SECTION B: ATTEMPT TWO QUESTIONS FROM THIS SECTION Question 1 (10 marks) A. Devine and Vicky are partners dealing in cosmetics and other assorted goods. They share profit and losses in ratio 3:2. The trial balance below was extracted from the books of the partners as at 31st December, 2020. DR CR Rent Expenses 400,000 Bank overdraft 100,000 Discount 50,000 100,000 Turnover 2,100,000 Cost of Sales 700,000 Receivable 400,000 Patent 400,000 Stocks (31/12/2019) 150,000 Loan from Devine at 15% per annum 200,000 Land 900,000 Motor vehicle 600,000 Equipment 400,000 Provision for depreciation: Motor vehicles 140,000 Equipment 240,000 Payable 300,000 Drawings: Devine 70,000 Vicky 60,000 Capital Account: Devine 500,000 Vicky 300,000 Current Account: Devine 120,000 Vicky 30,000 Total 4,630,000 4,630,000 The following information is relevant: i. Interest on loan from Devine had neither been paid nor provided for. ii. Motor Vehicles and Equipment are to be depreciated at the rate of the 10% and 20% percent per annum respectively on the reducing balance methods. iii. Rent expenses outstanding at 31/12/2000 amounted to GHc 50,000. iv. Capital attracts interest of 10% per annum. Vicky is to be paid a monthly salary of GHc 3,000. v. No interest is allowed or charged on current accounts or on drawings or on drawings. You are required to prepare: a. Income Statement ( 2.5 Marks) b. Profit and Loss Appropriation Account (2.5 marks) c. Partners current account (2.5 marks) d. Statement of Financial Position as at 31/12/2000 (2.5marks) B. Critically examining why businesses that are made up of two or more people coming together with the aim of making profit fail in Ghana. You are to support your answers with relevant examples. ( 20 Marks) Question 2 (20 marks) A summary of the cash transactions of Sekonde Club for the year ended 31st December, 2000 was as follows; GHC Balance b/d 46,500 Membership Subscription 132,500 Bar Sales 600,000 Sales of party Tickets 112,500 901,500 GHC Party Expenses 52,500 Stationery 31,500 Bar Expenses 21,000 Administrators Expenses 5,750 Office Equipment 80,000 Bar Purchases 400,000 Office Expenses 89,500 Travelling Expenses 75,000 Office Rent 20,000 Processing Fee 10,000 Balanced c/d 115,000 901,500 The following information is relevant 1. Assets and Liabilities of the Club was as follows; 31/12/2000 01/01/2000 GHC GHC Office Equipment - 70,000 Furniture - 60,000 Bar Stock 49,000 34,000 Owings to Bar Suppliers 38,750 30,000 Subscription in Advance 5,000 4,000 Subscription in Arrears 26,000 20,000 2. Office Equipment is to be depreciated at 20% on cost and Furniture at 15% on cost. Required: Prepare a. Statement of Accumulated Fund for the Club (2.5 marks) b. Bar Trading Account (2.5marks) c. Income and Expenditure (2.5 marks) d. Statement of Financial Position (2.5marks) B. You have been appointed as a financial consultant to Show-Man-Show club to assist them in restructuring their finance. Explain to the executives the types of accounts they are to prepare at the end of the period and if it is different from the partnership Accounts. (10 Marks) Question 3 (20 Marks) The following are summarized accounts for ALICEZONA, a company with an accounting year ending 31st December. Statement of Financial Position as at 31st December 2017 2016 GHC GHC Non-Current Assets 12,700 4,995 Current Assets Stocks 50,455 40,145 Debtors 43,370 40,120 Cash/Bank 5,790 12,092 99,615 92,447 Current Liabilities Trade Creditors 37,230 32,604 Taxation 3,260 2,473 Accruals 1,985 1,785 42,475 36,862 Net Current Assets 57,140 55,585 Total Assets less Current liabilities 68,840 60,580 Non-Current Liabilities 10% Debentures 19,840 19,840 Net Assets 50,000 40,740 Financed By: Capital (ordinary share of GHC 0.25) 9,920 9,920 Income Surplus 40,080 30,820 50,000 40,740 PROFIT AND LOSS ACCOUNT FOR 2017 2016 GHC GHC Turnover 583,900 486,300 Profit before interest and tax 20,670 17,238 Less: Interest Payable 1,984 1,984 Profit before Tax 18,686 15,254 Taxation 7,026 5,734 Profit after Tax 11,660 9,520 INCOME SURPLUS ACCOUNT 2017 2016 GHC GHC Balance at 1st January 30,820 23,540 Add: Profit for the year 11,660 9,520 42,480 33,060 Less: Dividend 2,400 2,240 Balance at 31st December 40,080 30,820 You are required to: a. Calculate, for each year, one ratio for each of the following user groups, which are of particular significance to them: i. Shareholders (2 marks) ii. Trade creditors (2 marks) iii. Management (2 marks) b. Make brief comments upon the changes, between the two years, in the ratios calculated in (a) above. (6 marks) c. Explain the usefulness of Financial statement information to the following stakeholders: Financial Analysts (2 marks) Employee (2 marks) Debtors (2 marks) Government Agency (2 marks)