Further information: 1. Capital as at 1 January. 2017 Shs 274,350,000. 2. Drawings during the year amounted to She 12,450,000. Required: Determine the profit for the year using the business equation. (4 marks) (Total 20 marks) Question 2 The following trial balance was extracted from the books of Ebenezer Ltd as at 31 December, 2017: Details Dr Cr Shs '000' Shs '000' Ordinary share capital @ Shs 1000 435,500 Share premium 125,000 Retained loss as at 1 Jan 2017 45,500 Land at cost 419,330 Buildings at cost 234,000 Motor vehicles at cost 67,500 Accumulated depreciation as at 1 Jan 2017: Buildings 117,000 Motor vehicles 13,500 Inventory on 1 Jan 2017 45,500 Sales 543,910 Purchases 231,000 Carriage inwards 23,500 Returns 2,300 2,560 Discounts 3,450 5,430 Salaries and wages 65,450 Utilities 10,000 Directors' remuneration 43,500 Repairs 7,650 General expenses 28,760 Trade receivables and payables 54,500 34,600 Provision for bad debts 1,090 Cash and bank 67,900 10% Bank loan 75,000 Loan interest paid 3,750 1,353,590 1,353,590Additional information: 1. 2. 3. Inventory on 31 December, 2017 Shs 35.670,000. Loan interest was paid for the first six months. The remainder is outstanding. Non-current assets are depreciated on cost as follows: buildings 5% and motor vehicles 20%. A debtor with a balance Shs 3.560,500 had been declared bankrupt. Therefore. this balance should be written off. The provision for bad debts should be adjusted to 3% of the remaining receivables. Water bill Shs 3.000.000 (included in utilities) was paid on 1 July. 2017 covering a period of 15 months. Wages for casual labourers Shs 20,545,000 were outstanding on 31 December, 2017. Required: Prepare, for the year ended 31 December. 2017, Ebenezer Ltd's statement of: (i) profit or loss. (10 marks) (ii) financial position. (10 marks) (Total 20 marks) Question 3 (a) (b) Explain, with two examples. any four elements of financial statements. (4 marks) The following are transactions of James' sole proprietorship business relating to the month of January, 2018: 1 James started business by opening up a business bank account in Cent Bank. He transferred his savings Shs 45,000.000 to the business bank account. 2 He withdrew Shs 5.000.000 from the bank account to start trading. 5 He bought a motor cycle Shs 3,500,000 through the bank to help him transport merchandise from suppliers and to customers. 10 He purchased goods Shs 6,000,000 from Kibuuka Suppliers Ltd. He paid Shs 3,500,000 cash and the balance is payable in two months. 12 He paid for a trading license Shs 500.000 through the bank. 15 Goods worth Shs 2,500,000 were sold to Mary who paid Shs 1.760.000 cash and promised to pay the balance in two weeks. 12 Pens for training staff 110 40,000 14 Charcoal for staff tea 112 65,000 16 Airtime for headmistress 113 50,00 17 Staff sugar 114 30,000 18 Photocopying paper 115 45,000 20 Postal office rental box 116 15,000 21 Photo copier toner 117 60,000 23 Cleaning materials 118 10,000 25 Toilet paper 119 15,000 26 Petrol for school van 120 70,000 Required: Record. for Kireka Academy, the above transactions in a petty cashbook under the following headings: Fuel, Cleaning, Staff Welfare, Stationery, Postage. Transport and Telephone costs. (10 marks) (Total 20 marks) Question 6 (a) Explain the sources of information that can be helpful when reconstructing financial statements from incomplete records. (4 marks) (b) Grace maintains her gross profit at 7.5% of the cost of sales and all sales are on credit basis. The following information is given: Shs '000' (i) Inventory as at 1 January. 2017 600 (ii) Inventory as at 31 December, 2017 300 (iii) Accounts receivable as at 1 January, 2017 450 (iv) Bad debts written off 75 (v) Collections from credit customers 2,250 (vi) Accounts receivable as at 31 December, 2017 300 Required: Determine the purchases for the year. (6 marks) 22 Returned goods worth Shs 200,000 to Kibuuka Suppliers Lid because they were faulty. 26 Bought shop fixtures from Fine Carpenters Lid paying Shs 250,000 cash. 26 He acquired a bank loan Shs 25,000,000 to purchase land for business premises. The purchase is expected to take place in February, 2018. 30 Mary returned goods worth Shs 150,000 because they did not meet her specifications. Required: For each of the transactions above, show its effect and the appropriate double entry. Hint: Example: James banked cash Shs 2,000,000 on 1 April, 2018. Date Details Effect Dr Cr 1/4/2018 Bank Bank increased. 2,000,000 Cash Cash has reduced. 2,000,000 (16 marks) (Total 20 marks) Question 4 (a) There are several accounting branches as a result of varied uses of accounting information in an entity. Required: Explain any three branches of accounting. (3 marks) (b) SPW Ltd produces chicken feeds and the following information relates to its non currents assets: 1. Jan 1, 2014: Bought a milling machine (1) and a feed mixer (1) at Shs 35,000,000 and Shs 25,000,000 respectively. 2. Jan 1, 2015: Bought a milling machine (II) at Shs 65,000,000. 3. October 1, 2015: Bought a feed mixer (II) at Shs 30,000,000. 4. June 1, 2017: The milling machine (1) bought on Jan 1 2014 was sold for Shs 25,000,000.5. The company's policy is to depreciate milling machines and feed mixers at 15% and 20% per annum respectively using the straight line method. Depreciation is charged fully in the year of acquisition and none in year of disposal. Required: (i) Prepare, for the years ended 31 December: 2014. 2015. 2016 and 2017. SPW Ltd's: (a) combined non-current assets account. (4 marks) (b) combined accumulated depreciation account. (8 marks) (c) disposal of non-current assets account. (2 marks) (ii) Prepare. forthe year ended 31 December. 2017. an extract of SPW Ltd's: (a) profit or loss account. (1 mark) (b) statement of financial position. (2 marks) (Total 20 marks) Question 5 (a) Explain the term 'imprest system' as used in petty cash management and discuss any four benefits of using the imprest system to an organisation. (6 marks) Distinguish between the following terms: (i) Trade discount and cash discount. (2 marks) (ii) Discount received and discount allowed. (2 marks) Kireka Academy maintains a petty cashbook using the imprest system. On 1 August. 2017. Dick. the Assistant bursar. was given Shs 1.500.000 which is the monthly float and he made the following payments during the month. August Details Voucher No. Shs 1 Petrol for mowing machine 102 70.000 2 Staff break tea 103 25.000 3 Counter books 104 15.000 5 Note books 105 20.000 7 Office cleaning materials 106 10.000 8 Petrol for school van 107 65.000 10 Transport to run errands 108 100.000 11 Monthly airtime for school director 109 50.000 (c) The following are transactions of Jackson relating to his business bank account during the month of July, 2018: Bank balance (Shs) 1 July, 2018 45,414,500 31 July, 2018 20,500,000 Money paid into the bank: Date Transaction Shs 2 Additional capital 5,000,000 6 Cash sales 76,500,000 8 Receipts from debtors 54,678,000 Payments made by cheque: Date Transaction Shs 1 Electricity 4,500,000 5 Motor vehicle expenses 12,500,500 11 Rent 22,345,000 14 Purchases 56,760,000 16 Salaries and wages 34,500,000 17 Purchase of fixtures 12,400,000 21 Stationery expenses 8,645,000 Jackson has been recording information relating to his bank drawings in his smart phone. Unfortunately, his phone was stolen. Therefore, he is not certain of how much he drew out of the business. Required: Determine the drawings made by Jackson through his bank account. (6 marks) (:1) The following are closing balances extracted from the books of Jackson as at 31 December, 2017: Shs '000' Trade receivables 43,400 Trade payables 32,400 Cash at hand and bank 32,450 Inventory 13,560 Non-current assets 356,000