Question 2 (a) Source documents are essential to the bookkeeping and accounting processes as they provide physical evidence that a financial transaction occurred and help in verifying transactions during the auditing process. Required: Explain the following documents: (i) Outgoing invoice (ii) Receipt (iii) Outgoing credit note (2 marks) (2 marks) (2 marks) (b) The following transactions were extracted from the books of Superior Enterprises Ltd (SEL) for the month of January 2020: Date Transaction 1 to Shs 3,500,000 and Shs 2,450,000 respectively. The trade receivables and trade payables brought forward totaled 3 and Jack Shs 950,000. Sold goods on credit to: Peter Shs 1,000,000 John Shs. 500,000 8 SEL purchased goods on credit from: Excel Suppliers Shs 2,000,000 Kiyembe Enterprises Shs 1,000,000 and Supreme Suppliers Shs 400,000. 12 300,000. Sold goods for cash to: Mary Shs 400,000 and Jonathan Shs 15 respectively in respect of their outstanding balances. Peter and John paid cash Shs 200,000 and Shs 400,000 18 1,000,000 and Supreme Suppliers Shs 200,000. SEL paid by cash the following suppliers: Excel Suppliers Shs 19 400,000 and Mwesigwa Shs 300,000. Sold goods cash to: Munene Enterprises Shs 300,000; Mulungi Shs 20 Sold goods on credit to: Muggaga Shs 1,000,000; Mwavu Shs 400,000 and Peter Shs 500,000. 22 Mwavu and Peter returned goods worth Shs 120,000 and Shs 200,000 respectively for not conforming to the orders they had placed. 23 cash Shs 500,000 and Shs 400,000 respectively. SEL bought goods from Natete Traders and Mengo Suppliers for

24 SEL bought goods on credit from: Excel Suppliers Shs 300,000; Supreme Suppliers Shs 240,000 and Reliable Enterprises Shs 500,000. 25 Suppliers and Supreme Suppliers respectively. Goods worth Shs 100,000 and Shs 120,000 were returned to Excel Required: Prepare, for Superior Enterprises Ltd for the month of January 2020, the following books of account: (i) Sales daybook (ii) Purchases daybook (iii) Return inwards daybook (iv) Return outwards daybook (v) Subsidiary ledgers for Excel Suppliers and Peter (3 marks) (3 marks) (1 mark) (1 mark) (4 marks) (c) Identify the ledgers where the totals obtained in (b) (i)-(iv) above are The following is a trial balance for XIM Limited for the year ended 31 December 2019: Details Dr Shs '000' Cr Shs '000' 3,838,050 340,000 120,000 140,200 180,000 34,000 23,500 460,000 23,500 Sales and purchases Salaries and wages Balances as at 1 January, 2019: Retained earnings Inventory Share capital at Shs 1,000

Share premium Accumulated depreciation: Motor vehicles Accumulated depreciation: Equipment Returns Office expenses Discounts Trade receivables and trade payables Cash at hand General expenses Bank 2,450,000 200,000 350,000 154,000 45,000 120,000 34,500 265,000 125,000 76,500

Details Dr Shs '000' Cr Shs '000' 13,250 5,172,500 Allowance for bad debts Carriage inwards Land Motor vehicles at cost Equipment at cost Utilities Rent 30,500 345,000 350,500 450,000 56,500 120,000 5,172,500 Additional information: 1 Inventory as at 31 December 2019 was valued at Shs 235,000,000. 2 Non-current assets are depreciated, on cost, as follows: Motor vehicles 20% Equipment 10% 3 A customer with a balance Shs 2,500,000 disappeared and management has agreed that this balance should be written off and the allowance for doubtful debts adjusted to 8% of the remaining receivables. 4 Rent was paid for a period of 12 months from 1 October 2019. 5 Salaries and wages Shs 45,000,000 accrued by the end of the financial year. Required: Prepare, for the year ended 31 December 2019, XIM Limited's statement of: (a) profit or loss (b) financial position

Question 4 (a) Explain any two merits of control accounts (b) Eve does not follow double entry principles while preparing books of account for her business. She has provided the information below for the year ended 30 June 2018 relating to her retail business: 1 She estimates the gross profit margin on sales at 20%. 2 Accounts payable on 1 July 2017 Shs 2,000,000; payments to suppliers Shs 8,000,000; discounts received Shs 300,000; return outwards Shs 400,000 and accounts payable 30 June, 2018 Shs 3,000,000.

3 Accounts receivable on 1 July 2017 Shs 32,000,000; collections from debtors Shs 24,000,000; discounts allowed Shs 450,000; return in wards Shs 540,000 and accounts receivable 30 June, 2018 Shs 34,000,000. 4 Inventory at the beginning of the year was Shs 24,044,000. 5 All sales and purchases are on credit.

Required: Determine, for Eve, the value of: (i) sales for the period (ii) purchases for the period (iii) inventory as at 30 June, 2018 (c) Hannah Enterprises has provided the following information relating to the financial year ended 31 December, 2017: 1 Assets and liabilities at the beginning and end of year are as follows: Details 1 January Shs '000' 56,400 100,000 Land 300,000 Buildings 230,000 Trade receivables 87,500 Bank and cash 45,600 Inventory 23,400 31 December Shs '000' 34,300 130,000 300,000 200,000 98,500 67,400 34,500 Trade payables Bank loan 2 The drawings by Hannah during the year totalled to Shs 4,500,000. 3 Additional capital during the year was Shs 12,000,000.

Required: Using the business and accounting equation, determine Hannah Enterprises' profit or loss for the year ended 31 December, 2017.

Question 5 (a) Distinguish between 'straight line' and 'reducing balance' methods of depreciation. (2 marks)

(b) Wild Experience Limited (WEL), a tour and travel company, has provided the following information regarding its motor vehicles: 1 Balances as at 1 January, 2018: Cost (Shs '000') Mini bus 160,000 Land cruisers 800,000 Total depreciation (Shs '000') 64,000 320,000 2 A second mini bus UBA XXM was imported in 2018. The costs incurred included: Purchase price Shs 100 million; non-refundable taxes Shs 80 million and refundable taxes Shs 18 million. It was put to use on 1 April, 2018. 3 A land cruiser purchased on 1 February, 2015 at Shs 270 million was disposed of on 4 August, 2018 at Shs 140 million. 4 On 4 March 2019, WEL bought a new land cruiser at Shs 350 million; paying the supplier Shs 200 million and the balance payable in 12 months. 5 The financial year of WEL runs from 1 January to 31 December. 6 Depreciation is charged fully in the year of acquisition and none is charged in the year of disposal. It is computed, on cost, as follows: Mini bus 10% Land cruisers 12.5%

Required: Prepare, for the years ended 31 December 2018 and 2019, Wild Experience Limited's: i)Combined assets account ii)Accumulated depreciation account iii)Disposal of asset account iv)Extracts from the statement of profit or loss v)Extracts from the statement of financial position

Question 6 The statement of financial position below was extracted from the books of Shine Ltd as at 31 December, 2019. Their accountant prepared it with a suspense account. Non-current assets: Land Buildings Equipment Current assets: Inventory Trade receivables Cash and bank Suspense account Total assets Equity and liabilities: Share capital Retained profits b/d Loss during the year Non-current liabilities: 5-year bank loan Current liabilities: Trade payables Expenses payable Total equity and liabilities Shs '000' 150,000 350,000 150,000 650,000 76,500 85,000 63,450 13,050 238,000 888,000 400,000 175,000 (25,000) 250,000 45,500 42,500 888,000 On further examination, the following errors were discovered: 1 Legal costs relating to the purchase of land Shs 2,000,000 were treated as operating expenses. 2 Inventory worth Shs 3,000,000 was not counted at the year end. 3 Trade receivables were under cast by Shs 12,500,000. 4 A payment for utilities Shs 2,450,000 had only been entered in the utilities account on the credit side. 5 Shs 400,000 received from Maria, a credit customer, was entered in both accounts on the correct sides as Shs 40,000. 6 Outstanding rent Shs 1,500,000 was only posted in the rent account. 7 Discount received Shs 200,000 was only posted on the debit side of the discount allowed account. Required: Prepare for Shine Ltd: (a) Journal entries to correct the above errors (8 marks) (b) Statement of corrected net profit for the year ended 31 December, 2019 (c) Corrected statement of financial position as at 31 December, 2019 (3 marks) (9 marks) Hint: Particulars Non-current asset SOFP before Adjusting column Final SOFP