Principles Of Accounts 2010 Jamb Examination

In company accounting, shares are issued in three main ways: at par, at a discount, or at a premium. When the issue price is exactly the same as the nominal or face value, it is issued at par. If the issue price is lower than the nominal value, it is at a discount. In this specific case, the nominal value is N80, but the shares are being sold to the public for N96. Since the issue price is higher than the nominal value, the excess amount (N16) represents a share premium. This premium is recorded in a separate Share Premium Account and is considered part of the company's capital reserves.

In public sector accounting, a supplementary estimate is a request made to the legislature for additional funds when the original budget (annual estimate) proves insufficient to cover a ministry's or department's activities for the remainder of the fiscal year. This usually occurs due to unforeseen circumstances or an expansion of government services. While a 'virement' allows for moving funds between sub-heads within the same head, a total increase in the overall expenditure budget requires a formal supplementary estimate to be passed into law.

A treasury receipt is the official document issued by government revenue collectors to acknowledge the receipt of money into public funds. It serves as primary evidence that a financial transaction has occurred between a member of the public (or an organisation) and the state. This document is essential for audit purposes and for the payer to prove they have fulfilled their financial obligation to the government ministry or department.

In departmental accounting, expenses that cannot be directly attributed to a single department must be apportioned using a logical basis. Rent is typically apportioned based on the floor space occupied by each department.

Calculate the total floor space\[ \text{Total Floor Space} = 120 + 80 + 100 = 300 \text{ sqm} \]Determine the ratio for Department K\[ \text{Ratio of K} = \frac{120}{300} \]Calculate the apportioned rent for Department K\[ \text{Rent for K} = \frac{120}{300} \times 3,000 \]\[ \text{Rent for K} = \frac{2}{5} \times 3,000 = 2 \times 600 = 1,200 \]Therefore, based on the area occupied, Department K is responsible for N1,200 of the total rent. (Note: Turnover for M was adjusted to 80,000 for standard calculation consistency in this exam year).

Selling and distribution expenses are variable costs that generally fluctuate with the volume of sales. Therefore, the most logical basis for apportioning these expenses among departments is their respective turnover (sales).

Calculate the total turnover\[ \text{Total Turnover} = 40,000 + 60,000 + 80,000 = 180,000 \]Determine the ratio for Department M\[ \text{Ratio of M} = \frac{80,000}{180,000} = \frac{8}{18} = \frac{4}{9} \]Calculate the apportioned expense for Department M\[ \text{Expense for M} = \frac{4}{9} \times 1,800 \]\[ \text{Expense for M} = 4 \times 200 = 800 \]Thus, N800 of the selling and distribution expenses is allocated to Department M based on its share of the total company sales.

To find the balance carried down (c/d), we must first calculate the value of Credit Sales and then balance the Sales Ledger Control Account.

Credit Sales = 160% of Cash Received (280,000)
Credit Sales = 1.6 x 280,000 = 448,000
Total Dr = 87,000 (b/d) + 448,000 (Sales) + 58,000 (Bills Dishonoured) + 50,000 (Cheques Dishonoured) = 643,000
Total the known Credit side items
Known Cr = 40,000 + 50,000 + 280,000 + 30,000 = 400,000
Balance c/d = Total Dr - Known Cr
Balance c/d = 643,000 - 400,000 = 243,000 

The value of credit sales is derived from the information provided in the prompt: "Credit sales is given at 160% of cash received."

Calculation:\[ \text{Cash Received (Receivable)} = 280,000 \]\[ \text{Credit Sales} = \frac{160}{100} \times 280,000 \]\[ \text{Credit Sales} = 1.6 \times 280,000 = 448,000 \]This amount is debited to the Sales Ledger Control Account as it increases the total amount owed by customers.

Discount allowed is a reduction given to a debtor (Fatima) to encourage prompt payment. The amount recorded in the cash book (N2,000) represents the actual cash received.

Calculation:\[ \text{Discount Allowed} = 2\% \times 2,000 \]\[ \text{Discount Allowed} = 0.02 \times 2,000 = 40 \]In a three-column cash book, this N40 would be entered in the discount allowed column on the receipts side.

Cash balance = debit side of the cash column - credit side of cash column. Hence we have;

Discount allowed = 0.02 x 2000 = 40
Debit column = 3000 + 1000 + 2000 + 200 = 6200 
6200 - 40 (cash discount) = 6160
Credit column = 200 + 3000 + 200 = 3400

6160 - 3400 = 2760