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NATIONAL OPEN UNIVERSITY OF NIGERIA

UNIVERSITY VILLAGE, PLOT 91, CASDASTRAL ZONE, NNAMDI AZIKIWE EXPRESS WAY, JABI, ABUJA.
FACULTY OF MANAGEMENT SCIENCES
JANUARY/FEBRUARY 2018 EXAMINATION

COURSE CODE: ACC 311                                                     CREDIT UNIT: 3

COURSE TITLE:  FINANCIAL ACCOUNTING

TIME ALLOWED:  2 1/2 HOURS

 

Instructions:

1. Attempt question number one (1) and any other three (3).

2. Question number 1 is compulsory and carries 25 marks while the others carry 15 marks    

     each.

3. Present all your points in coherent and orderly manner.

 

Question One

 

Abuja Plc is an established merchandising business making accounts annually to 30th September.

The following is the trial balance of the company as at 30th September, 2017

                                                                                    Dr                               Cr

                                                                                    N’000                          N’000

Ordinary shares of 50k each                                                                           300,000

Share premium                                                                                                460,000

Revaluation surplus                                                                                        160,000

Retained earnings                                                                                           621,000

Sales                                                                                                                3,600,000

Purchases                                                        s           1,900,000

Inventory at 1st October 2016                                     600,000

Returns inwards                                                          240,000

Returns outwards                                                                                            200,000

Salaries and wages                                                     400,000

Directors remunerations                                             320,000

Insurance and rates                                                     280,000

Land                                                                            500,000

Building at cost                                                          800,000

Accumulated depreciation on building                                                          220,000

Plant and equipment at cost                                       1,700,000

Accumulated depreciation on plant and equipment                                      440,000

Motor vehicles at cost                                                            700,000

Accumulated depreciation on motor vehicles                                                            260,000

Furniture and fitting at cost                                        1,100,000

Accumulated depreciation on F&F                                                                400,000

Trade receivables                                                       500,000

Trade payables                                                                                               620,000

Long term investment                                                 800,000

Short term investment                                                400,000

Cash in hand                                                               300,000

Long term loan                                                                                               500,000

Investment income                                                                                         240,000

Commission received                                                                                                 300,000

Other income                                                                                                  1,020,000

Short term loan                                                                                               560,000

Loan interest                                                                   112,000

Sundry expenses                                                            200,000

Bank overdraft                                                                        -                          951,000

                                                                                    10,852,000                  10,852,000

 

Relevant notes

  1. Inventory at 30th September 20x7, valued at cost was N1000 millions. Its net realizable value is estimated at N840 million as a result of obsolescence.
  2. At 30th September, insurance and rates outstanding amounted to N120 million.
  3. At 30th September, prepaid wages amounted to ₦360 million.
  4. Provision for corporation tax of N360 million is to be made on the profit for the year.
  5. The company depreciates non-current assets as follows:

Land                                        0% on cost

Building                                  10% on cost

Plant and equipment               20% on cost

Motor vehicles                        25% on reducing balance

Furniture and fittings              15% on reducing balance

 

Required: Prepare the following statements for internal use:

  1. Statement of Profit or Loss account and other comprehensive income for the year ended 30th September, 2017.          (14 Marks)

 

  1. Statement of Financial Position as at 30th September, 2017.  (11 Marks)

 

(Total 25 Marks)

 

 

 

Question Two

On 31st December, 2017, the outline statement of financial position of Diamond, Gold and Silver in partnership sharing profits and losses equally, was

Statement of Financial Position as at 31 December, 2017

                                                                                                   N                       N

ASSETS:        Non-Current Assets

                        Freehold building & land                                                       2,000,000

                        Plant and Machinery                                                                900,000

                        Motor vehicles                                                                          750,000

                                                                                                                        3,650,000

Current Assets:           Inventory                                            950,000

                                    Receivables                                        700,000

                                    Bank                                                      100,000           1,750,000

                                                                                                                        5,400,000

 

Capital Accounts:

                        Diamond                                                                                   1,600,000

                        Gold                                                                                          1,400,000

                        Silver                                                                                        800,000

                                                                                                                        3,800,000

Current accounts:       Diamond                                             35,000

                                    Gold                                                     60,000

                                    Silver                                                  (45,000)              50,000

 

Current Liabilities:     Payables                                              800,000

                                    Bank overdraft                                    750,000             1,550,000

                                                                                                                        5,400,000

On 31st December, 2017, the Partnership was dissolved and the asset sold publicly as follows:

                                                                                                                 N

            Freehold building and land                                                    3,000,000

            Plant and Equipment                                                                650,000

            Motor vehicles                                                                          250,000

            Inventory                                                                                  725,000

Receivables realized N680,000. Payables were settled in full and the Bank overdraft was repaid. Black personally took over a vehicle at a valuation of N350,000 and white a vehicle at a valuation of N8,750. Dissolution expenses amounting to N50,000 were paid.

 

Required:

Prepare the Realisation Account, Bank account and Capital accounts to record the dissolution

                                                                                                                                    (15 Marks)

 

 

 

Question Three

3a)       Discuss the two methods of preparing cash flow statements (3 marks)

3b)       With respect to classification of cash flow statement, explain the following giving three (3) examples each:

  1. Operating activities  (4 Marks)
  2. Investing activities  (4 Marks)
  3. Financing activities (4 Marks)

 (Total 15 Marks)

 

 

Question Four

 The following balances were extracted from the books of Best Nig. Ltd for the year ended 31st   December, 2017:


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