Note: Attempt any FIVE questions in all, THREE questions from Section-A and TWO questions from Section-B.
1. ACCOUNTING FOR COMPANIES
The following are the balance sheet accounts of Abid Co. Ltd as on 30th June 2012.
|Accounts receivable||73000||Bank overdraft||52000|
|Merchandise inventory||61000||Share capital:|
|Plant machinery||84000||25000 ordinary shares of Rs.10 each||250000|
|Retained earning (Deficit)||85000|
The company proved unsuccessful and resolutions were passed to carry out the following scheme of reconstruction by reduction of capital:
(a) That the ordinary shares be reduced to an equal number of fully paid shares of Rs. 5 each.
(b) That the amount so available be utilized for wiping out losses and reduction of assets as follows:
Preliminary expenses and retained earning account (Dr balance) to be written of entirely. The plant and machinery be reduced by Rs. 8000. The merchandise inventory be written down by Rs. 6000. Make provision for bad debts Rs. 8000. The parent to be completely written off.
(i) Make necessary journal entries in the books of the company to implement the above scheme of reconstruction.
(ii) Prepare the balance sheet (revised)
2. ACCOUNTING FOR INSTALLMENT SALES
The following balance are taken from the pre-closing Trial balance of Hassan Co. as of Dec. 31, 2007.
(i) Installment A/C Receivable- 2011 Rs. 80,000
(ii) Installment A/C Receivable- 2012 Rs. 120,000
(iii) Installment sales Rs. 200,000
(iv) Cost of installment sales Rs. 140,000
(v) Unrealized gross profit- 2011 Rs. 80,000
(i) Prepare all entries for the year ended Dec. 31, 2007 adjusting and closing as well, assuming that rate of gross profit on installment sales of 2006 was 25% show all computations.
(ii) On Jan. 10, 2008 a customer defaulted on his payment. Give journal entries for repossession with the help of the following information.
(i) Original sale on installment Rs. 2000
(ii) Date of sale 12 august 2006
(iii) Collection up to date Rs 1500
(iv) Estimation market value of repossessed merchandise Rs. 600
3. ACCOUNTING FOR BRANCH
Asad Ltd sent merchandise costing Rs. 60,000 which was billed at 20% above cost to its Lahore Branch and paid transportation cost Rs. 7800.
On request of the Faisalabad Branch, Asad Ltd advised Lahore Branch to transfer the same shipment to Faisalabad Branch. Lahore Branch sent the same to Faisalabad branch and paid transportation charges Rs. 2200.
Pass journal entries in the books of:
(i) Asad Ltd.
(ii) Lahore Branch
(iii) Faislabad Branch
Note: If the merchandise had been supplied directly by the Head Office (Asad Ltd) to Faislabad Branch the transportation charges would have been Rs. 8000.
4. CASH FLOW STATEMENT
On December 31, 2006 and 2007 balance sheet of NIZAM Ltd shows the following:
|Accumulated depreciation equipment Rs.||6100||4800|
|Share capital-Rs. 10 per share||30,000||25,000|
(i) A fully depreciation equipment that costs of Rs. 800 was discarded and related accounts were closed.
(ii) Cash dividend of Rs. 4000 were declared and paid.
Prepare cash flow statement. Showing operating, investing and financial activities.
5. ANALYSIS OF FINANCIAL STATEMENTS
The following data have been obtained from the financial statements of Mujahid and Co for the year ended Dec 31, 2008 and 2009.
|Cost of goods sold||110000||125000|
Compute the following for 2008 and 2009:
(i) Amount of working capital
(ii) Current ratio
(iii) Acid test ratio
(iv) Inventory turn over
(v) Receivable turn over
(vi) Gross profit rate
6. ACCOUNTING FOR MANUFACTURING CONCERN
The following data relate to Waseem Co. for the year 2007.
(i) Purchase of direct material Rs. 88000
(ii) Direct material used Rs. 90000
(iii) Direct labour paid Rs. 65000
(iv) Direct labour assigned to production Rs. 70000
(v) Factory overhead cost incurred Rs. 80000
During the year, 24400 units were manufactured and 25000 units were sold. Selected information concerning inventories during the year is as follows:
|Jan. 1, 2007||Dec 31, 2007|
|2. Work in process||18000||14000|
|3. Finished goods 3000 units||27000||?|
(i) Cost of goods manufacturing during 2007.
(ii) Average unit cost produced during 2007.
(iii) Cost of goods sold assuming FIFO basis.
(iv) Cost of ending inventories of Material and Finished goods.
Also pass the necessary entries.
7. JOB ORDER COSTING
Skyline Co. uses job order cost system. The manufacturing operations for the year ended December 31, 2007 were as follows:
(i) Purchased raw materials on account Rs. 72000
(ii) Material issued to factory of Rs. 64500 of which Rs. 4500 was indirect materials.
(iii) Direct labour cost incurred Rs. 58000 and Rs. 4800 indirect labour.
(iv) Factory overhead application rate was 80% on direct labour cost.
(v) Factory overhead cost incurred on account Rs. 35,000.
(vi) Cost of jobs completed Rs. 150,000.
(vii) Cost of jobs Rs. 130,000.
(viii) Sales on account Rs. 170,000.
Record all the above transactions in the general journal and give a entry to close the factory overhead account.
8. STANDARD COSTING
Irfan Co. provided following standard and actual cost data for the month of June 2007.
|Materials||500 KGs @ Rs. 1.50|
|Labour||500 Hours @ Rs. 3.50|
|Factory overhead||Rs. 2.70 per labour hour|
|Materials||490 Kgs @Rs. 1.80|
|Labour||510 Hours @ Rs. 3.50|
|Factory overheads||Rs. 1480|
(i) Compute material price variance, material quantity variance, labour variance, labour efficiency variance and overhead variance.
(ii) General journal entries for the above
(iii) General journal entries to close the variance account.