TEST CODE 01239020

FORM TP 2008026 JANUARY 2008

CARIBBEAN EXAMINAT IONS COUNCIL

SECONDARY EDUCATION CERTIFICATE
EXAMINATION
PRINCIPLES OF ACCOUNTS
Paper 02 - General Proficiency
3 hours
c 08 JANUARY 2008 (a.m.))

1. Answer ALL questions in Section I, and TWO questions from Section II.

2. Begin EACH answer on a separate page.

3. Keep ALL parts of EACH answer together.

4. Silent electronic calculators may be used, but ALL necessary working should be clearly shown.

5. Each question is worth 20 marks.

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO

Copyright © 2007 Caribbean Examinations Council ®.

All rights reserved.

0 1239020/JANUARY /F 2008
 - 2 -

SECTION I
Answer all THREE questions in this section.

1. Johnson Company prepares the following list of account balances as at September 30, 2007.

Amounts
Accounts $

Sales 87 400
Transportation-in 1 800
Interest revenue 2 300
Loan 23 000
Sales returns 4250
Purchases returns 7 300
Opening stock 18 900
Purchases 30 900
Salaries expense 23 800
Insurance expense 6 300
Buildings 100 000
Provision of depreciation: Buildings 35 000
Debtors 8 700
Creditors 4 300
Provision for Bad Debts 700
Bank 12 450
Cash 900
Capital 60 000
Drawings 12 000

The following additional information is provided.

(1) Closing stock at year end $14 800.

(2) The insurance expense is for the two years ending September 30, 2008.
(3) $1 200 in interest revenue remains to be collected.
(4) Johnson owes workers $3 200 in salaries.
(5) Buildings are depreciated at the rate of 10% per year using the straight line method.
(6) Provision for Bad Debts is to be decreased to $500.

GO ON TO THE NEXT PAGE

01239020/JANUARY/F 2008
 - 3 -

(a) Prepare the Trading and Profit and Loss Account for Johnson Company for the period
ending September 30, 2007. (12 ma rks)

(b) Prepare the Balance Sheet for Johnson Company as at September 30, 2007.
( 8 marks)

Total 20 ma rks

2. On July 1, 2007, Irwin Dick, a plumber, had the following balances on his book of accounts.

Amounts Amounts
Accounts $ $
Capital 25 730
Bank 18 100
Roger George 7 370
Plumbing tools 15 000

His bookkeeper tried to prepare the following books of original entry for the month of July 2007 but fell
ill before completing them.

Irwin Dick
General Journal

Date Details DR($) CR($)

2007
July 1 Pick up van 23 000
Workingman's Motors Ltd 23 000

Irwin Dick
Purchases Journal

Date Details ($)

2007
July 5 Roger George 1 330

Irwin Dick
R eturns Outwards Journal

Date Details DR($)

2007
July 10 Roger George 200

GO ON TO THE NEXT PAGE

01239020/JANUAR Y/F 2008
 - 4 -

Irwin Dick
Cash Book

2007 Disco unt Bank

2007 Bank
received
July 2 Roger George 70 7 300
July 1 Balance b/d 18 100
16 Miscellaneous expenses 7 950
14 Sale of plumbing tool 6 000
30 Drawings 4000
23 Plumbing fees 2123 0
31 Balance c/d 26 080
45 330
45 330
August
1 Balance b/d 2608 0

at the beginning of the month,

(a) Open General Ledger Accounts for ALL accounts on record
( 6 marks)
except bank.
ng new accounts where necessary.
(b) Post information from the above journals to the Ledger, openi
( 6 marks)

( 8 marks)
(c) Balance and close ALL accounts.
Total 20 marks

GO ON TO THE NEX T PAGE

0123 9020 /JAN UAR Y/F 2008
 - 5 -

3. Sharon Kelly runs a medical laboratory. She records the following

incomplete opening entry at the start
of her accounting year.

Sharo n Kelly
Gener al Journ al

Date Details DR($) CR($)

2007 Cash 9400
Nov.1 Laboratory buildings 54500
Medical tools 29 800
Accounts Receivable 18 200
Office furnishings 11500
Stock of medical supplies 4400
Bank overdraft 5 400
5 year 10% Bank Loan
39 000
Accounts Payable
13 200
Sharon Kelly: Capital
?

(a) Calculate Sharon Kelly's capital as at November 1, 2007. (Show

workings) ( 3 marks )
(b) Using the vertic al style, prepare the classified Balance Sheet for Sharon
Kelly as at November
1, 2007.
( 7 marks)
(c) The following transactions took place during the first two weeks
of November.
1. A medical tool was sold for $2 000 in cash.
2. Sharon Kelly deposited $5 400 of her personal savings into the
bank to pay off the
business' overdraft.
3. Medical tests costing $2 000 were carried out for client, Kelsey
Morris , who will be
paying in December 2007.
4. Building Insurance $1 350 was paid in cash.
5. Stock of medical supplies of $2 600 was bought on credit from
Anne Charles.
6. A cheque for $9 800 was received for office furnishings sold.
On the answe r sheet provided:
(i) Identify the accounts affected by EACH transaction.
(ii) State the new dollar value of these accounts in EACH case.
The first one is done for you.
(lOma rks)
Total 20 marks

GO ON TO THE NEXT PAGE

01239 020/JA NUAR Y/F 2008
 - 6 -

SECTION II
Answ er any TWO questi ons in this sectio n.

debtors for the month of May

4. (a) Fraser Group Holdin gs provides the following inform ation about
2007
Detail s Amou nts
$
23 450 DR
Balanc es at May 1, 2007
610C R
Trans action s with debto rs for the month :
186
Disho noured chequ es
428
Bad debts
21013
Chequ es receiv ed
35 790
Credit sales
244
Return s inward s
139
Interes t charge d on late payme nts
50
Interes t receiv ed on late payme nts
2007. ( 7 marks )
Prepar e the appropriate Contro l Accou nt for the month of May
(b) Rishi Narine , Emplo yee Numb er 265 works for a compa ny which
pays a regula r rate of $12 per hour.
d in excess of 40 hours
pays one and one-ha lf time the regular rate for all hours worke
per week.
deduct s Nation al Insura nce of 2% of gross pay.
of 10% of gross pay.
makes as he reques ted, a regular payment to his credit union
.
deducts incom e tax at the rate of 20 cents on every dollar earned
a total of fifty (50) hours, ten (10)
During the week ending June 29, 2007, Rishi Narine worke d
of which were counte d as overtim e hours.
Narine. ( 7 marks )
On the answe r sheet provid ed, compl ete the pay slip for Rishi

(c) Roger s and Sons Ltd presen ts the following information.

Detail s Amou nts
$
Work in progre ss at March 1, 2007 2450

Raw materi als in stock at March 1, 2007 6920

Raw materi als purcha ses 45 890

Direct wages 123 800

Factor y overhe ads 56 200

Accru ed factory overhe ads 4 800

Work in progre ss at Augus t 31 , 2007 3 670

Raw materi als stock at Augus t 31 , 2007 5 710

for the six months ended Augus t

Prepar e the Manuf acturin g Accou nt for Rogers and Sons Ltd
( 6 marks )
31, 2007.
Total 20 marks
GO ON TO THE NEXT PAGE
0123 9020/JANUARYIF 2008
 - 7 -

5. (a) On August 31, 2007, Gift Bag Enterprises prepared the following incorrect Trial Balance.

Amounts Amounts
Items $ $
Fixed Assets 20900
Bank overdraft 3 700
Creditors 6 500
Cash in hand 300
Debtors 5 500
Capital 45 000
Drawings 4400
Opening Stock 5 000
Revenues 35 200
Expenses 18 300
72400 72400
--
- - --
- -
(i) Rewrite the Trial Balance placing items in their correct positions. ( 4 marks)

(ii) Open a Suspense Account and post any difference in the correct column of the Trial
Balance. ( 2 marks)

(b) On October 31, 2007, Gift Bag Enterprises discovered the following errors.

1. Fixtures bought for $450 in cash were entered in the Purchases Account. The owner
took stock of $1 009 for her own use. She debited drawings and credited the Sales
Account.

2. A return of goods by Small Contractors Inc worth $230 was recorded in the Returns
Outwards Journal.

3. A voucher of $30, for taxi fare, was never given to the petty cashier for recording.

4. A cheque for $360 paid to Paper Products Incorporated was credited in the creditor's
account and debited in the Cash Book.

(i) Prepare the Journal entries to correct the errors. (Do not include narratives).
(11 marks)

(ii) State the type of error recorded as 2, 3 and 4 above. ( 3 marks)

Total 20 marks

GO ON TO THE NEXT PAGE

01239020/JANUARY/F 2008
 - 8 -

6. On August 1, 2007, Karen and Jack decided to merge their business ventures into a partnership called
K and J' s Baked Goods. Each partner brought the following assets and liabilities into the partnership.

JACK $ KAREN $

Bank Overdraft 1000 Bank 9 650

Creditors 750 Industrial Ovens 20000
Cash 600 Debtors 5 950
Stock 1 550 Bank Loan 5 650
Van 35 000 Stock 2 550
Debtors 7 000 Creditors 1 900
Baking trays 1 800

(a) Prepare the Opening Entry to record the new partnership of K and J's Baked Goods as at
August 1, 2007. (Show all workings) ( 8 marks)

Karen and Jack have agreed that the remaining profit will be shared equally after recording the
following:

Interest on Capital will be 10% per year.

Salary: Karen will earn $10 000 per year.

(b) At the end of the first year of operation, K and J' s Baked Goods recorded a Net Profit of $30 000.
Drawings were as follows: KAREN - $8 000, JACK - $6 000.

(i) Prepare the Profit and Loss Appropriation Account of K and J' s Baked Goods for the
period ended July 31, 2007. ( 5 marks)

(ii) Calculate the Return on Capital Employed for EACH partner. (Show workings)
( 5 marks)

(c) Outline TWO advantages of the partnerships type of business over the sole trader.
( 2 marks)

Total 20 marks

GO ON TO THE NEXT PAGE

01239020/JAN UARY/F 2008
 - 9 -

7. Trappers Company Limited has permission to

issue 40 000 Ordinary share s and 1 000 $50 Prefe
Shares at 15%. On November 30, 2007, the rence
company has the following balances in its ledge
r.

$
28 000 Ordinary shares
56 000
Share Premium Account: Ordinary shares
84 000
800 15% $50 Prefe rence shares
40 000
Retained Earnings
45 800
100 5% Debentures
10 000
On that date, November 30, 2007, Trappers
Company Limited declared that on Decembe
would pay the following: r 31, they

Annual interest on debentures

Dividends on preference shares
Dividends of 10% on ordinary shares

The declaration also noted that the remaining

$12 400 of Net Profit would be added to the appr
reserve account. opriate

(a) (i) State ONE difference between an ordinary share

and a preference share.
(ii) State ONE difference between an ordinary share
and a debenture .
(iii) Calculate the annual interest on debentures.
(sho w work ing)
(iv) Calculate the dividend to be paid to preferenc
e shareholders. (show work ing)
(v) Calculate the amount of the original Net Profi
t.
(lOm arks )
(b) Draw up the liabilities and capital section of the
Balance Sheet of Trappers Limited identifying
clearly

any current liabilities

any long term liabilities
authorized share capital and
issued share capital.
(lOm arks )

Tota l 20 mar ks

END OF TES T

0123 9020 /JAN UAR Y/F 2008

 TEST COD E 01239020
FO RM TP 2008026
JANU ARY 2008
CA RIB BE AN EX AM INA TIO NS CO
UN CIL
SECONDARY EDUCATION CERTIFICATE
EXAMINATION
PRINCIPLES OF ACCOUNTS
Pape r 02 - Gene ral Proficiency

Cand idate No: - - - - - - -

Answ er Shee t for Ques tion 4 (b)
Cent re N o : - - -- - - - - -

Empl oyee Nam e Hour ly Total Over time Wag_es ($)

No. rate Natio nal Cred it Incom e Net
hours hours Regu lar Over time Gros s Insur ance Unio n Tax Pay
work ed work ed ($) ($) ($) ($)
'

01239 020/JANU ARY /F 2008

 TEST CODE 01239020
FORM TP 2008026 JANUARY 2008

CARIBBEAN EXAMINAT IONS COUNCIL

SECONDARY EDUCATION CERTIFICATE
EXAMINATION
PRINCIPLES OF ACCOUNTS
Paper 02 - General Proficiency

Answer Sheet for Question 3 (c) Candidate No: _ _ _ _ _ __

Centre No: _ _ _ _ _ _ __

(i) (ii)

Transaction Accounts Affected Working New Value

Cash $ 9 400 + $2 000 $11 400

1. Medical tools $29 800 - $2 000 $27 800

2.

3.

4.

5.

6.

01239020/JANUA RY/F 2008