Reference no: EM131150886

BAF1101 FINANCIAL ACCOUNTING I ASSIGNMENT MAY-AUG 2016

QUESTION ONE

The following trial balance has been extracted from the ledger of Ndotondogo, a sole trader

Ndotondogo Trial Balance for the year ended 31 May 2014
	£	£
Sales		138,078
Purchases	82,350
Carriage	5,144
Drawing	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
Cash in hand	177
Cash in bank	1,002
Stock at 1 June 2013	11,927
Equipment  At cost	58,000
Accumulated depreciation		19,000
Capital		53,091
	216,770	216,770

The following additional information as at 31 May 2014 is available:

a. Rent is accrued by £ 210
b. Rates have been prepaid by £880
c. £2,211 of carriage represents carriage inwards on purchases
d. Equipment is to be depreciated as 15% per annum using the straight line method
e. The provision for bad debts to be increased by £40
f. Stock at the close of business has been valued at £ 13,551

Required:

Prepare a statement of comprehensive income for the year ended 31 May 2014 and a statement of financial position as at that date.

QUESTION TWO

i) Explain 5 would be users of accounting information.

ii) Brian Barbados is a sole trader. At 30 June 2000 the following balances have been attracted from his books.

Sales	47,600
Purchases	22,850
Insurance	700
Wages	7,900
Rates	2,800
Heating and lighting	1,200
Telephone	650
Discount allowed	1,150
Opening Stock	200
Return inwards	200
Return outwards	150
Premises	40,000
Plant and machinery	5,000
Motor vehicle	12,500
Debtors	12,500
Bank balance	7,800
Creditors	3,400
Long term loan	10,000
Capital	60,000
Drawings for the year	4,000
Closing stock	550

Required

Construct a trial balance from the cost of balances.

iii) Distinguish between capital expenditure and revenue expenditure.

QUESTION THREE

a) Explain the term "bank reconciliation" and state the reasons for its preparation.

b) Ssemakula, a sole trader received his bank statement for the month of June 2001. At that date the bank balance was Sh.706,500 whereas his cash book balance was Sh.2,366,500. His accountant investigated the matter and discovered the following discrepancies:

1) Bank charges of Sh.3,000 had not been entered in the cash book.
2) Cheques drawn by Ssemakulatotalling Sh.22,500 had not yet been presented to the bank.
3) He had not entered receipts of Sh.26,500 in his cash book.
4) The bank had not credited MrSsemakula with receipts of Sh.98,500 paid into the bank on 30mJune 2001.
5) Standing order payments amounting to Sh.62.000 had not been entered into the cash book.
6) In the cash book Ssemakula had entered a payment of Sh.74,900 as Sh.79,400.
7) A cheque for Sh.15,000 from a debtor had been returned by the bank marked "refer to drawer" but had not been written back into the cash book.
8) Ssemakula had brought forward the opening cash balance of Sh.329,250 as a debit balance instead of a credit balance.
9) An old cheque payment amounting to Sh.44,000 had been written back in the cash book but the bank had already honoured it.
10) Some of Ssemakula's customers had agreed to settle their debts by paying directly into his bank account. Unfortunately, the bank had credited some deposits amounting to Sh.832,500 to another customer's account. However, acting on information from his customers, Ssemakula had actually entered the expected receipts from the debtors in his cash book.

Required:

i) A statement showing Ssemakula's adjusted cash book balance as at 30 June 2001.

ii) A bank reconciliation statement as at 30 June 2001.