Name Date Full Marks Percentage Grade

8/14/2019 Name Date Full Marks Percentage Grade

1/7

Name

Date

Full marks

Percentage

Grade

Question number Full marks Marks obtained

1. 522. 523. 524. 52Total marks 156

Grade A B C D E

Lowest mark for award of grade 80 75 65 55 50

ANSWER ANY THREE QUESTIONS.

TEACHERS COMMENTS:

Parents feedback:


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ACCOUNTING TEST #4

1. Saima ltd manufactures and retails two products: sports bags and gold bags.The following balances were extracted from the books on 31st December 2007.

Stock at 1 January 2007

Raw materials 500000

Work in progress:Sports bags 9500

Golf bags 33000

Finished goods:

Sports bags 15000

Golf bags 9600

Purchases of raw materials 225000

Production wages 180000

Management salaries 98000

Administration salaries 76500

Rent and insurance 105000Light and power 56000

Marketing 50000

Plant and machinery at cost 400000

Provision for depreciation for plant and machinery 100000

Office fixtures at cost 78000

Office fixtures provision for depreciation 35100

Sales

Sports bag 480000

Gold bag 350000

Additional information:i.

Stock at 31 December 2007Raw materials 55000Work in progress:

Sports bags 43500Golf bags 26000

Finished goods:Sports bags 26500Golf bags 18200

ii. Raw materials records show that 100000 of raw materials was used for theproduction of sports bags and the remainder of raw materials was used in the

manufacture of golf bags

iii. Production workers work 40 hours per week for 50 weeks per year. There 10production workers producing the sports bag being paid 5 per hour; and 10

production workers producing the golf bags being paid 4 per bag.

iv. During the year, 20000 sports bags and 8000 golf bags were manufactured andtransferred to the finished goods warehouse.

v. During the year 1800 sports bags and 7000 golf bags were sold by Saima Ltd


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ACCOUNTING TEST #4

vi. Depreciation is charged on plant and equipment at the rate of 25% using thediminishing balance method, and on the office fixtures at the rate of 15% on cost

using the straight line method.

vii.All the factory overheads are to be apportioned between the sports bags and thegolf bags using the most appropriate basis from the information detailed below:

Sports bags Golf bags Administration

Floor area (sq m) 600 400 500

Power usage (kwh) 1500 2500 3000

Plant & equipment (value) 240000 160000

Number of employees 10 10 8

Required:

a. Prepare for the year ended 31 December 2007, the:i. Manufacturing account (columnar format) showing the prime cost

and production cost of manufacturing sports bags and golf bags.

ii. Trading profit and loss account, showing the gross profit for the boththe sports bags and golf bags and the total net profit for the business.

(32)

b. Saima Ltd has been experiencing difficulties in selling both the sports bagsand the golf bags due to increased competition. An overseas supplier has

offered to supply Saima Ltd with the sports bag for 15 and golf bag for 30.

Calculate the effect on net profit of Saima Ltd if the offer was accepted and

the production bags ceased. (4)

c. Discuss the financial and non-financial factors involved in the offer of theoverseas supplier. (8)

d. You are informed that the trade average for the industry is:Mark up:

Net profit as a percentage of sales:

Rate of stock turn over

Evaluate the performance of Saima Ltd (8)


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ACCOUNTING TEST #4

2. John and Kyle were partners in retail business. The partnership agreement stated thatprofits and losses were shared equally after allowing interest on capital at the rate of 4%

per annum.

On 1st January 2005, Saima was admitted into the partnership. The following agreement

was made:

Goodwill would be valued at 35000 on 31 December 2004. Goodwill would not remain in

the books of the business.

Saima would bring the following assets into the new partnership as capital:

! Delivery Van 4800! Stock 6500! Bank transfer 13700

John would withdraw 10000 of his capital, by cheque on 1 January 2005.

Profits and losses would be shared in the ratio John one fifth, Kyle two fifths and Saima

two fifths.

Saima would take no active part in the business. Kyle would work in the business for 50%of the time.

The following balances were extracted from the books at 31 December 2004.

John:

Capital account 10000

Current account 1 July 2004 460 DR

Drawings 7000

Kyle:

Capital account 15000

Current account 1 July 2004 1300 CR

Drawings 6500

Net profit for the 6 months to 31 December 2004 13600

Lease hold premises 60000

Accrued expenses 830

Prepaid expenses 150

Debtors 1750

Fixtures and fittings at book value 8000

Bank overdraft 2500

Creditors 8950

Mortgage on premises 45000

Cash 970Stock 12350

Required:

a. Prepare the following:I. The appropriation account for the six months to 31 December 2004.(5)

II. The current account of John and Kyle for the six months to 31December 2004. (5)

III. The capital accounts of John, Kyle and Saima as at 1 January 2005. (10)IV. The balance sheet of the partnership as at 1 January 2005, after all the

adjustments in the capital accounts have been made. (20)

b. Distinguish between fixed and floating capital accounts (6)c. Evaluate the decision of the partnership to admit a new partner. (6)


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ACCOUNTING TEST #4

3. Huzaifa is a sole trader buying and selling on cash and credit. When he commencedbusiness he decided not to keep formal set of account and all bank transactions are

recorded in his personal bank account.

Huzaifa is now required to file his profit with the government and seeks your help to

prepare the return.

In discussion with Huzaifa the following information is available:

i. On 1st January 2007 assets and liabilities were as follows:Stock 18600

Motor van for business use 5900

Debtors 1520

Creditors 810

ii. Payments had been received during the year, by cheque, 14000 for credit salesand a further 1200 was owed by debtors on 31st December 2007.

iii. Huzaifa had banked all 13000 from cash sales after he had paid for the followingcash expenses: petrol and repairs for the motor van 920, a part time assistant

2400 and personal drawings 9000.

iv. Credit purchases of 21000 were paid by cheque during the year and were paidfor during the year and 900 was owed to creditors on 31st December 2007.

v. The motor van was valued at 4800 at 31st December 2007.vi. The mark up on goods is 50%.vii. On 28 December 2007, Huzaifas storage was broken into and goods were stolen.

On 31 December 2007, carried out a stock take of the goods remaining and valued

the stock at 12240. Huzaifa will make an insurance claim for the stolen goods.

Required:

a. Calculate for the year ended 31 December 2007, the value of:i. Salesii. Purchases (15)

b. Prepare for the year ended 31 December 2007:i. Trading accountii. The profit and loss accountiii. Calculation of the stock stolen. (22)

c. Identify and explain which accounting concept has been broken by Huzaifasfailure to maintain a separate bank account for the business. (5)d. Evaluate the decision of not maintaining proper set of accounts. (4)

e. Huzaifa depreciates his assets by revaluation method. What other methodsare available to him for depreciating his assets. (6)


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ACCOUNTING TEST #4

4. Saima is a sole trader selling satellite navigation unit for cars. Saima has not kept a full setof double entry accounts.

Additional information for the year ended 30th April 2008.

i. Most of the sales have been in cash. Where sales have been made on credit, thesehave been invoiced to customers.

ii. On 1st may 2007, Saima had a stock of 80 satellite navigation units in her shopwhich had cost 100 each. During the year she purchased stocks of Navigation

units on 1 May, 1 August, 1 November and 1 February on credit. Saima calculates

her closing stock on the Last in First out basis. The following information is

available.

Purchases Sales in units1 may to 31st July 90 units@ 110 1201st august to 31st October 270 units @ 120 1501st November to 31st January 150 units @ 130 1801st February to 30th April 120 units @ 140 150

iii. Sales are made at the rate of 200 per satellite navigation unit sold.iv. During the year Saima was given a 1200 discount for prompt payment.v. The following payments were made in cash in each of the 52 weeks of the year

from the cash till.

Rent of shop 100Sales assistants wages 250 plus bonus of 2% of salesDrawings 80

vi. After deducting cash expenditure in (v) above, all cash takings had been paid intothe bank. The following analysis of the bank account is available:

Receipts

Cash sales 75000

Credit sales banked 19640

Payments

Telephone and internet 890

Electricity 315

Sundry expenses 3720

Suppliers of goods 69850Shop fixtures 900

vii. Other assets and liabilities were valued as follows:1st May 2007

30th April 2008

Shop fixtures 11000 10500Telephone and internet due 130 210Electricity prepaid 80 95Sundry expense dues 450 630Sundry expenses prepaid - 160

Trade debtors 3400 ?Trade creditors 5350 ?


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ACCOUNTING TEST #4

Required:

a. Distinguish between perpetual and period stock valuation. (8)b. Saima is considering shifting to FIFO method. Explain the impact on net

profit. (6)

c. Calculate the value of closing stock at 30th April 2008 using the Last in firstout perpetual method (12)

d. Prepare for Saima the trading profit and loss account for the year ended 30thApril 2008. (18).

e. Calculate at 30th April 2008 the value of the:i. Trade debtorsii. Trade creditors (8)

Name Date Full Marks Percentage Grade

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