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.
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.
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:
|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.
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.
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|
|Amortization of intangible assets||40,000|
|Gain on sale of plant assets||80,000|
|Loss on sale of investment||35,000|
|Cash||Rs. 1,07,000||Rs. 45,000|
|Accounts payable (to merchad. Supplies)||3,79,000||4,10,000|
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/=
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
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
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|
The finished goods inventory is beginning carried at average unit production cost for the year.
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.
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:
|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|
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.
What is a budget? Explain why a budget is used.