MACHAKOS UNIVERSITY

University Examinations for 2017/2018 Academic Year

SCHOOL OF BUSINESS AND ECONOMICS

DEPARTMENT OF BANKING, ACCOUNTING & FINANCE

SECOND YEAR SECOND SEMESTER EXAMINATION FOR DIPLOMA IN

HOSPITALITY AND TOURISM MANAGEMENT

SHT 031: INTRODUCTION TO HOSPITALITY & TOURISM ACCOUNTING

DATE:11/12/2017 TIME:8.30-10.30 AM

INSTRUCTIONS:
i. Answer question one and any other two questions.
ii. Marks allocated for each question are shown at the end of the question.
iii. Show your working where necessary.

1. (a) Giving ONE relevant example in each case, explain the following terms.
i. Asset
ii. Revenue
iii. Expense
iv. Liability (8 marks)
(b) Fill the missing figures in the table below.

ASSETS (Sh.) CAPITAL (Sh.) LIABILITIES (Sh.)

513,470 114,375 ?
? 1,093,554 451,008
3,000,071 ? 1,999,073
499,111 298,892 ?
? 3,000,021 2,001,117
(10 marks)

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 (c) Kashujaa is a sole trader. As at 30th April 2016, the following balances were extracted
from his books.
Shs.
Sales 394,500
Purchases 228,500
Office expenses 19,000
Insurance 700
Wages 79,000
Rates 28,000
Lighting & Heating 12,000
Telephone 6,000
Discount Allowed 11,000
Opening Stock 5,000
Returns Inwards 2,000
Return Outwards 1,500
Premise 400,000
Plant & Machinery 50,000
Motor Vehicle 120,000
Debtors 125,000
Bank balance 78,000
Creditors 34,000
3 Year bank loan 100,000
Capital 600,000
Drawings 40,000
Closing stock 5,500

Required: Extract a Trial Balance from the above list of balances. (12 marks)

2. Q1. The following transactions took place in the month of May 2017.
2017
May 3: Sold goods Sh. 125,000 on credit to Jacobs invoice no. CP/0124/17
May 5: Bought goods Sh. 80,000 on credit from Muga Suppliers invoice no. RS 027
May 7: Returned goods to Muga Suppliers Sh. 12,000
May 8: Bought goods Sh. 170,000 from Kikwetu enterprises invoice no. ZC/089/T
May 11: Sold goods Sh. 37,000 on Credit to Jamleck invoice no. CP/0125/17
May 13: Sold goods Sh. 67,000 on credit to Joakim invoice no. CP/0126/17
May 17: Bought goods on credit Sh. 95,200 from Mambo traders invoice no. 147/F
May 18: Jamleck returned goods Sh. 4000.
May 20: Returned goods to Mambo traders Sh. 2,200
May 21: Sold goods on credit to Jacobs on credit Sh. 25,000 invoice no. CP/0127/17
May 23: Bought goods on Credit Sh. 128,000 from Muga Suppliers invoice no. RS 041
May 24: Cash purchases amounted to Sh. 46,000.

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 May 26: Cash sales Sh. 70,100.
May 28: Credit purchases from Waigwa Sh.21, 000 invoice no. W235/YT
May 29: Retuned goods to Waigwa Sh. 1,500
May 30: Sold goods on credit to Joakim Sh. 52,500 invoice no. CP/0128/2017.
May 30: Credit purchases from Kikwetu enterprises. Sh.140, 000 invoice no. ZC/097/T
May 31: Joakim returned goods Sh. 1,500

Required: Prepare;
a) Sales journal
b) Purchases journal
c) Sales Returns journal
d) Purchases returns journal (20 marks)

3. The following information is availed to you in relation to Alpha & Omega co.Ltd.
2016
Feb 1: Balance b/d Sh.
Cash 110,000
Bank 385,000
Debtors:
Sarakasi 160,000
Kawira 100,000
Rufus 120,000
Creditors:
Kilimo 120,000
Matata 200,000
Kutesa 280,000

The following transactions took place in the month of Feb, 2016

Feb 3. Kawira settles her account by cheque after deducting 5% cash discount.
Feb 7: Paid amount owing to Kilimo by cheque less 2.5% cash discount.
Feb 10: Withdrew sh. 150,000 in cash from the bank for business use.
Feb 15: Sold goods on credit to Kawira sh. 220,000
Feb 17: Sarakasi paid the amount owing by cheque less 2.5% cash discount.
Feb 20: Paid wages by cheque sh. 315,000
Feb 22: Paid the amount owing to Matata by cheque after deducting 5%
Cash discount
Feb 25: Rufus paid the amount owing by cheque less 2.5% cash discount.
Feb 28: Paid the amount owing to Kutesa by cheque after deducting 2.5% cash
discount .
Required:
Prepare a 3-column cash book for Alpha & Omega co. Ltd clearly showing the above
transactions and balance it as at Feb 28, 2016. (20 marks)

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4. From the following trial balance of Mlenga Mbele enterprises, prepare an income
statement for the year ending December 31, 2016 and a balance sheet as at that date, taking
into consideration the adjustments shown below.

TRIAL BALANCE
AS AT 31 DEC, 2016
ITEM DR CR
Sh. Sh.
Sales 400,000
Purchases 350,000
Purchases Returns 6,200
Sales Returns 5000
Opening Inventory 100,000
Allowance for doubtful debts 800
Wages and Salaries 30,000
Rates 6,000
Telephone 1,000
Shop fittings at cost 40,000
Van at cost 30,000
Accounts receivable and payable 9,800 7,000
Bad debts 200
Capital 179,000
Bank balance 3,000
Drawings 18,000
593,000 593,000
Additional information:
i. Closing inventory at Dec 31,2016 was sh. 120,000
ii. Rates prepaid sh. 500
iii. Accrued wages sh.5000
iv. The allowance for doubtful debts to be increased to 10% of accounts receivable.
v. Telephone account outstanding sh. 220
vi. Depreciate Shop fittings at 10% p.a and Van at 20% p.a on cost.
5. The following accounting information was extracted from the books of Mr. Juma for
the month of September 2016.
i) Started a business with Sh.40, 000 cash
ii) Bought goods for sale cash Sh.12 000
iii) Paid rent sh.4000
iv) Sold goods for Sh. 20, 000 cash
v) Paid wages and salaries Sh. 16000 cash
vi) Bought furniture on credit from Ashal Ltd Sh.100, 000
vii) Bought goods on credit from Maida sh. 30,000 and Mutua Sh. 10,000
viii) Paid cash Maida Sh. 15000, Mutua Sh.4000

Required:
Record the above transaction in appropriate ledger accounts and balance them off. (20 marks)

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