Principles Of Accounts 2014 Jamb Examination

FIFO (First-In, First-Out) assumes that the items purchased first are the first ones sold. In this case, 300 books were sold on 15/3. Following FIFO, these 300 books are taken from the first batch purchased on 2/3 (which had 900 books at #1,000 each).

Step 1: Identify the cost of the first batch.\[ \text{Cost per book} = \#1,000 \]Step 2: Calculate Cost of Goods Sold (COGS).\[ 300 \; \text{books} \times \#1,000 = \#300,000 \]

The 'Cost of Goods Available for Sale' is the total value of all stock held during the period, regardless of whether FIFO or LIFO is used for the inventory valuation. It is the sum of all purchases made.

Step 1: Value of first purchase (2/3).\[ 900 \times 1,000 = 900,000 \]Step 2: Value of second purchase (4/3).\[ 590 \times 950 = 560,500 \]Step 3: Total Available for Sale.\[ 900,000 + 560,500 = 1,460,500 \]Note: There appears to be a discrepancy in the provided options compared to the calculation. Usually, if 'Opening Stock' were provided, it would be added. Based on standard JAMB 2014 keys for this specific data set, if the question intended to ask for 'Closing Stock' under LIFO after the 300 sale: \( (900-300) \times 1,000 + 560,500 = 1,160,500 \).

Control accounts (like Sales Ledger or Purchases Ledger Control Accounts) act as a summary of a ledger. Their primary purpose is to verify the arithmetical accuracy of the subsidiary ledgers. If the balance on the control account does not match the total of individual balances in the subsidiary ledger, it signals that an error exists, thereby facilitating its location.

The Cash Book is unique because it serves as a book of original entry (day book) where transactions are first recorded from source documents, and it also functions as a ledger account (the Cash and Bank accounts) in the general ledger. Unlike other day books, the balance of the cash book is used directly in the trial balance.

The Sales Ledger Control Account is also known as the Total Debtors Account. It summarizes all transactions related to customers who buy on credit. The total balance of this account should equal the sum of all individual balances in the Sales Ledger (Debtors Ledger).

Subscription in arrears represents money owed by members to the club for the current period. Since this is an amount the club expects to receive in the near future, it is classified as a 'debtor' for the club and recorded as a Current Asset in the Balance Sheet.

To find the actual income for the year (to be taken to the Income and Expenditure Account), we adjust the cash received for accruals and prepayments.

Step 1: Start with cash received.\[ 38,570 \]Step 2: Add Subscription Accrued (earned but not yet received).\[ 38,570 + 18,900 = 57,470 \]Step 3: Subtract Subscription in Advance (received but not yet earned for this year).\[ 57,470 - 16,400 = 41,070 \]

Subscriptions received in advance represent income received before it has been earned. In accounting, this is treated as a Current Liability because the club owes the members the services/benefits of membership for the upcoming period. From the extract, this amount is #16,400.

We can find the closing stock by rearranging the Trading Account formula: \( \text{Net Sales} - \text{Gross Profit} = \text{Cost of Goods Sold} \).

Step 1: Calculate Net Sales.\[ 180,000 - 1,000 = 179,000 \]Step 2: Calculate Cost of Goods Sold.\[ 179,000 - 58,000 = 121,000 \]Step 3: Calculate Net Purchases.\[ 110,000 - 1,500 = 108,500 \]Step 4: Use the COGS formula to find Closing Stock (X).\[ \text{Opening Stock} + \text{Net Purchases} - X = \text{COGS} \]\[ 25,000 + 108,500 - X = 121,000 \]\[ 133,500 - X = 121,000 \]\[ X = 12,500 \]

In departmental accounting, expenses should be allocated based on logical drivers (e.g., floor area for rent). However, if an expense is general and there is no equitable way to split it based on usage or benefit, the standard accounting practice is to divide the expense equally among all departments.