National University of Science and

Technology

FACUlTV OF COMMERCE

DEPARTMENT OF ACCOUNTING

FIRST SEMESTER SUPPLIMENTARY EXAMINATION PAPER: 2013/2014

DATE: DECEMBER 2013

SUBJECT: FINANCAL ACCOUNTING 1A (CAC 1101)

TIME ALLOWED: THREE (3) HOURS

MARKS: 100

INSTRUCTIONS TO CANDIDATES
1. Answer all questions
2. Use the examination book provided
3. Use black or blue pen
4. Begin each question on a new page and
5. Submit all answer books

Page 1 of 6
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QUESTION ONE (25 MARKS)

The following is the Receipts and Payments Account of NUST Club for the year ended 31st

March, 2012:

Receipts $. Payments $.
Opening balance (1.4.2011) 89 100 Sports materials 304500

Salaries 315000

Equipment purchased on 1.10.201~ 60000

Subscriptions: Bank on 31.3.2012 150000

For the year 2010-11 18000 Rent 148500

For the year 2011-12 963000 Ground maintenance 22120

For the year 2012-13 4500 Insurance 38400

Interest on bank Stationery 3450

Fixed deposits@10% 45000 Sundry expenses 5880

Closing balance as on 31.3.2012 71750

1119600 1119600

The following additional information is provided to you:

i. The club has 220 members. The annual subscription is $4500 per member.

ii. Depreciation to be provided on furniture at 10% on cost p.a. and on sports

equipment at15% on cost p.a.

iii. On 31st March, 2012, stock of sports material in hand (after members use during the

year) is valued at $78000 and stock of stationery at $3 150.

iv. Rent for 1 month is outstanding.

v. Unexpired insurance amounts to $9 600.

vi. On 31st March, 2011 the club had the following assets:

• Furniture $270000

• Sports equipment $180000

• Bank $450000

• Stock of stationery $1500

• Stock of sports material $73500

• Unexpired insurance $8400

• Subscription in arrear $22 500

Note: There was no liability on 31.3.2011.

Page 2 of 6
Required

a. Statement of Activities for the year ended 31 March 2012 (12)

b. Statement of Financial Position as at 31st March, 2012. (13)

QUESTION TWO [25 MARKS]

Mr A, Mr B & Mr C are partners who share profits and losses in the ratio of 3:2:1. They have

agreed to convert the partnership into a limited company called ABC Pvt Ltd

Statement of Financial Position for ABC Partnership $

ASSETS

Freehold premises 30,000

Plant & machinery 30,000

Inventory 40,000

Receivables 30,000

Bank 20,000

TOTAL ASSETS 150,000

CAPITAL AND LIABILITIES $

Capital- Mr A 80,000

Capital- Mr B 20,000

" ~

- '"

Page 3 of 6
 Capital- Mr C 20,000

120,000

Trade Payables 30,000

TOTAL CAPITAL AND LIABILITIES 150,000

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Additional information:

i. Total purchase consideration is agreed at $180,000, payable as follows:

$90,000 in ordinary shares of $1 each fully paid,

$30,000 in 6% preference shares of $1 each fully paid,

$10,000 in 5% debentures. and

($50 000) the balance in cash

REQUIRED:

a. Show the ledger accounts closing the partnership's book (15)

b. Show the opening journal entries in ABC Pvt Ltd/ Purchaser's book (10)

QUESTION THREE [25 MAKS]

The following are summaries of the cash book and bank accounts of P Sibanda who does not

keep her books using the double entry system.

i. Bank Summary $ $

Balance on 1 January 2012 6000

Page 4 of 6
Receipts

Receivables 35000
Cash banked 2200 37200
43200

Payments

Trade creditors 31000

Rent 1100
Machinery 3400
Wages 9200
Insurance 850
Receivables (dishonored cheque) 80
Loan interest 500 (46130)
Balance on 31 December 2012 (2930)

ii. Cash Summary $ $

Balance on 1 January 2012 60

Receipts

Cash sales 9700

Receivables 1100 10800

10860

Payments

Drawings 6600
Repairs 1400
Electricity 570
Cash banked 2200 (10770)

Balance on 31 December 2012 90

iii. The following referred to 2012 $

Bad debts written off 240

Discount received 600

Page 5 of 6
Goods withdrawn by P Sibanda for own use 1200

Credit note issued 640

iv. The following additional information is available.

1 January 2012 31December 2012

$ $
Inventory 2300 5400

Machinery 9800 10400

Rent prepaid 100

Rent owing 150

Receivables 8100 9200

Payables 5700 4800

Loan from bank at 10% 7000 7000

Loan interest owing 200

Required

a. Statement of Comprehensive income for the year ended 31 December 2012. (12)

b. Statement of Financial Position as at that date. (13)

QUESTION FOUR [25 MARKS]

Allan is a Bachelor of Science degree in Pharmacy student operating a small medical supplies

shop. He just attended a Financial reporting convention and needs some explanations on

some of the issues that were discussed at the convention;

Difference between gain, revenue and income (5)

International Accounting Standards (lAS's) and International Financial Reporting

Standards (5)

Stakeholders of Financial Statements (5)

Elements Of Financial Statements (5)

Conceptual Framework (5)

Required

Draft a memorandum to be sent to Allan in order to address his issues

Page 6 of 6