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MID YEAR DECEMBER 2009

QU1. (24.3/282)

a) Green’s financial position as at 1 May 2009 is as follows:

K’000

Bank 2,910

Cash 160

Equipment 5,900

Premises 25,000

Creditors: Smith 890

Thomas 610

Debtors: Carnegie 540

Higgins 4,000

You are required to show the opening entries needed to open a double entry set of books for Green as
at 1May 2009. Then open up necessary accounts in Green’s ledger to record the above, as well as the
succeeding transactions.

b) During May 2009, Green’s transactions were as follows:

2009

May 2 bought goods from Thomas on credit K2,100

May 5 paid smith on account by cheque, K500

May 12 repaid Higgins by cheque, K1,000

May 24 sold goods to Carnegie on credit K2,220

May 31 total cash sales for the month K8,560, of which K8,000 banked on May 31

May 31 Carnegie returned goods to us K400

May 31 paid loan interest to Higgins by cheque, K200

You are required to post all accounts and to extract a trial balance as at 31 May 2009. But only the
cash book needs balancing down. Note that the sales, purchases, and returns day books are not
needed.
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QU2. (12.7x/120)

Bower manufactures sportswear, and for the year 2009 his sales were K76,540. He also paid carriage
outwards of K4,275 to transport the sportswear to customers.

The materials purchased in the year amounted to K33,325, with an additional amount paid for carriage
inwards of KK2,715. Bower had stock of K8,255 on 1November 2008, and of K7,985 on 31October
2009. He was owed K6,285 by customers, and owed K4,825 to suppliers on 31 October 2009. His
Bank balance was overdrawn by K3,335, and he had equipment valued at K11,125 and a van valued
at K2,225 on that date.

His overheads for the year ended 31 October 2009 were:

K’000

Rent and rates 6,000

Motor expenses 3,110

Salaries 7,450

Telephone 495

Insurance 500

General expenses 750

He drew K3,675 in the year to 31 October 2009 and had a balance brought forward on his capital
account on 1 November 2008 of K5,485.

You are required to draw up, in the vertical format, the trading and profit and loss account for the year
ended 31 October 2009, and a balance sheet for Bower at that date.

QUESTION 1 COMPULSORY (40 MARKS)

Correct the following trial balance of Patel Syndicate then draw up a trading and profit and loss
account for the year ended 30 December 2006, and a balance sheet as at that date.

Dr Cr

K’000 K’000

Carriage outwards 8,400

Carriage inwards 14,800
Returns inwards 6,160
Returns outwards 13,640
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Purchases 753,720
Sales 1,521,600
Wages 245,600
Rent 14,800
Insurance 5,424
Motor expenses 7,640
Office expenses 1,648
Electricity 3,576
Sundry expenses 980
Premises 368,000
Motor vehicles 53,600
Furniture 7,600
Debtors 170,240
Creditors 126,400
Cash at the bank 20,424
Drawings 88,000
Capital 275,372
Stock at January 1 2006 166,400

1,937,012 1,937,012

………………………………………….

QUESTION 1

Enter the following transactions in the ledger of Zulu & Co. and prepare a trial balance at 31 October 2008,
together with a calculation of profit for the month and a balance sheet at 31October:

October 1 Started business with K15,750,000 in the bank and K5,250,000 cash.

2 Purchased goods on credit K18,375,000 from Wholesalers Ltd.

3 Bought office furniture for K1,575,000 by cheque.

6 Bought goods on credit from Patel Syndicate for K1,207,500.

10 Paid rent cash K3,150,000.

12 Paid electricity cash K787,500.

14 Sold goods to Kangwa on credit K1,312,500.

20 Bought machinery on credit from Barlows K21,000,000.

28 Paid wages K4,725,000 by cheque.

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29 Cash sales for the month were K26,250,000.

30 Banked 21,000,000 out of the cash sales for the month

31 Withdrew K5,250,000 from the bank for domestic use.

31 Closing stock valued at K5,250,000.

QU3. (17.3/181)

Framework Ltd is a small company which specialises in framing pictures, photographs, certificates
etc. At the beginning of the new financial year 1 January 2009 the following balances appear in the
ledgers:

Sales Ledger

K’000

Forbes 745

Goodwin 276

Moss 390

Purchases Ledger

Fitz 800

Horne 450

Ward 215

During January 2009 the following transactions took place:

Jan 2 purchased goods from Horne, K650

3 purchased goods from Ward, K334

11 sold goods to Goodwin, K328

12 received credit note from Horne, K42

22 purchased goods from Fitz, K756

23 sold goods to Forbes, K1,234

27 sold goods to Moss, K2,500

28 received credit note from Fitz, K200

On 31 January the company received a cheque from Forbes for K745 and a cheque for K200 on
account from Moss.

On the same date the Company paid cheques to Fitz K500 on account and Ward K245.
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Required:

a) Open personal accounts for the debtors and creditors and enter the outstanding balances at 1
January 2009.
b) Post the above transactions to the accounts in the sales and purchases ledgers.
c) Balance off the accounts at 31 January and bring the balances down.

Note: daybooks and posting to the general ledger not required

QUESTION 2 (30 MARKS)

Reconstruct the following balance sheet using the vertical format after taking into account the
transactions for December 2006 shown below.

Balance sheet as at 30 November 2006

K’000 K’000
Assets: liabilities:
Cash 6,000 Capital 36,000
Fittings 12,000 + Net profit 12,000
Motor vehicles 24,000 48,000
Debtors 18,000 - Drawings 3,600

Stock 12,000 44,400

44,400
Creditors 27,600
Creditors
27,600
72,000 72,000
72,000

December 1 Received a cheque from debtors for K2,400,000.

7 Withdrew K1,800,000 cash for personal use.

13 Sold goods which cost K1,200,000 for K3,600,000 cash.

18 Bought goods on credit for K2,400,000.

24 Obtained a loan from the bank of K24,000,000 to pay for a motor vehicle.
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31 Paid K300,000 cash into the bank.

QUESTION 2 (30 Marks)

On 31 October 2006, the balances in the Sales and Purchases Ledgers of Banda & Sons are as follows:

Debtors: Kangwa K2,550,000; Chita K1,680,000; Longwe K480,000

Creditors: Dudia K1,350,000; Bookworld K1,650,000; Duly’s, K2,010,000

The following are the transactions for November 2006:

November 1 Sold goods on credit to Chita K1,500,000

3 Bought goods on credit from Dudia K2,400,000

5 Kangwa paid the balance on his account by cheque less cash discount of 5%

6 Returned goods to Bookworld K150,000.

8 Sold goods on credit to Longwe K900,000.

10 Sold goods on credit to Chita K4,350,000.

12 Longwe returned goods K60,000.

14 Bought goods on credit from Natwange K1,020,000.

16 Paid Bookworld the balance on its account by cheque, less 5% cash discount.

19 Bought goods on credit from Duly’s K1,800,000.

23 Chita returned goods K225,000

27 Chita paid off his account by cheque less 5% cash discount

30 Paid Dudia’s account by cash less 5% cash discount

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Write up the following for November 2006:

1) Sales day book

2) Purchases day book
3) Returns Inwards and Returns Outwards day books
4) Sales Ledger
5) Purchases Ledger
6) Cash book extracts
7) All the necessary accounts in the General Ledger.

QUESTION 2

Enter the following in a three-column cash book. Balance off the cash book at the end of the month and show
the discount accounts in the general ledger.

2008

September 1 Balances b/d; cash K4,410,000; bank K51,870,000.

2 The following paid us by cheque, in each case deducting a 5% cash

discount Banda K8,610,000; Phiri K3,360,000; Haangala K4,620,000; Tambo
K10,920,000.

3 Cash sales paid direct into the bank K7,770,000.

5 Paid rent cash K3,570,000.

6 Paid the following by cheque in each case deducting 2 ½ % cash

discount: Pule K3,780,000; Gondwe K10,080,000; Bwalya
K4,200,000.

8 Withdrew cash from the bank for office use K4,200,000.

10 Cash sales K13,230,000.

12 Sombe paid up his account of K2,940,000 by cheque less K42,000

cash discount.

14 Paid wages by cash K5,670,000.

16 Paid the following accounts by cheque Tembo K3,255,000 less

K157,500 cash discount; Dante 4,326,000 less K126,000 cash
discount.
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20 Bought equipment by cheque K45,360,000.

24 Bought van by cheque K150,150,000.

26 Received cheque for K3,402,000 from Sambo.

29 Cash sales K10,290,000.

30 Paid water bill cash K588,000.

30 Paid all cash into the bank leaving K800,000 in the till.

QU4. (21.3x/239)

From the details below, enter up the cash book for February 2009, balance off at the end of the month,
and bring the balances down.

K’000

2009

Feb 1 balances brought down from January:

Cash in hand 76.32

Cash at bank 2,376.50

2 paid electricity bill by cheque 156

4 paid motor expenses by cash 15

6 received cheques from the following debtors:

Hill 300

Jackson 275

Wardle 93.20

7 paid for stationery by cash 3.70

10 sold goods for cash 57.10

12 paid for purchases from Palmer by cheque 723.50

14 received loan by cheque from Whitman 500

16 paid Wright by cheque 86.20

17 the proprietor Jepson, took cash for his own use 50

He asks you (accountant) to pay his personal telephone bill by cheque

to the post office 140

22 Smith paid his account by cheque 217

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23 petrol bill paid by cash 21

26 Received cheque for sale of goods 53

27 bought new photocopier from Game paid by cheque 899

28 paid monthly salaries by cheque 2,400

QUESTION 3 (30 MARKS)

Enter the following transactions in the ledger of P. Senkwe and prepare a trial balance at 31 August
2007, together with a calculation of the profit for the month and a balance sheet at 31 August 2007.

August

1 Started in business with K30,000,000 in the bank and K10,000,000 cash.

2 Bought goods for K35,000,000 from Patel on credit.

4 Bought furniture for K3,000,000 paying by cheque.

7 Bought goods on credit from Amin for K2,300,000.

11 Paid rent with cash K6,000,000.

13 Bought equipment with cash K1,500,000.

16 Sold goods on credit with a value of K2,500,000 to Mulenga.

22 Bought a van for K40,000,000 on credit from Southern Cross Ltd.

29 Paid wages of K9,000,000 by cheque.

31 From cash sales of K50,000,000 for the month banked K40,000,000. Paid himself
K10,000,000 by cheque as salary for the month.

31 Closing stock was K10,000,000.

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………………………………………….
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QUESTION 3 (30 MARKS)

Write up a three-column cash book for Tembo from the details that follow. Then balance the cash
book at the end of the month and show the discount accounts in the General Ledger.

2006

April 1 Balances brought down:

Cash in hand K928,000

Bank overdraft K17,640,000

2 Tembo increases his investment in the business by paying

K16,000,000 into the business bank account

4 He buys office equipment by cheque for K12,480,000

5 Cash sales K3,520,000

7 He banks cash K3,200,000

8 He pays the following by cheque, in each case deducting a 2.5% cash discount: Zulu
K1,280,000; Kaumba K3,840,000; Kangwa K6,400,000.

10 Cash sales K8,000,000

12 He pays telephone bill in cash K1,232,000

14 He withdrawn cash from the bank for office use K6,400,000

15 He draws cash for personal use K1,920,000

QUESTION 3 (30 MARKS)

Write up a three-column cash book for Tembo from the details that follow. Then balance the cash
book at the end of the month and show the discount accounts in the General Ledger.
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2006

April 1 Balances brought down:

Cash in hand K928,000

Bank overdraft K17,640,000

2 Tembo increases his investment in the business by paying

K16,000,000 into the business bank account

4 He buys office equipment by cheque for K12,480,000

5 Cash sales K3,520,000

7 He banks cash K3,200,000

8 He pays the following by cheque, in each case deducting a 2.5% cash discount: Zulu
K1,280,000; Kaumba K3,840,000; Kangwa K6,400,000.

10 Cash sales K8,000,000

12 He pays telephone bill in cash K1,232,000

14 He withdrawn cash from the bank for office use K6,400,000

16 He draws cash for personal use K1,920,000

QU5. (22.2x/250)

Porter has recently introduced a petty cash book using the imprest system on 15 October with a float
of K100. On 15 October 2009 there was an opening balance of K23.40 in the petty cash box. The
following transactions took place during the period commencing 15 October 2009

2009 K’000

Oct 15 received amount from cashier to restore imprest 11.66

16 envelopes and files 7

17 Tea, coffee and milk 8.60

18 postage 20

20 Office cleaner 4.23

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23 received K3.50 from Lloyd for sale of stationery (receipt No. 78)

23 postage stamps 7.00

25 travel expenses 16.42

27 flowers for reception 4.99

28 photocopying paper 9.40

31 received cash to restore imprest

Required:

a) Enter the balance brought down and the cash received to restore the imprest on 15
October 2009 in the petty cash book page 33
b) Enter the above transactions into the petty cash book using the following analysis
columns: postage, cleaning, travel expenses, stationery, and sundry expenses. The next
petty cash voucher number is 80.
c) Total and balance the petty cash book on 31 October and bring down the balance on 1
November. Show the amount of cash received from the cashier to restore the imprest to
K100
d) QUESTION 4 (30 MARKS)
e)
f)

g) Show the journal entries

necessary to record the following
transaction and show the ledger
account postings.
h)
i) 2007
j) April 1 Bought furniture
on credit from Furniture World
for K10,153,000.
k) 3 Took goods
costing K5,340,000 from the
business for personal use.
l) 5From the goods taken on 3 April
we return goods costing
K768,000 back into stock.
m) 10 Chanda owes us K840,000 He
is unable to pay us we obtain a
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court order and seize his furniture

as full payment of his debt.
n) 12We return furniture costing
K942,000 which is faulty to
Furniture World and are given
full allowance for it.
o) 15 We write off a debt of
K424,000 owed to us by Phiri as
bad.
p) 20 We buy a van costing
K120,000,000 from Southern
Cross Motors and pay 50% the
balance payable before 31
December this year.
q)

r) …………………………………
……….
s)
t)
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QUESTION 4 (30 Marks)

The following is a summary of the petty cash book for ZIALE for October 2006

October 1 received cash from accountant 1,500,000

2 postage 36,000

4 travelling 84,000

6 cleaning 30,000

7 fuel for vehicle 144,000

8 travelling 100,000

9 stationery 34,000

10 cleaning 16,000

11 postage 10,000

12 travelling 96,000

14 stationery 18,000

15 cleaning 46,000

20 postage 26,000

22 vehicle service 286,000

23 fuel 166,000

27 cleaning 42,000

28 postage 30,000

31 fuel 200,000

Required
1) Rule up a suitable cash book with analysis columns for expenditure on cleaning, motor
vehicle expenses, postage, stationery and travelling.
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2) Enter the month’s transactions.

3) Enter the amount necessary to restore the imprest and carry down the balance on the
first day of the next month.
4) Show how the double entry of the expenditure is completed.

QUESTION 4

Mulenga keeps his petty cash book using the imprest system, it is maintained at K1,500,000 with the balance
being restored to that amount on the first of each month. At 31 August 2008 his petty cash stood at K734,6000.
During September 2008 the following petty cash transactions took place:

Kwacha

September 1 cash received to restore imprest (Calculate) ?

1 tea bags 8,200

2 taxi faire 47,000

4 sugar 6,000

7 Cleaning 150,000

8 air time 20,000

11 toilet paper 21,600

12 paid Chanda for stationery supplied on credit 80,000

14 Cleaning 150,000

16 newspapers 9,000

17 postage 130,000

19 biscuits 70,000

20 tea bags 10,500

21 Cleaning 150,000

23 taxi faire 30,000

25 toilette soap 16,000

26 postage 125,000

28 bus faire 95,000

30 air time 100,000

October 1 cash received to restore imprest (calculate) ?

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Required:

1. Open and post Mulenga’s analysed petty cashbook for the period 1 September to 1
October 2008 inclusive, analysed under; air time, beverages, travelling, cleaning, postage,
sundry and ledger account.

QUESTION 5 (30 MARKS)

A) During the first quarter of 2006 Changa a grocer draws out in cash from the grocery
K3,360,000 for his own use at the end of each month.

1) Prepare the accounts in his books necessary to record each one of these
transactions
2) Show how the Drawings Account is balanced at the end of the quarter and the
transfer to the Capital Account. Then complete and balance off the Capital Account.

Note:

(a) The balance on Changa’s Capital Account at 1 January 2006 is K253,400,000

(b) Net profit (for the quarter) is K17,920,000

B) Which of the following do not affect trial balance?

1) Purchases of K650,000 from P Tembo entered in S Tembo’s account

2) Sales K980,000 to J Lungu entered in both accounts as 890,000
3) Cheque payment to R Nonde of K270,000 entered only in cash book
4) Motor vehicle purchased for K70,000,000 entered in motor expenses account

QUESTION 5 (multiple choice)

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Banda commenced business on 1 January 2006. He prepares his financial statements to 31 December every
year. For the year ended 31December 2006, bad debts written off amounted to K14,700,000. It was also found
necessary to create a provision for doubtful debts of K27,300,000.

In 2007, debts amounting to K23,100,000 proved bad and were written off. Phiri, whose debt of K2,205,000 had
been written off as bad in 2006, settled his account in full on 30 November 2007. As at 30 December 2007 total
debts outstanding were K966,000,000. It was decided to bring the provision up to 4% of this figure on that date.

In 2008 K39,900,000 debts were written off during the year, and another recovery of 3,360,000 was made in
respect of debts written off in 2006. As at 31 December 2008, total debts outstanding were 756,000,000. The
provision for doubtful debts is to be increased to 5% of this figure.

Required

Show the years 2006, 2007 and 2008 the

1. Bad debts account.

2. Bad debts recovered account

3. Provision for doubtful debts account

4. Extract from the Profit And Loss Account.

(25.9 page 282)

Mid year November 2008

QUESTION 1

Enter the following transactions in the ledger of Zulu and prepare a trial balance at 31 October 2008, together
with a calculation of profit for the month and a balance sheet at 31October

October 1 started business with 15,750,000 in the bank and 5,250,000 cash
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2 purchased goods on credit 18,375,000 from (Wholesalers Ltd) Dunn

3 bought office furniture for 1,575,000 by cheque

6 bought goods on credit from (Patel Syndicate) for 1,207,500

10 paid rent cash 3,150,000

12 paid electricity cash 787,500

14 sold goods to Kangwa on credit 1,312,500

20 bought machinery on credit from Barlows 21,000,000

28 paid wages 4,725,000 by cheque

29 cash sales for the month were 26,250,000

30 withdrew 5,250,000 for domestic use

31 closing stock valued at 5,250,000

(9.7 page 102)

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QUESTION 1

CAPITAL

2008 K’000 2008 K’000

Oct 1 Bank 15,750

Oct 1 Cash 5,250

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