QUESTION ONE

The following trial balance was extracted from the books of a merchant on 31st December 2017.

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Details TZS TZS
Furniture and Fittings ~It's an asset64,000
Motor vehicles ~It's an asset 625,000
Building ~It's an asset750,000
Capital account1,250,000
Bad debts ~an expense 12,500
Provision for bad debt 2,000
Sundry debtors and creditors380,000250,000
Stock on January 1st 2017 ~Opening stock 346,000
Purchases and sales547,500 1,545,000
Bank overdraft ~Current Liability 285,000
Sales and purchases return
~Sales less 20,000
20,000 12,500
Advertising ~an expense45,000
Interest ~an expense11,800
Commision ~a revenue 37,500
Cash ~current asset item65,000
Taxes and insurance ~an expense107,000
General expenses ~an expense78,200
Salaries ~an expense330,000
3,382,000 3,382,000

The following adjustments are to be made;

  1. Stock in hand on 31st December, 2017 was Tshs. 325,000 ~a closing stock
  2. Depreciate buildings at 5%, furniture and fittings at 10% and Motor vehicles at 20% ~Annual charges are charged to income statement
  3. Tshs. 8,500 is due for interet on Bank overdraft ~additional interest goes to income statement and current liabilities
  4. Salaries Tshs. 30,000 and Taxes Tshs. 12,000 are outstanding ~added to respective expense, but also part of current liabilities.
  5. Insurance amounting to Tshs. 10,000 is prepaid ~deducted to respective expense, but also current asset item.
  6. One-third of the commission is in respect of the work to be done in next year ~1/3 of 37,500 (prepaid) is deducted from commission on income statement, but also current liabilities item.
  7. Write off further Tshs. 10,000 as bad debt and provision for bad debts is to made equal to 5% on sundry debors. ~10,000 goes to income statement but also reduce debtors figure before computing provisions.

Required:
Prepare a Income statement for the year ended 31st December, 2017, and Statement of Financial Position as at that date.


  • Posted: 25 Dec 20
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  • Attempts: 64
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  • Correct: 10

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Gross Profit:
QUESTION TWO

From the following balances given below and the adjustments that follow, prepare Income Statement, for the year ending 31st March 2017 and a Statement of Financial Position as on that date.

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Trade creditors ~Current Liability 35,780
Bill payable ~Current Liability 18,700
Legal charges ~an Expense 420
General expenses ~an expense 7,580
Cash at bank ~C-asset 18,980
Capital 169,200
Building~NC-asset 40,000
Bank loan @ 10% p.a ~Long-term liability40,000
Purchases returns ~reduces purhases 16,200
Reserve for doubtful debts 2,200
Cash in hand ~C-asset 400
Discount allowed ~an expense 8,600
Wages ~an expense 39,940
Discount received ~revenue 5,800
Bills receivables ~revenue 5,360
Purchases 117,200
Stock on April 1,2016 ~opening stock 63,900
Trade debtors ~C-Asset 63,220
Carriage inwards ~add to purchases 3,580
Return inwards ~reduces sales 28,600
Salaries ~an expense15,700
Sales 198,400
Bad debts ~an expense2,600
Rent, Rates and Taxes ~an expense 11,200
Plant and machinery ~NC-Asset 59,000

The following adjustments are necessary:

  1. Bad debts are estimated to be Tshs. 3,220 ~the difference with 2,600 goes to income statement; and also reduces debtors figure before computing provisions.
  2. Create reserve for bad and doubtful debts at the rate of 5% ~the difference goes to income statement.
  3. Interest on bank loan is outstanding for the full year. ~interest 10% of Loan, goes to income statement and current liability.
  4. Depreciate plant and machinery at the rate of 10% and buildings at 2.5%
  5. Stock on 31st March, 2017 is Tshs. 93,840 ~closing stock

  • Updated: 25 Dec 20
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  • Attempts: 1
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  • Correct: 0

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Gross Profit:
QUESTION THREE

The following trial balance was extracted from the books of chapakazi Traders at 31st December 2015.

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Details TZS TZS
Chapakazi capital 825,000
Provision for bad debts 1st January 2015 4,000
Stock in trade as at 1st January 2015 ~opening stock 235,000
Purchases 1,200,000
Sales 1,550,000
Trade debtors 142,000
Trade creditors 61,000
Balance at bank 181,900
General expenses 66,500
Motor vehicles 500,000
Bad debts written-off ~an expense 8,200
Wages and salaries ~an expense92,400
Furniture and fittings 30,000
Provision for depreciation on Furniture and Fittings6,000
Electricity charges 10,000
Rent and Rates 2,500
Repair expenses 5,000
Discount received~ts a revenue27,500
2,473,500 2,473,500

The following adjustments are taken into account:

  1. Stock in trade as at 31st December, 2015 shs. 247,000 ~Closing stock
  2. Wages and salaries outstanding as at 31st December 2015 shs. 2,400 ~Outstanding wages added to 92,400 in the income statement.
  3. Rates paid in advance shs. 500 ~Prepaid Rates: Goes to income statement to reduce the Rates figure.
  4. The provision for bad debts is required to be shs. 3,500 ~This is the closing provision balance. The difference between 3,500 and 4,000 stands and Operating revenue.
  5. Provide for depreciation of furniture and fittings at the rate of 5% on cost. ~the 5% is charged to income statement.

Required:

Prepare the income statement for the year ended 31st December 2015 and a balance sheet thereof.


  • Updated: 25 Dec 20
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  • Attempts: 0
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  • Correct: 0

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Gross Profit:
QUESTION FOUR

Below is the Trial balance of Achi Harris as at 31, 2019

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Details Dr (TZS) Cr (TZS)
Capital 100,000
Sales 315,000
Purchases 201,591
Stock as at 1.1.2019 ~opening stock 36,598
Premises ~NC-Asset 84,000
Fixture and fittings ~NC-Asset 36,000
Motor van (at cost) ~NC-Asset 25,000
Provision for depreciation; motor vans 5,000
Debtors ~C-Asset 37,000
Creditors ~C-Liability 12,689
Wages ~Expense 30,100
Electricity ~Expense 3,000
Rates ~Expense 10,000
Office expenses ~Expense 5,000
Discount 700 ~Expense 550 ~Income
Carriage outwards ~Expense 250
Loan ~LT-Liability 36,000
469,239 469,239

Notes:

  1. Stock as at 31.12. 2019 shs. 42,000 ~Closing stock
  2. Prepaid; wages shs. 515 and rates shs. 2,000 ~Prepaid is deducted from the respective expense on the income statement. They are also Current Asset items.
  3. Owing; office expenses shs. 2,000 ~Owing is added to the respective expense on the income statement. They are also Current Liability items.
  4. Create a provision for bad debts of sh.3,500 ~No provision balance in the Trial Balance. Thus, 3,500 is charged to income statement, also reduces debtors figure.
  5. Depreciation on motor vans is charged on reducing balance basis at rate of 20% per unit. ~The 20% of the NBV under this method, goes to income statement as annual charge.

Required:
Prepare the income statement for the year ended 31st December 2019 and a balance sheet as at that date.


  • Updated: 25 Dec 20
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  • Attempts: 0
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  • Correct: 0

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Gross Profit:
QUESTION FIVE

From the following balances prepare final accounts in respect of the year ended 31st December 2020

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Description Shs Description Shs
Loan ~LT-Liability 500,000 Creditors ~C-Liability 3,740,000
Sundry expenses 398,000 Income Tax ~An expense 303,000
Stock at 1st January, 2020 ~opening stock 5,470,000 Investments ~NC-Asset 2,000,000
Purchases 31,400,000 Fixtures and Fitting ~NC-Asset 600,000
Wages ~An expense 2,000,000 Motor Vans ~NC-Asset 500,000
Discount allowed ~An expense 126,000 Investment Provision 500,000
Rent and rates~An expense 170,000 Bad Debts written off ~An expense 20,000
Sales 37,000,000 Bad debts Provision 320,000
Carriage inwards ~An expense 224,000 Bank Interest ~An expense 15,000
Bank 3,247,000 Capital 9,150,000
Sundry debtors 1,900,000 Dividends on Investments ~Income 107,000
Buildings ~NC-Asset 2,674,000 Drawings 400,000
Commision Received ~Income 110,000

Additional information

  1. Stock in hand as at 31st December 2020; shs 3,517,000 (including stationary stock Shs. 17,000) ~Deduct it from closing stock figure
  2. Sundry expenses include stationary purchased shs. 37,000. ~Reduce sundry expenses by the stated amount, then show stationary 37,000 separately in the income statement.
  3. The loan was made on 1st March of the current year, interest at the rate of 6% per annum, no provision for which has yet been made. ~Compute the 10 months interest. The figure goes to income statement and current liabilities.
  4. Investment valued at shs. 1,420,000; adjust Investment Provisions accordingly. ~Treat it the way you treat provision for bad debts. Now, consider this as a closing balance.
  5. Provide 20% for bad debts. ~Closing balance of the provision for bad debts
  6. Write off 5% for depreciation on buildings ~The 5% is the current year charge, it goes to income statement. The cummulative figur goes to the statement of financial position.
  7. Included in sundry expenses is Shs. 26,000 for legal charges in connection with the acquisition of certain buildings (included in the item of shs. 2,674,000)~The 26,000 is to be capitalized before computing current year depreciation.
  8. Dividends accruing shs. 27,000; rates paid in advance shs. 20,000 and rent owing shs. 30,000
  9. The opening stock included stationary stock shs. 20,000. ~Remove 20,000 from the opening stock.

  • Updated: 25 Dec 20
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  • Attempts: 0
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  • Correct: 0

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Gross Profit:
QUESTION SIX

This is a DEMO Question with DEMO answer

Shani cinema closes its accounts each month. At November 30, the trial balance and other information given below were available for adjusting and closing the accounts

SHANI CINEMA
TRIAL BALANCE
NOVEMBER 30, 2016

Shs ‘000’ Shs ‘000’
Cash 26,000
Prepaid advertising 6,200
Prepaid Film Rental 26,000
Land 30,000
Building 84,000
Accumulated depreciation: Building 1,750
Projection equipment 36,000
Accumulated depreciation: Projection equipment 3,000
Bill payable 15,000
Trade creditors 4,400
Khan, Capital 166,150
Khan, drawings 4,250
Revenue from admission 33,950
Salaries expense 8,700
Light and power expenses 3,100
224,250 224,250

Other data:

REQUIRED:

  1. Prepare adjusting entries at November 30, 2016
  2. Prepare an adjusted trial balance


UnAdjusted Trial Balance Adjustment Adjusted Trial Balance
Dr. ‘000’ Cr. ‘000’ Dr. ‘000’ Cr. ‘000’ Dr. ‘000’ Cr. ‘000’
Cash 26,000 26,000
Prepaid advertising 6,200 3,750 2,450
Prepaid Film Rental 26,000 16,850 9,150
Land 30,000 30,000
Building 84,000 84,000
Accumulated depreciation: Building 1,750 1,750
Projection equipment 36,000 36,000
Accumulated depreciation: Projection equipment 3,000 15,000
Bill payable 15,000 3,000
Trade creditors 4,400 4,400
Khan, Capital 166,150 166,150
Khan, drawings 4,250 4,250
Revenue from admission 33,950 33,950
Salaries expense 8,700 1,500 10,200
Light and power expenses 3,100 3,100
Total 224,250 224,250
Advertsing expenses 3,750 3,750
Film rental expenses 16,850 16,850
Interest payable 100 100
Interest expenses 100 100
Accrued Salaries 1,500 1,500
Total 22,200 22,200 225,850 225,850
QUESTION SEVEN

Southern Engineering Company was organized in January 2017 to provide technical services to various companies in Morogoro. The following trial balance was prepared at 30th June 2017 after six months of operations

SOUTHERN ENGINEERING COMPANY
TRIAL BALANCE
JUNE 30, 2017

Shs ‘000’ Shs ‘000’
Cash 61,000
Prepaid office rent 72,000
Supplies 14,400
Instruments 79,200
Bills payable 60,000
Unearned fees 156,000
Solile:Capital 131,200
Solile:Drawings 51,240
Fees earned 127,440
Salaries expense 194,400
Miscellaneous expense 2,400

Other data:

  1. Office rent for one year was paid on 1st January when the lease was signed
  2. Supplies on hand on 30th June amounted to shs. 2,880,000
  3. Accrued interest on bill payable, shs. 600,000 at June 30
  4. A number of clients obtained during the first six months of the company’s operations had made advance payments for fees to be rendered over a considerable period. As of June 30, value of services rendered and chargeable against unearned fees was shs. 114,000,000
  5. Service rendered and chargeable to other clients amounted to shs. 44,400,000 as of June 30, no entries had yet been made to record the value earned by performing services for these clients (Debit fees receivable)
  6. Salaries earned by staff personnel but not yet paid amounted shs. 6,000,000 on June 30

REQUIRED:

  1. Prepare adjusting entries at June 30, 2017
  2. Prepare an adjusted trial balance

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QUESTION EIGHT

The following trial balance has been extracted from the ledgers of Abraham who trades as a general merchant

Trial Balance as at 31st October 2017

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Dr
Shs
Cr
Shs
Sales 530,780
Purchases 388,650
Discount allowed ~expense 1,454
Discount received ~income 1,973
Carriage outwards ~expense 5,328
Carriage inwards ~add to purhases 2,444
Returns in ~reduces sales 1,866
Returns out ~reduces purchases 2,449
Rent, rates and insurance ~expense 15,769
Heating and lighting ~expense 6,324
Postage and stationary ~expense 7,660
Advertising ~expense 13,765
Salaries and wages ~expense 44,970
Loan interest ~expense 1,650
Bad debts ~expense 2,088
Debtors 26,550
Creditors 36,887
Cash on hand 515
Bank Overdraft ~C-Liability 3,466
Stock as at 1st Nov 2016 12,306
Equipment at cost ~an asset 141,450
Accumulated depreciation 55,320
Loan ~LT-LT-Liability 13,500
Drawings ~reduces capital 20,800
Capital as at 1st Nov 2016 49,214
693,589 693,589

The following additional information as at 31st October 2017 is available

  1. Rent and rates have been prepaid by Shs. 750 ~deducted from rent in the income statement. Ts a current asset item too.
  2. Loan interest is accrued by shs. 150 ~added to loan interest in the income statement. Ts also a current liability item.
  3. Depreciation for equipment is shs. 14,145 ~this is annual depreciation charge.
  4. Stock at the close of business was valued at shs. 14,521 ~closing stock

REQUIRED:

Prepare Abraham’s Income Statement for the year ended 31st October 2017 and his Statement of Financial Position at that date.


  • Updated: 25 Dec 20
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  • Attempts: 10
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  • Correct: 1

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Gross Profit:
QUESTION NINE

The Dar es Salaam Super Cleaners opened for business on 1st July 2018. The trial balance as at 30th September 2018 was as follows

DAR ES SALAAM SUPER CLEANERS
UNADJUSTED TRIAL BALNCE
AS AT 30th SEPTEMBER 2018

ACCOUNT DEBIT CREDIT
Cash at bank 20,000,000
Prepaid insurance 4,500,000
Supplies inventory 2,200,000
Vehicles 80,000,000
Buildings 50,000,000
Furniture 26,000,000
Accounts Payable 14,500,000
Unearned fees 4,600,000
Mortgage Payable 50,000,000
Z.K Capital 100,000,000
Z.K Drawings 6,000,000
Cleaning Service Revenue 80,900,000
Salaries 43,000,000
Electricity 15,000,000
Repairs 3,300,000
250,000,000 250,000,000

Examination of accounting records revealed the following information:

  1. Insurance expired at the rate of shs 225,000/= per month.
  2. Physical stock taking showed shs 400,000/= worth of supplies inventory on hand at 30th September, 2018.
  3. The company has the policy of depreciating non-current assets at the following rates: Vehicles (25%); Buildings(4%); Furniture (10%) annually. (Assume Non-current assets were acquired on 1st July 2018).
  4. Of the unearned fees, shs 4,000,000/= was earned by 30th September 2018.
  5. Accrued salaries amounted to shs 400,000/= as at 30th September 2018.
  6. The mortgage interest rate per annum is 15%.

Required:
Prepare the adjusted trial balance of Super Cleaners as at 30th September 2018.


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Sunshine profit using Traditional method:
QUESTION TEN

Ali Rashid furnished you with the following information relating to his business

Assets and liabilities as on 01.07.2017
Shs
31.12.2017
Shs
Furniture 600,000 635,000
Stock at cost 800,000 700,000
Sundry debtors 1,600,000 ?
Sundry creditors 1,100,000 1,500,000
Prepaid expenses 60,000 70,000
Unpaid expenses 200,000 180,000
Cash in hand and at bank 120,000 62,500

Receipts and payment during 2017

  • Collections from debtors after allowing discounts of shs. 150,000 amounted to shs. 5,850,000
  • Collections on discounting of bills of exchange after deduction of discount of shs. 12,500 by the bank totaled shs. 612,500
  • Creditors of shs. 4,000,000 were paid shs. 3,920,000 in full settlement of their dues
  • Payment for freight inwards shs. 300,000
  • amount withdrawn for personal use shs. 700,000
  • Payment for office furniture shs. 100,000
  • Investments carrying annual interest rate of 4% were purchased at shs. 9,600 on 1st July 2017 and payment made there for
  • Expenses including salaries paid shs. 1,450,000
  • Miscellaneous receipts shs. 50,000
  1. Bills of exchange drawn on and accepted by customers during the year amounted to shs. 1,000,000, of these bills of exchange of shs. 200,000 were endorsed in favour of creditors. An endorsed bill of exchange of shs. 40,000 was dishonoured
  2. Goods costing shs. 90,000 were used as advertising materials
  3. Goods are in variably sold to show a gross profit of 331/3% on sales
  4. Difference in cash book, if any is to be treated as further drawings or introduction by Ali Rashid
  5. Provide at 2.5% for doubtful debts on closing debtors

REQUIRED:
Rashid asks you to prepare Income Statement for the year ended 31st December, 2017 and the Statement of Financial Position as at that date


  • Updated: 25 Dec 20
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  • Attempts: 1
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  • Correct: 0

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Hint! This question is missing values for Purchases, Sales etc. Thus, we need to open Debtors a/c, Creditors a/c, Bills receivable a/c, Expenses a/c, Cash a/c and furniture a/c to get the missing values.

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