Part A - Compulsory Questions
Question 1
The following trial balance is extracted from the books of Shimmer & Shine Ltd at 31.12.2020 was
as follows;
Trial Balance as on 31.12.2020
Dr Cr
Share capital 250,000
Retained profits at 31.12.2019 30,000
Premises at cost 250,000
Provision for depreciation for premises as at 31.12.2019 51,000
Machinery at cost 114,000
Provision for depreciation for machinery as at 31.12.2019 21,000
Purchases 563,700
Sales 925,300
General expenses 14,600
Wages and salaries 179,400
Business rates 15,800
Electricity 4,800
Bad debts 1,400
Allowance for doubtful debts at 31.12.2019 1,200
Trade receivable 85,000
Trade payable 68,300
Inventory at 31.12.2019 81,900
Cash balance 36,200
1,346,800 1,346,800
1. Inventory in December 2020 is valued as 7,500
2. Wages and salaries due at 31.12.2020 amounted to 2,000 and Business rates paid in advance
at 31.12.2020 amounted to 500.
3. Depreciation charge on straight line – Premises – 10% and machinery 25% per annum.
4. Provide corporate tax of 50,000
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Required: Prepare the following for the purpose of publication
1. Comprehensive Income Statement/ Profit and loss statement (10 Marks)
2. Statement of Financial Position/ Balance sheet (8 Marks)
3. Statement of changes in equity (5 Marks)
4. Relevant notes to the financial statements (7 Marks)
Question 2
The transactions of the Peter Traders for the month of January are given below.
January
01 Peter invested Rs.180,000 and started the business
05 Peter obtained a loan from Sara amounting to Rs.70,000 s
06 Purchased a furniture for Rs.20,000
08 Opened a current account in Sampath Bank by depositing Rs.25,000
12 Cash Sales Rs.50,000, Credit Sales Rs.20,000 to Ann
15 Peter withdrawn Rs.7,000 for his personal use from the bank account
18 Withdrawn from the bank Rs.5,000
20 Paid telephone bill by a cheque Rs. 3,000
25 Obtained a loan from Jayasena Rs.150,000 and deposited Rs.80,000 from it in the
bank
28 Purchased stock for Rs.16,000 by issuing a cheque
28 Received a cheque Rs.20000 from Ann and deposited to the account
29 Bank informed that Ann’s cheque was dishonored
30 Peter took Rs.6000 worth of stocks for his personal use from the business
Required:
1. Prepare the relevant ledger accounts for the above transactions (12 Marks)
2. Prepare the trail balance as at 31.1.2019 (8 Marks)
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Question No 3
1.The following is a simple example of interfirm comparison. Here are the ratios Identify the
Best Company. (20 Marks)
Ratio A B C D E
Net Profit 38% 44.3% 10% 27.9 40%
Assets Employed
Net Profit % 42% 40% 15% 30% 35%
Sales
Sales % 60% 65% 25% 50% 53%
Assets Employed
Production Cost % 18% 15% 40% 13% 26%
Sales
Distribution & Marketing Expences 12% 10% 30% 14% 20%
Sales
Average Stocks x 365 days 28 days 20 days 41 days 19 days 29days
Net Cost of Sales
Debtors x 365 days 21 days 19 days 24 days 17days 26ays
Net Sales
Creditors x 365 days 56 days 60 days 70 days 49 days 54 days
Average Purchases
Current Assets 3.5:1 2.9:1 1.9:1 1.7:1 3.7:1
Current Liabilities
Quick Assets 1.2:1 1.0:1 0.8:1 1.2:1 2.1:1
Current Liabilities
ROCE % 27% 25% 11% 20% 19%
Interest Cover 43% 40% 37% 30% 28%
EPS 9.1 8.9 3.2 7.2 5.9
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Question No 4
Prepare a Manufacturing Account for the year ended December 31st 2021 using the Trial
balance and other information given below.
Trial balance as at 31 December 2021
Dr Cr
Buildings 8600
Plant and Machinery 21000
Rent 1250
Repairs to Plant 500
Sales 79200
Stocks 1st January
Raw material 2500
Finished Goods 7500
Work in progress 1750
Wages 2100
Debtors and Creditors 10650 10100
Cash at Bank 4200
Transport 700
Discount Allowed 400
Carriage inwards 500
Purchases 25000
Purchase returns 1200
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Carriage outwards 1000
Factory Power 750
Light and Heat 2000
Bank Overdraft 700
Sales Commission 1700
Insurance 1600
92,450 92450
Notes
1. Stock as at 31 December were
RM -2600
WIP -1600
FG -4800
2. Two fifth of light &heat and Insurance are to be allocated the Factory and Three fifth to
the Office.
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