Question $2$

Kaboom Fireworks is an entertainment company based in Uganda. It provides entertainment to companies

and the public at large. They also provide service celebrity singers and ensure success of their tours. The

company also sell venue decorations. Their biggest customer is the government when they conduct

workshops and conference to small to medium enterprises and the public at large. Kaboom Fireworks has

been making good return for the past two years. The accounting assistant has prepared the final accounts for

the year ended $30$ May $2024.$ The following subsequent events has been identified:

a$)$ On $7$ June the accounts clerks realised that accrued communication expense and bank loan interest

payable of BWP$2,360$ and BWP$4,123$ respectively had not been recorded in the books of accounts.

b$)$ On $10$ June $2024$ it was discovered that the payroll manager who resigned on $31$ April $2024,$ had

created ghost employees in the payroll system. He was using three of his cousin's bank accounts to

pay the ghost employees. He will later collect the money and use to his benefit. So far records

show estimates of BWP$209,000.$

c$)$ On $15$ June the warehouse manager discovered that some the decoration items in the inventory

had become obsolete which resulted in a significant decrease in its market value. It is estimated

that it would be valued $60\%$ of the current value.

d$)$ The Uganda tax authority declared an increase in value added tax by $3\%$ from $15\%$ to $18\%$ on the

$4^{?}$Kaboom Fireworks is an entertainment company based in Uganda. It provides entertainment to companies

and the public at large. They also provide service celebrity singers and ensure success of their tours. The

company also sell venue decorations. Their biggest customer is the government when they conduct

workshops and conference to small to medium enterprises and the public at large. Kaboom Fireworks has

been making good return for the past two years. The accounting assistant has prepared the final accounts for

the year ended $30$ May $2024.$ The following subsequent events has been identified:

a$)$ On $7$ June the accounts clerks realised that accrued communication expense and bank loan interest

payable of BWP$2,360$ and BWP$4,123$ respectively had not been recorded in the books of accounts.

b$)$ On $10$ June $2024$ it was discovered that the payroll manager who resigned on $31$ April $2024,$ had

created ghost employees in the payroll system. He was using three of his cousin$$s bank accounts to

pay the ghost employees. He will later collect the money and use to his benefit. So far records

show estimates of BWP$209,000.$

c$)$ On $15$ June the warehouse manager discovered that some the decoration items in the inventory

had become obsolete which resulted in a significant decrease in its market value. It is estimated

that it would be valued $60\%$ of the current value.

d$)$ The Uganda tax authority declared an increase in value added tax by $3\%$ from $15\%$ to $18\%$ on the

$4$

th of June $2024$

Required

Identify and classify of the subsequent event and in brief explain how kaboom fireworks should account for

the event aboveQuestion $2$

Kaboom Fireworks is an entertainment company based in Uganda. It provides entertainment to companies

and the public at large. They also provide service celebrity singers and ensure success of their tours. The

company also sell venue decorations. Their biggest customer is the government when they conduct

workshops and conference to small to medium enterprises and the public at large. Kaboom Fireworks has

been making good return for the past two years. The accounting assistant has prepared the final accounts for

the year ended $30$ May $2024.$ The following subsequent events has been identified:

a$)$ On $7$ June the accounts clerks realised that accrued communication expense and bank loan interest

payable of BWP$2,360$ and BWP$4,123$ respectively had not been recorded in the books of accounts.

b$)$ On $10$ June $2024$ it was discovered that the payroll manager who resigned on $31$ April $2024,$ had

created ghost employees in the payroll system. He was using three of his cousin's bank accounts to

pay the ghost employees. He will later collect the money and use to his benefit. So far records

show estimates of BWP$209,000.$

c$)$ On $15$ June the warehouse manager discovered that some the decoration items in the inventory

had become obsolete which resulted in a significant decrease in its market value. It is estimated

that it would be valued $60\%$ of the current value.

d$)$ The Uganda tax authority declared an increase in value added tax by $3\%$ from $15\%$ to $18\%$ on the

$4^{th}$ of June $2024$

Required

Identify and classify of the subsequent event and in brief explain how kaboom fireworks should account for

the event above.

$[10$ marks$]$