B.Com I Accounting 2010
Q.1. INSTALLMENT SALES
Amir and Co. use Perpetual Inventory System for recording merchandise and Installment method for recognizing profit their transactions for the year ended June 30, 2007 were as under
Sales on Installment basis ……………………………… Rs. 4,50,000
Cost of Inst. Sales ………………………………………. Rs. 3,15,000
Purchase Merchandise on Account ……………………. Rs. 5,00,000
Collection of inst ………………………………………… Rs. 1,50,000
Payment of Accounts Payable …………………………. Rs. 2,00,000
Expense Paid …………………………………………….. Rs. 4,000
Inst Accounts Cancelled ……………………………….. Rs. 25,000
Repossessed Merchandise ……………………………… Rs. 16,000
Required: Record the above transaction in General Journal with adjustment and closing entries. Show necessary Computation
Q.2. FINANCIAL RATIO
Following are the selected data taken from ABC and Co at the year ended 2008.
Cash Rs. 22,400, Mark. Securities Rs. 7,700, Inventory Beginning Rs. 29,600, Inventory End Rs. 25,800, Prepaid Expense Rs. 19,200, Accounts Receivable Beginning Rs. 59,700, Accounts Receivable End Rs. 49,400, Accounts Payable Rs. 36,600, Notes Payable Rs. 21,400, Purchase Rs. 2,46,200, Sales Discount Rs. 14,000, Operating Expenses Rs. 80,000, Non Operating Expense Rs. 4,000.
Required: Compute the following
a. Equity Ratio
b. Current Ratio
c. Rate of Gross Profit on Sales
d. Quick Ratio
e. Rate of net income on sales
f. Return on Assets
g. Return on Equity
h. Total days of Operating Cycle
i. Inventory Turn Over
j. Accounts Receivable turn over.
Q.3. COMPANY ACCOUNT
On Jan 01, 2009 Balance Sheet Data of KKK Limited are as follows
………………………………………… KKK Limited …………… NNN Limited
Cash …………………………………… Rs. 7,000 …………….. Rs. 41,000
Accounts Receivable ………………. Rs. 1,04,000 …………… Rs. 97,000
Merchandise Inventory …………….. Rs. 85,000 ………….. Rs. 1,00,000
Land ………………………………….. Rs. 60,000 ……………. Rs. 45,000
Building ……………………………… Rs. 1,25,000 …………. Rs. 1,40,000
Goodwill ……………………………… Rs. 20,000 ……………… ——-
Retained Earning …………………… ——— ……………….. ——-
……………………………………… Rs. 4,01,000 …………… Rs. 4,33,000
Allowance for Bad Debts ………….. Rs. 4,000 ………………… Rs. 3,000
Allowance for Depreciation ………. Rs. 25,000 ………………. Rs. 30,000
Account Payable ………………….. Rs. 47,000 ………………. Rs. 50,000
Share Capital …………………….. Rs. 3,00,000 …………… Rs. 3,50,000
Reserve for Contingencies ………. Rs. 5,000 …………………. ——-
Retained Earning …………………. Rs. 20,000 ………………… ——-
…………………………………….. Rs. 4,01,000 ……………. Rs. 4,33,000
Both the companies have agreed to amalgamate on Jan 01, 2009. For this purpose a new company KNKNKN Co. limited has been formed with an authorized Capital of Rs. 10,00,000 dividing into Ordinary Shares of Rs. 10 each. The new company issued shares equal to the value of their net assets in payment of purchase consideration to each of the old company and also paid Rs. 15,000 each liquidating company for their liquidation expenses and paid preliminary expenses Rs. 25,000.
Required:
i. Amount of purchase consideration of each company and the number of shares to be issued.
ii. Entries in General Journal of KNKNKN Company Limited.
iii. Initial Balance Sheet of KNKNKN Co. Limited.
Q.4. CASH FLOW AND FUND FLOW
Nokia Diti Net Company’s comparative balance sheet and income statement for the year 2010 follows
Comparative Balance Sheet
…………………………………………………….
2010 …………….
2009
Assets …………………………………………….Rs. ……………… Rs.
Cash ………………………………………… 1,40,000 ………….. 1,00,000
Account Receivable ………………………. 2,10,000 ………….. 1,50,000
Inventory ………………………………….. 5,00,000 ………….. 4,30,000
Prepaid Expense …………………………… 20,000 …………….. 60,000
Plant and Equipment ……………………. 19,00,000 …………. 14,00,000
Less: Accumulated Depreciation ………. 6,50,000 …………… 5,40,000
Long term investment …………………… 7,00,000 …………… 9,00,000
Total ………………………………………
28,20,000 …………..
22,50,000
Liabilities and Equities
Account Payable ………………………… 2,60,000 ……………. 2,50,000
Accrued Payable ………………………… 1,00,000 ……………. 1,20,000
Taxes Payable …………………………… 4,90,000 ……………. 4,90,000
Debenture Payable ……………………… 5,00,000 ……………. 5,00,000
Ordinary Share Capital …………………. 8,00,000 ……………. 7,00,000
Retained Earning ………………………… 6,70,000 ……………. 5,40,000
Total …………………………………….
28,20,000 ……………
25,00,000
Income Statement
Sales …………………………………………….. Rs. 23,00,000
Less: Cost of good sold ………………………..
Rs. 12,00,000
Gross Margin ……………………………………. Rs. 11,00,000
Less: Operating Expenses ……………………..
Rs. 7,00,000
Net Operating Income …………………………. Rs. 4,00,000
Gain on sales of long term investment ……….
Rs. 50,000
Income before taxes …………………………… Rs. 4,50,000
Less: Income Taxes …………………………….
Rs. 1,40,000
Net Income ………………………………………
Rs. 3,10,000
Additional Information
Dividends of Rs. 1,80,000 were declared and paid during the year. The gain on sale of long-term investments was from the sale of investments for Rs. 2,50,000 in cash. The investments had an original cost of Rs. 2,00,000. There was no retirement or disposal of plant and equipment during the year.
Required: Prepare cash flow statement using indirect method showing the following clearly
i. Cash flow from operating activities
ii. Cash flow from investing activities
iii. Cash flow from financing activities
Q.5. RECONSTRUCTION
The Balance sheet of Zeeshan Ltd as on Dec 31, 2009 is as follows
Assets ……………………………………………………
Equities
Cash ………………….. Rs. 15,000 | Account Payable ……… Rs. 75,000
A/C Receivable ……. Rs. 2,50,000 | Allow. for Dep ………….
Mds. Inventory ……… Rs. 50,000 | Plant Assets …………. Rs. 1,50,000
Investment ……….. Rs. 1,00,000 | Authorized Capital …… Rs. 2,50,000
Preliminary Exp. …….. Rs. 25,000 | Ordinary Shares of Rs. 10 each
Goodwill ……………… Rs. 35,000 | Rs. 25,00,000
Profit & Loss ……… Rs. 1,50,000 | Paid Up Capital ………. Rs. 1,00,000
Plant Assets ……… Rs. 6,50,000 | Ord. shares of Rs.10 each 10,00,000
…………………………………….. | Share Premium ………. Rs. 50,000
TOTAL ……………. Rs. 12,75,000 | ……………………….. Rs. 12,75,000
The following scheme of reconstruction was agreed and implemented on July 31, 2010.
i. Ordinary Shares of Rs. 10 each be reduced to an equal number of fully paid shares of Rs. 5 each.
ii. Share premium was utilized.
iii. Investment was sold for Rs. 90,000.
iv. The amount thus available be utilized to write off preliminary expenses, profit and loss and goodwill completely.
v. Accounts receivable are estimated to realize Rs. 2,00,000 inventory is valued at Rs. 40,000 and plant assets are assigned a book value of Rs. 3,00,000.
Required: Prepare General Journal entries to give effect to the above scheme. And also prepare revised Balance Sheet of Zeeshan Ltd.
Q.6. BRANCH ACCOUNTING
The following are some of the selected balances taken out from the trail balance of Head Office and Branch on Dec 31, 1992
…………………………………………….
Head Office ……………
Branch
Merchandise Inventory (op) ………….. Rs. 29,000 …………. Rs. 25,000
Sales Revenue ………………………… Rs. 3,00,000 ………. Rs. 1,50,000
Purchases ……………………………… Rs. 3,00,000 ………… ——–
Purchase Discount …………………….. Rs. 5,000 …………… ——–
Goods Sent to Branch ……………….. Rs. 64,000 …………… ——–
Goods received from head office ……. ——— …………… 80,000
Allowance for Over Valuation ………. Rs. 18,000 …………… ——-
Salaries Expense …………………….. Rs. 20,000 …………… Rs. 5,000
Miscellaneous Expense ……………… Rs. 5,000 …………….. Rs. 1,000
Adjustment Data
Merchandise Inventory (end) …….. Rs. 40,000 ……………. Rs. 20,000
Accrued Salaries ……………………. ——— …………….. Rs. 1,000
Prepaid Salaries ……………………. Rs. 2,000 ……………… ———
Depreciation on Equipment ……….. Rs. 3,000 …………….. Rs. 500
Required:
i. Income Statement
ii. Consolidate Income Statement of Head Office and Branch
iii. Entries in the book of Head Office to incorporate Branch net income and adjustment of income resulting from over valuation of merchandise.
Q.7. PROCESS COSTING
The information below relates to a production operated by Mehran Corporation during the month of October 2009.
Unit in Process Oct 01, 2009, 3,000 Units
(90% completed as to Material and 70% completed as conversion cost)
Cost of Units in Process Oct 2009 ………………….. Rs. 25,000
Unit placed in production during Oct 2009 …………. 20,000 Units
Cost of Material placed in production ………………. Rs. 97,000
Direct Labour cost incurred …………………………. Rs. 57,900
Factory overhead incurred on account ……………. Rs. 70,000
Units in process Oct 31, 2009 (80% completed as to Material and 60% as to conversion cost) ………………………………. 4,000 Units
Required:
i. Compute Equivalent full units completed of Material and conversion costs.
ii. Compute unit cost of Material, Labour and factory overhead.
iii. Determine cost of transferred unit on finished goods inventory (use FIFO method)
Q.8. JOB ORDER
The following transaction relate to DACCAN Corporation for the month of June 2009
i. Material Purchase on account …………………. Rs. 1,70,000
ii. Material and labour used on jobs were as under
……………………………………….
Direct Material ……..
Direct Labour
Job 1 …………………………………. Rs. 11,400 ………….. Rs. 14,000
Job 2 ………………………………….. Rs. 5,000 …………… Rs. 7,000
Job 3 …………………………………. Rs. 17,200 ………….. Rs. 18,400
Indirect Material Rs. 3,800; Indirect Labour
iii. Other FOH cost incurred ….. Rs. 6,850
iv. Depreciation on Machinery .. Rs. 3,000
v. FOH is applied at 80% of direct labour.
vi. Jobs No. 1 and 2 were completed and customers were billed with Rs. 50,000 and Rs. 26,000 respectively.
Required: Prepare necessary General Journal Entries of the above transactions.
Q.9. MANUFACTURING CONCERN
Fauji Fertilizer Company produces various types of fertilizer. No Beginning units in process or finished units were on hand on Jan 1, 2010; 30,000 finished units were on hand on Dec 31, 2010 and 95,000 units were sold during the year. There were no units in work in process inventory on Dec 31, 2010.
The material put into production cost Rs. 3,00,000, 75% were direct materials. There was no beginning or ending material inventory. Labour cost were Rs. 3,50,000, 40% was for indirect labour. FOH costs, other than indirect material and indirect labours were the following.
Heat, light and power ………………………………. Rs. 1,15,000
Depreciation …………………………………………. Rs. 78,000
Factory Taxes ………………………………………. Rs. 65,000
Repairs and Maintenance ………………………….. Rs. 42,000
Selling expense was Rs. 8,000 General and administrative expenses were Rs. 50,000.
Required: Compute the following
i. Cost of good manufactured
ii. Total Cost
iii. Unit Cost
iv. Prime Cost
v. Conversion Cost
Q.10. Standard Cost
The standard and actual cost data of Mahran ltd are as follows.
……………………………………
Standard ……………………….
Actual
Direct Materials …………. 5000 kg @ Rs. 10 ………… 6000 kg @ Rs. 12
Direct labour ……………. 2000 hrs @ Rs. 5.50 ……… 1800 hrs @ Rs. 6
FOH …………………………. Rs. 50,000 ………………….. Rs. 50,000
Required: Compute
i. Material Price and Quantity Variance
ii. Labour Rate and Labour Time Variance
iii. Overhead Variance
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