XII – ACCOUNTINGa4accounting.weebly.com/uploads/7/1/2/8/7128209/xii-2003p.pdf · Compiled & Solved by: S.Hussain [email protected] X I I – Accounting – 2003 (Private)

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2003

Compiled and Solved by:

S.Hussain

XII – ACCOUNTING

PRIVATE

http://www.a4accounting.net/

Compiled & Solved by: S.Hussain [email protected]

X I I – A c c o u n t i n g – 2 0 0 3 ( P r i v a t e )

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ACCOUNTING – 2003

PRIVATE NOTE: Attempt any four questions. All questions carry equal marks. Q.No.1 SINGLE ENTRY GIVEN Mr. Waqar keeps his business record on single entry basis and uses a cashbook only. A summary of his cash receipts and payments during the year ended March 31, 2003 is as follows:-

Receipts Payments

Capital 250,000 Furniture 60,000 Notes payable 100,000 Salaries expenses 30,000 Commission income 160,000 Rent expenses 20,000 Other expense 10,000 Drawings 40,000

Adjustment Data at Year End: (i) Commission income Rs.150,000. (ii) Accrued salaries Rs,6,000. (iii) Prepaid rent Rs.2,000. (iv) Depreciation on furniture Rs.3,000.

REQUIRED (a) Prepare cash on hand on March 31. (b) Prepare statement of profit and loss. (c) Prepare statement of affairs.

SOLUTION 1 (a) Computation of Cash: Capital 250,000 Notes payable 100,000 Commission income 160,000

Total cash receipts 510,000 Less: Total Cash Payments: Furniture 60,000 Salaries expenses 30,000 Rent expense 20,000 Other expense 10,000 Drawings 40,000

Total cash payments (160,000)

Cash balance 350,000



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SOLUTION 1 (b) MR. WAQAR

STATEMENT OF PROFIT AND LOSS FOR THE PERIOD ENDED 31 MARCH 2003

Commission income (160,000 – 10,000) 150,000 Less: Operating Expenses: Salaries expense (30,000 + 6,000) 36,000 Rent expense (20,000 – 2,000) 18,000 Other expense 10,000 Depreciation expense 3,000

Total operating expenses (67,000)

Net profit 83,000

SOLUTION 1 (c)

MR. WAQAR STATEMENT OF AFFAIRS AS ON 31 MARCH 2003

ASSETS EQUITIES

Current Assets: Liabilities: Cash 350,000 Notes payable 100,000 Prepaid rent 2,000 Unearned commission 10,000

Total current assets 352,000 Salaries payable 6,000

Total liabilities 116,000 Fixed Assets: Furniture 60,000 Owner’s Equity: Less: All for dep. (3,000) Capital 250,000

Total fixed assets 57,000 Add: Net profit 83,000

333,000 Less: Drawings (40,000)

Total owner’s equity 293,000

Total assets 409,000 Total equities 409,000

Additional Working: MR. WAQAR

ADJUSTING ENTRIES FOR THE PERIOD ENDED 31 MARCH 2003

Date Particulars P/R Debit Credit

1 Commission income 10,000 Unearned commission 10,000 (To adjust the unearned commission)

2 Salaries expense 6,000 Salaries payable 6,000 (To adjust the unpaid salaries)

3 Prepaid rent 2,000 Rent expense 2,000 (To adjust the rent expense)

4 Depreciation expense 1,400 Allowance for depreciation – Furniture 1,400 (To adjust the depreciation expense)



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Q.No.2 DEPRECIATION (a) GIVEN On July 1, 2002 Zaidi Company purchased a machine for cash at a list price of Rs.50,000

subject to a trade discount of 10%. On July 5, 2002 the company paid Rs.6,000 against fire insurance for the next two years, Rs.3,000 as installation charges of the machine. On December 31, 2002 its depreciation at Rs.4,000. REQUIRED (i) Cost of machine. (ii) Dated journal entries from July 1, to Dec. 31, 2002, including adjusting and closing entries. (iii) Partial balance sheet on Dec. 31, 2002, showing machine and its related allowance for

depreciation. (b) GIVEN A computer was purchased on June 30, 2001 at a cost of Rs.48,000. Its salvage value was

estimated at Rs.8,000 and useful life to be 4 years. Accounting period ends on Dec. 31 each year. REQUIRED

Depreciation for 2001 and 2002, under: (i) Straight Line Method. (ii) Diminishing Balance @50 per cent.

SOLUTION 2 (a) Computation of Cost of Machine: List price of machine 50,000 Less: Trade discount (50,000 x 10%) (5,000)

Invoice price 45,000 Add: Additional Cost Incurred: Installation charges 3,000

Total additional cost incurred 3,000

Total cost of machine 48,000

ZAIDI COMPANY

GENERAL JOURNAL


1 July Machine 45,000 2002 Cash 45,000 (To record the purchase of machine)

5 July Machine 3,000 2002 Cash 3,000 (To record the additional cost incurred on machine)

5 July Prepaid fire insurance 6,000 2002 Cash 6,000 (To record the fire insurance paid on machine)

31 Dec Depreciation expense 4,000 2002 Allowance for depreciation 4,000 (To record the depreciation expense)

31 Dec Expense and revenue summary 4,000 2002 Depreciation expense 4,000 (To close the depreciation expense)



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ZAIDI COMPANY BALANCE SHEET

AS ON 31 DECEMBER 2002

Assets Equities Machine 48,000 Less: Allowance for depreciation (4,000)

44,000 SOLUTION 2 (b) Computation of Depreciation Expense by Straight Line Method:; Annual depreciation = Cost – Scrap value Estimated life in years Annual depreciation = 48,000 – 8,000 4 Annual depreciation = 10,000 Depreciation expense for the period 31 December 2001 = 10,000 x 6/12 = 5,000 Depreciation expense for the period 31 December 2002 = 10,000 Computation of Depreciation Expense by Diminishing Balance Method: Annual depreciation = Cost/Book value x Rate (%) Book value = Cost – Allowance for depreciation

Year Cost/Book Value Rate Depreciation Expense Book Value

2001 48,000 50% 24,000 x 6/12 = 12,000 48,000 – 12,000 = 36,000

2002 36,000 50% 18,000 36,000 – 18,000 = 18,000

Q.No.3 PARTNERSHIP – PROFIT/LOSS DISTRIBUTION GIVEN Akram and Ayaz partners with capital of Rs.150,000 and Rs.250,000 respectively. Their partnership agreement provides that each partner to be allowed 10% of his capital as markup, and the remaining profit/loss be divided equally. REQUIRED Profit/Loss Distribution Summary and general journal entries for:

(i) Net income Rs.4,000. (ii) Net loss Rs.4,000.

SOLUTION 3 Case – 1:-

________ PARTNERSHIP INCOME DISTRIBUTION SUMMARY FOR THE PERIOD ENDED ________

Akram Ayaz Total

Capital balances 150,000 250,000 400,000

Net profit 4,000

10% Markup on capital 15,000 25,000 40,000 Distribution of remaining loss equally (18,000) (18,000) (36,000)

Total (3,000) 7,000 4,000



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________ PARTNERSHIP GENERAL JOURNAL


1 Expense and revenue summary 4,000 Akram current account 3,000 Ayaz current account 7,000 (To record the distribution of net income)

Case – 2:-

________ PARTNERSHIP INCOME DISTRIBUTION SUMMARY FOR THE PERIOD ENDED ________

Akram Ayaz Total

Capital balances 150,000 250,000 400,000

Net loss (4,000)

10% Markup on capital 15,000 25,000 40,000 Distribution of remaining loss equally (22,000) (22,000) (44,000)

Total (7,000) 3,000) (4,000)

________ PARTNERSHIP

GENERAL JOURNAL


1 Akram current account 7,000 Ayaz current account 3,000 Expense and revenue summary 4,000 (To record the distribution of net loss)

Q.No.4 PARTNERSHIP – ADMISSION GIVEN Asma and Sultana are partners with capitals of Rs.200,000 and Rs.300,000 respectively, sharing profit/loss equally. They decide to admit Khalida as a new partner for 1/5 interest in capital of the firm. REQUIRED General journal entries in each of the following cases:-

(i) Khalida purchases share from Sultana for Rs.110,000 paying cash. (ii) Khalida invests in the firm sufficient cash. (iii) Khalida invests in the firm Rs.100,000 cash in total capital of Rs.600,000. (iv) Khalida invests in the firm Rs.150,000 cash her capital account is to be credited with the same

amount. SOLUTION 4 Case – 1:- Computation: Sultana capital = 300,000 x 1/5 = 60,000 Khalida Capital = 60,000



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1 Cash 60,000 Khalida Capital 60,000 (To record the investment of Khalida)

Case – 2:- Computation: For 4/5 interest, old partners’ capital (200,000 + 300,000) 500,000

Therefore total capital of firm (500,000 x 5/4) 625,000

For 1/5 interest Khalida’s capital (625,000 x 1/5) 125,000


GENERAL JOURNAL



Case – 3:- Computation: For 1/5 interest, Khalida capital (600,000 x 1/5) 120,000 Less: Khalida’s investment (100,000)

Bonus to Khalida 20,000 For 4/5 interest, old partners’ capital (600,000 x 4/5) 480,000 Less: Old partners’ capital before admission of Khalida (200,000 + 300,000) (500,000)

(20,000)

Goodwill ---


GENERAL JOURNAL


1 Cash 100,000 Asma Capital (20,000 x ½) 10,000 Sultana Capital (20,000 x ½) 10,000 Khalida Capital 120,000 (To record the investment of Khalida)

Case – 4:- Computation: (Goodwill to Old Partners): (Sentence “her capital account is to be credited with the same amount” shows goodwill old partners). For 1/5 interest, Khalida’s investment 150,000

Therefore total capital of firm (150,000 x 5/1) 750,000

For 4/5 interest, old partners’ capital (750,000 x 4/5) 600,000 Less: Old partners’ capital before admission (200,000 + 300,000) (500,000)

Goodwill to old partners 100,000



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2 Goodwill 100,000 Asma Capital (100,000 x 1/2) 50,000 Sultana Capital (100,000 x 1/2) 50,000 (To record the distribution of goodwill)

OR Q.No.4 PARTNERSHIP – RETIREMENT GIVEN Balance sheet data of the partnership firm of Naila, Huma and Shahida on dec. 31, 2002 were as follows:-

Debit Credit

Cash 10,000 Allowance for depreciation – Furniture 12,000 Merchandise 42,000 Accounts payable 20,000 Furniture 30,000 Naila Capital 20,000 Huma Capital 20,000 Shahida Capital 10,000

On the above date Shahida withdrew from the partnership. Before her withdrawal merchandise and furniture were revalued at Rs.32,000 and Rs.13,000 respectively, and goodwill of the firm was recognized at Rs.25,000. Then Shahida received a six-month 12% note of Rs.5,000, merchandise worth Rs.5,000 and cash Rs.2,000 in settlement of her account. The partners share Profit / loss in their capital ratio. REQUIRED Prepare:

(i) General journal entries for the above. (ii) Balance sheet after retirement of Shahida.

SOLUTION 4 (i)


FOR THE PERIOD 31 DECEMBER 2002


1 Revaluation 10,000 Merchandise inventory 10,000 (To record the revaluation of merchandise)

2 Revaluation 5,000 Allowance for depreciation – Furniture 5,000 (To record the revaluation of furniture)

3 Goodwill 25,000 Naila Capital (25,000 x 2/5) 10,000 Huma Capital (25,000 x 2/5) 10,000 Shahida Capital (25,000 x 1/5) 5,000 (To record the distribution of goodwill)



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4 Naila Capital (15,000 x 2/5) 6,000 Huma Capital (15,000 x 2/5) 6,000 Shahida Capital (15,000 x 1/5) 3,000 Revaluation (10,000 + 5,000) 15,000 (To record the distribution of loss on revaluation)

5 Shahida Capital (10,000 + 5,000 – 3,000) 12,000 12% Notes payable 5,000 Merchandise 5,000 Cash 2,000 (To record the retirement of Shahida)

SOLUTION 4 (ii)

________ PARTNERSHIP BALANCE SHEET

AS ON 31 DECEMBER 2002

ASSETS EQUITIES

Current Assets: Liabilities: Cash 8,000 Accounts payable 20,000 Merchandise 27,000 12% Notes payable 5,000

Total current assets 35,000 Total liabilities 25,000 Fixed Assets: Owner’s Equity: Furniture 30,000 Naila Capital 24,000 Less: All for depreciation (17,000) Huma Capital 24,000

13,000 Total owner’s equity 48,000 Goodwill 25,000

Total fixed assets 38,000

Total assets 73,000 Total equities 73,000

Q.No.5 PARTNERSHIP – DISSOLUTION GIVEN Balance sheet data of the partnership firm of Shamim and Fahim on March 31, 2003 are as follows: Assets: Cash Rs.2,000; Merchandise Rs.90,000; Land Rs.40,000; Goodwill Rs.18,000. Equities: Accounts payable Rs.30,000; Shamim’s Capital Rs.40,000; Fahim’s Capital Rs.80,000. On this date Shamim and Fahim decided to dissolve the partnership firm. They sold merchandise and land for Rs.36,000 and Rs.46,000 respectively and paid Rs.27,000 in full settlement of accounts payable. The partners share profit/loss in the ratio of their capital. REQUIRED

Prepare: (i) General Journal entries. (ii) Partners’ Capital accounts and cash account.



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SOLUTION 5 (i) ________ PARTNERSHIP

GENERAL JOURNAL FOR THE PERIOD 31 MARCH 2003


1 Cash 36,000 Realization 54,000 Merchandise inventory 90,000 (To record the sale of merchandise on loss)

2 Cash 46,000 Realization 6,000 Land 40,000 (To record the sale of land on loss)

3 Accounts payable 30,000 Realization 3,000 Cash 27,000 (To record the payment of accounts payable)

4 Shamim Capital (18,0000 x 1/3) 6,000 Fahim Caapital (18,000 x 2/3) 12,000 Goodwill 18,000 (To close the goodwill)

5 Shamim Capital (45,000 x 1/3) 15,000 Fahim Capital (45,000 x 2/3) 30,000 Realization (54,000 – 6,000 – 3,000) 45,000 (To record the distribution of loss between partners)

6 Shamim Capital (40,000 – 6,000 – 15,000) 19,000 Fahim Capital (80,000 – 12,000 – 30,000) 38,000 Cash (2,000 + 36,000 + 46,000 – 27,000) 57,000 (To record the distribution of remaining cash)

SOLUTION 5 (ii)

GENERAL LEDGER Shamim Capital

4 Goodwill 6,000 Balance 40,000 5 Realization 15,000 6 Cash 19,000

40,000 40,000

Fahim Capital

4 Goodwill 12,000 Balance 80,000 5 Realization 30,000 6 Cash 38,000

120,000 120,000

Cash

Balance 2,000 3 Accounts payable 27,000 1 Merchandise 36,000 6 Partners’ capital 57,000 2 Land 46,000

84,000 84,000



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Q.No.6 COMPANY – ISSUE OF SHARES GIVEN The following are transactions, completed by Abdul Sattar and Company:

(i) Received applications for 50,000 ordinary shares of Rs.10 each @ Rs.12 per share. (ii) Allotted 40,000 ordinary shares of Rs.10 each at a premium of Rs.2 per share. (iii) Refunded application money on 10,000 ordinary shares @ Rs.12 per share. (iv) Paid preliminary expenses Rs.20,000. (v) Allotted 5,000 ordinary shares of Rs.10 each against land costing Rs.60,000. (vi) Allotted 5,000 ordinary shares of Rs.10 each to the promoters of the company for their services.

REQUIRED Prepare General Journal entries for the above transactions. SOLUTION 6

ABDUL SATTAR AND COMPANY GENERAL JOURNAL


1 Bank (50,000 x 12) 600,000 Ordinary shares application 600,000 (To record the ordinary shares application received at

premium)

2 Ordinary shares application (40,000 x 12) 480,000 Ordinary share capital (40,000 x 10) 400,000 Ordinary share premium (40,000 x 2) 80,000 (To record the ordinary shares issued at premium)

3 Ordinary shares application (10,000 x 12) 120,000 Bank (10,000 x 12) 120,000 (To record the refund of excess money to the public)

4 Preliminary expenses 20,000 Bank 20,000 (To record the preliminary expense paid)

5 Land 60,000 Ordinary share capital (5,000 x 10) 50,000 Ordinary share premium (5,000 x 2) 10,000 (To record the purchase of land by issuing shares at

premium)

6 Preliminary expenses 50,000 Ordinary share capital (5,000 x 10) 50,000 (To record the shares issued to the promoters)

Q.No.7(a) RESERVES AND FUNDS GIVEN Rafat Limited had a debit balance of Rs.35,000 in cash account and a credit balance of Rs.50,000 in retained earnings account. It appropriated Rs.20,000 for debenture redemption, and set aside an equal amount of cash for this purpose. REQUIRED Prepare:

(i) General Journal entries for the creation of reserves and fund. (ii) Partial balance sheet, reporting the relevant data.



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Q.No.7(b) ACCOUNTING FOR NON – PROFITABLE CONCERN GIVEN The following is the receipts and payments account of Ajmeera Welfare Trust for 2002:

Receipts Payments

Opening bank balance 16,500 Salaries expenses 26,000 Subscription fee 64,000 Repair expense 2,000 Rent revenue 6,000 Utilities expense 8,000 Other revenue 11,000 Other expense 21,000 Furniture 20,000 Closing bank balance 20,500

Adjustment data at December 31, are as follows: (i) Accrued subscription fees Rs.3,000. (ii) Prepaid salaries Rs.2,000. (iii) Accrued utilities Rs.1,000. (iv) Depreciation on furniture Rs.1,000.

REQUIRED Income and Expenditure account. SOLUTION 7 (a)

RAFAT LIMITED GENERAL JOURNAL


1 Retained earnings 20,000 Reserve for debenture redemption 20,000 (To record the reserve for debenture redemption)

2 Fund 20,000 Cash 20,000 (To record the cash set aside for debenture redemption)

RAFAT LIMITED BALANCE SHEET AS ON _______

Equities Assets Shareholders’ Equity: Current Assets: Retained earnings 30,000 Fund 20,000 Reserves for debenture redemption 20,000 Cash 15,000

Total equities Total assets

SOLUTION 7 (a)

AJMEERA WELFARE TRUST INCOME AND EXPENDITURE ACCOUNT

FOR THE PERIOD ENDED 31 DECEMBER 2002

Expenditure Income

Salaries expense (26,000 – 2,000) 24,000 Subscription fees (64,000 + 3,000) 67,000 Repair expense 2,000 Rent revenue 6,000 Utilities expense (8,000 + 1,000) 9,000 Other revenue 11,000 Other expense 21,00 Depreciation expense – Furniture 1,000

57,000 Surplus over expenditure 27,000

84,000 84,000

XII – ACCOUNTINGa4accounting.weebly.com/uploads/7/1/2/8/7128209/xii-2003p.pdf · Compiled & Solved by: S.Hussain [email protected] X I I – Accounting – 2003 (Private)

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