Accounting

UNITED STATES INTERNATIONAL UNIVERSITY-AFRICA

SPRING 2021 END-SEMESTER UNIVERSITY EXAMINATION

COURSE CODE: ACT 1010-D

COURSE TITLE: PRINCIPLES OF ACCOUNTING-I

EXAM DATE: 13 – 04 – 2021

DAY: TUESDAY

TIME: 07:20 PM – 09:20 PM

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INSTRUCTIONS:

Please attempt question one and any other two

Question one

The following is the trial balance was extracted from the books of Mr. Wambo, a sole trader as at 31 April 2020;

Particulars	Dr.	Cr.
Capital (1 May 2019) Trade receivables Cash in hand Trade payables Fixtures and fittings at cost Discount allowed Discount received Inventory (1 May 2019) Sales Purchases Motor vehicles at cost Lighting and heating Motor vehicles running expenses Rent payable General expenses Bank overdraft Accumulated depreciation (1 May 2019): Fixture and fittings Motor vehicles Drawings	128,211 4,233 126,600 3,912 55,380 1,163,808 137,190 18,552 8,586 26,523 22,239 79,704 1,774,938	78,282 106,212 3,525 1,474,860 59,583 6,600 45,876 1,774,938

Additional information available at 30th April 2020:

i) Inventory was valued at Sh.59,778

ii) Depreciate motor vehicle at 20% straight line and fixtures and fittings at 10% reducing balance

iii) Accrued motor vehicles running expenses Sh.218

iv) Prepaid rent was Sh.680

Required:

a) Income Statement for the year ended 30th April 2020 (10 marks)

b) The Statement of Financial Position as at 30th April 2020 (10 marks)

Question two

At the beginning of the year 1 January, 2020, the balance brought forward from the previous year for the provision for doubtful debts in the books of A. Sonia was Sh.14,000. Following information was provided in regard to the year ended 31 December 2020;

Bad debts written off Sh.5,600

Debtors after bad debts written off Sh.360,000

Provision on debtors for doubtful debts 5%

Required:

a) The bad debts account for the year ended 31 December 2020 (2.5 marks)

b) The provision for doubtful debts account for the year (2.5 marks)

c) Extract from the income statement for the year (2.5 marks)

d) The extract from the balance sheet at the end of the year (2.5 marks)

Question three

The following information is taken from the bank column of the cash book and the bank statement respectively of Kyomuhendo Traders:

Cash Book

2020 May 1 5 6 11 14

Balance b/d E. Mambo Contra W. Hamisi K. Charo

Sh. 17,500 850 280 1,100 4,500 24,230

2020 May 4 6 8 11 15

B. Ndolo Contra M. Njeri A. Ramadhan Balance c/d

Sh. 7,500 280 1,300 1,800 13,350 24,230

Bank Statement

Date 2020 May 1 4 7 8 11 13 14 15

Balance b/f Standing order B. Ndolo E. Mambo M. Njeri W. Hamisi Unpaid cheque – E. Mambo Rent receivable

Debit Sh. 470 7,500 1,300 850

Credit Sh. 850 1,100 3,000

Balance Sh. 17,500 17,030 9,530 10,380 9,080 10,055 9,205 12,330

Required:

a) Updated cash book (5 marks)

b) A statement to reconcile the difference between the two balances (5 marks)

Question Four

A business firm purchased two machines on 1st January 2017 at a cost of Sh1,500,000 each. Each machine had an estimated useful life of five years and a nil residual value. The straight line method of depreciation is used. On 31st March 2019, one machine was sold for Sh.800,000. The second machine was sold on 1st December 2019 for Sh.250,000.

Required:

a) Machinery account (3 marks)

b) Provision for depreciation account for machinery (3 marks)

c) Disposal of machinery account (4 marks)