SECTION “A” (MULTIPLE CHOICE QUESTIONS)
1. Choose the correct answer for each from the given options:
(i) If gross profit is Rs.80,000 (20% of cost of goods sold), the amount of sales is:
(ii) The amount of capital is computed by subtracting liabilities from:
(iii) On allotment of shares the account credited is:
* Share Application
* Share Capital
* Share Allotment
* Share Discount
(iv) This is an intangible asset:
(v) In the absence of partnership agreement, profit/loss is distributed:
* In beginning capital ratio.
* in average capital ratio.
* in ending capital ratio
(vi) Share of a public limited company is:
(vii) A joint stock company is registered with:
* Paid up capital
* Issued capital
* Called up capital
* Authorized capital
(viii) Accumulated Depreciation account is:
* Contra asset
* Current asset
* Tangible asset
(ix) Income & Expenditure account in a non-profit concern is substitute of:
* Profit & loss account
* Cash book
* Retained earnings
* Statement of affairs
(x) Reserves are created out of:
* retained earnings
(xi) This is shown in the shareholder’s equity section of balance sheet:
* Debentures payable
* Dividend payable
* Unclaimed dividend
* Share premium
(xii) A public limited company is managed by its:
* Share holders
* Bond holders
* Board of directors
(xiii) Under the Diminishing Balance method every year, the depreciation charge:
* remains constant
(xiv) This is a liability:
* Advance from customer
* Loan to employee
* Accrued rent income
* Advance to supplier
(xv) Another name of Straight line method is:
* Reducing balance method.
* Revaluation method
* Fixed installment method.
* Units of output method
(xvi) Realization account may be opened in case of:
(xvii) By its nature, a partner’s current account is:
* fixed asset
* current asset
* long term liability
* owner’s equity
(xviii) A joint stock company is owned by:
* debenture holders
* board of directors
(xix) By its nature, preliminary expense is:
* owner’s equity
(xx) In’ a non-profit concern, accumulated fund is an substitute of:
SECTION ‘B’ (SHORT – ANSWER QUESTIONS)
2. Non-profit Concern:
A summary of receipts and payments of Aziz Sports Club for the first year ended Dec. 31, 2014 is as follows:
Additional Information on December 31,2013:
(i) Subscriptions include Rs.6,000 for year 2015
(ii) Subscriptions Receivable Rs.8,000 at the end of 2014
(iii) Outstanding salaries were Rs.2,000
(iv) Interest on Investment is accrued Rs.1,000
(v) Depreciation is charged @ 10% on Fixed Assets.
REQUIRED: Prepare Income and Expenditure Account for the period ended Dec. 31,2014
3. Single Entry:
1. Find Profit of Loss, where Cap.at start Rs.43,000, Capital at end Rs.45,000. Drawing Rs.14,000, capital introduced during the year Rs.20,000.
2. Find Capital at start, where: Capital at end is Rs. 87,000. Drawing Rs. 13,000, Capital introduced during the year Rs. 21,000, Profit for the year 23,000
3. Find Drawing, where: Capital at start Rs.20,000, Additional investment ‘Rs.8,000, Profit for the year Rs.12,000, capital at end Rs.25,000
4. Find Capital at end, where: Capital at start Rs. 50,000, Drawing Rs, 18,000, Additional investment Rs. 10,000, Loss during the year Rs. 10,000.
4. Partnership – Liquidation:
On December 31, 2014, the Balance sheet of the partnership of Kamran, Munawwar & Haider sharing profit. and loss in the ratio of 3:2:1 showed following position:
On this date partners decided to liquidate their business. Machinery was sold for cash Rs.240.000. Furniture was taken over by Haider at an agreed value of Rs.152,000. Liabilities were settled by payment of Rs.41,000. All partners are insolvent.
REQUIRED: Give entries in the General Journal.
5. Partnership – Admission:
A and B are partners with capitals of Rs.60,000 and Rs.40,000 respectively’, sharing profit and losses in the ratio of 3:1. They agree to admit C as a partner.
REQUIRED: Give General Journal entries to record the admission of ‘C’ in each of the following cases separately:
Case 1: ‘c’ invests sufficient cash to acquire 1/5 interest in the total capital of the firm,
Case 2: ‘c’ invests Rs.70,000 cash for 1/3 interest in the total capital of Rs. 180,000
6. Appropriation of Retained Earning:
Given: The following information in related to Zeel Company Limited on Dec. 31,2014′.
Authorized Capital (500,000 shares of Rs.10 each)
Paid up Capital (200,000 shares of Rs.10 each)
Retained Earnings 3,00,000
Income Summary (Credit) 2,85,000
The Board of Directors decided to.
(i) Appropriate Rs.60,000 for plant expansion and Rs. 50,000 for contingencies.
(ii) declare cash dividend @ Rs.0.80 per share and stock dividend @ 7%.
The stock dividend was settled by issuing suitable number of shares at par.
(a) Give entries in General Journal for the above.
(b) Prepare Statement of Retained Earning
ZEEL COMPANY LIMITED,
RETAINED EARNING STATEMENT.
Retained Earning Balance at start 3,00,000
Add: Net income 2,85,000
Total Retained Earning 5,85,000
Less: Reserve for plant extension 60,000
Reserve for contingences 50,000
Declaration of cash dividend 1,60,000
Declaration of stock dividend 1,40,000 4,10,000
Retained Earning Balance at end 1,75,000
7. Partnership – Retirement:
Asif, Mazhar and Hasan were partners in a business sharing profit and loss in the ratio of 25%, 45% and 30% respectively. The balance sheet of their firm on December 31,2014 stood as under.
Hasan decided to retire from the firm on above date. Before his retirement, following adjustments were made in the accounts of the firm:
(i) 10%of Ale. Receivable estimated to be doubtful.
(ii) Land and Building to be appreciated by 20%
(iii) Merchandise Inv. to be reduced by Rs.8,000
After making all adjustment, Hasan sold his entire interest to Mazhar.
REQUIRED: Give entries in G. Journal for the above
8. Distribution of Profit/Loss:
Given: The capital accounts of Baba & Kaka are as follows:
REQUIRED: Give entries in General Journal to close Income Summary account having a debit balance of Rs.20,000. Partners share profit / loss in average capital ratio.
SECTION C (DETAILED -ANSWER QUESTION)
NOTE: Attempt any two part question.
Given: The following are the selected transactions completed by Jannat Corporation during August 2014:
Aug.5 Purchased’ six computers at a list price of Rs.120,000 subject to trade discount of 10%, on credit terms 2/10, n/30. Paid fine of Rs. 500 on negligent driving while transporting the computers.
Aug.7 Purchased a printer for the system for cash Rs.8,000.
Aug.10 Paid Rs.5,000 for installation of computers and Rs.2,000 for repairing the damage during installation.
Aug.14 Paid the liability dated August 5.
(i) Compute cost of the Office Equipment.
(ii) Give dated entries in general journal to record
the above transactions.
List price (20,000 x 6) 1,20,000
Less: Trade discount (120,000 x 10%) 12,000
Invoice Price 1,08,000
Less: Cash discount (108,000 x 2%) 2,160
Net Cash Price 1,05,840
Add: Other Expenses
Installation charges 5,000
Total Other Expenses 13,000
Total Cost of Equipment 1,18,840
Cash Rs.50,000 Accounts Receivable Rs.2,50,000 Allowance for Bad Debts Rs.20,000 Merchandise Inventory Rs.3,40,000 Prepaid Rent Rs.30,000 Store Equipment Rs.5,00,000 Accumulated Depreciation Rs.100,000 Accounts Payable Rs.97,000 and Notes Payable Rs.80,000.
Maheen transfer to the partnership her assets (except prepaid rent) and liabilities on the following values: Accounts Receivable Rs.2,50,000 Merchandise at Rs.3,00,000 Equipment and Liabilities at book values. Goodwill of Maheen is to be recognized at Rs. 100,000.
Raheen invests land Rs.200,000 and buildings Rs.60,000. She also contributes sufficient cash to make her capital equal to that of Maheen.
(i) G. Journal Entries
(ii) Initial Balance Sheet
(c) Issuance of Shares and Debentures:
Azad & Co. completed the following transactions:
(i) Received application for 25,000 shares of Rs.10 each @ Rs.11 per share. The Co. issued 20,000 shares and refunded the excess amount.
(ii) Purchased land for Rs.3,37,500 issuing shares of Rs.10@ Rs.13.50 per share.
(iii) Purchased Equipment and issued 4000 shares of Rs.10@ Rs.15 per share.
(iv) Issued 3,000 debentures of Rs.100 at par, redeemable after five years at Rs.103 each.
(v) Issued 2,000 debentures of Rs.100 @ Rs.95 redeemable alter’ four years at Rs.105 each.
Give entries in general journal to record the above transactions.