Total marks: 100 · Duration: 3 hours
Instructions to candidates
- This paper consists of FIVE compulsory questions drawn from the whole syllabus. Answer ALL questions.
- EACH question is worth 20 marks. Allow about 35 minutes per question.
- In the January 2027 sitting this paper is "hybrid": you read the questions on screen and write your answers in the answer booklet.
- All amounts are in dollars. Show all workings; marks are awarded for correct method even where the final figure is wrong.
- Present statements with full headings and in good form. A silent, non-programmable calculator may be used.
Paper
Question 1 — Bank reconciliation
Joan Lewis operates a small bakery in Castries, Saint Lucia. The bank columns of her Cash Book for June 2026 are shown below.
| Date | Debit side | Amount | Date | Credit side | Amount |
|---|---|---|---|---|---|
| June 1 | Balance b/d | 2,340 | June 18 | M. Thomas (cheque 0451) | 785 |
| June 10 | R. Joseph (cheque received) | 1,200 | June 28 | Electricity (cheque 0452) | 340 |
| June 12 | Cash paid into bank | 600 |
Her bank statement for June shows a closing balance of 2,810 (in her favour). Comparing the two records, she finds:
- The cheque from R. Joseph, banked on June 30, does not yet appear on the bank statement.
- Cheque 0451 to M. Thomas has not yet been presented for payment.
- Bank charges of 50 appear on the statement only.
- A direct debit of 160 for insurance appears on the statement only.
- A credit transfer of 420 from a customer, K. Paul, appears on the statement only.
(a) Explain the terms "unpresented cheque" and "uncredited deposit (lodgement)", using an example from Joan's records for EACH. (4 marks)
(b) Prepare the updated bank column of Joan's Cash Book, showing the adjusted balance at June 30, 2026. (6 marks)
(c) Prepare a Bank Reconciliation Statement as at June 30, 2026, starting with the balance shown on the bank statement. (6 marks)
(d) Explain TWO reasons why a business should prepare a bank reconciliation statement regularly. (4 marks)
Total 20 marks
Question 2 — Final accounts with adjustments
Marcus Williams is a sole trader operating a hardware store in Spanish Town, Jamaica. The following Trial Balance was extracted from his books on December 31, 2025.
| Account | Dr | Cr |
|---|---|---|
| Capital | 48,000 | |
| Drawings | 6,500 | |
| Premises | 35,000 | |
| Motor vehicle (cost) | 18,000 | |
| Inventory, January 1, 2025 | 8,400 | |
| Purchases | 52,600 | |
| Sales | 89,200 | |
| Returns inwards | 1,800 | |
| Returns outwards | 1,200 | |
| Wages | 12,400 | |
| Rent received | 3,600 | |
| General expenses | 4,800 | |
| Accounts receivable | 9,200 | |
| Accounts payable | 6,400 | |
| Bank | 2,900 | |
| Provision for doubtful debts | 900 | |
| Accumulated depreciation: motor vehicle | 2,300 | |
| Totals | 151,600 | 151,600 |
Additional information:
- Inventory on December 31, 2025 was valued at 9,600.
- The motor vehicle is to be depreciated at 20% per annum using the reducing balance method.
- The provision for doubtful debts is to be adjusted to 5% of accounts receivable.
- Wages of 800 are owing at the year end.
- Rent received includes 300 paid in advance by the tenant for January 2026.
(a) (i) Define the term "accrued expense". (2 marks)
(ii) State ONE effect on the financial statements if the wages owing were NOT recorded. (1 mark)
(b) Calculate:
(i) the depreciation charge on the motor vehicle for 2025 (2 marks)
(ii) the adjustment to the provision for doubtful debts, stating whether it is an increase or a decrease. (2 marks)
(c) Prepare the Income Statement of Marcus Williams for the year ended December 31, 2025. (11 marks)
(d) State how the rent received in advance should be shown in the Statement of Financial Position at December 31, 2025, and explain why. (2 marks)
Total 20 marks
Question 3 — Partnership accounts
Karen and Lisa are partners in a catering business in Bridgetown, Barbados, sharing profits and losses in the ratio 3:2. The partnership agreement provides for:
- interest on capital at 6% per annum
- a salary for Karen of 12,000 per annum
- interest on drawings: Karen 240; Lisa 160.
The net profit for the year ended March 31, 2026, before appropriations, was 45,000.
| Karen | Lisa | |
|---|---|---|
| Capital account, April 1, 2025 (Cr) | 50,000 | 30,000 |
| Current account, April 1, 2025 (Cr) | 2,400 | 1,800 |
| Drawings during the year | 18,000 | 15,000 |
(a) Explain the purpose of keeping separate capital and current accounts for partners. (3 marks)
(b) Prepare the Appropriation Account for the year ended March 31, 2026. (8 marks)
(c) Prepare the partners' Current Accounts for the year ended March 31, 2026, in columnar form. (7 marks)
(d) Explain what the balance on Lisa's current account at March 31, 2026 tells her. (2 marks)
Total 20 marks
Question 4 — Manufacturing accounts
Tropical Manufacturing Ltd of Port of Spain, Trinidad, makes fruit juices. The following information relates to October 2026.
| Item | Amount |
|---|---|
| Raw materials purchased | 28,500 |
| Direct labour | 16,800 |
| Factory supervisor's salary | 4,200 |
| Factory rent | 2,400 |
| Factory power | 1,800 |
| Depreciation of factory machinery | 1,500 |
| Factory insurance | 900 |
| Administrative salaries | 5,600 |
| Selling expenses | 3,200 |
| Inventory | October 1 | October 31 |
|---|---|---|
| Raw materials | 4,200 | 3,800 |
| Work in progress | 2,600 | 3,100 |
| Finished goods | 8,400 | 9,200 |
(a) Distinguish between "prime cost" and "factory overhead cost". (4 marks)
(b) Calculate:
(i) the cost of raw materials consumed (2 marks)
(ii) the prime cost (2 marks)
(iii) the total factory overhead cost. (2 marks)
(c) Prepare the Manufacturing Account for October 2026, showing the cost of production of finished goods. (8 marks)
(d) Calculate the cost of goods sold for October 2026. (2 marks)
Total 20 marks
Question 5 — Incomplete records
Michael Thompson operates a small hardware business in Roseau, Dominica, and keeps incomplete records. All takings are banked and all payments are made by cheque.
| January 1, 2025 | December 31, 2025 | |
|---|---|---|
| Inventory | 12,400 | 14,800 |
| Accounts receivable | 8,600 | 9,200 |
| Accounts payable | 5,800 | 7,400 |
| Bank balance | 3,200 | to be calculated |
| Equipment | 22,000 | 22,000 |
| Cash float in hand | 450 | 450 |
Summary of the bank account for 2025:
| Receipts | Amount | Payments | Amount |
|---|---|---|---|
| Cash sales banked | 112,000 | Payments to suppliers | 86,200 |
| Receipts from credit customers | 37,800 | Business expenses | 24,600 |
| Additional capital introduced | 10,000 | Drawings | 18,000 |
(a) Explain what is meant by "incomplete records". (2 marks)
(b) Prepare a Statement of Affairs at January 1, 2025 to find Michael's opening capital. (4 marks)
(c) Calculate:
(i) the credit purchases for 2025 (2 marks)
(ii) the total sales for 2025 (2 marks)
(iii) the bank balance at December 31, 2025. (3 marks)
(d) Using a Statement of Affairs at December 31, 2025, calculate Michael's closing capital and hence his net profit for 2025. (5 marks)
(e) State TWO problems a business may face if it keeps incomplete records. (2 marks)
Total 20 marks