3. (a) Manenge Furniture started a business of buying and selling furniture since 1stJanuary, 2010. Quality Furniture has a warehouse in Changombe - Temeke and a shop which is situated at Nyerere Road. Manenge Furniture prepares financial statement on 31stDecember each year.
The following transactions were made during that period:
1.For the year ended 31stDecember, 2010 bad debts written off amounted to sh. 140,000. It was also found necessaryto create an allowance for doubtful debts of sh 260,000.
2.In 2011 debts amounting to sh. 220,000 proved as bad debts and written off.
3.Mangosongo, whose debts of sh. 21,000 were written off as bad debt in 2010, settled his account in full on 30thNovember, 2011.
4.On 31stDecember, 2011 total debts outstanding were sh. 9,200,000. It was decided to bring the provision up to 5% on this figure at that date.
5.In year 2012, sh. 380,000 of debts was written off during the year, and another recovery of sh. 320,000 was made in respect of debts written off in 2010. As at 31stDecember, 2012 total debts outstanding were sh. 7,200,000. The allowance of doubtful debts is to be charged to 60% of this figure.
Using the information above prepare:
(i)Bad debt accounts for the years ending 31stDecember, 2010, 2011 and 2012.
(ii)Bad debts recovered account for the year concerned. (iii) Allowance for doubtful debts account for the years 2010, 2911 and 2012.
(b) Three of the accounts in the ledger of F Mangula indicated the following balance at 1stJanuary 2013:
Transactions during the year made by F Mangula:
Paid for water bill sh. 203,800 by bank standingorder.
Paid sh. 3,000,000 salaries in cash
Received sh. 520,000 commission, by cheque from the wholesaler.
At 31stDecember, 2013, water bill prepaid was sh. 69,000. On the same day commission receivable in arrears was sh. 21,000 and commission received in advance was sh. 9,000. Salaries accrued amounted to sh 83,800.
From the information given above, prepare:
(i)Water bill, Salaries and Commission Receivable accounts for the year ending 31stDecember, 2013.
(ii)Income Statement (extract) for the year ending 31stDecember, 2013.
4.Royal Company Ltd. purchased 40,000 6% Government Stock at 94 plus brokerage charges of sh. 400 on 1stApril, 2006 at Cum div. Interest is receivable on 31stDecember and 30thJune each year.
The company prepares accounts on 31stMarch annually. On 1stAugust purchased 25,000 nominal value stocks at 92 ex div. and brokerage charges sh. 250. On 1stFebruary, 2007 sold 15,000 nominal value stocks at 102 cum div. and brokerage charges sh. 150. On 30thApril, 2007 sold 40,000 nominal value stocks at 97 ex div. Brokerage charge paid sh. 520.
Using the details above, prepare the Investment Account on 31stMarch, 2007 and 2008 valuing closing stock by using LIFO Method.
(b) Singanane and Company Ltd in Tabora invoiced goods to Dodoma Branch at cost plus 25%. All branch expenses are paid by Head Office, and the branch sells goods on credit and cash. Cash collected by branch has to be remitted immediately to the Head Office cash account.
During the year 2009 the following transactions were made:
Using the details above prepare:
(i)Branch stock account
(ii)Goods sent to branch account
(iii)Branch stock adjustment account for the year 2010.
7.(a) A company maintains its non-current assets at cost. Depreciation provision accounts for each asset are kept.
At 31stDecember, 2013 the position was as follows:
The following additions were made during the financial year ending 31stDecember, 2013:
Machinery sh. 160, 000 office furniture sh. 4,600
A machine bought in 2009 for sh. 16,000 was sold for sh. 3, 600 during the year.
The rates of depreciation are:
Machinery 20 per cent and office furniture 10 per cent per annum. Using the straight line basis, depreciation was calculated on the assets in existence at the end of each financial year irrespective of the date of purchases.
Using the information above, show the asset and depreciation accounts for the year ending 31stDecember, 2013 and the Statement of Financial Position entries at that date.