Kumawu District Assembly revalues its buildings and decides to incorporate the revaluation into the financial statements. The following information has been made available:
a) Extract from the statement of financial position at 31 December 2023
Buildings at cost
GHc’000
Buildings at cost
300,000
Accumulated Depreciation
(93,000)
Carrying amount
207,000
b) Depreciation has been provided at 2% per annum on a straight-line method.
c) The building is revalued at 30 June 2024 at GHc276 million. There has been no change in the remaining estimated future life of the buildings.
Required:
Show the relevant extracts from the financial statements at 31 December 2024.
Kwame Ansah is a vehicle spare parts dealer in Kumawu. He pays into his bank account the amount of his cash takings after keeping an amount of GH¢2,000 per week for personal use and after payment of wages and other expenses, which for the accounting period ending 31st December 20X9, were as follows:
Expenses
GH¢
Staff wages
1,440
Goods
120,580
Cleaning
1,200
Carriage
600
Sundry
5,000
The following are his bank transactions:
Bank Transactions
GH¢
Income tax
3,000
Telephone
650
Bank lodgements
15,000
Cash sales
6,000
Bulk sales (cheques)
10,000
Treasury bill interest
5,000
Payments to suppliers
15,000
Rent
11,000
Electricity
650
Balance as at 1st January 20X9
6,000
The following additional information was also provided:
Assets and Liabilities
01/01/20X9 (GH¢)
31/12/20X9 (GH¢)
Furniture & fittings
1,200
1,200
Stocks in trade
10,500
7,650
Payables – Goods purchased
1,670
2,750
Payables – Rent
5,000
6,000
Payables – Electricity
500
650
Payables – Telephone
150
200
Payables – Accountancy fee
–
750
Treasury bills
10,000
15,000
Receivables – Bulk sales
8,000
15,000
Required:
(i) Prepare statement of profit or loss for the year ending 31st December 20X9. (10 marks)
(ii) Prepare statement of affairs as at 1st January 20X9. (2 marks)
(iii) Prepare statement of financial position as at 31st December 20X9. (8 marks)
Kofi is in business but does not keep proper books of account. In order to prepare his income and expenditure account for the year ended 31 December 20X9 you are given the following information.
| | 1 Jan 20X9 | 31 Dec 20X9 | | | GH¢000 | GH¢000 | | Inventory on hand | 1,310 | 1,623 | | Receivables | 268 | 412 | | Payables for goods | 712 | 914 | | Payables for expenses | 116 | 103 |
In addition you are able to prepare the following summary of his cash and bank transactions for the year.
In addition Kofi says that he had taken goods for personal consumption and estimates that those goods cost GH¢100,000.
In considering accounts receivable Kofi suggests that a provision is to be made of 5% of amounts due after writing off a specific irrecoverable debt of GH¢30,000.
Depreciation on the delivery van is to be recognised at 20% per annum.
Required:
Prepare the statement of profit or loss and a statement of financial position at 31 December 20X9.
Kofi Mensah retired from his employment abroad and returned to this country, where he purchased a small kiosk.
He took over the business on 1 July 20X8, acquiring the existing inventory at a valuation of GH¢1,142,000. The rest of the purchase price was apportioned as to GH¢1,500,000 for fixtures and fittings and the balance for goodwill.
The following day he acquired a second-hand computer and accounts package at a price of GH¢80,000. Unfortunately, Kofi Mensah made an error when printing his year-end accounts causing him to lose all data except for printed a summary listing of payments from the till. Other than this, the only records available were his bank statements and a number of vouchers. Surplus cash was banked during the year.
A summary of his bank account for the year ended 30 June 20X9 shows the following.
Receipts
GH¢000
Payments
GH¢000
Cash introduced
5,000
Purchase of business
3,192
Bankings from shop
16,427
Purchase of accounts computer
80
Loan from mother (long-term) (interest at 5% pa)
1,000
Rent (15 months to 30 September 20X9)
500
Rates (9 months to 31 March 20X9)
84
Electricity
92
Purchases for resale
14,700
Private cheques
1,122
Balance 30 June 20X9
2,657
22,427
22,427
The computer print-out was as follows.
GH¢000
Cash purchases for resale
1,606
Staff wages
742
Sundry shop expenses
156
Cash drawings
520
On 30 June 20X9 inventory, measured at cost, amounted to GH¢1,542,000, amounts due from customers GH¢74,000, and cash in hand amounted to GH¢54,000. Depreciation is to be recognised on fixtures and fittings at a rate of 10%.
Accounts outstanding on 30 June 20X9 were purchases of GH¢470,000 and rates of GH¢120,000 for the year ended 31 March 20Y0.
Required:
Prepare Kofi Mensah’s statement of profit or loss for the year ended 30 June 20X9 and a statement of financial position at that date.
Kofi Mensah does not keep proper books of account due to his lack of knowledge of double entry system of accounting. He has supplied you the following information with respect to the year ended 31 December 20X9 from the records kept in his diary:
(i) Transactions during the year:
GH¢
Cash received from customers
80,000
Discount allowed to customers
1,400
Irrecoverable debts written off
1,800
Cash paid to suppliers
63,000
Discount allowed by suppliers
1,000
Sales returns
3,000
Purchases returns
2,000
Expenses paid
6,000
Drawings
5,000
Rent paid
2,500
(ii) Opening balances as on 1 January 20X9:
Assets and liabilities
GH¢
Receivables
45,000
Payables
24,000
Cash
4,500
Furniture and fixtures
15,000
Inventory
25,000
Motor van
16,000
(iii) Receivables and payables as on 31 December 20X9 amounted to GH¢ 48,600 and GH¢ 27,000 respectively.
(iv) Outstanding expenses as on 31 December 20X9 amounted to GH¢ 1,200.
(v) Depreciation is charged on furniture and fixtures at the rate of 10% and on motor van at 20%.
(vi) Kofi Mensah sells goods at cost plus 40% and follows a policy of maintaining an allowance of 5% of the outstanding receivables.
Required:
Prepare the following:
(a) Statement of profit or loss for the year ended 31 December 20X9.
(b) Statement of financial position as at 31 December 20X9.
The KNUST Social Club prepares its accounts annually on 31st December. The receipts and payments account for the year ended 31st December 20X8 was prepared by the treasurer as follows:
GH¢
GH¢
Balance b/d
7,000
Caretaker’s wages
18,000
Subscriptions received
Heating and lighting
4,000
for the year: 20X7
600
Insurance
1,000
20X8
13,500
Bar payables
22,000
20X9
1,100
Dinner dance expenses
1,000
Dinner dance ticket sales
1,800
Equipment purchases
12,000
Bar takings
55,000
Bar staff wages
16,000
Donations
2,500
Savings account
3,000
Sale of equipment
450
Balance c/d
18,350
81,350
81,350
The following additional information is available:
(i) The equipment sold during the year was valued in the books at GH¢600 as at 1st January 20X8. The club’s policy is to provide a full year’s depreciation in the year of purchase but none in the year of sale.
(ii) The savings account (short term) pays a fixed rate of interest of 5% per annum. An additional amount of GH¢400 was paid into the account on 1st July 20X8. There were no withdrawals made during the year. Interest due on 31st December 20X8 has not been received.
(iii) The remaining assets and liabilities of the club at the beginning and end of the year were:
1st January 20X8
31st December 20X8
GH¢
GH¢
Clubhouse
230,000
230,000
Equipment
26,000
25,200
Bar inventory
2,000
2,400
Savings account
2,000
2,400
Insurance prepaid
100
80
Subscriptions owing
180
160
Subscriptions in advance
800
300
Bar payables
700
1,000
Bar staff wages owing
2,400
1,400
Cash at bank
7,500
8,700
(iv) All subscriptions due for the year 20X7, but unpaid on 31st December 20X7, are considered to be irrecoverable debts.
(v) Bar staff wages are the only expense to be charged to the bar trading account.
Required:
(a) Prepare the bar trading account for the year ended 31st December 20X8.
(b) Prepare the income and expenditure account for the year ended 31st December 20X8.
(c) Prepare the statement of financial position as at 31st December 20X8.
Prepare income and expenditure account and statement of financial position for XY Healthcare Co Sports and Social Club for 20X9, including subscriptions and inventory adjustments.
You have agreed to take over the role of bookkeeper for the XY Healthcare Co Sports and Social Club.
The summarised statement of financial position on 31 December 20X8 as prepared by the previous bookkeeper contained the following items.
Assets
GH₵
Heating oil for clubhouse
700
Shop and cafe inventories
5,000
New sportswear, for sale, at cost
4,000
Used sportswear, for hire, at valuation
1,000
Equipment for groundsman
Cost
10,000
Depreciation
(2,000)
Subscriptions due
200
Bank
Current account
800
Deposit account
20,000
Capital and liabilities
GH₵
Accumulated fund
29,200
Payables
Shop and cafe inventories
600
Sportswear
900
The bank account summary for the year to 31 December 20X9 contained the following items.
Receipts
GH₵
Subscriptions
11,000
Bankings
Shop and cafe
10,000
Sale of sportswear
6,000
Hire of sportswear
4,500
Interest on deposit account
400
Payments
GH₵
Rent and repairs of clubhouse
6,000
Heating oil
4,000
Sportswear
4,500
Grounds person
9,000
Shop and cafe purchases
9,000
Transfer to deposit account
3,000
You discover that the subscriptions due figure as at 31 December 20X8 was arrived at as follows.
Subscriptions due
GH₵
Subscriptions unpaid for 20X7
10
Subscriptions unpaid for 20X8
230
Subscriptions paid for 20X9
(40)
Corresponding figures at 31 December 20X9 are:
Subscriptions due
GH₵
Subscriptions unpaid for 20X7
10
Subscriptions unpaid for 20X8
20
Subscriptions unpaid for 20X9
90
Subscriptions paid for 20X0
(200)
Subscriptions due for more than 12 months should be written off with effect from 1 January 20X9.
Asset balances at 31 December 20X9 include:
Assets
GH₵
Heating oil for clubhouse
700
Shop and cafe inventories
5,000
New sportswear, for sale, at cost
4,000
Used sportswear, for hire, at valuation
1,000
Closing payables at 31 December 20X9 are for:
Shop and cafe inventories
800
Sportswear
450
Heating oil for clubhouse
200
Two thirds of the sportswear purchases made in 20X9 had been added to inventory of new sportswear in the figures given in the list of assets above, and one third had been added directly to the inventory of used sportswear for hire.
Half of the resulting ‘new sportswear for sale at cost’ at 31 December 20X9 is actually over two years old. You decide, with effect from 31 December 20X9, to transfer these older items into the inventory of used sportswear, at a valuation of 25% of their original cost.
No cash balances are held at 31 December 20X8 or 31 December 20X9. The equipment for the grounds person is to be depreciated at 10% per annum, on cost.
Required:
Prepare the income and expenditure account and statement of financial position for the XY Healthcare Co Sports and Social Club for 20X9.
Prepare income and expenditure account and statement of financial position for Sankofa Hockey Club for the year ended 30 June 20Y0 using provided cash transactions and asset details.
The Sankofa Hockey Club does not have any formal accounting records but the following information is available.
(1) The payments that have been made by the club for the year ending 30 June 20Y0 are as follows:
Description
GH¢(000)
Purchase of second hand table tennis table
250
Rent
600
Tea stall purchases
980
Annual fair expenses
1,450
Outings expenses
370
Prizes for whist evenings
190
Repairs to snooker table
110
Refreshments at social evenings
180
(2) The club’s income, apart from annual subscriptions, is as follows:
Description
GH¢(000)
Contributions to outings
300
Takings at the annual fair
2,150
The club also runs a tea stall in the community park every Sunday in the summer months. This sells tea and coffee, cakes, biscuits, and ice creams, etc. The profit margin on the tea stall is normally 20% of selling price.
(3) All the club’s transactions are in cash, but if there are any surplus funds, they are banked in a local bank account. The balance on the bank account was GH¢30,000 at 1 July 20X9.
(4) The club has an annual subscription rate of GH¢20,000 per annum per person or GH¢50,000 per annum for a family membership. Members are asked to pay their subscription in July at the beginning of the club’s accounting year.
There are 10 family members of the club. Of these, two paid their 20Y0 subscription in June 20X9, and all the rest were received before 30 June 20Y0.
No individual members had paid their 20Y0 subscriptions in advance, but at 30 June 20Y0, four members still owed their subscriptions. They had been contacted, and all four had promised to pay at the next evening social event. There are in total 80 individual members.
(5) The club has the following other assets and liabilities:
Description
1 July 20X9 (GH¢(000))
30 June 20Y0 (GH¢(000))
Sports equipment
2,560
–
Inventory for the tea stall
110
190
Payables for the tea purchases
100
–
Prepayment of rent
50
50
(6) The sports equipment is all depreciated at 20% per annum on carrying amount on the basis of the equipment held at 30 June each year.
(7) The old table tennis table was sold during the year for GH¢40,000. Its value as recorded by the club at 30 June 20X9 was GH¢30,000.
You are required to prepare an income and expenditure account for the year ended 30 June 20Y0 and a statement of financial position at that date.
The treasurer of the Sunridge Golf Club has prepared the following receipts and payments account for the year ended 31 March 20X9.
N₦(000)
Balance at 1 April 20X8
682
Functions
305
Subscriptions
2,930
Repairs
65
Functions
367
Telephone
67
Sale of land
1,600
Extension of club house
600
Bank interest
60
Furniture
135
Bequest (legacy)
255
Heat and light
115
Sundry income
46
Salary and wages
2,066
Sundry expenses
110
Balance at 31 March 20X9
2,520
5,940
5,940
(a) Subscriptions received included N₦65,000 which had been in arrears at 31 March 20X8 and N₦35,000 which had been paid for the year commencing 1 April 20X9.
(b) Land sold had been valued in the club’s books at cost N₦500,000.
(c) Accrued expenses
31 March 20X8 N₦(000)
31 March 20X9 N₦(000)
Heat and light
32
40
Salaries and wages
12
14
Telephone
14
10
Total
58
64
(d) Depreciation is to be charged on the original cost of assets appearing in the books at 31 March 20X9 as follows:
Buildings: 5%
Fixtures and fittings: 10%
Furniture: 20%
(e) The following balances are from the club’s books at 31 March 20X8:
Land at cost: N₦4,000,000
Buildings at cost: N₦3,200,000
Buildings allowance for depreciation: N₦860,000
Fixtures and fittings at cost: N₦470,000
Fixtures allowance for depreciation: N₦82,000
Furniture at cost: N₦380,000
Furniture allowance for depreciation: N₦164,000
Subscriptions in arrears (including N₦15,000 irrecoverable – member had emigrated): N₦80,000
Subscriptions in advance: N₦30,000
Required:
Prepare an income and expenditure account for the year ended 31 March 20X9 and a statement of financial position as at that date.
Prepare capital accounts and statement of financial position for Alvin, Boris, and Gina partnership after Gina's admission, including adjustments for goodwill and revaluation.
Alvin and Boris are partners in a firm sharing profits and losses in the ratio of 3:2. The Statement of financial position of the firm as on 31 March 20X9 was as under:
Assets
GH¢
Furniture and fixture
600,000
Office equipment
300,000
Motor car
375,000
Inventory
250,000
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Due to expansion in the business, Gina was admitted as a partner with effect from 1 April 20X9. Gina brought furniture worth GH¢120,000 and inventory costing GH¢80,000. She also contributed cash of GH¢150,000 plus her proportionate share of goodwill valued at two years’ purchase of the average profits of the last three years.
Following adjustments were considered necessary, at the time of admission:
(i) On 1 April 20X7, new furniture costing GH¢8,000 was purchased but wrongly debited to revenue account. The firm charges depreciation on furniture @ 10% on straight line basis.
(ii) An invoice dated 1 October 20X8 for purchase of goods amounting to GH¢24,000 has not been recorded.
(iii) Value of the sundry receivables on 31 March 20X9 is to be reduced by 6%.
The profits of the last three years, before the above adjustments were:
Year
GH¢
20X8-11
352,100
20X7-10
232,000
20X9-09
128,000
It was decided that the future profits of the firm would be shared among Alvin, Boris, and Gina in the ratio of 5:3:2 respectively.
Required:
Prepare the capital accounts of the partners and the statement of financial position of the firm on Gina’s admission as a partner.
