The University of Zambia

In association with

Zambia Centre for Accountancy Studies

PRINCIPLES OF FINANCIAL ACCOUNTING

ASSIGNMENT

22 August 2019

INSTRUCTIONS:

1. All questions must be attempted.

2. Clearly type all your work and use; Font: Times New Roman, Font Size: 12, Line and
Paragraph spacing: 1.15

3. Clearly write on the cover page: Student Name; Student Number; Programme; Subject
Code and Subject; Lecturer’s name; and the due date.

4. Due date for submission is 20th September 2019

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Question One

Enter the following transactions for July 2019 in the subsidiary books of J. Mubanga, post
them to the Ledger Accounts and extract a Trial Balance as at 31 July 2016.

2019
July 1 Opening balances K
Cash at Bank 70,000
Inventory 650,000

Trade receivables
J. Tembo 45,000
T. Mumba 61,000

Trade payables
S. Kangwa 22,500
B. Banda 30,000

Premises 400,000
Furniture and Fittings 80,000
Motor Van 65,000
Capital – J. Mubanga 1,318,500

Transactions for the Month:

July 3 Purchased goods on credit from S. Kangwa – K20, 000 (Invoice No. 82).

5 Purchased goods on credit from B. Banda – K60, 000 (Invoice No. 196).

7 Sold goods to Tembo on credit – K28, 000 (Invoice No. 48).

9 Returned goods to S. Kangwa – K2, 500 (Debit Note No 12).

14 Sold goods to T. Mumba on credit – K20, 000 (Invoice No: 14).

16 Returned goods to B. Banda – K6, 800 (Debit Note No: 17).

18 Return from J. Tembo goods worth K3, 500 (Note No: 42).

20 T. Mumba returned goods – K2, 300 (Debit Note No. 68).

23 Purchased Furniture on credit from W. Wilombe – K25, 000 (Invoice No: 06).

25 Invoice No.26 received from Maambo & Co for K6, 200 being fuel purchased
on Credit.

28 Purchased goods from S. Kangwa for K15, 000 (Invoice No 109)

29 Sold goods to Tembo on credit – K27, 500 (Invoice No 50)

30 Sold goods to T. Mumba on credit – K52, 000 (Invoice No. 51)

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 (Total: 40 marks)

Question Two

The following are the ledger account balances of M. Munatamba as at 30th June 2019 a sole
trader based in the tourist Capital of Livingstone:

DR CR
K K
M. Munatamba’s Capital a/c 70,000
M. Munatamba’s Drawings a/c 5,000
Plant and Machinery 26,000
Inventory (1 July, 2018) 9,500
Purchases 58,000
Sale returns 1,500
Sundry Trade Receivables 34,600
Furniture and Fixtures 2,400
Freight and Duty incurred on
Purchases (Carriage inwards) 4,200
Carriage outwards 1,200
Rent, rates and taxes 2,600
Printing and stationery 1,560
Trade expenses 400
Sales 78,000
Purchases returns 1,000
Discounts received 450
Insurance charges 475
Salaries and wages 6,500
Sundry Trade Payables 14,800
Petty Cash 1,000
Cash at Bank 9,315
Totals 164,250 164,250

The following matters are to be taken into consideration:

1. Inventory on 30th June 2019 was counted and was valued at K10,000;
2. Write off K200 as bad debts;
3. Provision for doubtful debts to be created at 5% on trade receivables;
4. Create a provision for discount on trade receivables and reserve for discount on trade
payables at 2%;
5. Depreciation to be provided on:
Plant and machinery at 10%;
Furniture and Fixtures at 10%;
6. Insurance pre-paid amounted to K75;
7. Salary outstanding amounted to K500;
8. A fire occurred in May 2015 in the go-down and K6, 000 worth of goods were
destroyed. The insurance admitted the claim up to K3,000;

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 Required:

i. Prepare suitable final accounts for the year ended 30th June 2019 and;
(16 marks)

ii. A Statement of Financial Position at that date.

(24 marks)

(Total: 40 marks)

Question Three

The IASB’s framework sets out the concepts underlying the preparation and presentation of
financial statements for external users. Based on the framework, you are required to answer
the following questions:

(a) State and explain objectives of financial accounting. (2 marks)

(b) Explain FOUR qualitative characteristics of financial statements. (4 marks)

(c) Describe the TYPE of accounting records that a business should maintain and the
main use of each. (10 marks)

(d) Define the elements of financial statements. (4 marks)

(Total: 20 marks)

End of question Paper