THE INSTITUTE OF ADMINISTRATION AND COMMERCE
FINANCIAL ACCOUNTING 1
MARCH 2018
TIME ALLOWED 3 HOURS
TOTAL MARKS 100
INSTRUCTIONS TO CANDIDATES
1. Answer ALL questions
1
QUESTION 1 (10 marks)
On February 2-11, the cash book of a trader showed a debit balance of $5 917,
while the bank statement for the same date showed a credit balance of $ 6 667. The
following cheques had not yet been presented at the bank. The following cheques
had not yet been presented at the bank. No 187 = $100, No 188 = $170. The bank
statement had the following entries.
DR CR BALANCE
$ $ $
2-11
Feb 1 Balance 5 600
2 Deposit 300 5 900
5 Cheque 180 55 5 845
6 Cheque 181 100 5 745
9 Cheque 182 90 5 655
10 Cheque 183 83 5 572
15 Deposit 1000 6 572
17 Cheque 184 115 6 457
18 Commission 10 6 447
23 Cheque 185 200 6 247
25 Cheque 186 70 6 177
26 Cheque book 10 6 167
28 Deposit – R. Makina 500 6 667
Prepare a bank reconciliation statement for the month of February 2011
(10 marks)
QUESTION 2 N and M are partners in a wholesale
business sharing profits and losses in the ratio 3:2. The partners are entitles to
interest on capital at 5%, but they have to pay interest on drawings at the rate of
10% per annum. The following trial balance was extracted from their records on 31
December 2-13
2
N & M PARTNERSHIP
TRIAL BALANCE AS AT 31/12/2-13
DR CR
Capital Accounts 1/12/2-13 150 00
N
M
10 000
Current Accounts 1/1/2-13
N 3 600
M
1 200
Drawings
N 1 500
M 2 000
Salary: N 8 000
Stock 1/1/2-13 6 700
Debtors 4 300
Creditors 5 645
Purchases & sales 26 200 100 000
Freehold premises 25 000
Plant & machinery at cost 17 000
Accumulated depreciation 5 625
on plant & machinery
Motor vehicle at cost 15 000
Accumulated depreciation 3 800
on motor vehicle
Administrative salaries & wages 30 000
Electricity & water 2 250
Cash at Bank 4 180
Cash on hand 340
143 760 143 670
The closing stock was $7 100. Depreciate plant and machinery and motor
vehicles at 10% on cost.
Required
a) Statement of comprehensive income (including appropriations) for the
year-ended 31 December 2-13
b) Partners current accounts in columnar form
c) Statement of financial position as at 31 December 2-13 (30 marks)
3
QUESTION 3
a) On December 2-12, the total of the individual credit balances extracted from
the creditors’ ledger of a trader was $5 221. On the same date, there were
debit balances in the same ledger amount to $230. The following information
was available for January 2-13
$
Credit purchases 7 500
Payments to creditors by cheque 3 800
Cash discount received from creditors 218
Returns outwards 430
Sundry allowances from creditors 154
Amount transferred to debtors ledger 320
Debit balances on creditors accounts on 31/1/2-1 270
Credit balances on creditors accounts on 31/1/2-1 7 839
Required
Prepare a creditors ledger control account (10 marks)
b) On December 2-12, the total of the individual balances extracted from the
Debtors Ledger of a business was $2 900, on the same date there were credit
balances in the same Ledger amount to $40. The following information was
available for January 2-13
$
Credit sales 5 700
Payments from debtors by cheque 6 000
Sales returns 85
Debtors cheques dishonoured by the bank 120
Transfer from creditors’ ledger 50
Cash discount to debtors 144
Sundry allowances on debtors accounts on 31/1/2-1 68
Credit balances on debtors accounts 31/1/2-13 25
Debit balances on debtors accounts on 31/1/2-13 2 358
Required
Prepare a debtors ledger control account (10 marks)
QUESTION 4
Identify and explain at least six types of errors which the trial balance cannot
reveal (20 marks)
QUESTION 5
Identify and explain at least ten accounting concepts (20 marks)
END OF PAPER
