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The partnership of Omar and Said carried on a business as manufacturer of computer chips,
present their petition for bankruptcy on 31st March 2008. Having listed their assets and
liabilities on that date as follows;
Appearing in expected to
the books realise
TZS'000' TZS'000'
Plant and machinery 64,200 11,600
Motor Vehecles 52,600 34,500
Furniture and fittings 39,500 12,500
Stock in trade 56,900 21,000
Debtors 47,700 29,500
Cash in hand and bank balance 1,200
262,100
Omar Said
TZS'000' TZS'000'
Motor Vehicles 28,500 0
Furniture 8,600 8,500
Life policy at surrender value 8,000 25,000
Cash in hand and at bank 700 4,200
Bank loan secured on motor vehicle 18,800 0
Overdarfts 7,200 2,800
Income tax payable - 2005 2,800 1,200
-2006 4,100 2,900
-2007 1,600 1,400
i. The bank overdraft of the partnership has been secured by a mortgaged on the plant
and machinery and by a personal guarantee by Said, who has pledged also his life
policy.
REQUIRED:
a) The statement of affairs of the Partnership and separate estates (14 marks)
b) The Deficiency Accounts of the partnership and separates estates (6 marks)
Total = 20 marks
QUESTION NO. 2
RAFIKI COMPANY LIMITED wishes to prepare current cost accounts in accordance with
IAS 29- Financial Reporting in Hyperinflationary economies: the company’s profit and loss
account and balance sheet are given below:
TZS. TZS.
'000' '000'
REVENUE 8,000
LESS COST OF SALES
Opening Stock 2,400
Add: Purchases 7,200
COGS 9,600
Less; Closing Stock 4,000 5,600
Gross profit 2,400
LESS Operating Expenses
Depreciation 720
Interest Expenses 400 1,120
Profit before tax 1,280
Less: Corporate tax 640
profit after tax 640
less: Dividend paid 320
Retained profit for the year 320
iv. You may assume that price levels both for plant and machinery and for stock items
have risen steadily over the year. You man further assume that working capital items
acquired within one month period from the end of the accounting period.
Required:
Prepare current cost accounting statement of comprehensive income for the year ended
31/12/2009 (statement of financial position is not required) (20 marks)
Total = 20 marks
QUESTION NO. 3:
By March 31st, 2008 you have completed the realizations of all assets exactly as anticipated
except that:
TZS .
th
11 January Court fees and expenses 1,469
14th January Salaries payable on preferential basis 12,600
26th January Sale notice in t he press 600
4th February Stationery 200
1st March Settled bank loan in fully
4th March Tax payable on preferential basis 21,000
Sale Notice in press 800
Required:
Prepare a Statement to accompany the dividend you recommend should be paid and your
application for release. (CASH BOOK IS NOT REQUIRED) (20 marks)
QUESTION no 4
X Co. Ltd. agrees to absorb Y Co. ltd. on 31.12.2008 on which date their Balance Sheet are as
follows:
Required:
Show the entries in the books of X CO the companies and the opening Balance Sheet of X Co.
Ltd. (20 marks)
QUESTION NO. 5
a) Define the following term as used in IAS 21 Accounting for the Effects of Changes in
Foreign Exchange Rates:
i. Functional currency
ii. Foreign operation:
iii. Exchange difference
iv. Presentation currency (1mark each = 4 marks)
Total = 20 marks