TEST CODE 001092

FORM TP 2132

JANUARY 2001

C AR I B B E AN E X AM I N AT I O N S C O U N C I L
E X AM I N AT I O N
PRINCIPLES OF ACCOUNTS
Paper 02 General Proficiency
3 hours
05 JANUARY 2001 (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.

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO

Copyright 2000 Caribbean Examinations Council.
All rights reserved.
001092/JANUARY/F 2001

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

(a)

State which book of Original Entry would be used to record the following
transactions:
1)
2)
3)
4)
5)

(b)

Purchase of goods on credit

Sale of motor vehicle on credit
Allowance given to a customer whose goods were damaged in transit
Cash discount received
Return of fixtures purchased (incorrect order)
(5 marks)

From the following balances, prepare a Trading and Profit and Loss Account for
Smiths Auto for the year ending 31st October, 2000:
$
Stock (31.10.99)
2 150
Purchases
23 602
Rent
1 300
Stock (31.10.2000)
2 460
Interest on loan
250
New building
11 000
Sales
34 400
Purchases returns
650
Sales returns
1 009
Electricity
420
Advertising
610
Plant hire
400
Drawings
3 100
Discount allowed
552
Interest received
400
Printing and stationery
216
Carriage inwards
85
Subscriptions paid
100
Carriage outwards
419

NOTE:
1)
The loan ($5 000) bears interest at 10% per annum. Payments are due 31 st
October.
2)
The rent includes $300 for quarter ending 30.11.2000.
3)
Electricity does not include an accrual of $58.
4)
Subscriptions include $30 paid in advance.
5)
The interest received is for 15 months ending 31st January 2001.
(11 marks)
(c)

Use Ledger accounts to show how the following four accounts from the list in (b) would
be closed. (Include adjustments.)
1)
2)
3)
4)

Purchases
Electricity
New building
Interest received

(4 marks)
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-32.

Al Ramsingh extracted a Trial Balance from his ledgers at the close of business on 31 st
January, 2000. The trial balance totals failed to agree. In early February, Ramsingh
found the following errors:
1)

Telephone had been undercast by $200.

2)

A cheque paid to Dixon for $268 had been posted to the credit of his account.

3)

Discounts received in the amount of $216 had been posted to the debit of the
discounts allowed account as $162.

4)

Commission paid in the amount of $2 400 had been posted to the credit of the
commissions received account.

5)

Goods valued at $168, which were returned by Beverly Clarke to Ramsingh, had
been completely omitted from the books.
(a)

(i)

Prepare the journal entries to correct the errors. (Include

narrations.)

(10

marks)
(ii)

Prepare a suspense account showing clearly the original trial

balance error.
(5

marks)
(b)
each of
example
(5 marks)

The net profit BEFORE the errors were corrected was $35 750. Using
the terms Increase, Decrease, No Effect, state the effect
the errors in (a) would have had on the net profit. Use the
below as a model.

EXAMPLE
Error
Undercast sales

Effect On Net Profit

Decrease

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001092/JANUARY/F 2001
-43.

Marcia owns a small gift shop. She does not keep proper books of account. She supplied
you with the following information for the financial year ending December 30, 2000.
Assets and liabilities at December 30
Stock
Debtors
Creditors
Rent owing
Rates prepaid
Fixtures
Motor vehicles
Cash in hand
Cash at bank

1999
$
680
144
420
148
1 200
16 000
234
1 296

2000
$
820
96
692
1 200
172
1 200
14 000
234
7 514

Her summarized bank account for the year ending December 30, 2000 is as follows:
__________________________BANK ACCOUNT__________________________

$
Balance
Cash sales (paid into bank)

1 296

Payments to creditors

104 000
Receipts from debtors

Rent
223
Rates
Insurance
Advertising
Wages
Motor vehicle expenses
Drawings
Balance Dec 30, 2000

_______
105 519

$
56 722
7 200
1 900
1 632
177
4 186
2 643
23 000
7 514
105 519

NOTE: There was no sale or purchase of motor vehicles during the year.
Prepare for Marcia the following:
(a)
(b)
(c)
(d)
(e)

An opening Statement of Affairs

(3 marks)
A Debtors Summary (Control Account) to determine Credit Sales
(2 marks)
A Creditors Summary (Control Account) to determine Credit Purchases
(2 marks)
A Trading and Profit and Loss Account for the year ending 30th December, 2000
(6 marks)
A Balance Sheet (showing Working Capital) as at December 2000
(7 marks)

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001092/JANUARY/F 2001
SECTION II
Answer any TWO questions in this section.
4.

The following balances and other information were taken from the books of Peat
Hendricks Ltd. on November 30, 2000 after the Trading and Profit and Loss Accounts
had been prepared:
100 000 ordinary shares issued at 50c each
30 000 8% preference shares issued at 50c each
Debit
$
Ordinary share capital fully paid
8% Preference share capital fully paid
General reserve
Light and heat owing
Bank
Debtors and creditors
Premises at cost
Net profit for year ended 30.11.2000
Machinery and plant at cost
Provision for depreciation on machinery and plant
Stock
Insurance prepaid
_______

Credit
$
50 000
15 000
2 500
420
4 100
560

2 900
70 000

29 900
25 000
12 500
16 670
410
114 980

114 980

The Directors of Peat Hendricks Ltd. have recommended the following:

1)
2)
3)

A transfer of $5 200 to general reserve

An ordinary dividend of 12%
The payment of the years preference dividend

(a)

Prepare the Profit and Loss Appropriation Account for Peat Hendricks Ltd. for
the year ending November 30, 2000.
(6

(b)

Prepare a balance sheet as at November 30, 2000. (Show working capital.)

(11 marks)

(c)

(i)

marks)

What percentage of the share capital is preference shares? (Show

working.)

(2

marks)
(ii)

Define the term retained earnings. (One short sentence)

(1 mark)

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001092/JANUARY/F 2002
-65.

(a)

The supervisor of Bronx manufacturing provides you with the following report
regarding four workers:
Name of Employee
Sarah
Jill
Maxine
Raji

1)
2)
3)

Hours Worked
44
38
41
35

Workers are expected to work a basic 35 hour week for which they are paid $15
per hour.
Time and a half is paid for hours worked in excess of the basic.
Deductions are made for:
.
Pension Fund
- 3% of gross pay
.
National Insurance -2.5% of gross pay
.
Education Tax
- 2.5% of gross pay
.
Income Tax
- 20% of gross pay AFTER deducting National
Insurance and Pension Fund

Prepare the payroll sheet of Bronx Manufacturing on the form provided.

(b)

(i)

Which of the following are NOT relevant to the preparation of a payroll?

Time cards
Employees address
Tax rate
Employees age
Tax code number

(ii)

(17 marks)

State the main purpose for which the Pension Fund is used.

(2 marks)
(1 mark)

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001092/JANUARY/F 2001
-76.

Alex, Becky, and Chase are in partnership. The capitals they have invested in the
partnership are: $25 000, $20 000 and $10 000 respectively. During the financial year
ending 30th September 2000, the partnership earned a net profit of $21 000. The partners
have agreed to the following:
1)
2)
3)
4)

Interest to be allowed on capital at 15% per annum.

Alex and Chase are to receive salaries of $200 and $300 respectively on a
monthly basis.
Profits are to be shared in the ratio 3:2:1.
No interest is to be charged on drawings.

The partners had the following balances in their current accounts as at 1 st October, 1999:
Alex
Becky
Chase

$3 000 (Credit)
$ 200 (Debit)
$1 500 (Credit)

During the year ending 30th September, 2000 the partners withdrew the following mounts
from the partnership:
Alex
Becky
Chase
(i)

$ 7 000
$ 8 500
$12 000

Show the Appropriation Account for the partnership for the year ending 30 th
September, 2000.

(5

marks)
(ii)
(b)

Prepare the partners Current Accounts for the year ending 30 th September, 2000.
(6 marks)

Mark and Norma are in partnership, sharing profits and losses 3:2 respectively.
Their capital accounts as at 31st March, 2000 were as follows:
Mark
Norma

$50 000
$44 000

On 1st April, 2000, they admitted Orville into the partnership. He paid $30 000 cash into
the partnership, of which $20 000 was for goodwill.

(i)

Show the Journal entry to record Orvilles entry into the partnership on 1 st April,
2002.
(3

(ii)

Prepare the Capital Accounts of EACH of the THREE partners to show the effect
of the goodwill on 1st April, 2000.
(6 marks)

marks)

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001092/JANUARY/F 2001
-87.

The following is a summary of the Receipts and Payments Accounts of the Bridge Town
Cricket Club for the year ending 31st July, 2000.
Bridge Town Cricket Club
________RECEIPTS AND Payments Accounts for the year ending July 31, 2000__
$
$
Cash and bank balances
420 Secretarial expenses
364
Members subscriptions
3 974 Rent
3 500
Sale of barbecue tickets
5 000 Training costs
1 200
Donations
1 000 Barbecue expenses
1 500
Stationery and print
370
______ Balance c/d
3 460
10 394
10 394
The following additional information is also provided:

Equipment
Subscriptions in arrears
Subscriptions in advance
Creditors for stationery and printing

1999
$
2 000
130
25
150

2000
$
1 800
170
83
180

(a)

Calculate the value of the accumulated fund of the Bridge Town Cricket Club as
at August 1, 1999. (Show working)
(4

(b)

Prepare the Subscriptions Account for the year ending 31st July, 2000.

marks)
(4 marks)
(c)

Prepare the Printing and Stationery Account.

(3 marks)

(d)

Prepare an Income and Expenditure Account for The Bridge Town Cricket Club
for the year ending July 31, 2000 together with a Balance Sheet as at that

date.
(9 marks)

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001092/JANUARY/F 2001