CARIBBEAN EXAMINATIONS COUNCIL

JANUARY 1994

PRINCIPLES OF ACCOUNTS PAPER II GNERAL PROFICIENCY

Answer ALL questions in Section I and TWO questions from Section II.
Begin EACH answer on a separate page
Keep ALL parts of EACH answer together
Silent electronic calculators may be used, but ALL necessary working should be clearly
shown.

SECTION I
5.

(a)

(i)

The worksheet of Columbus Company was started but not finished. You are required
to complete it on December 31, 1989 using the answer sheet provided. ( 15 marks)

(ii)

How would you interpret EACH of the following entries taken from the Adjustments
Column of the worksheet?
Entry

(b)

Credit of $410 to Store Supplies.

Credit of $1 500 to Provision for Depreciation.

Debit of $2 800 to Commissions Received.

Debit of $1 600 to Wages Expenses

( 4 marks)

(iii)

What does the total Provision for Depreciation shown on the worksheet represent?
( 1 mark)

(i)

List TWO types of companies found in the Caribbean.

(ii)

Company XYZ, manufacturing toys, made a net profit (after taxation) of $78 500 for
the year ended December 31, 1989. There were retained profits of $21 500 from the
previous year.

( 2 marks)

The following appropriations were to be made:

Transfer to General Reserve
Part Goodwill to be written off
Preference Share Dividend

$10 000
5 000
10 000

Ordinary Share Dividends:

Iterim

7 500

Final

17 500

Prepare the XYZ Companys Appropriation of Profit Account and show the amount
of the profit to be carried forward to the next year.
( 8 marks)
6.

(a)

(i)

Prepare the Balance Sheet for Kismo Hardware Co. as at December 31, 1989 using
the balances given below.
(Note: Set out the Balance Sheet using appropriate headings and subsections.)
Capital, January 1, 1989
Cash in hand
Creditors
Furniture and Fittings
Stock, December 31, 1989

1990/adjustments

$
57 000
600
54 000
86 000
42 000

Drawings
Bank Overdraft
Debtors
Land and Buildings
Provision for Depreciation on Furniture and Fittings
Prepaid Insurance
Net Profit for the year
Mortgage Loan
12% Debentures
(ii)

Calculate for Kismo Hardware Co:

(a)
(b)
(c)

(b)

(a)

7 000
31 000
63 000
190 000
15 900
2 000
2 700
110 000
120 000
( 7 marks)

The working capital

The Current ratio
The Acid Test ratio

( 6 marks)

Prepare the Trading and Profit and Loss Account of P. Higgs for the year ending June 30, 1989
from the following balances and additional information:
Balances:
$
9
10% Loan (due 1994)
Purchases
Sales
Carriage Inwards
Carriage Outwards
Bad Debts
Commission Received

80 000
13 200
16 000
26 500
96 760
1 200
3 300
2 160
970

$
Purchases
Returns
and
Allowances
Sales Returns and Allowances
Wages and Salaries
Discounts Received
Discounts Allowed
Rent and Rates

4 100
5 000
37 000
2 930
1 800
19 600

Additional Information:
1.
2.
3.
4.
5.
6.
(b)

(a)

( 16 marks)

Calculate:
(i)
(ii)
(iii)
(v)

7.

Stock at June 30, 1989, $15 000.

Depreciate all fixed assets by 15%.
Rates paid in advance $420.
The purchase figure includes an office desk for $1 500.
Wages owing $300
Loan interest for 6 months was outstanding.

Average Stock
Rate of Stock Turnover
Gross Profit percentage on Sales
Gross Profit percentage on Cost of Goods Sold.

( 4 marks)

The following information was extracted from the books of Tom Johnson, a sole trader, who
does not maintain a double entry accounting system:
April 1, 1989

March 31, 1999

Stock

$ 990

$1 080

Debtors

3 625

4 040

Creditors

2 070

2 815

General Expenses Accrued500

250

Tom passes all payments and receipts through the bank. The following is a summary of his
bank transactions for the year ended March 31, 1990.
1990/adjustments

Bank Summary
$ 8 000
Payment to Creditors

Balance b/d
Cash Received from Debtors
Cash Sales

11 000
600

General Expenses
Drawings

$8 595
3 600
500

The following information was also available for the year ended March 31, 1990:
Bad Debts written off
Discounts Allowed

335

Discount Received

235

Purchases Returns

150

(i)

(b)

$205

You are required to prepare:

-

The Total Debtors Account (Debtors Control)

The Total Creditors Account (Creditors Control)

The General Expenses Account

( 16 marks)

(ii)

Balance the Bank Summary Account

( 1 mark)

(iii)

Prepare the Trading Account for the year ended March 31, 1990

(iv)

How would you interpret the balancing figure in the General Expenses Account?
( 1 mark)

( 7 marks)

Arrange the following steps in the Accounting Cycle in their correct sequence by numbering
the correct first step 1, the correct second step 2 and so on in the spaces on the answer
sheet provided.
Prepare trial balance
Prepare post-closing trial balance
Prepare Trading and Profit and Loss Account
Journalise
Journalise and post closing entries
Complete the worksheet
Journalise and post adjusting entries
Analyze source documents
Prepare balance sheet
Post to the ledger

1990/adjustments

( 5 marks)