Question 2 The following information relates to Bukoma Church for the year ended 31 December, 2017. The church's Planning & Development unit operates a clinic with a dentistry unit at Bukoma trading centre. The proceeds from the clinic are used to finance some of the church's activities. The following are the church's receipts and payments for the year ended 31 December, 2017. Receipts: Shs '000' Church offerings 76,000 Tithes 54,500 Donations to church 25,600 Income from weddings 23,400 Clinic consultation fees 184,000 Cash from sale of drugs 153,600 Income from dentistry unit 67,500 Payments: Staff costs 53,600 Payments to credit suppliers of drugs 76,500 License, dentistry & laboratory expenses 54,900 Utilities 25,600 Maintenance of clinical equipment 10,500 Purchase of additional clinical equipment (note 2) 43,600 Clinic waste management costs 6,700 Motor vehicles expenses 13,500 Donation by church to orphanage home 4,500 Remittances to the diocese 21,400 Welfare expenses for (hosting church visitors) 8,300 Rental expenses for the clinic 6,000

Additional information: 1. Balances as at: 1 January, 2017 31 December, 2017 Shs '000' Shs '000' Cash & bank balance 34,500 294,000 Clinical equipment (cost Shs 350.7 million) 315,630 ? Motor vehicles (cost Shs 120 million) 96,000 ? Church land 45,500 45,500 Church building (cost Shs 250 million) 237,500 ? Inventory of drugs 23,670 19,860 Trade payables (drug suppliers) 12,500 14,700 Accrued staff costs 10,540 12,450 Accumulated fund 729,760 ? 2. The clinical equipment was acquired during the year and had not been capitalised by the year end. The church provides for full year's depreciation of non-current assets in the year of purchase and none in the year of disposal. 3. The non-current assets are depreciated, on straight-line basis per annum, as follows: Asset Rate (%) Clinical equipment 10 Motor vehicle 20 Church building 5 4. The church's policy is to charge 30% of utilities expenses to the clinic. In addition, staff costs, motor vehicle depreciation and motor vehicle expenses are apportioned between the church and clinic in the ratio of 2:3 respectively. Required: Prepare for Bukoma Church for the year ended 31 December, 2017 a statement of: (a) profit or loss for the clinic. (11 marks) (b) income and expenditure for the church. (5 marks) (c) financial position as at 31 December for the church. (4 marks) (Total 20 marks)

Question 3 The following trial balance was extracted from the books of Njogoo Transporters Limited (NTL) as at 31 December, 2017. In addition to provision of transport services, the company owns a garage that offers mechanical services to other companies and lets out part of the business' parking yard. Account title: Shs '000' Shs '000' Cash 6,700 Bank 85,000 Share capital 9,217,400 Retained earnings 112,318 Transport fares (note 3) 2,605,950 Mechanical services 45,620 7% investments 1,180,000 Interest on investments 82,600 Buses 8,017,000 Computers & printers 80,000 Furniture 10,000 Garage equipment 180,000 Land 2,960,000 Repairs & maintenance 200,000 Salaries 340,000 Utilities 15,000 Insurance premium 150,000 Fuel 640,000 Rent expense 8,418 License fees 10,000 Stationery 56,000 Provision for depreciation: Buses 2,000,000 Computers & printers 20,000 Furniture 2,000 Garage equipment 45,000 Compensation (accident victims) 180,450 Court penalties 12,320 14,130,888 14,130,888

Additional information: 1. Shs 8 million worth of invoices issued to tenants for sub-letting of the parking yard was outstanding by the year end. This had not been incorporated in the books. 2. Shs 40 million and Shs 620,000 in salaries and mechanical services respectively were prepaid by the year end. 3. Included in the amount for transport fares was Shs 10 million received from HTT Preparatory Schools to transport pupils for a tour to Kigali, Rwanda. The tour was slated for 14 January, 2018. 4. Shs 2.5 million for compensation for the loss of a passenger's luggage that was in the company's custody had not been paid by the year end. 5. The company depreciates non-current assets as follows: Buses 25% on cost Computers & printers 20% reducing balance Furniture 15% on cost Garage equipment 30% reducing balance Required: (a) Prepare Journal entries for the additional information 1 - 5 above. (9 marks) (b) Prepare a statement of profit or loss for the year ended 31 December, 2017. (11 marks)

Question 4 The following transactions were extracted from Hajjati Hadijah's catering business for the month of January 2018. Date Transaction Shs '000' 1 Brought the following personal items into the business: Bread toaster 35 Microwave 550 Fridge 1,500 Furniture 800 Car 14,000 Cash 5,000 3 Purchased catering equipment on credit from Ken Suppliers on terms of a 5% discount if paid within two months 8,000 6 Paid rent for three months in cash 1,200 6 Paid for utilities in advance in cash 250 7 Purchased foodstuffs in cash 500 7 Received cash for catering services provided 1,500 8 Purchased fruits in cash 250 8 Received cash from catering services 900 9 Acquired loan directly into the business bank account. 15,000 10 Paid Ken suppliers in full by cheque ? 11 Purchased foodstuffs for the restaurant in cash 1,200 11 Received cheque for catering services provided 2,500 12 Withdrew cash from the bank to pay wages 600 15 Invoiced NRP Ltd for outside catering services provided on terms of 2% discount if paid within one month 3,000 16 Paid for fuel in cash 300 17 Deposited cash into the bank 1,000 20 Withdrew cash from the bank for business use 5,000 20 Purchased serving dishes for outside catering by cheque 4,500 22 Received cheque from NRP Ltd in full settlement ? Required: Prepare the following ledger accounts for Hajjati Hadijah's catering business: Three column cash book. Capital. Purchases. Sales. Suppliers. Receivables. Single expenses account.

Question 5 (a) Explain reasons why Uganda has a high failure rate of businesses annually. (5 marks) (b) Kwality Investments Ltd (KIL) owns a number of assets. The following is an extract from their assets register as at 1 January, 2017. Asset Shs 'million' Date of purchase Machinery 400 30 June, 2014 Land 600 1 January, 2016 1. On 31 March, 2018 the company's management decided to dispose of the entire machinery due to obsolescence and acquired a new line of machinery in a part exchange arrangement. The old machinery was valued at Shs 200 million on the date of disposal and the company topped up Shs 350 million to acquire the new machinery. Additional costs incurred in the purchase of the new line of machinery included installation Shs 20 million, refundable and nonrefundable taxes Shs 26 million and Shs 40 million respectively, testing of the new machinery Shs 3.6 million. Shs 4 million was incurred in the servicing of the new machinery during the first quarter of its operation after installation. The company's policy is to depreciate machinery at 20% per annum using reducing balance method. Depreciation is time apportioned where applicable. 2. On 31 December, 2017 the land was revalued upwards by Shs 400 million. This land, however, was affected by the government's road construction project. On 1 January, 2018 the company received Shs 900 million in compensation for the portion of the land (valued at Shs 550 million) that had been affected by the road construction project. 3. All transactions were made through the bank. 4. KIL's financial year ends 30 June. Required: Prepare for KIL as at 30 June, 2017 and 2018: (i) machinery, provision for depreciation of machinery and disposal of machinery accounts. (11 marks) (ii) land and disposal of land accounts. (4 marks)

Question 6 Wanda, Kalule and Mwambu are partners trading as Wafanya Kazi Traders, exporting cereals to South Sudan. Their profit or loss sharing ratio is 4:1:3 respectively. Due to the insecurity in South Sudan, the partners have decided to dissolve the partnership. The following is their statement of financial position as at 31 December, 2017: Non-current assets: Shs '000' Shs '000' Land & buildings 79,000 Plant & machinery 65,000 Motor vehicles 16,000 160,000 Current assets: Inventory 41,000 Trade receivables 25,000 Provision for bad debts (2,000) 64,000 224,000 Capital accounts: Wanda 98,000 Kalule 20,000 Mwambu 62,000 180,000 Current accounts: Wanda 15,000 Kalule (24,500) Mwambu 11,000 1,500 Current liabilities: Trade payables 23,500 Loan from Wanda 15,000 Bank 4,000 42,500 Total equity & liabilities 224,000 Additional information: 1 The assets were realised as follows: Asset Shs '000' Land & buildings 90,000 Plant & machinery 45,000 Inventory 28,000 2 Wanda took over the motor vehicle at Shs 14 million as part settlement of his loan. 3 Dissolution expenses were Shs 3,500,000. 4 Accounts receivable were factored at Shs 23.55 million while Wanda took over Shs 10 million of accounts payable and the balance was paid off less 10% discount.

5 Kalule could only manage to meet half of his deficiency before he became insolvent. Required: Prepare for WafanyaKazi Traders as at 31 December, 2017: (a) Realisation account. (7 marks) (b) Bank account. (5 marks) (c) Partners' capital accounts (columnar format) (5 marks) (d) Loan account. (1 mark) (e) Payables account. (2 marks) Note: Apply the rule in the case of Garner vs Murray. (Total 20 marks)