BFC 3125 Financial Accounting I

MERU UNIVERSITY OF SCIENCE AND TECHNOLOGY
P.O. Box 972-60200 – Meru-Kenya

Tel: +254(0) 799 529 958, +254(0) 799 529 959, + 254 (0) 712 524 293,
Website: info@must.ac.ke Email: info@must.ac.ke
University Examinations 2023/2024
FIRST YEAR FIRST SEMESTER EXAMINATION FOR THE DEGREE OF BACHELOR

OF BUSINESS ADMINISTRATION, BACHELOR OF PURCHASING AND LOGISTIC
MANAGEMENT, BACHELOR OF COMMERCE, BACHELOR OF SCIENCE IN
EDUCATION
SECOND YEAR FIRST SEMESTER BACHELOR OF ECONOMICS
THIRD YEAR FIRST SEMESTER BACHELOR OF INFORMATION SCIENCE AND

BACHELOR OF SCIENCE IN MATHEMATICS AND COMPUTER
BFC 3125: FINANCIAL ACCOUNTING I
DATE: DECEMBER 2023 TIME: 2 HOURS
INSTRUCTIONS: Answer question one and any other two questions
QUESTION ONE (30 MARKS)
You are to enter the following transactions, completing the double entry in the books for
the month of June 2023 and extract a trial balance 2023.
June 1 Started business with Ksh 2,000,000 in the bank
“
2 Purchases goods Ksh 475,000 on credit from M Rooks.
“ 3 Bought furniture and fittings Ksh 190,000 paying by cheque
“ 5 Sold goods for cash Ksh 745,000
“ 6 Bought goods on credit Ksh 124,000 from P Scot
“ 10 Paid rent by cash Ksh 35,000
“ 12 Bought stationery Ksh 72,000, paying in cash
18 Goods returned to M Rooks Ksh 33,000.

‘’ 21 Let off part of the premises receiving rent by cheque Ksh5,000
“ 23 Sold goods on credit to U Foot for Ksh 17,000
24 Bought a motor van paying by cheque Ksh 3,000,000

30 paid the month's wages by cash Ksh 217,000.
“ 31 The proprietor took cash for himself ksh 54,000 (20 marks)
b) Discuss the various attributes that would make accounting information good
information for purpose of decision making by various users of accounting
information (l0 marks)
QUESTION TWO (20 MARKS)
a) The following balances were extracted from the books of James Inyangala, a sole
trader in respect of the year ended 30 June 2023
KES
Capital account - July 2022 9,327,500

Sales 10,662,000
Sales returns 180,500
Trade debtors 2,250,000
Drawings 1,500,000
Purchases 5,236,000
Trade creditors 750,000
Purchases returns 273,500
Wages and salaries 2,350,000
Discounts allowed 124,000
Provision for depreciation
Fixtures 145,000
Vehicles 400,000
Cash at bank 1,291,500
Cash at hand 60,000
Electricity 236,000
Rated paid 124,000
Freehold premises at cost 3,817,500
Fixtures at cost 760,000
Motor vehicles at cost 800,000
Stationery 78,000
Postage and telephone 100,000
Insurances 30,000
Bad debts provision 100,000
Bad debts written off 36,000
Motor vehicle running expenses 193,000
Inventory on 1 July 2015 3,167,000
Loan at 15 per cent interest 500,000
Interest on loan 37,500
Additional information:
1. Rates are to be apportioned such that three-quarters is for business and the rest for private
premises, while KES 32,000 is prepaid for the business
2. Three-quarters of the charge for electricity is for the business and one-quarter for private
use.
3. Inventory on 30 June 2023 amounted to KES 3, 105,000.
4. Depreciation on fixtures is at 5 per cent on cost and on motor vehicles at 20 per cent
reducing balances. No depreciation is to be provided on freehold premises.
5. Insurance unexpired is KES 6,000
6. Allowance for bad debts is to be adjusted to KES 125,000
7. Only half year's interest on loan had been paid.
8. An invoice for goods purchased amounting to KES 50,000 has not been recorded on the
books though the goods were included in closing inventory.
9. Goods amounting to KES 20,000 had been taken for personal use by James, the
proprietor.
Required:
a) Trading and profit and loss account for the year ended 30 June 2023
b) Statement of financial position as at 30 June 2023

QUESTION THREE (20 MARKS)
The following trial balance has been extracted from the ledger of Karibu Drapers, a sole trader
Shs Shs
Sales 138,058
Purchases 82,350
Carriage 5,144
Drawings 7,800
Rent, rates and insurance 6,622
Postage and stationery 3,001
Advertising 1,330
Salaries and wages 26,420
Bad debts 877
Provision for bad debts 130
Debtors 12,120
Creditors 6,471
Cash in hand 177
Cash at bank 1,002
Stock as at 1 June 2022 11,927
Equipment at cost 58,000
Accumulated depreciation 19,000
Capital 53,091
216,770 216,770
The following additional information as at May 2023 is available

1. Rent is accrued by 210
2. Rents have been prepaid by 880
3. 2,211 of carriage represents carriage inwards on purchases
4. Equipment is to depreciated at 15% per annum using the straight line method
5. The provision for bad debts to be increased by 40
6. Stock at the close of business has been valued at 13,551
Required:
Prepare a trading and profit and loss account for the year ended 31 May 2023 and a
balance sheet as at that date (20 marks)
QUESTION FOUR (20 MARKS)
a) A three-column cashbook is to be written up from the following details, balance off, and
the relevant discount accounts in the general ledger shown.
19x8 1 Balances brought forward; Cash Ksh230; Bank Ksh 4,756
Mar
2 The following paid their accounts by cheque, in each case
deducting five percent discounts; R Burton Ksh 140;
E Taylor
Ksh 220; R Harris Ksh 800.
4 Paid rent by cheque ksh 120
6 J Cotton lent us ksh 1,000 paying by cheque

8
We paid the following accounts by cheque in each case deducting a 2 1/2
per cent cash discount; N Blank Ksh 360; P Towers Ksh 480; C Rowse
Ksh 300.
10 Paid wages in cash Ksh 44
12 H Hankins pays his account of Ksh 77, by cheque Ksh 74,
deducting Ksh 3 cash discount
15 Paid wages in cash Ksh 160

18
The following paid their accounts by cheque, in each
case deducting five per cent cash discount; C Winston
Ksh 260;
R Wilson & Son Ksh 340; H winter Ksh 460.
21 Cash withdrawn from the bank Ksh 350 for business use
24 Cash Drawings Ksh120

25
Paid T Briers his account of Ksh 140, by cash Ksh133,
having deducted Kh 7 cash discount
29 Bought fixtures paying by cheque ksh 650
31 received commission by cheque ksh 88

QUESTION FIVE (20 MARKS)
A bookkeeper extracted a trial balance on 31 December 2002 that failed to agree by ksh
3,300 a shortage on the credit side of the trial balance. A suspense account was opened for
the difference. In January 2003 the following errors made in 2003 were found
i. Sales daybook had been undercast by ksh 1,000
ii. Sales of ksh 2,500 to J Church had been debited in error to J Chane account
iii. Rent account had been undercast by ksh 700
iv. Discounts received account had been under cast by ksh 3,000
v. The sale of motor vehicle at book value had been credited in error to sales account
ksh 3,600
You are required to;
a. Show the journal entries necessary to correct the errors (8 marks)
b. Draw up the suspense account after the described have been corrected
(6 marks)
c. Explain the various errors that don’t affect the trial balance (6 marks)
MUST is ISO 9001:2015 and ISO/IEC 27001:2013 CERTIFIED
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MERU UNIVERSITY OF SCIENCE AND TECHNOLOGY

P.O. Box 972-60200 – Meru-Kenya

University Examinations 2023/2024

FIRST YEAR FIRST SEMESTER EXAMINATION FOR THE DEGREE OF BACHELOR

SECOND YEAR FIRST SEMESTER BACHELOR OF ECONOMICS

THIRD YEAR FIRST SEMESTER BACHELOR OF INFORMATION SCIENCE AND

BFC 3125: FINANCIAL ACCOUNTING I

DATE: DECEMBER 2023 TIME: 2 HOURS

INSTRUCTIONS: Answer question one and any other two questions

QUESTION ONE (30 MARKS)

“ 3 Bought furniture and fittings Ksh 190,000 paying by cheque

“ 5 Sold goods for cash Ksh 745,000

“ 6 Bought goods on credit Ksh 124,000 from P Scot

“ 10 Paid rent by cash Ksh 35,000

“ 12 Bought stationery Ksh 72,000, paying in cash

18 Goods returned to M Rooks Ksh 33,000.

24 Bought a motor van paying by cheque Ksh 3,000,000

QUESTION TWO (20 MARKS)

Capital account - July 2022 9,327,500

b) Statement of financial position as at 30 June 2023

The following additional information as at May 2023 is available

4 Paid rent by cheque ksh 120

6 J Cotton lent us ksh 1,000 paying by cheque

15 Paid wages in cash Ksh 160

24 Cash Drawings Ksh120

29 Bought fixtures paying by cheque ksh 650

31 received commission by cheque ksh 88

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