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|
|Accounts Receivable (Net)||125,000||123,500|
|EQUITIES||June 30, 2004||June30, 2003|
|Ord. Share capital Rs.10||100,000||70,000|
|Ordinary Share Premium||320,000||200,000|
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
(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. 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.
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.
|Selling and Distribution Expenses||130,000||———|
|Ordinary Share Capital||———||5,000,000|
|Plan & Machinery cost||4,700,000||———|
|Motor Van at Cost||700,000||———|
|Accumulated Dep. Plant & Machine||———||140,000|
|Accumulated Dep. Motor Van||———||80,000|
|Retained Earning Jan.1, 04||———||120,000|
|Inventory January 1, 2004||50,000||———|
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.
(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
Income Tax Payable 7000
Marketable Securities 200,000
Notes Payable 68,000
Prepaid Expenses 14,000
(a) (I) Working Capital, (ii) Current Ratio. (iii) Acid Test Ratio.
The following data has been extracted from the financial statements of GREEN GROCERS.
|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.
- 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.
(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:
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|
|Total 23,80,000||Total 23,80,000|
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|
|Office equipment 1,00,000|
|Total 21,50,000||Total 21,50,000|
(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