This paper consists of FOUR (4) compulsory questions worth a total of 100 marks

QUESTION 1 (CLO 4)

The following trial balance was extracted from the books of M. Beetleman as at 31 May 2020.

DR

CR

$

$

Purchases and Sales

43,820

83,940

Opening stock at June 1, 2019

10,320

Bank overdraft

8,700

Capital

14,400

Cash

180

Discounts

2,880

1,920

Return inwards

1,620

Return outwards

1,140

Carriage outwards

4,320

Carriage inwards

1,900

Rent and Rates

3,480

Provision for bad debts

1,320

Machinery

3,400

Van

6,200

Provision for depreciation on Vans

2,000

Provision for depreciation on Machinery

1,000

Accounts Receivable and Payables

23,820

12,120

Drawings

5,760

Wages and Salaries

17,880

General office expenses

960

126,540

126,540

Notes:

a.Closing stock $9500

b.Wages and salaries: accrual $420; Office expenses accrued $40

c.Rent and rates prepaid $480

d.Increase the provision for bad debts to $1620

e.Provision for depreciation Van 10% of cost, and Machinery 15% on the reducing balance method.

Prepare:

(a)An income statement for the year ended 31 May 2020.(20 marks)

(b)A Balance Sheet as at May 31, 2020. (20 marks)

[Total 40 Marks]

QUESTION 2 (CLO 3)

Your bookkeeper extracted a trial balance on 31 December 2019 which failed to agree by $400, a shortage on the credit side of the trial balance. A suspense account was opened for the difference.

In January 2020 the following errors made in 2019 were found:

i)Sales day book had been undercast by $300

ii)Sales of $500 to T. Ball had been undercast by $200

iii)Rent account had been undercast by $200

iv)Discounts allowed account had been overcast by $50

v)The sale of a computer at net book value had been credited in error to the sales account $400.

Required:

a)Show the journal entries necessary to correct the errors.(10 marks)

b)Draw up the suspense account after the errors described have been corrected.(4 marks)

c)If the net profit had previously been calculated at $30,000 for the year ending

31 December 2019, show the calculations of the corrected net profit. (6 marks)

[Total 20 Marks]

QUESTION 3 (CLO 5 & 6)

The bank columns in the cash book for June 2019 and the bank statement for that month for D. Hogan are as follows:

Dr

Cash Book

Cr

2019

$

2019

$

1-Jun

Balance b/d

1410

5-Jun

L. Holmes

180

7-Jun

J. May

62

12-Jun

J. Rebus

519

16-Jun

T. Wilson

75

16-Jun

T. Silver

41

28-Jun

F. Slack

224

29-Jun

Blister Disco

22

30-Jun

G. Baker

582

Jun-30

Balance c/d

1591

2353

2353

Bank Statement

Jun-19

Dr

Cr

Balance

$

$

$

1

Balance b/d

1410

7

Cheque

62

1472

8

F. Lane

180

1292

16

Cheque

75

1367

17

J. Rebus

519

848

18

T. Silver

41

807

28

Cheque

224

1031

29

SLM standing order

52

979

30

Flynn: trader's credit

64

1043

30

Bank charges

43

1000

As the accountant, you have been asked to do the following:

a.Prepare an updated cashbook for the month.(8 marks) (CLO 5)

b.Prepare a bank reconciliation statement for the month.(6 marks) (CLO 5)

c.Describe three (3) objectives of internal control.(6 marks) (CLO 6)

[Total 20 marks]