Ordinary level 2023 South West regional mock financial reporting 2
Ordinary level 2023 South West regional mock financial reporting 2
You were presented with the situation of doubtful customers of MEMPHIS Ltd as follows for the year ended
31/12/2021
| Name | Debts in CFAF (VAT Inclusive) |
Impairment 2020 | Payment 20 with VAT Inclusive 21 in CFAF | Observation as at 21/12/2021 |
| TALE | 7, 155,000 | 15% | 298,125 | For balance |
| SIBAM | 954,000 | 20% | 178,875 | Hope to recover 75% |
| TOBI | 8, 586,000 | 1, 296,000 CFAF | – | Irrecoverable |
| KEN | 536,625 | 25% | 119,250 | Provision 15% |
In addition to the above customers, we also have doubtful debtors on 31/12/2021 as follows:
| Name | Observation as at 21/12/2021 |
| MBA | 381,600 CFAF tax inclusive, impairment losses 40% |
| LINUS | 190,800 CFAF tax inclusive. Loss |
VAT rate is 19.25%.
Required:
a) Present the table of doubtful customers on 31/12/2021 with the corresponding impairment losses.
(Use appendix 1) (12 marks)
b) Present all necessary journal entries on 31/12/2021. (8 marks)
(Total 20 marks)
2. The portfolio of investment securities in ZUAMBALI PLC as at 31/12/2018 are provided to you as follows :
| Nature | Qty | Unit purchase price in CFAF |
Market Price in CFAF | |
| 2017 | 2018 | |||
| Participation Certificates: – SCT – OKOLO |
10 70 |
140,000 160,000 |
142,000 156,000 |
138,000 157,000 |
| Short-term securities: – A – B |
200 120 |
30,000 50,000 |
27,000 48,000 |
32,000 46,000 |
Required:
a) Determine the impairment loss of long-term equity investments and short-term securities for the year ended
31/12/2017 and 31/12/2018 (Use appendix 2). (16 marks)
b) Record the impairment losses in the classical journal of the enterprise on 31/12/2018. (4 marks)
(Total 20 marks)
3. MOTIA Plc received a bank statement from NFC Bank on 31/12/2020 with an overdraft (debit
balance) of 1,954,150 FCFA whereas the bank account kept by MOTIA Plc had a debit balance of
260,000 FCFA. On comparing the bank statement and the bank account, the following discrepancies
were noticed:
– Customer’s transfer recorded in the bank statement was unknown to the enterprise 1,278,000
FCFA.
– The discount of 119,250 FCFA (VAT Inclusive) deducted by the bank was unknown to the
enterprise.
– Coupon (dividend from investment in shares of another company) amounting to 3,500,000 FCFA
was discovered in the bank statement.
– Cheque No 441 of 22,760,000 FCFA issued to a supplier had not been presented for settlement.
– Cheque No 209 of 25,808,000 FCFA received from a customer and deposited for collection had
not gone through the banking system.
– Bill No 106 of 3,610,250 FCFA earlier discounted was later dishonoured by the bank as unpaid
bill.
– Bank charge was discovered in the bank statement amounting to 214,650 FCFA (VAT Inclusive).
Required:
a) Prepare the bank reconciliation statement as at 31/12/2020 in appendix 3 (15 marks)
b) Do the Adjustment entries as at 31/12/2020 (5 marks)
(Total 20 marks)
