ACCOUNTING 2

5
CHOU EDUCATION INSTITUTION EXAMINATION BOARD
PRE MOCK EVALUATION
DECEMBER 2017 ORDINARY LEVEL

SUBJECT TITLE ACCOUNTING

PAPER NO 2
SUBJECT CODE 5

THREE HOURS
INSTRUCTIONS;
Answer any five (5) questions. All questions carry equal marks.
In all cases involving calculations, you are advised to show all the steps in your working.
You are reminded of the necessity for good English and orderly presentation of your
answer.
Calculators and formula booklets are allowed.
Question O
ne.

STEADY MAMA is a small manufacturer of ¨SO FRESH DRINK¨ which is produce and sold to
customers:
The following information is taken from the books for the year ended, 31 December 2015.

FCFA (000)
Materials:
Stock 1/1/2015 32,16
Purchases 38,942
Stock 31/12/2015 2,964
Work in progress at factory cost:
1 Jan 2015 1,748
31 Dec 2015 1,894
Factory expenses 3,656
Office expenses 1,450
Depreciation of plant and machinery 6,500
Stock of Finished Goods:
1 Jan 5,064
31 Dec 7,138
Factory power 3,670
Advertising 1,034
Motor vehicles repairs 1,426
Sales commission 4,630
Repairs to machinery 2,160
Rent and rate 6,400
Sales 145,600
Light and heat 1,600
salaries 10,000

You are required to prepare the manufacturing accounts, trading profit and loss account for the year
ended 31st December 2015, taking into account the following adjustment:

- Light and heating ¾ for factory and ¼ for office

- Rent and rates ¾ for factory and ¼ for office
- Salaries 6,000,000 FRS for factory and 4,000,000 FRS for office. (20mks)

Question Two.

A) Explain the following concepts as used in accounting:

a) Accruals concept b) Prudence concept c) prepayment concept

d) Going concern concept e) Double entry principle. (2mks each)

B) The following balances were obtained from the books of CHARGE MAN & MIMBO
MAN on June 30, 2015.

FCFA 000
Ordinary share capital 300,000
Retained profit 56,766
6% debenture 90,000
Stock at 1/6 350,000
Gross profit 280,000
Stock at 30/6 150,000
Cost of goods sold 145,000
Debtors 63,288
Accrued rents 4,880
Bank and Cash balance 46,780
Sundry creditors 69,460
Plant and machinery 211,800

Required;
Calculate the following:
a) Current Ratio
b) Working Capital
c) Acid test ratio
d) Rate of inventory turnover( in times)
 e) Return On Capital Employed (ROCE)(2mks each)
Question Three.

Johnny Bosco is the proprietor of a shop selling paintings and ornaments. For the
purposes of his financial statements he wishes the business to be divided into two
departments.
The following balances have been extracted from the nominal ledger at 31 st August
2013.

000 Fcfa DR 000 Fcfa CR

Sales; Department A 75000
Department B 50000
Inventory; Department A, 1st September 2012 1250
Department B, 1st September 2012 1000
Purchase ; Department A 51000
38020

Wages; Department A 7200

Department B 6800

Picture farming cost 300

General office salaries 13200
Fire insurance Building 360
Lighting and heating 620
Repairs to premises 175
Internal telephone 30
Cleaning 180
Accountancy charges 1490
General office expenses 510

Additional Information:
Inventory at 31st August was valued at; Department A, 1410000 FRS
Department B, 912000 FRS.
The proportion of total floor area occupied by each department was;
Department A, two – fifths
Department B, three – fifths.
All expenses should be shared using the apportionment basis above.
Required;
Prepare Johnny Bosco departmental income statement for the year ending 31 st August 2013.
Question four

Mrs. Chika has been trading for some years as a wine seller. The following list of balances
has been extracted from his ledger as at 30th June 2015.

Elements 000 fcfa Element 000 fcfa

Building at cost 30000 Capital 49900
vehicle 4000 Provision for bad debt 330
purchases 12340 Sales 20650
Debtors 1400 Commission 380
Machine at cost 20000 Provision for depreciation ;
Furniture at cost 2400 Building 1500
Stock at start 295 Machine 4000
Cash 550 Vehicle 800
Bank 2000 Furniture 100
rents 500 Return outward 210
Lighting 450
Water bills 150
Wages 1300
Drawings 1600
Car repairs 700
Total 79540 Total 79540

Additional information:
A closing inventory 1260000frs
B provision for bad debt is to be increased by 5 percent of total debtors.
C provision for depreciation to be: 5 percent on machines and vehicle at cos. 10 percent on
building at cost and 50000frs on furniture.
D commission prepaid 20000frs
E wages owing 1550000frs
F out of 700000frs for car repairs the proprietor used 200000frs for the year for private
reasons.
Required:
Prepare the income statement of Mrs Chichi for the period ended and a balance sheet as at
that date.