NATIONAL OPEN UNIVERSITY OF NIGERIA

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

COURSE CODE:      ACC 757                                                        

CREDIT UNIT: 2

COURSE TITLE:     PRINCIPLES OF ACCOUNTING

TIME ALLOWED:   2 Hours

INSTRUCTIONS:     1. Attempt question Number one (1) and any other two (2).

2. Question number 1 is compulsory and carries 30 marks, while the other questions carry 20 marks each

1a. State ten contents of Partnership Deed or Agreement                            (10 marks)

1b. The following Statement of Financial Position was extracted from the books of Tony, Bayo and Okun as at 31^st December, 2016.

                                                                                                            N’000                                                                                   N’000

Capital Accounts

Tony                                                                                                                                                                                                 18,000

Bayo                                                                                                                                                                                                 12,000

Okun                                                                                                                                                                                                  6,000

Current account (1/1/2016)                                                                                                                                                                 

Tony                                                                                                                                                                                                      600

Bayo                                                                                                                                                                                                      900

Okun                                                                                                        300                                                                                                                                                                                                            

Drawings

Tony                                                                                                      3,000

Bayo                                                                                                      2,400

Okun                                                                                                     3,600

Gross Profit                                                                                                                                                                                      21,000

Expenses                                                                                             12,525

Non-Current Assets                                                                            37,500

Current Assets                                                                                    14,625

Current Liabilities                                                                                                                                                                             10,950

Loan Account-Tony                                                                                                                                                                           4,500

                                                                                                            73,950                                                                                    73,950

You are provided with additional information below;

1. Interest is to be allowed at 6% per annum in partners’ capital accounts
2. N1.5m is to be allowed as salary to Tony
3. Interest on loan is 5% per annum
4. Profit and losses are to be shared among Tayo, Bayo and Okun in the ratio; 2:1:1 respectively

Required:

 Prepare an Appropriation Account, Current account and a Statement of financial position as at 31/12/ 2016.                                               20 marks

2. Adebayo and Chukwuma entered into a joint venture agreement for the purchase and sale of yams on 1 January 2007. Transactions carried out were as follows:

Jan 2                            Chukwuma purchased yam at Enugu for N9,000; to finance the purchase he took a loan of N3,000 from his local Co-operative society and paid the   balance in cash.

Jan 5                            Chukwuma sent to Adebayo in Lagos, yams costing N6,000 and paid transport charge of N1,500 in that connection.

Jan 20                          Adebayo sold all the yams for N13,000 and remitted N10,000 to Chukwuma. He paid N600 for a stand at mile 12 market, in Lagos, and N400 to the labourers that assisted him.

Jan 25                          Chukwuma paid N800 for rent of shop for storing yams.

Jan 28                          Chukwuma sold part of the yams in his possession for N5,000. He agreed to take-over the remaining at a cost of N2,500

Jan 30                          Chukwuma paid the co-operative society N3,050 in full settlement of the loan.

Each party was entitled to 5% commission on his own gross sales. The balance of profit was

to be shared between Chukwuma and Adebayo in ratio 7:3 respectively. Final cash  

settlement between the partners was made on 15 February 2007.                 (20 marks)

3a. Differentiate clearly between a bill of exchange and promissory note                  (10 marks)

3b. Briefly explain the following;

1.  Discounting a bill                                                                                    (4 marks)
2.  Renewal of a bill                                                                                     (3 marks)
3.  Retiring of a bill                                                                                      (3 marks)

4. APC Ltd. Produces paints; the trial balance of the company as at 31^st December, 2015 has been presented below;