QUESTION 1 Mariana prepares her financial statements to 31* December every year. At 31 December, 2019, trial balance was as follows: DR CR GHS'000 GHS'000 Capital 55,720 Sales 65,880 Purchases 50,356 Inventory 1/1/2019 7.900 Returns 545 1,720 Printing and Stationery 1.692 Rent 2.400 Discounts 1.800 3,520 Transport and travelling 1.760 Repairs and maintenance 1,523 Allowance for receivables 650 Land at cost 13,500 Building at cost 45,000 Accumulated depreciation on building 6,100 Motor Vehicle at cost 24,500 Accumulated depreciation on motor vehicles 9,600 Equipment and Furniture 12.450 Accumulated depreciation on equipment & furniture 4.980 Trade receivables 9,450 Cash at hand 9.524 Cash at bank 5,950 Drawings 4,520 Interest on loan 2.200 Trade payables 13,000 20% Loan 22,000 189,120 189.120 The following additional information is relevant i) Depreciation is to be provided as follows: Building - 5% per year on cost Motor Vehicle -15% per year on reducing balance basis. Equipment & Fumiture -10% per year on reducing balance basis. ii) Inventory value at 31 December 2019 amounted to GHS 5,840,000 iii) Rent recorded in the trial balance represents 16 months' rent paid to 304, April 2020 iv) A provision of 6% of trade receivable is to be made v) Rate paid during the year of GH4 750,000 was omitted from the books. vi) Adverting cost of GH1,250,000 received in November 2019 remained outstanding at the end of the year vii) The loan was contracted on 30th June 2019 to expand the operations of the business entity. 1 You are required to prepare: a) Income Statement for the year ended 31 December 2019 b) Statement of financial position as at 31 December 2019 (12 marks) (8 marks) (Total 20 marks) QUESTION 2 A) Nananom enterprise purchased 3 Motor Vehicles for their business operations at a cost of GHS 50,000 each on January 1, 2016. On July 1, 2017, they added a new BMW X5 which cost GHS 100,000 to the fleet. On June 30, 2018, one of the vehicles purchased in 2016 was disposed for GHS 19,200. On October 1, the same year, another vehicle was acquired for GHS 120,000 on credit from Silver Star Auto Limited to replace the disposed vehicle. Depreciation is charged at 20% on cost and on one-month ownership basis. The financial year ends on December 31. You are required prepare: a) Motor Vehicles Account (2016-2019) b) Provision for depreciation Account (2016-2019) c) Disposal account (2018) d) Extract of Statement of profit or loss account (2018 and 2019) e) Extract of Statement of financial position. (2018 and 2019) (3 marks) (4 marks) (1.5 marks) (1.5 marks) (2 marks) B) The trial balance of Paa Kwasi Enterprise has an excess of credit over debit of GHS 50,000. Suspense account has been opened to balance the accounts. The following transactions were later discovered: i) Discount allowed of GHS 20,000 and Discount received of GHS 32,000 have both been entered on the wrong side of the trial balance. ii) The receivable control account balance of GHS 897,548 had been included in the trial balance as GHS 969,548 iii) Sales of GHS 8,000 had been omitted from the sales records (i.e from the sales account). iv) Purchase of raw material of GHS 16,020 was entered in the purchase account as GHS 18,000. v) The debit balance of GHS 11,980 on the current account with the Proprietor's wife had been omitted from the trial balance. Required: a) Make journal entries to correct the errors b) Prepare the suspense account. (5 marks) (3 marks) (Total 20 marks) 2