Waec Model Questions Vol1 2023 Financial Accounting Question 35

A municipal council receives a grant of ₦12,000,000 for road maintenance with two conditions: (1) at least 60 % of the grant must be spent on resurfacing, and (2) administrative costs may not exceed 30 % of the grant. During the year the council spends ₦5,000,000 on resurfacing, ₦2,000,000 on new road construction, ₦1,200,000 on administrative costs, and ₦1,800,000 on other maintenance (e.g., signage). Unspent grant money may be carried forward, but any amount spent on non‑eligible items (i.e., exceeding the 30 % admin limit) must be repaid. Determine (a) whether the council complied with the grant conditions, (b) the amount of grant money that must be repaid, if any, and (c) the closing balance of the grant fund at year‑end after repayment and carry‑forward.