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  • 20 Marks

IA – OCT 2022 – L1 – Q1 – Preparation of Financial Statements from Trial Balance

Prepare the Income Statement for the year ended 31/12/2021 and the Statement of Financial Position as at 31/12/2021 for Kolikoli Enterprise using the given trial balance and additional information.

The following trial balance was extracted from the ledger of Kolikoli Enterprise as at 31/12/21.

Dr GH¢000 Cr GH¢000
Buildings at cost 750,000
Plant at cost 350,000
Provision for depreciation as at 1/1/2021 On buildings 100,000
Provision for depreciation as at 1/1/2021 On plant 190,000
Purchases 2,250,000
Sales 3,022,000
Stocks 01-01-2021 250,000
Discounts 40,000 24,000
Returns 11,000 75,000
Wages and salaries 294,000
Bad debts written off 23,000
Other expenses 114,000
Debtors 190,000
Creditors 180,000
Bank and Cash 8,000
Drawings 20,000
Provision for doubtful debts 2,500
Capital 706,500
Total 4,300,000 4,300,000

The following additional information is also made available:
a) Stocks at 31/12/2021 were valued at GH¢210,000
b) Wages and salaries accrued amounted to GH¢4,000
c) Other expenses prepaid amounted to GH¢1,500
d) Provision for doubtful debts is to be made at 2% of debtors at 31/12/2021
e) Depreciation for the year is to be provided as follows:
• Buildings 2% on cost
• Plant 25% reducing balance method

You are required to prepare the following:
i. Income Statement for the year ended 31/12/2021; and
ii. Statement of Financial Position as at 31/12/2021
[20 marks]

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  • 20 Marks

ITA – APR 2023 – L1 – Q1 – Trial Balance and Financial Statements Preparation

Prepare Income Statement and Statement of Financial Position from given trial balance with additional adjustments.

The following trial balance was extracted from the ledger of Adtrack Enterprise as at 31/12/21.

Dr Cr GHe00 GHe00 Motor Vehicle at cost 350,000 700,000 Factory Building at cost 700,000 On Motor Vehicle On Factory Building Purchases and sales 5,250,000 250,000 Stocks 1/1/2022 290,000 290,000 Discounts 190,000 324,000 Returns 31,1,000 274,000 Wages and salaries 654,000 654,000 Bad debts written off 500,000 500,000 Other expenses 450,000 450,000 Debtors and creditors 1,1,900,000 1,1,900,000 Bank and Cash 900,000 900,000 Drawings 560,000 560,000 Provision for doubtful debts 75,500 75,500 Capital 10,057,000 10,057,000 The following additional information is also made available: a) Stocks at 31/12/2022 were valued at GHe $450,000,000$ b) Wages and salaries accrued amounted to GHe $9,560,000$ c) Other expenses prepaid amounted to GHe $1,800,000$ d) Provision for doubtful debts is to be made at $7 %$ of debtors at 31/12/2022 e) The factory plant and machinery was leased under an operating lease for a period of 7 years with a yearly payment of GHe $12,200,000$. This has not been paid for the year ended 31/12/2022. f) Depreciation for the year is to be provided as follows:

  • Factory Building $2 %$ on cost
  • Motor Vehicle $25 %$ reducing balance method

You are required to prepare: i. Income Statement for the year ended 31/12/2022 (10 marks) ii. Statement of Financial Position as at 31/12/2022

(Total: 20 marks)

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  • 20 Marks

CIB GH – INTRODUCTION TO ACCOUNTING – APRIL 2024 – L1 – Q7 – Importance of Management Accounts and Adjustments for Accruals/Prepayments

Explain five reasons for importance of management accounts; two reasons for accruals and prepayments adjustments.

a) The owner of Asprino Ventures, as part of the advice to a newly appointed Accountant said that she should focus on the preparation of the Year-End Financial Statements and not the preparation of Management Accounts. As a Chartered Banker you know that it is important for companies to prepare Management Accounts. You are required to: Explain to the owner of Asprino Ventures with FIVE (5) reasons why Management Accounts are important. (15 marks)

b) Explain TWO (2) reasons why a business entity will make Adjustments for Accruals and Prepayments in preparing its Final Accounts. (5 marks)

[Total: 20 marks]

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  • 40 Marks

FR – May 2021 – L2 – Q1 – Presentation of Financial Statements (IAS 1)

Prepare financial statements from a trial balance, including adjustments for provisions, tax, asset disposals, depreciation, and development costs.

The following is the trial balance of Almajiri Nigeria Limited as at September 30, 2018:

Account Debit (₦’m) Credit (₦’m)
Revenue 60,000
Cost of sales 40,800
Distribution costs 2,900
Administrative expenses 4,440
Interest on bank borrowings 40
Research and development costs 1,720
Leasehold property (at valuation Oct 1, 2017) 10,000
Plant and equipment (at cost) 15,320
Plant and equipment (accum. depr. at Oct 1, 2017) 4,920
Capitalised development expenditure (Oct 1, 2017) 4,000
Development expenditure (accum. amortiz. at Oct 1, 2017) 1,200
Closing inventory (30 Sept 2018) 4,000
Trade receivables 8,620
Bank 260
Trade payables & provisions 4,760
Preference dividend paid 160
Dividend paid on ordinary shares 1,200
Ordinary shares at 25k each 10,000
8% Redeemable preference shares at N1 each (year 2020) 4,000
Retained earnings brought forward 4,900
Deferred tax 1,160
Leasehold property revaluation reserve 2,000
Total 93,200 93,200

Additional information:
(i)
One of the reputable customers of Almajiri Nigeria Limited sued the company for
N
400 million for breach of contract over a cancelled order. Almajiri Nigeria
Limited obtained a legal opinion that there is 20% chance that Almajiri will lose the
case.
Accordingly, it has provided for N
80 million (N
400 million x 20%) included in
administrative expenses in respect of the claim. The unrecoverable legal cost of
defending the action was estimated at N20 million and these have not been
provided for as the legal action will not go to court until next year.
(ii)
The directors of the Company have estimated the provision for income tax for the
year ended September 30, 2018 at N2,280 million. The required deferred tax
provision at September 30, is N
1,200 million.
(iii) The redeemable preference shares were issued on April 1, 2018 at par. They are
redeemable at a large premium which gives them an effective finance cost of 12%
per annum.
(iv) The leasehold property had a remaining life of 20 years at October 1, 2017. The
company‟s policy is to revalue its property at each year end and as at September
30, 2018 it was revalued at N
8,600 million.
(v) On October 1, 2017 an item of plant and equipment was disposed of for N500
million cash. The proceeds have been treated as revenue by the company. The
plant is still included in the company‟s trial balance figure at the cost of N
million and accumulated depreciation of N
1,600
800 million (to date of disposal). All
plants and equipment are depreciated at 20% per annum using reducing balance
method. Depreciation and amortisation of all non-current assets are charged to
cost of sales.
(vi) In addition to capitalised development expenditure of N
4,000 million further
research and development cost were incurred on a new project which commenced
on October 1, 2017. The research stage of the new project lasted until December
31, 2017 and incurred N
280 million costs, from that date the project incurred
development cost of N160 million per month. On April 1, 2018 the directors
became confident that the project would be successful and yield a profit well in
excess of its costs. The project is still in development as at September 30, 2018.

Capitalised development expenditure is amortised at 20% per annum using straight
line method. All expensed research and development expenditure is charged to
cost of sales.

You are required to prepare:
a. Statement of profit or loss and other comprehensive income for the year ended
September 30, 2018.

b. Statement of changes in equity for the year ended September 30, 2018.

c. Statement of movement in property, plant and equipment to be included in
published financial statements.

d. Statement of financial position as at September 30, 2018.

 

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  • 10 Marks

FR – Nov 2020 – L2 – Q2d – Accounting Policies, Changes in Accounting Estimates, and Errors (IAS 8)

Required adjustments for Eko Transport Company’s overstated inventory, dividend error, and omitted share issue.

Eko Transport Company (ETC) Limited is preparing its financial statements for the year ended August 31, 2019. The draft statement of changes in equity is presented as follows:

 

Additional Information:

  1. On January 10, 2020, ETC Limited discovered that inventory was overstated by N105 million as at August 31, 2019, and by N90 million as at August 31, 2018.
  2. There was a transposition error in reporting dividend payments in the statement of changes in equity. The correct figure as at August 31, 2019, was N105 million.
  3. The company income tax rate is 30% in each year.
  4. On August 31, 2019, additional shares of 50,000,000 were issued at N1.25 per share. The par value of ETC Limited shares is N1.00 per share. This was inadvertently omitted in the record.

You are required to prepare:
i. Revised Comparative Income Statements after necessary adjustments for the years ended August 31, 2018, and 2019. (3 Marks)
ii. Adjusted Statement of Changes in Equity as at August 31, 2019. (5 Marks)
iii. The journal entries to correct the errors in (2) and (4) above. (2 Marks)

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FR – May 2020 – L2 – Q3c – Statement of Changes in Equity

Prepare a statement of changes in equity for Badu Trading Ltd, including dividends, revaluation reserves, and retained profits adjustments for the year ending May 31, 2020.

Prepare the following information in a form suitable for publication for Badu Trading Ltd’s financial statements for the year ended 31 May 2020.

c) Statement of changes in equity. (6 marks)

 

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  • 20 Marks

FA – Nov 2015 – L1 – SB – Q2 – Bank Reconciliation

Preparing an adjusted cash book and bank reconciliation for a club with discrepancies.

a. Bank Statement is a mirror of any entity’s cash book, and they are expected to have equal balances at any point in time. However, this is not usually the case. Based on the ongoing statement, state five reasons that could cause the bank statement balance to differ from the cash book balance. (5 Marks)

b. The Treasurer of Young Star Social Club (YSSC) did not keep proper records for receipts and payments for the month of December 2014, causing mistrust among members. He has decided to seek your assistance to prepare a bank reconciliation statement before presenting the account to the club members.

The bank statement and the receipts and payments cash book of the club on December 31, 2014, showed a credit balance of N205,000 and N2,078,000, respectively. A comparison of the bank statement with the receipts and payment cash book of the club revealed the following:

i. Cheque drawn but not presented N3,160,000
ii. Amount lodged in the bank but not credited N725,000
iii. Entries in bank statement not recorded in receipts and payments cash book:

  • Standing order for loan refund N35,000
  • Interest received on deposit account N18,000
  • Bank charges N15,000
  • Cheque paid-in but returned with “refer to drawer” N120,000

Required:
i. Prepare an adjusted cash book as at December 31, 2014; (8 Marks)
ii. Prepare the Bank Reconciliation Statement showing the balance on December 31, 2014. (7 Marks)

(Total 20 Marks)

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  • 1 Marks

FA – Nov 2015 – L1 – SA – Q5 – Financial Statements Preparation

The question identifies the term for an extended trial balance that incorporates adjustments.

The extension of a trial balance to incorporate details of accounting adjustments, in order to arrive at the final trial balance for the preparation of statement of profit or loss and statement of financial position is referred to as:
A. Extension summary sheet
B. Spread sheet analysis
C. Extended Accounts balances lists
D. Extended trial balance
E. Extended balance sheet

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  • 20 Marks

FA – Nov 2021 – L1 – SB – Q3 – Trial Balance

This question involves preparing financial statements based on a given trial balance and additional adjustments.

The following balances remained in the books of Chukwu Limited as at December 31, 2020:

Accounts ₦’000
200,000,000 ordinary shares of N1 each 200,000
Cash at bank and in hand 500
Inventory (December 31, 2020) 61,200
Receivables 18,005
Payables 15,009
Gross profit 128,942
General reserves 25,000
Salaries and wages 28,430
Prepayments 600
Bad debts written off 500
Accrued expenses 526
Director’s account (Credit) 2,500
Interest on loan notes (half year) 600
Sundry expenses 4,100
Rates and insurance 1,520
6% loan notes 20,000
Lighting and cooling 1,310
Postage and telephones 800
Motor vehicles (Cost ₦25,000,000) 25,000
Office fittings and equipment (Cost ₦65,500,000) 42,350
Provision for depreciation – Motor vehicles 10,000
Provision for depreciation – Office fittings & equipment 23,150
Profit or loss (January 1, 2020) (Credit) 22,300
Land and buildings (Cost) 239,362

Additional Information:

  1. Office fittings and equipment are to be depreciated at 15% on cost, and motor vehicles at 20% of cost.
  2. Provisions are to be made for:
    • Directors’ fees of N6,000,000
    • Audit fees of N2,500,000
  3. The amount for insurance includes a premium of ₦600,000 paid in September 2020 to cover fire loss for the period September 1, 2020, to August 31, 2021.
  4. A bill for N548,000 in respect of electricity consumed up to December 31, 2020, has not been accounted for.
  5. The directors have recommended:
    • N15,000,000 be transferred to general reserves
    • A 5% dividend on ordinary share capital

You are required to prepare:
a. The trial balance of Chukwu Limited at December 31, 2020. (6 Marks)
b. The statement of profit or loss for the year ended December 31, 2020. (8 Marks)
c. The statement of financial position as at December 31, 2020. (6 Marks)
Note: Ignore taxation.

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  • 1 Marks

FA – Nov 2022 – L1 – SA – Q15 – Bank Reconciliation

Identify the bank statement item that should not be adjusted in the cash book balance.

Which of the following bank statement items should NOT be added or subtracted from the cash book balance to determine the adjusted bank balance?
A. Bank service charges
B. Unpresented cheques
C. Direct transfer
D. Cash book error
E. Value added tax

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  • 20 Marks

IA – OCT 2022 – L1 – Q1 – Preparation of Financial Statements from Trial Balance

Prepare the Income Statement for the year ended 31/12/2021 and the Statement of Financial Position as at 31/12/2021 for Kolikoli Enterprise using the given trial balance and additional information.

The following trial balance was extracted from the ledger of Kolikoli Enterprise as at 31/12/21.

Dr GH¢000 Cr GH¢000
Buildings at cost 750,000
Plant at cost 350,000
Provision for depreciation as at 1/1/2021 On buildings 100,000
Provision for depreciation as at 1/1/2021 On plant 190,000
Purchases 2,250,000
Sales 3,022,000
Stocks 01-01-2021 250,000
Discounts 40,000 24,000
Returns 11,000 75,000
Wages and salaries 294,000
Bad debts written off 23,000
Other expenses 114,000
Debtors 190,000
Creditors 180,000
Bank and Cash 8,000
Drawings 20,000
Provision for doubtful debts 2,500
Capital 706,500
Total 4,300,000 4,300,000

The following additional information is also made available:
a) Stocks at 31/12/2021 were valued at GH¢210,000
b) Wages and salaries accrued amounted to GH¢4,000
c) Other expenses prepaid amounted to GH¢1,500
d) Provision for doubtful debts is to be made at 2% of debtors at 31/12/2021
e) Depreciation for the year is to be provided as follows:
• Buildings 2% on cost
• Plant 25% reducing balance method

You are required to prepare the following:
i. Income Statement for the year ended 31/12/2021; and
ii. Statement of Financial Position as at 31/12/2021
[20 marks]

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  • 20 Marks

ITA – APR 2023 – L1 – Q1 – Trial Balance and Financial Statements Preparation

Prepare Income Statement and Statement of Financial Position from given trial balance with additional adjustments.

The following trial balance was extracted from the ledger of Adtrack Enterprise as at 31/12/21.

Dr Cr GHe00 GHe00 Motor Vehicle at cost 350,000 700,000 Factory Building at cost 700,000 On Motor Vehicle On Factory Building Purchases and sales 5,250,000 250,000 Stocks 1/1/2022 290,000 290,000 Discounts 190,000 324,000 Returns 31,1,000 274,000 Wages and salaries 654,000 654,000 Bad debts written off 500,000 500,000 Other expenses 450,000 450,000 Debtors and creditors 1,1,900,000 1,1,900,000 Bank and Cash 900,000 900,000 Drawings 560,000 560,000 Provision for doubtful debts 75,500 75,500 Capital 10,057,000 10,057,000 The following additional information is also made available: a) Stocks at 31/12/2022 were valued at GHe $450,000,000$ b) Wages and salaries accrued amounted to GHe $9,560,000$ c) Other expenses prepaid amounted to GHe $1,800,000$ d) Provision for doubtful debts is to be made at $7 %$ of debtors at 31/12/2022 e) The factory plant and machinery was leased under an operating lease for a period of 7 years with a yearly payment of GHe $12,200,000$. This has not been paid for the year ended 31/12/2022. f) Depreciation for the year is to be provided as follows:

  • Factory Building $2 %$ on cost
  • Motor Vehicle $25 %$ reducing balance method

You are required to prepare: i. Income Statement for the year ended 31/12/2022 (10 marks) ii. Statement of Financial Position as at 31/12/2022

(Total: 20 marks)

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  • 20 Marks

CIB GH – INTRODUCTION TO ACCOUNTING – APRIL 2024 – L1 – Q7 – Importance of Management Accounts and Adjustments for Accruals/Prepayments

Explain five reasons for importance of management accounts; two reasons for accruals and prepayments adjustments.

a) The owner of Asprino Ventures, as part of the advice to a newly appointed Accountant said that she should focus on the preparation of the Year-End Financial Statements and not the preparation of Management Accounts. As a Chartered Banker you know that it is important for companies to prepare Management Accounts. You are required to: Explain to the owner of Asprino Ventures with FIVE (5) reasons why Management Accounts are important. (15 marks)

b) Explain TWO (2) reasons why a business entity will make Adjustments for Accruals and Prepayments in preparing its Final Accounts. (5 marks)

[Total: 20 marks]

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  • 40 Marks

FR – May 2021 – L2 – Q1 – Presentation of Financial Statements (IAS 1)

Prepare financial statements from a trial balance, including adjustments for provisions, tax, asset disposals, depreciation, and development costs.

The following is the trial balance of Almajiri Nigeria Limited as at September 30, 2018:

Account Debit (₦’m) Credit (₦’m)
Revenue 60,000
Cost of sales 40,800
Distribution costs 2,900
Administrative expenses 4,440
Interest on bank borrowings 40
Research and development costs 1,720
Leasehold property (at valuation Oct 1, 2017) 10,000
Plant and equipment (at cost) 15,320
Plant and equipment (accum. depr. at Oct 1, 2017) 4,920
Capitalised development expenditure (Oct 1, 2017) 4,000
Development expenditure (accum. amortiz. at Oct 1, 2017) 1,200
Closing inventory (30 Sept 2018) 4,000
Trade receivables 8,620
Bank 260
Trade payables & provisions 4,760
Preference dividend paid 160
Dividend paid on ordinary shares 1,200
Ordinary shares at 25k each 10,000
8% Redeemable preference shares at N1 each (year 2020) 4,000
Retained earnings brought forward 4,900
Deferred tax 1,160
Leasehold property revaluation reserve 2,000
Total 93,200 93,200

Additional information:
(i)
One of the reputable customers of Almajiri Nigeria Limited sued the company for
N
400 million for breach of contract over a cancelled order. Almajiri Nigeria
Limited obtained a legal opinion that there is 20% chance that Almajiri will lose the
case.
Accordingly, it has provided for N
80 million (N
400 million x 20%) included in
administrative expenses in respect of the claim. The unrecoverable legal cost of
defending the action was estimated at N20 million and these have not been
provided for as the legal action will not go to court until next year.
(ii)
The directors of the Company have estimated the provision for income tax for the
year ended September 30, 2018 at N2,280 million. The required deferred tax
provision at September 30, is N
1,200 million.
(iii) The redeemable preference shares were issued on April 1, 2018 at par. They are
redeemable at a large premium which gives them an effective finance cost of 12%
per annum.
(iv) The leasehold property had a remaining life of 20 years at October 1, 2017. The
company‟s policy is to revalue its property at each year end and as at September
30, 2018 it was revalued at N
8,600 million.
(v) On October 1, 2017 an item of plant and equipment was disposed of for N500
million cash. The proceeds have been treated as revenue by the company. The
plant is still included in the company‟s trial balance figure at the cost of N
million and accumulated depreciation of N
1,600
800 million (to date of disposal). All
plants and equipment are depreciated at 20% per annum using reducing balance
method. Depreciation and amortisation of all non-current assets are charged to
cost of sales.
(vi) In addition to capitalised development expenditure of N
4,000 million further
research and development cost were incurred on a new project which commenced
on October 1, 2017. The research stage of the new project lasted until December
31, 2017 and incurred N
280 million costs, from that date the project incurred
development cost of N160 million per month. On April 1, 2018 the directors
became confident that the project would be successful and yield a profit well in
excess of its costs. The project is still in development as at September 30, 2018.

Capitalised development expenditure is amortised at 20% per annum using straight
line method. All expensed research and development expenditure is charged to
cost of sales.

You are required to prepare:
a. Statement of profit or loss and other comprehensive income for the year ended
September 30, 2018.

b. Statement of changes in equity for the year ended September 30, 2018.

c. Statement of movement in property, plant and equipment to be included in
published financial statements.

d. Statement of financial position as at September 30, 2018.

 

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  • 10 Marks

FR – Nov 2020 – L2 – Q2d – Accounting Policies, Changes in Accounting Estimates, and Errors (IAS 8)

Required adjustments for Eko Transport Company’s overstated inventory, dividend error, and omitted share issue.

Eko Transport Company (ETC) Limited is preparing its financial statements for the year ended August 31, 2019. The draft statement of changes in equity is presented as follows:

 

Additional Information:

  1. On January 10, 2020, ETC Limited discovered that inventory was overstated by N105 million as at August 31, 2019, and by N90 million as at August 31, 2018.
  2. There was a transposition error in reporting dividend payments in the statement of changes in equity. The correct figure as at August 31, 2019, was N105 million.
  3. The company income tax rate is 30% in each year.
  4. On August 31, 2019, additional shares of 50,000,000 were issued at N1.25 per share. The par value of ETC Limited shares is N1.00 per share. This was inadvertently omitted in the record.

You are required to prepare:
i. Revised Comparative Income Statements after necessary adjustments for the years ended August 31, 2018, and 2019. (3 Marks)
ii. Adjusted Statement of Changes in Equity as at August 31, 2019. (5 Marks)
iii. The journal entries to correct the errors in (2) and (4) above. (2 Marks)

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FR – May 2020 – L2 – Q3c – Statement of Changes in Equity

Prepare a statement of changes in equity for Badu Trading Ltd, including dividends, revaluation reserves, and retained profits adjustments for the year ending May 31, 2020.

Prepare the following information in a form suitable for publication for Badu Trading Ltd’s financial statements for the year ended 31 May 2020.

c) Statement of changes in equity. (6 marks)

 

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  • 20 Marks

FA – Nov 2015 – L1 – SB – Q2 – Bank Reconciliation

Preparing an adjusted cash book and bank reconciliation for a club with discrepancies.

a. Bank Statement is a mirror of any entity’s cash book, and they are expected to have equal balances at any point in time. However, this is not usually the case. Based on the ongoing statement, state five reasons that could cause the bank statement balance to differ from the cash book balance. (5 Marks)

b. The Treasurer of Young Star Social Club (YSSC) did not keep proper records for receipts and payments for the month of December 2014, causing mistrust among members. He has decided to seek your assistance to prepare a bank reconciliation statement before presenting the account to the club members.

The bank statement and the receipts and payments cash book of the club on December 31, 2014, showed a credit balance of N205,000 and N2,078,000, respectively. A comparison of the bank statement with the receipts and payment cash book of the club revealed the following:

i. Cheque drawn but not presented N3,160,000
ii. Amount lodged in the bank but not credited N725,000
iii. Entries in bank statement not recorded in receipts and payments cash book:

  • Standing order for loan refund N35,000
  • Interest received on deposit account N18,000
  • Bank charges N15,000
  • Cheque paid-in but returned with “refer to drawer” N120,000

Required:
i. Prepare an adjusted cash book as at December 31, 2014; (8 Marks)
ii. Prepare the Bank Reconciliation Statement showing the balance on December 31, 2014. (7 Marks)

(Total 20 Marks)

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  • 1 Marks

FA – Nov 2015 – L1 – SA – Q5 – Financial Statements Preparation

The question identifies the term for an extended trial balance that incorporates adjustments.

The extension of a trial balance to incorporate details of accounting adjustments, in order to arrive at the final trial balance for the preparation of statement of profit or loss and statement of financial position is referred to as:
A. Extension summary sheet
B. Spread sheet analysis
C. Extended Accounts balances lists
D. Extended trial balance
E. Extended balance sheet

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  • 20 Marks

FA – Nov 2021 – L1 – SB – Q3 – Trial Balance

This question involves preparing financial statements based on a given trial balance and additional adjustments.

The following balances remained in the books of Chukwu Limited as at December 31, 2020:

Accounts ₦’000
200,000,000 ordinary shares of N1 each 200,000
Cash at bank and in hand 500
Inventory (December 31, 2020) 61,200
Receivables 18,005
Payables 15,009
Gross profit 128,942
General reserves 25,000
Salaries and wages 28,430
Prepayments 600
Bad debts written off 500
Accrued expenses 526
Director’s account (Credit) 2,500
Interest on loan notes (half year) 600
Sundry expenses 4,100
Rates and insurance 1,520
6% loan notes 20,000
Lighting and cooling 1,310
Postage and telephones 800
Motor vehicles (Cost ₦25,000,000) 25,000
Office fittings and equipment (Cost ₦65,500,000) 42,350
Provision for depreciation – Motor vehicles 10,000
Provision for depreciation – Office fittings & equipment 23,150
Profit or loss (January 1, 2020) (Credit) 22,300
Land and buildings (Cost) 239,362

Additional Information:

  1. Office fittings and equipment are to be depreciated at 15% on cost, and motor vehicles at 20% of cost.
  2. Provisions are to be made for:
    • Directors’ fees of N6,000,000
    • Audit fees of N2,500,000
  3. The amount for insurance includes a premium of ₦600,000 paid in September 2020 to cover fire loss for the period September 1, 2020, to August 31, 2021.
  4. A bill for N548,000 in respect of electricity consumed up to December 31, 2020, has not been accounted for.
  5. The directors have recommended:
    • N15,000,000 be transferred to general reserves
    • A 5% dividend on ordinary share capital

You are required to prepare:
a. The trial balance of Chukwu Limited at December 31, 2020. (6 Marks)
b. The statement of profit or loss for the year ended December 31, 2020. (8 Marks)
c. The statement of financial position as at December 31, 2020. (6 Marks)
Note: Ignore taxation.

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  • 1 Marks

FA – Nov 2022 – L1 – SA – Q15 – Bank Reconciliation

Identify the bank statement item that should not be adjusted in the cash book balance.

Which of the following bank statement items should NOT be added or subtracted from the cash book balance to determine the adjusted bank balance?
A. Bank service charges
B. Unpresented cheques
C. Direct transfer
D. Cash book error
E. Value added tax

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