P230/2

ENTREPRENEURSHIP EDUCATION
PAPER 2
JULY, 2017
3 Hours

ACEITEKA JOINT MOCK EXAMINATIONS 2017

INSTRUCTIONS TO CANDIDATES
• Answer only four questions in all.
• All questions carry equal marks.
• Credit will be given for the use of relevant diagrams and illustrations.
• Any additional question(s) answered shall not be marked.
• Begin answers to each question on a fresh page.

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© Aceiteka Joint Mock Examinations 2017
1. You have acquired a loan of Ugx. 18,000,000/= from Bank of Africa to clear your goods from
Uganda Revenue Authority. The borrowed money is to be repaid in the next 5 years at an interest
rate of 10% per year in 5 equal instalments.
(a) Develop a loan amortization schedule you are to follow (08 marks)
(b) Explain any three factors the bank will consider before issuing you with the funds required
(06 marks)
(c) Complete the loan application form issued to you by the bank (06 marks)
(d) How will you ensure proper handling of the borrowed funds? (05 marks)

2. You and your friends have opened up a new business in your home locality dealing in
compound designing and maintenance; however, you have a challenge of acquiring office space
from where to carry out your operations.
(a) Write a letter to one of your business partners requesting her to assist you look around for an
appropriate office. (07 marks)
(b) Formulate the terms and conditions you will follow when recruiting workers in your company.
(06 marks)
(c) Prepare a partnership deed to govern your operations (07 marks)
(d) Advertise your business using a signpost (05 marks)
3. The Government of the Republic of Uganda plans to organise Local Council 1 elections next

year in the month of April and it has been resolved that these elections shall be by secret ballot.

However, to accomplish this task, Government through the Ministry of Local Government is

calling for bids to supply the Electoral Commission with the required stationery.

(a) As an official of the Ministry in charge of this exercise, write a bid notice that is to be placed

in the newspapers (08 marks)

(b) Explain any five reasons why non-registered businesses will not be considered eligible for

this business deal (05 marks)

(c) Design a stock requisition form to be used during this exercise (06 marks)

(d) Write a memo to all District chairpersons inviting them for an urgent meeting to discuss the

issue (06 marks)

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© Aceiteka Joint Mock Examinations 2017
4. The Trial Balance below was extracted from the books of J.T. Confectionery Limited as at

December 31, 2015.

Particulars Dr Cr
(Shs ) (Shs )
Purchases and sales 25,000,000 45,000,000

Returns 500,000 400,000

Stock January 1, 2015 9,500,000

Electricity 1,000,000

Salaries and wages 2,500,000

Advertising 300,000

Rent 700,000

Discounts 150,000 200,000

Furniture and fittings at cost 5,000,000

Motor vehicle at cost 10,000,000

Drawings 1,450,000

Motor van at cost 8,500,000

Debtors and creditors 1,800,000 1,555,000

Bad debts 200,000

Bank overdraft 1,300,000

Provision for bad debts 150,000

Capital 9,495,000

TOTALS 58,100,000 58,100,000

Additional information as at December 31, 2015.

(i) Stock was valued at shs. 5,000,000

(ii) Electricity accrued shs 500,000

(iii) The provision for bad debts should be charged at 5 % on debtors

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© Aceiteka Joint Mock Examinations 2017
(iv) Prepaid rent shs 200,000

(v) Advertising bill due shs 100,000

(vi) Depreciate furniture and fittings at 10% and motor vehicle at 15% per annum all on cost.

Required:

(a) Prepare an Income Statement for the year ended December 31, 2015. (13 marks)

(b) Determine the value of the following as at December 31,2015.

(i) Fixed assets (02 marks)

(ii) Current assets (02 marks)

(iii) Liabilities (02 marks)

(c) Compute and interpret the:

(i) Current ratio (03 marks)

(ii) Average credit period for sales (assume 365 days in a year) (03 marks)

5. Uganda is currently experiencing a huge challenge of sugar shortage; as a person with an

entrepreneurial mind-set you have spotted a prime business opportunity as a result and thus

decided to set up a sugar processing plant in your home area to assist Government in addressing

this challenge.

(a) Prepare a cash withdrawal slip of shs. 50,000,0000 from your bank (06 marks)

(b) Design a label to be fixed on the packaging material of your product (05 marks)

(c) Draft a programme that you will follow on the day of launching your business enterprise.

(07 marks)

(d) Develop a distribution schedule for the company (06 marks)

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© Aceiteka Joint Mock Examinations 2017
6. Gift Holdings Limited (GHL)had the following balances for the months of January, February,
March, and April.
(i) January 1, GHL had a cash balance of shs 20,000,000.
(ii) Monthly credit sales of shs 4,000,000 but payment was made in the following month.
(iii) The business bought a motor van of shs 18,000,000 on hire purchase in February and the down
payment was shs 8,000,000; the balance was paid in a ratio of 2:3 respectively in the following
months.
(iv) Monthly cash purchases stood at shs 5,000,000.
(v) Monthly cash sales were shs 2,000,000.
(vi) The business got a loan of shs 10,000,000 in the month of March at an interest rate of 5%
on the principal.
(vii) The company's monthly wages and salaries amounted to shs. 1,500,000.
(viii) Monthly income from rent was shs. 500,000 which increased by 5% in the last two
months.
(ix) GHL received a donation of shs. 8,000,000 in the month of April.
(x) Payment of electricity bills amounted to shs 300,000 in January and February.
(xi) Monthly taxes were shs 180,000.
(xii) Monthly credit purchases amounted to shs 600,000 and payment was made in the
last month.
(xiii) The business sold a machine on and received cash of shs. 600,000 in the second
month.

Required:

(a) Prepare GHL's cash flow statement for the months four months (16 marks)

(b) Comment on GHL's cash status (03 marks)

(c) Advise GHL’s Management on how to deal with cash deficit. (06 marks)

END

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© Aceiteka Joint Mock Examinations 2017