SUGGESTED SOLUTIONS
01104 – Financial Accounting
Certificate in Accounting and Business I Examination
September 2012
THE INSTITUTE OF CHARTERED ACCOUNTANTS OF SRI LANKA
All Rights Reserved
PAPER ‘A’ - ANSWERS FOR MULTIPLE CHOICE QUESTIONS
1. 3 11. 3
2. 3 12. 2
3 3 13. 4
4. 4 14. 4
5. 2 15. 4
6. 4 16. 2
7. 4 17. 2
8. 2 18. 4
9. 2 19. 2
10. 2 20. 2
(2)
PAPER ‘ B’
Answer No. 01
(a)
MR. HIRUKA
COMPREHENSIVE INCOME STATEMENT FOR THE YEAR ENDED 31ST MARCH 2012
Rs.”000” Rs.”000”
Turnover 275,120
Less : Sales Returns (120)
275,000
Less : Cost of Sales
Stocks as at 1st April 2011 77,400
Add : Purchases – Imports 124,350
Local 15,620
Import duty & Clearing charges 2,450
Carriage inwards 320
220,140
Less : Closing stock – 31.03.2012 (Note 1) (69,050)
Free samples (50) (151,040)
Gross Profit 123,960
Other Income
Profit on sale of motor lorry (Note 2) 2,000
Interest Income 3,000 5,000
Less : Administration Expenditure
Insurance – Buildings 300
Depreciation – Buildings 410
Depreciation – Equipment, tools and computers 3,700
Electricity 3,220
Security 2,560
Water 570
Salaries & Wages 4,500
Insurance – Equipment& Computers 200
EPF & ETF 640
Stationery 1,230
Building Maintenance 122
Donation 500
Audit Fees 250
Telephone Expenses 198
Other Admin expenses 1,455 (19,855)
(3)
Rs.”000” Rs.”000”
Less: Selling & Distribution Expenditure
Motor Vehicle Insurance 600
Sales promotion – Free samples 50
Motor Vehicle Depreciation (Note 3) 5,740
Motor Vehicle Repairs & Maintenance 1,350
Bad Debts Written off 3,910
Provision for bad debts (Note 4) 880
Salaries & Wages 12,750
Overtime 2,750
Sales Promotion 12,850
EPF & ETF 1,830
Fuel Expenses 7,430
Discounts 600 (50,740)
Less : Finance Cost
Bank Charges 3
Overdraft Interest 305
Interest charged by the supplier 50 (358)
Profit for the year 58,007
(Note 1) : 71,550 – 2,500 = 69,050
(Note 2) : 3,200 + 800 + 10,000 – 8,000 – 4,000 = 2,000
(Note 3 ) : 3,940 + 1,000 + 800 = 5,740
(Note 4 ) : 380 + 500 = 880
(15 mark)
(4)
(b) MR. HIRUKA
STATEMENT OF FINANCIAL POSITION AS AT 31ST MARCH 2012
Rs.”000” Rs.”000”
Non Current Assets
Land 10,500
Buildings 13,290
Motor Vehicle (Net) (Note 5) (29,700 – 13,140) 16,560
Equipment, Tools & Computers 1,300
41,650
Fixed Deposit 25,000 66,650
Current Assets
Inventories 69,050
Prepayments – Buildings Insurance 200
Trade Receivables (Net of Bad Debt) (27,300-3,130) 24,170
(Note 6)
Interest Receivable 3,000
Cash in Hand 275 96,695
Total Assets 163,345
Equity
Capital A/c – Hiruka 50,000
Current A/c – Hiruka as at 1st April 2011 18,240
Add : Profit for the year 58,007
76,247
Less : Drawings (4,450) 71,797
121,797
Current Liabilities
Accrued Expenses (550 + 120 + 20) 690
Trade Payables 37,390
VAT Payable 1,290
Bank Overdraft (1,650+500+3+25) 2,178 41,548
Total Equity & Liabilities 163,345
Note 5 : 27,700 – 8,000 + 10,000 = 29,700
11,400 (3,200 + 800) + 5,740 – 13,140
(15 marks)
Note 6 : 27,300 – 3,130 = 24,170 (5)
Answer No. 02
RST Traders
Income Statement & Profit & Loss Appropriation Account
For the year ended 31 March 2012
Rs. ‘000’ Rs. ‘000’
Sales (Turnover) 28,000
Less: Cost of sales
Inventories as at 01 April 2011 1,050
Add: Purchases 12,600
13,650
Less; Inventories as at 31 March 2012 (925) 12,725
Gross Profit 15,275
Less: Expenses
Administration expenses 2,920
Depreciation - Building 240
Selling and distribution expenses 3,770
Depreciation - Motor Vehicle 1,200
Bad Debts 26
Provision for Doubtful Debts 90
Finance cost 1,368
Interest on Loan 130 9,744
Net Profit 5,531
Less Salaries
Reen 240
Seen 360
Teen 480 1,080
Loan Interest
Reen 140
Seen 95
Teen 35 270
Share of Profits
Reen 2,090.50
Seen 1,393.68
Teen 696.83 4,181
-
(6)
RST Partnership
Statement of Financial Position as at 31 March 2012 (before retirement)
Rs. ‘000’ Rs. ‘000’
Property, Plant & Equipment
Land 2,400
Building - at cost 4,800
(2,340) 2,460
Motor Vehicle at cost 12,000
(4,800) 7,200
Inventories as at 31 March 2012 925
Debtors 2,600
Less; Provision for doubtful debts (130) 2,470
Cash in Hand and at Bank 105
Amount paid to Teen 450
16,010
Capital Accounts as at 31 March 2012
Reen 2,800
Seen 1,900
Teen 700 5,400
Current Accounts as at 31 March 2012
Reen 2,475.50
Seen 2,663.67
Teen 1,056.83 6,196
Loan given by Reen 1,300
Trade Creditors 3,114
16,010
RST Partnership
Statement of Financial Position as at 31 March 2012 (After Retirement)
Rs. ‘000’ Rs. ‘000’
Property, Plant & Equipment
Land 2,400
Building – Revaluated 3,000
Motor Vehicle – revaluated 7,500 12,900
Inventories as at 31 March 2012 925
Debtors 2,430
Cash in Hand and at Bank 105 3,460
16,360
(7)
Rs. ‘000’ Rs. ‘000’
Capital Accounts as at 31 March 2012
Reen 3,310
Seen 2,240 5,550
Current Accounts as at 31 March 2012
Reen 2,476
Seen 2,664 5,139
Loan Account – Reen 1,300
Amount to be paid to Teen 1,257
Trade Creditors 3,114
16,360
Revaluation Account
Debtors 40 Building 540
Reen - 600 Motor Vehicle 700
Seen - 400
Teen - 200 1200
1,240 1,240
Partners’ Capital Accounts
Rs. ‘000’ Rs. ‘000’ Rs. ‘000’ Rs. ‘000’ Rs. ‘000’ Rs. ‘000’
Reen Seen Teen Reen Seen Teen
O/P
Goodwill 540 360 - Balance 2,800 1900 700
Transferred to
Loan Account 1,050 Goodwill 450 300 150
C/S Balance 3,310 2,240 - Revaluation 600 400 200
3,850 2,600 1,050 3,850 2600 1050
Partners’ Current Accounts
Rs. ‘000’ Rs. ‘000’ Rs. ‘000’ Rs. ‘000’ Rs. ‘000’ Rs. ‘000’
Reen Seen Teen Reen Seen Teen
O/P
O/P Balance 95 - 35 Balance - 905 -
Drawings 30 90 120 Salaries 240 360 480
Amount Paid 450 Interests 140 95 35
Motor Share of
Vehicle 400 Profit 2,090.50 1,393.67 696.83
Transferred to Interest on
Loan Account 206.83 Loan 130
C/S Balance 2,475.50 2,663.67 0.00
2,600.50 2,753.67 1,211.83 2,600.50 2,753.67 1,211.83
(8)
(15 marks)
Answer No. 03
1 Discount Allowed Account Debit 97,000
Discount Received Account 82,000
Trade Creditors Account 15,000
97,000 97,000
2 Expense Account Debit 1,000,000
Asset Account 1,000,000
1,000,000 1,000,000
3 Debtors Account Debit 90,000
Sales 90,000
90,000 90,000
4 Return Inwards Debit 80,000.00
Debtors Account 80,000.00
80,000.00 80,000.00
5 Creditors Account Debit 300,000
Advanced Paid Debit 50,000
Purchase Account 350,000
350,000 350,000
6 Bank Account Debit 8,500
Discount received Account 6,500
Suspense Account 2,000
8,500 8,500
7 Suspense Account Debit 9,000
Electricity Expense 9,000
9,000 9,000
8 Suspense Account Debit 550,000
Rent Expense 230,000
Rent Income 320,000
550,000 550,000
(9)
Suspense Account
Opening balance 557,000
Electricity Expense 9,000 Bank Account 2,000
Rent Expense 230,000
Rent Income 320,000
559,000 559,000
(12 marks)
(B) Core modules Non- Core modules
Accounts receivable Debt collection
Accounts payable Expenses
General Ledger Pay roll
Billing Reports
Stock/Inventory Time sheet
Purchase order
Sales order
(3 marks)
(10)
Answer No 04
General Journal
Description Dr. Cr.
Buildings at Net Book Value (Show Room and Office) Dr. 3,300,000
Motor Vehicles at Net Book Value Dr. 2,700,000
Inventories - Glass Products as at 31 March 2012 Dr. 1,470,000
Accounts receivable
Amal Enterprises Dr. 600,000
Bimal Traders Dr. 525,000
Ciril's House Dr. 451,000
Provision for bad and doubtful debts as at 01 April 2012 15,760
Cash in hand Dr. 105,000
Cash at bank (overdraft) Dr. 497,500
Accounts payables
Gayan Manufactures 427,500
Asoka Glass Products 501,000
Silicon Producers 326,500
Capital 7,382,740
9,151,000 9,151,000
Sales Day Book
Amal Enterprises 400,000
Bimal Traders 160,000
Cyril's House 530,000
Super Chance Traders 210,000
1,300,000
Sales Returns Book
Amal Enterprises 10,000
Bimal Traders 4,000
Cyril's House 15,500
Super Chance Traders 10,500
40,000
(11)
Purchase Day Book
Gayan Manufactures 550,000
Asoka Glass Products 860,000
Silicon Products 1,130,000
Glossy Makes 215,000
2,755,000
Purchase Return Day Book
Gayan Manufactures 8,000
Asoka Glass Products 14,000
Silicon Products 6,500
Glossy Makes 50,500
79,000
Cash Account
Opening Balance 105,000 Cash at bank 650,000
Sales Account 1,250,000 Admin Exp 380,000
Trade Debtors 2,116,000 Sales Exp 260,000
Cash at bank 2,116,000
Closing Balance 65,000
3,471,000 3,471,000
Bank Account
Cash in hand 650,000 Opening Balance 497,500
Cash in hand 2,116,000 Purchase Account 1,190,000
Capital 45,000
2,362,500 Closing Balance 3,396,000
5,128,500 5,128,500
(12)
Debtors Control Account
Opening Balance 1,576,000 Sales Return 40,000
Sales Account 1,300,000 Cash in hand 2,116,000
Discount Allowed 23,500
Closing Balance 696,500
2,876,000 2,876,000
Amal Enterprises
Opening Balance 600,000 Sales Return 10,000
Sales Account 400,000 Cash in hand 980,000
Discount Allowed 10,000
-
1,000,000 1,000,000
Buildings at Net Book Value (Show Room and Office)
Opening Balance 3,300,000
Motor Vehicles at Net Book Value
Opening Balance 2,700,000
Capital 2,500,000
Total 5,200,000
Inventories - Glass Products as at 31 March 2012
Opening Balance 1,470,000
(13)
Bimal Traders
Opening Balance 525,000 Sales Return 4,000
Sales Account 160,000 Cash in hand 476,000
Discount Allowed 5,000
Closing Balance 200,000
685,000 685,000
Cyril's House
Opening Balance 451,000 Sales Return 15,500
Sales Account 530,000 Cash in hand 610,000
Discount Allowed 8,500
Closing Balance 347,000
981,000 981,000
Super Chance Traders
Sales Account 210,000 Sales Return 10,500
Cash in hand 50,000
Closing Balance 149,500
210,000 210,000
Provision for bad and doubtful debts as at 31 March 2012
Opening Balance 15,760
Creditors Control Account
Purchase Return 79,000 Opening Balance 1,255,000
Cash Account 3,396,000 Purchase Account 2,755,000
Discount Received 92000
Closing Balance 443,000
4,010,000 4,010,000
Gayan Manufactures
Purchase Return 8,000 Opening Balance 427,500
Cash Account 820,000 Purchase Account 550,000
Discount Received 20,000
Closing Balance 129,500
977,500 977,500
(14)
Asoka Glass Products
Purchase Reurn 14,000 Opening Balance 501,000
Cash in hand 1,176,000 Purchase Account 860,000
Discount Received 30,000
Closing Balance 141,000
1,361,000 1,361,000
Silicon Producers
Purchase Reurn 6,500 Opening Balance 326,500
Cash in hand 1,350,000 Purchase Account 1,130,000
Discount Received 40,000
Closing Balance 60,000
1,456,500 1,456,500
Glossy Makes
Purchase Reurn 50,500 Purchase Account 215,000
Cash in hand 50,000
Discount Received 2,000
Closing Balance 112,500
215,000 215,000
Capital
Cash at bank (Debit) 45,000 Opening Balance 7,382,740
Motor Vehicle 2,500,000
Closing Balance 9,837,740
9,882,740 9,882,740
Sales Account
Cash Account 1,250,000
Trade Debtors 1,300,000
2,550,000
Purchase Account
Cash in hand 1,190,000
Trade Creditors 2,755,000
3,945,000
(15)
Administration Expenses
Cash in hand 380,000
Selling Expenses
Cash in hand 260,000
Sales Return
Trade Debtors 40,000
Discount Allowed
Trade Debtors 23,500
Purchase Return
Trade Creditors 79,000
Discount Received
Trade Creditors 92,000
(16)
Trial Balance as at 31 March 2012
Description Dr. (Rs.) Cr. (Rs)
Buildings at Net Book Value (Show Room and Office) 3,300,000
Motor Vehicles at Net Book Value 5,200,000
Inventories - Glass Products as at 31 March 2012 1,470,000
Account receivable
Amal Enterprises -
Bimal Traders 200,000
Ciril's House 347,000
Super Chance Traders 149,500
Provision for bad and doubtful debts as at 01 April 2012 15,760
Cash in hand 65,000
Cash at bank 2,362,500
Account payables
Gayan Manufactures 129,500
Asoka Glass Products 141,000
Silicon Producers 60,000
Glossy Makes 112,500
Sales Account 2,550,000
Purchase Account 3,945,000
Administration Expenses 380,000
Selling Expenses 260,000
Sales Return 40,000
Discount Allowed 23,500
Purchase Return 79,000
Discount Received 92,000
Capital 9,837,740
15,380,000 15,380,000
(B) Audit Committee
This consists of non-executive directors of the company. Purpose of the Audit Committee is to;
- Review Internal control procedures and recommend the required developments to the
internal control measures of the organization.
Human Resource Committee
Purpose is to decide and make the recommendation policy, especially for CEO and management
team.
Decide the targets of Board of directors and CEO
Finance Committee
Purpose is to prepare annual budget, identify variances and make recommendations.
Identify funding methods and made recommendations.
(15 marks)
(17)
Notice of Disclaimer
The answers given are entirely by the Institute of Chartered Accountants of Sri Lanka (CA Sri
Lanka) and you accept the answers on an "as is" basis.
They are not intended as “Model answers’, but rather as suggested solutions.
The answers have two fundamental purposes, namely:
1. to provide a detailed example of a suggested solution to an examination question; and
2. to assist students with their research into the subject and to further their understanding
and appreciation of the subject.
The Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka) makes no warranties with
respect to the suggested solutions and as such there should be no reason for you to bring any
grievance against the Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka). However,
if you do bring any action, claim, suit, threat or demand against the Institute of Chartered
Accountants of Sri Lanka (CA Sri Lanka), and you do not substantially prevail, you shall pay the
Institute of Chartered Accountants of Sri Lanka's (CA Sri Lanka’s) entire legal fees and costs
attached to such action. In the same token, if the Institute of Chartered Accountants of Sri Lanka
(CA Sri Lanka) is forced to take legal action to enforce this right or any of its rights described
herein or under the laws of Sri Lanka, you will pay the Institute of Chartered Accountants of Sri
Lanka (CA Sri Lanka) legal fees and costs.
© 2013 by the Institute of Chartered Accountants of Sri Lanka(CA Sri Lanka).
All rights reserved. No part of this document may be reproduced or transmitted in any form or by
any means, electronic, mechanical, photocopying, recording, or otherwise, without prior written
permission of the Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka).
(18)
01104 – Financial Accounting : Certificate in Accounting and Business I Examination September 2012
(19)
