117 IS 1210 ( UNIVERSITY OF MORATUWA S Faculty of Information Technology Seas B.Sc. (Hons) in Information Technology and B.Sc. (Hons) in Information Technology and Management Level 01 ~ Semester 02 Examination IS 1210 — FINANCIAL ACCOUNTING Time Allowed: 03 hours January 2018 INSTRUCTIONS TO CANDIDATES 1 2: ‘This paper contains 04 questions on 05 Pages. The total marks obtainable for this examination is 100. The marks assigned for each question & sections thereof are included in square brackets. This examination accounts for 70% of the module assessment. This is a closed book examination. Non programmable calculators are allowed. Use separate answer sheet for each question. Answer ALL questions. Page 1 of 5 Continued...IS 1210 Question 01 [Total Marks allocated: 25 Marks} 1. Briefly describe the following terms, a) Business Entity Concept b) Duality Concept ©) Accrual Basis d) Accounting Equation ©) Bad debts 110 Marks} 2. Following transactions have been extracted from Sureni Traders who is a sole trader for the month of December 2017. n. mL, Vv, Vi. vu. vu. Ix. x. Xi. XI. XIIL Required: December 1: Sureni commenced business introducing Rs. 2,000,000 cash and Rs, 4,000,000 in bank. December 2 Purchased motor vehicle for Rs, 2,000,000 paid by cheque. December 3 Cash Purchases Rs. 1,000,000 and Credit Purchases Rs. 400,000 December 6 Credit Sales Rs. 600,000 December 8 Bought goods worth of Rs. 1,600,000 and paid by cheque. December 12 Cash sales Rs. 1,000,000. December 15 Paid Rs. 400,000 to his creditors by cheque December 19 Received Rs 400,000 cash from a customer. December 23 Sureni withdrew Rs 150,000 in cash from the business December 28 Paid monthly building rent of Rs 80,000 in cash. December 29 Obtained a bank loan of Rs 3,000,000 repayable in two years. December 30: Accrued electricity expense was Rs, 8,000 December 31: Closing inventory is valued at its cost of Rs. 2,000,000. a. Record the above transactions in the relevant ledger accounts. 110 Marksy 6. Extract a trial balance as at 3] December 2017 for Sureni Traders 105 Marksy Page 2 ofIS 1210 Question 02 /Total Marks allocated: 25 Marks] ‘The following transactions were extracted from the books of Anuradha Traders who is a sole trader for the month of December 2017, I. December 1: Started the business by introducing Rs. 4,000,000 cash and Rs. 2,000,000 in Bank. Il December 2: Purchased office equipment worth of Rs. 2,000,000 for cash. Il. December 3: Purchased motor vehicle for Rs. 1,000,000 paid by cheque. IV. December 4: Cash Purchases Rs. 500,000 and Credit Purchases Rs. 200,000 V. December 7: Rs. 120,000 worth of goods were sold for Rs. 160,000 on credit. VI. December 15: A cheque of Rs. 190,000 was issued to a creditor, discount received Rs. 10,000. VIL. December 20: Rs. 200,000 worth of goods were sold for Rs. 275,000 on cash, VII. December 21: A cheque of Rs. 150,000 was received from a customer, discount allowed 10,000 and the cheque was deposited in the bank on the same day. IX. December 22: Rs. 150,000 worth of goods were sold for Rs. 220,000 on credit and Rs. 60,000 worth of goods were sold for Rs. 105,000 on cash X. December 25: Employee salaries of Rs. 100,000 were paid by cheque. XI. December 28: Rs. 40,000 worth of goods and Rs. 30,000 cash were withdrawn from the business for personal use by the owner. XII. December 30: Paid monthly Rental for building Rs. 200,000 in cash, XII. December 31: Accrued electricity expense was Rs. 25,000. 4) Record the transactions in the accounting equation for the month of December 2017 in the following format. Motor vehicles+ Office Equipment + Cash + Bank + Trade Receivables + Inventory = Capitat+(Income-Expenses)-Drawings+ Trade Payables Accrued Expenses 116 Marks] 4) Calculate the profit or loss for the month ended 31 December 2017 for Anuradha traders. 109 Marksy Page 3 of S Continued...IS 1210 Question 03 /Total Marks allocated: 25 Marks] Following transactions have been extracted for the month of December 2017 from the books of Amaya Traders, I. December 01: Started the business by investing Rs. 500,000 in cash and on the same day opened a bank account by depositing Rs, 400,000. Il December 03: IIL December 04: IV. December 05: V. December 05: VI. December 06: VIL. December 07: VII. December 08: IX, December 09: respectively. X. December 11: XI. December 12: Rs. 1,000 XI December 13: XII December 15: XIV. December 19: XV. December 20: XVL_ December 21: XVII December 22: XVII. December 25: XIX. December 27: on credit. Required: Goods purchased on credit from Kasun Traders Rs.50, 000 Goods purchased on credit from Hashan Traders Rs.24, 000 Cash purchases Rs. 80,000 Goods sold to Ruwan on credit Rs. 56,000 ‘Rowan retumed the goods Rs. 4,000, Credit sales to Asela Rs. 36,000 Asela returned the goods Rs. 3,000, Rent and electricity paid by cheque Rs.12, 000 and 6,000 Cash sales Rs. 20,000 Paid to Kasun Traders by cheque Rs.12, 000, Discount received Return outwards to Hashan Traders Rs. 4,000 Cash received from Ruwan Rs.13, 400, Discount allowed Rs. 600 Credit purchase from Nadun Traders Rs. 36,000 Retum outwards to Nadun Traders Rs. 6,000, Cash sales Rs. 20,000 Purchased goods worth of Rs. 8,000 by cheque. Salaries paid by cheque Rs. 50,000 Purchased Rs, 2,500,000 worth of motor vehicle from Siva Motors Record above transactions in the relevant books of prime entry. [25 Marks) Page 4 of 5 Continued...IS 1210 Question 04 [Total Marks allocated: 25 Marks} ‘The following is the trail balance of Dimuthu Traders as at 31 March 2017. Tobe:0s Dr (Rs'000)_[_Cr(Rs7000) Revenue : 284,000 Purchases : 170,000 | Selling and Distribution costs 18,000 | Administrative expenses : ~ 20,000 Cash Drawings : = 1,200 Land and bui a — 60,000 fotor vehicle 50,000 | ‘nventory at 01 April 2016 25,000 Trade receivables 40,500 Cash. - 1,800 | ‘Allowance for receivables at 01 April 2016 I 1,600 Trade payables I 30,400 Capital as at 01 April 2016 | 35,000 Retained Earnings at 01 April 2016 35,500 386,500 | 386,500 ‘The following additional information is also relevant; I. Closing inventory counted and valued at cost as at 31 March 2017 was Rs. 35,000,000 and the net realizable value of inventory on that date was decided to be Rs. 34,500,000. II. One of its customers who owed Rs. 500,000 to the business was declared bankrupt on 31 March 2017 thus the amount in due became irrecoverable. Following a final review of the trade receivables, it was decided to maintain the allowance for receivables at 5% of the final balance. IIL. The following acerued and prepaid expenses are to be accounted for as at 31 March 2017. Prepaid electricity Rs. 500,000 Accrued advertising Rs, 1,000,000 Required: @) Statement of Profit or toss for the year ended 31 March 2017. 112 Marks} 4) Statement of Financial Position as at 31 March 2017. [13 Marks} END OF QUESTION PAPER Page 5 of S