ALLAMA IQBAL OPEN UNIVERSITY(Department of Commerce)

Course: Advanced Accounting Code No. 444Level: B.A/B.Com Semester: Autumn 2011Units: 1-9 Total Marks: 100 each……………

Note: Plagiarism or hiring ghost writer/s for solving the assignment/s will debar the student from award of degree/certificate, if found at any stage. Submitting assignment/s borrowed or stolen from other/s as one’s own will be penalized as defined in AIOU Plagiarism Policy.You are required to solve all questions if you are unable to understand any question of assignment, do seek help from your concerned tutor. But keep in mind that tutors are not supposed to solve the assignment questions for you.

Assignment No. 1Units 1-4

Question No. 1

(i) Discuss the points of differentiation between a partnership business and a joint venture business.Marks 10

(ii) Briefly explain the steps involved in preparing memorandum joint venture accounts.Marks 10

Question No. 2

Ahmad of Lahore purchased 10,000 books of Economics @ Rs. 100 per book. 6,000 books were sent on consignment to Ashraf of Rawalpindi at the selling price of Rs. 120 per book. Ahmad paid Rs. 3,000 for carriage and insurance.Ashraf sold 5,000 books @ Rs. 125 per book and incurred selling expenses Rs. 1,000 and remitted 4,00,000 to Ahmad on account. Ashraf is entitled to a commission of 5% on total sales and further commission of 20% on any surplus price realized over Rs. 120 per book. Ahmad sold 3,000 books @ Rs. 110 per book. Owing to fall in market price, the value of stock in hand is to be reduced by 10%.Prepare necessary ledger accounts in the books of consignor and consignee. Marks 20

Question No. 3

Ali Bros. has a retail branch at Jehlum. Goods are sold to customers at cost plus 100%. The wholesale price is cost plus 75%. Goods are invoiced to Jehlum at wholesale price. Head office sells goods on wholesale basis only. Stock at branch is valued at invoice price.From the following details ascertain the profit or loss made at head office and branch for the year 2005:

Marks 20Particulars Head Office

Rs.Jehlum

Rs.Opening stock 2,500Purchases 15,000Goods sent to branch (at invoice price) 5,400Sales 15,300 5,000

Question No. 4

(i) Explain various kinds of share capital. Marks 10(ii) Discuss the main sources of fund raising to finance a company. Marks 10

Question No. 5

(i) Define debenture. Marks 5(ii) Journalize the above transactions. Marks 15

The ABC Company offered to the general public 5,000 10% debentures of Rs. 100 at Rs. 105 each. 80% of the issued was underwritten by M/s Stock and shares @ 25% underwriting commission. Applications were received from public for 4,000 debentures which were allotted.

Assignment No. 2Units 5-9

Question No. 1

The Sportsman Ltd. was registered with a capital of Rs. 10,00,000 divided into equity shares of Rs. 10 each. From the following trial balance, prepare Profit and loss account and a balance sheet as on 31-12-2009.

Marks 20

Particulars Rs. Particulars Rs.Sundry debtorsClosing stockFixed assets (at cost):FurnitureMotor carPremisesSalaries Investment in shares (at cost)Printing and stationeryPostage and telegramsMotor car fuelAudit feeDirectors feeCash at bank Cash in hand

145,000100,000

60,00021,000

200,00035,00015,0001,0001,5004,5001,200

75091,6801,870

Share capital (fully called-up)Gross profitSundry creditorsDividendsProfit & loss Account (last year)Depreciation provisions:FurnitureMotor carPremises

400,000200,00030,0001,500

26,000

10,0006,0005,000

678,500 678,500

Additional Information:

(i) Depreciation is to be provided @ 20% on motor car, 10% on furniture and 2.5% on premises.(ii) Salaries include Rs. 9,000 paid to managing director.(iii) Proposed dividend at 15%. Provision is to be made for taxation Rs. 79,000.

Question No. 2

Define liquidation. Provide accounting treatment for liquidation. Marks 20

Question No. 3

Make an assessment of comparative position of the following two companies engaged in the same line of business, on the basis of the following information: Marks 20

X Ltd. Y Ltd.Rs. Rs.

Sale volume for 2009 3,00,000 4,24,000Cost of goods sold for 2009 2,14,000 3,56,000Inventory as on 31-12-2009 20,000 90,000Administrative expenses for 2009 43,000 75,000Accounts receivable for 2009 72,000 1,61,000(Assuming the year of 360 days)

Question No. 4

On January 1, 2002 Super Asia Limited sold a multipurpose machine to Ali & Co. on hire-purchase basis. The cash price of the machine was Rs. 3,48,680. The hire-purchase agreement terms are:

(i) Ali & Co. has to pay a sum of Rs. 100,000 as down payment at the time of agreement.(ii) The remaining amount is to be paid in three equal installments of Rs. 100,000 each.(iii) The vendor is entitled to charge interest @ 10% p.a.

Prepare ledger accounts in the books of both the parties. Marks 20

Question No. 5

Ashraf started cloth business with a capital of Rs. 50,000 on 1st January, 2010. He purchased furniture for Rs. 12,000 on the same date. During the year the following information are kept due to lack of proper accounting knowledge.

Rs.Sales 75,000Purchases 44,500Salaries to staff 7,500Bad debts written off 2,250Sundry expenses 8,210Ashraf took cloth worth Rs. 2,400 for his personal use and gave Rs. 3,000 as school fee of his son. On 31st December, 2010 his sundry debtors were Rs. 7,120 and his sundry creditors were Rs. 4,500. On 31st December, 2010 the stock was Rs. 4,300.He could not maintain proper books of accounts. So, you are required to ascertain the profit or loss earned by Ashraf. Marks 20