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NUMBER FIVE (a) Explain briefly the meaning of the terms listed below in relation to Government accounting: The Exchequer account (3 marks) The General account of Vote (3 marks) The Paymaster General (3 marks) (iv) Appropriations in Aid. (3 marks) (b) The approved estimates and actual expenditure details for the Ministry of Planning and Development for the year 2001/2002 were as follows: Sh. Sh. Personal emoluments 14,793,600 11,702,400 House allowance 2,346,000 1,711,200 Passage and leave 4,024,800 80,040 Traveling and accommodation 160,080 198,720 Transport and mainenance 1,932,000 1,631,160 Postage and telephone expenses 552,000 397,440 Miscellaneous charges 2,097,600 2,025,840 Training expenses 717,600 568,560 Purchase of equipment 2,520,000 4,776,000 Appropriations in Aid 120,000 667,200 The ministry made four equal withdrawals from the exchequer in July 2001, October 2001, January 2002 and May 2002. In total, the ministry had withdrawn Sh.24,000,000 by the year end. Required: The General Account of Vote. ( 2 marks) The Exchequer Account ( 1 mark) The Paymaster General Account. ( 2 marks) (iv) Statement of assets and liabilities as at 30 June 2002. ( 3 marks) (Total: 20 marks)NUMBER FOUR Mwalu Traders Led. sells most of its goods through consignees. One of the consignees is Bali Enterprises Lid. who operates in Mombasa. Bali Enterprises Led. is entitled to a commission of 5% on sales. Given below are the transactions carried out between Mwalu Traders Led. and Bali Enterprises Led. for the three months ended 31 October 2002. August A consignment of 500 bicycles each costing Sh.4,000 was sent to Bali Enterprises Led. Mwalu Traders Lid. paid packing costs Sh.80,000, freight Sh.100,000 and insurance Sh.40,000. Bali Enterprises Led. paid carriage-in costs of Sh.18,000 from the railway station to the trading premises. Bali Enterprises Lid. also paid Sh. 12,000 with respect to offloading the bicycles. September Bali Enteprises Led. sold 300 bicycles at Sh.6,000 each and paid carriage out-costs of Sh.30,000 In order to sell the remaining 200 bicycles, they were fitted with head lamps at a total cost of Sh.50,000, the amount being paid by Bali Enterprises Lid. Bali Enterprises Led. paid storage costs of Sh.18,000 and advertisment costs of Sh.20,000. October Bali Enterprises Lid. sold 160 bicycles at Sh.6,500 each. Bali Enterprises Lid. sent account sales to Mwalu Traders Led. accompanied by a cheque for Sh.2,150,000 after deducting its commission and payments on behalf of the consignor, the balance remaining as a debt due to Mwalu Traders Lid. Mwalu Traders Led. prepares separate trading and profit and loss accounts for consignment sales made through each consignce. Required: (a) In the books of Mwalu Traders Led: Consignment out account. (5 marks) Trading and profit and loss account for the three months ended 31 October 2002. 5 marks) (b) Mwalu Traders Led.'s account in the books of Bali Enterprises Led. (5 marks) (Total: 15 marks)NUMBER THREE (a) Distinguish between hire purchase and lease. (4 marks) (b) Pesa Limited commenced trading on 1 January 2002, selling photocopy machines. Pesa Led's trial balance as at 30 June 2002 was as follows: Sh. Sh. Sales 15,096,000 Purchases 12,720,000 Lease rentals received 121,600 Creditors 2,876,400 Office expenses 1,460,000 Salaries 1,690,000 Miscellaneous expenses 849,000 Hire purchase debtors 2,172,000 Authorised and issued share capital 3,000,000 Bank balance 2,203,000 21.094.000 21.094.000 Additional information: 1. The company only sells one type of photocopy machine which costs Sh.16,000 and is sold for cash at cost plus 50%. The majority of sales are for cash, but a number are sold on hire purchase or rare leased. 2. Hire purchase sales require a deposit of Sh.4,800 and 24 monthly instalments of Sh.1,200 each while the leasing charge is Sh.800 a month. The first monthly hire purchase instalment and the first leasing payment are due in the month of delivery. It is estimated that a photocopy machine will have a useful life of five years after which its residual value will be Sh. 1,000. 3. The number of photocopy machines sold on hire purchase and leased during the six months were as follows: No. No. February 20 March 25 10 April 30 12 May 30 14 June 18 60 No leased photocopy machine had been returned as at 30 June 2002. 4 All instalments were received on their due dates and were credited to hire purchase debtors account. The account had originally been debited with the cash selling price of machines sold on hire purchase. 5. The directors of Pesa Led. decided that they will: Deem that interest accrues evenly over the life of hire purchase contracts. Show the normal gross profit on all sales in the trading account Treat the leases as operating leases. Required: "Trading and profit and loss account for the six months ended 30 June 2002. (13 marks) Balance sheet as at 30 June 2002. (8 marks) (Total: 25 marks)NUMBER TWO (a) Define the following terms and explain how they are treated in the financial statements of an insurance company: Bonus in reduction of premium (2 marks) Surrender value (2 marks) Consideration for annuities granted (2 marks) (iv) Commission on reinsurance ceded. (2 marks) (b) The Bahari Marine Insurance Company Led. accepts premiums from clients and settles claims as they fall due. The company is obligated to pass over a portion of the business risk to a re-insurance company. Direct business Reinsurance Sh.'000' Sh.'000' 1. Premiums : Received 4,600,000 720,000 : Receivable - 1 December 2001 248,000 27,000 - 30 November 2002 336,000 34,000 : Payable - 1 December 2001 37,500 - 30 November 2002 62,000 : Paid 460,000 2. Claims : Paid 2,350,000 300,000 : Payable - 1 December 2001 166,000 39,000 - 30 November 2002 208,000 44,000 : Received 170,000 Receivable - 1 December 2001 16,000 - 30 November 2002 23,000 3. Commission : On insurance accepted 220,000 19,000 : On reinsurance ceded 26,000 4. Other expenses and income in thousands of shillings: Salaries - Sh.320,000; Rent and rates - Sh.29,000; Tax paid - Sh.440,000; Postage and stationery - Sh.43,000; Interest, dividends and rent receivable (net) - Sh.137,500; Withholding taxes - Sh.40,250; Legal expenses (inclusive of Sh.40,000 in connection with the settlement of claims) - Sh.72,000 5. The fund balance on 1 December 2001 was Sh.3,485,000,000. 6. The additional reserve on 1 December 2001 was Sh.445,000,000 and must be maintained at 5% of the net premium of the year. Required: Revenue account for the year ended 30 November 2002. (12 marks)QUESTIONS NUMBER ONE (a) Briefly explain the following terms as used in the accounts of professional practitioners: Office account (2 marks) Client account (2 marks) Costs charged to clients (2 marks) (iv) Work-in-progress. (2 marks) (b) Given below is a trial balance extracted from the books of Kamau and Nyambati, a firm of practicing advocates as at 31 October 2002: Kamau and Nyambati Advocates Trial Balance Sh. Sh. Capital account 204,000 Disbursements on behalf of clients 12,000 Drawings 60,000 Salaries 72,000 Rent and rates 60.000 Printing and stationery 35,000 Postage and telephone 18,200 Costs charged to clients 250,000 Work in progress on 1 November 2001 36,800 Clients: for the moneys held on their behalf 24,800 Creditors 27,200 Debtors 78,000 Sundry office expenses 8,500 Furniture, fittings and library books 45.000 Cash at bank: Clients' account 24,800 Office account 55,700 506.000 506.000 Additional information: 1. The uncompleted work on 31 October 2002 was valued at Sh.23,500. It is estimated that debts amounting to Sh.5,500 are uncollectible and should be written off. Depreciation should be provided at 20% per annum on the book value of the furniture, fittings and library books. Required: Profit and loss account for the year ended 31 October 2002. (6 marks) (b) Balance sheet as at 31 October 2002. 6 marks) (Total: 20 marks)