The University of the West Indies SEMESTER | 6 SeMesteR ‘SU-IMERSUMMER SCHOOL Examinations of December @ / April/May /JulyQ 2014 Originating Campus: Cave Hill Mona = St Augustine () UWIMONA WJC Mode: OnCampus & ByDistance Course Code and Tit ACCT 2014 Financial Accounting 1 Date: Friday, December 5, 2014 Time: 1-3 pm Duration: 2 Hrs. Paper No: FINAL, terials required ‘Answer booklet: Nonnal 6 Special O Not required 2} Caleulat Programmable [Non Programmable 62 (ober applicable) “Multiple choice answer sheets numerical alpaetical O) 1-200 100 Auxiiary/Other material(s) - Please speci: Candidates are permitted to bring the following items to their desks: Per, pencil, ruler, whiteout and calculator Instructions to Candidates: This paper has 7 pages and 5 uestions. ‘This paper consists of THREE sections to be completed in TWO (2) hours. ANSWER QUESTION ONE IN SECTION A ANSWER ONE QUESTION FROM SI:CTION B ANSWER ONE QUESTION FROM S}:CTION C Financial statements should be prepared in accordance with International Financial Reporting Standards Page | (© The University ofthe West Indies Course Code ACCT 2014SECTION A ANSWER QUESTION ONE. Question 1 (50 marks) Marsha Blackwood is a retailer in Saint Lucia, who had not kept a full set of accounting records. ‘The following is a summary of her bank transactions in her Cash Book for the year ended December 31, 2013. Receipts Payments $ 3 Trade debtors 120,000 Trade creditors 72,500 Cash sales 165,200 Rent 12,250 Office supplies 6,000 Insurance 2,800 Wages 60,000 Accounting fee (2012) 5,000 Utilities 3,600 Drawings 1,000 Cash purchases 30,800 285,200 193.950 ‘You are given the following information: 2. Favourable bank balance per Cash Book on December 31, 2013 amounted to $125,600. During the financial year discounts allowed by trade creditors amounted to $600 and those allowed to trade debtors amounted to $400. Trade debt written off during the financial year amounted to $700. During the financial year goods retumed by trade debtors amounted to $300 and goods returned to trade creditors amounted to $100. During the financial year a trade debt of $8,500 owed by Shallamae Ramatar was set off against the $9,000 owing to the same Shallamae Ramatar a trade creditor. Sanjene Roberts, a cash sales customer retumed goods during the financial year amounting, to $200. Sanjene Roberts was repaid her $200 from the daily cash sales on the day she returned the goods. Marsha Blackwood keeps a cash float of $2,000 for change at her retail outlet. Marsha Blackwood agreed to pay her brother, a commission of 4% of the net profit after charging such commission, for working in the retail outlet on Sundays in 2013. ‘The accounting fee for preparing the 2013 financial statements is estimated at $5,250. Page 2Question 1 continued 10. December 31,2012 December 31, 2013 $ $ Stock 10,500 15,000 Trade debtors 1,500 1,800 Trade creditors 200 560 Rent paid in advance 1,000 1,250 Accrued utilities 170 100 Property, plant and equipment (NBV) 50,000 45,000 Required: a. Prepare the Statement of Affairs on December 31, 2012. (10 marks) b. Prepare the Trade Creditors Control Account for the year ended December 31, 2013, (3% marks) c. Prepare the Trade Debtors Control Account for the year :nded December 31, 2013. (4 marks) 4, Prepare the Income Statement for the year ended Decem ver 31, 2013. (20 marks) ©. Prepare the Balance Sheet as at December 31, 2013. . (12% marks) Page 3SECTION B ANSWER ONE QUESTION Question 2 (30 marks) Andreanna Gardener Limited Balance Sheets at December 31 Non-current Assets Equipment Less accumulated depreciation Current Assets, Stocks Trade debtors Prepayments Fixed deposit (30 days) Cash Bank Total assets Owners’ Equity Ordinary share capital 20% Preference share capital General reserves Retained profits Non-current Li Loan Current Liabilities ‘Accruals Trade creditors Current portion of loan Taxation payable ‘Total equity and liabilities Page 4 2012 s 352,000 190,000 162,000 54,000 154,000 20,000 0 4,000 10,000 242,000 404,000 77,000 20,000 25,000 60,000 182,000 10,000 404,000 2013 478,000 215,000 263,000 157,000 415,000 25,000 160,000 27,000 827,000 1,090,000 115,000 20,000 15,000 310,000 460,000 5,000 100,000 466,000 5,000 54,000 625,000 1,090,000Question 2 continued Andreanna Gardener Limited Profit and Loss Statements for the y« ars December 31 2012 2013, $ $ Profit before taxation 190,000 408,000 Taxation (64 000) 104,000) Profit after taxation 126.000 304,000 Preference dividends paid (4000) ( 4,000) Ordinary dividends paid 78 000) (50,000) Retained profit for the year 44.000 250,000 Retained profit brought forward 16.000 60,000 Retained profit carried forward 60.000 310,000 Additional information: 1, During the year to December 31, 2013, equipment origin ily costing $10,000 was sold for $6,000. The accumulated depreciation on the equipment disposed of was $8,000. 2. Bonus issue of ordinary shares out of general reserves ar iounted to $10,000 on December 31,2013. Required: a, Calculate the corporation tax paid during the 2013 financial year. (2% marks) b. Calculate the amount of ordinary shares issued for cash. (2% marks) ©. Prepare a Statement of Cash Flow (indir set method) for the year ended December 31, 2013 in accordance with 1AS 7. (25 marks) Page 5Question 3 (30 marks) ‘Sunshine Limited list of balances on September 30, 2014 $ Ordinary Share Capital 360,000 10% Cumulative Preference Share Capital 40,000 General Reserves 20,000 Retained Profits October 1, 2013 67,500 20% Long Term Loan 150,000 Cost of Sales 1,126,000, Sales 2,025,500 Other Operating Income 13,000 Distributions Costs 280,200 ‘Administrative Costs 335,300 Other Operating Costs 77,400 Interest paid 30,000 Property, Plant and Equipment (NBV) 165,000 Long Term Receivable 75,000 Cash and Bank 127,250 Closing Stock 42,600 Trade Debtors 336,250 Trade Creditors 9,000 Preference Dividends Paid 4,000 Ordinary Dividends Paid 36,000 Additional information: 1. Transfer $20,000 to General Reserves. 2. 360,000 ordinary shares were in issue on September 30, 2014. 3. Bonus issue of ordinary shares out of General Reserves Account on October 1, 2013 amounted to $60,000. 4. Corporation tax is estimated at $16,200 for the financial year ended September 30, 2014, this information is not yet reflected in the accounts. 5. On September 30 each year $50,000 is paid on the 26% long term loan. No loan payment ‘was outstanding on September 30, 2014. No interest payment was outstanding on October 1,2013. 6. The current portion of the long term receivable amounted to $35,000 on September 30, 2014, Page 6Question 3 continued Required: ‘a, Prepare the Income Statement for the year ended Septeml er 30, 2014. (8 marks) b. Prepare the Statement of Changes in Equity for the year e ided September 30, 2014, (10 marks) ©. Prepare the Statement of Financial Position as at September 30, 2014. (12. marks) SECTION C ANSWER ONE QUESTION Question 4 (20 marks) Trace the development of financial accounting in the English spcaking Caribbean. (20 marks) Question 5 (20 marks) a. Explain these four terms extracted from the accounting cde of ethics: i, Integrity (marks Objectivity (2 marks) . Independence (2 marks) iv. Due care (marks) b. Explain the term adjusting event in accordance with IAS 10, (3 marks) ¢. Identify the five (5) conditions which must be satisfied u der IAS 18 before revenue from the sale of goods can be recognized in the accounts. (5 m irks) d. Identify the internal control features for cash. (4 marks) Page 7