Waec Model Questions Vol1 2022 Financial Accounting Question 14

A municipal council prepares its annual financial statements. The following data are given:\n- Total revenue from rates (property tax) for the year: ₦5,000,000, of which ₦500,000 is still uncollected at year‑end.\n- Grants received from the federal government: ₦2,000,000, of which ₦300,000 is receivable (unearned) because the grant is for the next fiscal year.\n- Capital expenditure on a new water‑treatment plant: ₦3,600,000, financed by a 5‑year loan at 8% per annum, with annual repayments of ₦900,000 (principal + interest) due at year‑end.\n- The plant is depreciated using straight‑line over 10 years with no residual value.\n- The council also has an existing loan of ₦1,200,000 taken 2 years ago, with annual interest of 10% payable each year, and principal repayment of ₦200,000 per year.\nCompute: (a) the amount to be shown as "Rates receivable" in the statement of financial position, (b) the amount of "Unearned grant revenue" to be shown, (c) the depreciation expense for the water‑treatment plant for the year, (d) the total interest expense to be recognized for the year (including both loans), and (e) the cash outflow for loan repayments (principal only) for the year.