UNIVERSITY OF CAPE COAST

COLLEGE OF HUMANITIES AND LEGAL STUDIES

SCHOOL OF BUSINESS
DEPARTMENT OF ACCOUNTING
SBU 104 – FOUNDATIONS OF ACCOUNTING
TRIAL QUSTIONS

QUESTION ONE
The following were extracted from the books of BCOM Ltd on 31 December 2018.
Dr Cr
GH¢ GH¢
Purchases
284,000
Sales
496,000
Inventories at 1 January 2018 18,000
Distribution costs 22,000
Electricity 9,500
Telephone 1,600
Irrecoverable debt expense 1,200
Allowance for receivables at 1 January 2018
Wages 84,500 840
Directors’ remuneration 32,000
Administration expenses 40,880
Dividends paid 5,200
Equity Share capital (GH¢1 shares)
5% Loan stock 50,000
Retained earnings at 1 January 2018 25,000
Fixtures and Fittings at cost 98,200 23,700
Fixtures and Fittings, accumulated depreciation at 01-
Jan-18 43,700
Motor vehicles at cost 64,000
Motor Vehicles, accumulated depreciation at 01-Jan-18 18,500
Trade receivables 55,400
Trade payables 57,300
Bank 1,600
Cash 160 _______
716,640 716,640

Additional information:
i) Inventories at 31 December 2018 was valued at GH¢18,226.
ii) Directors’ bonuses for the year ended 31 December 2018 calculated at GH¢1,160 have
not been accounted for.
iii) Distribution costs include a payment of GH¢3,750 for rent for the three months to 28
February 2019.
iv) The company’s depreciation policies are as follows:
• Fixtures and Fittings – Straight line over 5 years.
• Motor vehicles – Reducing balance method at 20% per annum.
• All non-current asset residual values are estimated at zero.

v) The company reviewed the trade receivables at 31 December 2018, and the following
adjustments are required:
• Irrecoverable debts of GH¢450 in addition to those already written off.
• Specific allowance for receivables of GH¢650.
• General allowance of 3% against the remaining receivables.

vi) The interest on the loan stock is outstanding at the year end.

Required:
Prepare a Statement of Profit or Loss account for BCOM Ltd for the year ended 31
December and a Statement of Financial Position as at that date

QUESTION TWO
a) A newly qualified Accountant has prepared draft accounts for a client for the
year ended September 2018, but has not dealt with the adjustments for
accrued expenses, prepaid expenses, irrecoverable debts, allowance for
receivables and depreciation.
Below is the statement of financial position prepared by the newly qualified
Accountant.

Draft statement of financial position as at 30 September 2018 (before

adjustments)
Non-Current assets GH¢ GH¢
Plant and Machinery (Cost) 875,000
Accumulated Depreciation (at 1 October 2017) (427,000)
448,000
Current Assets
Inventory 211,695
Trade receivables 747,055
Cash and bank balance 31,400 990,150
1,438,150

Proprietor’s capital 1,005,350

Current Liabilities
Trade payables 432,800
1,438,150

The newly qualified Accountant has given the following information about
the remaining adjustments:
 • The last fixed bill paid for electricity covered three months period to 31 July
2018. The bill was GH¢34,350.
• Rent of GH¢142,500 for six months to December 2018 was paid in March
2018.
• The trade receivables figure of GH¢747,055 in the draft account is stated
after deducting allowance for doubtful debts of GH¢39,500 from the total
receivable balance of GH¢786,555.
• The trade receivable balance of GH¢786,555 includes a balance of
GH¢3,300 which has been outstanding for 10 months. The client has decided
to write this balance off his books.
• The policy of the client is to allow for receivables on the basis of the length
of time the debt has been outstanding. The aged analysis of trade receivables
as at 30 September 2018 and the required allowance is shown below:
Age of Debt Balance Allowance required
GH¢
0-30 days First 626,375 Nil
31-60 days Next 136,000 20% of balances
Over 60 days Next 24,180 75% of balances
786,555
• Depreciation is to be provided at a rate of 20% per annum on reducing
balance method.

Required:
Calculate the correct balances as at 30 September 2018 for each of the
following:
i) Accrued expenses
ii) Prepaid expenses
iii) Allowance for receivables
iv) Accumulated Depreciation
v) Prepare a revised statement of financial position as at 30 September
2018.

QUESTION THREE
Mr. Wilson is a dealer in spare parts who has not kept proper books of accounts.
As at 31 December 2017, the following balances were available:

Description of Assets GH¢

Cash in hand 1,500
Cash at bank 15,000
Inventories 17,440
Trade receivables 8,540
Trade payables 9,520
Motor Vehicle (at valuation) 45,000
Furniture and Fittings 14,500

The following activities took place during 2018 accounting year.

 • His drawings amounted to GH¢47,400. Wining from a lottery of GH¢5,000
was put into the business.
• He bought extra Furniture for GH¢2,000.
• Furniture and Fittings is to be depreciated at GH¢2,175 for the year.
• As at 31 December 2018 his assets and liabilities apart from Furniture and
Fittings were as follows:
GH¢
Cash in hand 1,000
Bank overdraft 12,000
Inventory 12,845
Trade receivables 5,750
Trade payables 5,290
Motor Vehicle to be valued at 40,000
Prepaid rent 10,000

Required:
i) Prepare the Statement of affairs for December 2017.
ii) Prepare the statement of financial position (showing the movements in
retained earnings made by Mr Wilson) as at 31 December 2018.

QUESTION FOUR
a) Mr. Patrick Mensah, a sole trader, has asked you to prepare the receivable and
payable control accounts and ensure that the closing balances match with the list
of balances. Currently, the closing balances as at 30 October 2017 are as follows:
GH¢
Receivables Control Account 126,845
Payables Control Account 103,240
Receivables list of balances 123,589
Payables list of balances 104,476

On investigation, the following have been discovered:

• A contra entry of GH¢3,250 has not been included in either control account.
• Bad debt of GH¢1,680 has been written off in the list of balances but has not
been included in the receivables control account.
• The sales day book has been overstated by GH¢890 and this has not been
reflected in the control account.
• Purchase returns to Taifa, a supplier of GH¢256 have not been reflected in the
control account.
• An invoice amounting to GH¢981 for Obojo, a customer has been entered in the
sales day book as GH¢891.
• A balance due to Amasaman, a supplier amounting to GH¢1,248 was not
included in the list of balances.
• Payment received from Amrahia, a customer for GH¢2,864 was posted to a
supplier account Manhia mistakenly. The payment was correctly accounted for
in the control account.
• Goods purchased from a supplier Kasoa amounting to GH¢3,126 have been
omitted from the relevant control account.
 • Bad debt recovered of GH¢300 relating to Tantra has not been updated in the
list of balances but has been included in the control account.

Required:
i) Based on the information provided above prepare the Receivables and
Payables Control Accounts for the year-ended 30 October 2017
ii) Prepare a statement reconciling the list of balances with the revised control
accounts for Receivables and Payables for the year-ended 30 October 2017.

QUESTION FIVE
Ama did not keep proper books of accounts. She has provided you with this information
to help in order for you to prepare a statement of profit and loss and a statement of financial
position

The balances as at 1 May 2016 are as follows:

GH¢
Motor vehicle (carrying amount) 4,750
Inventories 956
Trade receivables 2,632
Trade payables 1,745
Cash in hand 50
Cash at bank (overdrawn) 1,693
Capital 4,950

The bank statements for the year to 30 April 2017 are summarised as follows:
GH¢
Payments to suppliers 6,463
Cash takings 5,907
Sundry expenses 763
Motor expenses 505
Rent 1,800
Telephone 135

The balance on the bank statement at 30 April 2017 was GH¢1,144. There were no timing
differences.

You are given the following additional information:

i) Closing inventory is valued at GH¢1,324.
ii) Ama took goods which had a cost of GH¢96 and would have been sold for GH¢124
for her own personal use.
iii) A telephone bill was received on 7 July 2017 for GH¢75, this related to the quarter
ended 30 June 2017.
iv) Rent includes GH¢1,000 paid on 1 January 2017 for the year to 31 December 2017.
v) Ama takes GH¢60 every week out of the takings before banking them. She also
spends GH¢20 every week on petrol for the company van.
vi) Depreciation is to be charged at 15% reducing balance.
vii) Closing trade receivables and payables were GH¢2,072 and GH¢967 respectively.
However, one customer, Caroline, has vanished and her debt of GH¢575 is not likely
to be paid.
viii) Ama always keeps a cash float of GH¢50.
ix) Ama makes sales to cash and credit customers. Customers taking credit always pay by
cheque or bank transfer.

Required:
a) Prepare the statement of profit or loss for ma for the year ended 30 April 2017.
b) Prepare the statement of financial position for Ama as at 30 April 2017.

QUESTION SIX
The following Trial Balance was extracted from the books of SOB
Enterprise, a second hand bags dealer as at 31st December, 2014.
DR CR
GH¢ GH¢
Stock in Trade 120,000
Vehicle (Cost) 150,000
Trade Receivables 80,000

Accumulated Depreciation: Vehicle 30,000

Furniture & Fittings 10,120
Trade Payables 100,000
Drawings 120,000
General Expenses 65,000
Provision for doubtful 2,500
debt
Rate & Rent 14,000
Insurance 5,000

Bad Debt 7,000

Discount Received 25,150
Discount Allowed 15,160

Bank Balance 165,240

Wages & Salaries 250,000
Sundry Expenses 6,150
Vehicle Running Expenses 15,650
Furniture & Fittings 50,600
Repairs to the shop 6,500
Purchases 650,120
Sales 1,079,130
Capital 473,520
1,720,420 1,720,420

The following additional information are provided:

i. Provision for doubtful debts is to be reduced by 10%.
ii. Rate and Rent has been paid in advance by two (2) months. Note
that SOB Enterprise pays GH¢1,000 each month.
iii. Stock in trade as at 31st December, 2014 GH¢80,150.
iv. A bill of GH¢6,150 for vehicle running was outstanding as at 31st
December, 2014.
v. The Enterprise provide depreciation as following.
• Vehicle 20% per annum on straight line bases.
• Furniture and Fittings 20% per annum on straight line basis.
You are required to:
Prepare Income statement for the year ending 31st December 2014 and a
Statement of Financial Position as at that date

QUESTION SEVEN
From the following information, prepare the manufacturing, trading and profit and
loss account for the year ending 31 December 20X6 and the balance sheet as at 31
December 20X6 for the firm of J Jones Limited.

£ £
Purchase of raw materials 258,000
Fuel and light 21,000
Administration salaries 17,000
Factory wages 59,000
Carriage outwards 4,000
Rent and business rates 21,000
 Sales 482,000
Returns inward 7,000
General office expenses 9,000
Repairs to plant and machinery 9,000
Stock at 1 January 20X6:
Raw materials 21,000
Work in progress 14,000
Finished goods 23,000
Sundry creditors 37,000
Capital account 457,000
Freehold premises 410,000
Plant and machinery 80,000
Debtors 20,000
Accumulated provision for depreciation on plant and 8,000
machinery
Cost in hand 11,000
984,000 984,000
Make provision for the following:
a. Stock in hand at 31 December 20X6:
Raw materials £25,000
Work in progress £11,000
Finished goods £26,000.
b. Depreciation of 10% on plant and machinery using the straight-line method.
c. 80% of fuel and light and 75% of rent and rates to be charged to
manufacturing.
d. Doubtful debts provision: 5% of sundry debtors.
e. £4,000 outstanding for fuel and light.
f. Rent and business rates paid in advance: £5,000.
g. Market value of finished goods: £382,000.