Co-operative Accounting November 2010 Past Paper – KNEC Diploma

Co-operative Accounting November 2010 Past Examination Question Paper – KNEC

This Past Paper examination was examined by the Kenya National Examination Council (KNEC) and it applies to the following Certificate courses

• Diploma in Co-operative Management

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THE KENYA NATIONAL EXAMINATIONS COUNCIL
DIPLOMA IN CO-OPERATIVE MANAGEMENT
CO-OPERATIVE ACCOUNTING
3 hours

(a) Explain five contents of the asset register of a co-operative society. (10 marks)

(b) The following balances were extracted from the books of Tamutamu Co-operative Society on 1 January 2010.
Ksh.
Cash at bank                                       410,000
Cash in hand                                       80,000
Transactions for the month of January 2008 were as follows:
_f £ •
January
2 Sold milk for cash Ksh. 13,000.

• Deposited Ksh. 75,000 into the bank account.
• Bought fuel and oil for Ksh. 5,000 in cash.

10    40 members joined the society and paid cash Ksh. 4,000 as shares and Ksh. 800 as entrance fees.

• Received a cheque for Ksh. 150,000 from K.C.C. Ltd for milk delivered.
• Withdrew Ksh. 160,000 from bank for office use.
• Paid members Ksh. 70,000 cash for milk delivered.
• Paid wages Ksh. 24,000 in cash.

Prepare a Cash Journal with analysis columns for cash and bank.                                                                          (10 marks)

2. The following is the balance sheet of Jengo Co-operative Society as at 30 June 2010.

	Ksh.	Fixed assets:	Ksh.
Share capital	14,000,000	Land and buildings	2,500,000
Surplus	184,000	Motor vehicles	7,376,000
	14,184,000	Equipment	1,448,000
		Furniture	850,000
Current liabilities:
Creditors	470,000	Current assets:
Accrued general expenses	140,000	Stocks	260,000
		Debtors	860,000
		Bank	1.500.000
	LLmOOO		14.794 000

Additional information:

Forecasts for the period from July to September 2010. Month Sales Purchases Wages General Expenses Ksh. Ksh. Ksh. Ksh. July 1,280,000 184,000 24,000 12,000 August 1,350,000 200,000 24,000 21,000 September 1,460,000 350,000 24,000 36,000

• Wages are paid on the last day of tlfe month.
• All sales and purchases are made on credit
• Sales for May were Ksh. 800,000. Purchases for April, May and June were Ksh. 190,000, Ksh. 280,000 and Ksh. 300,000 respectively.

On average, debtors pay after two months while creditors are paid after three months.

• General expenses are paid one month after they are incurred. General expenses for the month of June were Ksh. 140,000.
• Stocks on 30 September was J£sh. 300,000.
• Depreciation on motor vehicles and furniture is to be provided at 25% and 7% per annum respectively.

Prepare:

• cash budget for the months of July, August and September 2010.
• a budgeted trading profit and loss account for the quarter ended

30 September 2010.                                                         (20 marks)

3. (a) Explain four powers that may be exercised by the Commissioner for

Co-operative Development during liquidation of a co-operative society. (8 marks)
(b) Mazao Co-operative Society Ltd has a tractor which is used to transport maize for members and non-members. The members are charged Ksh. 500 per kilometre while non-members are charged Ksh. 575 per kilometre. The estimated costs on the tractor are as follows:
Repair and maintenance Fuel and oil Depreciation Licence Tyres Insurance Driver’s salary Loader’s salary
The tractor can operate a maximum distance of 105,000 kilometers.

• Calculate the break-even point in kilometres for
• members
• non-members;
• Advise the management on whether to serve members or non-members.               (12 marks)

4. Kiame Multipurpose Co-operative Society sells chicken feed. It has five employees whose monthly wages and salaries amount to Ksh. 16,400.

The society owns equipment bought two years ago at a price of Ksh. 193,000. The current book-value of the equipment is Ksh. 96,000. The society uses straight line method of depreciation.

All other operating expenses amount to Ksh. 4,800 per month.

During the month of November 2009, the society had the following transactions:

Purchases Date Quantity (bags) received Price Value November 2 400 150 60,000 . 10 600 165 99,000 24 700 170 119,000 27 500 180 90,000

Sales Date Quantity (bags) received Price Value November 8 300 170 ‘ 51,000 15 500 180 90,000 26 800 200 160,000 30 500 ? 100,000

Additional information:

The society had an opening stock of 200 bags valued at Ksh. 28,000.

Required:

• The value of closing stock using First In First Out (FIFO) valuation method.
• Trading profit and loss account for the month ended 30 November 2009.                   (20 marks)

5. Moto and Lola Co-operative Societies decided to amalgamate and form Motolola Co-operative Society Ltd on 1 January 2010.

The balance sheets of Moto and Lola Co-operative societies at that date are given below: Moto Co-op Society Lola Co-o p Society Ksh. Ksh. Ksh. Ksh. SHARE CAPITAL Authorised and issued shares of Shs 25 each fully paid 2,500,000 1,950,000 Reserve fund 390,000 350,000 Surplus and loss account 50,000 35,000 Current liabilities: Creditors 95.000 75.000 3.035.000 2.410 000 Fixed Assets: Goodwill 170,000 145,000 Land and buildings 1,290,000 1,120,000 Motor vehicle 880,000 630,000 Plant moot? 280,000 2,660,000 2,175,000 Current Assets: Stock 80,000 65,000 Debtors 140,000 110,000 Cash 155.000 -3.2&QQ0 60.000 235,000 3.035.000 2A1Q.QQQ

Motolola Co-operative Society Limited is to acquire the assets including cash of both societies except Ksh 20,000 retained by the liquidator from each society.
Additional information:

• a provision for bad and doubtful debts at 2% is to be made on the closing debtors.
• goodwill to be taken over at balance sheet date for the purpose of purchase consideration but not to be shown in the books of Motolola society.

A

• Purchase consideration is to be discharged by issue of shares of Ksh 20 each.
• All other assets and liabilities are to be taken over at book values.

Required:

• Realization accounts of Moto and Lola Co-operative Societies.
• Purchase consideration.

(Hi) Shares to be taken up by Moto and Lola in Motolola Co-operative Society Ltd.
(20 marks)

6. (a) Explain five factors that may lead to the division of a registered co-operative

society.                (10 marks)
(b)    On 31 August 2010, the balance at the bank as shown by the Cash Journal of
Mau Co-operative Society Ltd. was Ksh. 6,200,000 while the bank statement showed a credit balance of Ksh. 6,350,000. A comparison of the cash journal and the bank statement showed the following differences:

• Cheques drawn and not yet presented for payment totalled Ksh. 2,030,000.
• Cheques paid into the banlcSn 31 August 2010 and not appearing in the • bank statement amounted Ksh. 1,901,050.
• Items shown in the bank statement but not entered in the cash journal included:

Ksh.
Bank charges                                            3,950
Dividends collected by the bank                48,000
Payment for insurance by standing order  32,000

• A cheque received for Ksh. 32,000 was entered as Ksh. 23,000 in the cash journal.

Prepare:

• • updated cash journal.
  • bank reconciliation statement as at 31 August 2008. (10 marks)

Plant to be taken over at Ksh 300,000 for Moto and Ksh 250,00 for Lola.