UGBS 205: FUNDAMENTALS OF ACCOUNTING METHODS
1ST SEMESTER 2024/2025 ACADEMIC YEAR
PRACTICE
Q1
The following trial balance was extracted from the books of Shael Ventures, a retail business as
at 30 November, 2023:
GH¢ GH¢
Freehold Land & Building (at cost) 70,000
Accumulated depreciation on building (at 1 December 2022) 26,000
Motor Vehicles (at cost) 70,000
Accumulated depreciation on vehicles (at 1 December 2022) 37,500
Trade Receivables and Payables 73,000 8,000
Purchases and Sales 350,000 500,000
Inventory (at 1 December, 2022) 40,000
Advertising 16,000
General expenses 14,500
Wages & Salaries 40,000
Furniture (cost 40,000) 27,000
Provision for doubtful debts (at 1 December, 2022) 1,500
Returns 15,000 12,000
Discounts 10,000 15,000
5% Long-term Bank Loan 20,000
Cash drawings 36,000
Cash in hand 50,000
Bank 6,500
Carriage Inwards 3,000
Carriage Outwards 2,000
Investments 10,000
Rent receivables 8,000
Capital 100,000
826,000 826,000
Additional information is provided as follows:
1. Wages outstanding on 30 November 2023 amounted to GH¢1,000, while advertising
includes a prepayment of GH¢2,000.
2. Goods returned by a receivable to the value of GH¢20,000 have not been accounted for
and an irrecoverable debt of GH¢13,000 is to be written off. The provision for doubtful
debts should be adjusted to represent 2.5% of receivables.
3. Shael, the owner, took goods costing GH¢10,000 for his personal use. Inventory at 30
November, 2023 is valued at GH¢50,000;
4. During the year, a vehicle which had cost GH¢20,000 and a written down value of
GH¢12,000 was sold for proceeds of GH¢15,000 received in cheque. No entries have
been made for this transaction.
5. Depreciation is charged at 5% reducing balance basis for buildings, 20% for furniture on
reducing balance basis and 2% straight line for motor vehicles. No depreciation is
charged in the year of asset disposal, and Land constitutes two-seventh (2/7) of the entire
cost of Freehold land & building.
6. Interest payable on the loan is yet to be paid and a return of 10% per annum is expected
on the investments.
7. The rent receivables of GH¢8,000 relates to rental income received during the year. The
business has an office space which is rented out at GH¢500 per month.
Required:
You are required to prepare for Shael Ventures, the income statement for the year then ended
30th November 2023 and the statement of financial position as at that date.
Q2
"Something must kill a man enterprise" was established in August 2024 by R.K. Asiedu. He
started the business with cash of GH¢8,700. In the month of August 2024, the following
transactions were undertaken:
a. He opened a bank account for the business and deposited a cash of GH¢4,500
b. He used part of a house given to him by his father as a store. The store was valued at
GH¢60,000.
c. He purchased some furniture and fittings for GH¢1,800 which he paid for with cash from the
business.
d. He arranged with Toyota Company Ltd and bought a delivery van on credit at a cost of
GH¢18,750.
e. He took a loan of GH¢16,500 from GT Bank payable within two years, used GH¢13,500 to
pay for part of the car and paid the rest into his bank account.
f. He bought goods from Aboagye enterprise and paid for it with a cheque of GH¢4,200
g. Goods valued at GH¢30,000 was procured from Aseda Company Ltd on credit.
h. He sold some of the goods costing GH¢12,000 and received cash of GH¢3,500, cheque of
GH¢1500 while the remaining amount was on credit to another trader Nana Kwame.
You are required to;
i. State the accounting equation
ii. Explain the effect that each transaction above will have on the accounting equation.
Q3
On 2nd April 2024 Hala Madrid Ltd received its monthly bank statement which showed
that there was a bank overdraft of GH¢2,129,000.00. The balance was not in agreement
with the balance shown in the bank column of the company’s cash book. The chief cashier
carried out a reconciliation which revealed the following:
a) Bank charges for the quarter ended 31 March 2024 amounting to GH¢48,000.00 had
been omitted from the cash book.
b) A page in the cash book of debit entries had been understated by
GH¢600,000.00 and the incorrect total carried forward to the next page.
c) A dividend cheque received for GH¢340,000.00 had been entered twice in the cash
book.
d) The company’s agent in Tema had paid into a local bank a sum of GH¢1,550,000.00 but this
was not shown on the bank statement.
e) A standing order of GH¢110,000.00 to a trade association had been duly paid by the
bank but there was no entry in the cash book.
f) Cheques totaling GH¢4,920,000.00 had been delivered to suppliers on 30 March 2024
but none of these had yet been presented to the bank.
g) A cheque received for GH¢154,000.00 had been entered in the cash book as
GH¢145,000.00.
h) The bank statement revealed a credit transfer receivable for GH¢291,000.00 but after
enquiries it was discovered that this related to another company.
i) A cheque of GH¢120,000.00 being hire purchase instalment payment was due on 20
January 2024. The amount was correctly entered by the company, but the bank had
inadvertently debited another company.
j) The bank statement recorded that a cheque for GH¢185,000.00 paid into the bank
had been subsequently dishonored. The company was unaware of this.
Required
a. Prepare a corrected cash book
b. Prepare Bank Reconciliation statement as at 31 March, 2024.
Q4
You have been able to obtain the following information for the financial year from the books of
the original entry of Nocolich Enterprise:
GH¢
Sales - cash 344,890
- credit 268,187
Purchases - cash 14,440
- credit 496,600
Total receipts from customers 600,570
Total payments to suppliers 503,970
Discounts allowed (all to credit customers) 5,520
Discounts received (all from credit suppliers) 3,510
Refunds given to cash customers 5,070
Balance in the sales ledger set off against balance in the purchases ledger 70
Bad debts written off 780
Increase in the provision for bad debts 90
Credit notes issued to credit customers 4,140
Credit notes received from credit suppliers 1,480
According to the audited financial statements for the previous year, debtors’ and creditors’
balances as at 31st May, 2023 were GH¢26,555 and GH¢43,450 respectively.
Required:
Draw up the relevant control accounts for debtors and creditors.
Q5.
The following transactions relate to the first 3 months ended 31st March, 2024 of ABC
Enterprise.
Jan 1st : Commenced business with cash at bank of Ghc 500,000.
Jan 5th : Bought furniture and fittings worth Ghc 100,000 from Adom Ltd. On credit
Jan 15th: Bought office stationery for Ghc 2,000 with cheque
Jan 28th: Bought goods for resale with cheque of Ghc 50,000
Feb 2nd: Paid Adom Ltd. A cheque for Ghc 100,000
Feb 3rd: Withdrew cash of Ghc 200,000 from the bank for office use.
Feb 5th: Paid rent with cash of Ghc 60,000
Feb 10th: Sold some of the goods for Ghc 40,000 on credit to K. Danso
Feb 25th: Bought goods with cash of Ghc 70,000
Mar. 8th: Received cheque payment of Ghc 40,000 from K. Danso
Mar. 31st: Sold goods for Ghc 30,000 receiving cheque in payment.
Required.
You are required to enter the above transactions in the relevant accounts and prepare a trial
balance as of 31st March 2024.
Q6.
a) The following balances were extracted from the books of Auspic Enterprise for July 2020.
Office Furniture GH₵150,000
Cash on hand GH₵70,000
Bank Balance GH₵200,000
Debtors: Ascertain GH₵ 1,200
Freeman GH₵8,000
Creditors: Suzzy GH₵26,000
Pao GH₵14,000
The following transactions took place during the month of August 2020
August:
1 Credit Sales: Ascertain GH₵50,000, Joe GH₵55,000 Freeman GH₵117,000.
5 Credit Purchases: Suzzy GH₵30,000, Jane GH₵35,000, Pao GH₵59,000.
9 Return Inwards: Ascertain 10,000, Joe GH₵1,000, Freeman GH₵3,000.
11 Return Outwards: Jane GH₵3,000, Pao GH₵1,000.
20 Credit Sales: Ascertain GH₵50,000, Joe GH₵40,000, Freeman GH₵15,000.
25 Credit purchases: Jane GH₵12,500, Pao GH₵20,500, Suzzy GH₵18,000.
28 Bought 100 bags of stocks from Samuel at GH₵10 each on credit.
You are required to:
i. Determine the opening capital of Auspic Enterprise.
ii. Write up the above transactions in the relevant journals.
