Bulo Parents Secondary School
Uganda Advanced Certificate of Education
ENTREPRENEURSHIP EDUCATION
PAPER 2
INSTRUCTIONS
- Answer any four questions only.
- All questions carry equal marks.
- Credit will be given for use of relevant diagrams and illustration.
- Any additional question(s) answered will not be marked.
1. Your youth association has acquired a Rice Huller Machine that threshes and pick rice.
- Prepare regulations for the maintenance of this machine. (07 marks)
b) Design a label to be placed on packaging bags for rice. (06 marks)
c) Draft policy guidelines to be followed when buying rice from farmers. (07 marks)
d) What are the benefits of your business to the community? (05 marks)
2. The following information relates to TRIPPLE Z LTD for the months of May, June, July
and August 2016:
i) Opening balance as at 1st May 2016 was shs 320,000.
ii) Output of 800, 900, 700 and 100 units were sold at shs 500 each during the months
of May, June, July and August respectively less 10% discount.
iii) Capitalization loan of shs 500,000 and shs 300,000 were obtained from Equity Bank in
June and August respectively.
iv) Receipts from debtors of shs 100,000, shs 80,000 and shs 30,000 were registered for the
months of June, July and August respectively.
v) Purchases of 700, 800, 900 and 1000 units for raw materials were made in the months
of May, June, July and August respectively at a cost of shs 200 per unit.
vi) Labour costs for the months of May, June, July and August were shs 150,000,
shs 120,000, shs 100,000 and shs 140,000 respectively.
vii) A generator was bought and paid for in July for shs 1,000,000. This was expected to
depreciate at a rate of 10% per annum.
viii) Monthly supervision and market expenses of shs 20,000. This was to reduce by 20%
in August.
ix) Monthly rent income was shs 50,000. This was to increase by 10% monthly.
x) The owner withdrew goods worth shs 100,000 in the month of June 2016.
xi) The thieves broke into the cash office and stole shs 70,000.
Required to:
- Prepare monthly a cash budget for TRIPPLE Z LTD for the months of May to August
2016. (21marks)
- Comment on the net cash position of the business for each month. (04marks)
3. You have obtained a loan of shs 8,000,000 from Equity Bank to expand your carpentry workshop. You have been granted the credit period of 4 years at an annual interest of 12% per annum. You are required to pay the principal in 8 installments.
- Prepare a loan repayment schedule on reducing balance scheme (07 marks)
- Draft guidelines for ensuring proper loan management in your
carpentry workshop. (07 marks)
- Prepare a local purchase order for any two furniture products. (06 marks)
- Design a sign post for your workshop. (05 marks)
4. You own a fast growing poultry farm in your village.
a) Prepare a marketing expenses budget for your business. (07 marks)
b) Formulate policy guidelines for enhancing good business ethics to customers.
(08 marks)
c) Design a business card for the sales manager. (04 marks)
d) Develop instructions for ensuring safety and security of your employees
at the work place. (06 marks)
5. The following income statement relates to the business of Bulo Traders for the period ended 31st December 2018.
BULO TRADERS’
INCOME STATEMENT
FOR THE YEAR ENDED 31ST DECEMBER 2018
Details | Amount (Shs) | Amount (Shs) | Amount (Shs) |
Sales | 65,310,000 | ||
LESS: COST OF SALES: | |||
Opening stock | 3,120,000 | ||
Purchases | 48,900,000 | ||
Add: Carriage inwards | 3,993,000 | ||
Net purchase | 52,893,000 | ||
Cost of goods available for sale | 56,013,000 | ||
Less: Closing stock | 3,276,000 | ||
Cost of sales | 52,737,000 | ||
Gross profit | 12,573,000 | ||
ADD: OTHER INCOMES: | |||
Commission | 1,260,000 | ||
Rent income | 1,800,000 | ||
Discount received | 630,000 | 3,690,000 | |
Gross income | 16,263,000 | ||
LESS: OPERATING EXPENSES: | |||
Salaries | 2,652,000 | ||
Electricity and Telephone | 534,000 | ||
Rates | 1,080,000 | ||
Discount allowed | 366,000 | ||
Total operating expenses | 4,632,000 | ||
Net profit | 11,631,000 |
Additional information:
i) Debtors as at 31/12/2017 shs 3,265,500
ii) Creditors as at 31/12/2017 shs 3,912,000
iii) Take a financial year to be 365 days.
Required:
Using the information provided above, compute and interpret each of the following ratios:
- Gross profit margin. (03 marks)
- Gross profit mark-up. (04 marks)
- Inventory turnover. (03 marks)
- Rate of inventory turnover period. (03 marks)
- Net profit to sales ration. (04 marks)
- Debtors to sales ratio. (04 marks)
- Creditors to purchases ratio. (04 marks)
6. Akuna Belvah earned the following incomes from various sources during a given year.
Shs
Profit made on sale of the business machinery 6,000,000
Salaries earned 6,000,000
Property interest received 4,000,000
Transport allowance 2,400,000
Rent income 12,000,000
Gross sales 9,000,000
In addition, she incurred total expenses and losses of shs 1,680,000. Tax exempt income for the year amounted to shs 7,080,000.
Shs uses the following annual chargeable income tax rates to make computations.
Annual chargeable income | Tax rate |
Exceeding shs 4,020,000 but not exceeding shs 4,920,000 | Shs 120,000 + 20% of the amount chargeable income exceeds shs 4,020,000 |
Exceeding shs 4,920,000 | Shs 300,000 + 30% of the amount by which chargeable income exceeds shs 4,920,000 |
a) Calculate Akuna’s:
i) Gross annual income
ii) Chargeable income for the year.
iii) Monthly income tax paid
b) Akuna Belvah also owns two rental rooms. She earned monthly rental income of shs 350,000 from each room in 2016. Both rooms had tenants for the entire year. Provision for expenses and losses is 20% of gross rental income. The annual tax threshold is shs 2,820,000.
c) Compute rental income tax paid in 2016.
d) The following transactions were carried out by Akuna Belvah and other VAT registered business at various stages of distribution for the month of June 2016.
i) Akuna bought goods worth shs 30,000,000.
ii) Akuna sold all the goods for cash to Akello for shs 54,000,000.
- Akello sold all the goods for cash to Onyait for shs 75,000,000.
- Onyait sold all the goods for cash to a final consumer at shs 114,000,000.
Required:
Using the VAT rate of 18%
i) Compute the VAT chargeable at each stage.
ii) compute total VAT payable
END.
