QUESTION 1

The trial balance of Bright Morning Ltd has been provided for the year ended 31 December, 2012 as
follows:
DR CR
GHC GHC
Buildings 160,000
Stated capital 250,000
Bank 23,000
Sales 260,000
Trade receivables 30,000
Trade payables 24,600
Plant & machinery 190,000
Accumulated depreciation on plant & machinery 80,000
Purchase of raw materials 96,000
Selling expenses 9,000
Administrative expenses 2,600
Distribution expenses 16,200
Factory wages 13,000
Factory expenses 9,200
Rates 5,600
Inventory: 01/01/2012
Raw materials 22,000
Work-in-progress 17,000
Finished goods 21,000 ______
614,600 614,600

You are provided with the following additional information:

(1) Inventory at 31 December, 2012:

GHC
- Raw materials 16,600
- Work-in-progress 20,000
- Finished goods 24,000

(2) Rates of GHC1,600 had been prepaid

(3) Provide for depreciation on cost as follows:

Building - 3%
Plant & machinery - 10%

Required:

Prepared the Income Statement for the year ended 31 December, 2012 and a Statement of Financial
Position as at that date.

20 marks

ICAGP1.10513 Page 1 of 5
QUESTION 2

You are given the following as the summary of the bank account of Precious Enterprise for the year
ended 31 December 2012.

GHC GHC
Balance (1/1/2011) 9,700 Payment to creditors for goods 30,400
Receipts from receivables 56,000 Rent 2,000
Investment income 3,000 Insurance 1,500
Salary 6,000
Drawings 11,300
Sundry expenses 800
_____ Balance c/d 16,700
68,700 68,700

Cash sales amounted to GHC15,000 out of which the following payments were made:
GHC
Wages 5,600
Purchases 5,500
Drawings 2,000
Sundry expenses 300

The following additional information is given:

31/12/2011 31/12/2012
Inventory 7,850 9,200
Trade payables 12,600 14,000
Trade receivables 17,300 15,800
Insurance prepaid 1,100 900
Rent prepaid 700 1,000
Sundry expenses owing 400 700

You are required to prepare the following:

(i) Trade Receivables Control Account

(ii) Trade Payables Control Account
(iii) Income Statement for the year ended 31 December, 2012.
20 marks

QUESTION 3

The statement of the financial position of Obiba Brokeman given below did not agree and the
balance of GHC26,940 was entered in the suspense account.

ICAGP1.10513 Page 2 of 5
 Obiba Brokeman
Statement of Financial Position As At 30th June, 2012

Cost Depreciation Net Book Value

GHC GHC GHC
Furniture & Fittings 90,000 36,000 54,000
Delivery Van 12,000 6,000 6,000
102,000 42,000 60,000

Current Assets
Inventory 6,000
Accounts receivable 12,000
Cash at bank 300
18,300
Current Liabilities
Accounts payable 7,200
Net current asset 11,100
Net assets 71,100

Financed By:
Capital 12,000
Add net profit for the year 32,160
Suspense account 26,940
71,100

Upon investigations, the following errors were discovered:

(i) Accounts payable had been understated by GHC6,000.

(ii) The sales figure for the period was understated by GHC540.

(iii) The closing inventory amounted to GHC7,200 but the amount stated in the statement of
financial position was the beginning inventory.

(iv) A loan from the Country Bank of GHC3,000 was credited to the income statement.

(v) Discount allowed of GHC600 had been credited to the income statement and discount
received of GHC900 had been debited to the income statement.

(vi) Drawings of GHC6,000 had been debited to the income statement.

(vii) A new delivery van costing GHC3,000 had been debited to the delivery van running
expenses. It is the policy of Obiba Brokeman not to charge depreciation in the year of
purchase.

(viii) The balance on the allowance for bad debts account of GHC1,080 as at 1 July 2011 had
been credited to the income statement account, the bad debt allowance should have been
made equal to 10% of account receivables as at 30th June 2012.

ICAGP1.10513 Page 3 of 5
(ix) Depreciation is charged on the furniture and fittings at the rate of 20% per annum on cost,
and on delivery van at the rate of 50% on the reducing balance. The depreciation for the
year to 30th June 2012 had been correctly charged to the income statement for the year but
no adjustments had been made elsewhere.

You are required to prepare:

(i) A statement correcting the net profit for the year.

(ii) The corrected statement of financial position as at 30th June 2012.

20 marks

QUESTION 4

(a) State three (3) purposes of Accounting Information. (6 marks)

(b) Identify four (4) users who have stake in Accounting Information and state their information
needs. (8 marks)

(c) Explain the following Accounting Concepts.

(i) Going Concern

(ii) Prudence (6 marks)

(Total: 20 marks)

QUESTION 5

The cash book of Adjoa Shikishiki Ltd for the year ending 31st December 2012 is as follows:

GHC GHC
Opening balance 4,962
Receipts:
Cheque No. 248296 from Billy Ham 166,239
Cheque No. 188098 from Global Express 277,065
Cheque No. 155812 from Agba Ltd 4,860
Cheque No. 394504 from Morris Ltd 349,270
Cheque No. 112001 from Dunenyo Farms 200,000 1,002,396
Payments
Cheque No. 182306 to Alfa Ltd 150,205
Cheque No. 182307 to Baba Ali 200,000
Cheque No. 128908 to Mawuko Ltd 4,305
Cheque No. 182309 to Bonsu Ltd 300,000
Cheque No. 182310 to Srodae Co. 295,695 950,205
Closing balance 52,191

ICAGP1.10513 Page 4 of 5
Investigations of the records for the period revealed the following information:

(i) A dividend of GHC400 on shares in GT2 Ltd was paid direct to bank account and no entry
was made in the company’s cash book.

(ii) An amount of GHC4,887 received from a customer by credit transfer during the period had
not been recorded in the cash book.

(iii) Bank charges of GHC1,356 shown in the bank statement had not been entered in the cash
book.

(iv) Standing orders entered in the bank statement had been omitted from the cash book in respect
of rates to the Oman District Assembly, of GHC3,456 and insurance of GHC450.

(v) Cheque No. 182308 paid to Mawuko Ltd had not been presented at the bank and cheque No.
155812 from Agba Ltd and deposited into the bank account had not been credited to the
company’s account.

(vi) A cheque for GHC714 had been debited to the company’s account in error by the bank.

You are required to prepare a Bank Reconciliation Statement as at 31st December 2012 together with
a corrected Cash Book.

20 marks

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