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 — Control accounts
Nadia Charles is a wholesaler of school supplies in St George's, Grenada. She keeps a sales ledger control account. The following information is available for May 2026.
| Item | Amount |
|---|---|
| Debit balance, May 1 | 14,250 |
| Credit balance, May 1 (a customer who overpaid) | 180 |
| Credit sales | 38,600 |
| Cash and cheques received from credit customers | 31,400 |
| Discounts allowed | 720 |
| Returns inwards | 1,150 |
| Bad debts written off | 460 |
| Customer's cheque dishonoured by the bank | 600 |
| Interest charged on an overdue account | 90 |
| Set-off (contra) against the purchases ledger | 850 |
| Credit balance, May 31 | 240 |
(a) Explain TWO purposes of keeping control accounts. (4 marks)
(b) State the book of original entry from which EACH of the following totals is taken:
(i) credit sales (1 mark)
(ii) returns inwards. (1 mark)
(c) Prepare the sales ledger control account for May 2026, showing the debit balance carried down on May 31. (10 marks)
(d) The total of the individual customers' balances in the sales ledger on May 31 is 18,770. State TWO possible reasons for the difference between this total and the control account balance. (2 marks)
(e) Explain why the set-off (contra) of 850 is recorded in the sales ledger control account. (2 marks)
Total 20 marks
Question 2 — Correction of errors and the suspense account
Dwayne Harris is an electrical contractor in Kingstown, St Vincent. His Trial Balance at December 31, 2025 did not agree: the credit column exceeded the debit column by 1,480, and this difference was entered in a suspense account. His draft net profit for the year was 18,600. The following errors were then found:
- The sales day book was overcast by 900.
- Rent paid of 1,250 was entered in the rent account as 1,520.
- Discount received of 350 was not posted to the discount received account.
- Office equipment bought for 2,400 was debited to the purchases account.
- A cash payment of 600 to a supplier, L. Grant, was credited to his account.
- Commission received in cash, 480, was completely omitted from the books.
(a) Name and explain TWO types of error that do NOT affect the agreement of the Trial Balance, using an example from the list above for EACH. (4 marks)
(b) Prepare journal entries to correct errors 1 to 6. Narratives are NOT required. (6 marks)
(c) Prepare the suspense account, showing that it is closed. (5 marks)
(d) Prepare a statement of corrected net profit for the year ended December 31, 2025. (5 marks)
Total 20 marks
Question 3 — Depreciation and disposal of non-current assets
Island Couriers prepares its accounts to December 31 each year. It depreciates motor vans at 20% per annum on cost using the straight-line method, charged for each complete month of ownership.
| Van | Date bought | Cost |
|---|---|---|
| Van A | January 1, 2023 | 45,000 |
| Van B | July 1, 2024 | 60,000 |
| Van C | April 1, 2025 | 72,000 |
Van C was paid for by cheque. On September 30, 2025, Van A was sold for 19,050, received by cheque.
(a) Define the term "depreciation" and state TWO causes of depreciation. (3 marks)
(b) Calculate the depreciation charge for 2025 on EACH van. (3 marks)
(c) Prepare for the year ended December 31, 2025:
(i) the motor vans account (3 marks)
(ii) the accumulated depreciation (provision for depreciation) account (4 marks)
(iii) the disposal account. (4 marks)
(d) Show how the motor vans would appear in the Statement of Financial Position at December 31, 2025. (2 marks)
(e) State ONE reason why a business might choose the reducing balance method rather than the straight-line method for motor vans. (1 mark)
Total 20 marks
Question 4 — Accounts of a non-profit organisation
The Mount Pleasant Sports Club in Belize City runs a bar for its members. Its Receipts and Payments Account for the year ended December 31, 2025 is summarised below.
| Receipts | Amount | Payments | Amount |
|---|---|---|---|
| Balance b/d, January 1 | 2,150 | Bar purchases | 8,900 |
| Subscriptions | 9,600 | Groundsman's wages | 6,240 |
| Bar takings | 14,950 | Tournament expenses | 1,850 |
| Tournament entry fees | 2,600 | Electricity | 1,320 |
| Donations for general use | 1,500 | New sports equipment | 4,500 |
| General expenses | 980 | ||
| Balance c/d, December 31 | 7,010 | ||
| 30,800 | 30,800 |
Additional information:
| January 1, 2025 | December 31, 2025 | |
|---|---|---|
| Subscriptions in arrears | 360 | 600 |
| Subscriptions in advance | 240 | 420 |
| Bar inventory | 1,200 | 1,450 |
| Bar suppliers (payables) | 640 | 810 |
- Electricity of 210 was owing at December 31, 2025.
- Sports equipment was valued at 12,000 on January 1, 2025. All equipment held at December 31, 2025 is to be depreciated by 10%.
- The subscriptions in arrears at January 1, 2025 were all received during the year.
(a) Distinguish between a Receipts and Payments Account and an Income and Expenditure Account. (4 marks)
(b) Prepare the subscriptions account for the year ended December 31, 2025, showing the amount transferred to the Income and Expenditure Account. (5 marks)
(c) Calculate the profit on the bar for 2025, showing the bar purchases for the year. (4 marks)
(d) Prepare the Income and Expenditure Account for the year ended December 31, 2025. (7 marks)
Total 20 marks
Question 5 — Limited companies and accounting ratios
Carib Packaging Ltd has an authorised share capital of 500,000 ordinary shares of $1 each, of which 250,000 have been issued and fully paid. The following figures are taken from its accounts for the year ended June 30, 2026.
| Item | Amount |
|---|---|
| Sales | 480,000 |
| Cost of sales | 336,000 |
| Gross profit | 144,000 |
| Expenses | 96,000 |
| Net profit | 48,000 |
| Inventory, July 1, 2025 | 38,000 |
| Inventory, June 30, 2026 | 46,000 |
| Accounts receivable | 54,000 |
| Bank | 20,000 |
| Accounts payable | 60,000 |
| Accrued expenses | 15,000 |
For the previous year the company's gross profit margin was 33%, its current ratio was 2.1 : 1 and its rate of inventory turnover was 10 times.
(a) Distinguish between authorised share capital and issued share capital, using the figures for Carib Packaging Ltd. (2 marks)
(b) Calculate, for the year ended June 30, 2026:
(i) the gross profit margin (2 marks)
(ii) the net profit margin (2 marks)
(iii) the current ratio (2 marks)
(iv) the acid-test (quick) ratio (2 marks)
(v) the rate of inventory turnover. (3 marks)
(c) Comment on TWO changes in the company's performance or position compared with the previous year. (4 marks)
(d) The directors propose an ordinary dividend of $0.12 per share.
(i) Calculate the total ordinary dividend. (1 mark)
(ii) State ONE difference between ordinary shares and preference shares. (2 marks)
Total 20 marks