THE INSTITUTE OF ADMINISTRATION AND COMMERCE

FINANCIAL ACCOUNTING 1 OCTOBER 2021 COURSEWORK

DUE 31 AUGUST 2021 TOTAL MARKS: 100

INSTRUCTIONS TO CANDIDATES

1. Answer ALL questions

2. Answers should be submitted in typed softcopy
3. Use times new roman fond 12, line spacing 1.15
4. Observe Proper citing and acknowledgement of sources used
5. The cover Page should have: Name of Institute, National ID, Student Number,
Subject, a box indicating answered questions

1
QUESTION 1 (30 marks)

The following balances will be extracted from the books of Zama Zama Trading as at
30 June 2019

$
Sales 1 291 500
Purchases 444 150
Carriage inwards 10 080
Carriage outwards 11 658
Salaries/ wages 189 000
Interest charges 18 900
Licences 10 080
Bad debts 13 548
Investment income 33 204
Rent and rates expenses 151 200
Transport 27 720
Telephone charges 9 450
Cash on hand 7 248
Cash at bank 132 300
Debtors 70 932
Creditors 114 912
Drawings 25 200
Premises 711 900
Furniture and fittings 157 500
Inventory at 01/07/2018 198 450
Inventory at 01/ 07/ 2019 78 750

REQUIRED

a) from the above information determine the capital of Zama Zama Trading from
the pre-closing trial balance. (10 marks)

b) Prepare the statements of profit or loss and other comprehensive income for
the year-ended 30 June 2019. (10 marks)

c) Prepare the statement of financial position as at 30 June 2019. (10 marks)

2
QUESTION 2 (25 marks)

a) Movawear (Pvt) Ltd bought equipment from Germany at a cost of $1 100 000
plus import duty of 20%. Freight charges were $165 000. Installation costs
amounted to $192 500 which included $27 500 for test runs and hosting the
commissioning ceremony. The expected life span of the equipment is ten
years with an expected salvage value of
$275 000.

REQUIRED
Calculate the depreciation of the equipment assuming a straight line basis (10
Marks)

b) Beauty Salon had the following information as regards the working capital of
its business.

$
Networking Capital 412 500
Chemicals and consumables 82 500
Trade creditors 247 500
Bank overdraft 55 000
Debtors 275 000
Cash on hand 2 750
Rent 82 500
Lights and water 24 750
Wages 33 000
Trading inventory ?

REQUIRED
Calculate the value of the trading inventory (10 marks)

c). Extracts from the balance sheet of Beauty Salon showed the following:

$
Opening Inventory 110 000
Bank overdraft 55 000
General reserve 137 500

3
 Equipment 440 000
Capital 275 000
Retained profits 82 500
5% loan at 10% p.a 110 000

REQUIRED
Calculate the equity of Beauty Salonfrom the information given. (10 marks)

QUESTION 3 (20 marks)

You are employed as an accounts clerk and the following information is made
available to you.

$
Opening balance: Debtors 225 000
Creditors 90 000
Credit sales 450 000
Cash sales 120 000
Debtors cheque receipts 375 000
A credit customer overpaid 7 500
Debtors cheques dishonoured 52 500
Credit purchases 240 000
Discount received 30 000
Discount allowed 7 500
Bad debts 22 500
Provision for bad debts 18 000
Purchases returns 45 000
Sales returns 30 000
Closing balances: Debtors 81 000
Debtors (7 500)
Creditors 255 000

4
REQUIRED
Prepare the debtors control account and the creditors control account.
QUESTION 4 (15 marks)

The trial balance of Chigutiro Bottlestore did not balance and a suspense account
was opened for the difference.

On further investigations the following errors were revealed:

i) A debtors cheque payment of $3 375 had been credited to the debtors ledger
as $3 825.
ii) Machinery spares for stock of $25 000 had been expensed.
iii) Depreciation charges for machinery of $62 500 had been credited to the
assets account as $6 250.
iv) Sales ledger control account was overcast by $2 500.
v) Sales returns amounting to $7 500 had been omitted.
vi) Rent income of $5 000 had been recorded as rent expense.
vii) Petty cash balance had been overstated by $500.00

REQUIRED
a) Prepare journal entries to correct the above errors. Narrations are required.
(10 marks)
b) Prepare the suspense account showing the original balance. ( 5 marks)

QUESTION 5 (10 marks)

a) Name any 5 errors that are not revealed by a trial balance even if it balances.
(5 marks)

b) Name any five books of primary entry that you know. (5 marks)

END OF PAPER