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DIVISrON OF COMMERCE

ASSOCIATE DEGREE IN ARTS/APPLIED ARTS

ACCT lee - PRINCIPLEI OF ACCOUNTING

FINAL EXAMINATION

DATE: THURSDAY, lo'*" December 2009 TUTORS: MS R SMALL

MS T MOTTLEY
MR A STEVENSON
MRATULL
MR W CAMPBELL
MS J BURTON
TIME ALLOWED: 2 HOURS
(3:30-5:30 PM)

INSTRUCTIONS TO CANDIDATES:

a) Write your NAME and ID Number on each page of the answer booklet.

b) This examination paper has five (5) pages which includes the cover page. There are
three (3) questions. YOU ARE REQUIRED TO ANSWER ALL QUESTIONS

c) Non-programmable calculators are permitted.

d) 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

I
Question 1

The following Trial Balance has been extracted from the books of the Zena
PLC as at 31 December 2008:

Trial Balance as at 31 December 2008

DR CR
$ $
Ordinary Share Capitai (50c per share) 240,000
7% Preference Share Capital ($1 per share) 150,000
10% 20-year Loan Notes (Debentures) 80,000
Profit 81 Loss Account -1 January 2008 160,000
General Reserve 60,000
Land Building at cost 630,000
Plant 81 Machinery at cost 475,000
Motor Vehicles at cost 380,000
Accumulated Depreciation:
Plant 81 Machinery -1 January 2008 188,500
Motor Vehicles -1 January 2008 140,000
Inventory (Stock) -1 January 2008 125,000
Purchases 8t Sales 2,400,000 3,500,000
Bad Debts 6,000
Loan Interest 5,000
Wages & Salaries 255,000
Light & Heating 116,000
Sundry Expenses 110,000
Provision for doubtful debts 40,000
Trade Debtors (Accounts Receivable) 215,000
Trade Creditors (Accounts Payable) 135,000
Cash 9,000
Bank 15,000
Returns 20,000
Share Premium 6,000
Interim Preference Dividends 8^500
4734.500 4734.500

Additional Information was as follows:

(i) Inventory (Stock) unsold at 31 December 2008 was valued at

$195,000.

(ii) Sundry Expenses included $9,500 in respect of insurance paid

for the three montFis^ended March 31, 2009.

(iii) Light 81 Heating unpaid for the period ended 31 December

2008 was $13,000.
TURNOVER

ACCT 100 FINAL - Thursday, 10 December 2009 (3:30 - 5:30 PM)

Cutters Limited's policy is to depreciate aii appliances owned at the end of the
financial period at a rate of 15% using the straight line method. A full yeafs
depreciation is charged in the year of acquisition and no charge is made in
the year of disposal.

Required:

(a) Calculate the value of the cheque paid by Cutters Limited

for Deep Freeze B. (1 mark)
(b) Prepare the Appliances Account for the year ended
December 31,2008. (4 marks)

(c) Prepare the Provision for Depreciation Account on the

Appliances for the year ended December 31, 2008.
(6 marks)

(d) Prepare the Disposal Account for Refrigerator I, clearly

showing the profit/loss made on the appliance disposed.
(3 marks)

(e) Identify another method that Cutter Limited could have

used to depreciate Its assets at the end of the period.
(1 mark)

Question 3

Over the past few years, DA3AYS & Sons Limited has increased its sales to
credit customers, which in turn led to fluctuations in debtors and uncertainty
in the collection of funds. The information below relates to the business for
the past three years:

Year Accounts Receivables Bad Provision for

ended (Inclusive of Bad Debts) Debts Doubtful Debts %
Dec 31, 2006 $26,325 $4,675 6%
Dec 31, 2007 $49,490 $6,480 9%
Dec 31, 2008 $50,140 $3,640 4%

Additional Information:

The Provision for Doubtful Debts Account's balance at the December 31, 2005
was $2,089.

TURN OVER

ACCT 100 FINAL - Thursday, 10 December 2009 (3:30 - 5:30 PM)

 Required:

(a) Using the information above, prepare the following for the
business for each of the thre^ stated;

(i) The Provision for Doubtful Debts Account.

(10 marks)
(ii) A Profit and Loss Extract. (4 marks)
(ill) A Balance Sheet Extract. (5 marks)
(b) A decision was made during 2008 to create a provision for
discounts allowed at a rate of 2% on the accounts
receivables based on the information above.

Prepare the provision for discount allowed account for the

year ended December 31, 2008.
(3 marks)

(c) Prepare ail journal entries to record the following

transaction:

During 2009 a customer, H.B Graham, paid cash of $215 to

the business. This amount was for an outstanding debt
owed to the business since 2004, which was written off in
2007. (3 marks)

END OF EXAMINATION

ACCT 100 FINAL - Thursday, 10 December 2009 (3:30 - 5:30 PM)