BB is the owner of a business supplying goods to other traders. He has just received the financial accounts for his business for the year ended 31st December 2014 from his accountant. These are reproduced below.

Note: Inventory on 1st January 2014 was valued at GH¢48,000.
BB has also obtained comparative information about a competitor for the year ended 31st December 2014.
Net profit margin                              6%
Return on capital employed             10.50%
Current ratio                                     4.2:1
Liquid (acid test) ratio                      0.3:1
Rate of inventory turnover               4 times
Required:
a) Calculate for BB each of the following ratios for the year ended 31st December 2014 (where appropriate, calculations should be approximated to two decimal places):
i) Net profit margin.                                                                                                                                                            (2 marks)
ii) Return on capital employed (using the closing year end value for capital employed)                                                  (2 marks)
iii) Current ratio.                                                                                                                                                                 (2 marks)
iv) Liquid (acid test) ratio.                                                                                                                                                  (2 marks)
v) Rate of inventory turnover.                                                                                                                                             (2 marks)

b) Based on the ratios calculated in part (a) and all other information provided, demonstrate the performance (profitability and liquidity) of BB’s business.                                                                                                                                             (10 marks)

The Statements of Financial Position for the last two years for AO Ltd are shown below. AO Ltd implemented an expansion programme during the year ended 31st May 2015.

Additional information:
i) The total depreciation provision incorporated in the statements of financial position was GH¢48,000 at 31st May 2014 and GH¢122,000 at 31st May 2015.
ii) During the year ended 31st May 2015 a non-current asset costing GH¢22,000 with a carrying of GH¢6,000 was sold for GH¢1,000. No other disposals took place.

iii) The revaluation surplus, represents a revaluation of premises during the year ended 31st May 2015.
Required:
a) Prepare a Statement of Cash Flow for AO Ltd for the year ended 31st May 2015 in accordance with IAS 7. (Use the indirect method).                                                                                                                                                                            (12 marks)

b) State the effects of the expansion policy on AO Ltd.                                                                                                     (8 marks)

The following is a summary from the cash book of BW Ltd for July 2015:
                                         GH¢
Opening balance            1,530
Receipts                        23,104
Payments                    (23,005)
Closing balance             1,629
On investigation it was discovered that:
i) Bank charges of GH¢15 shown on the bank statement have not been entered in the cash book.
ii) A cheque drawn for GH¢110 to pay a supplier has been entered in the cash book as a receipt.
iii) A cheque from a customer for GH¢120, which was banked (and included above in receipts), has been returned by the bank, but this has not been adjusted in the company’s books.
iv) An error of transposition which occurred in the opening balance of the cash book should have been recorded as GH¢1,350.
v) Cheques totaling GH¢264 have been sent by post to suppliers but were not presented to the company’s bank until August 2015.
vi) The last page of a bank account paying-in book shows a deposit of GH¢1,040 which was not credited to the account by the bank until 1st August 2015.
vii) The company’s bank statement at 31st July 2015 shows a balance of GH¢318.
Required:
a) Demonstrate any adjustments needed to the company’s accounting records.                                                               (8 marks)

b) Prepare a Bank Reconciliation Statement as at 31st July 2015.                                                                                    (6 marks)

c) Explain THREE benefits to BW Ltd of reconciling its cash book and bank statement balances.                                 (6 marks)

The Sales Ledger Control Account of PC Ltd for the year ended 31st December 2014 has been prepared from the following information:

                                                                                                     GH¢
Debit balance b/d 1st January 2014                                         128,540
Credit balance b/d 1st January 2014                                            2,800
Total for the year 1st January 2014 to 31st December 2014
Credit Sales                                                                            1,144,200
Cheques received from customers                                        1,046,200
Cash received from customers                                                     7,100
Sales returns from customers                                                     12,000
Discounts allowed                                                                         2,480
Dishonoured cheques                                                                   5,000
Contras purchases ledger                                                           10,640
Irrecoverable debts                                                                       6,500

The Sales Ledger Control Account balance, which is part of the double entry system, failed to agree with the total receivables of GH¢189,380 as shown by the Schedule of Receivables. The following errors were subsequently discovered:
i) A customer had returned goods to PC Ltd at the selling price of GH¢2,400. The goods had been bought on credit. No entries had been made to record the return of the goods in the accounts of PC Ltd.
ii) The discounts allowed column in the cash book had been overcast by GH¢1,080.
iii) No contra entry had been made in the receivables account in the sales ledger in respect of purchases by PC Ltd of goods at a list price of GH¢2,000. PC Ltd received a trade discount of 10% on these goods. This transaction had been correctly dealt with in the Sales Ledger Control Account.
iv) A credit sale of GH¢3,520 to JT Ltd was correctly recorded in the Sales ledger Control Account, but no other entry had been made.
v) A cheque received from a customer for GH¢6,900, correctly processed through the books, had subsequently been dishonored. No entries have yet been made to record this dishonored cheque.
vi) DT Ltd, a customer, has recently been declared bankrupt and the debt of GH¢3,500 is to be written off, but no entries have yet been made.
Required:
a) Prepare a revised Sales Ledger Control Account for the year ended 31 December 2014.                                             (9 marks)

b) Prepare a statement showing the correct total of the Schedule of Receivables for the year ended 31 December, 2014.    (5 marks)

c) Discuss TWO advantages to PC Ltd of using control accounts.                                                                                   (6 marks)

Asomdwee Enterprise is run by a sole trader. The following Trial Balance was prepared from the business accounts on 30th September 2015.

The following information is also available.
i) Only 10 months’ salaries are shown in the Trial Balance. An equal amount is paid for salaries for each month of the year.

ii) As at 30th September 2015, GH¢3,200 had been prepaid for insurance, whilst GH¢410 was owing for general expenses.
iii) GH¢4,600 had been charged to general expenses for the owner’s private holiday.
iv) As at 30th September 2015, inventory was valued at GH¢22,500.
v) A customer, owing GH¢5,040 has been declared bankrupt. This amount is to be written off in full.
vi) An allowance for receivables is to be maintained at 3% of the remaining receivables.
vii) As at 30th September 2015, the business’s land was valued at GH¢100,000. Land is not depreciated.
viii) Depreciation is to be provided as follows:

• Buildings: 4% per annum using the straight line method.
• Equipment: 25% per annum using the straight line method.
• Motor vehicles: 40% per annum using the reducing balance method.

ix) There were no additions or disposals of non-current assets during the financial year.
Required:

i) Identify the accounting concept involved in each of the footnotes/items (i), (iii) and (v).                                            (3 marks)

ii) Explain the correct accounting treatment in each case.                                                                                                 (3 marks)

Asomdwee Enterprise is run by a sole trader. The following Trial Balance was prepared from the business accounts on 30th September 2015.

The following information is also available.
i) Only 10 months’ salaries are shown in the Trial Balance. An equal amount is paid for salaries for each month of the year.

ii) As at 30th September 2015, GH¢3,200 had been prepaid for insurance, whilst GH¢410 was owing for general expenses.
iii) GH¢4,600 had been charged to general expenses for the owner’s private holiday.
iv) As at 30th September 2015, inventory was valued at GH¢22,500.
v) A customer, owing GH¢5,040 has been declared bankrupt. This amount is to be written off in full.
vi) An allowance for receivables is to be maintained at 3% of the remaining receivables.
vii) As at 30th September 2015, the business’s land was valued at GH¢100,000. Land is not depreciated.
viii) Depreciation is to be provided as follows:

• Buildings: 4% per annum using the straight line method.
• Equipment: 25% per annum using the straight line method.
• Motor vehicles: 40% per annum using the reducing balance method.

ix) There were no additions or disposals of non-current assets during the financial year.
Required:
a) Prepare the Income Statement for the year ended 30th September 2015.                                                                    (8 marks)

b) Prepare the Statement of Financial Position as at 30th September 2015.                                                                     (6 marks)

The following Trial Balance was extracted from the books of Danfo Enterprise, a second hand bags dealer as at 31st December, 2014.

The following additional information are provided:
i. Provision for doubtful debts is to be reduced by 10%.

ii. Rate and Rent has been paid in advance by two (2) months. Note that Danfo Enterprise pays GH¢1,000 each month.
iii. Stock in trade as at 31st December, 2014 GH¢80,150.
iv. A bill of GH¢6,150 for vehicle running was outstanding as at 31st December, 2014.
v. The Enterprise provide depreciation as following.

• Vehicle 20% per annum on straight line bases.
• Furniture and Fittings 20% per annum on straight line basis.

You are required to:
i. Prepare Income statement for the year ending 31st December 2014.                                                                              (8 marks)

ii. Prepare Statement of Financial Position as at 31st December 2014.                                                                              (7 marks)

Distinguish between Capital Expenditure and Revenue Expenditure.                                                                                (5 marks)

Agyakoo is a vehicle spare parts dealer in Aboisokai. He pays into his Bank Account the amount of his cash takings after keeping an amount of GH¢2,000 per week for personal use and after payment of wages and other expenses, which for the Accounting period ending 31st December 2014,were as follows:

You are required to:
i. Prepare Income Statement for the year ending 31st December 2014.                                                                           (10 marks)

ii. Prepare Statement of Affairs as at 1st January 2014.                                                                                                      (2 marks)

iii Prepare Statement of Financial Position as at 31st December 2014.                                                                              (8 marks)

Alpha Ltd. controls its Creditors’ Accounts by preparing monthly Creditors’ ledger Control Account in two parts, Northern and Southern Sectors. The following figures were available as at January 31st 2014 when there was a difference of Gh¢3,000 on the Trial Balance.

On 31st January, 2014 the officer in charge of Northern Sector Ledger declared GH¢89,600
while that of Southern Sector declared GH¢15,016.
You are required to:
i. Prepare Creditors Ledger Control Account for the Northern and Southern Sectors respectively.                               (12 marks)

ii. Draw any conclusion you can from the two Control Accounts.                                                                                     (2 marks)