Credit notes received from suppliers 26700 Balances as at 30 April 2005

Credit notes received from suppliers 26700 balances

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Credit notes received from suppliers 26,700 Balances as at 30 April 2005: Purchases ledger (debt) 14,400 Sales ledger (credit) 50,700 Required: (i) Sales ledger control account for the month ended 30 April 2005. (7 marks) (ii) Purchases ledger control account for the month ended 30 April 2005. (7 marks) STRATHMORE UNIVERSITY REVISION KIT
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Introduction 92 (Total: 20 marks) QUESTION FIVE a) Explain the importance of ratio analysis to a business enterprise. (2 marks) b) Identify with reasons, one party who may be interested in each of the following ratios: (i) Current ratio (2 marks) (ii) Net profit margin (2 marks) (iii) Stock turnover (2 marks) c) Citing suitable examples, briefly explain of the following terms: (i) Accounting concepts (2 marks) (ii) Accounting policies (2 marks) (iii) Accounting standards (2 marks) d) Explain the accounting treatment that would be applicable in dealing with the following transactions relating to the accounts of Mlachake Ltd. for the year ended 31 December 2004: (i) A debtor who owed the company Sh.200,000 was declared bankrupt on 1 February 2005. 25% of the debt had been recovered when the accounts were approved by the directors on 15 March 2005. (2 marks) (ii) Some items of inventory purchased for Sh.300,000 were damaged in the warehouse during the year. These items were repaired at Sh.50,000 and sold to a customer on 2 February 2005 at 75% of the normal selling price of Sh.400,000 (2 marks) (iii) On 10 December 2004, the company secured an order worth Sh.1.2 million from a foreign based company. The goods were shipped on 10 January 2005 and included in sales for December 2004. (2 marks) (To tal: 20 marks) FINANCIAL ACCOUNTING 1
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93 Answers – Past Papers DECEMBER 2005 Time allowed: 3 Hours. Answer ALL questions. Marks allocated to each question are shown at the end of the question. Show ALL your workings. QUESTION ONE Araka Ltd., a company dealing in retail products, extracted from the following trial balance as at 30 September 2005: Shs. ‘000’ Shs. ‘000’ Freehold land: Cost 121,500 Buildings: Cost 431,000 Accumulate depreciation 68,960 Plant and machinery: Cost 64,172 Accumulated depreciation 16,074 Sales 1,312,567 Purchases 839,004 Cash in hand 1,268 Creditors ledger control account 21,172 Electricity 6,917 Ordinary share capital 50,000 Cash at bank 1,210 Debtors ledger control account 61,074 Suspense account 4,300 Inventory as at 1 October 2004 41,912 Retained profits 296,057 Motor vehicle expenses 4,174 Sundry expenses 2,002 Salaries and wages 121,600 Directors remuneration 48,999 Bank charges 1,621 Motor vehicles: Cost 28,900 Accumulated depreciation ________ 14,712 STRATHMORE UNIVERSITY REVISION KIT
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Introduction 94 1,779,542 1,779,542 Additional information: 1. Provision for doubtful debts should be made at 2% of the debtors ledger balances after writing of bad debts amounting to Shs. 1,370,000. 2. The suspense account was analysed as follows: FINANCIAL ACCOUNTING 1
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95 Answers – Past Papers Shs. ‘000’ Shs. ‘000’ Bad debts written off during the year 512 Motor vehicle purchased on 1 April 2005 7,400 7,912 Less: motor vehicle sold on 1 April 2005 3,000 Amounts received in respect of a bad debt recovered 612 (3,612) 4,300 3. The motor vehicle sold during the year had been purchased on 1 February 2002 for Sh.6,500,000.
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