NATIONAL OPEN UNIVERSITY OF NIGERIA

UNIVERSITY VILLAGE, PLOT 91, CASDASTRAL ZONE, NNAMDI AZIKIWE EXPRESS WAY, JABI, ABUJA.
FACULTY OF MANAGEMENT SCIENCES
SEPTEMBER/OCTOBER 2015 EXAMINATION

COURSE CODE:                                                                              ACC 311                                                                              

COURSE TITLE:                                                                             Intermediate Financial Accounting I

DURATION:                                                                                     3 Hours

INSTRUCTIONS:                                                                            1. Attempt question 1 and any other 3 questions.

2. Question number 1 is compulsory and carries 25         marks, while other questions carry 15 marks each.

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

1.         You are required to prepare a trading, profit and loss account for Benedict Group of Farms for the year ended 31 December 2013 and its balance sheet as at that date from the following trial balance:

                                                                                                                        DR                               CR

Regular labour expenses                                                                 6,800

Repair of motor vehicles                                                                  1,780

Petrol, oil and lubrications                                                                  586

Electricity                                                                                              440

Depreciation                                                                                      2,800

Rent and rates                                                                                                  820

Insurance                                                                                              220

Debtors                                                                                                          8,200

Repairs of property                                                                             920

Telephone                                                                                               96

Bank charges                                                                                        136

Generator repairs and diesel                                                                      2,860

Other general expenses                                                                                  940

Cash at bank                                                                                      8,420

Equipment                                                                                         20,400

Drawings                                                                                            3,800

Capital                                                                                                                                                25,200

Creditors                                                                                                                                  8,360

Opening stock                                                                                                7,836

Purchases                                                                                          8,192

Sales                                                                                                                                       50,120

Subsidies                                                                                                                                   2,904

Fertilizer                                                                                               860

Seeds                                                                                                  2,280

Contract work-crop                                                                          2,680

Casual labour-crop                                                                                90

Other expenses-crop                                                                                       408

Feed                                                                                                    3,240

Casual labour-livestock                                                                                    420

Vetenary medicine-livestock                                                                            820

Diary expenses                                                                                                  180

Sundry expenses-livestock                                                                  360

                                                                                                                 86,584                             86,584

Below is additional information relevant to the accounts:

1. Closing stock cassava N440, 000, Yam N740, 000, Cow 440,000, Ram N600, 000.
2. Sales: Cassava N8, 400,000. Yam N9, 680,000, Cow N23, 560,000, Ram N8, 480,000.
3. 2/3 of rent and rates; petrol, electricity and telephone should be charged to the farm’s account.
4. The opening stocks for the following product lines: Cassava N1, 581,000, Yam N1, 565,000, Cow N2, 525,000, Ram N2, 165,000.
5. Purchases of: Cow N5, 720,000 and Ram N2, 472,000.
6. Own consumption: Cassava N64, 000; Cow N120, 000.

2.   Cross Oil Ltd was incorporated in 2012 and has two oil mining leases (OML). Reserves in commercial quantities were discovered in 2012 in one of the OMLs. Expenditure were:

OML 200 (100 years)                                                                             N’000

Rent and signature bonus                                                                                    7,600

Exploration costs                                                                                                17,000

Development costs                                                                                             14,000

Estimated future development costs                                                      7,000

Estimated future abandonment costs (nets of salvage value)            1,000

                                                                                                                        46,600

OML 201 (100 years)

Rent and signature bonus                                                                  7,600

Exploration/drilling costs (dry hole costs)                                    19,760

                                                                                                                         27,520

Reserves and production data of crude oil were:

Proved reserves at 31/12/2012:

Developed                                                                                 65,000 barrels

Undeveloped                                                                             17,000 barrels

Production 2012                                                                       8,600 barrels

You are required to compute depletion, depreciation and amoritisation (DD&A) for 2012 and prepare an extract of profit and loss account as at 31 December 2012 under:

1. The full cost method
2. Successful efforts method

3.  The following is the summary of the fixed assets of Niger Cement Ltd for the years, 2008 to 2012 and residential values of the assets in those years.

(Total Fixed Assets)

                                                                        2008   2009   2010   2011   2012

                                                                        N’000  N’000  N’000  N’000  N’000

Cost at 1^st January                             1,400  1,800  2,500  2,150  3,450

Addition                                                 700 1,200       -      1,300      -

Disposals                                              (300)            (500) (350)     -            -

Costs at 31^st December                                 1,800  2,500  2,150  3,450  3,450

Depreciation at 1^st January                  250   350     530     680   1,490

Charge for the year                              350   520      450     810      350

Disposals                                            (150) (340) (300)      -            -

Depreciation at 31^st January                           450    530     680   1,490 1,840

NBV                                                       1,350  1,970  1,470  1,960  1,610

1.                                                       Tax Computation Schedule

(Summary of all assets)

                                                                        2008   2009   2010   2011   2012

                                                                        N’000  N’000  N’000  N’000  N’000

Residual value b/f                                980     900  1,180     960 1,760

Additions during the year                   700  1,200       -      1,300     -

Disposals during the year                  (180)            (240) (100)     -            -

                                                                        1,500  1,860  2,150  3,450  3,450

Allowances:                                       

Initial                                                  (310) (450)     -       (350)     ­-

Annual                                                             (290)  (230)              (120)            (150) (190)

Residual value at end of year                        900   1,180     960 1,760  1,570

Using only the information given above, you are required to compute the deferred taxation for the years 2008 to 2009 and the a