Account.
( 4 marks )

Total 20 marks

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 3. L Marcus is a grocer who has not kept proper books of accounts. His accountant has found the
following details of transactions for the business for the year ending December 31 2008.

1. All sales were made on a credit sales basis. His cash book shows that $75 000
was received from persons to whom goods have been sold.

2. The amount paid to suppliers during the year was $53 000.

3. His bank account showed the following expenses paid by cheque: rent $5 000;
general expenses $2 500; and wages $10 500.

4. The only fixed asset of the business was office furniture valued on January 1,
2008 at $2 500. this is to be depreciated at 10% per annum.

5. Other information available:

January 1, 2008 December 31, 2008

$ $
Debtors 1 500 1 900
Creditors for goods 2 400 6 500
Inventories 9 855 11 249
Rent prepaid - 1 250
Bank 12 500 6 500
Cash 600 30

Required:
(a) Prepare L. Marcus' Statement of Affairs as at January 1 , 2008
(6 marks )
(b) Calculate by means of statements or accounts:

(I) Purchases for the year

(II) Sales for the year ( 6marks )

(c) Prepare L Marcus' Trading and Profit and Loss Account for the year ended
December 31, 2008 ( 8marks )

Total 20 marks

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 SECTION ll
Answer any Two questions in this section.

4. Lipset Enterprise is a manufacturer of concrete garden benches. For the year ending June 30
2008, the enterprise produced 1 000 benches. The following information relates to the
manufacturing operations for the period:
$
Inventory at May 1 , 2007:
Raw material 4 000
Work in progress 10 000

Inventory at June 30 2008

Raw material 3 200
Work in progress 3 400

Purchases of raw material 150 000

Returns outwards 3 500
Carriage on raw material 5 000
Factory wages 80 000
Salary of factory manager 35 000
Direct expenses 10 000
Factory power 8 400
General factory expenses 12 000
Annual depreciation on plant and machinery 50 000
Administrative and selling expenses 48 000

Required:
(a) Prepare Lipset Enterprise's Manufacturing Account for the year ended June 30, 2008.
Show clearly:
 Cost of material available for use
 Cost of materials consumed
 Prime cost
 Factory overheads
 Cost of production
(14 marks )

(b) Calculate the production cost per bench. ( 2marks )

(c) Calculate the profit made by Lipset Enterprise for the period. ( 3marks )

Show all your workings.

Total 20 marks

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 The treasurer of the St Dominic's Cricket Club prepared the following Receipts and Payment
 Account for June 30, 2008.

$ $
Balance : July 1, 2007 720 Wages to bar attendant 3 000
Rent of club house 2 000 Wages to groundsmen 12 000
Bar takings 13 200 Utilities 2 200
Subscriptions 25 000 Payment to creditors 7 300
Purchases of new lawn mower 15 000

Additional information:
July 1, 2007 July 30. 2008
$ $
Bar inventory 2 300 1 800
Subscription owing 300 500
Subscription in advance - 800
Bar creditors 1 800 2 700
Fixed Asset at cost 70 000 ?

Depreciation on fixed asset is to be written off at the rate of 10% per annum on cost.

Required:
(a) Copy the Receipts and Payment Account and balance it. ( 3marks )

(b) Prepare the following for the St Dominic's Club

(i) A Bar Trading Account ( 6marks )

(ii) A Subscription Account ( 5marks )

(c) Prepare an Income and Expenditure Account for the St. Dominic's Cricket Club, for the year
ended June 30, 2008. ( 6marks )

Total 20 marks

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6. The following balances and other information were taken from the books of Serve-Me-Well Ltd
 on November 30, 2008 AFTER the Trading and Profit and Loss Account has been prepared:

Authorized Share Capital

2600 000 ordinary shares at $1 each
70 000 preference shares of 7% at $2 each
Debit Credit
$ $
Ordinary share capital – fully paid up 200 000
7% Preference share capital – fully paid up 120 000
General reserve 40 000
Utilities owing 5 000
Bank 12 000
Debtors and creditors 40 000 25 000
Premises at cost 320 000
Net profit for year ended November 30 , 2008 150 000
Provision for depreciation on machinery and plant 36 000
Inventory 45 000
Insurance prepaid 3 000
588 000 588 000

The directors of Serve-Me-Well Ltd. Have recommended the the following:

1. A transfer of $20 000 to general reserve
2. An ordinary dividend of 30%
3. The payment of the year's preference dividend

Required:

(a) Prepare the profit and Loss Appropriation Account for Serve-Me-Well Ltd. For the year ended
November 30, 2008
( 5 Marks )
(b) Prepare a Classified Balance Sheet in vertical style for Serve-Me-Well Ltd. As at
November 30, 2008
( 13marks )
(c) (i) State what a negative working capital indicates about the financial position of a
business (1 mark)

(ii) Identify ONE method, other than issuing shares, which Serve-Me-Well Ltd. Could have used to
finance the business. (1 mark)

Total 20 marks

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7. The factory workers at Garmex Ltd. Are paid $30 an hour, Monday to Friday, and time and a
 half on weekends. The time card below shows the number of hours worked by each of the four
employees.

Garmex Ltd.
Time Card

Employees Sun Mon Tue Wed Thu Fir Sat

A. Smith 4 8 - 8 7 - -

P. Persaud 4 8 8 8 7 7 3
T. Roberts 5 6 6 6 7 7 3
L Martin 4 7 7 7 8 7 4

Deductions include:

National insurance: 5% of gross pay

Contribution to pension fund: 2.5 % of gross pay
Income tax: 15% of pay after deducting national insurance and pension fund contributions

Required:

(a) On the answer sheet provided, prepare the payroll for the four employees.

(b) Write brief definitions for EACH of the following:

(I) Time clock card

(II) Gross pay

(III) “Take home pay”

(IV) Bonus

(V) Voluntary deductions

END OF EXAM
Question No. 7 (a)
Garmex Ltd
Payroll

A. Smith P. Persaud T. Roberts L. Martin

$ $ $ $

Gross Pay

National Insurance

Pension Fund

Income Tax

Total Deductions

Net Pay

TO BE ATTACHED TO YOUR ANSWER BOOKLET