Workings: 

Workings:
Interest on Capital: Khary –   $200,000 x 12% = $24,000
                                    Kwame – $160,000 x 12% = $19,200
                                    Kofi –       $100,000 x 12% = $12,000
 
Residual Profit: $741,000 – (160,000+100,000+100,000) – (24,000+19,200+12,000) = $325,800.
 
Share of Residual Profit: Khary –   $325,800 x 60% = $195,480
                                             Kwame – $325,800 x 20% = $65,160
                                             Kofi –       $325,800 x 20% = $65,160

WORKINGS:
Note 2:
Depreciation on Equipment: 10% x $170,240 = $17,024 per year. This is the depreciation charge for the Statement of Comprehensive Income.
Accumulated depreciation charged Equipment as at December 31st 2012 - [$32,200 + $17,024] = $49,224. This figure will be recorded on the Statement of Financial Position.
 
Note 3:
Insurance to be recorded on the Statement of Comprehensive Income = $1,320. Prepaid insurance to be recorded on the Statement of Financial Position = [$2,590 - $1,320] = $1,270.
 
Note 4:
The amount of $50,000 is now a ‘bad debt to be written off’ therefore:
Double entry:   Debit        Bad Debt Expense Account         $50,000
                                Credit          Accounts Receivables  Account  $50,000

No.1 (f) Explanations: 
Note 1:
The purchase of the welding plant will give rise to a liability of $50,000 that is; ($150,000-$100,000), owing to Welders International as only a part payment was made.
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Note 2: The unused office supplies on hand is an asset of D&G Ltd, however the portion that has been used during the period must be expensed. As a result the office supplies balance must be reduced to $2,500 by expensing $22,500, that is; (25,000-$2,500). At the end of the period this expense must be transferred to the Income Statement.

No. 2(c): Below are the related explanations and the journal entries with narratives to record the transactions of Bernice Inc.
Note 1:
The par value of the share is $10, however the 15,000 shares were exchanged for assets worth $240,000 therefore this means that they were issued at a value of $16 per share, ($240,000/1500 shares). The excess of $6, ($16-$6), is the par value is the share’s premium.
Notes 2 and 3:
Bernice Inc purchased 35% of the outstanding shares of Fly Corporation and Fly Corporation paid out a total cash dividend of $120,000. Therefore Bernice Inc received 35% of $120,000 = $42,000.
Note 4:
The loan interest due is calculated at $80,000 x 10% x 3/12 since only three (3) months interest has been accrued.
Note 5:
The value of the stock dividend paid is $10 x 9,000 shares.

WORKINGS:
Note 2:
The invoices for the utilities NOT received for June $12,000 is to be treated as a prepayment.
Therefore $12,000 will be recorded under the Current Assets section of the Statement of Financial Position. The balance of $70,000 for utilities from the trial balance will be adjusted to $58,000 ($70,000-$12,000), to account for the prepayment.               
Note 3:
The $2,000 prepayment for July and August 2011 will be recorded under the Current Assets section of the Statement of Financial Position. The balance of $14,000 for insurance from the trial balance will be adjusted to $12,000 ($14,000-$2,000), to account for the prepayment. 
Note 4:
Depreciation on Fixtures and Fittings: 25% x [$226,000-$88,000] = $34,500 for year 2011. This is the depreciation charge for the Statement of Comprehensive Income.
Accumulated depreciation charged on Fixtures and Fittings as at June 30th, 2011 - [$88,000 + $34,500] = $122,500. This is the accumulated depreciation figure for the Statement of Financial Position.
Note 5:
Depreciation on Buildings: 5% x [$592,000] = $29,600 for year 2011. This is the depreciation charge for the Statement of Comprehensive Income.
Accumulated depreciation charged on Buildings as at June 30th, 2011 - [$48,000 + $29,600] = $77,600. This is the accumulated depreciation figure for the Statement of Financial Position.                                         
Note 6:
The land has been revalued upwards therefore the double entry to record the revaluation of land is:
Debit:    Land Account     $12,000
                          Credit:        Revaluation Reserve Account     $12,000
Note the Revaluation Reserve Account will appear in the Statement of Financial Position.
Note 7:
The long term loan will be recorded as follows:
$10,000 will be recorded under the Current Liabilities section of the Statement of Financial Position as this portion is due to be paid in less than 1 year.
The balance $30,000, ($40,000-$10,000) will be recorded under the Non-Current Liabilities section of the Statement of Financial Position as this portion is not due to be paid in less than 1 year. 
Note 8:
The income tax liability of $40,000 is an expense and will appear in the Statement of Comprehensive Income. This figure will also be recorded under the Current Liabilities section of the Statement of Financial Position as it is an accrual.