Principles Of Accounts 2009 Jamb Examination

To determine the total expenses for Department P, we must sum its specific expenses and its portion of the common depreciation expense.

1. Identify specific expenses for P:
Selling expenses = N1,100
Administrative expenses = N1,400

2. Calculate P's share of depreciation:
Total Depreciation = N1,800
Ratio = 3:5:7 (Total parts = \(3 + 5 + 7 = 15\))
P's share = \(\frac{3}{15} \times 1,800\)\[ \text{P's Depreciation} = \frac{1}{5} \times 1,800 = 360 \] 3. Total Expenses for P:\[ \text{Total} = 1,100 + 1,400 + 360 = 2,860 \] Note: Cost of sales (N6,900) is a trading account item, not typically grouped under 'operating expenses' unless specifically asked for total costs. The calculation 2,860 matches option C.

Head offices maintain branch accounts primarily for control and performance evaluation. By keeping detailed records of each branch's transactions, the head office can monitor profitability, stock levels, and cash flows. This allows management to check and monitor the growth of individual branches, identify underperforming units, and ensure that resources are being used effectively across the entire organisation.

Discrepancies between the Head Office (HO) account in the branch books and the Branch account in the HO books usually arise due to timing differences. The most common causes are 'Cash in transit' (money sent by the branch but not yet received/recorded by the HO) and 'Goods (Stock) in transit' (goods sent by the HO but not yet received by the branch). These items cause the reciprocal accounts to have different balances until adjustments are made.

To find the new ratio, we first determine the remaining share after the new partner's admission.

1. Let the total profit be 1.
2. Khadija's share = \(1/5\).
3. Remaining share = \(1 - 1/5 = 4/5\).

Sule and Ahmad previously shared equally (1:1). They will now share the remaining \(4/5\) equally:
Sule's new share = \(1/2 \times 4/5 = 2/5\)
Ahmad's new share = \(1/2 \times 4/5 = 2/5\)

The new ratio is Sule \(2/5\), Ahmad \(2/5\), and Khadija \(1/5\).

First, we must calculate the 'Distributable Profit' (or Divisible Profit) using the Profit and Loss Appropriation account logic.
\[ \text{Distributable Profit} = \text{Net Profit} + \text{Interest on Drawings} - \text{Interest on Capital} - \text{Salaries} \]\[ \text{Distributable Profit} = 10,000 + 500 - (2,000 + 1,000) - 800 \]\[ \text{Distributable Profit} = 10,500 - 3,000 - 800 = 6,700 \]Now, divide this profit between M and K in the ratio 3:2 (Total parts = 5):\[ \text{M's share} = \frac{3}{5} \times 6,700 \]\[ \text{M's share} = 3 \times 1,340 = 4,020 \]

When a partnership maintains 'Fixed Capital' accounts, all adjustments for drawings, shares of profit, salaries, and interest are recorded in a separate 'Current Account'. The Capital Account balance remains unchanged unless there is a permanent introduction or withdrawal of capital. Since the data provided (drawings, profit, salary) are current year adjustments, they do not affect the fixed capital balance of P. Therefore, P's closing capital remains at the opening amount of N20,000.

Actually, the term 'unfixed' (Fluctuating) usually means there is no separate current account—everything is in the capital account. However, if the question asks for the balance of the movements (which would constitute a 'Current Account' if one were maintained), we calculate for K:

Additions to K's account:
Share of Profit: N2,000

Deductions from K's account:
Drawings: N1,000
Interest on Drawings: N20\[ \text{Net movement} = 2,000 - 1,000 - 20 = 980 \] If 'unfixed' refers to the total balance (Capital + Current):\[ 10,000 + 980 = 10,980 \] However, based on the options provided, there is no match for 980 or 10,980. Re-evaluating the 'Share of profits' line which says 'K...N4,000' and 'K...N2,000' in the prompt might be a typo for P and K. If K's profit was N2,000, the result is 10,980. If the question implies that 'unfixed' results in a zero current account because all balances are merged into capital, then 0 is the logical answer.

When a partnership is dissolved, the assets are sold (converted into cash) to pay off liabilities and return capital to the partners. This specific process of selling off assets and collecting debts is called 'Realization'. A 'Realization Account' is opened to record the book value of assets, the cash received from their sale, and the resulting profit or loss on the process.

The Share Premium is the amount received over and above the nominal (par) value of the shares.
Nominal value = N1.00
Issue price = N1.50
Premium per share = N0.50

The number of shares issued is 750,000.
Total Share Premium:\[ \text{Total Premium} = 750,000 \times 0.50 = 375,000 \]In accounting, the Share Premium account is an equity account with a credit balance. When the premium is recognised (usually during the allotment stage), the Share Premium account is credited. Therefore, it is credited with N375,000.

When a call is made, the company creates a receivable from the shareholders. The 'Second and Final Call' account is debited, and the '12% Preference Share Capital' account is credited.

Calculation for the second and final call:
Amount per share = 25k (N0.25)
Number of shares = 750,000\[ \text{Total Call Amount} = 750,000 \times 0.25 = 187,500 \]The journal entry is:
Debit: 12% Preference Share Final Call Account N187,500
Credit: 12% Preference Share Capital Account N187,500.