ACCOUNTING 2001 (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-a) Differentiate between Amalgamation and Absorption of Co’s.
b) Shan Ltd. And Adnan Ltd. Decided to amalgamate their business and a new company S and A Co is formed to take over all assets and liabilities of the two concerns. The new Co. S and A Ltd. Issue 1,10,000 shares of Rs.10 each at Rs.20 to Shan Ltd. And 90,000 shares of Rs.10 each at Rs.20 to Adnan Ltd. The following are the Balance Sheets.
Balance Sheet December 31, 2000
|A/c Receivable||400,000||General Reserved||300,000|
|Mds.Inventory||600,000||Share capital (190,000 shares of Rs.10 each)||1,900,000|
Balance Sheet December 31, 2000
|A/c Receivable||300,000||General Reserved||100,000|
|Mds.Inventory||700,000||Share capital (185,000 shares of Rs.10 each)||1,850,000|
i) Give entries in General Journal form in the books of SHAN Ltd.
ii) Prepare ALAMGAMATED Balance sheet in the book of S and A Co.
iii) Compute purchase consideration for each liquidatingCo.
2- ACCOUNTING FOR INSTALLMENT SALES
Given: A-ONE Co. follows the perpetual inventory system and FIFO method for inventory valuation and closes its book twice in a year at June 30, and December-31.
Balances at January 1, 2001:
Installment A/receivable- 1999 Rs. 75,000
Deferred gross profit- 1999 Rs. 25,000
Installment a/receivable-2000 Rs. 150,000
Deferred Gross Profit-2000 Rs. 45,000
At June 30. 2001:
Installment sales made at 25% above cost during the 6 — month period Rs. 450000
An installment NReceivable-1999 cancelled 5,000
Repossessed merchandise was assigned a value of Rs. 2,500
Installment A/Receivable— 1999 30,000
Installment A/Receivable —2000 45,000
Installment A/Receivable — 2001 175,000
i) Compute gross profit rates 01 the installment sales originated in 1999 and 2000.
ii) Prepare a statement showing collection of installment A/Receivables of 1999, 2000, and 2001 at June 30, 2001
iii) Give all necessary entries under installment method for recording transactions concerning installment sales including an adjusting entry for recording realized gross profit.
iv) Record repossession without recognizing loss or gain.
3- BRANCH ACCOUNTING
GIVEN: PAK TRANDING CO. with Its Head Office In Karachi, has a number of branches operating independently almost in all the cities ofPakistan. Given below are the transactions and accounting data concerning Head Office and its Multan Branch for the month of November 2001. The Head office bills merchandise to all its branches at 25% above cost.
1. Multan Branch reported merchandise inventory at November 01 valued at Rs.12500 (comprising exclusively of shipments from Head office).
2. Multan Branch received merchandise shipment from Head office at billed price of Rs,37,500.
3. Multan Branch returned merchandise against shipments in (2) at billed price of Rs,2,500.
4. Multan Branch received another shipment from Head office at billed price of Rs.50,000,
5. At November 30, Multan Branch valued its inventory at Rs.18,750. The branch is not authorized to make merchandise purchases from its local market.
1) Give entries in General Journal of Multan Branch to record transactions numbered 2, 3 and 4.
2) Give an adjusting entry in the General Journal of Head office to record profit from Allowance for over-valuation.
3) Set up a T-account for Allowance for over-valuation in the Ledger of Head office, post relevant entries into it Balance and rule off of the account.
4) Show all the necessary computations on Head office books.
4- ANALYSIS OF FINANCIAL STATMNT
GWEN The following information has been taken from the record of ASHRAF COMPANY LTD. at the end of the current year:-
Total assets Rs 450,000
Quick assets 80000
Total liabilities 202,500
Current liabilities 100000
Fixed assets 250000
Retained earning 47,500
Sales (including cash sales of Rs.100,000) 1000,000
Gross profit on sales 30%
Average inventory 70,000
Average receivable 90000
Operating expenses 180000
Market price of Rs20 share Is Rs.25.
(a) Working Capital (b) Debt ratio
(c) Equity Ratio (d) Current Ratio
(e) Inventory Turnover (f) Receivable turnover
(g) Rate of Net Income on sale
(h) Earning per share (i) Earning Ratio
(j) Total days of operating cycle
(k) Quick Ratio (l) Operating Expenses Rate
4- FUND FLOW ANALYSIS
GIVEN the comparative balance sheet of UZAIR CORPORATION at December 31, 1999 and 1998 is as follows:
|DEBIT BALANCES||Dec.31, 1999||Dec.31,1998|
|Ordinary share capital||100,000||80,000|
The Corporation declared a cash dividend of Rs.15,000 and share dividend of Rs.25,000 during 1999.
1) Define and determine working capital for both the years.
2) Statement of sources and uses of fund.
3) Prepare a cash flow statement for the year ended December 31, 1999.
6- COST ACCOUNTING SYSTEM – PROCESS CO
The following information is taken from the books of PAK STEEL MILLS for Department I for the month of March, 2001.
Cost of units in process on March 1, 2001 40,000
Cost of material placed in production 1,77600
Direct labour ?
Factory overhead (120% of DL Cost) 135,000
The data extracted from the production report relating to above process are as follows:
Units in process on March 1, 2001 (80% complete as to material & 50% as to conversion cost) 4,000 Units
Units placed in production during March, 2001 22,000 Units
Units in hand on March 31, 2001 (90% complete as to material & 75% complete as to conversion cost) 6,000 Units
a) Compute (i) Equivalent Production Units.
(ii) Per Unit Cost
(iii) Total cost of Units in process on March 31, 2001
(iv) Total cost of Units transferred out to Department II
b) Give necessary General Journal entry to record the transfer of units from Department) to Department II.
7- COST ACCOUNTING – JOB ORDER
HAKEEM & COMPANY reported the following inventories on November. 2001.
Raw material inventory Re. 45,000
Goods in process inventory 60,000
Finished goods inventory 37,000
The company uses the Job order cost accounting system. The following transactions took place during November:
a) Material purchased on account Rs,150,000.
b) Materials requisition for production Rs. 90,000 and supplies Rs. 20000.
c) Materials returned to supplier Rs,6000.
d) Accrued payroll Rs.105,000 including payroll for indirect labour Rs. 15,000.
e) Sundry manufacturing expenses incurred Rs. 110,000
t) Paid to Accounts payable Rs.56,000.
g) Collected from Accounts Receivable Rs.90,000.
h) FOH applied at the rate of 110% of direct labour cost
i) Goods in process inventory November 30. Rs.65,000.
j) Finished goods inventory November 30. Rs.55,000.
k) Sales on accounts Rs.405,000.
Prepare general journal entries for each of the above transactions (including entries for cost of goods manufactured, cost of goods sold and closing factory overhead account).
8-a) STANDARD COSTS
The Actual costs and variance for direct materials, direct labour and factory overhead for the month of October are given below:
|Actual Cost||Unfavourable Variance||Favourable Variance|
|Factory overhead variance||10,000|
1) Compute the standard costs of direct material, direct labour and factory overhead.
2) Give the entries In general journal to record the actual and standard costs and their variances.
8-b) STANDARD COST
RASHID PRODUCT CO. uses standard costs system. The cost data for various elements of cost for manufacture of 8000 units is following:
|Direct material||5,000 units @ Rs. 8.00||4,800 units @ Rs. 9.00|
|Direct labour||2,000 units @ Rs.11||2,300 units @ Rs12.00|
|Factory overhead||90% of direct labour||Rs.1,37,000|
i) Material Quantity Variance & Material Price Variance
ii) Labour Time Variance & Labour Rate Variance
iii) Factory Overhead Variance
Write a detailed note on MASTER BUDGET.