Required: Prepare. for Dmondi 8 Dmollo Co. advocates for the year ended 31 December 2017, (i) statement of corrected net profit. (4 marks) (ii) appropriation account. (4 marks) (iii) goodwill account. (2 marks) (iv) partners' capital and current accounts (using fixed capital method). (10 marks) (Total 25 marks) Question 3 (a) A professional accountant is seen as a key pillar in helping an organization to achieve its obiectives. Required: Explain the roles of an accountant in an organization. (4 marks) (b) The following information. relating to the year ended 31 December 2018. was extracted from the Iedgers of Maine 8 Sons Ltd: Balances as at 1 January, 2018: She Trade payables control account 2.169.120 Trade receivables control account 2.394.000 Transactions during the year to 31 December, 2018: Total purchases 33.221,200 Total Sales 15.703000 Return outwards 314.720 Return inwards 445.680 Carriage inwards 2.000.000 Carriage outwards 850.400 Cheques and cash paid to credit suppliers 11.334.960 Cheques and cash received from credit customers 8.748.000 Discounts Allowed 530.400 Discounts received 266.320 Bad debts written off 429.600 Customer cheques dishonoured 4.200.000 Suppliers cheques dishonoured 1.600.000 Excess cash refund: To customers 5.450.000 From suppliers 6.320.000 Interest charged by suppliers 800.000 Additional information: 1 The cash sales and cash purchases for the year were Shs 3,400,000 and Shs 5,000,000 respectively. 2 Maina & Sons Lid and Bebe Traders are dealers in building materials and stationery respectively. Maina & Sons Lid bought stationery Shs 5,000,000 from Bebe Traders on credit. Bebe Traders, too, purchased building materials Shs 4,800,000 from Maina & Sons Lid on credit. The business owners have agreed to offset the balances in their books of account. Required: Prepare, for Maina & Sons Lid, trade receivables and trade payables control accounts for the year ended 31 December 2018. (10 marks) (c) The following information was extracted from the books of Mabembe Lid for the year ended 31 December 2018: 1 Non- current assets as at 31 December 2017 were as follows: Asset Cost Accumulated Net book depreciation value Shs '000' Shs '000' Shs '000' Motor vehicles (each at Shs 30 million) 90,000 9,000 81,000 Machinery 300,000 45,000 255,000 Computers & printers 20,000 5,000 15,000 2 Depreciation of non-current assets is charged, on straight line basis, as follows: Asset: Rate (% ) Motor vehicles 10 Machinery 15 Computers & printers 25 3 On 30 September 2018, one of the motor vehicles was involved in an accident. Management agreed that it should be disposed of and a cheque Shs 25,000,000 was received for this transaction. On the same date, they acquired another motor vehicle Shs 40,000,000 by cheque.Date 11 Sold tiles Shs 400,000 to Mukasa who paid Shs 300,000 cash and the balance payable in a month's time. 13 Returned plumbing materials worth Shs 500,000 to Nakasero Traders Ltd because they were damaged. 14 Paid offloading expenses Shs 50,000 cash. 16 Acquired a computer Shs 1,500,000 cash to be used by the bookkeeper in records management. 17 Paid the Municipality business license Shs 500,000 through the business bank account. 18 Obtained a business bank loan Shs 30,000,000 from Sente bank. 21 Used the business bank loan to buy a used truck Shs 28,000,000. She made a part payment Shs 25,000,000 through the business bank account. 22 Sold cement Shs 1,200,000 cash. 24 Banked Shs 1,000,000 cash. 25 Purchased spades, slashers and hoes Shs 400,000 cash. 25 Sold tiles Shs 3,000,000 to Classic Construction Company Lid who paid Shs 2,500,000 by cheque. 27 Paid utilities Shs 100,000 cash. 28 Paid staff overtime allowances Shs 1,000,000 by cheque. 29 Sold hoes to Empower Agriculture Lid, Shs 200,000, who paid by cheque. 30 Purchased eucalyptus logs Shs 300,000 cash from Forestry International Ltd. Required: Prepare, for Malaika, for the month of January 2018, a two-column cashbook. (13 marks) (c) Kakaire is a commercial farmer in Luuka district. He purchased a tractor on 1 January 2010 at Shs 180 million from Agro-machinery Ltd. The tractor has useful life of 10 years and a residual value of Shs 45 million. In January 2018, Kakaire acquired more land hence the need for a superior tractor. He approached Agro-machinery Lid and the company was willingto exchange his old tractor with a superior one with a top up Shs 140 million. Kakaire has agreed to this arrangement. His bookkeeper uses the straight line method of depreciation and charges full depreciation in the year of purchase and none in the year of disposal. Required: Compute. tor Kakaire. the: (i) net book value of the old tractor at the time of exchange. (3 marks) (ii) value at which the superior tractor is recorded in the books of account at the time of acquisition. (2 marks) (iii) net book value of the superior tractor at the end of 2018. assuming a useful life of 10 years and a residual value of Shs 50 million. (1 mark) (Total 25 marks) Question 5 (a) The Accounts assistant of Kalodo Enterprises Ltd extracted a trial balance for the year ended 31 December 2017 and realized that the debit side was short by Shs 4,340,000. On further examination. she discovered the following: 1 A purchase Shs 6,550,000 was over cast by Shs 50,000. 2 Repair of equipment Shs 240,000 was recorded in the equipment account. 3 Discount received Shs 120,000 was credited to the discount allowed account as Shs 210.000. 4 Sales Shs 490,000 had not been posted to the respective ledger accounts from the sales journal. 5 Water bills Shs 90.000 had been debited in the account for water expense as Shs 900.000. 6 Shs 1,800,000 incurred in purchasing a laptop for use in the business had been debited to the purchases account. This transaction was correctly recorded in the cashbook. 7 Shs 43,000 in respect of a sale was correctly entered in the debtor's account but erroneously entered in the sales accounts as Shs 46,600. 4 On 25 October 2018, a printer which cost Shs 5,000,000 and with accumulated depreciation Shs 1,250,000 broke down and was disposed of at Shs 1,000,000. 5 The company charges full depreciation in the year of purchase and none in the year of disposal. Required: Prepare, for Mabembe Lid, for the year ended 31 December 2018, a combined: (i) non-current assets account. (3 marks) (ii) accumulated depreciation account. (4 marks) (iii) disposal of non-current assets account. (4 marks) (Total 25 marks) Question 4 (a) Explain any six errors that CANNOT be detected by the trial balance. (6 marks) (b) Malaika started a business to deal in building and construction materials in Mukono Town. The following were her transactions for the month of January 2018: Date 1 Started business with Shs 20,000,000 as capital. Shs 2,000,000 was in cash while the balance was on the business bank account in Sente bank. Paid rent for six months by cheque Shs 3,000,000. Withdrew Shs 3,000,000 from the bank to be used in the daily operations of the business. Purchased cement from Seruma Traders Lid Shs 2,000,000. She paid Shs 1,200,000 cash and the balance is payable after a month. Sold cement for cash Shs 200,000. CO 00 Purchased plumbing materials Shs 4,000,000 from Nakasero Traders Ltd. She paid Shs 2,000,000 cash and the balance payable at the beginning of February 2018. 10 Purchased tiles Shs 5,000,000 from Mirror Traders Ltd. Paid Shs 3,000,000 through the bank and the balance payable in 2 months' time.Inventory at the close of the year was valued at Shs 4,300,000. Staff salaries Shs 2,500,000 was still outstanding by 31 December 2017. 6 Computers and furniture are depreciated, on straight line basis, at 20% and 5% per annum respectively. Required: Prepare, for Good-life Family Drug Shop, for the year ended 31 December 2017 (i) journal entries to record the transactions reflected in the additional information notes (1) to (5) above. (6 marks) (ii) statement of profit or loss. (8 marks) (iii) statement of financial position. (6 marks) (Total 25 marks) Question 2 (a) Explain the reasons for: (i) dissolution of a partnership business. (2 marks) (ii) payment of goodwill under partnership. (3 marks) (b) The following trial balance was extracted from the books of Omondi & Omollo Co. advocates for the year ended 31 December 2017: Dr Cr Shs Shs Net profit for the year 2,520,500 Capital balances as at 1 Jan. 2017: Omondi 100,000,000 Omollo 80,000,000 Current balances as at 1 Jan. 2017: Omondi 45,500,000 Omollo 35,000,000 Cash & bank balances 90,585,500 Accrued legal fees 15,600,500 Prepaid retainer fees 4, 115,500 Motor vehicles 160,000,000 Accrued utilities 5,500,000 Furniture & fittings 6,450,000 272,636,000 272,636,000('3) Purchase of a motorcycle Shs 5,106,400 was correctly recorded in the cashbook but the corresponding entry required to complete the double entry was not posted. Required: Prepare, for Kalodo Enterprises Ltd, journal entries to correct the above errors and post the entries to the suspense account. (14 marks) The following transactions were extracted from Hajji Mukiibi's books of account for the month of April 2019: 1 Received a credit note from Abu and Sons Shs 64,000 in respect of returns. Issued a credit note to Ntinda Suppliers Limited Shs 120,000 in respect of returns. Withdraw Shs 3,400,000 from the business bank account and deposited it in the business cash box. Required: Prepare, for Haiii Mukiibi. tor the month of April 2019, relevant ledger accounts and extract a trial balance from the above transactions. (8 marks) Kapere started a business to transport school children to and from school. He subsequently, surrendered his vehicle, a Toyota Noah valued at Shs 18,000,000 for use in the business. Required: Explain, using journal entries. how this transaction should be recorded in the business' books of account. Justify your answer. (3 marks) (Total 25 marks) Additional information: 1 The drawings during the year to 31 December 2017 amounted to Shs 40,000,000 and Shs 50,000,000 for Omondi and Omollo respectively. 2 Interest on drawings and capital is 5% per annum and 10% per annum respectively. 3 Both partners are active in the business and are entitled to a salary Shs 1,200,000 each per month. Omondi is entitled to a salary from 1 March, 2017 and Omollo from 1 January, 2017. 4 Omondi advanced a loan to the partnership Shs 100,000,000 at the beginning of the year. Interest on loan was agreed at 8% per annum. This was omitted in the books of account. 5 Omondi received legal fees income from a client Shs 5,500,000 but it was not recorded in the books of account. 6 Of the prepaid retainer fees, services worth Shs 2,000,000 were provided during the year to 31 December, 2017. 7 The motor vehicles and furniture were not depreciated at the year end. It is the firm's policy to depreciate vehicles and furniture, on reducing balance, at 20% and 30% respectively. 8 Rent expense Shs 10,000,000 for the year ended 31 December 2017 was outstanding. 9 The firm sub-let part of the office block for Shs 4,000,000 per annum, but this was not accounted for at the year end. 10 Omollo increased his capital contribution on 1 January 2017 by Shs 10,000,000 11 The partnership uses the fixed capital balance method to prepare partners' capital accounts. 12 Omondi and Omollo have been sharing profits or losses in the ratio of 3:1 respectively. In 2017, they decided to change the profit or loss sharing ratios to 3:2 for Omondi and Omollo respectively. On change of profit sharing ratios, goodwill Shs 50,000,000 was introduced but it would not be maintained in the books of account.Question 1 (a) Explain two merits and three demerits of operating a sole proprietorship form of business. (5 marks) (b) The following information was obtained from the books of Good-life Family Drug Shop for the year ended December 2017. Account title Debit Credit (Shs) (Shs) Furniture at cost 4,800,000 Computer at cost 1,500,000 License fees 250.000 Staff salaries 4,600,000 Purchases/sales 9,500,000 7,500.000 Discounts 120,000 220,000 Rent 4,800,000 Bad debts 200.000 Utilities 1,600,000 Inventory (1 January, 2017) 3,400,000 Capital 22,047,000 Retained profits/loss 1,200,000 Cash balance 540,000 Accumulated depreciation: Furniture 240,000 Computer 300.000 Bank balance 3,000 Accounts receivable/payable 600.000 2,800.000 W W Additional information: 1 The license fees paid to National Drug Authority related to the period 1 July 2017 to 30 June 2018. 2 Drugs worth Shs 4,500,000 got expired at the year end and the Shop incurred Shs 500,000 cash to them. This cost had not yet been incorporated into the books of account. 3 Drugs worth Shs 6,700,000 had been dispensed by the year end but money not yet received. This amount had not been recorded in the books of account