CPA
Foundation Leval
Financial Accounting May 2019
Suggested solutions

W1

Property plant and equipment a/c
Bal b/d Purchase	Sh 000 5,910 2,992 8,902	Disposal Depreciation charge old 10% (7,290 - 800) Disposal 10% × 800 × 8 / 12 Balance c/d	Sh 000 520 649 53 7680 8,902

W2

Disposal of plant
Cost	Sh 000 800 800	Accumulated depreciation Sales proceeds P&L	Sh 000 280 500 20 800

W3

Cash & cash equivalent
Cash Bank overdraft	2017 Sh 000 168 (90) 78	2018 Sh 000 75 (60) 15

W4

Tax a/c
Tax paid(Bal fig) Bal c/f	3 150 153	Bal b/f Current tax	90 63 153

W5

Profit before tax Less tax P.A.T Add: Retailed profit balance b/d Less: dividend paid Retained profit balance c/d

Sh 000 2,243 (63) 2,180 3,603 (86) 5,697

Pwani ltd statement of cash flow for the year ended 31 December 2018

Cash flow from operating activities Profit before tax Adjustments Finance cost Loss on disposal of plant Depreciation (649+53) working capital changes: Increase in inventories 2,070 - 1,830 Increase in receivables 1,170 - 1,020 Decrease in payables 2,208 - 2,250 Gross cash flow from operating activities Less: Tax paid (150 - 90 - 63) Net cash flow from operating activities (A) Cash flow from investing activities Purchase of PPE Sales of proceeds from disposal of plant Net cash flows from investing activities (B) Cash flow from financing activities Issue of shares (360 - 300) Issue of shares of a premium 150 - 75 Dividend paid Finance cost Loan paid (2,400 - 2,250) Net cash flow from financing activities (C) Net changes in cash and cash equivalent (A+B+C) Cash and cash equivalent balance b/d Cash and cash equivalent balance c/d

Sh 000 2,243 48 20 702 (240) (150) (42) 2,581 (3) 2,578 (2,992) 500 (2,492) 60 75 (86) (48) (150) (149) (63) 78 15

W1

Bank a/c
Balance b/d Receivables	Sh 000 40,000 218,000 258,000	Licence & Clearing charges Bank charges 6×12 Insurance Purchase of furniture Computer Staff sales 200 × 12 Drawings 360 × 12 Telephone 16 × 11 Electricity 20 × 11 Stationery Balance c/d	Sh 000 3,840 72 1,152 256 1,800 2,400 4,320 176 220 192,000 51,764 258,000
Receivable a/c
Balance b/d Credit sales	Sh 000 - 219,800 219,800	Bank Balance c/d	Sh 000 218,000 1,800 219,800
Payables a/c
Bank Balance c/d	Sh 000 192,000 1,200 193,200	Purchases	Sh 000 193,200 193,200
Cash a/c
Cash sales	Sh 000 6,168 6,168	Office expenses 20 × 52 Godown 200 × 12 Casual wages 8 × 52 Local transport 14 × 52 Partners salaries - Kamau 60 × 12 - Johana 72 × 12	Sh 000 1,040 2,400 416 728 720 864 6,168

(a) Income statement for the year ended 31 March 2019.

Kamau, Johana And Lelei Income Statement For The Year Ended 31st March 2019
Sales 6,168 + 219,800 Less: Cost of sales Opening inventory Add: purchases Less: closing stock :17,400 - 2,200 + 1,600 Gross profit Less: Expenses Licences and clearing charges Bank charges Insurance expenses Staff salaries and wages Telephone 16 × 11 + 16 × 1 Electricity 20 × 11 + 20 × 1 Office expenses Rent go down Casual wages Local transport Depreciation: Office furniture 12.5% × 256 Computers 20% x 1,800 Profit for the year Less: Interest on capital K 10% x 20,000 J 10% x 10,000 L 10% x 10,000 Less: Salaries to partners K J Profit to be shared Share of the profit K - 2/5 x 31,112 J - 2/5 x 31,112 L - 1/5 x 31,112	Sh 000 193,200 (16,800) 3,840 72 1,152 2,400 192 240 1,040 2,400 416 728 32 360 2,000 1,000 1,000 720 864 12,444.8 12,444.8 6,222.4	Sh 000 225,968 (176,400) 49,568 (12,872) 36,696 (4,000) (1,584) 31,112 31,112

(b) Partners' current accounts as at 31 March 2019.

Partners Current Accounts
Drawings Balance c/d	K Sh 000 1,200 13,964.8 15,164.8	J Sh 000 1,920 12,388.8 14,308.8	L Sh 000 1,200 6,022.4 7,222.4	Balance b/d Interest on capital Share of profile Salaries	K Sh 000 - 2,000 12,444.8 720 15,164.8	J Sh 000 - 1,000 12,444.8 864 14,308.8	L Sh 000 - 1,000 6,222.4 - 7,222.4

(c) Statement of financial position as at 31 March 2019.

Kamau Johana And Lelei Statement of Financial Position As At 31st March 2019
Non current assets Furniture and fittings 256 - 32 Computers 1,800 - 360 Current Assets Inventory Account receivable Bank balance Total Assets Capital and liabilities Capital a/c - K - J - L Current a/c- K - J - L Current liabilities Trade payables Accrued telephone bills Accrued electricity bills	Sh 000 224 1,440 16,800 1,800 51,764 72,028 20,000 10,000 10,000 13,964.8 12,388.8 6,022.4 1,200 16 20 72,028

(a) Manufacturing account for the year ended 3 1 December 2018

AM Manufacturing enterprise Manufacturing Income statement for the year ended 31st Dec 2018
Opening inventory raw materials Add: purchases raw materials Add: Carriage on raw materials Less: Drawings Less: closing inventory raw material Cost of raw materials consumed Factory wages Prime cost Factory overheads Factory fuel Factory rates and insurance 800 + 600 - 300 Factory managers salary Depreciation factory building 2½ x 4,000 Depreciation plant and machinery 10% × 8000 Gross manufacturing cost Add: Opening W.I.P Less: Opening W.I.P Manufacturing cost Manufacturing profit 25% × 71,150 Market value of manufactured goods	Sh 000 1,200 1,100 650 100 800	Sh 000 2,000 60,000 600 (2,500) (3,500) 56,600 12,000 68,600 3,850 72,450 3,200 (4,500) 71,150 17,787.5 88,937.5

(b) Income statement for the year ended 31 December 2018 (6 marks)

AMA Manufacturing Income Statement for the year ended 31 December 2018
Sales Cost of Sales Opening stock finished goods Market value of manufactured goods Less: closing stock finished goods Gross profit Add: Manufacturing profit Less: Expenses Office salaries Distribution cost Royalties paid Office rates and insurance Increase in allowance for doubtful debt Depreciation motor vehicle 20%x2400 Increase in provision for unrealized profit Profit before tax Income tax expense 30% × 24225 Profit after tax	2,400 88,937.5 (4,000) 6,000 2,850 800 430 10 480 320	104,665 (87,337.5) 17,327.5 17,787.5 (10,890) 24,225 (7,267.5) 16,957.5

(c) Statement of financial position as at 31 December 2018.

Non Current assets Land Plant and machinery 8,000 - 800-3,200 Factory buildings 4,000-400 - 100 Motor vehicles 2,400 - 480 - 960 Current assets Inventory 4,000 - 800 Trade receivable 1,100 - 55 Work in progress Closing stock raw materials Bank Prepaid expenses 300 + 50 Total Assets Equity and Liabilities Capital Profit Drawings Tax Payable Accruals	Sh 000 12,000 4,000 3,500 960 3,200 1,045 4,500 3,500 8,100 350 41,155 18,000 16,957.5 (2,500) 7,267.5 800 630 41,155

Bank a/c
Capital Loan Debtor	500,000 90,000 620,000 1,210,000	Rent Paint Furniture Safe Insurance Balance c/d	120,000 35,000 120,000 30,000 90,000 815,000 1,210,000
Cash a/c
Capital Capital Sales	70,000 7,500 5,600,000 5,677,500	Painting Electricity Salaries Consumables Sundry Supplier Drawings Balance c/d	7,500 286,000 1,120,000 120,000 43,000 2,300,000 240,000 1,561,000 5,677,500
Capital a/c
Balance c/d	727,500 727,500	Bank Cash Equipments Cash	500,000 70,000 150,000 7,500 727,500

(a) Income statement for the-year ended 3 1 March 2019.

Moses Rono Income Statement for the Period Ended 31st March
Sales Cost of sales Opening stock Add: purchases Less: Drawings Less: closing stock Gross profit Expenses Depreciation furniture 15% x 120,000 Depreciation equipement 15% x 150,000 Accrued loan interest 10%x90,000 Electricity 28,600 + 26,000 Rent Painting Insurance Salaries Consumables Sundry Net profit	2,600,000 (20,000) (235.000) 18,000 22,500 9,000 312,000 120,000 42,500 90,000 1,120,000 120,000 43,000	6,380,000 (2,345,000) 4,035,000 (1,897,000) 2,138,000

(b) Statement of financial position as at 31 March 2019.

Moses Rono Statement Of Financial Position As At 31 March 2019
Non Current assets Furniture 120,000 - 18000 Equipment 150,000 -22,500 Safe Current Assets Inventory Debtor Cash Bank Capital and liabilities Capital Net profit Drawings 240,000+20,000 Loan Creditors Accruals 26,000 + 9,000	102,000 127,500 30,000 235,000 160,000 1,561,000 815,000 3,030,500 727,500 2,138,000 (260,000) 90,000 300,000 35,000 3,030,500