ADVANCED AND COST ACCOUNTING 2007 (Private)
Time : 3 Hours Max. Marks:100
Instructions: Attempt FIVE questions, THREE from Section-I and TWO from Section-II.
SECTION “A” (Advanced Accounting) 60 Marks
1. ACCOUNTING FOR COMPANIES – ABSORPTION
On January 2OO7 Balance Sheet of Zeeshan Ltd. Appeared
|Cash 70,000||All. ForDep.Building1,00,000|
|Account receivable 70,000||A/c payable 1,00,000|
|Merchandise inventory 50,000||Bonds Payable 50,000|
|Equipment 50,000||Share capital Rs.10 5,50,000|
|Building 6,00,000||Retained Earning 40,000|
Zeeshan Ltd. Is absorbed on January 1,2007 by Furqan Ltd. On the following terms.
(i) All the assets and liabilities were taken over at book values except cash.
(ii) Share holders will get 60,000 shares of Rs.10 each in Furqan Ltd.
(iii) Liquidation expenses paid by Zeeshan Ltd. amounted to Rs.20,000,
Compute purchase consideration.
(2) Journal entries in the books of Zeeshan Ltd.
(3) Journal entries in the books of Furqan Ltd.
2. ANALYSIS OF FINANCIAL STATEMENT
The data given below were taken from the financial statements of Hamza Corporation for years 2006 and 2006.
|Cost of goods sold||4,50,000||5,60,000|
Compute the following for 2005 and 2006
i) Amount of working capital
ii) Current ratio
iii) Days of inventory turnover
iv) Quick ratio
v) Days of receivable turnover
vi) Rates of gross profit on sales
vii) Days of operating cycle in 2006 only
4. ACCOUNTING FOR INSTALLMENT SALES:
The following transaction resale to Al-Abid Co. for 2006. Which follows the perpetual inventory system and FIFO method for valuation of inventory.
Opening inventory consist of 50 machines @ Rs.560 per machine. They completed the following transactions.
1) Purchased 350 machines @ Rs.600 per machine on account.
2) Sold 250 machines @ Rs.1,000 each on installments.
3) Received down payment @ Rs.200 per machine on all the sold machines.
4) Received 996 installments @ Rs.100 per installment.
5) Repossessed one machine from a customer who had paid only down payment having market value of Rs.500.
Journal entries including adjusting and closing entries. Show all computations.
4. CASH FLOW STATEMENT:
Muzammil Ltd. Balance sheet as on Dec. 31,2005 and 2006 are given below:
|Allowance for depreciation||28,000||20,000|
|Ordinary share cap[ital||1,35,000||1,00,000|
Cash dividend of Rs.1O,000 and stock dividend of Rs.20,000 were declared during 2006.
(1) Compute Net Income or Loss for 2006.
(2) Cash flow statement, showing cash flows from operating, investing and financing activities.
5. ACCOUNTING FOR BRANCH:
On January 1,2006 Bilal Co. of Karachi opened a branch atMultan. Following is the information for the month of January 2006.
(i) Sent merchandise to branch at billed price of Rs.96,000.
(ii) During the month additional shipment was made at billed price of Rs,60,000.
(iii) Branch returned merchandise of billed price Rs.4,800 during January.
(iv) At the end of January the inventory (at billed price) held by branch amounted to Rs.30,000.
(v) Branch reported net profit of Rs.4,000 for the month. The head office followed the practice of billing the branch at 20% above cost of merchandise.
(1) Give Journal entries in the books of head office including adjustment of over valuation.
(2) Give Journal entries in the books of Multan Branch.
Note: Where computation of over valuation is required entries without computation will not be accepted.
SECTION “B” (Cost Accounting) 40 MARKS
6.(a) Danish Corporation produces special product as to customer specifications and uses the Job Order Cost System. The following data relates to its operations of December 2006.
(1) Purchased Raw material on account Rs.60,000.
(2) Raw material issued to factory Rs.43,000 of which Rs.4,000 was used directly.
(3) Factory Labour used Direct Rs.65,000 and indirect Rs.5,500.
(4) Factory Overhead cost incurred on account Rs.44)000.
(5) Factory Overhead applied at 100% of Direct Labour Cost.
(6) Jobs were completed to the extent of 80%.
(7) Goods sold on account Rs.2,00,000.
(8) Finished Goods inventory on Dec.3112006 Rs.18,400.
Record the above transactions in Journal also close over or under applied factory overhead at the end of month.
(b) The following information is taken from the Financial statements of Abdul Rehman Co. at the end of 2006.
Cost of raw materials used Rs.1,60000
Cost of goods manufactured . Rs.3,80,000
Factory overhead, 75% of direct labor Rs.90,000
Goods in process inventory on Dec.31 ,2005 Rs.36,000
Compute the cost of goods in process inventory at December 31, 2006.
7. PROCESS COST SYSTEM:
The following information’s was taken from the records of Faisal Manufacturing Co. for the month of January 2006.
(1) Cost of units in process on Jan.1, 2006 Rs.30,000.
(2) Cost of Raw material used Rs.81,400.
(3) Direct Labour Cost incurred Rs.64,600
(4) Factory Overhead Cost incurred Rs.43,200.
The data extracted from the production report relating to above process is as for follows.
(1) Units in process at end of January 2006 3,000 Units (60% complete as to Material and 80% complete as to conversion cost)
(2) Units placed in production during the month 13,000 Units
(3) Units in process on January 1, 2006 5,000 Units (40% complete as to Material and 60% complete as to conversion cost)
(1) Equivalent production during the month.
(2) Unit Cost
(3) Cost of units completed V
(4) Cost of ending inventory of Goods in Process.
(5) Journal entries to records cost allocated to production and cost of goods completed during the month.
8. STANDARD COST AND VARIANCES:
(a) The Standard and Actual cost data of Arif Co. are as follows:
|Direct Material||20,000 units @ Rs.4 per unit||19,600 units @ Rs.3.50 per unit|
|Direct Labour||10,000 hours @ Rs.10 per hour||11,000 hours @ 10.50 per hour|
(1) Material Price Variance
(2) Material Quantity Variance
(3) Labour Rate Variance
(4) Labour Time Variance
(5) Journal Entries for recording of variances with Actual and Standard Cost.
F. OVERHEAD VARIANCE (FAVOURABLE)
|Factory Overhead||Rs .96,000||Rs.6,000|
(i) Determine the Actual Factory Overhead.
(ii) Record the factory overhead costs and its variance.
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