Fanya Kazi Ltd is a private company limited by shares. Its business has been going on well until recently when its future became dim. At its inception, it comprised of 17 members who among others included Owino, Reto and Suka. The three doubled as directors. While the company business was booming, the directors in liaison with Zisuma the company secretary called for an extraordinary general meeting. A seven days' notice was issued in writing to all members. According to the notice, the main purpose of the meeting was to resolve on how the company business management could be boosted by innovations. The meeting went on successfully and a number of resolutions were made. Prior to the general meeting, the company directors held a meeting and resolved to award each director Shs 500,000 for the well concluded transactions in which the company realised a considerable profit. This matter was brought to the attention of the members in the communication from the chairperson but no reaction was made on it by members. After the meeting, the company directors rewarded themselves with the said money which was termed as 'bonus for work well done'. In another development Jeremeya public company Ltd was incorporated with 13 shareholders. In the course of running the company business, 12 members sold their shares to Mesh a rich investor. Having learnt that Mesh had bought shares in Jeremeya Ltd, Kabenzi lent the company Shs 30 million to enhance its business and was issued a debenture. A month later, Mesh bought the shares of his fellow shareholders thereby becoming a single company shareholder and director. On failure to settle the debts, and subsequent winding up a year after, the proceeds from sale of company's assets could not settle Kabenzi's debt and other creditors. The debts had accumulated after Mesh became a shareholder. While Kabenzi is threatening to hold Mesh personally liable, other creditors have attached Mesh's car that is currently parked at Katindo police station pending sale for settlement of their debts.

Required: Identify the legal issues and resolve them.

Question 3 Kamu, a member of Bikurungu Society and credit savings (SACCO) together with other cooperative members pulled funds and incorporated AJUNA Uganda Ltd, a limited liability company. The main objective of the company was to deal in pornographic materials to be imported from USA among other sources. Murojo an illiterate born again christian was a promoter and a majority shareholder having contributed 50% of the share capital towards the company. After discovering the company's objective, Murojo became uncomfortable. Murojo seeks to be advised on the legality of the company. In another development, Kamba Uganda Ltd is a limited liability company incorporated in Uganda to exclusively supply building materials. The company realised a lot of profits and further invested in the importation of drugs from India. Three months after the annual general meeting, URA discovered that, Kamba Limited had not filed any returns. The articles of association of Kamba Uganda Ltd provided that the company's borrowing and lending was the company directors became too ambitious to expand on the business of supplying building materials and borrowed Shs 60 million from Pesa Bank. During the riots, many vehicle-tyres were burnt near the stores. The stores caught fire and the company has since gone through serious financial challenges, to the extent that they have failed to pay the loan acquired from Pesa Bank.

Required:

Identify the legal issues and resolve them. Question 4 Bintu Ltd deals in construction. It adopted Table A as its Articles of Association. The board of directors include: Bingi, Busa and Bimbosa. At a recent board meeting, the directors discussed acquiring a nearby piece of land from Fantasy Ltd for Shs 100 million. The board of directors of Bintu Ltd decided that the company should accept the offer as it had realised considerable profits. Recently, Bintu Ltd appointed professor Mawenu, a senior lecturer at Kabanda University, as the company secretary. Mawenu is a professor in forestry and specifically afforestation. Busa is against the appointment. In a related development, the directors in Bintu Ltd after realising the company was at the verge of collapsing decided to borrow Shs 500 million from Barimbisa, a registered money lender. The company's borrowing limit was Shs 100 million.

However, the lender was not aware of the limit and has decided to sue the company for breach of contract and recovery of his money. In another development, Magote, a trustee of Muleju, sold off one of the trust houses and never remitted the proceeds and rent of the other houses to Muleju. This prompted Muleju to appoint Banura with legal powers over all the trust property. Banura has written a demand notice to Magote demanding for the proceeds from the sale of the house and the rent fees demanded from Magote.

Required: Identify the legal issues and resolve them.

Question 5 (a) Explain the Legal characteristics of negotiable instruments. (20 marks) (10 marks) (b) Describe ways in which a person may become a member of an incorporated company. Question 6 The general principle is that 'where it is necessary to legally enforce a duty owing to the Company, the only plaintiff is the company itself'. Foss V Harbottle (1843)2. Hare 461.

Required: Explain the exception to the general rule with reference to relevant authorities.

(a) (i)Describe any two ethical responsibilities of a management (b) (i)organization. (2 marks)

Distinguish between a materials requisition note and a bill of materials. (2 marks) accountant. (2 marks)

(ii) Explain any two roles of a management accountant in an (ii) Magoola carpentry workshop Limited deals in furniture. The firm purchases timber and turns it into furniture. Provided below is the monthly requirement for timber: Particulars Pieces Minimum usage 500 Maximum usage 900 Average usage 425 Normal usage 800 The supplier's lead-time ranges between 2 to 8 days and the reorder quantity is 3000 pieces. Required: Determine the firm's: i)Reorder level

ii)Maximum stock level

iii)Minimum stock level

iv)Average stock

(7 marks) (ii) Explain any three arguments in favour of marginal costing. (3 marks) Jingo and sons Ltd makes and sells music instruments both on a retail and whole sale basis. The firm's selling price for a speaker is Shs 850,000. The firm incurs variable cost expenses of Shs 650,000 per speaker while monthly fixed manufacturing cost and non manufacturing overheads are Shs 19 million and Shs 15 million respectively. Required: Determine the (i) firm's break even quantity. (2 marks) (ii) contribution to sale ratio. (2 marks) (iii) number of units to be sold in order to achieve the target profit of Shs 80 million. (2 marks) (iv) firm's margin of safety if budgeted sales is 300 speakers. (2 marks) (Total 20 marks) Question 6 (a) (b) (i) Explain any four merits of budgeting in organisations. (4 marks) (ii) Describe any two causes of labour variances. (2 marks) Byansi plastics Limited (BPL) is a renowned manufacture of quality plastic products. It deals in chairs. buckets and tables. BPL prepares quarterly budgets for planning purposes. The following data for relates to the current quarter: Product Budgeted selling price Opening Closing sales per batch inventory inventory (Batches) (Shs '000') (batches) (batches) Chairs 10,000 17,000 2,000 1,500 Buckets 50,000 12,000 15,000 10,000 Tables 7,000 18,000 1,700 1,000 Data relating to materials and labour has been provided as below: Material type Opening stock Closing stock tons tons A 7,000 5,000 B 8,000 7,000 ' - --- - u-uu-u-n-l Question 5 (a) (b) Describe any two qualitative factors that may be considered when undertaking a make or buy decision. (2 marks) Fancy fabrics Ltd (FFL) manufactures textiles of various types purposely for sale. Production is carried out in rolls and normal monthly production is 50,000 rolls. At the beginning of October 2018. opening inventory was 25,000 rolls, 45,000 rolls were manufactured during the period while 60.000 rolls were sold. COSt data I'ltBS t0 the month Of October 2019: Particulars m Direct materials m Direct labour m variable overheads Fixed manufacturing absorption rate is Shs 320,000 per roll while administrative overheads and selling a distribution overheads are Shs 4 billion and Shs 6.5 billion respectively. Each roll produced is sold for Shs 2.5 million. Required: (i) Using absorption costing. prepare FFL's profit and loss statement