Question
Question The following information relates to Bukoma Church for the year ended 31 December, 2017. The church's Planning & Development unit operates a clinic with
Question
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
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
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 statement of profit or loss for the year ended 31
December, 2017.
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 non-
refundable 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.
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.
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