TEST CODE

FORM TP 2238

001092

JANUARY 2002

C AR I B B E AN E X AM I N AT I O N S C O U N C I L
SECONDARY EDUCATION CERTIFICATE
EXAMINATION
PRINCIPLES OF ACCOUNTS
Paper 02 General Proficiency
3 hours
07 JANUARY 2002 (a.m.)

1.

Answer ALL the questions in Section I and TWO questions from Section II.

2.

Begin EACH answer on a separate page.

3.

Keep ALL parts of EACH answer together.

4.

Silent electronic calculators may be used, but ALL necessary working should be clearly
shown.

5.

Each question is worth twenty marks.

______________________________________________________________________________________
DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO
Copyright 2001 Caribbean Examinations Council.
All rights reserved.

001092/JANUARY/F 2002

SECTION I
Answer all THREE questions in this section.
1.

M Pradash prepared his Trading and Profit and Loss Account for the year ending March 31 2000.
which showed a profit of $69 050. He then provided you with the following list of balances
and additional information:
$
200
800
600
15 000
27 000
40 000
25 000
8 000
6 000
13 000
55 000
14 000
7 500
30 000
1 500
30 000

Provision for bad debts (April 1 1999)

Provision for depreciation
Plant and machinery (April 1 1999)
Furniture and fittings (April 1 1999)
Motor vehicles (April 1 1999)
Capital (M Pradash)
Plant and Machinery (cost)
Fixtures and fittings (cost)
Sundry creditors
Sundry debtors
Bank overdraft
Land and buildings (cost)
Ending stock
Drawings
Mortgage (20 Years)
Cash in hand
Motor vehicles (cost)
Additional information
(i)

Depreciation written-off during the year and accounted for in the profit
and loss account was:
Plant and machinery 10% of cost
Fixtures and fittings 15% of cost
Motor vehicles 25% of cost

(ii)

Provision for bad debts (originally $200) was increased to 5% of debtors.

The increase was accounted for in the profit and loss account.

(a)

Prepare M Pradashs Balance Sheet as at March 31 2000 listing items in order of

permanence.
(16 marks)

(b)

Calculate M Pradashs working capital.

(1 mark)

(c)

(i)

Calculate ONE ratio which will indicate how liquid Pradashs business is.
(Show the formula)
(ii)
Use the ratio in (c) (i) above to make a BRIEF comment (one short sentence) on
the liquidity of Pradashs business.
(3
marks) 001092/JANUARY/F 2002
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-32.

(a)

State the Book of Original Entry in which the following transactions should be recorded.
(i)
(ii)
(iii)
(iv)
(v)

(b)

(5 marks)

Write up the following transactions in a three-column cash book of T Jordan. Balance

the cash book and bring down the balances.

January 1
2
3
4
7
8
12
17
20
21
25
(c)
(d)

Wrote a receipt to K Willis for $2 500

Invoice received from B Stupart - $3 700
Sent credit note to L Mills for $300
Sent invoice to B Williams for $5 250
Received a credit note from T Brooks for $250

Overdrawn balance in bank $3 500

Cash balance $150
Cash sales $70
Paid by cheque J Blackburn $200 less 7 % cash discount
Paid for sundry expenses by cash $23
Received cheque for $95 from C long having taken a 5% discount to which he
was entitled
Cheque cashed for the office $200
Received a cheque for $250 from J Smart in full settlement for goods sold valued
at $275
Cash sales $50
Wages paid by cash $25
Cash paid into the bank $300
Sundry expenses paid by cash $35
Cash sales $105
Cheque drawn for personal use $43
(12 marks)

Post the totals of the discount columns.

Which of the following is a Revenue item and which is an Expense item:
(i)

Discount allowed

(ii)

Discount received

(1 mark)

(2 marks)

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001092/JANUARY/F 2002

-43.

(a)

From the following details

(i)

make adjustments to the cash book

(ii)

draw up a bank reconciliation statement

$
984
200
158
1 092
100

Cash at bank as per cash book

Balance as per bank statement
Unpresented cheques
Deposit not entered by bank
Dividend received by bank not entered in the cash book
Cheque drawn for $1 344 entered in the cash book as $1 434
Bank charges not entered in cash book
Cheque returned refer to drawer not entered in cash book
Credit transfer received by bank not entered in cash book
180

54
166
(10 marks)

(b)

On 31 July 1999 a trader decided to raise provision for bad debts based on 5% of debtors and to
maintain the provision at that percentage at the end of each financial year. The following
particulars relate to THREE financial years:
YEAR
1999
2000
2001

DEBTORS BALANCE
$
25 200
21 400
35 700

(i)

Construct the provision for bad debts account for the THREE years.

(ii)

Show the entries in the balance sheet for EACH of the THREE years..

(iii)

How would the amount for bad debts provision be dealt with in the profit and loss
account in 2000?
(10 marks)

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001092/JANUARY/ 2002
-5SECTION II
Answer any TWO questions in this section.
4.

A Ramsook keeps a cash book as his only book-keeping record. The following is a summary of
transactions for the year ending 30 June 2000.
______________________Cash Book (Cash and Bank combined_________________
Opening balance
Cash received from debtors
Closing balance

$
3 284
97 056
4 120

Cash paid to creditors

Salaries
Rent and rates
Electricity
General expenses
Drawings

_______
104 460

$
74 496
8 996
3 296
672
7 124
9 876
______
104 460

His assets and liabilities on 30 June 1999 and 30 June 2000 were:

Fixed assets at cost

Stock
Debtors
Rent and rates prepaid
Creditors
Electricity

30.06.99
$
8 800
8 484
12 876
400
7 368
124

30.06.2000
$
8 800
10 592
13 552
480
7 564
168

Fixed assets should be depreciated at 15% of cost.

Prepare the following:
(a)
(b)

Trading and Profit and Loss Account of A Ramsook for the year ending 30 June
2000.
(11 marks)
A balance sheet as at that date.
(9 marks)
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-65.

The following list of balances as at December 31 2000 has been extracted from books of K
Pringle a door manufacturer:
$
Stocks of lumber and other raw materials 1.1.2000
32 000
Work in progress (incomplete doors) 1.1.2000
20 000
Completed doors 1.1.2000
48 000
Purchases of lumber and other raw materials
110 000
Carriage inwards
2 400
Carriage outwards
1 300
Manufacturing wages (worker making doors)
56 000
Supervisory wages
15 200
Rent and rates
9 200
Electricity and cleaning
14 000
Office salaries
12 800
Plant and machinery at cost
136 000
Sales
281 200
Returns inwards (damaged doors)
7 500
The following additional information is available:
$
(1)

Stocks at 31.12.2000
Lumber and other raw materials
Work in progress (incomplete doors)
Completed doors

(2)

Rent and rates are to be apportioned 75% to factory, 25% to administration.

(3)

Electricity and cleaning expenses are to be apportioned 80% to the factory and 20% to
administration.

(4)

Plant and machinery is to be depreciated by 5% of cost.

(a)

Prepare the Manufacturing Trading and Profit and Loss A/C for K Pringle for the year
ending 31 December 2000. Your accounts should clearly show the following:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)

(b)
marks)

40 000
38 000
28 000

Raw materials (lumber) used

Prime cost
Factory overheads
Cost of production
Cost of goods sold
Gross profit
Net profit

(18 marks)

If 400 doors were manufactured during the year what was the cost of producing ONE
door? Show workings.
(2

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001092/JANUARY/F 2002
-76.

for a

(a)

Give TWO differences between ordinary shares and preference shares.

(2 marks)

(b)

What is the difference between authorized capital and issued capital?

(c)

Give TWO reasons why a partnership might choose to convert to a company. (2 marks)

(d)

The draft final accounts of Gasoline Retailers Ltd are shown below. The accounts are
badly presented. Re-draft the accounts using the vertical format after providing
dividend of 10% and a transfer to general reserve of $1 500.

(1 mark)

Profit and Loss Account

For year ending 30 April 2000
Purchases
Opening stock
Office salaries
Office expenses
Directors remuneration
Bad debts expenses
Debenture interest
Net profit

54 000
25 000
5 500
2 675
2 875
350
375
5 725
_____
96 500

Investment income
Closing stock
Sales

______
96 500

Balance Sheet a at 30 April 2000

$
Authorized share capital
25 000 ordinary shares $1 each
Less shares not issued
5% debentures
Trade creditors
Share premium
Profit and loss account
Provision for doubtful debts

250
15 000
81 250

25 000
5 000
20 000
5 000
8 000
5 000
18 750
500
_____
57 250

Bank
Debtors
Pre-payments
Property at cost
Investment at cost
Plant and machinery
Stocks
Goodwill

500
12 500
500
8 250
4 500
12 000
15 000
7 500
_____
60 750
(15 marks)

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001092/JANUARY/F 2002

-87.

(a)

The following is a summary of the receipts and payments for the year 1 April 1999 to 31
March 2000 of the Rock Hall Cricket Club:
Receipts

Club subscriptions
Donations
Christmas dance
Bar takings

25 500
2 250
1 275
40 500

Payments
Rates
General expenses
Bar purchases
Christmas dance expenses

1 350
39 300
27 750
225

Other relevant information at the beginning and end of the year is as follows:

Rates
Bar stocks
Club premises (cost $75 000)
Furniture (cost $15 000)
Bank and cash in hand

April 1 1999
$
3 000
30 000
4 500
2 400

March 31 2000
$
150
3 750
27 000
3 000
3 300

(i)

Prepare the clubs Bar Trading Account for the year ending 31 March 2000.
(5 marks)

(ii)

Prepare the clubs income and expenditure account for the year to 31 March
2000.

(8

marks)
(b)

Prepare the subscriptions account for a sports club at December 31 1999 from the
following information:
Members paid $2 per annum in 1998 and $4 per annum in 1999 and 2000.
At 31.12.98

6 members had not yet paid last years subscription while 3 had paid in
advance.

At 31.12.99

5 members had not paid their 1999 subscriptions while 12 had paid in
advance for 2000.

Cash received in respect of subscriptions in 1999 was $126.

(7 marks)

END OF TEST
001092/JANUARY/F 2002