INSTITUTE OF BUSINESS AND ACCOUNTING STUDIES

DIPLOMA

MAY 2020 ASSIGNMENT QUESTIONS

BUSINESS ACCOUNTING

SUBMISSION DEADLINE: 16 APRIL 2020

INSTRUCTIONS TO CANDIDATES

Answer all questions.

Diploma Level:
Business Accounting Assignment Question Paper: May 2020 Page 1
Question 1

The following information relates to the transactions of Sharon a Sole Trader for the year ended 31
December 2019:
$

Inventory at 11/01/2019 10,000

Sales 500,000

Purchases 200,000

Sales Returns 10,000

Purchases Returns 5,000

Carriage Inwards 20,000

Carriage Outwards 15,000

Packaging wages 30,000

Land and Buildings 250,000

Plant / Machinery cost 100,000

Fixtures / Fittings cost 80,000

Motor Vehicle cost 60,000

Accounts Receivable 50,000

Accounts Payable 30,000

Salaries 18,000

Telephone 10,000

Rent 8,000

Insurance 12,000

Discount Received 14,000

Discount Paid 9,000

Bad debts 10,000

Provisions for doubtful debts 2,000

Diploma Level:
Business Accounting Assignment Question Paper: May 2020 Page 2
 $

Drawings 18,000

Electricity 8,000

Accumulated depreciation:

Plant/Machinery 20,000

Fixtures/Fittings 16,000

Motor Vehicles 12,000

30% Loan ZB 100,000

Cash on hand 10,000

Bank overdraft 20,000

Rent Income 10,000

Additional Information:

1. The owner took goods worth $2,000 for personal use and they were not recorded in the books.
2. The provisions for doubtful debts were to be calculated at 2% of the Accounts Receivables.
3. The inventory on 31 December was $15,000 (20,000 NRV).
4. An amount of $2,000 was outstanding for electricity and $1,000 paid in advance for telephones.
5. The depreciation of assets were to be calculated as follows:
 Plant/Machinery – 20 % per annum using straight line basis.
 Motor vehicles – 20% per annum using the straight line method.
 Furniture/Fitting – 20% per annum using the reducing balance method.

Required:

a) Prepare a Trial Balance for the year ended 31 December 2019. (10 marks)
b) Prepare a Statement of Profit and Loss and other Comprehensive Income for
the year ended 31 December 2019. (10 marks)
c) Prepare a Statement of Financial Position for the year ended 31 December 2019. (10 marks)
[Total: 30 marks]

Diploma Level:
Business Accounting Assignment Question Paper: May 2020 Page 3
Question 2

Albert, a Sole Trader had the following information for the month of January 2020.

January 2020

2 100 units at $2.00 each on hand.

3 Bought 50 units at $2.50 each.

4 Sold 30 units at $5.00 each.

5 Bought 20 units at $3.00 each.

6 Sold 70 units at $5.00 each.

8 Sold 60 units at $5.00 each.

9 Bought 80 units at $3.50 each.

11 Bought 10 units at $4.00 each.

13 Sold 50 units at $6.00 each.

15 Sold 20 units at $6.00 each.

17 Bought 30 units at $4.50 each.

Required:

Recalculate the value of closing inventory using the First In First Out (FIFO) method. [25 marks]

Question 3

(a) What are the purposes of financial statements? (5 marks)

(b) Mention and explain five characteristics of financial information. (10 marks)

(c) Mention and explain five errors which the Trial Balance cannot reveal. (10 marks)

[Total: 25 marks)

Diploma Level:
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Question 4

The following information pertains to Nathaniel’s transactions for the year ended 31 December
2019:

Accounts receivable had an opening balance of $10,000 and a credit balance of $2,000.

The Accounts payable had an opening balance of $8,000 and a debit balance of $500.

Accounts receivable at 31/12/2019 50,000

Bad debts 5,000

Accounts payable at 30/12/2019 30,000

Discount Received 1,000

Discount allowed 2,000

Amounts received from customers 2,000

Amounts paid to customers 14,000

Provision for doubtful debts 4,000

The dishonoured cheques by customers amounted to 6,000

Purchase Returns 6,000

The dishonoured cheques to suppliers 1,500

Required:

Calculate the Credit Sales and Credit Purchases. [20 marks]

END OF ASSIGNMENT QUESTION PAPER

Diploma Level:
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