SECTION A

QUESTION 1
Solution
The rate of the leasing contract
the rate of the leasing contract is determine from the following equation
(1− (1+ r ))
408000=150000+150000 + 50000 (1+r)-3
r
Using the trial by error method, the rate is 20%
1.3 working for the amortization table
- first reimbursement (at the signing of the contract) =150000
The remainder is: 408000-150000 =258000
Corresponding interest: 258000 x20% =51600
- The annuity at the end of the first year will be 150000 corresponding to a principal of:
150000-51600=98400 and an interest of 51600
- The annuity at the end of the second year will be 150000 corresponding to an interest of:
Remaining capital=258000-98400=159000
Interest: 159000 x 20% = 31920
Principal:150000-31920 =118080
- The annuity at the end of the third year will be 50000 corresponding to a principal of 159000-
118080 =41520
Interest: 50000-41520 =8480
The amortization schedule
Year ended Capital b/f Interest Repayment of Payment Capital c/f
capital
0 408000 0 150000 150000 258000
1 258000 51600 98400 150000 1599000
2 159000 31920 118080 150000 41520
3 41520 8480 41520 50000 0
92000 408000 500000

1.4 Journal entries at the signing of the contract

30/04/2011
2411 173 Commercial equipment leasing debts 408000 408000
being payment at the signing lease
contract

6233 521 Leasing contracts royalties local bank 150000 150000

being payment at the signing of the
contract

30/04/2011
173 Equiv. Leasing debt Leasing and related 150000
6233 contracts royalties retreatment of 150000
advances made

672 Interest on leasing contracts accrues 34400

176 interest (51600 x 8/12) 34400
6813 2841 Depreciation of tangible NCA 68000
depreciation NCA (408000 x 25% x 8/12) 68000
176 Accrued interest/leasing interest in 34400
675 leasing contract being reversal entry 34400
 30/04/2012
6233 Leasing and related contract royalties local bank 150000
521 being annuals lease payments 150000

QUESTION 2
Solution
a) Presentation of stock bin card

Movement of total stock Stock on consignment Warehouse Total

Date Description
sales
Purch Sales Losses stock Return Sales Entry Exit Stock
ase
1/1 Initial stock 4 000 2 000 6 000
4/1 Return 2 000 2 000 2 000 4 000 6 000
2 000 8/1 Purchase 2 000 2 000 2 000 3 000 6 000 8 000
12/1 Consignment 5 000 3 000 8 000
16/1 Return 3 000 2 000 2 000 5 000 8 000
4 000 20/1 Purchase 3 000 4 000 9 000 12 000
24/1 Consignment 5 000 2 000 7 000 12 000
28/1 Consignment 8 000 3 000 4 000 12 000
1 500 30/1 Sales 8 000 1 500 1 500 2 500 10 000

b) Presentation of Accounting Entries

SECTION B: END OF YEAR WORKS
QUESTION 3
1. Determination of the reducing balance rate of depreciation
OV1 = 1 920 000
n = 4 years
OV2 = 3 200 000
n = 2 years
NAV on 31/12/2008 = 1 400 832
1 920 000(1−r)4 + 3200 000 (1−r )2=1 400 832
Let (1−r)2=x
 1 920 000 x 2 +2 200 000 x −1 400 832=0

 x=
b ± √b 2−4 ac
2b

−3 200 000± √ 3 200 0002−4 ( 1920 000 ) (−1 400 832)

 x=
2(1 920 000)

−3 200 000± 4 580 400

 x=
3 840 000

−3 200000+ 4 580 400

 x 1= → x 1=0.36
3 840 000

−3 200 000−4 580 400

 x 2= → x 2 ≠ 2.026 .
3 840 000

 x=(1−r )2 → ¿

 → √ (1−r )2=√ 0.36

  → 1−r=0.6

 r = 0.4

r = 40%

Let the constant rate be x%

→ X x 2=40

→ X=20 % and if the constant rate = y%,

y x 2.5 = 40

→ y=16 %but it is not normal to have a constant rate of 16%

Therefore, the constant rate is 20%.

1.1. Presentation of the depreciation table of the two assets

Computer PC 1386D

Period Amt of Rate Annuity Previous Acc. Dep NAV

C D
Dep
2005 1 920 000 20% 40% 768 000 - 768 000 1 152 000
2006 1 152 000 25% 40% 460 800 768 000 1 228 800 691 200
2007 691 200 33% 40% 276 480 1 228 800 1 505 280 414 720
2008 414 720 50% 40% 207 360 1 505 280 1 712 640 207 360
2009 207 360 40% 40% 207 360 1 712 640 1 920 000 0

Computer PC 1245 C

Period Amt of Dep Rate Annuity Previous Acc. Dep NAV

2007 3 200 000 20% 40% 1 280 000 - 1 280 000 1 920 000
2008 1 920 000 25% 40% 768 000 1 280 000 2 048 000 1 152 000
2009 1 152 000 33% 40% 460 800 2 048 000 2 508 800 691 200
2010 691 200 50% 40% 345 600 2 508 800 2 854 400 345 600
2011 345 600 100% 40% 345 600 2 854 400 3 200 000 0

1.2. Accounting entries for the period 2008

31/12/2008
 6813 Operating Depreciation of Tang. F.A. 975 360
2844 Depreciation of office Equipment 975 360
Endowment of depreciation for the period

SECTION C:
QUESTION FIVE

SECTION D
QUESTION 5
I. Determination of capital before and after the increase.
we know that the situation of the trial balance is after the increase
 let the capital before the increase be x frs
Increase =60% = 0.6x
New capital after increase =1.6x frs
But new capital =Acc 1011 + 1012 +1013
New capital = 100 000 000 – 50 000 000 +750 000 000
New Capital after Increase = 800 000 000 frs

Capital before increase = 800 000 000/1.6

Capital before increase = 500 000 000frs

ii) Amount of capital increase = 800 000 000 – 500 000 000frs
Capital increase = 300 000frs
N.V = 20 000frs
Number of new shares = 300 000 000/20 000

= 15 000 shares

*No of cash shares

Account 4615 =200 000 000
N.V 20 000
No of new cash shares = 200 000 000/20 000
=10 000 shares

No of new free shares = 15 000 – 10 000 = 5 000shares

iii) Fraction of the capital paid up at the start of 2008
Amount paid = amount called in cash + anticipated payment
=100 000 000 + 3 000 000
= 103 000 000frs
Fraction paid in cash= 103 000 000/200 000 000
=0.515
iv) Fraction of the new capital that was called at the start of December.
Amount Called = 100 000 000
Fraction called in cash= 100 000 000/200 000 000
= 0.5

V) Determination of the issue price

EP = amount in cash + issue Premium/new shares in cash
EP =200 000 000 +100 000 000/10 000
EP = 30 000 FRS
vi) Determination of shares paid in anticipation.
Account 4616 Credited = 3 000 000.
During the increase, ⅟2 of the contribution in cash were ccalled
 Shareholders anticipated the other ,⅟2
4615 Shareholders increase of 200 000 000
109 capital 100 000 000
1011 Shareholders subscribed Un C/ 100 000 000
1012 Cap. 100 000 000
1051 Uncalled Subscribe called capt 100 000 000
 Subscribe called & unpaid
Issue premium
At the increase of capital
521 Local Bank 203 000 000
Anticipated Shareholders 3 000 000
Shareholders increase on cap 200 000 000
At the realization of increase
1012 Subscribed called on paid 100 000 000
1013 capital 100 000 000
Subscribed called P non RD
To be balance the account
debted
118 Optional Reserve 100 000 000
1013 Subscribed called up P non 100 000 000
Rd
Incorporation of reserves

 Number of shares anticipated = 3 000 000 × 2/20 000

 Number of anticipated shares = 300 Shares
Vi) Journal Entries for the increase of capital 1/03/2008

QUESTION 6
DETERMINATION OF AMOUNT OF DIVIDEND SHARED.
i) WE know that FV =D/i
 FV on shares In kind = D/0.09
 27778 = D /0.09, D. Per shares =2500frs
Total dividend of shares in kind =2500 ×500 =1250 000frs

FV. On shares is cash =D /0.09

 19445 =D/0.09 ; D. per share in cash =1750 frs
Total Dividend on shares in cash = 1750 ×2000 = 3 500 000frs
Total Dividend Shared = 1 250 000+ 3500 000 =4 750 000frs
ii) Determination of statutory interest rate and supper dividend per share
Let the statutory interest rate b r% and supper dividend per share be xfrs
Statutory interest per share in kind
Nominal Value of a share =
SI per share in kind= 20 000× r/100
=200r
But we know that SI + supper Dividend =Gross Dividend

200r + X =2500…….(1)

Statutory interest per share in cash

1st part called = 1/2 ×20 000 ×1 × r=100 r

100
 1
2nd part called ¿ ×20000 ×3 × r =25r
2
1200
∴ 100r + 25r =125 r
SI per share in cash+ Supper dividend per share = Gross dividend per share.

125+×=1750−−−−−(2)

From (1) and (2)

200r+ x= 2500------------ (1)
125r + x =1750---- (2)
75r 1 =750
r = 750
75

r = 10%
Substituting r in (2)
125 (10) + X= 1750

X=500

Statutory interest rate =10

% andsupperdividendpers h are=500 frs

i) Determination of total statutory interest, total supper dividend and total Gross
Dividend.

elements Contribution in Contribution total

kind in cash
Statutory 500x20 000x1 3500 000
interest 100 1/2x2000x10
=1000000 100=2000000

1/2x 2000
x20000 x10x3
1200=500000

Supper 500x500 =250 2000x 500 1250 000

Dividend 000 =1000 000
Total 1250 000 4750 000
3500 000

Total statutory interest = 3500 000 FRS

Total super Dividend = 1 250 000 Frs.
Total Gross Dividend =4 750 000 Frs.
iv) Determination of amount of net accounting profit
Accounting Net Situation After profit distribution
Capital = 50 000 000
Previous losses = -2 540 000
Over values = 2500000
Fictitious Expenses = - 500 000
Reserves kept = ( p – 4 750000) * reserves kept = profit – Gross Dividevd
Net Assets p + 44710000
Math’s Value Ex – coupon
Net Assets after profit Distribution
Number of shares
21520 = p+ 44710 000
2500
53 800 000 + P + 47710000

Profit= 9090 000