GAME CHANGER AND 2024 KOTWA
HIGH STUDENTS
JUNE 2024: ACCOUNTING
PAPER1 SOLUTIONS
Nyamomba K, Maphosa P, Mangani P, Mwashita A, Kamusikiri L, Nyahondo B, Jombo N, Kaukonde E,
Wapfaira L
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1. A
2. D Economic substance of a transaction takes precedence over its legal form. Legally an
asset bought on hire purchase belongs to the seller but when accounting for such a non-current
asset its economic substance must be prioritized.
3. B
4. B Since depreciation= (Cost-Residual value)/Estimated Useful life, therefore repair costs
are not considered and are accounted for separately.
5. A Depreciation=(20% x 300 000 x 4.5 years)= 270 000
Machinery Disposal Account
Machinery 300 000 Provision for depreciation 270 000
Bank 20 000
Income Statement(Loss) 10 000
300 000 300 000
6. A Discount received is debited in the payables account and credited in the discount
received account. The above scenario is corrected by:
Journal Entries
DR($) CR($)
Suspense 2 000
Discount Received 2 000
7. D
8. B
Bank Reconciliation Statement
$ $
Balance as per bank statement 50 000
Add uncleared cheques 3 000
53 000
Less unpresented deposits 5 250
Balance as per cash book 47 750
9. C When the purchases journal is overcast, the purchases account is also overcast. Such an
error is corrected by debiting the suspense a/c and crediting the purchases a/c.
A is an error of complete reversal of entries
B is an error of principle
D is an error of omission
Such errors are not corrected through the suspense a/c since they are not revealed by the trial
balance.
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10. A
Amended Purchases Ledger Control Account
$ $
Set off 14 000 Balance b/d 288 000
Balance c/d 274 000
288 000 288 000
Balance b/d 274 000
11. D
12. B
13. C
Journal Entries
DR($) CR($)
Plant and machinery 50 000
Provision for depreciation 40 000
Revaluation 90 000
14. B Manufacturing profit increases the market value of goods completed therefore it
reduces the gross profit due to the higher cost of sales figure. But it increases net profit since it is
added before getting the net profit figure.
15. B
Manager’s commission = [% of commission/(100 + % of commission)] x Net profit before commission
= (10% / 110 %) x 150 000 = $13 636,36
Net profit after commission= Net profit before commission – Manager’s commission
= $150 000 - $13 636,36 = $136 363,64
16. C Since the donation is a specific donation, it must be transferred to a deferred income a/c(Special
fund)
17. A For an intangible non-current asset to be recognized as such, it must satisfy the following
conditions:-must generate some economic benefits
-must have an identity
-must be measurable
-must be wholely owned and controlled by the organization
18. B Buying inventory using cash reduces the quick ratio due to decrease in cash, which is one of the
most liquid current assets used to calculate the quick ratio. The transaction also has no effect to the
current ratio since buying inventory using cash reduces cash and increases inventory.
19. C
Journal Entries
DR($) CR($)
Preference Share Capital 150 000
Preference Share Redemption 150 000
Retained Earnings(150 000x$0,3) 45 000
Premium on Redemption 45 000
Preference Share Redemption 150 000
Premium on Redemption 45 000
Bank 195 000
Retained Earnings 150 000
Capital Redemption Reserve 150 000
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20. C
Margin = (15/100+15) = 3/23
Provision for unrealised profit
$ $
Balance c/d (3/23 x $276 000) 36 000 Balance b/d (3/23 x $207 000) 27 000
Income Statement(Increase) 9 000
36 000 36 000
Balance b/d 36 000
21. C
Journal Entries
Dr($) Cr($)
Goodwill 60 000
Capital(old ratios):A 30 000
B 30 000
Capital(new ratios):A 30 000
B 20 000
C 10 000
Goodwill 60 000
Capital Account
A($) B($) C($) A($) B($) C($)
Goodwill 30 000 20 000 10 000 Goodwill 30 000 30 000 -
22. A The question requires knowledge and application of IAS 2 which prescribes the valuation of
inventory at the lower of cost and NRV where cost = cost of purchase + conversion cost and NRV =
Estimated selling price – Estimated selling expenses
Component A Component B Component C
Cost $5 000 $7 000 $3 000
NRV $5 150 $7 650 $2 950
Units 50 60 40
Value of inventory= ($500x50) + ($7000x60) +($2050x40)
= $788 000
23. B Redeemable preference dividend is classified as a financial charge in order to comply with the
substance over form concept.
24. D
25. C The question requires application of IAS 10 and according to IAS 10, an adjusting event is any
event after the reporting date that provides further evidence of a condition that existed on the reporting
date but was not accounted for. Such an event necessitates a change of financial statements.
26. A
27. C 10% x x = $20 000
x= $200 000
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28. D
29. D ROCE = (Operating Profit/Capital Employed) x 100
= 428 000 x 100
148 500 + 300 000
= 23,98%
30. B
31. A
32. A
33. C
34. C
35. B
Contribution per unit = Selling Price-Marginal Cost/Unit
= $500 - $240 = $260
Contribution Sales Ratio= $260/$500 = $0,52
36. A
Contribution per unit
P= $17
Q=$5
R$16
Contribution per limiting factor= Contribution per unit
Limiting factor(Direct labour hrs)
P = $12/6 = $2 Q = $5/3 = $1,67 R = $16/10 = $1,6
Ranking: PQR
37. B
Valuation of batch(3000)
$
Direct materials(3.60x3000) 10 800
Direct labour(10 hrs x$10) 100
Production Overheads($15 x 10 hrs) 150
11 050
38. A or D A change in customer taste against a product reduces its demand, thereby causing an adverse
sales volume variance. Reduction in the price of a substitute produce also leads to a change in preferences
against a product, leading to lowers sale volume, consequently leading to an adverse sales volume
variance.
39. D
40. A
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ARR= Average Annual Profit x 100
Average Investment
Average Investment = Initial Cost + Scrap Value + Additional Capital = $300 000 + $50 000 + $40 000
2 2
=$215 000
ARR= $24 000 X 100 = 11,16%
$215 000
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077 474 3229(Game Changer)
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