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Question One
Chella and Shadreck are in partnership sharing profits and losses in the ratio 5:3 respectively.
The following information has been taken from the partnership records for the financial year ended 31 May 2019.
Partners’ capital account balances:
Interest is to be charged on withdrawals at the rate of 8.5% per annum. Interest is allowed on capital accounts and credit balances on current accounts at the rate of 11% per annum.
Shadreck is to be allowed a salary of K53,000 per annum.
The net profit of the partnership for the year ended 31 May 2019 is K108,377.
Required:
(a) A computation of the amount of interest chargeable on each partner’s withdrawals for the year ended 31 May 2019. (6 Marks)
(b) The partnership appropriation account for the year ended 31 May 2019. (8 Marks)
(c) The partners’ current accounts showing the balances carried down as at 31 May 2019. (7Marks)
Question Two
Sam’s Lodge operates three sections, accommodation, restaurant and bar.
The Assistant Accountant has been tasked to prepare accounts for the year ended 30 September, 2019. The following information was provided:
Expenses are to be apportioned on the following bases:
Floor area – rates, cleaning, depreciation of building, water & electricity, repairs and maintenance
Sales value – salary of supervisor, advertising
No. of employees – telephone, general office expenses
Cost of sales – insurance, motor vehicle depreciation and running costs
The cost of Buildings is K189,500 and Van is K56,000. The van is used mainly to purchase goods for the Lodge. Depreciation is as follows:
Buildings 5% on cost
Fixtures and fittings 10% straight line
Motor vehicle 20% straight line
Electricity bill outstanding at the year-end was K2,300 and rates paid for six months up to 31 December 2019 were K1,350.
Required:
Prepare Sam’s Departmental Statement of profit and loss for the year ended 30 September, 2019, showing clearly, the contribution of each department.
Question Three
The following information relates to Julie Limited for the year ended 31 December, 2019.
Profit before tax for the year ended 31 December 2019 |
K20,550 |
Debentures issued by the company in 2017 with an interest of 12% p.a. |
K26,000 |
Interim dividend paid on ordinary shares in 2019 |
K 1,300 |
Cost of motor vehicle IST purchased in 2019 |
K48,000 |
Trade-in value of vehicle given in part-exchange against IST |
K 7,000 |
Ordinary shares of K100 each in Julie Limited issued at par and fully paid during 2019 |
K32,000 |
Ordinary share dividend proposed in 2018 paid in 2019 |
K 3,000 |
Ordinary dividend proposed in 2019 |
K 2,250 |
Corporation tax paid |
K10,500 |
Cash and bank balance 1 January 2019 |
K 7,100 |
Cash and bank balance 31 December 2019 |
K13,250 |
During the year ended 31 December 2019,
(i) Receivables decreased by K4,250
(ii) Payables increased by K2,650
(iii) Inventory increased by K5,150
(iv) Depreciation charged was K7,900.
Debenture interest is not in arrears.
Required:
Prepare a Statement of Cash Flow for Julie Limited for the year ended 31 December, 2019.
(b) Explain the term ‘cash equivalents’. (2 Marks)
(c) Name THREE headings which would be used when calculating Net Cash Inflow from Operating Activities using the direct method.
(d) Give THREE advantages of cash flow accounting
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