Par Tern Ship And Control Account

Name Date Total marks HIGHEST MARK IN CLASS TIME ALLOWED Starting time Ending time Percentage Grade

80 2 hours and 30 minutes

Instructions for the students: • • • • • •

Write your answers neatly and in good English. The paper has four questions. Answer all the questions. Understanding the question is part of the exam. Please maintain pin drop silence. Try to switch off your cell phone. If you have to attend calls please go outside and receive calls. Please do not complain about the difficulty of the question paper.

TEACHERS COMMENTS:

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1. Bramely and Pippin are in partnership, sharing profits and losses in the ratio 3:2 repectively. Interest is charged on partnership at 8% per annum. On 1st January 1996, cox was admitted to be partnership, with future profits and losses to be shared equally and interest on drawings to continue at 8% per annum. He brought in £34500 as his share of capital. Goodwill was calculated as twice the average of profits after interest for 1993, 1994, and 1995. Details of profits before interest in those years are: Year Drawings Profit before interest 1993 £20000 £30800 1994 £30000 £31200 1995 £37500 £39000 The partners capital balances at 31 December 1995 were: Bramley £45000 Pippin £35000 Net profit for 1996 was £60000 before interest. Drawings at the end of 1996 totalled: Bramley £24000 Pippin £22000 Cox £20000 No current accounts were maintained, and no goodwill account was opened. Assume that all drawings were made on first day of the year. Required: Show the partners capital accounts for the year ended 31 December 1996. (20 marks)

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2. Stan and Hardy started a film editing business in 1975, called Lonsome Pinweed. On 31 March 1998, the partnership had the following summarised trial balance, produced after the years profit had been calculated: £ £ Stan capital account 1 April 1997 45250 Hardy Capital account 1 April 1997 49600 Suspense account see note below 23730 Total profit for the year before apportions 75120 Stan drawings 24000 Hardy Drawings 28000 Keaton drawings 9000 Trade debtors and creditors 16530 18420 Accruals and prepayment 8250 3400 Fixed assets, net of depreciation 153000 Bank balance 14260 Loan (repayable in October2008) 9000

Notes:

• • •

i.

A CREDIT of £20000 in 1 April 1997. This represented capital introduced by a new partner, Keaton to buy a one fifth share of the business from that date. No goodwill account was opened in the partnership books. Profits Stan, Hardy and Keaton is to be shared in the ratio 2:2:1 respectively.

ii.

A CREDIT of £3370 on 1 November 1997, being the sale proceeds of vehicle with a book value of £4500 at that date of sale.

Additional information: No entries had been made relating to interest charged at 4% per annum on partners drawings. Stan and Hardy’s drawings were made in four equal instalments on 1 July 1997, 1 October 1997, 1 January 1998, and 31 March 1998. Keaton’s drawings were made in two equal instalments on 1 January 1998 and 31 March 1998. Required: a. Prepare a profit/loss appropriation account. (5) b. Show the partners capital accounts. (8) c. Prepare a balance sheet as at 31 March 1998. (7)

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3. Saima and Hammad had been in business for many years. Hammad decided to pursue his career in politics and the partners decided to dissolve the partnership. The profits and losses were shared in the ratio of partner’s capital account balances. The partnership balance sheet as at 30 September 2003 were as follows: £ Fixed assets (net book value) Buildings Fixtures and fittings Motor vehicles

£

104000 35000 26000 165000

Current assets Stock Debtors Bank Current liabilities Creditors

10500 17230 950 28680 (9230) 19450 184450

Capital accounts: Saima Hammad Current accounts: Saima Hammad Loan from Saima

80000 40000 120000 14430 (2580) 11850 52600 184450

The partnership ceased trading on 30 September 2003 and the assets realised were as follows: Buildings £100000 Fixtures and fittings £37000 Motor vehicles £15000 Stocks £5200 Additional information: • The remaining motor vehicle was taken over by Saima at an agreed valuation of £9500. • All debts collected and banked except for bad debts £900 and discount allowed amounted to £200. • Creditors were paid in full. • Dissolution expenses amounted to £1200 which was paid by cheque. • Saima’s loan was repaid from the bank account. Required: a. Realisation account. b. Partners capital account c. Bank account.

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4. The following entries had been included in the sales ledger control account of Saima for the year ended 31 May 2004. £ Balance at 1st June 2003 19340 Sales (note 1) 188216 Receipts from customers (note 2) 144030 Discount allowed (note 3) 4800 Return inwards 6720 Bad debts written off (note 4) 2480 The sales ledger balances at 31st May 2004: Debit ? Credit (note 5) 296 Notes: 1. Sales invoices totalling £5400 had been omitted from the sales day book totals. 2. In voice for sale of goods on credit for $4500 was not entered in the books. 3. £80 discount allowed had been over added in the cash book. 4. The bad debts written off included a transfer to profit and loss account of £500 which represented an increase in general provision for doubtful debts in the year. 5. A credit balance of £46 had been listed incorrectly as £64. 6. The debit balance of Ted Brown (£340) had been listed as Ted Bragg. 7. The purchase day book was under cast by £200. 8. Invoices for credit sales of £4000 had not been entered into the accounts. John just came to know that one of the invoices was for a business which had gone bankrupt and there was no chance of payment. 9. Discount allowed of £28 had been correctly entered in the cash book and the discount allowed account but was not entered in the debtors account in the ledger.

Required: a. Prepare an amended sales ledger control account. (20)

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