Financial Management
FMA 7208S
QUESTION TWO
[MARKS]
a. On 31 Dec 2018, Amos Poultry LLP completed its first year in business. Suppose you
have just been employed as a Manager at Amos Poultry LLP, and your first assignment
is to prepare the company’s balance sheet for the financial year ended 31 Dec 2018.
To accomplish the task, the following information, on transactions that Amos Poultry
made in 2018, is provided to you:
The company received a cash investment of N$350,000 from its owners.
The company received N$300,000 loan from a bank. The company is obligated
to pay back the loan, with a 10% interest, in two equal annual payments.
A poultry house valued at N$450,000 was constructed using the company’s
money.
The first batch of day-old chicks worth N$100,000 was purchased.
Chicks worth NS20,000 died before being marketed.
Feed and vaccines for NS40,000 were purchased.
Sold all the surviving chickens in the first batch and made a cash profit of
NS160,000.
The second batch of day-old chicks worth NS120,000 were purchased.
At the end of 2018, the company owed its creditors NS80,000 from credit
purchases of inputs. The debt was structured as follows: 40% of it attracted
no interest, while 60% attracted interest. Payment on this debt was made in
the 2018 financial year.
At the end of 2018, accumulated depreciation was estimated at N$30,000.
Task: As a Manager, you have two options. The first option is to hire an accountant to
prepare the balance sheet for you and forfeit marks for this question. The second
option is to use the information provided to answer the questions below:
Prepare a balance sheet ledger and enter the transactions above using the
(15)
double-entry system.
Using the ledger, you have prepared in part b(i), generate a balance sheet for
Sori Sori conservancy for the financial year ended 31 December 2018.
(10)
TOTAL MARKS
[25]
Second Opportunity Examination
Page 3 of 6
January 2020