BARBADOS COMMUNITY COLLEGE cONU.*.

UW;ry

DIVISION OF COMMERCE
8 2a05 "

ASSOCIATE DEGREE IN ARTS & APPLIED ARTS -

ACCOUNTS

ACCT 100 - PRINCIPLES OF ACCOUNTS 1

FINAL EXAMINATION

DATE: THURSDAY, 9 DEC 2004 TUTORS; MR 0 DOYLE

MR B COWARD

TIME ALLOWED: 2 HOURS MR A STE\^NSON

(3:30 - 5:30 PM) MRS L GRAY-BOWEN
MS D SKEETE
MS P BXJRKE

INSTRUCTIONS TO CANDIDATES:

(a) Write your Name and ID Number on each page of your answer
sheets.

(b) Answer ALL questions .

(c) Draw a line through any rough work. Write legibly and pay
particular attention to clarity of expression, spelling,
punctuation and layout.

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO

 QUESTION 1

The following trial balance has been prepared for Amfield Ltd for the year ended 31 October
1999.

Dr Cr
$000 $000
Buildings at cost 2,000
Motor vehicles at cost 70
Land at cost 600
Furniture and equipment at cost 1,000
Fixed assets replacement reserve 100
Share premium account 40
Cash in hand 140
Stock at 1 November 1998 700
Rates 100
Advertising 3q
Insurance jq
Wages and salaries 75O
Heating and lighting gO
Discounts received 130
Profit and loss account at 1 November 1998
100
Provision for doubtful debts
40
Returns inward 30
General expenses 20
Telephone 40
Sales
7,900
Creditors
320
Bank
300
Debtors 1 0^0
Purchases 3 5O0
Debenture interest '^0
Bad debts 600
Provisions for depreciation at 1 November 1998
Furniture and equipment 0^0
Buildings
Motor vehicles
10% Debentures
500
6% $1 Preference shares
300
$2 Ordinaiy shares
1.240
11.740 11.740

turnover
You have also been provided with the following notes:

1. Stock at 31 October 1999 was valued at $900,000.

2. The advertising expenditure included $10,000 which relates to a newspaper

advertising campaign to be run during November and December 1999.

3. There are wages and salaries outstanding of$70,000 for the year ended 31 October
1999.

4. The provision for doubtful debts is to be increased to $50,000.

5. Depreciation is to be provided for as follows:

Motor vehicles at 20% of written down value.
Furniture and equipment at 20% of written down value.

6. Buildings are depreciated at 10% of cost.

7. The directors have declared an ordinary dividend of40 cents per share.

8. An additional $150,000 is to be transferred to the fixed assets replacement reserve.

9. Corporation tax of$700,000 is to be provided for the year.

Required:

Prepare the following statements, using vertical presentation:

(a) the trading and profit and loss account for the year ended 31 October 1999; and
(b) the balance sheet as at 31 October 1999.
(30 Marks)
You are advised to show workings where appropriate.

TURNOVER
 1

QUESTION 2

Lucy Kim is in the luxury car hire business. The following information came from her Fixed
Assets Register on 1 June 1994:

Limousine Number Cost Price Date ofPurchase

$
KVD 382H 31 250 1 June 1990
B123NHY 25 000 23 March 1991
978GPLK 27 500 26 August 1991
C149 USH 30 000 23 January 1993

On 18 May 1995, a new limousine, number MVD 346J, was purchased on credit from
Archibald Ltd for $35 000 and B123 NHY was sold for $1 200 cash.

All limousines are depreciated at 10% per annum using the straight line method. They have a
full year's depreciation charged against them each financial year, regardless ofthe date of
purchase, except in the financial year ofsale, when no depreciation is charged.

Required:

For the year ended 31 May 1995 draw up:

(i) the Limousines Account;

(ii) the Provision for Depreciation of Limousines Account;

(iii) the Disposal of Limousine Account.
(20 Marks)

QUESTIONS

(i) The table shows opening and closing balances for the Rent Receivable account.

start of year end of year

$ $
rent received in advance 4200 1600

rent due in arrears 2000 2400

During the year, $111 000 rental income was received.

What is the total rent receivable for the year?

A $110 600 B $111 000 C $112 800 D $114 000

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(ii) A company uses the straight line method of depreciation for all its fixed assets. On
1 January, the company bought machineiy on hire purchase. The cash price was
$115,000 and the interest for the year is $19 550. The estimated useful life of the
machinery is five years with no residual value.

What is the charge for depreciation for the year ended 31 December?

A $19 090 B $23 000 C $26 910 D $42 550

(iii) A business sells some of its stock for $80 on credit to a customer. The stock
originally cost $50.

Which statement actually reflects the effect ofthis transaction on the Balance Sheet?

current assets owner's capital

A decrease by $30 decreases by $30
B decrease by $30 increases by $30
C increase by $30 increases by $30
D increase by $30 decreases by $30

(iv) The table shows information relating to a company's fixed assets.

$
cost at 1 January 2002 10 500

accumulated depreciation at 1 January 2002 4 900

purchases for the year ended 31 December 2002 2 500

disposals for the year ended 31 December 2002 700

Depreciation is 25% per annum on the reducing balance basis.

What is the depreciation charge for the year?

A $1 850 B $2 025 C $2 200 D $3 250

TURN OVER
(v) A business that purchases a shop incurs the following costs.

$
purchase price ofthe shop 680 000

legal fees incurred in the purchase ofthe shop 7 200

cost of initial stock 12 500

cost of installing air conditioning 47 300

Which amount will be capitalized as the cost ofthe shop?

A $680 000 B $687 200 C $734 500 D $747 000

(vi) Which ofthe following is the definition ofa business as a going concern?

A The assets owned by the business exceed its liabilities.

B The business has accumulated revenue reserves.

C The business is currently liquid and able to pay its creditors.

D The business will continue in operational existence for the foreseeable future.

(vii) A sole trader pays private expenses from the business bank account and records them
as drawings.

Which accounting principle is applied?

A business entity
going concern
matching
prudence

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(viii) A customer paid a deposit in advance for goods to be supplied at a later date.

How should this be recorded in the seller's books?

debit credit
A cash customer

B cash sales

C customer prepayment

D customer sales

(ix) A trial balance at 30 April 2003, before making end of year adjustments, showed:
debit credit
$ $
Trade debtors 17 800

Provision for doubtful debts 580

At 30 April 2003 it was decided to write offa bad debt of$800 and to make a
provision for doubtful debts of2% oftrade debtors. During the year an amount of
$200 was received from a customer relating to a debt that was written off in the year
ended 30 April 2002.

What was the net expense to be charged to the Profit and Loss Account for the year
ended 30 April 2003?

$360 B $560 $940 D $1 140

(Total 10 Marlis)

END OF EXAMINATION