ADVANCED ACCOUNTING 2004 (Private)

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ADVANCED ACCOUNTING 2004 (Private)

 

Time : 3 Hours                Max. Marks:100

 

Instructions: Attempt any FIVE questions.

1. FINANCIAL STATEMENTS: (20)

Sana LTD. was registered with a Capital 500,000 shares of Rs.10 per. The unarranged Trial Balance at 3l December 2004 was as under:

 

 

ACCOUNT TITLES

DEBIT

CREDIT

Cash 120,000
Accounts Receivable 155,000
Accounts Payable 145,000
Merchandise Inventory 125,000
Purchases 1500,000
Paid up Capital 1800,000
Transportation in 20,000
Salaries Expense 120,000
Sales 1830,000
Building 1800,000
Auditors Fee 70,000
Furniture 50,000
Retained Earnings 225,000
Fire Insurance Premium 10,000
Utility Expenses 30,000

 

4000,000

4000,000

 

DATA FOR ADJUSTMENT ON 31-12-04

1. Merchandise Inventory valued at Rs.140,000.

2. Salaries unpaid amounted to Rs.10,000

3. Accrued Utility Expenses Rs.5000

4. One-fifth of Insurance Premium is unexpired.

5. Provide Depreciation on Furniture 20% and on Building at2%

6. As per Board of Directors approval.

(i) Reserve for Income Tax @ 10% of Net Income.

(ii) Reserve for contingencies

(iii) lnterim Dividend declared @ 10% of paid up Capital.

 

REQUIRED:

(i) Income Statement

(ii) Retained Earning Statement

(iii) Balance Sheet.

 

2. FINANCIAL STATEMENT ANALYSIS: (20)

Following are the selected Balances taken from the Books of Annie LTD. at the end of 2004.

Cost of goods sold 270,000

Accounts Payable 100,000

Merchandise Inventory (1.1.04) 60,000

Bills payable 250,000

Accounts Receivable (1.1.04) 190,000

Marketable Securities 71,000

Notes payable 15,000

Cash 54,000

Accounts Receivable (31.12.04 175,000

Credit Sales (Net) 912,500

Merchandise Inventory (31 .12.04) 75,000

 

REQUIRED:

On the basis of above information, Compute:

(1) Current Ratio (2) Acid Test Ratio

(3) Inventory Turnover (4) A/c. Receivable Turnover

(5) Net Profit Percentage. (6) Gross Profit Percentage.

(7) Average days to A/c. Receivable & Inventory Turnover.

Note: Computation without the use of relevant Formula will not be accepted.

 

FUND & CASH FLOW ANALYSIS: (20)

The comparative Balance Sheet of Sumera Ltd. are reproduced below:

DEBIT BALANCES (in Rs.) 2004 2003
Cash 175,000 210,000
Prepaid Insurance 80,000 90,000
Accounts Receivable 350,000 320,000
Merchandise Inventory 325,000 350,000
Plan & Machinery 880,000 830,000
Total Rs. 1810,000 800,000
CREDIT BALANCES (In Rs)
Paid up Capital 1200,000 1130,000
Accounts Payable 180,000 200,000
Salaries Payable 60,000 50,000
Bonds payable 120,000 200,000
Retained Earnings 250,000 220,000
Total Rs. 1810,000 800,000

 

ADDITIONAL DATA:

(1)Net Income for the year 2004, Rs.120,000

(2) Declared Cash Dividend Rs.90,000.

 

REQUIRED:

(1) Working Capital for both the year.

(2) Statement showing Changes in Working Capital

(3) Determine Cash flow from operating activities.

 

4. ACCOUNTING FOR BRANCH: (20)

On 1 October 2004, Fahad Traders of Karachi opened a Branch atIslamabadby sending goods at a Billed Price of Rs.270,000. On 151h Nov. additional shipment was made at a billed price of Rs.108000. On 20th Nov. the Branch returned goods worth Rs.8,000.

 

On 31st Dec., 2004, the Branch reported a Net Loss of Rs.15,600 and goods unsold (inventory) at Billed price of Rs.90.000. The Head office invoices goods at 25% above cost

 

REQUIRED:

(1) Show over-valuation Adjustment with necessary computation in the Head Office Books.

(2) Record the above transactions (including incorporation of Branch Profit) Loss and Over-valuation Adjustment) in the Head Office Journal.

 

5. COMPANY ACCOUNTING- AMALGMATION:

The respective Balance sheets of Fiza Ltd and Aimen Ltd stood on 31. Dec. 2004. as under:

 

ASSETS (In Rs.) FizaLtd. Aimen Ltd.
Building (Net) 800,000 1400,000
Plant & Machinery (Net) 650,000 800,000
Goodwill 100,000
Merchandise Inventory 100,000 250,000
Accounts Receivable 60,000 300,000
Cash 40,000 150,000
Profit and Loss 50,000
Total: 17,00,000 30,00,000
EQUITIES (In Rs.) Fiza Ltd. Aimen Ltd.
Share Capital (in Rs.10 share) 1500,000 2500,000
Accounts Payable 200,000 300,000
Retained Earnings 200,000
Total: 17,00,000 30,00,000

 

1st January 2005, both the companies agreed to amalgamate. A new company Nadeem Ltd. was formed with an authorized Capital of Rs.50,00,000 (divided into 500,000 share of Rs.10 each) to take over Assets and Liabilities of both the concerns at Book Values with the exception of Buildings which were taken at 20% more than their Book values:
REQUIRED:

(1) Compute the amount payable to each company and Number of shares to be issued to the Share holders of the liquidation Companies.

(2) Journal Entries in the Books of Nadeem Ltd.

(3) Prepare initial Balance sheet of Nadeem Ltd.

 

6. ACCOUNTING FOR INSTALLMENT SALES

Nizam Sons use Perpetual inventory system for recording Merchandise. Summarised data for the year 2004 are as under:

 

1. Sales made on Installment basis 500,000

2. Collection from Installment AIR 200,000

3. Operating Expenses paid 32,Q00

4. Operating Expenses payable 3,000

5. Cost of installment sales 400,000

6. Installment A/c. Receivable cancelled 30,000

7. Repossessed goods valued at 22,090

 

REQUIRED:

(a) Calculate Gross profit rate

(b) Find out Loss/gain on repossession.

(c) Pass Journal Entries for recording the above transactions including Adjusting and closing Entries.

 

7. CONSIGNMENTS ACCOUNT: (20)
NOT INCLUDED IN THE NEW COURSE

 

8. ACCOUNTING FOR INCOMPLETE RECORDS:

NOT INCLUDED IN THE NEW COURSE

 

9. DISTINGUISH BETWEEN (ANY TWO) (20)

1. Joint Venture and Consignment.

2. InstallmentSaleand Hire Purchase.

3. Amalgamation and Absorption of Companies.

 

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