a)The following transactions were recorded in the books of Lexus Enterprises for the three months ended March 31, 2019.

Jan. 1 Commenced business by introducing Sh.250,000 into a bank account

Jan. 5 Bought Sh.50,000 furniture from Adam Enterprises on credit.

Jan. 15 Bought office stationery for Sh.1,000 paying by cheque.

Jan. 28 Bought goods for resale worth Sh.25,000 paying by cheque.

Feb. 2 Paid Adam Enterprises a cheque of Sh.35,000.

Feb. 3 Rent of Sh.30,000 for business premises was paid by cheque.

Mar. 5 Bought goods on credit from Jay Enterprises for Sh.35,000.

Mar. 8 Bought office stationery for Sh.500 paying by cheque.

Required:

Post the above transactions in the relevant ledger accounts and balance the accounts.(10 Marks)

b)Accounting concepts are the broad principles and general assumptions underlying the preparation of financial statements. In line with IFRS Conceptual Framework on the fundamental assumptions underlying the preparation of financial statements.

Required:

i) Differentiate between cash and accrual bases, of accounting. (2Marks)

c) Mpapale owns several properties in Sega which are let out to tenants. The summary of transactions at December 31, 2019 is given below:

Sh.000

Accrued rent at December 31, 2018440

Prepaid rent at December 31, 2018250

Rent received during 20192,550

Accrued rent at December 31, 2019350

Prepaid rent at December 31, 2019480

Uncollectable rent to be written-off35

Agreement fee received50

Required:

Prepare Rental Income Account to determine the amount of rent to be recognised in the statement of profit or loss. (3 Marks)

(TOTAL 15 MARKS)