Multiple Transactions

FA – Nov 2021 – L1 – SB – Q2 – Partnership Account

This question involves partnership accounting with a new partner's admission, requiring the preparation of the profit or loss appropriation account and partners' current accounts.

Question

Bala and Ade had been together in partnership for several years in plastic manufacturing, sharing profits and losses in the ratio of 3:2 after charging salaries of N3,000,000 p.a. each.

On September 1, 2020, Ngozi was admitted into the partnership on the following terms:

That she paid N2,800,000 to the partnership as her capital contributions; and
She would be entitled to a salary of N2,700,000 per annum and a 20% share of profits after charging all salaries.

Bala and Ade are to continue their old profit sharing ratios and Ngozi’s 20% share of profits is guaranteed at a minimum of N1,500,000 per annum by the old partners.

On December 31, 2020, the following balances were extracted from the partnership books of Bala, Ade, and Ngozi:

Accounts	N’000
Capital Accounts:
Bala	28,000
Ade	18,000
Current Accounts:
Bala	4,800
Ade	2,000
Ngozi	2,800
Revenue	272,000
Purchases	190,000
Wages	20,000
Salaries	25,000
General Expenses	10,000
Plant and Machinery	25,000
Motor Vehicles	15,000
Receivables	20,000
Telephone Expenses	3,750
Payables	24,350
Inventory January 1, 2020	15,000
Allowances for Bad Debts	1,500
Bank Balance	17,100
Drawings:
Bala	6,600
Ade	5,000
Ngozi	1,000

Additional information:

Allowances for doubtful debts should be maintained at 5% of receivables.
Inventory at December 31, 2020, was valued at N12,000,000.
Depreciation on plant and machinery is 20% per annum and on motor vehicles is 25% per annum.

You are required to: a. Prepare the statement of profit or loss and appropriation account for the year ended December 31, 2020, accounting for Ngozi on a pro-rata time basis. (12 Marks)
b. Prepare the partners’ current account for the same period. (8 Marks)

Answer

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Tags: Capital Contributions, Multiple Transactions, Partnership Accounting, Profit Sharing
Level: Level 1

Topic: Partnership Accounts (Including Profit Sharing, Capital and Current Accounts)
Series: NOV 2021

FA – Nov 2021 – L1 – SB – Q1 – Bank Reconciliation

The question asks for the preparation of an adjusted cash book and a bank reconciliation statement and requires an explanation of the need for regular reconciliation.

Question

On April 6, 2020, Alhaji Mogaji received his bank statement for the month ended March 31, 2020. The bank statement showed a balance of N41,740,000 (overdraft) as at March 31, while the cash book showed a balance of N52,599,000 (credit) as at that date. On examination of the cash book and the bank statement the following were discovered:

Bank charges of N201,000 had not been recorded in the cash book.
Alhaji Mogaji exceeded his overdraft limit during the month of March. The bank had therefore charged him a default penalty of N250,000. This was not reflected in the cash book.
A sum of N1,250,000 had been credited to Alhaji Mogaji’s bank account in error.
A cheque for N1,230,000 had been returned by the bank as dishonoured. In effect, the bank charged Alhaji Mogaji N15,000, which was not reflected in the cash book.
Cash receipts of N3,740,000 were posted as cash payments of N4,730,000 in the cash book.
On March 21, Alhaji Mogaji transferred cash of N650,000 to his personal bank account, but this was credited to the business bank account in error by the bank.
Standing orders and direct debits of N1,115,000 had not been posted to the cash book.
Customers had transferred N2,170,000 directly to the bank account. The credit alert was received, but no record had been made in the cash book.
An amount of N5,120,000 lodged to the bank account on March 31, 2020, had not been credited by the bank.
The following cheques drawn on the bank account had not been presented for payment as at March 31, 2020:

Cheque No: 4528, March 11, 2020, for N840,000
Cheque No: 4535, March 28, 2020, for N1,740,000
Cheque No: 4537, March 31, 2020, for N3,670,000

You are required to:
a. Prepare the adjusted cash book for the month of March 2020. (9 Marks)
b. Prepare a statement on March 31, 2020, reconciling the bank statement balance with the adjusted cash book balance. (7 Marks)
c. Explain TWO reasons for preparing a bank reconciliation statement on a regular basis. (4 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Adjusted Cash Book, Bank Reconciliation, Errors, Multiple Transactions
Level: Level 1

Topic: Bank reconciliations
Series: NOV 2021

FA – Nov 2021 – L1 – SB – Q2 – Partnership Account

This question involves partnership accounting with a new partner's admission, requiring the preparation of the profit or loss appropriation account and partners' current accounts.

Question

Bala and Ade had been together in partnership for several years in plastic manufacturing, sharing profits and losses in the ratio of 3:2 after charging salaries of N3,000,000 p.a. each.

On September 1, 2020, Ngozi was admitted into the partnership on the following terms:

That she paid N2,800,000 to the partnership as her capital contributions; and
She would be entitled to a salary of N2,700,000 per annum and a 20% share of profits after charging all salaries.

Bala and Ade are to continue their old profit sharing ratios and Ngozi’s 20% share of profits is guaranteed at a minimum of N1,500,000 per annum by the old partners.

On December 31, 2020, the following balances were extracted from the partnership books of Bala, Ade, and Ngozi:

Accounts	N’000
Capital Accounts:
Bala	28,000
Ade	18,000
Current Accounts:
Bala	4,800
Ade	2,000
Ngozi	2,800
Revenue	272,000
Purchases	190,000
Wages	20,000
Salaries	25,000
General Expenses	10,000
Plant and Machinery	25,000
Motor Vehicles	15,000
Receivables	20,000
Telephone Expenses	3,750
Payables	24,350
Inventory January 1, 2020	15,000
Allowances for Bad Debts	1,500
Bank Balance	17,100
Drawings:
Bala	6,600
Ade	5,000
Ngozi	1,000

Additional information:

Allowances for doubtful debts should be maintained at 5% of receivables.
Inventory at December 31, 2020, was valued at N12,000,000.
Depreciation on plant and machinery is 20% per annum and on motor vehicles is 25% per annum.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Capital Contributions, Multiple Transactions, Partnership Accounting, Profit Sharing
Level: Level 1

Topic: Partnership Accounts (Including Profit Sharing, Capital and Current Accounts)
Series: NOV 2021

FA – Nov 2021 – L1 – SB – Q1 – Bank Reconciliation

The question asks for the preparation of an adjusted cash book and a bank reconciliation statement and requires an explanation of the need for regular reconciliation.

Question

Bank charges of N201,000 had not been recorded in the cash book.
Alhaji Mogaji exceeded his overdraft limit during the month of March. The bank had therefore charged him a default penalty of N250,000. This was not reflected in the cash book.
A sum of N1,250,000 had been credited to Alhaji Mogaji’s bank account in error.
A cheque for N1,230,000 had been returned by the bank as dishonoured. In effect, the bank charged Alhaji Mogaji N15,000, which was not reflected in the cash book.
Cash receipts of N3,740,000 were posted as cash payments of N4,730,000 in the cash book.
On March 21, Alhaji Mogaji transferred cash of N650,000 to his personal bank account, but this was credited to the business bank account in error by the bank.
Standing orders and direct debits of N1,115,000 had not been posted to the cash book.
Customers had transferred N2,170,000 directly to the bank account. The credit alert was received, but no record had been made in the cash book.
An amount of N5,120,000 lodged to the bank account on March 31, 2020, had not been credited by the bank.
The following cheques drawn on the bank account had not been presented for payment as at March 31, 2020:

Cheque No: 4528, March 11, 2020, for N840,000
Cheque No: 4535, March 28, 2020, for N1,740,000
Cheque No: 4537, March 31, 2020, for N3,670,000

Answer

Find Related Questions by Tags, levels, etc.

Tags: Adjusted Cash Book, Bank Reconciliation, Errors, Multiple Transactions
Level: Level 1

Topic: Bank reconciliations
Series: NOV 2021

Question Tag: Multiple Transactions

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FA – Nov 2021 – L1 – SB – Q2 – Partnership Account

This question involves partnership accounting with a new partner's admission, requiring the preparation of the profit or loss appropriation account and partners' current accounts.

FA – Nov 2021 – L1 – SB – Q1 – Bank Reconciliation

The question asks for the preparation of an adjusted cash book and a bank reconciliation statement and requires an explanation of the need for regular reconciliation.

FA – Nov 2021 – L1 – SB – Q2 – Partnership Account

This question involves partnership accounting with a new partner's admission, requiring the preparation of the profit or loss appropriation account and partners' current accounts.

FA – Nov 2021 – L1 – SB – Q1 – Bank Reconciliation

The question asks for the preparation of an adjusted cash book and a bank reconciliation statement and requires an explanation of the need for regular reconciliation.

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FA – Nov 2021 – L1 – SB – Q2 – Partnership Account

This question involves partnership accounting with a new partner's admission, requiring the preparation of the profit or loss appropriation account and partners' current accounts.

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FA – Nov 2021 – L1 – SB – Q1 – Bank Reconciliation

The question asks for the preparation of an adjusted cash book and a bank reconciliation statement and requires an explanation of the need for regular reconciliation.

You're reporting an error for "FA – Nov 2021 – L1 – SB – Q1 – Bank Reconciliation"

FA – Nov 2021 – L1 – SB – Q2 – Partnership Account

This question involves partnership accounting with a new partner's admission, requiring the preparation of the profit or loss appropriation account and partners' current accounts.

You're reporting an error for "FA – Nov 2021 – L1 – SB – Q2 – Partnership Account"

FA – Nov 2021 – L1 – SB – Q1 – Bank Reconciliation

The question asks for the preparation of an adjusted cash book and a bank reconciliation statement and requires an explanation of the need for regular reconciliation.

You're reporting an error for "FA – Nov 2021 – L1 – SB – Q1 – Bank Reconciliation"

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