TRUST ACADEMY

in collaboration with

MIDLANDS STATE UNIVERSITY

FINANCIAL ACCOUNTING (DAC 101)

ASSIGNMENT 2

LECTURER: MR WILSON C CHANAKIRA

0773 796 091 / 0717 076 193

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Question 1
i. Santa runs a large toy shop in Windsor. In the year ended 31 August 20X5, she
bought the following fixed assets:
• A new cash register for $5,000. This was purchased on 1 December 20X4, in time for
the Christmas rush, and was to be depreciated at 10% straight line.
• A new delivery van, purchased on 31 March 20X5, at a cost of $22,000. The van is to
be depreciated at 15% reducing balance.
Santa charges depreciation on a monthly basis.
• What is the depreciation charge for the year ended 31st August 20X5? (3 marks)
• Show the relevant ledger accounts and statement of financial position presentation at
that date (7 marks).
ii. Amazulu Ltd started its business and made the following purchases

In June 1420 units were sold for $7 000

Required

Calculate the value of closing stock and gross profit using FIFO method (10 marks)

Question 2
i. The director of your compoany has given you the following terms. Opening capital,
drawings, Profit, Assets, liabilities.
Draw the accounting equation and explain your solution (5 marks)
ii. The Director had just handed you statement from the bank. (5 marks)

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iii. The Marketing Manager has requested you to explain the effect of a debit and a credit
entry in the books of accounts (5 marks)

iv. The following information pertains to the business of AT Ltd. Opening balance $900,

Day 1 $56 stationery, $50 bread, $20 photocopy

Day 2, $45 bus fare, $25 refreshments
Day 3 $70 airtime, $22 bread, $15 sweets
Day 4 $10 stationery, $14 photocopy, $50 bus fare
The Managing Director is worried that too many transactions of insignificant value appear on
the bank statement. Show how you can record the above without affecting the bank statement?
(5 marks)

Question 3

Balance as at 1st June 2020 USD$

Purchases ledger 3,525 Cr
54 Dr
Sales ledger 7,500 Dr
25 Cr
Transaction for June 2020
Cash Purchases 35,000
Credit Sales 100,500
Cash Sales 65,540
Credit Purchases 52,000
Allowances from Suppliers 360
Cheque from Credit customers 56,000
Cash from Credit customers 10,000
Discount received 1,200
Cheque paid to creditors 21,000
Purchases ledger & Sales ledger settlement 1,650

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 Allowances to customers 2,650
Bill of exchange payable 2,000
Bill of exchange receivable 2,540
Cheque from customer dishonoured 500
Provision for discount on debtors 1,500
Bad debt written off 700
Discount allowed 900
Refund to customer for overpayment 500
Interest charge on overdue customer 364
Sales returns 1,000
Returns outwards 1,500
Balances at 30 June 2020
Sales Ledger 390 Cr
Purchases 88 DR

i. Prepare the Purchase ledger control account and the Sales Ledger control account (14
marks)
ii. (6 marks)

Question 4
i. The Marketing Manager Has approached you requesting for explanation as to why the
cash account does not always agree with the bank statement.
Explain to her the three (3) differences between cash book and the bank statement giving
clear examples (10 marks)

ii. The following is a summary of Amia’s cash book as presented to you for the month of
December 20X6:

All receipts are banked and payments made by cheque.

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On investigation you discover:
(1) Bank charges of $136 entered on the bank statement had not been entered in the cash
book.
(2) Cheques drawn amounting to $267 had not been presented to the bank for payment.
(3) A cheque for $22 had been entered as a receipt in the cash book instead of as a payment;
(4) A cheque drawn for $6 had been incorrectly entered in the cash book as $66.

You are required to:

Prepare an adjusted cashbook (5 marks)
Do a bank reconciliation (5 marks)

Question 5

The following record was extracted from the books of Shoot Ltd 31 December 2020
Figures in $000
Capital 4,500
Stock at 01/01/2017
Raw Materials 836
Finished Goods 560
Purchase of raw materials 6,950
Carriage Inwards 45
Returns outwards 75
Factory wages 1,523
Factory power 85
Factory lights and heats 67
Office Light and heat 39
Printing and Stationery 50
Postage and telephone 45
Other Insurance 102
Display Expenses 201
Advertising Expenses 16
Discount Allowed 74
Office salaries 228
Factory salaries 400
Factory insurance 62
Discount received 82
Sale of manufactured
production 8,032

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 Provision for unrealised profit
(1/7/2017) 35
Land and building 700
Factory Equip & Mach (cost
$500) 400
Office Equip (Cost $100) 70
Furniture and fittings (cost $50) 35
Drawings 87
Debtors and Creditors 70
Creditors 55
Cash in hand 100
Returns Inwards 34
25,558

The following additional information is relevant to the above accounting period

i. Finished goods manufactured during all the accounting period are transferred from
the factory at a manufacturing price of cost production plus 10%
ii. Stock at 31 December 2020. Raw materials $700 000 and finished goods $335 000
iii. Provision for depreciation rate is 10% per annum on all cost of non-current assets
purchased by the company excluding land and building
Required:
Prepare a manufacturing account and Income Statement for the year ended 31 December 2020
and the Statement of Financial position at that date. (20 marks)

END 100MARKS.
CREDIT IS GIVEN FOR ATTEMPTING ALL QUESTIONS –
DEADLINE 20 FEBRUARY 2025