UNIVERSITY OF DAR ES SALAAM
FACULTY OF COMMERCE AND MANAGEMENT
DEPARTMENT OF ACCOUNTING
P.O. Box 35046, Dar es Salaam
TANZANIA
SUGGESTED SOLUTIONS AND MARKING SCHEME FOR FIRST
SEMESTER UNIVERSITY SUPPLEMENTARY/SPECIAL
EXAMINATION FOR AWARD OF THE DEGREE OF
BACHELOR OF COMMERCE, BACHELOR OF ARTS
[ECONOMICS], BACHELOR OF EDUCATION [COMMERCE]
AND BACHELOR OF SCIENCE [WILDLIFE]
ACADEMIC YEAR 2005/2006
Course Code: AC 100
Course Title: Principles of Accounting I
Date: Friday, 25th August 2006
Venue: Yombo 3, Main Campus
Time: 08:00 - 10:30
General Instructions:
1) There are four questions in this paper; you are required to attempt all questions.
Please note the total time allowed is 2 hours 30 minutes only .
2) Show your workings clearly.
AC 100 August 2006 :Page 1 of 6
Question 1 (25 marks)
1.] D
2.] D
3.] A
4.] B
5.] C
6.] D
7.] C
8.] C
9.] C
10.] C
AC 100 August 2006 :Page 2 of 6
Question 2 (25 marks)
Cash Book
2004 2004
1,793,00
Dec-31 Balance b/f 0 Dec-31 Bank charges 18,000
Dec-31 Dividends 26,000 Dec-31 Standing order 32,000
Direct debit 88,000
1,681,00
Balance c/f 0
1,819,00 1,819,00
0 0
Bank Reconciliation Statement as at 31 December 2004
1,557,00
Balance as per bank statement 0
Add: Deposits in transit
V. Owena 98,000
K. Watuhu 134,000
232,000
Less: Outstanding cheques
B. Okeyo [No. 869] 71,000
L. Pendo [No. 872] 37,000
108,000
1,681,00
Balance as per adjusted cash book balance 0
AC 100 August 2006 :Page 3 of 6
Question 3(25 marks)
A.] A business is commenced on 1 January and purchases are made as follows:
Unit price
Month No of units Value TAS.
TAS.
Jan 380 2.00 760
Feb 400 2.50 1,000
Mar 350 2.50 875
Apr 420 2.75 1,155
May 430 3.00 1,290
Jun 440 3.25 1,430
2,420 6,510
During this period, 1,420 articles were sold for TAS.7,000.
Required:
1. Compute the cost of stock on hand at 30 June using the following methods: [9 marks]
(i) FIFO
(ii) LIFO
(iii) Weighted Average Cost
2. Show the effect of each method on the trading results for the six months [6 marks].
B.] Gati has been trading for many years, making up his accounts to 31 December.
On July 20X2 he purchased a van for TAS.2,400,000. He estimates that its useful life is
five years, with a TAS.300,000 residual value. He provides depreciation on a straight line
basis on all his fixed assets.
Gati sold the van on 1 April 20X4 for proceeds of TAS.1,800,000.
Required:
Enter the above transactions in the relevant ledger accounts and show the effects on the
financial statements for each year [10 marks].
AC 100 August 2006 :Page 4 of 6
Question 4(25 marks)
Income Statement for the year
ended 31st December 2002
TAS 000s TAS 000s TAS 000s
Sales 279,000
Cost of Goods Sold:
Opening Stock 11,000
Purchases 154,000
165,000
Less: Closing Stock 17,000
Cost of Goods Sold 148,000
Gross Profit 131,000
add:
Miscellaneous Income 800
131,800
Operating Expenses:
Salaries 22,000
Electricity 5,720
Postage and Stationery 1,640
Telephone 970
Motor Expenses 716
Rates and Insurance 2,150
Bad Debts 149
Doubtful Debts 196
Depreciation - Vehicles 6,100
Depreciation - Buildings 1,000
Loss on Disposal of Vehicle 250
Total operating expenses 40,891
Net Profit 90,909
AC 100 August 2006 :Page 5 of 6
Balance Sheet as at 31 December
2002
TAS 000s TAS 000s TAS 000s
Fixed Assets:
Freehold Buildings at cost 100,000
Less: Accumulated depreciation 19,000
81,000
Motor Vehicles at cost 30,500
Less: Accumulated depreciation 21,600
8,900
Net Book Value 89,900
Current Assets:
Stocks 17,000
Trade Debtors 37,650
less: Provision for Doubtful debts 426
37,224
Prepayments 400
Sundry Debtors 200
Bank 5,248
60,072
Current Liabilities:
Creditors 12,833
Accruals 230
13,063
Net Current Assets 47,009
136,909
Financed by:
Capital at start 100,000
Net Profit 90,909
190,909
Less: Drawings 54,000
136,909
AC 100 August 2006 :Page 6 of 6
