O Level Accounts Q Answers 21 June 2012

Table of contents
Chapter Page
CHAPTER 1....................................................................................................6
Ledger entries..................................................................................................6
CHAPTER 2.................................................................................................10
Bank Reconciliation Statements...................................................................10
CHAPTER 3.................................................................................................15
TRIAL BALANCE.......................................................................................15
CHAPTER 4.................................................................................................16
CAPITAL AND REVENUE EXPENDITURE............................................16
CHAPTER 5.................................................................................................20
DEPRECIATION AND PROVISION FOR DEPRICIATION....................20
CHAPTER 6.................................................................................................21
BAD DEBTS AND PROVISION OF BAD DEBTS...................................21
CHAPTER 7.................................................................................................22
Statement of comprehensive income............................................................22
CHAPTER 8.................................................................................................28
Turn-up College “O” Level accounts questions and answers Page 1

CONTROL ACCOUNTS.............................................................................28
CHAPTER 9.................................................................................................31
SUSPENSE ACCOUNTS AND ERRORS..................................................31
CHAPTER 10...............................................................................................38
INCOMPLETE RECORDS..........................................................................38
CHAPTER 11................................................................................................47
Accounts for Non-profit making organization..............................................47
CHAPTER 12...............................................................................................51
Partnership Accounts....................................................................................51
CHAPTER 13...............................................................................................58
RATIOS........................................................................................................58
CHAPTER 14...............................................................................................61
MANUFACTURING ACCOUNTS.............................................................61
CHAPTER 15...............................................................................................65
DEPARTMENTAL ACCOUNTS................................................................65
CHAPTER 16...............................................................................................69
COMPANY ACCOUNTS............................................................................69
CHAPTER 17...............................................................................................74

AMALGAMATION OF BUSINESS...........................................................74
CHAPTER 18...............................................................................................75
Answers to chapter One................................................................................75
CHAPTER 19...............................................................................................78
ANSWER TO CHAPTER 2.........................................................................78
CHAPTER 20..............................................................................................83
Answers chapter 3........................................................................................83
CHAPTER 21...............................................................................................84
Answers to chapter 4.....................................................................................84
CHAPTER 22..............................................................................................88
CHAPTER 23..............................................................................................90
Answer to Q1a).............................................................................................90
CHAPTER 24..............................................................................................92
ANSWERS TO CHAPTER 7.......................................................................92
CHAPTER 25............................................................................................103
Answers to chapter Chapter 8.....................................................................103

CHAPTER 26............................................................................................107
Answers to chapter 9...................................................................................107
CHAPTER 27............................................................................................115
Answers to Chapter 10................................................................................115
CHAPTER 28............................................................................................128
Answers to chapter 11.................................................................................128
CHAPTER 29............................................................................................138
CHAPTER 30............................................................................................149
CHAPTER 31.............................................................................................152
Answers to CHAPTER 14........................................................................152
CHAPTER 32............................................................................................159
CHAPTER 33............................................................................................166
CHAPTER 34............................................................................................173

Acknowledgements
I would like to express my gratitude to the members of staff and other outside individuals who
researched on the content of this book. I am also grateful to my Secretary Crystabell
Mudzingwa who typed the manuscript.
We have taken every effort to try and get hold of the copyright holders of any information we
have reproduced without acknowledgement. We will appreciate the help from anyone to enable
us contact the copyright holders whose permission we have not yet obtained.
S. Madzingira
Director

CHAPTER 1
Ledger entries
1. For each of the following transactions state the account to be debited and the
account to be credited.
(i) Bought office furniture from Z furnishers for $l000.
(ii) Paid S Ncube by cheque $140.
(iii) Bought paper, pins and pencils form Ezo stationers for $110.
(iv) Sold goods to J. Piggy for $1800
(v) Sold old office furniture to H. Lim for $500-
(vi) Bought Delivery Van for $7000- from Fax motors
(vii) J. Peg returned unsatisfactory goods worth $140.
(viii) An amount of $350-owed by a debtor R Clemence was written off as irrecoverable
(ix) Paid rent by cheque $150.
(x) Charged P. Sithole a debtor interest on an overdue account of $70.
2. The ledger accounts of N. Gwaze had been balanced.
Look at the balances brought down. For each one name the account balanced, the amount of the
balance and state whether the balance is debit or credit.
(i) The business owes F. Jani $200
(ii) Rent payable $600- was owing
(iii) Chikozho owes the business $700
(iv) There was a bank overdraft of $150
(v) Insurance of $320- had been prepaid.
(vi) There was a bank balance of $180.
3. The following accounts appeared in the ledger of T. Zone on 1 June 2004.
M. Kudzai $600- Cr

C. Sibanda $720-DR
During the month of June the following transactions took place.
June 2 C. Sibanda settled her account in full less 2 ½ % discount.
June 4. Sold good to C. Sibanda $1200 less 25% trade discount
June 6 Sent a cheque to M. Kudzai for $550 in full settlement of balance owing on 1 June.
June 9 C. Sibanda returned unsatisfactory goods worth $200 from consignment of 4 June
June 12 Bought goods on credit from M. Kudzai for $2600- less 30% trade discount
June 14 Sold further goods to C. Sibanda for $1850-net
June 17 Returned unsatisfactory goods worth $200 from consignment of June 12
June 19 Sibandas cheque was returned by the bank marked “Refer to Drawer’
June 23 Sent a cheque to M. Kudzai for $800 less 5% cash discount
June 26 Sibanda paid cash $1960.
Required
(a) Record the above transactions in the accounts of M. Kudzai and C Sibanda balance the
accounts at 30 June 2004.
(b) State the ledgers in which you will find M Kudzai and C. Sibanda.
4. On 1 March 2004 Gina had the following balance in her Stationery account
Stationery $150- Dr.
During the month of March the following transactions too place.
March 4 Bought stationery worth $260- on credit from R.B stationers.
March 7 Returned unsatisfactory stationery worth $35.
March 10 Bought stationery cash $190.
March 14 Paid $380 by cheque for stationery.
On 31 March 2004 stock of stationery was valued at $220.
Required: Record the above transactions in the stationery account balance it and show the
transfer to the Profit & Loss account.

Pay special attention to dates and detail.
Q5
K. Katanga owns properties which he lets out to tenants at a total rent of $10 000- per annum.
The following balances were taken from his books on 1 January 2001.
$
Land & Buildings (at cost) $200 000
Repairs owing $500
Rent Receivable owing 700
During 2001, the following transactions took place

Repairs paid by cheque $2160
Rent received by cheque $9720
Buildings were sold for $235000- on 31 December 2001 for cash. At 31 December 2001, there
was rent receivable paid in advance of $250 and repairs owing of $330-
Required
(a) Land & Buildings Account
(b) Repairs Account
(c) Rent Receivable Account
Q6
Owen is a customer of Godfrey and the following transactions too place.
2002.
$
Nov 1 Balance owing by Owen $5 000-
Nov 4 Goods supplied to Owen worth $3 500- less 25% trade discount
Nov 12 balance owing on 1 November paid by cheque less 5% cash discount
Nov 14 Further good were supplied to Owen for $2100- net

Nov 22 Owen was informed that the trade discount on goods supplied on 4 November should
have been 20%
Nov 27 Owen paid by cheque $2350.00
Nov 30 Owen was unable to pay, but offered Furniture at an agreed value of $1900
Required
(a) Prepare Owen’s account in Godfrey’s ledger and balance it on 30 November 2002.
b) From the following details, prepare Mullers’ stationary account for the month of June
2010 and balance it showing the amount transferred to Profit & Loss account.
June 1 Stock of unused stationery $1 200
June 14 Bought stationery by cheque $2 900
June 24 Bought Stationery on credit form Compt Stationers for $1 870
June 30 Stock of unused Stationery $900

Q7
The following accounts appeared in the books of M. Moon
Bax a/c
2006 $ 2006 $
Mar 3 Bank (ii) 1 200 Mar 1 Balance (i) b/d 1 280
Mar 3 Discount (iii) 80 Mar 13 Purchase (v) 960
Mar 19 Returns (iv) 130
Mar 31 Balance (vi) c/d 830 _____
2 240 2 240-
Insurance A/c Bal b/d
2006 2006
Jan 1 Balance (vii) b/d 660- Dec 31 Profit & Loss (ix) 1 440
Sept 30 Bank (viii) 900- Dec 31 Balance (x) c/d 120
1 560- 1 560
Bal b/d 120
(a) Describe the transactions or information represented by each of the entries (i) to (x)
(b) In which ledger would you find Bax account
(c) Where exactly in the Statement of Financial Position would you find the balance of the
insurance accounts.

CHAPTER 2
Bank Reconciliation Statements
Q1. The following is the cash book (bank columns only) of Mugijima for July 2006.
$ $
July 1 Balance 1 230 July 6 B. Bridges 0001 610
July 3 N. Soko 420 July 11 Water Eng 0002 550
July 13 J. Samuels 930 July 14 Drawings 003 1 040
July 19 M. Rumbidzai 1 710 July 19 N. Noel 0004 870
July 26 S. Tonderai 1 990 July 23 City Council 0005 695

July 28 Purchases 0006 1 445
__________ July 31 Balance 1 070
6 280 6 280
He received the following statements from his bank on 1 August 2006.
DATE DETAILS DEBIT CREDIT BALANCE

July 1 Balance b/ $ $
July 4 Deposit d 420 1 230
July 7 0001 610 1 650
July 12 0002 550 1 040
July 14 Deposit 930 490
July 16 Stop order- HTC 190 1 420
July 19 0003 1 040 1 230
July 22 Dividends Man 210 190
July 24 Credit Transfer 1 860 400
July 29 0006 1 445 2 260
July 30 Charges 360 815
455
Required
(a) Bring the cash book up to date to show a corrected balance on 31 July 2006.
(b) Prepare a bank reconciliation statement correctly headed to show why the corrected cash
book balance still does not agree with the Bank Statement balance on 31 July 2006.

Q2. The following is the cash book (bank columns only) for Phenduka for the month of
August 2010.
$ $
Aug 4 M. chino 1 320 Aug 1 Balance b/d 1 800
Aug 8 Curry Ltd 1 150 Aug 6 Essoltd 0011 540
Aug 12 Casper 910 Aug 9 Purchases 0012 990
Aug 16 Dahwa 790 Aug 12 Drawings 0013 1 410
Aug 20 T Shiri 1 360 Aug 18 Miller 0014 885
Aug 22 N. Njiva 510 Aug 22 T. Duke 0015 975
Aug 24 Kadimba 290 Aug 26 Purchases 0016 1 680
Aug 27 Desai 1 375 Aug 29 Stefan 2 710
Aug 31 Balance 3 285 0017 _________
10 990 10 990
On 31 August the received the following statement from his bank
DATE DETAILS FO DEBIT CREDIT BALANCE

Aug 1 Balance b/d $ 1 800 $
Aug 9 Deposit 1 320 480 D
Aug 7 0011 540 1 020 D
Aug 10 0012 990 2 010 D
Aug 12 Deposit 1 150 860 D
Aug 15 Deposit 910 50
Aug 16 Stop order B.IC 830 780 D
Aug 17 0013 1410 140D
Aug 19 Deposit 790 1 290D
Aug 22 Dividends S.N 610 790 D
Aug 23 Deposit 1 360 570
Aug 24 Credit Transfer J.T 1 240 1 810
Aug 26 0016 1680 780D
Aug 28 Dishonoroued cheque 910 1 220D
Aug 30 Bank charges 440
Required
(a) Bring the cash book up to date starting with the balance of $3285-
(b) Prepare a statement under its proper title to reconcile the difference between your
amended cash book balance and the balance in the Bank statement on 30 August.

Q3. Below is the cash book (bank columns only) of N. Zemba for the month of
September 2007.
$ $
Sept 1 Balance b/d 1 080 Sept 2 Gukuta 0100 740
Sept 4 Jonga 660 Sept 6 Drawings 0101 1 140
Sept 10 Kapungu 1 310 Sept 9 Clark 0102 865
Sept 16 Cheure 985 Sept 11 Edwards 0103 990
Sept 22 Masuku 1 490 Sept 14 K. Lee 0104 1 500
Sept 26 Zowa 1 820 Sept 19 MacDonald’s 0105 1 960
Sept 301 Gwatidzo 1 570 Sept 24 Curry 0106 770
Sept 30 Balance 950
8915 8916
DATE DETALS DEBIT CREDIT BALANCE

Sept 1 Balance b/d $ $ $
1 180
Sept 3 0099 100 1 080
Sept 6 Deposit 660 1 740
Sept 7 0100 740 1 000
Sept 11 0101 1 140 140D
Sept 14 Deposit 1 310 1 170
Sept 16 Stop order AT 220 950
Sept 18 Deposit 985 1 935
Sept 20 0102 865 1 070
Sept 22 Dividends-MC 1 440 2 510
Sept 22 0103 990 1 520
Sept 24 Credit transfer for JB 1 005 2 525
Sept 26 Deposit 1 490 4 015
Sept 29 Dishonoured cheque 1 310 2 705
Sept 30 Bank charges 760 1 945
Required
(a) Bring the cash book up to date starting with the balance on 30 September 2007
(b) Prepare a Bank Reconciliation statement as at 30 September 2007.
4. On 31 July 2005 the cash book of N. Nzira showed a debit balance of $1760. The Bank
statement of the same date showed a credit balance of $2110- On comparing the cash
book an the Bank Statement the following discrepancies were discovered
(i) Cheques deposited into the bank totaling $1540- did not appear on the bank statement.
(ii) Dividends of $365-due to Nzira had been received by the bank

(iii) A stop order payment of $180- for a trade subscription had been paid by the bank.
(iv) An amount of $220- had been received by the bank on behalf of Nzira form chato.
(vi) Cheques issues totaling $2121- had not been presented to the bank for payment
(vii) A cheque of $520- relieved from Tsiyo and deposited into the bank had been returned by
the bank marked ‘Refer to Drawer’
(viii) Charges of $116-raised by the bank did not appear in the cash book.
Required
(a) Make the necessary corrections in the cash book to show a corrected balance on 31 July
2005.
(b) Prepare a Bank Reconciliation statement as at 31 July 2005 to show why the cash book
balance does not agree with the Bank statement balance.
Q4 The summary of the bank column of the cash book of M. Bara for the ninth of March 2010
was as follows.
$ $
Balance b/d 1 954 Payments 4 220
Receipts 6 155 Balance b/d 3 889
8 109 8 109
An examination of the cash book and the bank statement revealed the following
(i) A cheque for $119- issued had been recorded in the cash book as $191.
(ii) A cheque for $832- had been charged to Bara’s account in errors by the bank
(iii) Cheques issued by Bara totaling $4135-had not been presented to the bank for payment
(iv) Cheques deposited into t he bank totaling $3220- on 30 March did not appear on the bank
statement
(v) A stop order payment of $1500- in respect of a hire purchase payment on a machine has
been made by the bank in accordance with the agreement.
(vi) Bank charges of $524- had not been entered in the cash book
Required
(a) A corrected cash book

(b) A Bank Reconciliation Statement as at 31 March 2010.
Q5. The cash book of Chamunorwa showed a credit balance of $380- in the bank column on
30 June 2005, but this did not agree with the Bank statement balance of the same date.
An investigation revealed the following differences.
(i) A stop order of $40- for a charitable subscription had been paid by the bank on 29 June.
(ii) A cheque paid for rent on 10 June of $179- had been entered in the cash book as 197.
(iii) Cheques for $1037, paid to creditors did not appear on the bank statement.

(iv) Cheques received from customers totaling $1680- paid into the bank on 30 June had not
been credited by the bank
(v) The bank had received by credit transfer an amount of $210- due to Chamunorwa from
Chifamba
(vi) Bank charges of $118- had been raised by the bank.
Required
(a) An updated cash book

(b) The Bank Reconciliation statement as at 30 June 2005

CHAPTER 3
TRIAL BALANCE
The following trial balance has prepared by inexperienced bookkeeper, re-write the
trial balance correctly.
Trial balance as at 31 December 2007
DR CR
$ $
Sales 63 000
Purchases 53 500
Returns outwards 210
Returns Inwards 390
Stock (1 Jan 2007) 8 170
Fixtures & Fittings 22 800
Buildings 17 800
Motor vehicles 9 200
Discount Allowed 650
Discount Received 2 070
Rent & Rates 880
Salaries & Wages 13 160
Stationery 1 220
Travelling expenses 930
Bad Debts 1 160
Debtors 4 600
Creditors 9 960
Bank Overdraft 1 560
Equipment 10 000
Capital 67 660
116 400 172 520

CHAPTER 4
CAPITAL AND REVENUE EXPENDITURE
Q1.
(a) Explain what is meant by Capital Expenditure and Revenue Expenditure

b) For each of the following state whether it is a capital Expenditure or Revenue
Expenditure.
(i) Cost of buying business premises
(ii) Legal costs incurred when buying business premises
(iii) Repairs to motor vehicles
(iv) Carriage costs on goods bought for resale
(v) Purchase of office furniture for resale
(vi) Purchase of Delivery Van for business use
(vii) Wages of workers engages in a general clean up of factory premises
(viii) Payment or rent for premises
(ix) Cost of repainting a delivery van
(x) Legal costs in a law suit for the business
Q2
(a) Distinguish between Capital Expenditure and Revenue Expenditure
(b) State whether each of the following is capital Expenditure or Revenue Expenditure
(i) Carriage inwards on goods bought for resale

(ii) Purchase of filing cabinet
(iii) Purchase of packing materials
(iv) Petty cash paid for stamp pad
(v) Payment of dividends to shareholders
(vi) Carriage outwards on goods sold
(vii) Extension of business premises
(viii) Replacement of light bulbs to business remises
(ix) Payment of insurance for new vehicle
(x) Purchase of new tyres for delivery van
Q3a) State what you understand by the terms (i) Capital

Expenditure (ii) Revenue Expenditure
b) If capital Expenditure had been treated as Revenue Expenditure state the effects on
(i) Net profit
(ii) Fixed Assets

c) An inexperienced clerk produced two lists of expenditures for a retail store which he
classified as revenue and capital expenditure. Unfortunately the list is not correct rewrite
it correctly.
Q4
Revenue Expenditure Capital Expenditure
Payment of wages to workers Carriage Costs on goods sold
Purchase of tyres for new vehicle Payment of interest on loan
Payment of builder for addition Payment of school fees
To sales premises For staff on a development
Purchase of new furniture for study
Office use Payment of business rent
Purchase of delivery van for` Payment o insurance on
Business use new vehicle
5 (a) How is working capital calculated?
(b) Why may a business fail because of insufficient working capital?

(c) Give two ways by which a sole trader can increase his working capital
(d) The balances below have been taken from a firm’s books on 31 July 2001.
$
Land & Buildings 55 000
Mortgage loan 18 000
Cash at bank 4 800
Creditors 5 900
Debtors 9 940
Motor Vehicles 29 900
Insurance prepaid 720
Expenses owing 630
Closing stock 8 860
Required: A statement showing the firm’s working capital.
Q6: Gamu presented the following badly arranged Statement of Financial Position showing the
position of her business on 30 April.
Assets $ Liabilities $
Debtors 8 140 Creditors 11 500
Motor Vans 13 450 Capital 25 900
Drawings 960 Bank overdraft 2 890
Stock 7 160
Fixtures & Fittings 10 580 _________
40 290 40 290

During May, the following transactions took place.
(i) Received a payment of $6330- from debtors
(ii) Made creditors 7 250-
(iii) Made a cash sales of one-quarter of stock for $2370
Paid expenses for the month 880-
Wrote off a debt of 140- as bad
Depreciated Motor Vehicles y 20% p.a
Required (a) A Bank Account balanced.

(b) Re- draft the Statement of Financial Position on 31 May 2007 showing the net profit or
loss for the month.
Q7: State the effect if any on the working capital of each of the following. If there is no effect,
write no effect. Present your answer in the following format.
Amount of increase Amount of decrease

In working capital In working capital
(i)
(ii)
(iii)
(i) New Equipment was bought by cheque for $3900-
(ii) New stock was bought on credit for $4200-
(iii) Bad debtors of $960- were written off as bad
(iv) A long-term loan of $5000 was obtained from bank and put into the business bank
account.
(v) Loan interest due of $700- was paid by cheque
(vi) Stock book value of $1800- was sold for $2200.
Q8:The following is the Statement of Financial Position of Tambaoga on 31 October 2004.
Assets Liabilities
Land & Buildings 40 500 Capital 38 750
Office Equipment 23 000 Mortgage Loan 40 000
Stock 7 140 Creditors 9 360
Debtors 10 200 Rent owing 480
Cash at bank 2 440
Insurance prepaid 810 _____
88 590 88 590
On 1 November 2004, the following transactions too place
(i) Tambaoga paid odd outstanding rent ill by cheque

(ii) Sold equipment (book value $6000-) for $7500- cheque received was banked.
(iv) Tambaoga took stock at cost worth $3000- for own use.
(v) Debtors paid $800- by cheque which was immediately deposited
(vi) Tambaoga brought into the business his private motor vehicle worth $10000-
(vii) Paid half of the mortgage loan by cheque

Required
(a) The Capital account
(b) The Statement of Financial Position as at 1 November 2004

CHAPTER 5
DEPRECIATION AND PROVISION FOR DEPRICIATION
Q1
Makama Pvt Ltd had the following ledger account balances at 1 January 2010
$
Motor Vehicles 200 000-
Provision for Depreciation on Motor Vehicles 64 000-
Depreciation is provided for at 20% p.a on cost A vehicle bought for $75 000-
In August 2008- was sold for $9 0000- cash on 1 November 2010. A full years depreciation is
charged in the year of purchase but no depreciation is charged in the year of disposal.
Required (a) The Motor vehicles accounts

(b) The Provision for Depreciation accounts
(c) The Motor Vehicle Disposals accounts
Q2
M. Dimba started a manufacturing businesses on 1 January 2004. He bought two machines at

$12 000- each payment by cheque. It was decided to depreciate them at a rate of 20% pa of the
net book value at the beginning of each year. Depreciation was recorded in a separate provision
for Depreciation account. On 31 December 2005 after allowing for the second years
depreciation, he sold one of the machines for $7 150. Cash on the same day he bought another
machine on credit for $18 000- from Ace Ltd.
Required
(a) The machinery account
(b) Provision for D-epreciation account
(c) Machinery Disposal account

CHAPTER 6
BAD DEBTS AND PROVISION OF BAD DEBTS
Q1: A firm had the following debtors at the end of each of the past five years.
$
2003 18 000
2004 14 500
2005 17 200
2006 24 100
2007 20 900
On 31 December 2003 the firm created a provision for bad debts equal to 5% of debtors and
maintained that rate for every year.
Required (a) the provision for bad debts account for the five years
(b) Show the Statement of Financial Position extracts for each of the five years.
Q2: A sale trader decided to open a Provision for Bad Debts AC in 2000. The provision was to
be 5% of Debtors outstanding at the end of each year. You are required to prepare the provision
for Bad debts
Debtors account balances for the years 2000, 2001, and 2002.
$
Debtors at 31 December 2000 18 200
(b) From the following information, prepare the account of Tafadzwa in Zorodza’s sales
Ledger and balance it off at the end of Zorodza’s financial year which is 31 August 2002.
Goods supplied to Tafadzwa $1300-
March 12 paid balance owed paid by cheque less
cash discount
May 22 Tafadzwa’s cheque was returned unpaid by the bank due to insufficient funds.
The discount was disallowed.
July 9 Tafadzwa was unable to pay his debt in full, but enclosed a payment of 50c for
each of the $ he owed.
Aug 30 Zorodzai decided to write off the remaining amount owed as bad debts.

CHAPTER 7
Statement of comprehensive income
Q1. The following trial balance was extracted from the books of D. Karuru on 31
December 2009.
DR CR
Sales $ $86 900
Purchases 64 690
Stock (1 Jan 2009) 5 940
Rent & Rates 1 060
Insurance 1 740
Delivery expenses 1 860
Stationery 1 210
Sundry expenses 1 980
Debtors 5 500
Creditors 7 150
Bank 1110
Cash 240
Drawings 3800
Capital 100 830
194 880- 194 880-
Additional information
1. Stock on 31 December 2009 was valued at $4990-
2. D. Karuru took goods worth $620- at cost for own use. No entry has been made in the
books
3. Wages and salaries owing amounted to $390.
4. Rent & rates figure include a payment of $330- which covers the period 1 October 2009
to 1 March 2010.
5. Stock of stationery was valued at $210.
6. Depreciate Motor Vehicles by 10% per annum, land & Buildings by 21% p.a
Required
(a) The Statement of comprehensive income for year ended 31 December 2009.

(b) The Statement of Financial Position as at 31 December 2009.
Q2 T. Katsenga. Trial Balance as at 30 June 2010

DR CR
$ $
Capital 54 300
Drawings 9 200
Stock (1 July 2009) 18 400
Purchases & Sales 60 080 96 930
Returns 330 240
Carriage Inwards 900
Carriage Outwards 650
Electricity & Water 1 830
Insurance 2 220
General expenses 3 180
Furniture & Equipment 12 600
Loan (repayable 31 December 2010) 5 000
Interest on Loan 250
Cash 1 930
Bank overdraft 1 020
Discounts 2 770 1 840
174 510 174 510
The following additional information is available on 30 June 2010.
1. Stock on 30 June 2010 was $20510-

2. Create a provision for bad debts equal to 5% of debtors
3. Electricity owing amounted to $390
4. Interest on Loan is at 10% p.a
5. Insurance paid in advance was $220
6. Depreciate Motor Vehicles by 5% p.a furniture and Equipment by 10% p.a
Required
(a) The Statement of comprehensive income for year ended 30 June 2010
(b) The Statement of Financial Position as at 30 June 2010

Q3. B. Jakarabi: Trial Balance as at 30 September 2008
DR CR$
$ $
Capital 147 890
Drawings 22 000
Stock (1 October 2007) 20 050
Discounts 1 190 2410
Rent & Rates 8 150
Light & water 6 720
Provision for bad debts (1 October 2007) 500
Insurance 1 010
Stationery 1 620
Bad Debts 740
Delivery Vans 48 500
Debtors & Creditors 19 100 11620
Bank 3 280
Cash 920
417 920 417920
The following additional information is available:
1. Stock on 30 September 2008 was valued at $24800-

2. Goods sold on credit to G. Gonzo for 1000- on 29 September 2008 ad not been recorded.
3. Adjust provision for bad debts to 5% of debtors
4. Stock of stationery was valued at $180-
5. Rates paid in advance amounted to $150-
6. Depreciate Delivery Vans by 10% p.a
Required
(a) The statement of comprehensive income for the year ended 30 September 2008.
(b) The Statement of Financial Position as at 30 September 2008.

Q4. The following trial balance was extracted from the books o J. Jimu, an import
merchant on 31 March 2009.
$ $
Stock (1 April 2008) 3 720
Wages & Salaries 4 220
Rates & Insurance 1 250
Heating & Lighting 1 760
Airfreight charges 2 430
Carriage on Sales 1 680
Returns 650
Discounts 1 275 2 470
Provision for bad debts (1 April 2008) 900
Loan form Ponvon Bank (repayable 2012) 20 000
Debtors & Creditors 6800 5 315
Bad debts 1115
Bank 1070
Cash 820
Provision for Depreciation on 1 April 2008
Furniture & Equipment 480
Drawings 2 900
Capital 20 655
147 680- 147 680-
The following additional information is available

1. Stock on 31 March 2009 was valued at $4135-
2. One-fifth of the wages was for staff employed in repackaging the goods for resale
3. Rates & Insurance include a premium of $330- for insurance for six months to 30 June
2009.
4. Interest on loan is at 5% p.a and is outstanding
5. Adjust provision for bad debts to 10% of debtors
6. Depreciate Motor Vehicles by 10% pa. Using the Diminishing Balance method and
furniture & Equipment by 5% p.a on cost.
Required
(a) The Statement of comprehensive income for year ended 31 March 2009.
(b) The Statement of Financial Position as at 31 March 2009.

Q5. C Jani is a trader and the following balances were extracted form her books on 31
December 2005.
$
Capital 147 019
Drawings 14 000
Stock (1 Jan 2005) 5 680
Purchases 59 600
Sales 83 110
Discount Allowed 1 770
Premises 150 000
Furniture & Fittings 39 500
Provision for Depreciation on 1 Jan 2005 on
Debtors 16 220
Creditors 11 860
Cash at Bank 3 125
Cash on hand 660
Provision for bad debts on 1 Jan 2005 800
Loan from Zunde Bank (repayable 31 Dec 2010) 100 000
1. Stock on 31 December 2005 was valued at $4670-

2. One-quarter of the wages was for staff employed in making extensions to Buildings
3. Bank charges of $1120- have not bee recorded
4. Interest on Loan is at 2% p.a and is due
5. Provision for bad debts is to be 10% of debtors
6. Depreciate Motor Vehicles by 15% p.a on the written down value and furniture &
Fittings by 20% p.a on cost.
Required
(a) The statement of comprehensive income for year ended 31 December 2005.

Q6. The following is the Statement of Financial Position of TJ. Ncube on 31 December 2004
Statement of Financial Position as at 31 December 2004

$ $
Office equipment 50 000 Loan 90 000
Stock 22 000 Creditors 39 000
Debtors 20 000 Rent owing 400
Stock of Stationery 500
Cash at bank 61 400 _______
333 900 33 900__
On 1 January 2005 the following transactions took place

(i) T.J Ncube paid off the outstanding rent by cheque
(ii) He took $7 500 from stock for personal use
(iii) The debtors paid $16 100 which was immediately deposited.
(iv) He brought into the business his personal computer with $35 000
(v) He paid half the loan by cheque
(vi) He bought a delivery Van paying by cheque $80 000
Required
(a) Write up the capital account at 1 January 2005
(b) Rewrite the Statement of Financial Position on 1 January 205 after the above transactions took
place

CHAPTER 8
CONTROL ACCOUNTS.
Q1 The following balances were extracted from the books of T. Juru.
$
Nov 1 Sales Ledger balance 16 400
30 Credit Sales 20 050
Cheques & Cash received from customers 11 150
Returns Inwards 610
Bad debts 1 870
Customer’s cheques returned unpaid 4 460
Interest charged on customer’s overdue accounts 1 005
Cash refunds in respect of overpayment of account 890
Sales Ledger balances transferred to
Purchases Ledger 370
Credit balances in the Sales Ledger 1 430
Required: Prepare the Sales Ledger control Account for the month of November 2005.
Q 2: The following balances were extracted form the books of M. Nyoka for the month of
April 2002.
$
April 1 Purchases Ledger balance 12 250
30 Credit Purchases 14 260
Cheques paid to suppliers 10 050
Discount Received 460
Accounts settled by contra 990
Interest charged on overdue accounts 2 115
Cash refund from creditor 370
Debit balances on the Purchases Ledger 75

Q3: Required: Prepare the Purchases Ledger control account for the month of April 2002.
Shilton is a retailer. The following balances were extracted from his books for the month of
June.
$
2007.
Debtors 1 June 2007 4 160
30 June 2007 2920
Creditors 1June 2007 6670
30 June 2007 8440
Cheques paid to creditors 39 260
Cheques received from debtors 47 750
Returns Inwards 1 500
Returns outwards 1 960
Interest charged on debtors’ overdue account 220
Required (a) The Total Debtors Account showing clearly the credit sales for June 2007.
(b The Total creditors Account showing clearly the credit Purchases for June
2007.
Q4: The following balances were extracted form the books of Kadzomba for the month of
August 2005.
$
2005
Aug 1. Purchases Ledger Balances 380 Dr
5 960 Cr
Sales Ledger balances 17 290Dr
640Cr
Aug 31 Purchases 48 975
Sales 62 380
Cash paid to creditors 39 240
Returns Inwards 265
Returns Outwards 305
Cash Sales 41 415
Customers cheques dishonoured 730
Bad debts written off 495
Discounts Allowed 675
Accounts Settled by contra 990
Cash refund to a customer 110
Interest charged n customer’s overdue accounts 205
Discounts Received 590
Debit balances on the Purchases Ledger 165
Credit balances on the sales Ledger 225

Required: (a) the sales Ledger control Account
(b) The purchases edger Control Account
Q5: The following details were obtained form the books of Kuipa for April 2003
2003
$
April 1, Debtors balance 17 440Dr
April 30, Creditors balance 12 970Cr
Credit Sales 49 105
Cash Sales 7 780
Credit Purchases 28 070
Cash Purchases 6 615
Return Inwards 550
Cash & Cheques received from debtors 39 640
Customers’ Cheques dishonoured 195
Discounts Received 425
Discounts Allowed 610
Cash & Cheques paid to creditors 29 010
Bad debts 880
Interest charged on debtor’s overdue accounts 185
Accounts settled by contra (set-off) 470
Cash refund form suppliers for overpayments 225
Debit balances in the Purchases
Ledger 130
Credit balances in the sales ledger 260
Required
(a)Prepare the sales Ledger control account for the month of April 2003
(b) Prepare the Purchases Ledger control account for the month to of April 2003.

CHAPTER 9
SUSPENSE ACCOUNTS AND ERRORS
Q1
a) State any two errors that are revealed by a trial balance
b) Correct the following errors by means of the journal
(i) Goods sold to A Moyo for $300 have been recorded in B Moyo’s account
(ii) Repairs to a motor van for$ 640 have been recorded in the Motor Vans account
(iii) Old office furniture sold for $1 400 has been record in the sales account
(iv) Stationery for $250 purchased from MN stationers has not been recorded
(v) The payment of rent for $400 by cheque has not been recorded
(vi) Goods worth $220- returned by G. Nyambuya have not been recorded
(vii) The proprietor’s personal expenses of $300 have been recorded in the Sundry Expenses
account
(viii) A sale of goods for $500 to S. Ndebele has not been recorded.
(ix) $700- received from A Amon had not been recorded.
(x) A cheque payment of $900 to S. Simon has been recorded in S. Symon’s account
Q2
a) State and explain any four errors not revealed by a trial balance.
b) Draft journal entities to correct the following errors.
(i) A purchase of goods for $200 from Taru has been posted to the wrong side of his account
(ii) A sale of goods for $96 to Carr has been recorded as $69
(iii) A cash deposit of $1000 has been credited to the bank and debited to cash in the cash
book
(iv) The Drawings account total for $11 300 has been recorded as $13 100
(v) Goods costing $550 bought from James has been credited to Jameson’s account
Q3
An entry appeared as follows
Stock details No. of Items Cost/Unit Total Cost

Dresses 50 10.50 625
a) What type of error is this?

b) State the effect of the above error on
(i) Closing stock
(ii) Cost profit for the year
(iv) Current Assets total

(v) Fixed Assets total
c) What is the name given to each of the following errors.
(i) An insurance bill of $600 has not been recorded in the books.
ii) Purchase of Fixtures & Fittings for $2000 has been recorded in the Office Expenses
account
iii) Both purchases account and Returns Outwards account have been overcast by $90
(iv) A sale of goods for $700 to panache has been recorded in Munashe’s account
(v) A sale of old office furniture for $800 has been recorded in the sales account
Q4
Matamba drew up a trial balance which failed to agree with debits exceeding credits by $690. An
investigation revealed the following errors.
i) Sales day book was overcast by$200

ii) Purchase of Office furniture for $3000 has been debited to Office Expenses account
iii) Mhandus account has been debited $50 for goods returned by him
iv) Matamba had taken goods $400 for private use from stock and have been charged to his
account as drawings, but no other entry has been made
v) Discounts Receive $390 have been posted from the cash book to creditors accounts but
no other entries have been made.
Required
a) Journal entries to correct the above errors
b) Prepare the suspense Account the discount Allowed account
Q5: A Stone extracted a trial balance which failed to agree with debits totaling $17 812 and
credits totaling $17 712. A Suspense account was opened for the difference. The following errors
was later discovered
i) The total of the sales day book of $11 220 had been posted to the ledger as $11 100.
ii) Discounts allowed amounting to 45 had been posted from the cash book to the wrong
side of
iii) A bad debt of 20 had been written off to Bad debts accounts but no entry had been made
in the personal account
iv) The total in the Purchases Day book had been overstated by 50
Required
(a) Prepare journal entries to correct the above errors
(b) Draw up the suspense account
Q6
The trial balance of a business failed to agree and a suspense account was opened for the
difference. The following errors were later discovered
(i) $88- in respect of repairs had been debited to purchases account
(ii) The Purchases Day book had been undercast by$200
(iii) Rent received $70. From a tenant had been debited to Rent Payable account

(iv) No entry had been made in the books in respect of goods returned by J. Smith for $130
(v) Goods sold to Romos for $930. Correctly recorded in the Sales account had been posted
to his account as $980.
Required
(a) Draft journal entries to correct the above errors
(b) Draw up the suspense account showing your calculation of the original balance.
Q7: The following errors were discovered in the books of J martins after the trial balance failed
to agree
i) The Rent account had been overcast by $200
ii) A cheque received from B. Barnes for $900
was correctly entered in the cash book, but no other entry has been made
iii) Repairs to a machine amounting to $350- had been debited to the asset account
iv) Goods worth 120. Returned by a customer was correctly recorded in the customer’s
account but were credited to Purchases returns account
Required
(a) Write up journal entries to correct the above errors. A suspense account is not required
(b) State any three errors that are shown by the trial balance
Q8:. Janga drew up a trial balance on 31 March 2003 which failed to agree a suspense A/C
was opened for the difference.
Trial balance as at 31 March 2003

$ $
Sales 121 400
Purchases 94 750
Debtors 10 310
Creditors 3 460
Stock (1 April 2002) 7 330
Drawings 9 500
Cash at bank 4 670
Capital 14 000
Suspense ___________________ _330
139 190 139 190
_________________________
After investigation the following errors were noted.
(i) A stop order payment for insurance of $100- had been posted to the wrong side of the
Bank account
(ii) Purchases day book had been overcast by $90

(iii) An amount of 455 paid for fixtures & Fittings for use in the business had been debited to
Purchases account
iv) A sale of goods to Njodzi for 196- had been correctly entered n the Sales day book but
posted to Njodzi’s account as $169
v) A sales ledger credit balance of 67 for Nyoni had been omitted from the Trial Balance
Required
(a) Prepare the suspense account starting with the original difference which you are required
to calculate from the Trial balance
b) Prepare the trial balance as it would appear after the correction of their above error
Q9: C. Chenyika drew up the following trial balance which failed to agree. A suspense account
was opened for the difference.
$ $
Capital 48 350
Drawings 13 930
Purchases 32 990
Sales 46 940
Debtors 3 290
Provision for bad debts 160
Creditors 1 550
Provision for depreciation on
Furniture & Equipment ( 1 Jan 2005) 5 040
Bank overdraft 690
Stock (1 Jan 2005) 6 660
Stock (31 December 2005) 5 330
Suspense 2 560
89 960 89 960
Required
(a) Prepare a corrected Trial balance as at 31 December 2005
(b) After the Trial balance had been corrected the following errors were discovered
(i) A cheque for $235 from J smith has been entered in the books at $325
(ii) A payment of $180 to C. Moyo had been credited to C. Moyo’s account and also credited
to the Bank account
(iii) A Sale of 310- for old office furniture had been credited to Sales account
(iv) Purchases day books had been undercast by $130
(v) A sale of goods to B. Adams for 490 had been completely omitted from the books.
b) Draft journal entries to correct the above errors
c) Draw up the suspense account.

Q10: Vaida drew up the following balances on 31 May 2007 form her books
$
Capital 25 000
Drawings 11 200
Equipment 12 600
Debtors 11 900
Creditors 5 340
Stock (1 June 2006) 9 900
Cash at bank 4 600
Sales 120 900
Purchases 94 300
Sundry Expenses 7 200
As the Trial balance failed to agree suspense account was opened for the difference and the
following were later discovered
i) An item of $120 had been debited two to Sundry expenses account
ii) A sale of goods for $230 to Nyasha had been correctly entered in the Sales day book, but
posted to his account as $320
iii) Goods worth $550 bought from Timba had been credited to the account of Simba
iv) The sales Day book had been overcast by $200
v) Drawings total of $11300 had been recorded as $11 200
vi) A stop order payment of $240 for Vaida’s rent had been posted to the wrong side of the
bank account
Required
a) Write up the Suspense account including the calculation of the opening balance
b) Prepare the Trial balance as it would appear after the corrections of the above errors had
been made.
Q11: Nhamo prepared his final accounts for the year ended 30 June 2008 from a trial balance .
Net profit was $25 600. A check on the accounts showed the following errors
i) The Purchases Day book had been under cast by $1000
ii) Expenses of $60 had not been posted to the ledger
iii) Nhamo had taken goods $250 for own use but no entry had been made in the books
iv) Shop furniture bought for $500 had been entered in the Cash book, but no other entry was
made
v) Returns inwards of $250- had been entered in the Trial balance as $350.
Required
Prepare a statement to show the net profit after the above error had been corrected.

Q12: Farai, an inexperienced accounts clerk drew up the following trial balance as at 30 April
2008
$ $
Sales 104 320
Purchases 73 308
Debtors 7 300
Creditors 3 456
$ $
Furniture & Equipment (1 May 2008) 11 200
Stocks (1 May 2008) 14 800
(30 April 2009) 11 840
Capital 107 440
Drawings 30 960
Suspense 67 552
267 440 267 440
a) Prepare a corrected Trial balance showing an amended figure for the suspense account.
b) After the trial balance had been prepared the following errors were discovered
i) Additional Furniture & Equipment of $1440- bought had been debited to Purchases
account
ii) An expense payment of $864- had been recorded as $846
iii) A cheque payment of $320 to Ranga had been credited to Ranga’s A/C and the Bank
account
iv) The Purchase day book had been undercast by $480
v) Goods returned by Sam for $148- had not been recorded in the books
b) Prepare journal entries to correct the above errors
c) Prepare the suspense account starting with the amended balance from (a)
Q13: Brad Pitt prepared the following Statement of Financial Position at 30 June 2004.
Statement of Financial Position as at 30 June 2004 $

$
Equipment 6 600 Capital 28 000
Stock 18 400 Add net profit 20 400
Debtors 14 600 48 400
Cash at bank 9 600 Less Drawings 16 000
32 400
Creditors 16 800
______ ______

49 200 49 200
When the books were checked the following errors were noted
(i) Additional Equipment bought for $1 200 had been debited to Purchases account
(ii) A debt of 600 should be written off as bad
(iii) Stock had been undercast by $200
(v) A cheque payment of $3 200 to Amos a creditor had not bee recorded in the books
Required
a) A statement to show corrected Net Profit or Loss for the year ended 30 June 2004
b) A corrected Statement of Financial Position as at 30 June 2004.

CHAPTER 10
INCOMPLETE RECORDS
Q1: T. Mambo started business on 1 January 2000 with cash capital of $25 000-
During the year he withdrew $100- per month for private purposes.
On 31 December 2000. He had cash on hand $240-
Bank $1 980- stock $5 610- Debtors $9 440-
Creditors $6 380- Amount due $560- Amount prepaid $870- Furniture and Equipment $8 500-
Delivery Van $13 600-
Required Prepare a statement of Affairs as at 31 December 2000 to show profit or loss for the
year.
Q2: On 1 June 2002 Tapera had cash $290-
Bank $2 240- Stock $6220- Debtors $8 140-
Creditors $5 990- Furniture & Equipment $15 600-
Motor Vans $30 000-
During the year he took cash $1 200- and goods worth $500- for personal use.
On 31 May 2003 he had cash $680- Bank
$3 450- Stock $8 940- Debtors $9 750- Creditors$4 220-
Prepaid expenses $580-
Accrrued expenses $340-
Furniture & Equipment $14 500- Motor Vans $28 200-
Required
(a) A calculation of capital at 1 June 2002

(b) A statement of Affairs as at 30 June 2002
Showing as much detail as possible including the net profit.

Q3: O. Dube does not keep proper accounting records. Given below is a summary of her bank
account for 2002.
$ $
Receipts from Debtors 50 166 Drawings 7 750
Equipment 5 500
Wages 3 410
Insurance 2 960
Payments to creditors 16 320
Dube informs you that he took cash from sales $3 440- to finance a private project.
He following additional information is available
31/12/01 31/12/02
$ $
Equipment 18 700 22 930
Land & Buildings 50 000 50 000
Debtors 13 390 16 770
Creditors 10 680 85 550
Stock 11 420 13 900
Cash at bank 12 300 ?
Insurance prepared 390 460
Rent owing 220 570
Required (a) A calculation of capital at 1 Jan 2002
(b) A calculation of net profit or loss for the year 2002. The statement of
comprehensive income is not required.

Q4: Dambudzo started business on 1 January 2005 by renting a shop at $2 400- p.a. He opened a
business bank into which he deposited $5 000- Whilst he was able to purchase goods on credit
all his sales were for cash, some of which was used for business expenses, some for private
expenses, paying the remainder into the bank. He did not keep proper records, but the following
information is available on 31 December 2005.
$
Business Bank account
Receipts: Cash sales paid in 55 150

Payments: Rates 1 260
Rent 3 000
Delivery Van 28 000
Trade creditors 16 100
Shop Fittings 7 500
Insurance 1 120
(a) Dambudzo estimates that he paid salaries and wages $4 600- out of cash takings and
sundry expenses $1 710- also out of cash takings.
(b) Dambudzo retained $6 900- of cash takings for personal use.
(c) On 31 December 2005
(i) Stock in trade was valued at $4 990-
(ii) Trade creditors amounted $7 140-
(iii) There was an amount of $180- owing for rates
(iv) There were cash takings on hands amounting to $465-
(v) Depreciate Delivery Van by 20% P.A. Shop fittings by 5% p.a
Required
(a) The Statement of comprehensive income for year ended 31 December 2005

Q5: T. Warambwa does not keep proper records. The following is summary of her bank account
for 2007.
$ $
Balance (01.01.07) 1 260 Payments to Creditors 10 120
Cash Sales 39 980 General expenses 3 930
Drawings 6 200
Rent 5 000
Purchases 5 330
Insurance 1 410
_________________ Balance c/d (31.12.07) 7 410
41 240 41 240-
Bal b/d 7 410
All money received is immediately banked and all payments are made by cheque. Warambwa
sells all goods for cash. The following additional information is available
31/12/06 31/12/07
$ $
Stock 5 530 6 250
Creditors 4 960 3 660
Electricity owing - 510
Furniture & Equipment 24 100 23 400
Shop rent is $400- per month
No furniture & Equipment was bought or sold.

Required
(a) The Statement of comprehensive income for the year ended 31 December 2007
Q6: On 1 January 2009 Damba started business with $200 000 in the bank. On the same day he
brought in his private motor vehicle worth $56 000- into the business. He does not keep proper
records. The following information is available from his records on 31 December 2009.
‘\’Motor Vehicles 56 000
Stock 12 900
Debtors 8 200
Bank 6 640
Cash 1 220
Creditors 5 880
Amount prepaid 860
Amount due 940
(i) During the year Damba withdrew $30 000 cash and goods worth $5 000 for private
use.
(ii) Bad debts of $4 000- are to be written off as bad and a provision for bad debts equal
to 5% of debtors is to be made.
(iii) Depreciate Motor vehicles by 20% p.a. Furniture and fittings by 10% p.a.
Required: A Statement of Financial Position as at 31 December 2009 clearly showing the net
profit for the year.

Q7: The following is the bank account of Noah Ltd for the year 2010.
$ $
Balance (1 Jan 2010) 1 590 Payments to Creditors 16 730
Receipts from Debtors 44 330 Rent & Rates 4 175
Drawings 3 110
New Furniture 2 000
\ General expenses 1 150
Wages and Salaries 9 160
Noah paid all money received into the bank except $3 180- out of which he paid $1 400- for
goods bought for resale, $930- for sundry expenses and the remainder for private expenses.
The following additional information is available
31/12/09 31/12/10
$ $
Stock 4 010 5 460
Debtors 5 805 4 995
Creditors 2 775 3 945
Furniture & Fittings 15 600 16 800
Delivery Vans 35 000 323 500
Required
(a) The statement of comprehensive income for the year ended 31 December 2010

Q8: On 1 Jan 2004 S. Ncube started business with $50 000 in a business bank account. He does
not keep proper records. The following information is made available on 31 December 2004.
Stock 7150
Debtors 6 680
Bank 2 110
Cash 780
Creditors 4 460
Prepaid Expenses 910
Accrued expenses 770
(i) During the year Ncube withdraw $1 000- per month for private use and took goods
worth $150- every two months also for private use.
(ii) Bad debts of $1 900- are to be written off as bad, and a provision for bad debts of 5%
of debtors is to be made.
(iii) Depreciate motor vehicles by 15% p.a Furniture and Equipment by 25% p.a.
Required
A Statement of Financial Position as at 31 December 2004 showing clearly the net profit or loss
for the year
Q9: Mhondiwa started business as retailer on 1 January 2002 and deposited $50 000 into a
business bank account. He found suitable premises to rent at $4 800- per annum, payable from 1
January 2002.
All sales were for cash, some of which was used for various business expenses, private expenses,
and paying the remainder into the bank. The following information relating to the first year of
trading was taken from his records on 31 December 2002.

$
Cheques issued for Shop Furniture 12 600
Delivery Van 16 700
Rent 4 200
Rates 3 140
Insurance 1 460
Trade creditors 34 100
Cash payments form takings
Drawings 11 420
Stationery 1 920
Cash sales banked 46 640
(i) Stock on 31 December 2002 was $5180.
(ii) Payments to creditors were made after a deduction of $1 440- discount for prompt for
payment
(iii) 9995- was owing for creditors
(iv) Insurance was prepaid was $220-
(v) Depreciate delivery Vans by 20% p.a shop Furniture by 10% p.a.
Required
(a) The statement of comprehensive income for year ended 31 December 2002.
Q10
: On 1 July 2004 Jimu started business as artist painter. He paid $1 000- into a bank account and
withdrew $250- to pay for Equipment. On 30 September 2004, he ascertained for the quarter
ended on that date
(i) He received 6 250 for art work and $480- way still owing to him.
(ii) He drew cheques for:
$
Art materials 2 110
Rent, rates & Insurance 1 140
Sundry expenses 930
New Equipment 500
Personal drawings 1 200

(iii) He still owed $280- for art materials and $120- for sundry expenses.
(iv) On 30 September 2004 Equipment was valued at $600
Required: (a) The Statetement of comprehensive income for the quarter ended 30 September
2004.
(c) The Statement of Financial Position as at 30 September 2004

CHAPTER 11
Accounts for Non-profit making organization
Q1
On 1 January 2001 the books of Sekwa Sports Club showed the following:
$
Amount owing for subscriptions 1 020
Subscriptions received in advance 180
\
During 2001 subscriptions received in cash were $3 240
This amount included $230 for 2002. On 31 December 2001, subscriptions owing amounted to
$380.
Required
Prepare the subscriptions accounts showing clearly the amount transferred to the Statement of
comprehensive income on 31 December 2001.
Q2. On 1 July 2004 Jari Football Club had Furniture & Equipment 24000. Subscriptions
prepaid 2010. Below is the receipt a Payments account for 2004.
$ $
Balance (1 July 2004) 1 260 Rent of ground 920
Subscriptions 2 930 Secretary’s expenses 1 400
Donations 3 200 Travelling expenses 580
Gate takings 2 580 Match expenses 1 010
New Equipment 2 000
Stationery 430
Balance (30 June 2005) 3 630
6 970 6 970
Bal bld 3 630
1. Subscriptions due were $180- and those paid in advance were $230- on 30 June 2005..
2. An amount of $160- was owing for rent
3. Stock of stationery was $110-
4. Depreciate furniture & Equipment by 15% p.a

Required
(a) The statement of comprehensive income for year ended 30 June 2005
(b) The Statement of Financial Position as at 30 June 2005.
Q3. On 1 January 2002 Kabondo sports club had cash at bank $1340. Equipment $5500 stock
of refreshments $580. Subscriptions prepaid $160. Below is a summary of the receipts
and payments for year ended 31 December 2002.
‘’’
$ $
AQ Q1 wz ZSAASubscriptions 3 360.
Cost of refreshments 1 110
Donations 1 840 Secretary’s wages 1 330
Sale of refreshments 2 610 New Equipment 500
Rent of ground 990
Games expenses 865
Stationery 295
On 31 December 2002
1. Stock of refreshments was $660

2. Subscriptions due were $100- and those paid in advance were $220.
3. Stock of stationery valued at $65.
4. Depreciate Equipment by 15% p.a on
Required
(a) The Refreshments trading account for year ended 31 Dec 2002
(b) The statement of comprehensive income for year ended 31 Dec 2002
(c) The Statement of Financial Position as at 31 December 2002.
Q4 Below is the Receipts and Payments account of Sango Sports for 2004.
$ $
Balance (1 Jan 2004) 1 020 Refreshments purchases 985
Subscriptions 3 210 Rent & Rates 1 770
Donations 500 Dance expenses 845
Receipts from dances 1 850 New Equipment 1 500
Sale of refreshments 2 700 Sundry expenses 1 115
__________ Balance (31 Dec 2004 3 065
9 280 ____ 9 280

31/12/03 31/12/04
$ $
Stock of refreshments 720 690
Owing for refreshments 85
Subscriptions due 110 70
Subscriptions prepaid 55 140
Rates prepaid 35
Required
(a) The refreshments trading account for year ended 31 Dec 2004
Q5. The following is a summary of the cash book of Goronga sports club for 2007.
$ $
Balance (1 Jan 2007) 1 360 Purchase of refreshment 3 700
Subscriptions 5 100 Secretary’s wages 1 500
Competition fees 1 160 Prizes 840
Sale of refreshments 6 400 Travelling expenses 980
Rent 750
New Equipment 2 000
Balance (31 Dec 2007) bal c/d 2 600
__________ ________
14 020 14 020
$ $
1 Jan 2007 31 Dec 2007
Stock of refreshments 630 810
Owing for refreshments 140
Subscriptions due 20 60
Subscriptions prepaid 135

General expenses owing 75 90
Equipment at valuation 5 500 7 150
Required
(a) The Refreshments Trading account for year ended 31 Dec 07

(c) The Statement of Financial Position as at 31 December 2007
Q6: The following is a list of assets and liabilities of Bhuka Sports Club on 1 Jan 2009.
Assets $ Liabilities $
Insurance prepaid 140 Rent owing 200
Subscriptions due 100 Subscriptions prepaid 65
Stock of refreshments 910
Below is a summary of the receipts and payments for 2009.
$ $
Balance (1 Jan 2009) 1 310 Refreshments Purchases 1 645
Subscriptions 4 660 Secretary’s wages 1 800
Sales of refreshments 2 580 New Equipment 1 400
Donations 1 990 Rent 1 720
Insurance 860
Sundry expenses 550
__________ Balance (31 Dec 2009) 2 565
10 540 10 540
Additional Information
1. Stock of refreshments on 31 Dec 2009 was 700
2. Subscriptions due were 190- and those prepaid were 220
3. Secretaries wages owing were 160
4. Depreciate Furniture & Equipment by 10% p.a
Required
(a) The Refreshments trading account for year ended 31 Dec 2009

CHAPTER 12
Partnership Accounts
Q1. Stafen and Jones are equal partners. Their agreement allows interest on capital at 5% pa.
A salary of 300- per month to Stafen, interest on Drawings at 2 ½ p.a. Below is the trial
balance extracted from their books on 31 March 2004.
$ $
Purchases 54 800
Sales 81 650
Stock (1 April 2003) 6 920
Discount received 3 340
Bad debts 865
Carriage on Purchases 310
Provision for bad debts on 1 April 2003 420
Debtors 10 500
Creditors 11 140
Bank 1 850
Cash 550
Capital Stefan 40 000
Jones 40 000
Drawings Stefan 7 200
Jones 12 400
Current A/C 1 April 2003 Stefan 1 020
Jones 1 370
177 920 177 920
1. Stock on 31 March 2004 was valued at $7340-

2. Insurance paid in advance was $200-
3. Bank charges of $230- had not been recorded.
4. Provision for bad debts is to be 5% of debtors
5. Depreciate Motor Vehicles by 5% p.a on cost
Required
(a) The Statement of comprehensive incomefor year ended 31 March 2004

(b) The Profit & Loss Appropriation account for year ended 31 March 2004
(c) The Statement of Financial Position as at 31 March 2004 showing as much detail as
possible including the details of current accounts
Q2. Chikono a sale trader had the following on 30 June 2007.

$
Delivery Van 18 000
Debtors 9 600
Creditors 5 950
Stock 6 100
Cash at Bank 2 150
On 1 July 2007 he and his friend Dema agreed to go into partnership on the following terms
(i) Chikonos assets and liabilities given above are to be his contribution to the business
(ii) Dema brought in Furniture & Equipment worth $16200 and cash $3800.
(iii) Interest is charged on Drawings at 3% p.a
(iv) Interest on Capital 5% P.A
(v) Chikono to get a salary of $2400- p.a.
(vi) Profits and losses are to be shared in the ratio of 3:1 respectively
The following balances were extracted from their books on 30 June 2008.
$
Net profit for the year 19 420
Debtors 23 500
Creditors 13 700
Bank 5 130
Cash 5 500
Amount Prepared 4 200
Amount due 1 720
Stock (30 June 2008) 10 850
Required

(a) The Profit & Loss Appropriation account for the year ended 30 June 2008
(b) The Statement of Financial Position as at 30 June 2008 including details of partners
current accounts
Q3 Lorraine and Georgina are in partnership. Their partnership deed include the
following
(i) Interest on Capital is allowed at 10% p.a

(ii) Interest is charged on drawings at 5% p.a
(iii) Georgina earns an annual salary of $1200-
(iv) Profits and losses are shared in the ratio of 3:2 respectively.
The following balances were extracted form their books on 30 June 2010- after the preparation
of the Trading account
$
Gross profit 27 680
Carriage outwards 1 980
Bad Debts 1 830
Premises 45 000
Debtors 9 000
Creditors 2 720
Capital Lorraine 40 000
Georgina 36 000
Drawings Lorraine 7 700
Georgina 10 200
Current A/C (1 July 2009)
Lorraine 660 Dr
Georgina 1 410Cr-
Bank 1 560
Stock at 30 June 2010 6 660
Required
(a) The Statement of comprehensive income for the year ended 30 June 2010.
(b) The Profit & Loss Appropriation account for year ended 30 June 2010.
(c) The Statement of Financial Position as at 30 June 2010 including details of Current
account
Q4

The following list of balances was extracted from the books of James and Wonder who are
partners in business after the preparation of the Statement of comprehensive income for year
ended 30 September 2008.
Net profit 93 040
Capital Accounts James 180 000
Wonder 180 000
Current Accounts (1 October 2001): James 2 000Dr
Wonder 4 000Cr
Drawings: James 20 000
Wonder 28 000
Salary paid to James 16 000
The Agreement contained the following
(i) Interest is allowed on capital at 10% pa

(ii) Interest is charged on Drawings at 5% pa
(iii) James earns on annual salary of $30000-
(iv) Current accounts are subject to an interest of 2% on their opening balance.
(v) Profits and losses are to be shared in the ration of 2:3 respectively.
Required
(a) The Statement of comprehensive income for year ended 30 September 2008.
(b) The Partner’s Current Accounts.
Question 5: On 1 April 2012 Taurai a trader agreed to admit Vimbai as a partner Taurai’s capital
was $30 000- on that date. However a revaluation of the business assets showed an increase of
$5 000- of their value and the accounts were adjusted accordingly.

Vimbai was to bring in $12 000- cash and a motor vehicle valued at $10 000- into the business.
After recording the above transactions it was agreed capital remain fixed. It was further agreed
that:
(i) Vimbai to receive an annual salary for $5000-

(ii) Interest to be allowed an capital at 10% p.a
(iii) Taurai to receive a bonus of 10% of net profit after deduction of interest on capital.
(iv) Remaining profits to be shared in the ratio of 3:2 respectively.
Net profit for the 12 months was $65 500
Drawings were Taurai $21 000- Vimbai $29 000
Required (a) The Profit & Loss Appropriation account
(b) The Partners Current Accounts.
Q6. Farai and Tapiwa formed a partnership in order to buy the business owned by Tafadzwa.
The partnership agreement provides that profits and losses be shared equally Tafadzwa’s
Statement of Financial Position at the date of Sale was.
Statement of Financial Position as at 31 December 2008

$ $
Motor Vehicles 100 000 Creditors 8 400
Equipment 20 000 Bank overdraft 6 300
Stock 12 000
Debtors 4 500
Cash __ 500 _______
437 000 437 000
The business purchase price was 500 000. The partners took over all the assets and liabilities except
cash and bank overdraft .
Farai and Tapiwa agreed that the purchase price would be provided by them equally and that each
would put in an additional $30 000 into the business for working capital. A partnership bank
account was opened and Tafadzwa was paid by cheque on 1 January 2009.
Required
(a) Calculate the value of goodwill
(b) Draw up the opening Statement of Financial Position of the partnership

Q7. S. Ndebele and C. Khumalo are in partnership and the following trial balance was
extracted form their books on 30 June 2009.
$ $
Capital S. Ndebele 36 000
C. Khumalo 30 000
Drawings S. Ndebele 2 900
C. Khulamo 4 100
Purchases 36 750
Sales 63 330
Premises 40 000
Motor Vans 15 250
Stock (1 July 2008) 4 950
Wages & salaries 9 300
Rent & Rates 1 200
Electricity & water 3 300
Returns Inwards 630
Returns Outwards 820
Debtors 2 830
Creditors 3 710
Bank 1 950
Cash 180
136 020 136 020
1. Stock on 30 June 2009 was valued at $4050-
2. Rent $350- had been paid in advance
3. An amount of $190 was owing for electricity
4. Interest on Capital is allowed at 10% p.a

5. Interest on Drawings is charged at 5% p.a
6. S. Ndebele earns an annual salary of $2400.
7. Profits and losses are shared in the ratio of 2:3 respectively
8. Depreciate Motors Vans by 10% p.a. Fixtures & Fittings by 5% p.a.
Required
(a) The Statement of comprehensive income for the year ended 30 June 2009
(b) The Profit & Loss Appropriation account for yea ended 30 June 2009
(c) The Statement of Financial Position as at 30 June 2009. Details of current accounts can
be shown within the Statement of Financial Position.
CHAPTER 13
RATIOS
Q1: The following details relate to the business of Ndoga for the year ended 31 December 2010.
$
Sales 49 670
Sales Returns 670

Stock (1 January 2010) 2 580
Gross profit for the year 9 000
Calculate for the year, showing your workings

(i) Turnover for the year.
(ii) Cost of goods sold during the year
(iii) Amount of purchases for the year
(iv) Rate of stock turn or turnover.
(v) The percentage of gross profit to turnover (to the nearest whole number)
N. Mabuku operates a business as a retailer.
Q2: The following information was obtained from his records on 31 December 2004.
$
Purchases 12 500
Stock (1 Jan 2004) 16 310
Sales 39 440
Sales Returns 440
Purchases Returns 500
Customs Duty 1400
Calculate for the year showing your workings

(i) Turnover for the year
(ii) Cost of goods sold
(iii) Gross profit
(iv) Mark-up (to nearest whole number)
(v) Margin (to nearest whole number)
(vi) Rate of stock turn (to nearest whole number)
Q3: The following details were obtained form the books of d. Damba at 31 December 2001.
$
Sales 269 000
Sales Returns 16 000
Stock (1 January 2001) 19500
Gross profit is 40% of turnover
Net profit is 25% of turnover
Rate of stock turn (rapidity of turnover) is 10

Calculate, showing your workings next to your answer.
(i) Turnover for the year

(ii) Gross profit
(iii) Cost of goods sold
(iv) Net profit
(v) Expenses of running the business charged to the Profit & Loss A/C
(vi) Cost price of stock on 31 December 2001
Q4
During 2007 Days held on average stock at cost price of $22560. His selling price was obtained
by adding 25% to cost price. His turnover for the year $338 400-
His selling and administrative expenses were 12% of turnover.
Calculate (a) Gross profit for 2007

(b) Net profit for 2007
(c) Gross profit mark up for 2007
(d) Rate of Stock turnover for 2007
(e) The Closing Stock given that the opening stock was $28660.
Q5
Tikana is a sole trader who has not kept a full set of books, but the following information has
been obtained
1/1/ 08 31/12/08
$ $
Debtors 5560 6650
Creditors 4870 4070
Stock 1900 2300
Additional information for the year 2008

$
Cash Sales 34 100
Receipts from debtors 35 950
Payments to Creditors 22 200
Credit notes issued to customers 420
(a) Calculate the total sales and purchases for the year ended 31 December 2008
(b) Calculate the rate of Stock turnover
Q6

Ralph sells electrical goods at the manufacturers recommended price. The manufacturer allows
Ralph a trade discount of 25% off the recommended retail price when Ralph buys goods. Ralph’s
sells for the year ended 31 December 2009 at a recommended price are $560 000.
At the beginning of 2010 Ralph decided to reduce the selling price by cutting 10% off the
recommended price. The sales for the year ended 31 December 2010 at the reduced price are
$720 000.
Calculate (a) Gross profit for 2009

(b) Gross profit for 2010
The financial year of Changamire ended on 30 June 2001, but it was not possible to carry out the
stocktaking until 4 July 2001. On that date the value of the actual stock on the premises was 58 910
at cost price.
(i) The gross profit margin was 40%
(ii) Sales made during the period 1-4 July totaled 3 500
(iii) A credit note of $200 had been issued on 2 July for goods returned by a customer on that date
(iv) Purchases invoices received for the period 1- 4 July 2 600
(v) Goods with an original cost of $220 have been found to be damaged and has been decided to
scrap them.
Required
(a) Draw up a statement to show the value of the stock at cost price on 30 June 2001
(b) State why stock is normally valued at the lower of cost or net realizable value.
CHAPTER 14
MANUFACTURING ACCOUNTS

Q1
Dzapasi is a manufacturer of ox-drawn ploughs. On 30 June 2006 the following balances were
extracted from his books Stocks on 1 July 2005. $
Raw materials - 2 370
Work in progress - 4 180
Finished Goods - 3 610
30 June 2006
Raw materials purchased 48 920
Manufacturing wages 39 220
Royalties 4 460
Factory power 2 770
Factory rent & rates 5 460
Repairs to Machinery 4 120
Depreciation of machinery 1 970
Sales of Finished Goods 165 410
Stocks 30 June 2006 Raw materials 3 180
Work in Progress 6 340
Finished Good 5 870
Required
(a) The manufacturing account for the year ended 30 June 2006 clearly showing within the
account cost of Raw materials consumed prime cost and Production Cost.
(b) The Statement of comprehensive income ended 30 June 2006
Q2
Andy Cole is the owner of a small manufacturing business. The following balances were taken
from his books on 31 December 2004.
$
Stock (1 Jan 2004) Raw materials- 9 200
Work in Progress- 7 880
Finished Goods- 6 140
Stocks (31 Dec 2004) Raw materials - 8 890
$
Finished goods- 7 750
Purchase of raw materials - 109 000
Carriage on raw materials - 3 350
Patent fees - 4 260
Manufacturing Wages - 29 770
Sales of Finished Goods - 296 100
Rent of factory - 9 990
Factory overheads - 11 420
Depreciation of Factory machinery 3 290
Required
(a) The Manufacturing account for the year ended 31 December 2004 clearly showing within
the account cost of Raw Materials consumed, Prime cost and Production cost

(b) The Trading account for year ended 31 December 2004
Q3
Tsikira owing a small manufacturing business. On 31 December 2007, the following balances
were extracted from their books.
$
Stocks (1 January 2007) Raw materials - 20 400
Stocks (31 December 2007) Raw materials- 13 400

Working progress- 12 900
Purchased of raw materials - 177 150

Carriage on sales - 5 600
Carriage on raw materials - 4 490
Wages of sales staff - 75 600

Raw materials returned to suppliers - 1 200
Factory power - 12 900
Rent & Rates - 34 300
Depreciation of Machinery - 12 600
Manufacturing Wages - 92 700
Sales of Finished Goods - 460 900
Patent fees - 16 650
Delivery expenses - 19 290
Depreciation of Delivery Vans - 10440
(a) Rent & Rates is apportioned 3/5 factory 2/5 office
(b) Tsikira took $2 500- worth of manufactured goods for own use. No entry has been made
in the books
(c) Factory power bill of 3700 is owing on 31 December 2007
Required
(a) The Manufacturing account for year ended 31 December 2007
Clearly showing cost of Raw materials consumed, prime Cost and Production Cost
(b) The Trading account.
Q4
The following trial balance was extracted from the books of Munyaradzi a soft drinks
manufacturer at 30 June 2009.
$
Sales of Finished Goods $ 459 300
Purchase of raw materials 116 750

Stocks (1 July 2008)
Raw materials 4 810
Work-in Progress 5 520
Finished Goods 6 330
Manufacturing wages 89 400
Royalties 5 100
Factory overheads 12 200
Delivery Vehicles at Cost 185 000
Selling & Distribution Expenses 13 600
Returns on raw materials 3 460
Bad debts 1 500
Stationery 2 800
General office expenses 7 260
Debtors 10 400
Creditors 11 110
Machinery at cost 206 000
Drawings 14 000
Provision for and debts 860
Bank overdraft 1280
Cash 3 940
Capital 214 000
690 010 690 010
Additional Information $
1. Stocks on 30 June 2009 were Raw materials 9 600
2. Stock of stationery was valued at 720
3. Provision for depreciation 520
4. Depreciate Machinery by 20% p.a on cost delivery Vans by 25% p.a on cost.
Required
(a) The Manufacturing account for year ended 30 June 2009
(b) The Statement of comprehensive income for year ended 30 June 2009
(c) The Statement of Financial Position as at 30 June 2009.
Q:5 Lameck and Donald entered into partnership to start a manufacturing business and the
following balances were taken from their books at 31 December 2009
$
Factory wages 85 000

Advertising 12 660
Bad debts 12 930
Carriage on raw materials 9 100
Carriage on sales 13 970
Depreciation of Machinery 4 880
Royalties 11 200
Sales of finished Goods 414 300
Selling expenses 21 100
Depreciation of Delivery Vans 11 900
Stocks (31 December 209) Raw materials- 12 400
Working Progress 16 130
Required
(a) The Manufacturing account for year ended 31 December 2009.
(b) The Statement of comprehensive income for year ended 31 December 2009

CHAPTER 15
DEPARTMENTAL ACCOUNTS
Q1 Chipito operates a shop with two departments. The following balances were extracted form
his books on 30 September 2008
$
Stock (1 October 2007) Dept A 12 900
Dept B 16 400
Sales Dept A 1 974 80
Dept B 101 560
Dept A 66 140
Dept B 72 390
Carriage Inwards Dept A 11 440
Dept B 9 670
Stocks (30 Sept 2008) Dept A 15 960
Dept B 18 460
Required
Prepare the Departmental Trading account for year ended 30 September 208 showing clearly the
gross profit for each department.
Q2 Tsano operates a shop which sells clothing and groceries. The following trial balance was
extracted from his books on 30 June 2008.
$ $
Sales: Clothing 330 100
Groceries 294 200
Purchases Clothing 181 410
Groceries 172 970
Stocks (1 July 2007) Clothing 18 840
Groceries 16 220
Rent & Rates 8 160
Stationery 2 600
Bad debts 4 315
Delivery Vehicles 190 500
Debtors 18 860
Creditors 9090
Bank 2 290
Cash 720
Drawings 6 100
Capital 11 470 171 960
Suspense 805 350 805 350

Additional Information $
(a) Stocks (30 June 2008) Clothing 13 200

Groceries 11 630
(b) Rates paid in advance amounted to 590
(c) A debt of $1 200 is to be written off as irrecoverable
(d) Create a provision for bad debts equal to 5% of debtors
(e) Depreciate Delivery vehicles by 10% p.a. Furniture & Equipment by 20% pa
Required
(a) The Departmental Trading account for year ended 30 June 2008 in columnar form to
show Gross profit for each department.
(b) The Combined Statement of comprehensive income for year ended 30 June 2008
(c) The Statement of Financial Position as at 30 June 2008.
Q3
Chenai owns a retail Store with two departments, one selling Hardware and the other selling
Furniture. The following information was taken from his books on 31 December 2004.
$
Stock (1 January) Hardware 10 200
Furniture 25 600
Purchases Hardware 54 100
Furniture 101 700
Sales Hardware 80 000

Furniture 160 000
Rates & Insurances 3 000
Motor vehicles expenses 6 000
Premises 52 000
Provision for depreciation 1 Jan 2004 Motor Vehicles 8 000
Debtors 6 400
Creditors 10 600
Capital 104 400
Drawings 19 000
Cash at bank 7 700

Additional information $
(a)Stocks (31 December 2004) Hardware 12 800
Furniture 27 400
(b) Furniture purchases figure of $101 700- includes 1000 for fittings bought for use in the
business
(c) Depreciate Motor Vehicles at 20% of the written down value. Fixtures & Fittings at 15%
on cost.
(d) Apportion expenses according to floor area. Hardware 240-m2 Furniture 360m2
(e) Depreciation of fixtures & Fittings and Motor Vehicles should be shared equally by the
two departments.
Required
(a) The Statement of comprehensive income in columnar form to show gross profit and net
profit for each department for year ended 31 December 2004
(b) The Statement of Financial Position as at December 2004.
Q4
J. Matinde started a retail business and divided it into two departments. The following trial
balance was extracted from his books on 31 December 2005.
$ $
Sales Dept A 78 330
Dept B 81 400
Purchases Dept A 49 960
Dept B 62 720
Carriage Inwards Dept A 5 600
Dept B 4 260
Salaries Dept A 12 600
Dept B 9 400
Office expenses 10 300
Rent & Rates 9 140
Water & Lights 2 410
Insurance 5 890
Stationery 1 390
Debtors & Creditors 12 410
Bank 7 220
Cash 690
Drawings 2 220
Suspense 14 200
Capital 113010
286 940 286 940

Additional information $
(a) Stocks (31 December 2005) Dept A 14 460
Dept B 10 700
(b) Depreciate Motor Vehicles by 20% p.a Furniture & Equipment by 10% p.a
(c) Apportion all expenses equally between the two departments
Required
(a) The departmental Statement of comprehensive income in columnar from to show gross
and net profit for each department for year ended 31 December 2005.

CHAPTER 16
COMPANY ACCOUNTS
The following information was obtained from the books Paida Ltd on 31 December 2002
Authorized capital $
1000 000 Ordinary shares of $100 each 1 000 000
400 000 8% Preference Shares of $1.00 400 000
Issued capital
900 000 Ordinary Shares of $100 each fully paid $900 000
300 000 8% Preference shares of $1.00 each fully paid $300 000.
General Reserve $500 000
Profit & Loss A/c 1 January 2002 $ 25 000
Net Trading Profit for the year $ 220 500
Interim ordinary share divided paid $ 22 000
Interim Preference share divided paid $ 12 000
On 31 December 2002 the Directors recommended that

i) The Transfer of $100 000 to General Reserve
ii) A Final divided be paid on Preference shares
iii) A final payment of 10 cents in the dollar be paid on Ordinary Shares
Required
a) The profit Loss Appropriation account for year ended 31 December 2002
b) The Statement of Financial Position extract as at 31 December 2002 showing the total of
the shareholders funds.
Q2: State briefly what you understand by the following terms used in connection with Limited
Companies
(a) Authorized Share Capital
(b) Issues Share Capital
(c) Called- up share capital
(d) Preference shares
(e) Debentures
(f) Ordinary Shares
Q3: The share capital of Dombo (Pvt) Ltd on 30 June 2007 was as follows
Authorized capital
800 000 Ordinary Shares of 50c each $400 000
300 000 10% Preference shares of $1.00 each $300 000

Issues capital
600 000 Ordinary shares of 50c each fully paid $300 000
250 000 10% Preference shares of $1.00 each fully paid $250 000
The following additional information is available for the year ended 30 June 2007.
$
Profit and loss as at 30 June 2006 46 000
Net Trading profit before charging debenture interest 126 000
General Reserve 200 000
150 000 8% Debentures of $1.00 each 150 000
Interim Ordinary dividend paid 18 000
Interim Preference dividend paid 12 500
The Directors recommended that

(i) $50 000- be transferred to General Reserve 150 000
(ii) The final Preference divided be paid 18 000
(iii) A final divided of 5c per share be paid to 12 500
The Directors recommended that

(i) $50 000- be transferred to General Reserve
(ii) The final preference divided be paid
(iii) A final dividend of 5c per share be paid to Ordinary shares
Required
(a) The Profit & Loss Appropriation account for the year ended 30 June 2007.
(b) The Statement of Financial Position extract as at 30 June 2007 showing total of
shareholders funds
Q4: The following information was obtained from the books of Pine Ltd on 30 June 2010.
Authorized Capital $
100 000 12% Preference shares of $1.00 each 100 000
150 000 10% Preference Shares of $1. 00 each 150 000
1000 000 Ordinary Shares of 50 cents each 500 000
Issues Capital
$
100 000 12% Preference Shares of $1.00 each 100 000
800 000 Ordinary Shares of 50 cents fully paid 400 000
2 000 10% Debentures of $100 each 200 000
General reserve 200 000
Net trading profit for the year before payment of debenture Interest 110 000
Statement of comprehensive income1 July 2009 67 000

The Directors recommended
(i)Payment of dividends to Preference Shares
(ii) Payment of a dividend for 16% n ordinary Shares
(iii) Transfer of 10 00 to General reserve
Required
(a) The Profit & Loss Appropriation account for years ended 30 June 2010
(b) The Statement of Financial Position extract as at 30 June 2010 showing the total of
shareholders funds
Q5: The details of Kaima Ltd were as follows

Authorized capital
2 000 000 Ordinary Shares of 50 cents each
500 000 10% Preference Shares
Issued capital
1 600 000 Ordinary Shares of 50cents fully paid
350 000 10% preference shares of $1.00 fully paid $
400 000 5% Debentures of $2.00 each
Additional information on 30 September 2010
(i) Net trading profit for the year was 212 500
(ii) Profit & Loss accounts (1October 2009) 52 000
On 30 September 2010, the Directors recommended

i) A transfer of 10 000 to General reserve
ii) A payment of a full year’s dividend on Preference shares
iii) A payment of 15% dividend on Ordinary Shares
Required
(a) The Profit & Loss Appropriation account for the year ended 30 September 2010
(b) The Statement of Financial Position extract as at 30 September 2010
Q6: K. Kondo bought the business of A Dahwa on 1. July 2009 for 120 000. The assets taken
over were valued at
$
Premises 98 000
Stock 5 200
All other assets and liabilities were kept by Dahwa.

On 30 June 2010 in addition to the above information the following additional balances were
taken form the books of Kondo
$
Sales 173 200
Purchases 103 300
Discount received 1 000

Wages 19 400
Distribution expenses 2 400
Petty Cash 60
Cash at bank 3 480
Debtors 6 800
Creditors 4 600
Drawings 25 000
Additional; information
(i) Stock on 30 June 2010 was value at $7 200-
(ii $400 was owing for wages
(iii) Rates prepaid were $600
(iv) Distribution expenses included 200- for carriage inwards
(v) Depreciate Motor vehicles by 20% p.a on cost
Required
a) The statement of comprehensive income for year ended 30 June 2010
b) The Statement of Financial Position as at 30 June 2010.
Q7: Complete the following sentences either by giving the correct word(s) or figure(s). do not write
the whole sentence.
(a)The purchase of a fixed asset is______________expenditure
(b) Debentures earn a fixed rate of_________________
(c) Preference shares earn a fixed rate of________________
(d) A debit balance on a sole traders capital account means that the business is __________
(e) A fixed asset costing 21 000 has an estimated useful life of 5 years after which it will be sold for
1000
The annual depreciation will be______________________
(f) The Issued capital of a company cannot exceed the_______________
(g) Subscriptions in advance from club members are shown as a________in the Statement of
Financial Position.
(h) If closing stock is undervalued net profit will be_________________
(i) The vale of the good reputation and profitability of a business is known as_________________
(j) Working capital is found by deducting_________________ from current assets
(k) Cash discount is an allowance for__________________a________________ is issued for the
additional amount instead of an amended invoice.
Q8: The following sentences are incomplete. Give the word(s) or figure(s) to complete the
sentences. Do not copy the whole sentence
(a)The purchase of stock is_________________expenditure
(b) The proprietors’ account is always called the______________________account

(c) Stock is usually valued at______________price or net realizable value whichever is lower
(d) A bank overdraft will be indicated by a_____________balance in the bank account in the cash
book
(e) When a business is bought the amount paid over and above the value of the total net assets is
called_________________
(f) In a manufacturing account prime cost consist of direct materials plus_____________
(g) If an asset is depreciated regularly by a percentage of the original cost the method is
called____________
(h)Two reasons why the bank statement credit balance may be larger than that in the cash book
are________________and__________________
(i) Debentures are a form of ____________________
(j) If the mark-up on goods bought for resale is 25% then the margin is___________________%
(k) Subscriptions due are shown as __________________in the Balance Sheet
Q9: Complete the following sentences by filling in the missing words(s) or figure (s)
(a)The payment of business rent is______________________expenditure

(b) The book in which goods returned by customers are first recorded is called________________
(c) If the margin is 25% then the mark-up is___________________
(d) Limited companies are owned by______________________
(e) The method of calculating depreciation where a fixed rate is applied on the book value each year
is called___________________
(f) The main purpose of a trial balance is____________________
(g) A debit balance on a Sales ledger control account should be equal to the_________________
(h) The Opening capital of a sole trader is $10 000- and the closing capital is $13 500. If the
drawings for the year were $2 900. Then the net profit for the year was_____________
(i) The main purpose of a manufacturing account is to find the___________________
(j) If fixed assets are $25 000. Current assets $8 400 current liabilities $6 200 then the working
capital is________________ and the capital is_____________________
(k) The loss in value of a fixed asset through wear and tear is called____________________
Q10: State what is meant by the following terms. State the formula where possible.
(a) Working capital
(b) Owners’ Equity
(c) Capital Employed
(d) Authorized share capital
(e)Issued Share Capital
(f) Loan capital

CHAPTER 17
AMALGAMATION OF BUSINESS
Tom and Jerry traded separately. On 30 June 2008, their Statement of Financial Positions
were as follows.
Tom Jerry Tom Jerry
$ $ $ $
Premises 30 000 24 000 Capital 72 200 30 900
Furniture 21 000 15 200 Loan 18 000
Stock 11 800 9 700 Creditors 6 000 4 800
Debtors 10 200 8 400
Bank 5 200 Bank ______ 3 600
78 200 57 300 78 200 57 300
Tom and Jerry agreed to amalgamate their business and become equal partners as from 1 July 2008.
It was agreed that
(i) The partnership should take over all assets and liabilities of the two business except for
Premises belonging to Tom and the loan owed by Jerry.
(ii) Furniture should be revalued at $19 000 for Tom and $18 000 for jerry
(iii) $900 of Tom’s debtors were bad and should be written off
(iv) Goodwill was to be valued at $9 000 for Tom and $6 800 for Jerry
(v) All other items were to be taken over by the partnership at the Statement of Financial
Position values
Required
(a)Draw up the two capitals accounts for the partners showing the balances on 1 July 2008.
(b)Draw up the Statement of Financial Position of the partnership 1 July 2008
(c)Briefly explain the meaning of goodwill.

CHAPTER 18
Answers to chapter One
Answer to question 1:
(i) Dr Office furniture A/c Cr ZB furnishers
(ii) Dr S. Ncube A/C Cr Bank A/C
(iii) Dr stationery A/C Cr Ezo stationers A/C
(iv) Dr J. Piggy A/C Cr Sales A/C
(v) Dr H Lim A/C Cr Office Furniture Disposal A/C
(vi) Dr Delivery A/C Van Cr Fax Motors A/C
(vii) Dr returns Inwards A/C or Sales Returns A/C Cr J. Peg A/C
(viii) Dr Bad Debts A/C Cr R. Clemence A/C
(ix) Dr Rent A/C Cr Bank A/C
(x) Dr P Sithole A/C Cr Interest Earned A/C
Answer 2:
(i) F. Jani A/C $200-Cr
(ii) Rent A/C $ 600-Cr
(iii) Chikozho A/C $ 700- Dr
(iv) Bank A/C $ 150- Cr
(v) Insurance A/C $320- Dr
(vi) Bank A/C $180- Dr
Answer 3:
M.Kudzai A/C
2004 $ $
June 6 Bank 550 2004 Balance b/d 600
June 6 Discount 50 June 12 Purchases 1 820
June 17 Returns 140
June 23 Bank 760
June 23 Discount 40
June 30 Balance c/d 880
2 420 2 420
July 1 Balance b/d 880
C. Sibanda A/c
2004 $ 2004 $
June 1 Balance c/d 720 June 2 Bank 702
June 4 Sales 900 June 2 Discount 18
June 14 Sales 1 850 June 9 Returns 150
June 19 Bank 702 June 26 cash 1960
June 19 Discount 18
Disallowed
_________ “30 Balance b/d 1360
4190- 4190
July 1 Balance b/d 1360-

3 b) M Kudzai A/C- creditors Ledger or Purchases Ledger
C. Sibanda A/C- Debtors Ledger or Sales Ledger
Answer 4 STATIONERY A/C

2004 $ 2004 $
Mar 1 Stock b/d 150 Mar 7 RB. Stationers 35
Mar 4 R.B Stationers 260 Mar 31 to Profit & Loss A/C 725
Mar 10 Cash 190
Mar 14 Bank 380 Mar Stock c/d 220
______ _____
980- 980-
April Stock b/d 220-
Answer Question 6
ANSWER 5
Land and Buildings

$ $
1 January 2001 balanced b/d 200 000
31 Dec 2001 Disposal 200 000
200 000 200 000
Repairs A/C
$ $
1 Jan balance b/d 500
Bank 2160
31 Dec Profit & Loss A/C 1 990
31 Dec Owing c/d 330 ____
2490 2490
Balance b/d 330
Rent Receivable A/C
$ $
1 Jan Owing b/d 700
31 Dec P & L 8770 Bank 9 720

31 Dec Advance c/d 250
9720 9 720
Balance b/d 250

Owen’s Account
6(a) 2002 $ 2002 $
Nov 1 Balance b/d 5 000 Nov 12 Bank 4 750
Nov 4 Sales 2 625 Nov 12 Discount 250
Nov14 Sales 2 100 Nov 27 Bank 2 350
Nov 22 Debt note 175 Nov 30 Office Furniture 1 900
Nov 30 Balance c/d 650
_____ ____
9 900 9 900
Dec 1 Balance b/d 650
6b: Stationery A/C

2010 $ 2010 $
June 1 Stock b/d 1 200 June 30 Profit & Loss A/C 5070
June 14 Bank 2 900 June 30 Stock c/d 900
June 24 Compt Stationers 1 870 _____
5970 5970
July 1 Stock b/d 900
Answer to Question 7
A (i) Amount owing to Bax at the beginning of the month
(ii) Amount paid to Bax by cheque
(iii) Discount allowed by Bax
(iv) Goods returned to Bax
(v) Goods purchased from Bax
(vi) Amount owing to Bax at the end of the month
(vii) Insurance prepaid
(viii) Insurance paid by cheque
(ix) Amount or expense of insurance for the year
(x) Insurance prepaid at the end of the year
b) Creditors Ledger
c) Current Assets.

CHAPTER 19
ANSWER TO CHAPTER 2
Answers to Q 1
Revised Cash Book

$ $
Balance b/d 1 070 Stop Order 190
Dividends 210 Charges 360
Credit transfer 1 860 Balance c/d 2 590
3 140 3 140
Mugijima: Bank Reconciliation Statement as at 31 July 2006

$ $
Balance as per Bank Statement 455
Add Deposits not yet cleared
M. Rumbidzai 1 710
S. Tonderai 1 990 3 700
4 155
Less Cheques issues but not presented

N. Noel 004 870
City Council 005 695 1565
:- Balance as per Cash Book 2590
Or
Balance as per cash Book 2 590

Add cheques issued but not presented
Noel 004 870
City Council 005 695 1 565
4 155
Less Deposits not yet credited

M. Rumbidzai 1 710
S. Tonderai 1 990 3 700
:- Balance as per Bank Statement 455

Answer to question 2
Revised Cash Book

$ $
Dividends S.N. 610 Balance b/d 3 285
Credit transfer 1 240 Stop order B/C 830
Dishonoured cheque 910
Balance c/d 3 615 Bank charges 440
5 465 5 465
Balance b/d 3 615
2b: Phenduka: Bank Reconciliation Statement as at 31 August 2010 $

Overdraft as per Bank statement 1 220
Add Deposits not yet cleared $
N. Njiva 510
Kadimba 290
Desai 1 375 2 175
955
Less Cheques issues but not presented

Miller 0014 885
T. Duke 0015 975
Stefan 0117 2 710 4 570
Overdraft as per Cash Book 3 615
Or
Overdraft as per cash Book 3 615
Add Cheques issued but not presented. Miller 0014 885
T Duke 0015 975
Stafan 007 2 710 4 570
955
Less Cheques issued but not cleared N. Njiva 510

Kadimba 290
Desai 1 370 2 175
:- Overdraft as per Bank statement 1 220

Answers to Q 3a)
Revised Cash Book
$ $
Balance b/d 950 Dishonoured cheque 1 310
Dividends 1 440 Bank Chagres 760
Credit transfer 1 005 Stop order: At 220
_____ Balance c/d 1105
3 395 3 395
Bal b/d 105
3b: Zemba: Bank Reconciliation Statement as at 30 Sept 2007
$ $
Balance as per Bank statement 1 945
Add Deposit not yet cleared: Zowa 1 820
Gwatidzo 1 570 3 390
5 335
Less cheques issued but not presented

K. Lee 0104 1 500 1 500
Macdonalds 0 105 1 960
Carry 0 106 770 4 230
:- Balance as per cash Book 1 105
Or
Balance as per Cash Book 1 105
Add cheques issued but not presented
K. Lee 0104 1 500
Macdonals 0105 1 960
Carry 0106 770 4 230
5 335
Less Deposits not yet cleared: Zowa 1 820
Gwatidzo 1 570 3 390
:- Balance as per Bank Statement 1 945

Revised Cash Book
4a
$ $
Balance b/d 1 760 Stop order 180
Dividends 365 Dishonoured cheque 520
Credit transfer 220 Bank charges 116
Balance b/d 1 529
2 345 2 345
4b: N. Nzira: Bank Reconciliation Statement as at 31 July 2005
$
Balance as per bank statement 2 110
Add Deposits not yet cleared 1 540
3 650
Less Cheques issued but not presented 2 121
: - Balance as per Cash Book 1 529
Or
Add Cheques issues but not presented 2 121
3 650
Less Deposit not yet cleared 1 540
:- Balance as per Bank statement 2 110
5a) Revised Cash Book
$ $
Balance b/d 3 889 Stop order 150
Error on cheque 72 Bank charges 524
_________ Balance c/d 3 287

3 961 3 961
bal b/d 3 267

M. Bara: Bank Reconciliation Statement as at 31 March 2010
$
Less Deposits not yet cleared 3 230
057
Add Cheques issued but not presented 4 135

4 192
Less cheque charged in error 832
:- Balance as per Bank Statement 3 360
Answer to Q6a
Revised Cash Book

$ $
Error on cheque 18 Balance b/d 380
Credit transfer 210 Stop order 40
Bank charges 118
Balance c/d 310
538 538
6b: Chamunorwa: Bank Reconciliation Statement as at 30/06/05

$
Balance as per Cash Book 310 O/D
Add Cheques issued but not presented 1 037

727O/D
Less Deposit is not yet credited 1 680
: - Balance as per Bank Statement 953 O/D

CHAPTER 20
Answers chapter 3
Trial balance as at 31 December 2007
$ $
Sales 63 000
Purchases 53 500
Returns Inwards 390
Buildings 17 800
Discount received 2070
Rent & Rates 880
Stationery 1 220
Bad debts 1 160
Debtors 4 600
Creditors 9 960
Equipment 10 000
Capital 67 660
144 460 144 460

CHAPTER 21
Answers to chapter 4
1(a) Capital Expenditure is the cost of acquiring a fixed asset and revenue expenditure is the
costs of the day to day running of the business
b(i) Capital Expenditure
(ii) Capital Expenditure
(iii) Revenue Expenditure
(iv) Revenue Expenditure
(v) Revenue Expenditure
(vi) Capital expenditure
(vii) Revenue Expenditure
(viii) Revenue Expenditure
(ix) Revenue Expenditure
(x) Revenue Expenditure
2a) Capital Expenditure is money spent on buying fixed assets and Revenue
Expenditure is money spent on expenses of the business
(bi) Revenue Expenditure
(ii) Capital Expenditure
(iii) Revenue Expenditure
(iv) Revenue Expenditure
(v) Revenue Expenditure
(vi) Revenue Expenditure
(vii) Capital Expenditure
(viii) Revenue Expenditure
(ix) Revenue Expenditure
(x) Revenue Expenditure
3a(i) Capital expenditure is money spent on acquiring a fixed asset or adding value to a fixed
asset
(ii) Revenue expenditure is the cost of running the business on a daily basis
b)(i) Net profit will decrease or will be understated

(ii)Fixed assets will be understated
c) Revenue Expenditure
Payment of wages to workers
Carriage costs on good sold
Payment of interest on loan
Payment of school fees for staff on development study
Payment of business rent
Payment of insurance on new vehicle

Capital Expenditure
Payment of builder for addition to sales premises
Payment of new furniture for office use
Purchase of delivery Van for business use
Purchase of tyres for new vehicle
4a) Current Assets less current liabilities
b) It will fail to meet or pay its short- term debts

(ii) It will not have money to meet day to day expenses.
(c)(i) Delaying payments to long term creditors
(ii) Borrowing money from long-term creditors.
d) Calculation of Working Capital

$ $
Current Assets
Closing Stock 8 860
Debtors 9 940
Cash at bank 4 800
24 320
Less Current Liabilities
Creditors 5 900
Expenses owing 630 6 530
:-Working capital 17 790
5 Answer
Bank Account
$ $
(a) Debtors 6 330 Balance b/d 2 890
Sales 2 370 Creditors 7 250
Expenses 880
Balance c/d 2 320 _________
11 020 11 020
Balance b/d 2 320

(d) Gamu: Statement of Financial Position as at 31 May 2007
$ $ $
Capital 25 900
Less Net Loss 3 040
22 860
Less Drawings 960
21 900
Financed by
Fixed Assets COST DEPR N.B.V
Motor Vans 13 450 2 690 10 760
Fixtures & Fittings 10 580 10 580
24 030 2 690 21 340
Currents Assets
Stock 5 370
Debtors 1 670
7 040
Less Current liabilities
Creditors 4 160
Bank Overdraft 2 320 6 480
Working capital 560
21 900
Answer 6:
Amount of increase Amount of decrease
In Working capital in Working capital
$ $
(i) 3 900
(ii) No effect
(iii) 960
(iv) 5 000
(v) No effect
(vi) 400
Answer 7 Capital A/c
$ $
(a) Drawings 3000- Balance b/d 38 750
Motor Vehicle 10 000
Balance c/d 47250- Net profit 1500
50250- 50 250

Balance b/d 47 250
(b) Tambaoga: Statement of Financial Position as at 1 November 2004
Fixed Assets $ $ $
Office Equipment 17 000
Motor Vehicle 10 000
72 000
Current Assets
Stock 4 140
Debtors 2 200
7 150

Creditors 9 360
Bank overdraft 2 540 11 900
Working capital (4750)
67 250
Financed by
Capital 47 250
Long-term liability
Loan 20 000
67 250

CHAPTER 22
Makama (Private) Limited
Answer to Q1a)
Motor vehicles Account
$ $
1 Jan 2010 balance b/d 200 000 1 November Disposal 75 000
31 December Balance c/d 125 000
200 000 200 000
Balance 125 000
Provision for Depreciation A/C

1 Nov $ $
Disposal 30 000 1 January bad b/d 64 000
31 Dec Balance c/d 59 000 31 Dec P& L 25 000
89 000 89 000
Balance b/d 59 000
Disposal A/C
$ $
Motor Vehicle 75 000 Provision for Depreciation 30 000
Profit & Loss 45 000 Cash 90 000
120 000
Answer to Q2
M Dimba
Machinery Account
$ $
1 Jan bal b/d 24 000 31 Dec Disposal 12 000
31 Dec Ace Ltd 18 000 31 Dec bal c/d 30 000
42 000 42 000
Bal b/d 30 000
Provision for Depreciation

$ $
31 Dec Disposal 4 320 1 Jan bal b/d 4 800
31 Dec Bal c/d 4 320 31 Dec P&L 3 840
8 640 8 640
Bal b/d
Disposal A/C

$ $
Machinery 12 000 Cash 7 150
Provision for Depreciation 4 320
P&L 530
12 000 12 000

CHAPTER 23
Answer to Q1a)
$ $
31 Dec balance c/d 900 2003 31 Dec P & L 900
2004
Dec 31 profit & Loss 175 1 Jan 31 Balance b/d 900
Dec 31 Balance c/d 725 _____
900 900
2005 2005
Dec 31 Balance c/d 860 Jan 1 Balance b/d 725
_________ Dec 31 P & L A/c 135
860 860
2006 2006
Dec 31 Balance c/d 1 205 Jan 1 Balance b/d 860
________ Dec 31 Profit & Loss 345
1 205 1 205
2007
Dec 31 Bad Debts 260 1 205
Dec 31 Balance c/d 1045 ____
1 205 2008 1 205
Jan 1 Balance b/d 1 045
Statement of Financial Position extract as at 31 December 2003 $ $

b) Debtors 18 000
Less Provision for bad debts 900 17 100
Statement of Financial Position extract as at 31 December 2004
Debtors 14 500
Less Provision for bad debts 725
Statement of Financial Position extracts as at 31 Dec 2008 13 775
Statement of Financial Position extract as at 31 December 2006

Debtors 24 100
Less Provision for bad debts 1 205 22 895
Statement of Financial Position extract at 31 December 2007
Debtors
20 900
Less Provision for bad debts 1 045 19 855
Statement of Financial Position extract at 31 December 2007
Debtors
Less provision for bad debts 17 200

860 16 340
Q2
Provision for Bad Debts A/c
2000 $ 2000 $
(a) Dec 31 Balance c/d 910 Dec 31 Debt b/d 910
______ ______
910 910
2001 2001
Dec 31 Balance c/d 1 458 Jan1 Balance b/d 910
______ Dec 31Bad Debts 548

1 458 1 458
2002
Dec 31 Balance c/d 875 ______
Dec P& L 583 1 Jan balance b/d 1 458
1 458 2003
Jan 1 Balance b/d 875
(b) Tafadzwa A/c
2002 2002 1 267.5

Jan 7 Sales 1 300 Mar 12 Bank 975
May 22Dishonoured cheq 12 67.5 Mar 12 Discount 32.5
Disallowed Disc 32.5 Aug 30 Bad Debts 650
Aug 30 Bank 650
2 600 2 600

CHAPTER 24
ANSWERS TO CHAPTER 7
Q1:
a) D. Karuru; Statement of comprehensive income for year ended 31 Dec 2009
$ $ $
Sales 86 900
Less Cost of Sales
Opening stock 5 490
Add Purchases 64 690
Less Drawings 620 64 070
69 560
Less closing stock 4 990 64 570
Gross profit 22 330
Less expenses
Insurance 1 740
Add Amount due 390 4 040
Rent & Rates 1 060
Less amount prepaid 165 895
Stationery 1 210
Less Stock of Stationery 210 1 000
Depreciation
Motor Vehicles 1 310 15 050
Net Profit 7 280

1b:J. Karuru: Statement of Financial Position as at 31 December 2009
$ $ $
Capital 100 380
Add net profit 7280 107 660
Less Drawings 4420
103240
Represented by
Land & Buildings 89 000 2 225 86 775
Motor Vehicles 13 100 1 310 11 790
102 100 3 535 98 565
Current Assets
Stock 4 990
Debtors 5 500
Bank 11 100
Amount prepaid 165
Stock of Stationery 210
Cash 240
12 215
Creditors 7 150
Expenses due 390- 7 540
Working capital
4675
103240

a) Answer 2: T Katsenga: Statement of comprehensive income for year ended 30 June
2010
$ $ $
Sales 96 930
Less Returns Inwards 330
96 600
Less Cost of Sales
Opening Stock 18 400
60 980
Less Returns outwards 240 60 740
79 140
Less Closing stock 20 510 58 630
Gross profit 37 970
Add Discount Received 1 840
Less Expenses 39 810
Carriage outwards 650
Insurance 2 220
Less Amount prepaid 220 2 000
Interest on loan 250
Add Amount due 250 500
Bad debts provision 630
Depreciation
Furniture & Fittings 1 620 30 435
Net Profit 9 375

2b: T. Katsengai Statement of Financial Position as at 30 June 2010
$ $ $
Motor Vehicles 28 500 1 425 27 075
Furniture & Fittings 16 200 1 620 14 580
44 700 3 045 41 655
Current Assets
Stock 20 510
Debtors 12 600
Cash 1 960
Amount prepaid 220
34 660
Creditors 15180
Loan 5000
Amount due (390+250) 650
Bank overdraft 1020 21 840
Working capital 12 820
54 475
Financed by 54 300
Capital
Add net profit 9 375
63 675
Less Drawings 9 200
54 475

3a) B Jakarabi: Statement of comprehensive income for year 30 Sept 2003
$ $
Sales 255 500
Add Credit sales 1 000
256 500
Less Cost of sales
Opening stock 20 050
Carriage Inwards 560 187 680
207 730
Gross profit 73 570
75 980
Less Expenses
Lights & Water 6 720
Insurance 1 010
Stationery 1620 1 620
Less stock of stationery 180 1 440
Bas Debts 740
Add Provision increase 455 1 195
Rent & Rates 8150
Less amount prepaid 180 7 970
Depreciation
Net Profit 21 645

3b:B. Jakarabi: Statement of Financial Position as at 30 September 2008
$ $ $
Capital 147 890
Add net profit 21 645 169 535
Less Drawings 22 000
147 535
Represented by
Fixed Assets COST DEPR N.B.V.
Land & Buildings 67 000 - 67 000
Delivery Vans 48 500 4 850 43 650
115 500 4 850 110 650
Current Assets
Stock 2 4800
Debtors 20100
Bank 3 280
Cash 920
Amount prepaid 180
Stock of stationery 180
48 505
Less Current liabilities 11 620 36 885
Workings Capital 147 535

4a): J Jimu: Statement of comprehensive income for year ended 31 March 2009
$ $ $
Sales 95 330
94 680
Less Cost of sales
Opening Stock 3 720
Wages 1 055
60 045
Airfreight charges 2 430 62 475
66 195
Less Closing Stock 4 135 62 060
Gross profit 32 620
35 090
Less Expenses
Heating & Lighting 1 760
Less Repacking cost 1 055 3 165
Interest on Loan 1 000
Rates & Insurance 1250
Bad Debts 1 115
Less provision decrease 220 895
Depreciation
Net Profit 19 768

4b: J. Jimu: Statement of Financial Position as at 31 March 2009
$ $ $
Capital 20 655
Add Net profit 19 768
40 423
Less Drawings 2 900
37 523
Long- term-liability Loan (PonVon Bank) 20 000
57 523
Represented by
Motor vehicles 35 300 5 807 29 493
Furniture & Equipment 23 700 1 665 22 035
59 000 7 472 51 528
Current Assets
Stock 4 135
Debtors 6 800
Less provision for bad debts 680 6 120
Bank 1 070
Cash 820
Amount prepaid 165
12 310
Creditors 5 315
Loan interest 1 000 6 315
57 523

Answer 5a: C. Jani: Statement of comprehensive income for year ended 31 Dec 2005
$ $ $
Sales 83 110
Less Cost of sales
Opening stock 5 680
45 640
Gross Profit 42 140
Less Expenses 44 275
Les capital Expenditure 2 478 9 912
Bank charges 1 120
Loan interest 20 000
Bad debts 822
Depreciation
43 717
Net Profit 558
C. Jani: Statement of Financial Position as at 31 December 2005
$ $ $
Capital 147 019
Add Net Profit 558
147 577
133 577
Long- term liability
Loan (Zunde Bank) 100 000
233 577
Represented by:
Premises (150 00 + 2478) 152 478 152 478
Motor Vehicles 44 100 8379 35 721
Furniture & Fittings 39 500 4195 35 305
236 078 12574 223 504
Current Assets
Stock 4670
Debtors 16 220
Bank 3 125
Cash 660
23 053
Creditors 11 860
Bank charges 1 120 12 980
233 577
T J Ncube
Capital Account
$ $
a) Drawings 7 500 Balance b/d 204 500
Computer 35 000
Balance c/d 232 000
239 500 239 500
Balance b/d
b) TD Ncube: Statement of Financial Position as at 1 January 2005

232 000
Capital 232 000
Long term- liability 45 000
277 000
Represented by
Fixed Assets
Delivery Vehicle 80 000
Office Equipment 85 000
345 000
Current Assets
Stock (22 000- 7 500) 14 500
Debtors (20 000- 16 100) 3 900
18 900
Creditors 39 000
Working capital (68 000)
277 000
CHAPTER 25
Answers to chapter Chapter 8
Answer to Q1
Sales Ledger Control Account

$ $
Balance b/d 16 400 Cheques & Cash received 11 150
Credit Sales 20 050 Discount Allowed 330
Dishonoured cheques 4 460 Returns Inwards 610
Interest charged 1 005 Bad debts 1 870
Cash refund 890 Set off 370
Balance c/d 1 430
Balance c/d 29 905
______ ______
442 535 44 235
Balance b/d 29 905 Balance b/d 1 430
Answers to Q2
Purchases Ledger Control A/c

$ $
Cheques paid 10 050 Balance b/d 12 250
Discount Received 460 Credit Purchases 14 260
Returns outwards 710 Interest charged 2 115
Set off 990 Cash refund 370
Balance c/d 16 860 Balance c/d 75
______ _____
29 070 29 070
Balance b/d 75 Balance b/d 16 860
3a) Answer 3: Total Debtors Account
$ $
(a) Balance b/d 4 160 Cheques received 47 750
Interest charged 220 Discount Allowed 1 200
:-Sales 48 990 Balance c/d 2 920
______ ________
53 370 53 370
Balance b/d 2 920
3b: Total Creditors Account

$ $
Payment to creditors 39 260 Balance b/d 6 670
Returns outwards 1 960 :-Credit Purchases 45 830
Balance c/d 8440

________ ___________
52 500 52 500
Balance b/d 8 440
Answer Q4a Sales Ledger Control Account
$ $
Balance b/d 17 290 Balance b/d 640
Sales 62 380 Returns Inwards 265
Dishonoured cheque 730 Bad debts 495
Cash refund 110 Discount Allowed 675
Interest charged 205 Cheques received 41 415
Balance c/d 225 Set-offs 990
_______ Balance c/d 36 460

80 940 80940
(b)Purchases Ledger Control Account

$ $
Cheques & Cash paid 39 240 Purchases 48 975
Discount received 590 Balance c/d 165
Set – off 990
Balance c/d 13 595 ______

55 100 55 100
Answer Q 5
a) Sales Ledger Control Account
$ $
Balance b/d 17 440 Cash & Cheques received 39 640
Credit Sales 49 105 Returns Inwards 550
Dishonoured cheques 195 Discount Allowed 610
Interest charged 185 Bad debts 880
Set-offs 470
Balance c/d 260

Balance c/d 25 035
_________ ______
67 185 67 185
b)Purchases Ledger Control Account
$ $
Returns outwards 320 Balance b/d 12 970
Discount Received 425 Credit Purchases 28 070
Cheques & Cash Paid 29 010 Cash refund 225
Set-off 470
Balance c/d 130
Balance c/d 11 170
___________ ______
41 395 41 395
Balance d/c 130 Balance b/c 11 170
CHAPTER 26
Answer to Q1(i) Arithmetic errors
(ii) Failure to post an entry
$ $
Bi) A Moyo 300

B Moyo 300
Being goods sold recorded in wrong account now corrected
(ii) Repairs 650
Motor Vans 650
Being repairs recorded in a wrong account now corrected
(iii) Sales 1 400
Office furniture Disposal 1 400
Being office furniture sold recorded in a wrong account
(iv) Stationery 250
M.N. Stationers 250
Being stationery bought not recorded now recorded
(v)Rent 400
Bank 400
Being payment of rent not recorded now recorded
(vi) Sales Returns or Returns Inwards 220
G. Nyambuya 220
Being goods returned previously not recorded.
(vii) Drawings 300
Sundry Expenses 300
Being drawings recorded in a wrong account now corrected
(viii) S. Ndebele 500

Sales 500
Being goods sold previously not recorded now recorded
(ix)Bank 700
A. Amon 700
: Being money received previously not recorded now recorded
(x) S. Simon 900

S. Symons 900
Being a payment previously recorded in a wrong account now corrected
Answer to Q2 (i) Error of omission- it occurs when an entry has not been recorded in books
of accounts
(ii) Error of commission- it occurs when an entry has been recorded in a wrong person’s
account
(iii) Error of principle- it occurs when an expense will have been recorded as a fixed asset or
vice versa
(iv) Error of original entry- it occurs when a wrong figure has been recorded in the books of
accounts
Bi) Suspense 400

Taru 400
Being good purchased previously recorded on the wrong side
DR CR
ii) J. Car 27
Suspense 27
Being goods sold recorded wrongly new corrected
iii) Bank 2000
Cash 2000
Being a deposit wrongly recorded now corrected
iv) Suspense 1 800-
Being a wrong amount recorded now corrected
v) Jameson 550
James 550
Answer to Q3: Being an entry recorded in a wrong account now corrected

a) An error of calculation should be 525- instead of 625
bi) Closing stock is overstated
ii) Cost of goods sold is understated
iii) Net profit is overstated
iv) Current assets total is over stated
v) Fixed assets total is not affected
c)i) Error of omission

ii) Error of principle
iii) Compensating error
iv) Error of commission
v) Error of principle
DR CR
Answer to Q4:ai) Sales 200
Suspense 200
Being an error of casting now corrected
ii) Office Furniture 3000

Office Expenses 3000
Being an error of recording in a wrong account now corrected
iii) Suspense 100
Mhandu 100
Being good returned previously recorded wrongly now corrected
iv) Suspense 400

Purchases (stock) 400
Being an entry not recorded now recorded
v) Suspense 390
Discount Received 390
Suspense A/C
b) $ $
Mhandu 100 Balance b/d 690
Purchases 400 Sales 200
Discount Received 390 ___
890 890
Answer to Q5:ai) Suspense 90

Being an error of posting to the wrong side now corrected
ii) Suspense 120
Sales 120
Being an error of posting a wrong figure now corrected
iii) Suspense 20
Debtors 20
Being an entry not posted to the personal account
iv) Suspense 50
Purchases 50
Being an error of casting now corrected
Suspense Account
Sales 120- Balance b/d 100

Debtors 20 Discount Allowed 90
Purchases 50 ____
190 190
$DR $CR
Answer to Q6:) Repairs 88
Purchases 88
Being an entry recorded in a wrong account now corrected
ii) Purchases 200
Suspense 200
Being an error of casting corrected

iii) Rent Received 70
Rent Payable 70
Suspense 140
` Rent Received 140
Being rent received recorded as rent paid now corrected
iv) Returns Inwards 130
J. Smith 130
Being goods returned not recorded now recorded
v) Suspense 50
Ramos 50
Being an error of recording a wrong figure now corrected

Suspense A/C
Balance b/d 10 Purchases 200
Rent Received 140
Ramos 50 ___
200 200
DR CR
Answer to7(a)i Suspense 200 200
Rent 200
Being an error of casting new corrected
ii) Suspense 900
B. Barnes 900
Being a payment received not posted now posted
iii) Repairs 350

Machinery 350
Being an error of posting to the wrong account corrected.
iv) Purchases returns 120
Returns 120
Sales Returns 240
Suspense 240
Being an entry recorded in a wrong account now corrected
bi) Arithmetic errors

ii) Wrong posting to the ledger
iii) Failure to post to the ledger DR CR
ai) Discount Allowed 90
Answer to Q8
Suspense A/C
$
Purchases 90 Difference as per TB 330
Sales ledger 67 Njodzi 27
Bank 200 ___
357 357
Trial balance as at 31 March 2003

$ $
Sales 121 400
Purchases 94 205
Debtors 10 270
Creditors 3 460
Stock (1 April 2002) 7 330
Drawings 9 500
Cash at bank 4 470
14 000
138 860 138 860
Answer to Q9 C. Chenyika Trial Balance as at 31 December 2005

$ $
Capital 48 350
Drawings 13 930
Purchases 32 990
Sales 46 940
Debtors 3 290
Provision for bad & doubtful debts 160
Creditors 1 550
Sundry Expenses 12 430
Bank Overdraft 690
Suspense 490
102 730 102 730
DR CR
b) Debtors (J. Smith) 90
Bank 90
Being amount overstated now corrected
ii) Creditor (C. Moyo) 360
Suspense 360
Being an entry wrongly credited now corrected
iii) Sales 310
Office Furniture Disposal 310
Being an entry recorded in a wrong account corrected
iv)Purchases 130
Suspense 130
Being purchases wrongly added now corrected
v) B. Adams 490
Sales 490
Being an entry previously omitted now recorded
Supense A/C
$ $
b) Difference as per TB 490 C. Moyo 360
Purchases 130
_____ ______
490 490
Answer to Q10
Suspense A/C
Sundry expenses 120 Difference as per TB 390
Nyasha 90 Sales 200
Bank 480 Drawings 100
690 690
b) Vaida: Trial balance as at 31 May 2007

$ $
Capital 25 000
Drawings 11 300
Equipment 12 600
Debtors 11 810
Creditors 5 340
Stock 9 900
Cash at bank 4 120
Sales 120 700
Purchases 94 300
Sundry expenses 7080
Balance 70
151 040 151 040
Statement of corrected Net Profit for Year Ended 30 June 2008
$ $
Answer to Q11:. Net profit b/d 25 600
Less Purchases undercast 1 000
Expenses 60 1 060
24 540
Add drawings 250
23 890
Answer to Q12: Trial balance as at 30 April 2009 $
Sales $ 104 320
Purchases 73 308
Debtors 7 300
General Expenses 27 616
Provision for Depreciation Furniture 11 200
Stock ( 1 May 2008) 14 800
Creditors 3 456
Capital 107 440
Drawings 30 960
Suspense 1 120
228 304 228 304 331 096
$ $
bi) Furniture & Equipment 1 440
Purchases 1 440
ii) Expenses 18
Bank 18
iii) Ranga 640
Suspense 640
iv) Purchases 480
Suspense 480
v) Sales Returns 148
Sam 148
c) Suspense A/C
Difference as per T.B 1 120 Ranga 640
______purchase c/d 480
1 120 1 120
Answer to Q13a) Statement to Show Corrected Net Profit for Year Ended 30/06/04
$
Net Profit b/d 20 400
Add Purchase of additional Equipment 1 200
Stock understated 200 1 400
21 800
Less Bad debts written off 600
:- Corrected Net Profit 21 200
b) Statement of Financial Position as at 30 June 2004

Capital 28 000
Add Net Profit 21 200
49 200
16 000
Represented by
Fixed Assets
Equipment (6 600 + 1 200) 7 800
Current Assets
Stock (18 400 + 200) 18 600
Debtors (14 600- 600) 14 000
Bank (9 600- 3 200) 6 400
39 000

Creditors (16800- 3 200) 13 600
Working Capital 25 400
33 200
CHAPTER 27
Answers to Chapter 10
Answer to Q1
T. Mambo: statement of Affairs as at 31 December 2000
$ $ $
Capital 25 000
Add Net profit 10 060 3 506
Less drawings 1 200
33 860
Represented by
Fixed Assets
Delivery Van 13 600
22 100
Current Assets
Stock 5 610
Debtors 9 440
Bank 1 980
Cash 240
Amount prepaid 870
18 140

Creditors 6 380
33 860
Answer to Q2) Calculation of capital
$
Assets: Cash 290
Bank 2 240
Stock 6 220
Debtors 8 140
Motor Vans 30 000
Less Liabilities Creditors 5 990
:- Capital 56 500
b) Tapera Statement of Affairs as at 30 June 2002

Capital 56 500
63 240
Less Drawings 1 700 61 540
Represented by:
Motor Vans 30 000 1 800 28 200
45 600 2 900 42 700
Current Assets
Stock 8 940
Debtors 9 750
Bank 3 450
Cash 680
Amount prepaid 580
23 400
Less Current liabilities 4 220

Amount due 340 4 560
61 540
Answer to Q3: Calculation of capital (1.102)
$
Assets: Equipment 18 700
Debtors 13 390
Stock 11 420
Cash at bank 12 300
106 200
Less Liabilities Creditors 10 680
Rent owing 220 10 900
:- Capital 95 300
b) Calculation of capital (31/12/02)

Assets: Equipment 22 930
Debtors 16 770
Stock 13 900
Bank 6 526
130 586
Less liabilities: Creditors 8550

Rent owing 570 9 120
:- Capital 121 466
Statement showing calculation of net profit

Closing capital 121 466
Less Opening Capital 95 300
26 166
Add Drawings 11 190

:- Net Profit for the year 37 356
Answer to Q4:
Dambudzo: Statement of comprehensive income for year ended 31 Dec 2005
$ $ $
Sales 68 825
Less Cost of Sales
Purchases 23 240
Gross profit 50 575
Less Expenses
Rates 1 260
Insurance 1 120
Rent 3 000
Depreciation
Delivery Van 5 600
Shop Fittings 275 17 245
Net profit 33 330
Dambudzo: Statement of Financial Position as at 31 December 2005
$ $ $
Capital 5 000
38 330
Less Drawings 6 900
______
31 430
Represented by:
Delivery Van 28 000 5 600 22 400
Shop Fittings 7 500 375 7 125
35 500 5 975 29 525
Current Assets
Stock 4 990
Bank 3 170
Cash 465
Amount prepaid 600
9 225
Creditors 7 140
31 430
Answer 5:
T. Warambwa: Statement of comprehensive income for year ended 31 Dec 2007
$
Sales 39 980
Less Cost of sales $
Opening Stock 5 530
19 680
Gross profit 26 550
Less Expenses
Insurance 1 410
Rent 5 000
Depreciation
Furniture & Equipment 700 13 190
Net Profit 13 360
5b:
T. Warambwa: Statement of Financial Position as at 31 December 2007
$ $ $
Capital 25 930
Less Drawings 6 200
33 090
Represented by:
Fixed Assets COST DEPT N.B.V
Furniture & Equipment 24 100 700 23 400
Current Assets
Stock 6 250
Bank 7 410
Amount prepaid 200
13 860

Creditors 3 660
_______
33 090
Answer 6: Damba: Statement of Financial Position as at 31 December 2009
$ $ $
Motor vehicles 56 000 11 200 44 800
Furniture & Fittings 40 000 4 000 36 000
96 000 15 200 80 800
Current Assets
Stock 12 900
Debtors 7 800
Bank 6 640
Cash 1 220
Amount prepaid 860
29 030

Creditors 5 880
103 010
Financed by
Capital 256 000
Less Net Loss 117 990
138 010
Less Drawings 3 500

103 010
Answer 7
Noah Ltd: Statement of comprehensive income for year ended 31 Dec 2010
$
Sales $ 46 700
Less Cost of Sales
Opening stock 4 010
23 310
Gross profit 28 850
Less expenses
Rent & Rates 4 157
Insurances 930
Depreciation
Delivery Vans 1 500
Furniture& Fittings 80 17 715
Net profit 11 435
Noah Ltd: Statement of Financial Position as at 31 December 2010

$ $ $
Delivery Vans 35 000 1 500 33 500
Furniture & Fittings 17 600 800 16 800
52 600 2 300 50 300
Current Assets
Stock 5 460
Debtors 4 995
Bank 9 595
20 050
Creditors 3 945
55 405
Financed by:
Capital 59 230
70 365
Answer Q 8:
S. Ncube Statement of Financial Position as at 31 December 2004
$ $ $ $
Capital 50 000
51 911
39 011
Represented by:
Motor Vehicles 25 000 3 750 21 250
35 000 6 250 28 750
Current Assets
Stock 7 150
Debtors 4 780
Bank 110
Cash 780
Prepaid expenses 910
1 5491

Creditors 4 460
Accrued expenses 770 5 230
39 011
Answer 6a): Mhondiwa Statement of comprehensive income for year ended 31 Dec 2002
$ $ $
Sales 62 490
Less Cost of sales
Purchases 35 540
Gross profit 23 135
23 575
Less Expenses
Rates 3 140
Stationery 1 920
Rent 4 200
Insurance 1 460
Less Account prepaid 220 1 240
Depreciation
Delivery Van 3 340
Furniture 1 260 18 210
Net Profit 5 365
9b.
Mhondiwa: Statement of Financial Position as at 31 December 2002

$ $ $
Capital 50 000
43 945
Represented by: $ $ $
Delivery Van 16 700 3 340 13 360
Shop Furniture 12 600 1 260 11 340
29 300 4 600 24 700
Current Assets
Stock 5 180
Bank 24 440
Amount prepaid 220
29 840
Creditors 9 995
43 945
Answer to Q 9: Jumu’ s Statement of comprehensive income for the quarter ended 30

Sept 2004
$
Receipts from artwork 6 730
Less Cost of sales $ $
Art materials 2 110
Gross profit 4 340
Less Expenses
Rent, rates & Insurance 1 140
Sundry expenses 930
Depreciation
Equipment 150 2 340
Net profit 2 000
9b:
Jimu: Statement of Financial Position as at 30 September 2004
Capital 1 000
3000
$ $ $
Represented by: Fixed Assets COST DEPR N.B.V
Equipment 750 150 600
Current assets
Debtors 480
Bank 1 120
1 600
Creditors 280
Amount due 120 400
1 800
CHAPTER 28
Answer to Q1
Subscriptions A/C
2001 2001
June 1 Amount due b/d 1 020 Jan 1 Amount prepaid b/d 180
Dec 31 To Income & Exp A/C 2 550 Dec 31 Bank 3 240
Dec 31 Amount prepaid b/d 230 Dec 31Amount due c/d 380
3 800 3 800
2002 2002
Jan 1 Amount due b/d 380 Jan 1 Amount prepaid b/d 230
Answer to Q 2:
Jari football club: Statement of comprehensive income year ended 30 June 2004
$ $
Donations 3 200
Gate takings 2 580
Subscriptions 2 930
Add Subscriptions prepaid 210
3 140
Add Subscriptions due 180
Add subscriptions due 3 320
Less subscriptions prepaid 230 3 090
Less Expenditure 8 870

Secretary’s expenses 1 400
Match expenses 1 010
Stationery 430
Less stock of stationery 110 320

Rent of ground 920
Depreciation
Equipment 3 900 8 290
Surplus 580
Jari: Football club: Statement of Financial Position as at 30 June 2004
$ $
Accumulated Fund 25 050
Add Surplus 580
25 630
Represented by:
Current Assets
Subscriptions due 180
Bank 3 630
3 820

Amount due 160 390
Working capital 3530
25 630
Answer to Q 3
Kabondo: Sports Club: Refreshments Trading A/c for year ended 31/12/
$ $
Sales of refreshments 2 610
Less Cost of Sales
Opening stock 580
Add Cost of refreshments 1 110
1 690
Less Closing stock 660 1 030

Bar profit c/d 1 580
Income & Expenditure A/c

Donations 1 840
Subscriptions 3 360
Add Subs prepaid 160
3 520
Add Subs due 100
3 620
Less Subs prepaid 220 3400

6820
Less Expenditure
Secretary’s wages 1330
Rent of ground 990
Games expenses 865
Stationery 295
Less Stock of Stationery 65 230
Depreciation
Equipment 900 4 315
Surplus 2 505
Kabondo Sports Club: Statement of Financial Position as at 31 December 2002
$
Add Surplus 2 505
9 765
Represented by $ $ $
Equipment 6 000 900 5 100
Current Assets
Bank 4 060
4 885

9 765
Answer to Q 4:
Sango Sports Club: Refreshments Trading A/c for year ended 31 Dec 2004
Sales of refreshments $ $ $ 2700

Less Cost of sales
Opening stock 720
Add Purchase of refreshments 985
Less Amount due 85 900

1 620
Less Closing stock 690 930

Bar profit c/b 1 770
Bar profit c/b 1 770

Donations 500
Receipts from Dances 1 850
Subscriptions 3 210
Add subs prepaid 55
3 265
Less Subs due 110

3 155
Less subs prepaid 140

3 015
Add subs due 70 3 085

7 205
Less Expenditure
Dance expenses 845
Rent & Rates 1 770

Less amount prepaid 35 1 735
Depreciation
Equipment 250 3 945

Surplus 3 260
Sango Sports Club: Statement of Financial Position as at 31 December 2004
$ $ $
Add Surplus 3 260
9 870
Represented by
Fixed Assets COST DEPR N.BV

Current Assets
Bank 3 065
Amount prepaid 35
3 860
Less current liabilities

Subscriptions prepaid 140 3 720
Working capital
9 870
Answer to Q 5a:
Goronga Sports Club: Refreshments Trading A/c for year ended
31 December 2007
Sales of Refreshments $ $ 6 400

Less Cost of sales
Opening stock 630
Add Purchase of refreshments 3 700

Add amount due 140 3 840
4 470
Less Closing Stock 810 3 660

Competition fees 1 160
Subscriptions 5 100
Add subs prepaid 135
5 235
Less Subs due 20

5 215
Add subs due 60 5 275
9 175
Less Expenditure
Secretary’s wages 1 500
Prizes 840
Rent 750
Add Amount due 90
1 740
Less Amount due 75 1 665

Depreciation 350 6085
Surplus 3090
Answer 5c:
Goronga Sports Club: Statement of Financial Position as at 31 December 2007
$ $ $
Add Surplus 3 090
10 390
Represented by:
Equipment 7 500 350 7 150
Current Assets
Bank 2 600
3 470

Amount due 90
Creditors for refreshments 140 230
_____
10 390
Answer to Q6a:
Bhuka Sports Club; refreshments Trading A/c for year ended 31 December 2009.
$ $ $
Sales of refreshments 2 580
Less Cost of sales
Opening stock 910
Add Purchase of refreshments 1 645
2 555
Less closing stock 700 1 855
Bar profit c/d 725

Bar profit c/d 725
Donations 1 990
Subscriptions 4 660
Add subscriptions prepaid 65
4 725
Less subscriptions due 100
4 625
Add subscriptions due 190
4 815
Less subscriptions prepaid 220 4 595
7 310
Less Expenditure
Secretary’s wages 1 800
Sundry expenses 550
Rent 1 720
Less Amount due 200 1 520
Insurance 860
Add Amount prepaid 140 1 000
Depreciation 430 5 300

Surplus 2 010
Q6C
Bhuka Sports Club: Statement of Financial Position as at 31 December 2009
$ $
Add Surplus 2 010
7 105
Current Assets
Bank 2 565
3 455
7105
CHAPTER 29
Answer to Q 1
Stefan & Jones : Statement of comprehensive income for year ended 31 March 2004
$
Sales 81 650
Less Cost of sales $ $
Opening stock 6 920
Carriage on Purchases 310 55 110
62 030
Gross profit 26 960
30 300
Less Expenses
Bank charges 230
Bad debts 865
Add Provision
Depreciation
Net profit 13 575
Profit & Loss Appropriation account $
Net profit b/d $ 13 575
Add Interest on Drawings Stefan 180
Jones 310 490
14 065
Less Interest on Capital Stefan 1200

Jones 1200
Salary Stefan 600 3 000
11 065
Share of profits Stefan 5532,50
Jones 5532,50
11 065
Stefan & Jones: Statement of Financial Position at 31 March 2004
Stefan Jones
$ $ $
Capital 40 000 40 000 80 000
Current A/c
Balance b/d (1020) 1370

Interest on capital 1200 1200
Salary 600 -
Share of profits 5 532,50 5 532,50
6 312,50 8 102 50

Interest on drawings 180 310
73380 12710
(1067,50) (4607,50) (5675)
74 325
Represented by
Fixed Assets COST $ DEPR $ N.BV$

Land & Buildings 35 000 - 35 000
Motor Vehicles 32 400 1 620 30 780
67 400 1 620 65 780
Current Assets $ $
Stock 7 340
Debtors 10 500
Bank 1 850
Cash 550
Amount prepaid 200
__________
19 915
Creditors 11 140
74 325
Answer Q 2:
Chikono and Dema: Profit & Loss Appropriation A/c For Year ended 30 June
2008
$
Add Interest on Drawings Chikomo 165
Dema 126 291
19 711
Less interest on capital Chikono 2 120

Dema 1 000
Salary Chikono 2 400 5 520
14 191
Share of profits Chikomo 10 643,25

Dema 3 547,75
14 191
2b: Chikono & Dema: Statement of Financial Position as at 30 June 2008
Chikomo Dema
$ $ $
42 400 20 000 62 400
Capital
Current Accounts
Interest on Capital 2 120 1 000
Salary 2 400 -
Share of profits 10 643,25 3 547,75
15 163,25 4 547,75
Interest on Drawings 165 126
5 665 4 326
9 498-25 221-75 9 720
72 120
Represented by
$ $ $
Delivery Vans 18 000 900 17 100
Furniture & Equipments 28 700 1 300 27 500
46 700 2 200 44 500
Current Assets
Stock 10 850
Debtors 23 500
Bank 5 130
Cash 1 590
Amount prepaid 1 970
43 040
Creditors 13 700
Amount due 1 720 15 420
72 120
Lorraine & Georgina: Profit & Loss and Appropriation account for Year ended 30 June
2010
$ $
Gross profit 27 680
Less Rates & Insurance 3 220
Carriage Outwards 1 980
Bad debts 1 830 7 030
Net profit 20 650
Add interest on drawings Lorraine 385
Georgina 510 895
21 545
Less interest on Capital Lorraine 4 000

Georgina 3 600
Salary Georgina 1 200 8 800
12 745
Share of profits Lorraine 7 647
Georgina 5 098
14 745
Lorraine & Georgina: Statement of Financial Position as at 30 June 2010
Lorraine Georgina
$ $ $
Capital 40 000 36 000 760 000
Current A/c
Balance b/d (660) 1 410

Interest on capital 4 000 3 600
Salary - - 1 200
Share of profits 7 647 5 098
10 987 11 108
Less Drawings
Interest on Drawings 7 700 10200
8 085 10710
2 902 598 3 500
79 500
-
Represented by
$ $ $
Premises 45 000 - 45 000
Delivery Vans 20 000 - 20 000
65 000 - 65 000
Current Assets
Stock 6 660
Debtors 9 000
Bank 1 560
17 220

Creditors 2 720
79 500
Answer to Q4: James & Wonder: Profit & Loss Appropriation A/c for year ended 30 Sept
2008
Net Profit b/d $ 93 040 $

Add Interest on Drawings James 1 000
Wonder 1 400 2 400
95 440
Less interest on Capital James 18 000
Wonder 18 000
Salary 30 000 66 000
29 440
Interest on current A/C James (40) (40)

Under (80) 11760 29 400
Share of profits James
Wonder 17 640
29 440
James Current Account
$ $
Balance b/d 2 000 Interest on capital 18 000
Interest 40 Share of profits 11 760
Drawings 20 000 Salary 16 000
Balance c/d 22 720 ______
45 760 45 760
Bal b/d 22 720
Wonder Current Account

$ $
Interest on Drawings 1 400 Balance b/d 4 000
Drawings 28 000 Interest 80
Interest on Capital 18 000
10 320 Share of profits 17 640
Balance Balance c/d 9 626
39 720
Bal b/d 10 320
Answer to Q 5: Taurai & Vimbai: profit & Loss Appropriation A/c for year ended 31
March 2002
$ $
Net Profit b/d 65 500
Less Interest on Capital Taurai 3 500
Vimbai 2 200
Bonus Taurai 5 980
Salary Vimbai 5 000 16 680
48 820
Share of profits Tarai 29 292

Vimbai 19 528
48 820
Taurai Current Account
Drawings 21 000 Interest on Capital 3 500

Bonus 5 980
Balance c/d 17 772 Share of profits 29 292
38 772 38 772
Balance b/d 17 772
Vimbai: Current Account

Drawings 29 000 Interest on capital 2 200
Salary 5 000
Share of profits 19 528
Balance c/d 2 272
___________
29 000 29 000
Balance b/d 2 272
Answer to Q7 : S. Ndebele C. Khumalo: Statement of comprehensive income for year
ended 30 June 2009
$ $ $
Sales 63 330
62 700
Less Cost of sales

Opening stock 4 950

37 160
Less Returns outwards 820 36 340

41 290
Less closing Stock 4 050 37 240

Gross profit 25 460
Add Discount received 2 160

27 620
Less Expenses
Rent & Rates 1 200
Less Amount prepaid 350 850
Depreciation
Motor Vans 1525
Fixtures & Fittings 525 17 460
Net profit 10 160
Profit & Loss Appropriation account
$
Add Interest on Drawings S. Ndebele 145
C. Khumalo 205 350
10 510
Less Interest on Capital S. Ndebele 3 600

C. Khumalo 3 000
Salary S. Ndebele 2 400 9 000
1 510
Share of profit S. Ndebele 604
C. Khumalo 906
1 510
Answer to Q7
S Ndebele C. Khumalo: Statement of Financial Position as at 30 June 2009
S. Ndebele C. Khumalo
$ $ $
Capital 36 000 30 000 66 000
Current Accounts
Interest n capital 3 600 3 000
Salary 2 400 -
Share of profits 604 906

3 045 4 305
3 559 (399) 3 160
69 160
Promises 40 000 40 000
MotorVans 15 250 1 525 13 725
Fixtures & Fittings 10 500 525 9 975
65 750 250 63 700
Current Assets
Stock 4 050
Debtors 2 830
Bank 1 950
Cash 180
Amount prepaid 350
9 360
Creditors 3 710
Amount due 190 3 900 5 460
Working capital
69 160
CHAPTER 30
Q1:
(i) Turnover = Sales - Sales Returns
$49 670 - $670

= $49 000 -
(ii) Cost of goods sold = Turnover - Gross profit
$49 000 - $9 000
= $40 000-
(ii) Amount of purchases for the year = opening stock
+ Purchases- closing stock
:- 2580 + x-1420= $40 000

1160 + x = $40 000
x = $40 000 1160
x = $38 840
(iv) Rate of stock turn- Cost of Sales

Average Stock
= $ 40 000
(2580 + 1420):- 2
= $40000
$ 2000
= 20 times
(v) Gross profit to Turnover = $9000 x 100

$49000 1
= 18%
Answer Q 2
(i) Turnover = Sales - Sales Returns
= 39 440 - 440
= 39 000
(ii) Cost of goods sold = Opening Stock + Purchases + Customs Duty – purchases Returns
16310 + 12500 + 1400- 8690
= 21520
(iii) Gross profit = Turnover- Cost of sales

39 000 21520
= 17 480
(iv) Mark- up = Gross profit:- Cost of Sales
874
$17 480
$21 520
1076
81%
(v) Margin = Gross profit:- Turnover
$874
$17 480
$39 000
$1 950
= 44%
(vi) Rate of stock turn = Cost of sales:- Average Stock

= $21 520
(16 310 + 8690) :-2
= $21 520
$12 500
= 2 times
Answer 3
(i) Turnover for the year = Sales - Sales Returns
$269000 $16000
= $25300
(ii) Gross profit = 40 x 253 000

100 1
= $101200-
(iii) Cost of goods sold = Turnover – Gross Profit

$25300- 101200
= $151 800
(iv) Net profit = $25x 25300

$100 1
= $63250-
(v) Expenses of running the business= Goss Profit-

Net Profit
$101200- $63 250
= $37 950
(vi) Closing Stock = $151 800 = 10
x
= $151 800 = 10x
$15 180 = x
Opening stock + Closing stock: - 2= $15 180

(19500 + x):- 2= $15180
$19500 + x = $30360
x = $30360 – $19500= $10 860
Q4
125%= 338 400
:- 25% of 338 400

= $84 600
b) Net Profit = $84 600- $40 608 = $43 992
c) Mark- up =¼= 1 = 1
4 -1 3
d) Rate of stock turnover = $338 400- $84 600
= $253 800:- 22 560
= 11 ¼ times
e) Closing Stock = (22 560 x 2) – 28 660
= 45 120- 28 660
= $16 460
Answers Q5 Sales Ledger Control account

(a) $ $
Payments to Crs 22 200 Balance b/d 4 870
Balance c/d 4 070 Purchases 21 400
26 270 26 270
:- Purchases = 21 400
b) Rate of stock turnover = 1900 + 21 400 – 2 300 = 21 000

= 21 000
(1 900 + 2 300):- 2
= 21 000
2100
= 10 times
$
Sales (31 December 2009 560 000
Less Cost of Sales (75% of 560 000) 420 000
:- Gross profit for 2009 140 000
Sales (31 December 2010) 720 000

Less Cost of Sales (75% of 800 000) 600 000
:- Gross profit for 2010 120 000
CHAPTER 31
Answers to CHAPTER 14
1a) Dzapasi Manufacturing account for year ended 30 June 2006
$ $
Stock of raw materials (1 July 2005) 2 370
Add Purchase of raw materials 48 920
51 290
Less stock of raw materials (30 June 2006) 3 180
Cost of Raw materials consumed 48 110
Add Manufacturing Wages 39 220

Royalties 4 460 43 680
Prime Cost 91 790
Add Factory overheads
Factory power 2 770
Factory rent & rates 5 460
Repairs to machinery 4 120
Depreciation of machinery 1 970- 14 320
106 110
Add Opening Work in Progress 4 180

110 290
Less Closing Working Progress 6 340
Production cost of completed goods 103 950
b) Dzapasi: Statement of comprehensive income for year ended 30 June 2006

$ $
Sales of Finished Goods 165410
Less Cost of Sales
Opening Stock 3 610
Add Production cost 103 950
107 560
Less closing stock 5 870- 101 690
Gross profit 63 720
2a) Andy Cole: manufacturing account for year ended 31 December 2004
$ $
Stock of raw materials (1 Jan 2004 9 200
Carriage on raw materials 3 350 112 350
121 550
Less closing stock of raw materials 8 890
Cost of raw materials consumed 112 600
Add Manufacturing Wages 29770
Patent fees 4 260 34 030
Prime cost 146 690
$ $
Rent of factory 9 990
Depreciation of Machinery 3 290 29 700
176 390
Add Opening Working Progress 7 880
184 270
Less Closing Work-in Progress 9 720
Production Cost of completed Goods 174 550
b) Andy Cole: Trading A/C for year ended 31 December 2006

Less Cost of sales
Opening Stock 6 140
180 690
Less closing stock 7750- 172 940
Gross profit 123 160
Q3: Tsikira Manufacturing A/C for year ended 31 December 2007
$ $
Stock of raw materials (1 Jan 2007) 20 400
Carriage on raw materials 4 490
181 640
Less Returns on raw materials 1 200 180 440
200 840
Less Stock of raw materials (31 Dec 2007) 13 400
Cost of Raw materials Consumed 187 440
Patent Fees 16 650 109 350
Prime Cost 296 790

Factory power 12 900
Add Amount due 3 700 16 600
Rent & Rates (3/5 of 34 300) 20 580
346 570
Add Opening work in Progress 17 200

363 770
Less Closing Work in Progress 12 900
Production cost of completed Goods 350 870
Tsikirai Trading A/C for year ended 31 December 2007

Less Cost of sales
Opening Stock 19 800
Less drawings 2 500 348 370
368 170
Less closing stock 11 500- 356 670
Gross Profit 104 230
Q4: Munyaradzi Manufacturing A/C for year ended 30 June 2009
$ $
Stock of raw materials (1 July 2008) 4 810
Less Returns on raw materials 3 460 113 290
118 100
Less Stock of raw materials (30 June 2009) 9 600

Cost of raw materials consumed 108 500

Royalties 5 100 94 540
Prime Cost 203 040

Depreciation of machinery 41 200 53 400
256 440
Add opening work-in progress 5 520
261 960
Less closing work-in progress 2810
Munyaradzi Statement of comprehensive income for year ended 30 June 2009
$ $
Sales of Finished goods 459 300
Less Cost of sales

Opening stock 6 330

265 480
Less Expenses
Selling distribution expenses 13 600

Carriage on sales 5 400
General office expenses 7 260
Bad debts 1 500

Less Provision decrease 340 1 160
Stationery 2 800
$ $ $
Less Stock of Stationery 720 2080
Depreciation
Net profit 121 270
Munyaradzi Statement of Financial Position as at 30 June 2009
$ $
Capital 214 000

335 270

321 270
Represented by
Fixed Assets Cost Depr N.B.V
Machinery 206 000 41 200 164 800
Delivery Vans 185 000 46250 138 750
391 000 87 450 303 550
Current Assets
Stocks Raw Materials 9 600
Debtors 10 400
Cash 3 900

Less Current liabilities 30 110
Creditors 11 110
321 270
Q5:a) Lameck & Donald: Manufacturing A/C for year ended 31 December 2009
$ $
Add Carriage on raw materials 91 000
121 800
Less Stock of raw materials 12 400
Cost of Raw Materials Consumed 109 400
Add Manufacturing Wages (factory) 85 000
Royalties 11 200 96 200
205 600
Add Factory Overheads
224 380
Less Closing Work in Progress 16 130
b) Lameck & Donald Statement of comprehensive income For year ended 31 Dec 2009
$
Sales of Finished Goods $ 414 300
Less cost of sales
Production Cost 208 250-

Less Expenses
Carriage on Sales 13970
Advertising 12 660
Bad debts 12930
Selling expenses 21 100
Depreciation of Delivery Vans 11 900 72 560
Net Profit 148 450
CHAPTER 32
Q 1 Chipito: Trading A/C for year ended 30 September 2008
Dept A Dept B Dept A Dept B

$ $ $ $
Sales 197 480 101 560
Less Cost of sales
Opening Stock 12 900 16 400
Add Purchases 66 140 72 390
Carriage Inwards 11 440 9 670

90 480 98 460
Less Closing stock 15 960 18 460 74 520 80 000

Gross profit 122 960 21 560
2aTsano: Statement of comprehensive income for Year ended 30 June 2008
Clothing Groceries Clothing Groceries

$ $ $ $
Sales 330 100- 294 200
Less Cost of Sales
Opening stock 18 840 16 220

200 250 189 190
Less Closing Stock 13 200- 11 630 187 050 177 560
Gross profit 143 050 116 640
Combined Gross profit 259 690
Less Expenses
Stationery 2 600
Insurance 1 840
Rent & Rates 8 160

Less Amount 590 7 570
Bad debts 4 315
Add Bad debts 1 200
Add Provision for bad debts 883 6 398
Depreciation
162 427
2b Tsano: Statement of Financial Position as at 30 June 2008
$ $ $
Capital 171 960
Represented by
Delivery Vans 190 500 19 050 171 450
341 400 49 230 292 170
Current Assets
Stocks Clothing 13 200

Groceries 11 630
Debtors 17 660
Bank 2 290
Cash 720
Amount prepaid 590
45 207
Creditors
36 117
328 287
3 Chenai: Statement of comprehensive income for year ended 31 Dec 2004
Hardware Furniture Hardware Furniture
$ $ $ $ $
Sales 80 000 160 000
Less Cost of sales
Opening stock 10 200 25 600
64 300 126 300
Less Closing Stock 12 800 27 400 51 500 98 900

Gross profit 28 500 61 100
Less Expenses
Salaries & Wages 16 920 25 380
Rates & Insurance 1 200 1 800
Motor vehicle expenses 2 400 3 600
Depreciation
$ $ $ $
Fixtures & Fittings 1 800 1 800 23 720 33 980
Net profit 4 780 27 120
b) Chenai Statement of Financial Position as at 31 December 2004
$ $
Capital 104 400

Add Net profit Hardware 4 780
Furniture 27 120 136 300
Less Drawings
19 000
117 300
Represented by
Premises 52 000 - 52 000
Motor Vehicles 22 000 10 800 11 200
Fixtures & Fittings 24 000 13 600 10 400
98 000 24 400 73 600
Currents Assets
Stocks Hardware 12 800
Furniture 27 400
Debtors 6 400
Bank 7 700
54 300
Creditors 10 600
117 300
Q4 J Matinde: Manufacturing A/C for year ended 31 December 2005
$ $ $ $
Dept A Dept B Dept A Dept B
Sales 78 330 81 400
Less Cost of Sales
Purchases 49 960 62 720
Add Carriage Inwards 5 600 4 260

55 560 66 980
Less Closing Stock 14 460 10 700 41 100 56280

Gross Profit 37 230 25 120
Less expenses $ $
Office expenses 5 150 5 150
Rent Rates 4 570 4 570
Water & Lights 1 205 1 205
Insurance 2 945 2 945
Stationery 695 695
Depreciation
Salaries 12 600 9 400 35 060 31 860
Net profit 2 170- (6 740)
J Matinde: Statement of Financial Position as at 31 December 2005
Capital 113 010
Add Net profit Dept A 2 170
Dept B (6 740)
108 440
Less Drawings 2 220
106 220
Represented by
Fixed Assets COST$ DEPR$ N.B.V$
Motor Vehicles 52 500 10 500 42 000
89 100 14 160 74 940
Current Assets
Stock Dept A 14 460
Dept B 10 700
Debtors 12 410
Bank 7 220
Cash 690
45 480
Creditors 14 200
______
106 220
CHAPTER 33
1 Paida Ltd. Profit & Loss Appropriation Account for year ended 31
$
Net Profit from previous year 25 000
Add net profit for the year 220 500
245 500
Less Transfer to General Reserve 100 000
Preference share Dividend: Interim 12 000
Final 12 000
Ordinary share Dividend: Interim 22 000
Final 90 000 236 000
:- Net Profit c/d 9 500
b) Paida Ltd: Statement of Financial Position extract as at 31 December 2002
Authorised Capital $
1 000 000 Ordinary Shares of $1.00 each 1 000 000
1 400 000
Issued Capital
900 000 Ordinary shares of 1.00 each fully paid 900 000
300 00 8% Preference shares of 1.00 each fully paid 300 000
1200 000
Reserves
General reserve 600 000

Profit & Loss A/c 9 500 609 500
Total of shareholders funds 1 809 500
2a) Authorised Share capital
This is the maxiumum of share capital the company is allowed by the law to issue to the public.
It is stated in the memorandum of Association of the company. The company cannot issue shares
more than the Authorised Share capital.
b) Issued Share Capital
It is part of the Authorised share capital that had been issued and taken up by the public.
Although taken by the public it is not necessarily fully paid.
c) Called-up Share capital
It is part of issued capital. It represents shares issued and the money paid sometimes the
company does not require shares to be fully paid at once. It may set specific times at which
payment is required or when shareholders will be called- up to pay.
d) Preference shares
Those special shares preferred over ordinary shares because they carry a fixed rate of dividend.
In cases of insolvent, they will be given priority over ordinary shares for repayment. The
dividend may be cumulative that is if not paid in one year, it will accumulate into next year, or
non- cumulative
e) Debentures
These are loans to the company. They bear a fixed rate of interest which must be paid whether
the company the company is making profits or not. They are first in line of payment in cases of
liquidation. They do not participate in the running of the company.
f) Ordinary Shares
This is a risk share which caries no fixed rate of dividend. Its dividend is paid last after all other
payments have been made its advantage is that in a good year, the earnings are very high, but in
a poor year the holder can get nothing.
Dombo
3: Profit & Loss Appropriation A/c for year needed 30/06/07

$
Net profit for the year $ 126 000
Less Debenture Interest 12 000
114 000
Add net profit from previous year 46 000
160 000

Preference share Dividend: Interim 12 500
Final 12 500
Ordinary share Dividend : Interim 18 000
Final 30 000 123 000
:- Retained Net Profit c/d 37 000
b) Dombo (Pvt) Ltd: Statement of Financial Position extract as at 30 June 2007
Authorised capital
800 000 Ordinary Shares of 50c each 400 000
300 000 10% Preference shares of $1.00 each 300 000
700 000
Issued Capital
600 000 ordinary shares of 50c each full paid 300 000
250 000 10% Preference shares of $1.00 each fully paid 250 000
550 000
Reserves
Profit & Loss A/c 37 000 287 000
Total of Shareholders’ funds 837 000
4a) Pine Ltd: Profit & Loss Appropriation A/c for year ended 30/6/10
Net profit 110 000
Less Debentures Interest 20 000
90 000
Add Not profit for previous year 67 000
157 000

Preference Share Dividend 19 500
Ordinary Share Dividend 64 000 93 500
b) Price Ltd Statement of Financial Position extract as at 30 June 2010
Authorised capital
100 000 Ordinary Shares of 50c each 500 000
750 000
Issued Capital
800 000 Ordinary Shares of 50c each fully paid 400 000
100 000 12% Preference shares of 1.00 each fully paid 100 000
75 000 10% Preference shares of $1.0 each full paid 75 000
57 5 000
Reserves
Profit & Loss A/c 63 500
273 500
Total of shareholders’ funds 848 500
5a) Karima Ltd: Profit & Loss Appropriation Account for year ended 30/09/2010
$
Net profit from previous year 52 000
add Net profit for the year 212 500
264 500
Preference share Dividend: Final 35 000
Ordinary share Dividend 120 000 165 000

5b) Karima Ltd: Statement of Financial Position extract as at 30 Sept 2010
Authorised Capital
2 000 000 Ordinary Shares of 50c each 1 000 000
500 000 10% Preference Shares of 1.00 each 500 000
15 000 000
Issued Capital
1 600 000 Ordinary shares of 50c each fully paid 800 000
350 000 10% Preference shares of $1.00 each fully paid 350 000
1 150 000
Reserves
General Reserve 60 000-
Profit & Loss A/c 99 500 159 500
:- Total of Shareholders Funds 1 309 500
6. K. Kondo: Trading, profit & Loss A/c for year ended 30/6/2010
$ $
Sales 173 200
Less Returns Inward 1 100
_________
172 100
Less Cost of sales
Opening Stock 5 200
109 360
Gross profit 69 940
Add Discount received 1 000

70 940
Less Expenses
Wages 19 400
Distribution expenses 2 400
Less Carriage Inwards 200 2 200
Depreciation
Net Profit 40 940
K. Kondo: Statement of Financial Position as at 30 June 2010
Fixed Assets Cost Depr N.B.V
$ $ $
Premises 98 000` - 98 000
Fixtures & Fittings 2 800 - 2 800
Motor Vehicles 10 000 2 000 8 000
110 800 2 000 108 800
14 000
Goodwill 122 800
Current Assets
Stock 7 200
Debtors 6 800
Bank 3 480
Petty Cash 60
Amount prepaid 600
18 140

Creditors 4 600
135 940
Financed by
Capital 120 000
160 940
25 000
Less drawings 135 940
7a) Capital
b) Interest
c) Divided
d) Insolvent
e) 4000
f) Authorized capital
g) Current liability
h) Understated
i) Goodwill
j) Current liabilities
k) Prompt payment
l) Debit note
8a)Revenue expenditure
b) Drawings
c) Cost price
d) Credit
e) Goodwill
f) Direct expenses
g) Straight line method or Equal Installment
h) Cheques issued but not presented ii) Bank transfers not yet recorded in the cash book
i) Long term loans
j) 20%
k) Current Asset
9a) Revenue Expenditure
b) Returns Inwards journal or sales returns journal
c) 3 3 1/3%
d) Shareholders
e) Diminishing Balance or Reducing Balance method
f) To check arithmetical accuracy of the books
g) Balances of the debtors accounts
h) $6 400
i) The cost of production
j) i) $2 200 ii) $27 200
k) Depreciation
10a) Working capital this represents the total of funds available in the business to finance the
day to day transactions such as payment of expenses, purchase of stock etc.
Working capital = current assets- Current liabilities
b) Owner’s capital- this represents the total amount of money contributed by the owner to
the business. It includes the net profit and minus drawings.
Owner’s capital = Total Assets- Total liabilities
c) Capital Employed- this represents the total amount of shareholders funds plus long term
liabilities, that in a company. From the sole trader’s point of view it represents all assets
minus the current liabilities.
Capital Employed = Share capital + Reserves + long term.
Liabilities (Debentures long-term loans etc
Capital Employed can also be calculated as follows fixed Assets current Assets other assets-
current liabilities.
d) Authorized Share a Capital- this represents the maximum share capital a company can
raise through issuing of shares. This is what the company can call up from the
shareholders whom it will have allocated the shares. This amount is specified in the
memorandum of association of the company.
e) Loan capital- this represents capital which will have been raised through borrowing. It is
money got from long-long-term loans. Such as debentures, etc.
CHAPTER 34
6a) Calculation of good will
Purchase Price- Net value of assets taken over
Equipment 20 000
Stock 12 000
Debtors 4 500
436 500
Less Creditors 8 400

:- Goodwill is 500 000 428 100 428100
= 71 900
6b) Farai & Tapiwa Statement of Financial Position as at 1 January 2009
Fixed Assets $ $
Equipment 20 000
Good will 420 000
Current Assets 71 900
Stock 12 000 491 900
Debtors 4 500
Bank 60 000
76 500
Creditors
Working capital 8 400 68 100
______
560 000
Financed by
Farai Tapiwa
Capital 280 000 280 000 560 000
Tom: Capital A/c
$ $
a) Creditors 6 000
Furniture 19 000
Stock 11 800
Debtors 9 300
Balance c/d 48 300 Bank 5 200
______ Goodwill 9 000
54 300 54 300
Balance b/d 48 300
Jerry: Capital A/c

$ $
Creditors 4 800 Premises 24 000
Bank 3 600 Furniture 18 000
Balance c/d 48 500 Stock 9 700
Debtors 8 400
______ Good will 6 800
56 900 56 900
Balance b/d 48 500
b) Tom & Jerry: Statement of Financial Position as at 1 July 2008
Tom Jerry $
Capital 48 300 48 500 96 800
Represented by
Fixed Assets
Promises 24 000
Furniture 37 000
61 000
Goodwill 15 800
76 800
Current Assets
Stock 21 500
Debtors 17 700
Bank 5 200
44 400
Creditors 10 800
106 800

O Level Accounts Q Answers 21 June 2012

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Table of contents

Bank Reconciliation Statements...................................................................10

CAPITAL AND REVENUE EXPENDITURE............................................16

DEPRECIATION AND PROVISION FOR DEPRICIATION....................20

BAD DEBTS AND PROVISION OF BAD DEBTS...................................21

Statement of comprehensive income............................................................22

Turn-up College “O” Level accounts questions and answers Page 1

SUSPENSE ACCOUNTS AND ERRORS..................................................31

Accounts for Non-profit making organization..............................................47

Turn-up College “O” Level accounts questions and answers Page 2

Answers to chapter One................................................................................75

ANSWER TO CHAPTER 2.........................................................................78

Answers chapter 3........................................................................................83

Answers to chapter 4.....................................................................................84

Answers to chapter 5.....................................................................................88

Answers to chapter 6.....................................................................................90

ANSWERS TO CHAPTER 7.......................................................................92

Answers to chapter Chapter 8.....................................................................103

Turn-up College “O” Level accounts questions and answers Page 3

Answers to chapter 9...................................................................................107

Answers to Chapter 10................................................................................115

Answers to chapter 11.................................................................................128

Answers to Chapter 12................................................................................138

Answers to chapter 13.................................................................................149

Answers to CHAPTER 14........................................................................152

Answers to chapter 15.................................................................................159

Answers to chapter 16.................................................................................166

Answers to Chapter 17................................................................................173

Turn-up College “O” Level accounts questions and answers Page 4

Turn-up College “O” Level accounts questions and answers Page 5

(i) Bought office furniture from Z furnishers for $l000.

(ii) Paid S Ncube by cheque $140.

(iv) Sold goods to J. Piggy for $1800

(v) Sold old office furniture to H. Lim for $500-

(vi) Bought Delivery Van for $7000- from Fax motors

(vii) J. Peg returned unsatisfactory goods worth $140.

(viii) An amount of $350-owed by a debtor R Clemence was written off as irrecoverable

(ix) Paid rent by cheque $150.

(x) Charged P. Sithole a debtor interest on an overdue account of $70.

2. The ledger accounts of N. Gwaze had been balanced.

(i) The business owes F. Jani $200

(ii) Rent payable $600- was owing

(iii) Chikozho owes the business $700

(iv) There was a bank overdraft of $150

(v) Insurance of $320- had been prepaid.

(vi) There was a bank balance of $180.

3. The following accounts appeared in the ledger of T. Zone on 1 June 2004.

Turn-up College “O” Level accounts questions and answers Page 6

During the month of June the following transactions took place.

June 2 C. Sibanda settled her account in full less 2 ½ % discount.

June 4. Sold good to C. Sibanda $1200 less 25% trade discount

June 14 Sold further goods to C. Sibanda for $1850-net

June 17 Returned unsatisfactory goods worth $200 from consignment of June 12

June 23 Sent a cheque to M. Kudzai for $800 less 5% cash discount

June 26 Sibanda paid cash $1960.

During the month of March the following transactions too place.

March 4 Bought stationery worth $260- on credit from R.B stationers.

March 7 Returned unsatisfactory stationery worth $35.

March 10 Bought stationery cash $190.

March 14 Paid $380 by cheque for stationery.

On 31 March 2004 stock of stationery was valued at $220.

Turn-up College “O” Level accounts questions and answers Page 7