CARIBBEAN EXAMINATIONS COUNCIL
1982
PRINCIPLES OF ACCOUNTS PAPER II GNERAL PROFICIENCY
Answer ALL questions in Section I and TWO questions from Section II.
Begin EACH answer on a separate page
Keep ALL parts of EACH answer together
Silent electronic calculators may be used, but ALL necessary working should be clearly
shown.
SECTION I
Answer all THREE questions in this section.
1.
A firms book-keeper was unable to agree the Trial Balance at the end of the
financial year. Threrefore he temporarily put the difference between the credits
and debits to a Suspense Account. However, on further investigation the reasons
for the out of balance situation were discovered, along with additional errors all of
which are listed below:
(i)
$100 had been posted to the debit side of the General Expenses Account,
instead of to the Building Repairs Account.
(ii)
$600 paid for Office Furniture had been posted to the Purchases Account.
(iii)
$60 Cash received from R Hayworth (a debtor) and entered correctly in
the Cash Book, had been posted to R Haywards Account.
(iv)
The discounts received and discounts allowed in January amounting to
$30 and $50 respectively had been posted to the wrong sides of the
Discount Accounts for these transactions.
(v)
Sales of $500 to J Williams had been posted to the correct side of the Sales
Account, but was also entered on the same side of J Williams Account.
(vi)
Goods returned by a customer valued at $150 had been entered in the
Carriage In Account (Transportation In Account) but entered correctly in
the Customers Account.
You are required to
2.
(a)
Show the JOURNAL entries necessary to correct these errors, including
those to eliminate the Suspense Account, with an appropriate brief
narration.
(b)
State the amount by which the TRIAL BALANCE would disagree, and
whether this would appear on the DEBIT or CREDIT side of the TRIAL
BALANCE.
On April 1 1980, Miss Jones decided to invest in her own business with a Capital
of $6 000. She agreed to buy fittings and associated goodwill of an existing
boutique owned by Mr Rockley for $2 500. The fittings included in the purchase
price had an agreed value of $500. She also purchased stock from the original
owner which was evaluated at $1 250. The owner of the premises agreed to grant
Miss Jones a new lease on the premises for $400 per annum payable quarterly at
the end of each quarter. Miss Jones opened a Bank account for the business with
$6 000, paid Mr Rockley the amount due for the business, including the stock,
and commenced business on April 1, 1980.
The only record that she kept was a note-book in which she recorded cash
payments made out of takings before paying them into the bank.
For the year ended March 31, 1981, the following cash payments were extracted
from Miss Jones books.
Wages
Sundry Shop Expenses
$597
$104
Cash Purchases for resale
Drawings
$158
$624
A summary of his account for the year ended March 31, 1981, showed the
following:
Deposits
Cash introduced
Shop Bankings
$6 000
12 050
Withdrawals
Mr Rockley
$ 3 750
Purchases for resale
10 000
Rent
300
Water rates
190
Electricity
49
Additional Fittings (purchased
on 1 April, 1980)
100
On 31 March, 1981 stock on hand at cost was valued at $1 456. The Bank
Balance (cash) was $3 655 and amounts owing to trade creditors was $268; and
for electricity $17. Depreciation on fittings is to be provided at a rate of 10 per
annum.
You are required to:
(a)
post the above transactions using a Cash Book, showing Cash on Hand
and Cash in Bank and General Expenses T Accounts.
(b)
prepare a Trading and Profit and Loss Account for the year ended March
31 1981 and a Balance Sheet at that date.
( 24 marks)
SECTION II
Answer any TWO questions in this section.
3.
The Balance Sheet of Mrs D Marks business on 30 April, 1981 shows the undermentioned position.
BALANCE SHEET AS AT 30 APRIL, 1981
Capital
Trade Creditors
Accrued Expenses
$
7 290
1 460
190
8 940
Premises
Fixtures and Fittings
Stock
Trade Debtors
Cash at Bank
$
3 700
600
2 500
1 850
290
8 940
You are required to:
(a)
(b)
calculate the amount of working capital in the business on 30 April, 1981
state separately the effect which each of the following transactions has on
the working capital and give reasons:
(i)
Cheques received for $6 000 representing a long-term loan from
S Young.
4.
(ii)
Additional fittings purchased at a cost of $400 from Mark Jones on
three months credit.
(iii)
Stock costing $250 and included at that value in the amount of
$2 500 shown above now sold for $200 cash.
(iv)
D Marks withdrew $200 from the business bank account for her
own use.
(v)
D Marks brought her private sewing machine into the business at a
valuation of $60.
( 24 marks)
Black and White are in partnership sharing profits and losses in proportion to their
capital.
Black has a capital of $30 000, and Whites capital is $40 000.
Their partnership agreement allows interest on capital at the rate of 12% per
annum.
During the financial year ended 31 March, 1982, their drawings were:
Black
White
$14 400
$15 600
The Partnership NET PROFIT was
$59 500
You are required to:
(i)
show a Partnership Appropriation Account for the year ended 31 March,
1982 showing how the partners entitlement to interest, drawings, and
share of profits was allocated.
(ii)
show the Partners Current Accounts in the Ledger taking into account all
the above transactions, and correctly balanced on 31 March, 1982.
NOTE: The Partners Capital accounts are not required to be shown. ( 24 marks)
5.
The following is a summary of the amounts received and paid by the Rock
Cricket Club for the year to March 31, 1982.
$
Subscriptions received
160
Wages paid
Loan from Community Council 300
Electricity
Sale of dance tickets
191
Purchase of new equipment
Proceeds of fete
325
Incidental expenses
Dance expenses
Rent paid
Secretarys allowance
Hall
$
208
72
350
47
100
125
52
NOTE:
1.
The rent paid is in respect of the five quarters to the following June 30.
2.
The electricityof $72 includes $19 for the previous year, there is also an
amount of $22 due at March 31, 1982 but not yet paid.
3.
The incidental expenses include $3 relating to the previous year.
4.
Subscriptions received include $15 paid in advance for the following year.
In the previous year $22 was received for current subscriptions.
5.
At April 1, 1981 the club owned equipment valued at $400.
6.
The equipment is to be depreciated by 10%.
You are required to prepare an income and expenditure account for the year ended
March 31, 1982 and a balance sheet as at March 31, 1982.
( 24 marks)
6.
The Cash Book of James discloses a credit balance at Bank of $380 on 31
January, but this is not borne out by the Bank Statement of the same date, which
had a Bank Balance of $1 051.
(i)
A cheque received from a customer for $1 680, and paid into the bank had
been returned for an additional signature, and was not credited by the bank
until February 1, 1981.
(ii)
During January, 1981, a cheque for $114 was received from a customer in
settlement of an invoice for $120, An entry of $120 had been made in the
Cash Book.
(iii)
A cheque paid to a creditor on 10 January, 1981, for $179 had been
entered in the Cash Book as $197.
(iv)
Interest and Bank charges for $40 had not been recorded in the Cash
Book.
(v)
Unpresented cheques on 31 January, 1981, amounted to $1 037.
(a)
Prepare an adjusted Cash Book
(b)
Prepare a statement to reconcile the adjusted Cash Book Balance with the
Bank Statement.