PRINCIPLES OF ACCOUNTS

MOCK EXAM

5th FORM

TIME: 3 hours

NAME: _____________________________________

This paper consists of FIVE (5) questions. You are required to

answer ALL questions in the spaces provided.

Silent non-programmable calculators may be used.

Question Total Student mark

Q1 20

Q2 15

Q3 20

Q4 20

Q5 25

TOTAL 100
 STRUCTURED QUESTIONS
ANSWER ALL QUESTIONS
Question One
The following balances relate to the business of Viola Shorts, a sole trader.
Balances on December 31, 2020:
$ $
Capital 757,300
5-Year Loan 120,000
Bank 100,000
Drawings 18,000
Furniture 240,000
Equipment 650,000
Stock (Jan 1, 2020) 45,250
Purchases 243,750
Sales 475,000
Return inwards 12,500
Return outwards 35,000
Carriage inwards 22,500
Carriage outwards 14,500
Bad debts 32,500
Provision for Bad debts 2,000
Discount received 4,750
Commission received 2,900
Debtors and creditors 81,450 63,500

1,460,450 1,460,450
Additional information:
(i) Rent owing $6500
(ii) Stock ( Dec 31, 2020) 30,000
(iii) Provision for bad debt is reduced to $1250
(iv) Commission received included $500 for 2021.
(v) Depreciation for furniture and equipment 10% using the straight line method
You are required to prepare:
(a) The trading profit and loss account (10 marks)
(b) A classified Balance sheet (10 marks)
 Viola Shorts
Trading Profit and Loss Account for the year December 31,2021

$ $ $

Sales 475,000

Less: Return Inwards (12,500)

Net Sales 462,500

Less: Cost of Goods Sold

Opening Stock 45,250

Add: Purchases 243,750

Add: Carriage Inwards 12,500

256,250

Less: Return Outwards (35,000) 221,250

Cost of Goods sold for sale 266,500

Less: Closing Stock (30,000)

Cost of Goods sold (236,500)

Gross Profit 226,000

Add: Revenue

Rent Received 6,500

Commission Received 2,400

Discount Received 4,750 13,650

239,650

Less: Expenses

Carriage Outwards 14,500 (14,500)

Net Profit 225,150

 Balance Sheet for Viola Shorts
As at 31 December 2020

Fixed Assets $ $ $

Equipment 650,000 6,500 643,500

Furniture 240,000 2,400 237,600

890,000 8900 881,100

Current Assets

Stock 30,000

Debtors 80,200

Bank 100,00 210,200

Less: Current Liabilities

Creditors 63,500

Rent Owing 6500 (56,500)

Net Current assets 153,700

1,034,800

Less:Long-term liabilities

Long-term loan (120,000)

Net Assets 916,800

Capital 757,300

Less: Drawings (18,000) (739,300)

177,500
Question Two
(a) Tianna Stewart keeps her petty cash on the Imprest System. Her interest amount for the
month of June 2001 is $600. Her petty cash transactions were as follows:

2001 May 31 Petty cash in hand 18

June 1 Petty cash restored to the ?: 600

imprest

June 4 Stamps bought 60

June 7 Stationery 36

June 8 Janitor’s wages 45

June 14 Bought stamps 60

June 18 Stationery 84

June 19 N. Lewis 45

June 29 Taxi fare 48

Stationery 30

June 30 Minor repairs 60

Electricity 45

Telephone 78

By preparing a Petty Cash Form, you are required to:

(a) Restore the imprest amount at June 1
(b) Enter the petty cash transactions in the Petty Cash Book
(c) Balance the Petty Cash Book for month of June
(d) Reimburse the petty cash with the imprest amount
SEE PETTY CASH TEMPLATE BELOW
Total 15 marks
 Postage
and Travel
Voucher stationery expense General Ledger Ledger
Receipts Folio Date Details No. Total $ $ $ expense $ folio account $

March 31 Balance b/f $18 $18

Interest
June 1 restored $600 $600
Stamps
June 4 bought $60 $60

June 7 Stationery $36 $36

Janitor’s
June 8 wage $45 $45
Stamps
June 14 Bought $60 $60

June 18 Stationery $86 $86

June 19 N.lewis $45 $45

June 29 Taxi Fare $48 $48

Stationery $30 $30

Minor
June 30 repairs $60 $60

Electricity $45 $45

Telephone $78 $78

$1,211 $544 $48 $246 $645

Question 3
a) From the following data, prepare control accounts for both the purchases ledger and the
sales ledger.

MARCH 1 (2009) MARCH 31

(2009)

Credit sales 46,998

Credit purchases 35,444

Purchases ledger balance 4,388

Sales ledger balance 5,677

Cheques and cash paid to suppliers 31,010

Discounts received 492

Discounts allowed 890

Sales ledger balances set- off against 500

purchases ledger balances

Return outwards 575

Return inwards 4,333

Bad debts written off 350

Cash and cheques received from customers 41,200

(18mks)

Sales ledger control account

Date Date
2007 Details $ 2007 Details $

March 1 Balance b/d 5,677 March 31 Return inwards 4,333

Cash and cheques
received from
March 31 Credit Sales 46,998 March 31 customers 41,200
March 31 Set off 500 March 31 Discount allowed 890
March 31 Set-off 500
53,175 March 31 Balance c/d 6,252

April 1 Balance b/d 6,252 53,175

Purchases ledger control account

Date Date
2007 Details $ 2007 Details $
March 31 Return outwards 575 March 1 balance b/d 4,388
Cheque and cash
March 31 paid to supplier 31,010 March 31 Credit Purchases 35,444
March 31 Discount Received 495 March 31 Set-Off 500
March 31 Balance c/d 8,255

40,332 40,332

April 1 Balance b/d 8,255

(b) What is the purpose of preparing control accounts (2mks)

The purpose of the control account is to check for the accuracy of the general ledger and
correct them.

Question 4
(a) Differentiate between an unpresented cheque and a late lodgement. (4mrks)
An unpresented cheque is the amount of money that was sent to the bank but this hasn’t
been recorded on the bank statement whilst the unpresented cheques are paid to the
suppliers but the bank haven't received it yet.

(b) Explain what a dishonored cheque is (2mks)

A dishonored cheque is a cheque which the payor’s account doesn’t have the sufficient
funds to withdraw from the bank.

(c) Sarah Jones’ cash account was last reconciled on November 30, 2020. The unadjusted
cash balance at December 31, 2020 was $24,457. The bank statement balance at
December 31, 2015 was $27,395. A comparison of the bank statement to the cash
account revealed the following :
● The deposit of $6700 made on December 30, 2020 was recorded by the bank on
January 2, 2021.
● A direct transfer of $3000 was made to the bank account by D. Spencer
● Interest paid by the bank $3.
● Bank service charges for the month were $5.
 ● Cheques issued but not yet presented to the bank as at December 31, 2020 were
cheque no#2000 - for $1,650 and cheque no#2004 - for $5,700
● A cheque previously deposited was returned marked NSF - $350
● One of the cheques that cleared was recorded in the cash book for $5,483. The
cheque was recorded on the bank statement at $5,843 which was the correct
amount. The cheque was for advertising expenses.

Prepare the updated Cash Book to show the adjusted balance. (8 mks)
Updated cash book
Details Amount Details Amount

Starting with the updated cash book balance, draw up a Bank Reconciliation for Dwayne
Ltd as at December 31,2015. (6mks)
Question 5
On August 1, 2007, Karen and Jack decided to merge their business ventures into a partnership
called K and J' s Baked Goods. Each partner brought the following assets and liabilities into the
partnership.

JACK $ KAREN $

Bank overdraft 1,000 Bank 9,650

Creditors 750 Industrial Oven 20,000

Cash 600 Debtors 5,950

Stock 1,550 Bank Loan 5,650

Van 35,000 Stock 2,550

Debtors 7,000 Creditors 1,900

Baking Trays 1,800

a) Prepare the opening journal entry to record the new partnership of K and J's Baked Goods
as at August 1, 2007. (Show all workings) ( 8 marks)

GENERAL JOURNAL

Date Details Folio Debit Credit

August 1 Bank Owing $6,650(5650+1000)

August 2 Creditors $2659(750+1900

August 3 Cash/Bank 10,250(600+96

50)

August 4 Stock $4,100(1,550+

2.550)

August 5 Van $35,000

August 6 Equipment $43,600

August 6 Debtors $12,950

Karen and Jack have agreed that the remaining profit will be shared equally after recording the
following:
Interest on Capital will be 10% per year.
Interest on Drawings will be 5% per year
Salary: Karen will earn $10 000 per year.

b) At the end of the first year of operation, K and J' s Baked Goods recorded a Net Profit of
$30 000.
Drawings were as follows: KAREN - $8 000, JACK - $6 000.
i) Prepare the Profit and Loss Appropriation Account of K and J' s Baked Goods
for the period ended July 31, 2008. ( 7 marks)

$ $ $
 ii) Show how profits would be shared if the partners used the capital sharing ratio
(ratio of their capital balances) (3 marks)

ii) Prepare the current account in columnar format, showing the balance in each
partner’s account (using the equal profit sharing ratio). ( 5 marks)

Current Account

Date Details KAREN$ JACK$ Date Details KAREN JACK$

$

c) Outline TWO advantages that partnership type businesses have over the sole trader.
( 2 marks)
1) Partnership business makes it easier for the business to get enough capital.
2) There will be shared responsibilities with two or more partners.