UNIVERSITY EXAMINATIONS 2021/2022

SCHOOL OF BUSINESS
ORDINARY EXAMINATION FOR BACHEOR OF COMMERCE
/BPL/IBM
ACC 1101: INTRODUCTION TO ACCOUNTING I
PART TIME

DATE: AUGUST 2022 TIME: 2 HOURS

INSTRUCTIONS: Answer ALL QUESTIONS
QUESTION ONE
(a) “For sound management of a business organization all you need is proper system of
accounting. Nothing else matters”. This is a statement made an accounting professor
while speaking to delegates in an investors’ conference.
Required:
Assess the validity of the above statement (10 Marks)
(b) Explain the use of the following source documents
i. Invoice
ii. Debit note
iii. Goods dispatch note
iv. Purchase requisition
v. Quotation (10 Marks)

QUESTION TWO

The following balances were extracted from the general ledger of Kajuju M’Kirima, a sole
trader, as at 31 March 2022:

Sh.
Bank overdraft 1,164,800
Cash in hand 49,140
Drawings 1,456,000
Furniture and fittings 1,176,000
Office equipment 1,848,000
Provision for depreciation as at 1 april 2021:
Furniture and fittings 235,200

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 Office equipment 462,000
Bad debts 36,400
Advertising 520,520
15% loan 1,400,000

Purchases 14,133,280
Sales 27,385,400
Loan interest as at 1 April 2021 157,500
Returns inwards 218,400
Office expenses 760,760
Delivery expenses 1,164,800
Wages and salaries 8,010,520
Stock as at 1 April 2021 3,657,080
Debtors 1,419,600
Creditors 1,160,600
Capital ?

Additional information:
1. Stock as at 31 March 2022 was valued at Sh.4,360,720.
2. Accrued wages as at 31 March 2022 amounted to Sh.251,160.
3. Debtors include an amount of Sh.39,200 which was not expected to be recovered.
4. Interest on loan is paid on a quarterly basis. Interest in respect of the quarter ended 31
March 2022 is outstanding.
5. Kajuju M’Kirima withdrew goods for her personal use amounting to Sh.252,000.

6. Depreciation is to be provided on the reducing balance basis as follows:

- Furniture and fittings - 20% per annum
- Office equipment - 25% per annum
7. Included in wages and salaries is Sh.75,600 paid to employees for repairing the roof of
Kajuju M’Kirima’s private residence.

Required:
(a) Statement of profit and loss for the year ended 31st March 2022. (8 Marks)

(b) Capital as at 31 April 2021. (4 Marks)

(c) Statement of Financial position as at 31 December 2022 (8 Marks)

QUESTION THREE
The following transactions are in respect of purchases and sales as recorded by ShumaShuma a steel
bars dealer, during the month of June 2022:

June
2 Bought 125 Steel bars at shs.3,200 each from Tononoka Ltd on credit.
3 Sold 50 steel bars cash at Sh. 4500 each

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 4 Sold 80 Steel bars at shs.5,300 each to Keya Hardware on credit
5. Keya hardware paid Sh. 200,000 in cash
9. Paid Tononoka Ltd Sh. 100,000 in cash
9 Returned 20 Steel bars at their original cost to Tononoka Ltd.
13. bought 150 Steel bars cash at Sh. 2800 each
14. Sold 200 steel bars cash at Sh. 4800 each
14. Bought 100 Steel bars cash at Sh. 2800 each
14 Bought 30 Steel bars at shs.3,000 each from Devki Ltd on credit
15 Sold 120 steel bars cash at Sh. 4800 each
16 Bought 200 Steel bars cash at Sh. 2900 each
17 Sold 50 steel bars for Sh. 4600 receiving payment by cheque
18 Sold 150 Steel bars at shs.5,000 each to Wote Enterprises on credit
21 Accepted back 25 Steel bars from Keya Hardware at their original cost
22 Wote Ltd paid their outstanding debt by cheque
23 Bought 35 Steel bars at shs.3,100 each from Devki Ltd on credit.
24 Issued a cheque of Sh. 300,000 to Devki Ltd
25 Returned 5 bars bought on 14th from Devki Ltd at their original cost
26 Sold 20 steel bars at shs.3500 each to Dafala Enterprises on credit
28 Sold 100 Steel bars at shs.5,500 each to Wote Enterprises on credit
29 Issued a cheque of Sh. 100,000 to Tononoka Ltd
30 Accepted 20 bars from Wote Ltd at their original cost

Required:
(a) The necessary entries in books of original entry (including cash book) to record the above
transactions. (10 Marks)
(b) The relevant accounts in their respective ledgers to record the above transactions
(6 Marks)
(c) A trial balance as at 30 June 2022 (4 Marks)