ACCOUNTING 2000 (Regular/ Private)

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ACCOUNTING 2000 (Regular/ Private)

 

Time : 3 Hours                Max. Marks:100

 

Instructions: Attempt any FIVE questions. Three from section-I and Two from section II. All questions carry equal marks.

SECTION-1

 

1) ACCOUNTING FOR COMPANIES- ABSORPTION

The following balances appear in the balance sheet of Malir Company Limited as on November Limited as on November 30, 2000.

 

Cash Rs. 1,50,000

Accounts receivable 5,50,000

Office equipment 2,50,000

Retained earnings 2,00,000

Allowance for Bad Debts 20,000

Allowance for depreciation 30,000

Accounts payable 1,00,000

Share capital 10,00,000

 

Malir Company Ltd. Was absorbed by Karachi Company Ltd on the following terms.

1) All assets (except cash) to be taken over at book calues.

2) purchase consideration to be paid in cash Rs. 2,00,000 and shares Rs. 5,00,000

 

Malir Company Ltd. Paid Rs. 95,000 in full settlement of accounts payable and Rs. 15,000 as liquidation expenses.

Shares and remaining cash were distributed amongst the share holders of Malir Company Ltd.

 

REQUIRED:

Prepare entries in general journal of

a) Malir Company Ltd. and

b) Karachi Company Ltd.

 

2- BRANCH ACCOUNTING

Given: The following Home Office A/c with selected entries is taken from The Pindi Branch  Ledger:

 

HOME OFFICE

1999 1999
March 5 Returns against Mdse. Shipments 9,000 Jan. 1 Balance 1,80,000
Dec.31 Net loss Feb. 6 Mdse. Shipments 60,000
June 8 Mdse. Shipments 36,000
Dec. 10 Corrected over stated bad debts for 1998 5,000

 

 

Pindi Branch reported inventories at billed price at Jan.1, 1999 Rs. 24,000 and at December 31, 1999 Rs. 18,000. The Home Office bills merchandise to its branches at 20% above cost.

 

REQUIRED:

Give all the reciprocal entries in the Home Office general journal including adjusting entry to record profit from allowance for overvaluation for 1999, and closing entry. Entries without supporting computations are not acceptable.

 

3- ACCOUNTING INSTALLMENT SALES

Given: Al-Fazal Manufacturing Co. sells its finished products for cash, on credit and on installment. Accidentally, some water was spread on the accounting records of installment sales and some of the pages were smeared. After drying, only the following portion is readable.

 

January 1, 1999
Installment A/Receivable 1998 Rs. 80,000
Deferred Gross Profit 1998 Rs. 32,000
December 31, 1999 (before adjustment)
Installment A/Receivable 1998 Rs. 20,000
Deferred Gross Profit 1998 Rs. 30,000
Installment A/Receivable 1999 Rs. 86,000
Deferred Gross Profit 1999 Rs. 90,000

 

During 1999, installment sales were made at 45% gross profit rate.

 

REQUIRED

1- Reconstruct in general journal form as many summary entries as possible for 1999 under installment method including adjusting and closing entries. Show necessary supporting computations.

2- Give an entry to record repossession assuming that the repossessed merchandise was recorded at its book value.

 

4. FUND FLOW ANALYSIS – CASH AND WORKING CAPITAL CONCEPTS

 

The following data are taken from the income statement and balance sheets of Shahdadpur Ltd.

 

Income statement Dec 31, 1999 Dec. 31, 1998
Net Income Rs. 4,00,000
Depreciation expense 1,20,000
Amortization of intangible assets 40,000
Gain on sale of plant assets 80,000
Loss on sale of investment 35,000
Balance Sheets
Cash Rs. 1,07,000 Rs. 45,000
Accounts receivable 3,35,000 3,80,000
Inventory 5,03,000 5,75,000
Prepaid expenses 22,000 10,000
Accounts payable (to merchad. Supplies) 3,79,000 4,10,000
Accrued expenses 1,80,000 1,55,000

 

REQUIRED

a) Compute

i) Working capital provided by operating activities.

ii) Net cash flow from operating activities

b) Prepare a schedule showing changes in working capital duing 1999.

 

5- ANALYSIS OF FINANCIAL STATEMENTS

The following items are taken from the financial statements of IMAM COMPANY LTD. for the year ended December 31, 1999.

 

Cash Rs. 1,08,000

Accounts receivable (net) 3,00,500

Merchandise Inventory 2,26,000

Accrued interest on notes receivable 4,500

Accounts payable 1,08,000

10% notes receivable (current) 16,500

Advances from customers 1.500

Ordinary shares capital 4,00,000

Premium on ordinary shares 1,20,000

Retained earnings 2,80,000

Sales (including cash sales of Rs.20,500/=) 12,20,500

Gross profit 5,20,500

Net income 2,50,000

Cash dividend declared 1,20,000

Operating expenses 4,00,000

 

Other Information is as under:

Shareholders’ equity (opening) was Rs.7,60,000/=

ii. Market price per share is Rs.42/=

in. Merchandise inventory (opening) was Rs.90,000/=

iv. Accounts receivable (opening) was Rs. 1,02,500/=

 

REQUIRED

i) Operating Expenses Rate (ii) Current ratio

iii Quick ratio iv) Dividend yield

v) Earnings per share vi) Price Earning ratio

vii) Rate of Return on ordinary shares

viii) Accounts Receivable Turnover Ratio

ix) Inventory Turnover ratio x) Gross Profit Ratio

 

 

SECTION ‘II’

 

6- ACCOUNTING FOR MANUFACTURING OPRATIONS

MICROSOFT COMPANY produces a single product. The following information has been taken from the company’s records for the year 1999:

 

Production in units 30,000

Sales in units ?

Ending finished goods in units ?

Sales (Rs. 25/= per unit) 6,50,000

 

Costs

Advertising Rs. 90,000

Direct labour 160,000

Raw materials purchased 80,000

Building rent (production uses 80% of the space, administration & sales offices use the rest) 50,000

Utilities, factory 35,000

Maintenance, factory 25,000

Depreciation on factory equipment is estimated at Rs.0.10 per unit produce ?

Selling and Administrative salaries 1,00,000

Other factory overhead costs 11,000

Other selling and administrative expenses 20,000

 

Inventories Jan. 1,1999 Dec. 31, 1999
Raw materials Rs. 20,000 Rs. 10,000
Work in process 30,000 40,000
Finished goods ——– ?

 

The finished goods inventory is beginning carried at average unit production cost for the year.

 

REQUIRED

i) Prepare statement of cost of goods manufactured for the year.

ii) Compute the following

a) The number of units in finished goods inventory at December 31.

b) . The cost of the units in finished goods inventory at December 31.

iii Prepare an Income Statement for the year.

 

7- JOB ORDER COST SYSTEM

Sunshine Co. uses a job order cost accounting system. The following information was provided for the month of March.

 

a) Purchases of direct materials during the month amounted to Rs.59,700/= on account.

b) Materials requisitions issued by the production department during the month total to Rs.56,2001.

c) Time cards of direct workers show 2000 hours worked on various jobs during the month, for total direct Labour cost of Rs,30000/=.

d) Direct workers were paid Rs.26300/= in March,

e) Actual overhead costs for the month amounted to 34,900/=

f) Overhead is applied to jobs at a rate of Rs.181= per direct labour hour.

g) Jobs with total accumulated cost of Rs.1,16,000/= were completed during the month.

h) On March 31, finished goods inventory was valued at Rs.22,0001.

i) During March finished goods were sold for Rs.1,28,000/= on account.

 

REQUIRED

Prepare general journal entries for each of the above transactions (including cost of goods sold and closing of factory overhead account).

 

8- STANDARD COSTS

GIVEN TOP PRODUCTS CO. uses Standard Cost System. Following data are taken from its cost accounting records:

 

  STANDARD ACTUAL
Raw material Rate per unit Rs.6 Total Cost Rs.54000/= Rate per unit Rs.6.2 Quantity 9200 units
Direct labour Wage per hour Rs.11 Total labour hours 10000 Wage per hour Rs.10.50 Total labour cost Rs.110250/=
Factory overhead 80% of direct labour cost Total Cost Rs.90,000

 

 

REQUIRED

a) Calculate (i) Materials Price Variance

(ii) Materials Quantity Variance (iii) Labour Wage Variance (iv) Labour Efficiency Variance (v) FOH Variance

 

b) Give entries in general journal to record actual and standard costs of direct materials, direct labour and FOH and their variances.

 

9. BUDGETING

What is a budget? Explain why a budget is used.

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