ADVANCED ACCOUNTING 2005 (Private)
Time : 3 Hours Max. Marks:100
Instructions: Attempt any FIVE questions.
1. FINANCIAL STATEMENT
HAMMAD HAMID LTD. Was registered with an authorized capital of Rs.70,00,000 divided into 7,00,000 Ordinary Shares Rs.10 each. The company books showed the following balances on June 30, 2005.
|Debit Balance||Credit balances|
|Cash 110,000||Paid up Capital 500,000|
|Receivable 125,000||Retained Earning 50,000|
|Merchandise Inv. 42,000||Accounts Payable 50,000|
|Office Supplies 36,000||6% Debentures Payable 100,000|
|Unexpired insurance 40,000||Accumulated Dep. (Plant Assets) 50,000|
|Plant Assets 450,000||Accumulated Dep. Vehicles 75,000|
|Purchases 205,000||Purchases return & All. 30,000|
|Transportation in 35,000||Commission Income 90,000|
|Sales Return & Allow. 25,000||Sales revenue 400,000|
|Salaries expense 75,000|
|Total Rs.1345,000||Total Rs.1345,000|
Data for adjustment on June 30.2005.
(i) Office Supplies Used Rs.24,000
(ii) Insurance Expired Rs.33,000
(iii) 20% Depreciation for the year on written down value on Vehicles.
(iv) Depreciation estimated on plant Assets Rs.50,000.
(v) Salaries for ‘he period Rs.80,000.
(vi) Prepaid Salaries Rs.5,000
(vii) Merchandise Inventory Rs32,000 on 30.6.2005.
(viii) Provision for estimated bad debts Rs.5,00
(ix) Appropriate Rs.40,000 for plant Extension and Rs.25,000 for General Reserves and Declare Cash dividend @ 10% on paid-up Capital.
(i) INCOME STATEMENT
(ii) STATEMENT OF RETAINED EARNING.
(iii) BALANCE SHEET
2. ACCOUNTING FOR INSTALLMENT SALES:
UMAR & SONS LTD. use perpetual Inventory System for recording merchandise and Installment method for recognizing profit their transactions for the year ended June 30,2005 were as under:
(i) Sales on installment basis Rs.4,50,000
(ii) Cost of Installment Sales 3,15,000
(iii) Purchased merchandise on account for 5,00,000
(iv) Collection of installments 1,50,000
(v) Payment 01 Accounts payable 2,00,000
(vi) Expenses paid 4,000
— Installment Accounts cancelled 25,000
— Repossessed merchandise was valued 16,000
Record the above transactions In GENERAL JOURNAL giving adjusting and closing entries.
3. ACCOUNTING FOR BRANCH:
On January 1, 2005 PRINTLAKE CO. opened a branch atQuetta. Following is the information for the month of January 2005.
The Head Office has followed the practice of billing the Branch at 25% above cost.
(i) Goods supplied to Branch at billed price Rs.40,000
(ii) During the month additional shipment was made at billed Price of Rs.4,800
(iii) Goods returned by branch at billed price of Rs.4,000
(iv) Cash remitted to branch Rs.5,000
(v) Branch purchased locally Rs.8,000
(vi) Sales by branch Rs.50,000
(vii) Branch incurred operating expenses Rs.6,000
(ix) Merchandise valued at Branch on January 31, 2005 Rs.15,000 including 10% of local purchases.
Give the journal entries in the books of Head Office and Branch office to record the above transactions and to record over valuation and closing entries.
4. COMPANY ACCOUNTING – Absorption:
The balance sheet data of Saim Waqar Ltd. Was as under:
Authorized Capital Rs.1250,000
Paid up Capital 500,000
Shares Premium Rs.62,500
Retained Earning 125,000
Bonds payable 125,000
Accounts payable Rs.75,000
Preliminary Expenses 125,000
Saim Waqar Ltd. Was absorbed by Owais Ltd. On the following terms:
(a) All the Assets and Accounts payable were taken over by absorbing Company at book value.
(b) Saim Waqar Ltd. Received 50,000 shares of Rs10 each and cash payment of Rs.75,000 from Absorbing Company.
(c) Bond holders received 13750 shares of Rs.10 each from the Absorbing Company.
(d) Owais Ltd. Paid the Liquidation Expenses of Rs,12,500 to Saim Waqar Ltd.
to purchase consideration.
(i) Compute the purchase consideration.
(ii) Give the necessary journal entries to give effect to the above decision on the books of
(1) SAIM WAQAR LTD.
(2) OWAIS LTD.
ACCOUNTING FOR COMPANY – AMALGAMATION:
On January 1,2005 Balance Sheet of Karim Ltd. And Raheem Ltd. appeared as follows:
|Shares Capital (Rs.10 each)||160,000||160,000|
The two Companies amalgamate on January 12005 to form BRIGHT STAR LTD. On the Following conditions:
(i) Authorized Capital of BRIGHT STAR LTD. is to be 80,000 ordinary shares of Rs.10 each.
(ii) All the assets and liabilities of Karim Ltd. are taken at book value and shareholders are issued 24,000 shares (fully paid up) m BRIGHT STAR LTD.
(iii) All the assets and liabilities of Rahim Ltd. are taken over at book value and the shareholders are issued 19200 shares (fully paid up) in BRIGHT STAR LTD.
(iv) Preliminary Expenses paid by new Company Rs.8,000
(i) General Journal entries m the books of BRIGHT STAR LTD.
(ii) Balance Sheet of BRIGHT STAR LTD. On January 1,2005
5. ANALYSIS OF FINANCIAL STATEMENT
Following are the selected data taken from the books of MASOOMA & Co. at the end of year. 2004.
|Inventory at Start.||29,600|
|Inventory at End||25,800|
|Accounts Receivable Beginning||59,700|
|Accounts Receivable Ending||49,400|
|Non operating expenses||4,000|
Compute the followings:
(a) Equity Ratio
(b) Current Ratio.
(c) Rate of Gross profit on Sales.
(d) Quick Ratio
(e) Rate of net income on Sales.
(f) Return on Assets.
(g) Return on Equity.
(h) Total days of operating cycle.
6. CASH & FUND FLOW ANALYSIS:
The comparative Balance Sheet of Uzair & Company for the two years are shown below:
|Debit balances (In Rs.)||Dec.31, 2004||Dec.31 ,2003|
|Credit balances (in Rs.)|
|Accumulated Dep. (Building)||48,000||35,000|
|Long term loan payable||50,000||———|
During the year 2004 the Company declared Cash Dividend of Rs.20,000 and Stock Dividend of Rs.35,000
(1) Compute working capital for both the year.
(2) Cash flow statement.
7. ACCOUNTING FOR INCOMPLETE RECORDS:
NOT INCLUDED IN THE NEW COURSE
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