a. Explain accounting ratio giving one example of liquidity ratio
b. State three users of accounting ratios
c. Outline three limitations to the use of accounting ratios
a. The following is the trial balance of Abete Trading Company as at 31st December 2020:
| Le | Le | |
|
Depreciation of fixed assets |
9,260 | |
|
Stock as 1st January 2020 |
3,600 | |
|
Purchases and sales |
100,000 | 174,000 |
|
General expenses |
170,00 | |
|
Fixed assets |
42,600 | |
|
Returns |
2,400 | 4,800 |
|
Discounts |
400 | 2,000 |
|
Salaries and wages |
21,000 | |
| Suspense account | 3,060 | |
| 190,060 |
190,060 |
Additional information
(i) Stock in hand on 31st December 2020 was Le 4,000
(ii) Investigation revealed the following errors which necessitated the opening of suspense account:
- Drawings of Le 1,000 was posted to salaries and wages account
- Furniture bought at Le 1,560 was wrongly debited to fixed asset as Le 300
- Purchases day book was undercast by Le 2,000
- Discount allowed of Le 200 to a customer had not been posted to the customer's account
(iii) Depreciation of fixed assets is 10% per annum.
You are required to:
Correct the errors through journal entries (no narration is required).
b. The following is the trial balance of Abete Trading Compnay as at 31st December 2020:
| Le | Le | |
|
Depreciation of fixed assets |
9,260 | |
|
Stock as 1st January 2020 |
3,600 | |
|
Purchases and sales |
100,000 | 174,000 |
|
General expenses |
170,00 | |
|
Fixed assets |
42,600 | |
|
Returns |
2,400 | 4,800 |
|
Discounts |
400 | 2,000 |
|
Salaries and wages |
21,000 | |
| Suspense account | 3,060 | |
| 190,060 |
190,060 |
Additional information
(i) Stock in hand on 31st December 2020 was Le 4,000
(ii) Investigation revealed the following errors which necessitated the opening of suspense account:
- Drawings of Le 1,000 was posted to salaries and wages account
- Furniture bought at Le 1,560 was wrongly debited to fixed asset as Le 300
- Purchases day book was undercast by Le 2,000
- Discount allowed of Le 200 to a customer had not been posted to the customer's account
(iii) Depreciation of fixed assets is 10% per annum.
You are required to:
Prepare Trading, Profit and Loss Account for the year ended 31st December, 2020
a. The following were extracted from the books of Edum Republic for the year ended 31/12/2021:
|
$ |
|
| Receipts from oil and gas |
522,500,000 |
| Import duties |
250,000,000 |
| Export duties |
180,500,000 |
|
Receipts from agriculture |
60,000,000 |
| Permit and license fees |
92,000,000 |
| Personal and other income taxes |
230,500,000 |
| Miscellaneous income |
100,500,000 |
Additional information:
(i) The country is structured into six(6) Regions/States A, B, C, D, E, F
(ii) The population of each of the Regions/States are:
A: 400,000 B: 350,000 C: 250,000
D: 100,000 E: 300,000 F: 200,000
(iii) Revenue is shared 30% to the Federal/Central government, 10% to education trust fund 60% to be shared by the Regions/States on the basis of population.
You are required to compute:
The total revenue for the country for the year 2021
b. The following were extracted from the books of Edum Republic for the year ended 31/12/2021:
|
$ |
|
| Receipts from oil and gas |
522,500,000 |
| Import duties |
250,000,000 |
| Export duties |
180,500,000 |
|
Receipts from agriculture |
60,000,000 |
| Permit and license fees |
92,000,000 |
| Personal and other income taxes |
230,500,000 |
| Miscellaneous income |
100,500,000 |
Additional information:
(i) The country is structured into six(6) Regions/States A, B, C, D, E, F
(ii) The population of each of the Regions/States are:
A: 400,000 B: 350,000 C: 250,000
D: 100,000 E: 300,000 F: 200,000
(iii) Revenue is shared 30% to the Federal/Central government, 10% to education trust fund 60% to be shared by the Regions/States on the basis of population.
You are required to compute:
Revenue for the Federal/Central government for the year 2021
c. The following were extracted from the books of Edum Republic for the year ended 31/12/2021:
|
$ |
|
| Receipts from oil and gas |
522,500,000 |
| Import duties |
250,000,000 |
| Export duties |
180,500,000 |
|
Receipts from agriculture |
60,000,000 |
| Permit and license fees |
92,000,000 |
| Personal and other income taxes |
230,500,000 |
| Miscellaneous income |
100,500,000 |
Additional information:
(i) The country is structured into six(6) Regions/States A, B, C, D, E, F
(ii) The population of each of the Regions/States are:
A: 400,000 B: 350,000 C: 250,000
D: 100,000 E: 300,000 F: 200,000
(iii) Revenue is shared 30% to the Federal/Central government, 10% to education trust fund 60% to be shared by the Regions/States on the basis of population.
You are required to compute:
Revenue for the Regions/State collectively and individually for the year 2021.
Easyway Limited produced disposable products for the health sector.
Information available for the year ended 31st December 2021 is as follows:
|
GH⊄ |
|
| Sales | 342000 |
| Raw materials purchased | 140500 |
| Direct labour | 70300 |
| Depreciation of plant and machinery | 24400 |
| Delivery expenses | 10000 |
| Discounts allowed | 5000 |
| Direct expenses | 10000 |
| Rent | 12000 |
| Electricity | 13000 |
| Depreciation of vehicles | 5600 |
| Stocks: | 01/01/2021 | 31/12/2021 |
| GH⊄ |
GH⊄ |
|
| Raw materials | 60400 | 52600 |
| Work-in-progress | 45000 | 40200 |
| Finished goods | 39200 | 20900 |
Additional information
Apportion rent, electricity and depreciation of vehicles to factory and office in the ratio 3:2 respectively.
You are required to prepare Manufacturing, Trading, Profit and Loss Account for the year ended 31st December 2021.
a. On 1st June 2021, Iroko Plc issued 300,000 ordinary shares of D 10 at par payables as follows:
D 6 on Application
D 3 on Allotment
D 1 on the First and Final call
450,000 applicants were received with application monies. The directors decided to:
(i) reject 50,000 applications and return the monies received
(ii) issue the shares to the remaining applicants on the basis of three (3) shares for every four (4) share applied
(iii) credit the excess application monies to allotment
All the calls were made and monies received accordingly.
You are required to prepare the following Ledger Accounts:
Share Application Account
b. On 1st June 2021, Iroko Plc issued 300,000 ordinary shares of D 10 at par payables as follows:
D 6 on Application
D 3 on Allotment
D 1 on the First and Final call
450,000 applicants were received with application monies. The directors decided to:
(i) reject 50,000 applications and return the monies received
(ii) issue the shares to the remaining applicants on the basis of three (3) shares for every four (4) share applied
(iii) credit the excess application monies to allotment
All the calls were made and monies received accordingly.
You are required to prepare the following Ledger Accounts:
Allotment Account
c. On 1st June 2021, Iroko Plc issued 300,000 ordinary shares of D 10 at par payables as follows:
D 6 on Application
D 3 on Allotment
D 1 on the First and Final call
450,000 applicants were received with application monies. The directors decided to:
(i) reject 50,000 applications and return the monies received
(ii) issue the shares to the remaining applicants on the basis of three (3) shares for every four (4) share applied
(iii) credit the excess application monies to allotment
All the calls were made and monies received accordingly.
You are required to prepare the following Ledger Accounts:
First and Final call Account
d. On 1st June 2021, Iroko Plc issued 300,000 ordinary shares of D 10 at par payables as follows:
D 6 on Application
D 3 on Allotment
D 1 on the First and Final call
450,000 applicants were received with application monies. The directors decided to:
(i) reject 50,000 applications and return the monies received
(ii) issue the shares to the remaining applicants on the basis of three (3) shares for every four (4) share applied
(iii) credit the excess application monies to allotment
All the calls were made and monies received accordingly.
You are required to prepare the following Ledger Accounts:
Bank Account
e. On 1st June 2021, Iroko Plc issued 300,000 ordinary shares of D 10 at par payables as follows:
D 6 on Application
D 3 on Allotment
D 1 on the First and Final call
450,000 applicants were received with application monies. The directors decided to:
(i) reject 50,000 applications and return the monies received
(ii) issue the shares to the remaining applicants on the basis of three (3) shares for every four (4) share applied
(iii) credit the excess application monies to allotment
All the calls were made and monies received accordingly.
You are required to prepare the following Ledger Accounts:
Ordinary Share Capital Account
