UNIVERSITY OF THE COMMONWEALTH CARIBBEAN

SCHOOL OF BUSINESS & MANAGEMENT

End of Module Examination

 FALL  SPRING  SUMMER

CENTRE : KINGSTON/MANDEVILLE

MODULE : ACT100 FINANCIAL ACCOUNTING

DATE :

TIME :

DURATION : HOURS

INSTRUCTIONS:

1. Please read all instructions carefully before attempting any question.

2. THIS PAPER REPRESENTS 60% OF YOUR TOTAL GRADE.
3. ANSWER ALL QUESTIONS.
4. ALL QUESTIONS MUST BE ANSWERED IN THE BOOKLET PROVIDED
5. PLEASE ENSURE THAT YOU NUMBER YOUR QUESTIONS CORRECTLY.
6. WRITE CLEARLY THE NUMBER OF THE QUESTION ON EACH OF THE
RELEVANT PAGES.
7. WHERE QUESTIONS HAVE MULTIPLE PARTS, ALL PARTS MUST BE
ANSWERED.
8. START THE RESPONSE TO EACH QUESTION ON A NEW PAGE.

Write your REGISTRATION NUMBER clearly on each page of your answer booklet.
DO NOT WRITE YOUR NAME.
NB. Your script will not be marked if it has your name.
DO NOT TURN OVER UNTIL YOU ARE TOLD TO DO SO

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 ANSWER ALL QUESTIONS (TOTAL MARKS =100)
Question 1

Elton, Janet and Alvin operate a wholesale business in Half Way Tree, St. Andrew,
Jamaica. Their partnership agreement requires that profits and losses be shared in the
ratio 3:2:1 respectively. Partners are to receive salaries as follows: Elton $600,000 per
annum; Janet $450,000 per annum; and Alvin $350,000 per annum. The partnership
agreement also stipulates that partners be paid 5% interests on their capitals and that
interest on drawings be charged at 10% per annum. On December 31, 2016, the following
Trial Balance was extracted from the partnership’s books:
Trial Balance as at December 31, 2016
Details/Accounts $ $
Bank 400,000
Office furniture, etc. 3,000,000
Accumulated depreciation on office furniture, etc. 600,000
Printing and stationery 300,000
Return of goods 400,000 150,000
Cash drawings: Elton 500,000
Janet 750,000
Alvin 450,000
Telephone 520,000
Administrative salaries 4,800,000
Cash in hand 2,500,000
Rent 1,200,000
Provision for bad and doubtful debts 200,000
Purchases 10,150,000
Insurance 360,000
Motor vehicles 10,000,000
Provision for depreciation on motor vehicles 2,000,000
Sales 30,500,000
Debtors and creditors 4,000,000 3,000,000
Discounts 1,000,000 650,000
Inventory, January 1, 2016 6,000,000
Commission 500,000 300,000
Capital Accounts: Elton-01/01/16 4,500,000
Janet-01/01/16 3,500,000
Alvin-01/01/16 2,500,000
Current Accounts: Elton-01/01/16 500,000
Janet-01/01/16 320,000
Alvin-01/01/16 450,000
Bad debts written off 100,000
Carriage inwards 400,000
Motor vehicle running costs 2,000,000 -------------
49,250,000 49,250,000

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Additional information:
(i) Telephone charges $45,000 and commission payable $105,000 were
outstanding on December 31, 2016.
(ii) Staff salaries include an amount of $50,000 paid to James Wright out of his
January 2017 salary, while $40,000 of the insurance was for 2017.
(iii) Depreciation is recorded in the books as follows: Motor vehicles 20%
Reducing Balance; Office furniture, etc. 10% on cost.
(iv) The provision for bad and doubtful debts is to be adjusted to 2½% of debtors.
(v) Discount received on December 20, 2016 for $320,000 was recorded in the
account as $220,000.
(vi) Inventory on December 31, 2016 was valued at $5,000,000.

Required:
(a) The partners’ Trading and Profit and Loss Account for the financial year ending
December 31, 2016. (10 marks)
(b) The Profit and Loss Appropriation Account for the financial year ending
December 31, 2016. (6 marks)
(c) The partners’ current accounts for the financial year ending December 31, 2016.
(6 marks)
(d) A Balance Sheet as at December 31, 2016. (8 marks)
(e) Calculate the following accounting ratios and inform the partners on the financial
status of the business:
(i) Current ratio. (2 marks)
(ii) Liquid ratio. (2 marks)
(iii) Stock turnover. (2 marks)
(iv) Net profit percentage. (2 marks)
(v) Debtors’ collection period. (2 marks)

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Question 2

On December 31, 2016, the following list of balances was extracted from the books of
Abrahams and Sons Manufacturing Limited:
Details/Accounts $
Rent 1,500,000
Stock, indirect raw materials, January 1, 2016 1,500,000
Stock, direct raw materials, January 1, 2016 10,500,000
Carriage inwards for indirect raw materials 300,000
Insurance 600,000
Purchase of indirect raw materials 2,000,000
Work in progress January 1, 2016 3,000,000
Sales of finished goods 62,500,000
Direct raw materials sent back to suppliers 250,000
Electricity 2,400,000
Purchases of raw materials to make product 14,500,000
Transportation charges for direct raw materials 2,500,000
Wages of workers who produce the product 15,000,000
License fees 4,000,000
Stock finished goods, January 1, 2016 16,000,000
Plant and machinery at cost 12,000,000
Administrative salaries 10,000,000
Indirect factory wages 4,500,000
Accumulated depreciation on plant and machinery 3,000,000
Furniture, fittings, etc. at cost 3,500,000

Notes:
(i) Stocks on December 31, 2016 were as follows: Direct raw materials
$8,000,000; Work-in-progress $4,000,000; Finished goods $12,000,000; and
Indirect raw materials $500,000.
(ii) Depreciation is charged at 10% per annum reducing balance on plant and
machinery; and 10% on costs for office furniture, fittings, etc.
(iii) On December 31, 2016 insurance of $100,000 related to the succeeding
financial year while $150,000 was accrued for rent.
(iv) The company adds 15% mark up to its cost of production.
(v) 40% of insurance charges are for the office; ¾ of rental charges are for the
factory and 1/5 of electricity charges apply to the office.

Required:
A manufacturing account for the financial year ending December 31, 2016 clearly
showing the following components: (20 marks)
(i) Prime costs.
(ii) Factory overheads.

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 (iii) Cost of production.
(iv) Market value of finished goods.

Question 3

Control Accounts provide Alanzo Enterprise Ltd with useful information on sales and
purchases. At the end of January 2016, the following balances were extracted from the
company’s ledgers:
Details/Accounts $
January 1, 2016:
Purchases ledger balance b/d (dr) 250,000
Sales ledger balance b/d (cr) 187,000
Sales ledger balance b/d (dr) 5,140,000
Purchases ledger balance b/d (cr) 3,740,000
January 31, 2016:
Bad debts written off 300,000
Discount received 460,000
Set off between sales and purchases ledgers 400,000
Credit sales for the month 3,780,000
Cheques paid to supplier’s 3,100,000
Interest on overdue customers’ accounts 350,000
Cash received from debtors 2,900,000
Dishonoured suppliers’ cheques 150,000
Discount allowed 450,000
Cash sales for the month 1,200,000
Credit purchases for the month 2,400,000
Refunds to credit customers 280,000
Return inwards 420,000
Cash purchases 750,000
Cheques received from accounts receivable 3,300,000
Return outwards 240,000
Cash paid to creditors 890,000
Interest on overdue suppliers’ accounts. 80,000
Dishonoured customers’ cheques 200,000
Bad debt recovery 330,000

Required
(a) Write up the company’s control accounts for receivables and payables for the
month of January 2016. (16 marks)
(b) Briefly describe four (4) errors that the Control Accounts will not identify for
Alanzo Enterprise Ltd. (4 marks)

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Question 4

The Hopeful Gathering Association is a charitable organization that provides health

services to elder citizens in Kingston and St. Andrew. The organization engages its
members in the collection of scrap metals which it sells to raise income. On January 1,
2015, the organization had the following assets and liabilities:

Details/Accounts $
Stationery owing 150,000
Motor vehicle 1,500,000
Debtors for scrap metal 750,000
Office furniture 450,000
Stock of scrap metals 2,000,000
Electricity owing 40,000
Rent paid in advance 60,000
The following additional information for 2015 was made available by the clerical officer
of the organization:
Payments for the year Receipts for the year
Details $ Details $
Refreshments 950,000 Donations 1,600,000
Party supplies 650,000 Members fees 900,000
Electricity 400,000 Refreshments sale 1,750,000
Rent 360,000 Proceeds from parties 1,200,000
Stationery 200,000 Fish fries 1,000,000
Miscellaneous expenses 150,000 Sale of scrap metals 7,250,000
Scrap metals 4,500,000
Fishes and seasoning 340,000
Medical supplies for elderly 4,965,000
Notes:
(i) On December 31, 2015 scrap metals in stock was valued at $3,200,000.
(ii) On January I, 2015 the cash balance was $2,820,000
(iii) On December 31, 2015, $40,000 was owing for electricity while $30,000 was
prepaid for rent.
Required:
(a) The Accumulated Fund Statement as at January 1, 2015. (4 marks)
(b) The Receipts and Payments Account for the year ending December 31, 2015. (5
marks)
(c) The scrap metals trading account for the year ending December 31, 2015. (4
marks)
(d) The Income and Expenditure Account for the year ending December 31, 2015. (7
marks)

END OF QUESTION PAPER