QUESTION NO.

The partnership of Omar and Said carried on a business as manufacturer of computer chips,
present their petition for bankruptcy on 31st March 2008. Having listed their assets and
liabilities on that date as follows;

Appearing in expected to
the books realise
TZS'000' TZS'000'
Plant and machinery 64,200 11,600
Motor Vehecles 52,600 34,500
Furniture and fittings 39,500 12,500
Stock in trade 56,900 21,000
Debtors 47,700 29,500
Cash in hand and bank balance 1,200
262,100

Bank loan secured on motor Vehicles 34,000

Bank overdarft 43,100
Trade creditors 64,400
Accrued expenses 20,600
Omar capital 60,000
Said capital 40,000
262,100
Apart from their investments in the partnership, the following assets and liabilities belong to
the partners:

Omar Said
TZS'000' TZS'000'
Motor Vehicles 28,500 0
Furniture 8,600 8,500
Life policy at surrender value 8,000 25,000
Cash in hand and at bank 700 4,200
Bank loan secured on motor vehicle 18,800 0
Overdarfts 7,200 2,800
Income tax payable - 2005 2,800 1,200
-2006 4,100 2,900
-2007 1,600 1,400

You are informed as follows:

i. The bank overdraft of the partnership has been secured by a mortgaged on the plant
and machinery and by a personal guarantee by Said, who has pledged also his life
policy.

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 ii. Workmen’s compensation awarded at TZS 14,800,000 and immediately payable, has
not been provided for in the books of the partnership.
iii. Accrued expenses, appearing in the books of the partnership, includes the shop
manager’s salary for three months at TZS 2,600,000 per month and wages for seven
floor assistances amounting to TZS 4,900,000

REQUIRED:

a) The statement of affairs of the Partnership and separate estates (14 marks)
b) The Deficiency Accounts of the partnership and separates estates (6 marks)
Total = 20 marks
QUESTION NO. 2

RAFIKI COMPANY LIMITED wishes to prepare current cost accounts in accordance with
IAS 29- Financial Reporting in Hyperinflationary economies: the company’s profit and loss
account and balance sheet are given below:

RAFIKI COMPANY LIMITED

STATEMENT OF COMPREHENSIVE INCOME FOR THE
YEAR ENDE DECEMBER,2009

TZS. TZS.
'000' '000'
REVENUE 8,000
LESS COST OF SALES
Opening Stock 2,400
Add: Purchases 7,200
COGS 9,600
Less; Closing Stock 4,000 5,600
Gross profit 2,400
LESS Operating Expenses
Depreciation 720
Interest Expenses 400 1,120
Profit before tax 1,280
Less: Corporate tax 640
profit after tax 640
less: Dividend paid 320
Retained profit for the year 320

AF-365- FINANCIAL ACCOUNTING II Page 2

 RAFIKI COMPANY LIMITED
STATEMENT OF FINANCIAL POSITION AS AT 31st
DECEMBER 2008 AND 2009
31/12/2008 31/12/2009
TZS. '000' TZS. '000'
Assets
Non-current assets
Plant and Machinery 5,600 8,800
Less: Accumulated
depreciation 1,840 2,560
Total non-current assets 3,760 6,240
Current assets
Stock 2,400 4,000
Debtors 1,200 2,000
Cash 1,600 400
Total assets 8,960 12,640
Equity and Liabilities
Equity
Ordinary shares 1,600 2,400
Revenue reserves 2,400 2,720
Total equity 4,000 5,120
Non-current liabilities
loan stock 3,200 4,800
Current liabilities
Taxation 800 896
Creditors 960 1,824
Total Equity and Liabilities 8,960 12,640

The following information is also available

i. Plant and machinery were purchased on

1st January 2004 for TZS. 2,400,000
1st January 2007 for TZS 3,200,000
30th June 2009 for TZS 3,200,000
(Plant and machinery are all being depreciated at 10% on straight line basis. The
annual depreciation charge for the purpose of current cost account is to be based on
mid-year asset value ;)
ii. The additional loan stock and equity shares were issued on 30 th June 2009 for cash.
iii. The special indices relevant to the company are as follows;

AF-365- FINANCIAL ACCOUNTING II Page 3

 Plant and Stock, debtors,
machinery creditors
1/1/2004 200
1/1/2007 400
30/11/2008 450 250
31/12/2008 460 275
Average for 2009 500 300
30/6/2009 480 290
30/11/2009 520 310
31/12/2009 525 320

iv. You may assume that price levels both for plant and machinery and for stock items
have risen steadily over the year. You man further assume that working capital items
acquired within one month period from the end of the accounting period.
Required:
Prepare current cost accounting statement of comprehensive income for the year ended
31/12/2009 (statement of financial position is not required) (20 marks)

Total = 20 marks

QUESTION NO. 3:

In the bankruptcy of JUMA Kobona the following Statement of Affairs prepared as at

December 31st, 2007 was submitted to courts:

Unsecured Creditors 188,875 Cash in hand and at bank 16,715

Fully Secured Stock in trade 78,400
Creditors Furniture & Fittings 38,400
Personal assets 12,000
Bank Loan 18,000
Add: Book Debts
Interest 315 Good 16,500 16,500
Doubtful 42,600 28,400
18,315 Bad 16,200 -
Less: 75,300 44,900
Motor
Vehicle (26,000) Surplus on secured creditors 7,685
Surplus (contra) 7,685 Less: Preferential
Preferential Creditors (33,600)
Preferential Creditors 164,500
Salaries payable 12,600 Deficiency as per account 24,375
Tax payable 21,000
33,600 188,875 188,875

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Interest is payable on bank loan at 7% per annum.
You have been appointed the Trustee and your remuneration has been agreed at 4% of the
amount realized and 6% of the amounts distributed.

By March 31st, 2008 you have completed the realizations of all assets exactly as anticipated
except that:

(a) Motor Vehicles realized only TZS. 23,500 on 28th February

(b) Stock realized 10% more than anticipated.
(c) Personal effects realized TZS. 11,500
(d) TZS. 1,610 was collected from a debtor who was regarded as bad.
Following payments had been made by you:

TZS .
th
11 January Court fees and expenses 1,469
14th January Salaries payable on preferential basis 12,600
26th January Sale notice in t he press 600
4th February Stationery 200
1st March Settled bank loan in fully
4th March Tax payable on preferential basis 21,000
Sale Notice in press 800
Required:
Prepare a Statement to accompany the dividend you recommend should be paid and your
application for release. (CASH BOOK IS NOT REQUIRED) (20 marks)

QUESTION no 4

X Co. Ltd. agrees to absorb Y Co. ltd. on 31.12.2008 on which date their Balance Sheet are as
follows:

X Co. Y Co. X Co. Y Co.

Ltd. Ltd. Ltd. Ltd.
TZS . TZS . TZS . TZS .
Liabilities Assets
Share Capital:
Equity shares of Fixed Assets 250,000 100,000
TZS .10 each 300,000 150,000 Stock 150,000 80,000
Profit and Loss A/c 100,000 50,000 Debtors 80,000 60,000
General Reserve 100,000 50,000 Bills 70,000 40,000
Receivable
Bills Payable 40,000 20,000 Cash and Bank 50,000 30,000
Sundry Creditors 60,000 40,000
600,000 310,000 600,000 310,000

AF-365- FINANCIAL ACCOUNTING II Page 5

 The purchase consideration is TZS .280,000 payable in Equity shares of TZS .10/= each.
Additional information:
(a) Sundry Debtors of X Co. Ltd. include TZS. 30,000 due from Y Co. Ltd.
(b) Bills Payable of X Co. Ltd. include TZS . 12,000 due to Y Co. Ltd.
(c) The Stocks of X Co. Ltd. include TZS. 20,000 worth of goods purchased from Y Co. Ltd.
on which Y Co. Ltd. made a profit of 25% on cost, whereas, the Stock of Y Co. Ltd.
include TZS. 16,000 worth of goods purchased from X Co. Ltd. on which X Co. Ltd. made
a profit of 20% on sales.

Required:
Show the entries in the books of X CO the companies and the opening Balance Sheet of X Co.
Ltd. (20 marks)

QUESTION NO. 5
a) Define the following term as used in IAS 21 Accounting for the Effects of Changes in
Foreign Exchange Rates:

i. Functional currency
ii. Foreign operation:
iii. Exchange difference
iv. Presentation currency (1mark each = 4 marks)

b) Summarise procedure required in the process of translation of Functional Currency to

the Presentation Currency (6 marks)
c) Explain what you understand by the term Probate (4 marks)
d) What are The Duties of Executor? (6 marks)

Total = 20 marks

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