Practice Questions

Q1.The following errors were committed by the book-keeper of ABC Whole-sellers Company Ltd, a Kigali
based company, when posting the books of accounts for the company for the year ended 2020:
1. A credit sale of 56,000Rwf was debited in the cash account and credited in Trade creditors’
account.
2. Sale of goods worth Rwf. 590,000 to a customer called George Kahama was completely omitted
from being recorded in the books.
3. Purchase of goods worth Rwf. 132,000 from Chris was entered in error in the account of
Chrispin. Both Chris and Chrispin are suppliers of goods to ABC Whole-sellers Company Ltd.
4. Purchase of a motor vehicle worth Rwf. 4,200,000 was wrongly debited to the purchases
account.
5. A sale of Rwf 102,000Rwf to XYZ was recorded in the books as 120,000Rwf
6. A credit purchase of 125,000 Rwf from Peterson, one of the supplier was recorded in the books
as 100,000Rwf.
7. An cash receipt from a supplier reads 43,000Rwf while the books for the same transaction show
no record.

Required:
a) Identify the type of errors committed in each of the above incidents
b) pass the necessary Journal Entries to correct the errors

Q2A. The trial balance as at 25th Dec 2020 for ADB Ltd has not balanced with the credit side have a
higher amount of 118,780,000Rwf.

On investigating the accounts, the following were discovered (all amounts in 000Rwf):

1. Some cheques paid directly to the bank by customers amounting to 39,000Rwf have not being
recorded in the ADB bank account
2. A payment to creditors amounting to 2,000Rwf has not yet being recorded in their accounts
3. Salary amounting to 79,000 was paid on 24th Dec but not recoded in the salary expense account
4. A payment of rent of 480 was wrongly entered in the rent account as 840
5. A credit sale of 860 was not entered in the Sales account

Required: Open the suspense account to show the adjustments for above information

Q2B. The unadjusted trial balance as at 25th Dec 2020 for ADB Ltd (in Q2A) is given as below

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ADB Ltd
Unadjusted Trial balance
As at 25th Dec 2020 000Rwf 000Rwf
Bank 340,000
Stock 129,200
Creditors 85,280
Debtors 42,300
Salaries 502,000
Capital 290,000
Adminstration expenses 24,000
Rent 39,000
Sales 820,000
Total 1,076,500 1,195,280

Required: Prepare an adjusted trial balance after correcting the errors in 2A above.

Q3. Annet is a sole proprietor and the following information was extracted from her books.

Annet's
Statement of financial position
As at 30th April 2021 000Rwf 000Rwf
Non-current assets
Motor vehicle, at cost 236,000
Accumulated Depreciaition (114,000) 122,000
Furniture and fittings, at cost 54,000
Accumulated Depreciaition (26,000) 28,000
Current Assets:
Inventory 268,000
Accounts Receivables 334,000
Bank 112,000 714,000
Total Assets 864,000
Financed by:
Capital 420,000
Net profit 274,000
694,000
Drawings (60,000) 634,000
Current Liabilities:
Accounts payables 229,800
Suspense 200 230,000
864,000

The following errors were later discovered:

i) A debit balance of 800 for Jack was omitted from the list of accounts receivable
ii) An entry of 200 returns outwards was made in error in the sales book instead of purchase return
book
iii) Purchases day book had been under-cast by 1,600
iv) Fixtures and fittings costing 12,000 had been debited to repairs accounts
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 v) Depreciation on fixtures and fittings should have been provided for at the rate of 15% p.a. on
cost
vi) Bad debts of 500 should written of, but this was not done
vii) A cheque of 500 paid to Arnold, a creditor, was correctly entered in the cash book but credited
into his account
viii) Goods worth 4,000 were taken by Annet for her personal use, but no entry has been made in
the books
ix) Discount received of 18 had been correctly entered in the cash book, but had been posted to
the wrong side of the discount received account.

Required:

a) Journal entries to correct the errors

b) Statement of adjusted trial balance
c) Income statement for the year ended
d) Adjusted statement of financial position as at 30th April 2021.

Q4. An inexperienced bookkeeper working for a sole trader Murgor business, wrongly prepared the trial
balance which could not balance. He therefore posted the balance to a suspense account as shown
below.

Murgor
Trial Balance
As at 30th December 2020 000 Rwf 000 Rwf
Fixed assets-cost 832,000
Stocks
1 January 2020 148,000
31 December 2020 98,800
Trade debtors 76,000
Prepayments 10,000
Trade creditors 34,600
Bank overdraft 15,200
Accruals 16,000
Drawings 359,600
Capital 1,054,000
Sales 1,043,200
Provision for depreciation 166,400
Purchases 733,000
Operating expenses 126,000
Provision for doubtful debts 3,800
Discounts received 5,000
Discounts allowed 5,800
Suspense account 369,400
2,548 400 2,548,400

On investigation, the following errors were also identified

1. The total of the sales day book for December 2020 was overcast by 25,700.

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 2. On 2 July 2020 the business purchased office equipment for 40,000. These were debited to
purchases account.
3. Depreciation on the equipment is at the rate of 10% per annum on cost and based on the period
(months) of usage in the year.
4. A payment to a creditor by cheque of 8,500 was erroneously credited to the creditor's account.
5. A payment of 4,500 for telephone expenses was debited to telephone account as 5,400.
6. An amount of 15,000 received from a debtor was not posted to the debtor's account
from the cash book.
7. An amount of discounts received of 2,500 was debited to discounts allowed account.
8. Purchases day book for October 2020 was undercast by 26,000.
9. Assume the business had reported a net profit of 85,800 before adjusting for the above errors.
Required:
a) The corrected trial balance (posting the balances on their right side) and the correct balance of the
suspense account (4 marks)
b) Journal entries to correct the errors (Narrations not required) (4 marks)
c) Suspense account starting with the balance determined in the corrected trial balance in (a)above. (4
marks)
d) Adjusted trial balance after correction of the stated errors (4 Marks)
e) The adjusted net profit for the year (4 Marks)
Q5. You act as accountant to Sam Horak. Mr Horak has requested you draw up the Statement of
Comprehensive Income for previous year’s trading together with Statement of Financial Position. To this
end he supplied you with a trial balance as at 31st December 2020. He pointed out, however, that the
debit side of said trial balance exceeded the credit side by Rwf 3,769.48. To balance the Trial Balance he
opened a suspense account on the credit side.

His bookkeeper further investigated and discovered the following discrepancies:

1. Sale of goods to J G Ltd. was posted to sales a/c as Rwf990 and not Rwf99 as originally recorded
in sales day book.
2. A machine was sold on 28th October to Michael Quint. The proceeds were Rwf 3,700. The book
value of the machine at 28th October was Rwf 3,970. Unfortunately, when posting the entry to
machinery account the proceeds were entered as Rwf 4,470 and the profit/loss computed
accordingly.
3. Purchase of motor vehicle costing Rwf 3,750 was posted to purchases account.
4. Purchases returns in the sum of Rwf 350 were posted to the debit side of purchases returns
account.
5. Rwf760 discounts allowed posted to the credit side of the discounts received account.
6. Bank overdraft in the sum of Rwf 3,000 was entered on the incorrect side of the trial balance.
7. A trade payable account in the sum of Rwf 1,765 entered in the incorrect side of the trial balance.
8. Sale of goods in the sum of Rwf 7,852 was posted in error to the account of John Hugo instead of
Ernest Hugo.
9. Goods taken from stock in the sum of Rwf 1,900 were credited to the sales account only.
10. Purchase of wrapping paper in the sum of Rwf 210.10 was included in the purchases day book but
was not posted to the relevant account in the nominal ledger.
11. Carriage inwards in the sum of Rwf 584.71 was entered on the incorrect side of the trial balance

Required: Draw up the suspense ledger account incorporating the relevant adjustments

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Q6. The trial balance of Gasasira failed to balance with debit side having less amount of 163,000Rwf and
a net profit of 398,000Rwf.

Upon investigations, the following were found out (all amount indicated in 000Rwf):

1. Interest paid by Gasasira of 100 had been entered on the incorrect side of the interest account.
2. Bank charges of 15 entered correctly in the cash book had not been posted to the ledger.
3. A payment of 140 for repairs to motor vehicles had been debited to the motor vehicles account.
4. A cheque for 96 received from a debtor M. Otto, had been entered correctly in the cash book but
credited to the trade receivables account as 69.
5. Goods sold on credit for 180 had not been entered in the books.
6. The purchases day book had been over-cast by 25.

Required:

a) Journal entries
b) Suspense account
c) The adjusted net profit

Q7. From the following details you are required to write up the debtors’ (trade receivables) ledger and
creditors’ (trade payables) ledger control accounts for the month of January.

000Rwf
Trade Receivables at January 1 9,753
Trade Payables at January 1 3,456
Credit Sales for month 19,506
Credit Purchases for month 6,912
Returns Outward for month 115
Returns Inward for month 97
Cash Received from Customers 18,912
Customers Cheques Dishonored 100
Cash Paid to Suppliers 5,814
Discount Allowed 178
Discount Received 117
Cash sales 21,200
Cash Purchases 8,900
Interest Charged to Customers on Overdue Accounts 5
Irrecoverable Debts Written Of 76
Accounts Settled by “Contra” 345
DR Balances in Trade Payables Ledger at January 31 28
CR Balances in Trade Receivables Ledger at January 31 49

Q8. The following list of balances as at 30 September 2009 has been extracted from the books of Brick
and Stone, trading partnership, sharing the balance of profits and losses in the proportions 3:2
respectively.

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 Brick And Stone
Trial Balance
As at 30th Sept 2019 000Rwf 000Rwf
Printing, Stationery and Postage 3,500
Sales 322,100
Stock 1st Oct 2018 23,000
Purchases 208,200
Rent and Rate 10,300
Staff Salaries 36,100
Telephone Charges 2,900
Motor Vehicle running costs 5,620
Discount Allowable 950
Discount Receivable 370
Sales Returns 2,100
Purchases Returns 6,100
Carriage Inwards 1,700
Carriage Outwards 2,400
Fixtures and Fittings, at Costs 26,000
Provision for Depreciation 11,200
Motor Vehicles, at cost 46,000
Provision for Depreciation 25,000
Provision for Doubtful debts 300
Drawings: Brick 24,000
Stone 11,000
Current Account bal.: Brick 3,600
Stone 2,400
Heart and Light 8,700
Capital Account bal b/d: Brick 33,000
Stone 17,000
Debtors 9,300
Creditors 8,400
Balance at Bank 7,700
429,470 429,470
Additional information (All amount in 000Rwf)
i) 10, 000 is to be transferred from Brick’s capital account to a newly opened Brick Loan Account on
1 July 2019.
ii) Interest at 10 per cent per annum on the loan is to be credited to Brick.
iii) Stone is to be credited with a salary at the rate of 12,000 per annum from 1 April 2019.
iv) Stock in hand at 30 September 2019 has been valued at cost at 32,000.
v) Telephone charges accrued due at 30 September 2019 amounted to 400 and rent of 600 prepaid
at that date.
vi) During the year ended 30 September 2019 Stone had taken goods costing 1,000 for his own use.
vii) Depreciation is to be provided at the following annual rates on the straight line basis:
Fixtures and fittings 10% Motor vehicles 20%
Required:
a) Prepare a profit and loss appropriation account for the year ended 30 September 2019.
b) Prepare a balance sheet as at 30 September 2019 which should include summaries of the
partners’ capital and current accounts for the year ended on that date.

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Q9. Tripple A is a partnership made up of three former classmates Agnes, Annette and Antoinette who
have being sharing profit and loss in the ratio 2:4:2. By the end of 31st Dec 2020, the partners had the
following balances.
Agnes Annette Antoinette
000 Rwf 000 Rwf 000 Rwf
Capital b/d 120,000 546,000 320,000
Current Accounts b/d 65,000 120,000 100,000
Partners' Salaries 80,000 260,000 210,000
Drawings 35,000 60,000 80,000
Additional information (all amounts in 000Rwf)
1. The net profit before sharing for the year was 305,000
2. The partnership deed has the following information
Interest on capital 10%p.a.
Interest on drawing 5%p.a.
Interest on loan 15%p.a
Required:
a) Prepare the profit and loss appropriation account for Tripple A
b) Partners’ Current Accounts.
Q10. Rashid, Phillip and Daudi started a business in partnership on 1st April 2015 and agreed to share
profits or losses in the ratio of 5:3:2. They brought in capital as follows:–
Rashid - Rwf. 50,000,
Phillip - Rwf. 30,000 and
Daudi - Rwf. 20,000.
On 31-03-2016, their state of affairs was:
1. Cash in hand - Rwf. 2,500,
2. Bank Overdraft - Rwf. 15,000,
3. Creditors - Rwf. 10,200,
4. Debtors - Rwf. 17,300
5. Bills Payable - Rwf. 3,500
6. Bills Receivables - Rwf. 4,000,
7. Stock - Rwf.20,400,
8. Machinery - Rwf. 30,000,
9. Furniture - Rwf. 9,800,
10. Loan from Bank - Rwf. 20,000,
11. Building - Rwf.70,000
12. Outstanding salaries; - Rwf. 1,000
On verification of records, it is found that out of the debtors, Rwf. 300 is bad & should be written off.
Stocks were overvalued by Rwf. 400 and Furniture was undervalued by Rwf. 200. Interest on loan was
Rwf. 1,000. A provision of 10% on remaining debtors needs to be made. During the year, the cash
withdrawal by partners for their personal use was – Rashid Rwf.4,500; Phillip Rwf. 3,500; and Daudi Rwf.
6,900. Salary of Rwf. 500 per month was payable to Daudi.
Required:
Prepare a statement of profit or loss made by the partnership firm, using the statement of affairs method.

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Q11. The following shows the unadjusted trial balance for KK Traders as at 31st Jan 2022.

KK Traders
Unadjusted Trial balance
As at 31st Jan 2022 000Rwf 000Rwf
Stock, 1st Feb 2021 94,000
Capital 766,000
Trade Payables 320,500
Trade Receivables 135,000
Rent expense 18,500
Salary & Wages 824,000
Discount Allowed 15,000
Discount Received 121,000
Motor van, at cost 734,000
Provision for depreciation 220,200
Furniture, at cost 1,155,000
Provision for depreciation 173,250
Investment Income 289,550
Telephone Expenses 14,000
Adminitration Expenses 21,400
Sales 1,930,000
Bank 345,600
Purchases 464,000
3,820,500 3,820,500

Additional information (all amount in 000Rwf)

1. Stock at 31/01/22 is 82,000
2. Rent was paid to cover for 15 months
3. Salary and wages amounting to 10,000 still outstanding
4. The depreciation on motor van is maintained at 10% reducing balance while for furniture at 5%
straight line method
5. Investment income includes unearned income of 550.
6. There is prepaid telephone expenses of 1,000 and accrued administration expenses of 1,600
Required:
a) Adjusted trial balance
b) Income statement
c) Statement of Financial Position (SoFP)

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Q12. The following shows the trial balance for B Spikes Ltd. For the year ended 31 Dec 2009

B spikes
Trial Balance
as at 31 December 2009
£ £
Stock of Raw Materials 1.1.2009 21,000
Stock of finished goods 1.1.2009 38,900
Work in progress 1.1.2009 13,500
Wages(direct £180,000: factory indirect£145,000) 325,000
Royalties 7,000
Carriage Inwards (on Raw Materials) 3,500
Purchases of raw materials 370,000
Productive machinery (cost £ 280,000) 230,000
Accounting machinery (cost £ 20,000) 12,000
General factory expenses 31,000
Lighting 7,500
Factory power 13,700
Administrative salaries 44,000
Sales representatives' salaries 30,000
Commission on sales 11,500
Rent 12,000
Insurance 4,200
General administration expenses 13,400
Bank charges 2,300
Discounts allowed 4,800
Carriage outwards 5,900
Sales 1,000,000
Debtors and creditors 142,300 125,000
Bank 56,800
Cash 1,500
Drawings 20,000
Capital as at 1.1.2009 296,800
1,421,800 1,421,800

• Additional information:

1. Stock of raw materials 24,000, stock of finished goods 40,000, work in progress 15,000.
2. Lighting, and rent and insurance are to be apportioned: factory 5/6ths, administration 1/6.
3. Depreciation on productive and accounting machinery at 10 per cent per annum on cost.
4. Finished goods are transferred to the selling department at a mark-up of 20% on cost.
Required: Prepare

a) Manufacturing, Trading Profit and Loss Account for the year ended 31 December 2009.
b) Financial position as at this date
Q13. Bibi Maridadi owns and manages a small manufacturing business. The following balances have
been extracted from her books of account at 31 January 2009.

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 Bibi Maridadi
Adjusted Trial Balance
As at 31st January 2009 000 Rwf 000 Rwf
Capital at 1 February 2009 171,120
Accounts payable 86,000
Bank and cash balance 5,400
Accounts receivable 92,000
Drawings 60,000
Administration Expenses 150,360
Advertising Expenses 12,000
Factory direct wages 60,000
Factory indirect wages 24,000
Factory power 36,000
Furniture and fittings (all offices) 18,400
Heat and light 16,000
Plant and equipment 276,800
Motor vehicle (used by salesmen) 144,000
Plant hire 4,000
Provision for bad debts 3,200
Provision for depreciation 1 February 2009:
Furniture and fittings 9,200
Plant and equipment 138,400
Motor vehicle 24,000
Raw material purchases 228,000
Rent rates 20,000
Sales 829,440
Selling and distribution expenses 66,400
Inventories at cost, 1 February 2009:
Raw materials 8,000
Work in progress 16,000
Finished goods 24,000
1,261,360 1,261,360

The following additional information is provided (all amount in 000 Rwf):

(i) Accruals at 31 January 2010 were:

• Factory power 1,600
• Rent Rates 4,000
There was also prepayment of 800 for salesmen’s motor vehicle insurance.
(ii) Inventories at 31 January 2010, were valued at cost as follows:
• Raw materials - 15,200
• Work in progress - 30,400
• Finished goods - 45,600
iii) Depreciation is to be charged on plant and equipment, motor vehicle, furniture and fittings at the
rates of 20%, 25% and 10% per annum respectively on cost.
iv) Expenditure on heat and light, and rent and rates is to be apportioned between the factory and
office in the ratio of 9 to 1 and 3 to 2 respectively.
v) The provision for bad debts is to be made equal to 5% of accounts receivable at 31 January 2010.
Required: Prepare Bibi Maridadi’s
a) manufacturing, trading and profit and loss account for the year ended 31 January 2010
b) Statement of financial position as at 31 January 2010.

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Q14. The following has been extracted from the books of DFR Manufacturing Ltd as at 31st March 2019.

DFR Manufacturing Ltd

Adjusted Trial Balance
As at 31st March 2019 USD USD
Freehold factory at cost 1,053,750
Factory plant, at cost 843,750
Provision for depreciation 1 April 2018 151,250
Delivery van, at cost 401,250
Provision for depreciation 1 April 2018 86,250
Stocks at 1 April 2018
Raw materials 100,700
Work-in-progress 85,000
Toys completed (30,000 at USD 40) 1,200,000
Sales (45,500 toys) 2,775,500
Purchases of raw materials 716,250
Factory Wages 375,500
Sales department wages 150,750
Expenses:
Factory 301,750
Sales Department 250,500
Provision for doubtful debts 1 April 2018 40,000
Trade debtors and creditors 450,000 250,000
Bank overdraft 76,200
Capital 2,825,000
Drawings 275,000
6,204,200 6,204,200
Additional Information; (all amount in USD)
i) The stock as on 31st March 2019 was valued at
Raw Materials 94,400
W.I.P 126,250
Finished goods 890,000
ii) Accrued expenses outstanding at 31st March 2019:
Factory Sales Department
Expenses 52,250 27,000
Factory Wages 7,000 -
iii) Provision for depreciation is to be maintained at 10% of the trade debtors.
Required:
a) Prepare the Manufacturing, Trade and Profit and Loss Accounts for the year ended 31st March 2019.
b) Prepare the Statement of financial position as at 31st March 2019.

Q15. AFH Ltd is a small manufacturing firm owned by members of the family. The following trial balance
was extracted from the books of the company as at 31 March 2020

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AFH Ltd
Adjusted Trial Balance
As at 31st March 2020 USD USD
Freehold property, at cost 125,000.00
Plant, at cost 130,000.00
Depreciation: Plant 62,000.00
Motor vehicle, at cost 53,000.00
Depreciation – motor vehicle 30,500.00
Fittings and fixtures, at cost 38,600.00
Depreciation – fittings and fixtures 11,790.00
20,000 Ordinary shares of USD 10 each authorized, issued
and fully paid 200,000.00
Share premium 50,000.00
General reserve 120,000.00
Interim dividend paid 16,000.00
Cash at bank and in hand 33,570.00
Accounts receivable and payable 130,540.00 57,430.00
15% Debentures 100,000.00
Discount received 3,640.00
Profit and loss account 1 April 2019 103,870.00
Purchases of raw materials 942,380.00
Sales of finished goods 1,254,760.00
Inventories 1 April 2019:
Raw materials 33,060.00
Work in progress 57,660.00
Finished goods 107,860.00
Provision for doubtful debts 6,400.00
Bad debts 4,890.00
Rates and insurance 9,430.00
Wages 108,370.00
Factory power 22,560.00
Light and water 16,280.00
Plant maintenance 10,970.00
Salaries 90,000.00
Returns of raw material 3,240.00
Sales returns 1,360.00
Advertising 8,580.00
Transport expenses (Sales department) 24,320.00
Bank charges 3,040.00
General expenses 36,160.00
2,003,630.00 2,003,630.00

Additional information:

i) Depreciation is to be provided for the year using the reducing balance method and applying
rates of 15% on plant, 25% on motor vehicle and 10% on fittings and fixtures.

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 ii) Building is to be depreciated at the rate of 4% using the straight-line method. (Assume the
whole building is used for manufacturing purposes).
iii) A quarter of the wages are deemed to be direct wages, while the rest are indirect wages.
iv) Provision for doubtful debts is to be adjusted to a figure equal to 10% of accounts receivable.
v) Light and water, insurance and general expenses are to be apportioned in the ratio 4:1 between
factory and administrative overheads.
vi) Finished goods are transferred to the selling department at a mark-up of 20% on cost.
vii) As at 31st March 20202, inventories were valued as follows: Raw materials 139,630; Work in
progress 82,450 and Finished goods 124,320
viii) Debenture interest has not yet been paid.
ix) The directors require provision for a final dividend which will bring the dividend for the year up
to USD. 2 per share.
x) The following have not being adjusted

Required: Prepare

a) A Manufacturing, Trading and Profit and Loss Account for the year ended 31 March 2020
and
b) A Statement of the Financial Position as at that date.

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