Advanced Accounting (ACCM3201)

Faculty of Economics and Management Science (FEMS)

Semester: Second Semester

Level: 300

Year: 2018

Answers (200 )
THE UNIVERSITY OF BAMENDA/UNIVERSITE DE BAMENDA
FACULTY OF ECONOMICS AND MANAGEMENT SCIENCES DEPARTMENT OF ACCOUNTING
First Semester Examination for 2017/201S Academic year Year: level
300 (year 2)
Course code and title: ACCT 302; Advanced Accounting Course Status: C Credit Value: 5
Course Lecturers: Akoso / Fai
Venue: TBA Date: 10/07/2018 Time: 15:00 - 18:00
Instructions
- ATTEMPT ALL THE QUESTIONS.
FILE ONE.
Question 1 (20 Marks)
On 01/01/2015, ALPHA PLC was constituted and a public offer of Ordinary Share was made. The details of the offer
were as follows:
1. 1,000 Debentures of 10,000 FCFA each payable in installments as follows:
- On Application, 3,000 FCFA per share;
- On Allotment, 4,000 FCFA;
- On the 1
st
and Final Call, 5,000 FCFA, This included a Premium worth 20% of the Nominal Value:
2. 1,500 applications were received from aspiring shareholders on 01/02/2015, and the company’s Board of Directors
decided to deal with them as follows:
- To make a refund of money for 500 applications; this was done on 01/03/2015
3. To allot the remaining shares applied for on the basis of 1 share for every 1 applied for, on 01/05/2015;
4. Money requested for the 1
st
(and final call) was all paid for with the exception of a holder of 50 shares, on
01/07/2015
5. A resolution was passed by the board of directors, on 01/08/2015, to forfeit the 50 shares. The forfeited shares were
later issued to Mr. John at 9,500 FCFA each on 01/09/2015.
Work Required:
(a) What is the gain realized by the company after the reissue of shares to Mr. John? (3mks)
(b) Show the journal entries for the above transactions, assuming that the first applicant was reimbursed a balance after
deducting all expenses on reissue (15mks)
(c) Present the new balance sheet of ALPHA PLC after the above transactions. (2mks)
Question 2.(15 Marks)
ABAM, BANDE and CHI entered into a joint venture on January 1, 2017. ABAM and BANDE were both to supply
some of the raw materials used for production, while only BANDE and CHI would sell the finished goods. Profits or
losses were to be shared in the ratio 3:2:1 respectively. The following transactions took place there after:
ABAM supplied raw materials costing 450,000 FCFA
BANDE supplied raw materials costing 300,000 FCFA
ABAM paid wages worth 180,000FCFA
ABAM paid storage expenses 40,000FCFA
BANDE paid carriage 90,000FCFA
CHI paid selling expenses 120,000FCFA
BANDE received cash from sales 800,000FCFA
CHI received cash from sales 1,000,000FCFA
Work Repaired:
(1) Show the accounts that will appear in the books of ABAM, BANDE and CHI.
(2) Prepare a memorandum joint venture account for the above transactions.
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FILE TWO.
Question 3.
(10 Marks)
HONEST PLC invested 70,000,000 FCFA in BRYAN PLC and controls 40% of its common stock, on 1/1/2016. As at
31/12/2016, BRYAN PLC Statement of Income showed a profit of 60,000,000 FCFA. On 15/3/2017, BRYAN PLC declared
dividends of 25% of the investment and immediately paid by cheque.
Required: Show the treatment of these transactions in the books of HONEST PLC using T-accounts
Question 4. (25 Marks)
The Statements of Financial Position of PANDA and SANG companies as at 31/12/2012 were as shown below:
PANDA Company 000
FCFA
SANO Company 000
FCFA
Cash
100,000
20,000
Other current assets
180,000
50,000
Plant and equipment (net)
120,000
40,000
Land -
20,000
Total assets
400,000
130,000
Liabilities
60,000
50,000
Common stock 10,000 FCFA par
200,000
50,000
Other contributed capital
40,000
10,000
Retained earnings
100,000
20,000.
Total equity
400,000
130,000
On 1/1/2013, PANDA Company acquired 4000 shares (80%) of the outstanding common stock of SANO Company for
74,000,000 FCFA cash. Any differential arising from the acquisition should be assigned to undervalued land. Within the year
2013, PANDA transferred equipment to SANO at 40,000,000 FCFA. The equipment had cost PANDA 32,000,000 FCFA and is
depreciated at 25% linearly. SANO also took a short term loan from PANDA of 12,000,000 FCFA within the year.
Work Required:
(a) Determine the differential at date of acquisition.
(Sinks)
(b) Prepare the Consolidated Statement of Financial Position Work Paper as at date of acquisition.
(13mks)
(c) Show journal entries for recording investment and elimination entries for consolidated statements.
(7mks)
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