ACCTN202-21B (HAM) Intermediate Financial Accounting
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ACCTN202-21B (HAM) Intermediate Financial Accounting
Test One – 18 August 2021
QUESTION 1 [25 Marks]
You are the accountant of BB Partnership. An extract of the trial balance is provided below as at 30 September 20.1.
|
Details |
Debit |
Credit |
|
Sales |
|
$3,755,200 |
|
Purchases |
$3,120,000 |
|
|
Inventory (1 October 20.0) |
$200,000 |
|
|
Creditors |
|
$195,000 |
|
Buildings |
$900,000 |
|
|
Machinery |
$120,000 |
|
|
Long term loan |
|
$400,000 |
|
Rent expense |
$20,000 |
|
|
Rental income |
|
$40,000 |
|
Bank |
$32,200 |
|
|
Bad debts |
$3,600 |
|
|
Salaries |
$181,000 |
|
|
Petty cash |
$4,400 |
|
|
Discount allowed |
$12,000 |
|
|
Capital: |
|
|
|
E Bridge |
|
$400,000 |
|
S Benade |
|
$600,000 |
|
Debtors |
$168,000 |
|
|
Term deposit |
$50,000 |
|
|
Drawings: |
|
|
|
E Bridge |
$108,000 |
|
|
S Benade |
$111,000 |
|
|
Discount received |
|
$10,800 |
|
Investment |
$370,800 |
|
|
|
$5,401,000 |
$5,401,000 |
Additional information:
1. The value of inventories on 30 September 20.1 was $ 170 000. Net realisable value was $150 000.
2. Depreciation must still be provided for. Machinery were bought on 1 January 20.1 and are depreciated on the units of production method. The total estimated machine hours are 350 000 hours and during the year 72 916.6667 hours were used. Buildings must be depreciated for the first time at 10% on cost and was purchased on 1 October 20.0
3. A further $ 2 200 must be written off as irrecoverable and a provision for bad debts must be created at 5% of outstanding debtors.
4. The accountant of BB Partnership did not post a purchase returns for goods bought on credit. An amount of $ 5 000 must be accounted for.
5. Included in sales is an amount of $ 10 000 for which BB Partnership have not yet performed the necessary work.
6. The partnership agreement stipulates the following:
§ Both partners are allowed a salary of $ 6 500 per month
§ Interest of 4% is allowed on the capital accounts of each partner
§ Interest of 8% is charged on drawings outstanding irrespective of when they were made
§ The partners share profits and losses based on their capital account balances
REQUIRED:
1. Prepare the Statement of profit and loss and appropriation for the year ending 30 September 20.1.
2. Prepare the Statement of Financial Position as at 30 September 20.1.
Note:
1. Decimals, if any, must be rounded up.
2. Current accounts must be opened for any transactions with the partners.
QUESTION 2 [15 Marks]
John, Elvis and Tracy have been in partnership for several years, sharing profits and losses in the ratio of 5:4:1 respectively. The last statement of financial position of the partnership prepared on 30th April 2019 is as follows:
John, Elvis & Tracy Partnership
Statement of Financial Position as at 30th April 2019
|
|
$ |
$ |
|
Non-current assets at cost |
40,000 |
|
|
Less accumulated depreciation |
(15,000) |
25,000 |
|
Stock |
|
10,000 |
|
Accounts receivable |
|
25,000 |
|
|
|
60,000 |
|
Capital Account: |
|
|
|
John |
10,000 |
|
|
Elvis |
8,000 |
|
|
Tracy |
7,000 |
25,000 |
|
|
|
|
|
Current Account: |
|
|
|
John |
5,000 |
|
|
Elvis |
3,000 |
|
|
Tracy |
(3,200) |
4,800 |
|
|
|
|
|
Current Liabilities |
|
|
|
Bank Overdraft |
|
10,200 |
|
Accounts Payable |
|
20,000 |
|
|
|
60,000 |
On 30th September the partners agreed to dissolve the partnership. The following are additional information on the dissolution:
· The stock was sold for a cash consideration of $5,000
· Non-current assets were sold for $8,000 except for a vehicle with a book value of $5,000 was taken over by John at an agreed valuation of $4,000
· Bad debts of $15,000 were fully written off and the remaining debtors settled amounts due in full.
· The cost of dissolution was $2,000.
· Discounts of $1000 were received from creditors and the balance of amounts owing was settled in full.
John was declared a bankrupt and was not able to pay amounts he owed and meet his joint obligation to the partnership.
REQUIRED:
1. Prepare the realisation account.
2. Prepare the bank general ledger.
QUESTION 3 [15 Marks]
You are the financial accountant of Oil Rig Ltd. The following extract of the trial balance as at the beginning of the year is presented. The financial year end is 31 December 2020.
|
Extract from equity |
Credit ($) |
|
Contributed equity |
12 000 000 |
|
Retained profits |
17 000 000 |
|
Revaluation reserve |
20 000 |
|
Cancelled share reserve |
8 000 000 |
Oil Rig Ltd made an offer to the public to subscribe for 10 million shares. The shares were issued at $2.00 per share. Applications for shares closed on 15 July 2020 with $1 being paid on application and a further $1 being payable within one month of allotment.
By 15 July 2020 applications closed and applications for 11 million shares were received. It was decided that all subscribers would receive shares on a pro rata basis with any excess paid on application to be offset against the amount due on allotment. The shares were allotted on 20 July 2020.
Subsequently, holders of one million shares failed to make their payments due on allotment by 20 August 2020. On 31 August the one million shares were forfeited and auctioned as fully paid. An amount of $1.50 was received for each share sold.
On 31 December, Oil Rig Ltd bought back three million of the issued shares at $1.50. These shares must be cancelled.
REQUIRED:
1. Journalise the issue of shares.
2. Journalise the forfeiture of shares and the re-issue.
3. Journalise the buy-back of shares.
2022-08-20