B.com Part 2 – ADVANCED ACCOUNTING 2005 (Regular)

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ADVANCED ACCOUNTING 2005 (Regular)

 

Time : 3 Hours                Max. Marks:100

 

Instructions: Attempt any FIVE questions.

1. ACCOUNTING FOR INCOMPLETE RECORDS:

NOT INCLUDED IN THE NEW COURSE

 

2. CASH FLOW ANALYSIS

The comparative balance sheet of ABDULLAH FOODS LTD. for June 30, 2004 and 2003 is as follows:

ASSETS June 30, 2004 June 30, 2003
Cash 93,400 57,800
Accounts Receivable (Net) 125,000 123,500
Inventories 148,500 108,900
Investment 65,000
Land 145,000
Equipment 367,600 278,600
Accumulated Depreciation (110,900) (87400)
EQUITIES June 30, 2004 June30, 2003
Accounts payable 82,400 74,000
Accrued Expenses 6,700 6,000
Dividend payable 18,400 15,700
Ord. Share capital Rs.10 100,000 70,000
Ordinary Share Premium 320,000 200,000
Retained Earnings 239,100 180,700

The following additional information has been taken from the records of ABDULLAH FOOD LTD.

 

(a) Equipment and Land were acquired for cash.

(b) The investments were sold for Rs.95,000 cash.

(c) The Ordinary shares were issued for cash.

(d) Net Income Rs.132,000

(e) Cash Dividend declared Rs.73,600

 

REQUIRED:

(a) Prepare a Statement of Cash Flow for the year ended June 30, 2004.

(b) Explain why the statement of Cash Flow is one of the basic financial statements.

 

 

  1. 1.      ACCOUNTING FOR BRANCH:

 

On March 1, 2005 a company ofKarachiopened a branch atLahore. The information for the month is as under:

1. Goods supplied to branch at billed price for Rs.1,65,000.

2. During the month additional shipment was made at billed price of Rs.64,800

3. Goods returned by branch at billed price of Rs.4 050

4. Merchandise valued at Branch on March 31, 2005 for Rs.54,000

5. The Head office had followed the practice of billing the branch at 25% above cost.

 

REQUIRED:

Give the Journal entries in the books of Head Office to record the above transactions and to record over valuation adjustment.

 

4. FINANCIAL STATEMENT:

GOOD LUCK LTD. has an issued Capital of Rs.50,00,000 dividend into Ordinary share of Rs.10, each. The authorized capital is 1,000,000 ordinary share of Rs.10 each. Following is the Company’s Trial Balance as on December 31, 2004.

Sales ——— 1000,000
Purchases 400,000 ———
Debenture Interest 2,500 ———
Directors Remuneration 45,000 ———
Selling and Distribution Expenses 130,000 ———
General Expenses 143,000 ———
Ordinary Share Capital ——— 5,000,000
Share Premium ——— 50,000
5% Debentures ——— 50,000
Plan & Machinery cost 4,700,000 ———
Motor Van at Cost 700,000 ———
Accumulated Dep. Plant & Machine ——— 140,000
Accumulated Dep. Motor Van ——— 80,000
General Reserve ——— 90,000
Retained Earning Jan.1, 04 ——— 120,000
Accounts payable ——— 60,000
Accounts Receivable 190,000 ———
Bank Balance 204,500 ———
Inventory January 1, 2004 50,000 ———
Interim Dividend 25,000 ———
65,90,000 65,90,000

Additional Information — December 31, 2004

(a) Merchandise Inventory Valued at Rs.80,000

(b) Dividend proposed on Ordinary Shares at 3%

(C) Audit fees for the year estimated at Rs.5,000

(d) Provision for depreciation on Plant and Machinery and Motor Van is estimated at 10% and 20% per annum respectively.

(e) The directors have recommended to transfer Rs.50,000 to general reserve.

 

REQUIRED:

(a) Income Statement for the year ended December 31, 2004

(b) Statement of Retained Earning.

(c) Balance Sheet as on December 31, 2004 in a classified form.

 

5. FINANCIAL STATEMENT ANALYSIS:

The following information has been taken from the balance Sheet ofKASHMIRCARPETS at the end of June 2004.

 

Accounts Payable Rs.100000

Accounts Receivable 80,000

Accrued Liabilities 5,000

Cash 50,000

Income Tax Payable 7000

Inventory 130,000

Marketable Securities 200,000

Notes Payable 68,000

Prepaid Expenses 14,000

 

REQUIRED:

(a) (I) Working Capital, (ii) Current Ratio. (iii) Acid Test Ratio.

 

The following data has been extracted from the financial statements of GREEN GROCERS.

 

2004 2003
Net Sales (70% credit sales) 20,48,000 23,35,000
Cost of goods Sold 10,48,000 13,97,000
Average Monthly Inventory 2,03,000 1,90,000
Inventory End of the year 2,43000 2,05,000
Accounts Receivable 150% of average inventory

 

REQUIRED:  (b) Determine for each year

(i) Inventory Turn over. (ii) Receivable Turn over.

(iii) No. of days sales in inventory.

(iv) Days of operating Cycle.

(c) Comment on favourable and unfavourable trend revealed by the data.

 

  1. 2.      ACCOUNTING FOR INSTALMENT SALES:

 

SMART HOME COMPANY sell Local Vacuum Cleaners on Installment basis. The Company uses periodic system and First in First out method for Inventory valuation. The company has 100 vacuum cleaners of Rs6O0 each in the beginning inventory. The company completed the following transaction during the year.

(a) Purchased 300 Vacuum cleaners at Rs.650 each.

(b) Sold 250 Vacuum cleaners at Rs.1000 each.

(c) Collected down payment at Rs.200 on each Vacuum cleaner

(d) The balance to be collected in 4 equal quarterly Installments of Rs.200 each.

(e) All installments were collected in full except a customer who failed to pay the last installment.

(f) The equipment was repossessed. The value of repossessed equipment was Rs.100.

 

REQUIRED:

(a) General journal entries inducing adjusting

(b) Cost of Installment Sates.

(c) Gain or loss on repossession.

(d) Gross Profit Realized

 

7. CONSIGNMENT ACCOUNTING:

NOT INCL1.DED IN THE NEW COURSE

 

8. COMPAN ACCOUNTING AMALGAMATION:

ZULFI LTD. And LUTFI LTD. Decided to AMALGAMATE their businesses and a new company ZL LTD. Is formed to take over all the assets and liabilities of the two concerns.

The new company ZL LTD. Issues 100,000 shares of Rs.10 each at Rs.20 to ZULFI LTD. and 80,000 shares of Rs.10 each at Rs.20 to LUTFI LTD. The following are the Balance Sheets of the two companies:

ZULFI LTD.

Balance Sheet as at December 31. 2004

Cash 1,00,000 Accounts Payable 3,80,000
Accounts Receivable  350,000 General Reserve 1,00,000
Merchandise inventory 6,50,000 Share capital (190,000 Share of Rs.10 each) 19,00,000
Machinery 12,20,000
Furniture 60,000
Total    23,80,000 Total    23,80,000

 

 

LUTFI LTD.

Balance Sheet as at December 31. 2004

Cash 2,00,000 Accounts Payable 1,80,000
Accounts Receivable  3,50,000 General Reserve 1,20,000
Merchandise inventory 7,00,000 Share capital (185,000 Share of Rs.10 each) 18,50,000
Machinery 8,00,000
Office equipment 1,00,000
Total    21,50,000 Total    21,50,000

 

REQUIRED:

(a) Compute purchase consideration for each Liquidating Company

(b) Give general journal entries in the books of ZULFI LTD.

(c) Prepare Amalgamated Balance sheet of ZI LTd

 

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