HI-AIMS COLLEGE OF COMMERCE AND MANAGEMENT SARGODHASend UP Exam. 2013 B.Com Part-I

Paper: Financial Accounting Total Marks: 100Time Allowed: 3 Hours Pass Marks: 40

Note: Attempt any five Questions. All question carry equal marks.Q.No.1: Journalize the following transactions in the books of Asif:

i) Saleem’s acceptance to Asif for Rs. 4,000 which Asif endorsed in favor of Rauf was dishonored. Rauf paid Rs. 20 as noting charges. Asif paid Rs. 20 to Rauf by a cheque and received a new acceptance from Saleem for the amount due plus interest Rs. 60.

ii) Asif renewed his acceptance to Amir for Rs. 3,000 by a cheque of Rs. 1,200 and a new bill at 3 months at 10% p.a interest.

iii) Farid’s acceptance to Asif for Rs. 3,000 renewed for two months at 12% p.a interest. iv) Asif’s acceptance to Haseeb for Rs. 5,000 was got retired one month before its maturity under a

rebate of 12% p.a v) Asif’ acceptance to Ansar for Rs.3,000 was discharged bye Javed’s acceptance to Asif for a

similar amount. vi) Asif’s acceptance to Farooq for Rs. 5000 was discharged by paying Rs. 2,000 in cash and

accepting a new bill for the balance for two months, interest at 12 % p.a being paid in cash.

Q.No.2: From the following Particulars, prepare a bank Reconciliation statement of Lahore stores as on 28th February 2005.i) Credit balance as per the cash book on 28.02.2005 was Rs. 60,000 ii) On20th Feb, the debit balance of Rs. 6104 as on the previous day was brought forward as credit balance. iii) Dividend on shares Rs. 18000 was collected directly by the bank. The trader has no information about this. iv) Out of cheques for Rs. 60,000 issued in February, Cheques of Rs. 36000 were presented for payment v) The trader had withdrawn from the bank Rs. 14,000 but the same had not been entered in the cash book vi) Bank charges for collected an outstation cheque of Rs. 15 appeared only in the passbook. vii) A Cheque for Rs. 20 was not shown in the cash book as dishonored,viii) Rs. 80,000worth of cheques. were sent for collection and only Rs. 50,000 worth of cheques. were collected up to 28 Feb. ix) Trade subscriptions of Rs. 400 paid by the bank was not recorded in the cash book.

Q.No.3 A and B are partners in a firm sharing profits and losses as 5:3. The position of the firm as on 31th March 2005 is as follows.

Assets Rs. Liabilities Rs. Plant & Machinery 40,000 Capital Accounts: Stock 30,000 A 30,000Sundry Debtors 20,000 B 20,000 50,000Bills receivable 10,000 Sundry creditors 15,000Cash at Bank 7,500 Bank overdraft 42,500

1,07,500 1,07,500

C now joins them on condition that he will share 3.4th of the future profits, the balance of profits being shared by A and B as 5: 3. He introduces Rs. 40,000 by way of capital in cash and pays off the overdraft. He also pays Rs. 4,000 by way of premium for goodwill of the business and this amount is to remain in business. The partners agree to depreciate plant by 10% and raise a reserve against Sunday Debtors by 5%..

You are asked to journalize the entries in the books of the firm and the resultant Balance sheet and also show how will he partners share future profits.

Q.No.4: Rectify the following errors and also show the effect on Final Account, also prepare suspense A/c.

i) Rs. 840, a debit balance in Amjad account are written off as bad debts, but only Rs. 480 were entered instead of Rs. 840, In addition to it Anwar account was credited instead of Amjad A/c ii) A receipt of Rs. 3500 from Saeed & Co. was credited to their account as Rs. 5300. iii) Wages paid Rs. 8000, posted to the wages A/c twice iv) An amount of Rs. 2600 receivable from Salman & Co was not included in Debtor A/c.v) Sales returns of Rs. 500 were taken into stock but no entry was passed in the books. vi) Goods worth Rs. 6200 sold to Dawood, were correctly entered in the sales book, but posted to Dawood A/c as Rs. 2600.vii) A item of sale of Rs. 5900 was posted to sales A/c as Rs. 9500.viii) A credit balance of Rs. 7550 of the rent received Account was shown as Rs. 5700. ix) Rs. 10,000 being purchases Returns were posted to the debit of purchases Account. x) Purchase of Furniture on credit from Lahore Furniture’s for Rs. 7500 was entered in the Purchase book.

Q.No.5: From the following Trial balance and adjustments, prepare Trading and Profit and Loss Account for the year ending 31st March, 2005 and a balance Sheet as 31.3.2005:

The following adjustments should be taken into account

1. Stationery unused on 31.3.2005 is Rs. 1,800 2. Closing stock valued at Rs. 162,000 3. Write off Rs. 3,000 as bad debts and increase the provision for bad debts by 5 % on Accounts receivable. 4. Depreciation machinery by 5 % and Furniture by 10% 5. On 28 February, 2005 a fire broke out and destroyed stock of the value of Rs. 60,000. The stock was not

covered by insurance.

Q.No.6 (a): On 1st July 2001, Basharat purchased machinery for Rs. 60,000. Depreciation is to be provided for at 10 % on diminishing balance cash year. On 31st October, 2003 ¼ of Machinery was sold for Rs. 6000 as they became useless. On the same date he purchased new machinery for Rs. 20,000 prepare machinery Account from 2001 to 2004. Accounts are closed on 31st December every year.

Debit Balances Rs. Debit Balance Rs. Cash in hand 3,000 Insurance 7,200Cash at Bank 13,200 Office Rent 12,000Bills Receivable 31,800 Productive Wages 129,000Furniture 60,000 Manufacturing expenses 9,000Machinery 168,000 Trade expenses 32,400Drawings 43,200 Credit balancesStock on 1.4.2004 123,000 Sales 843,000Purchases 408,000 Accounts payable 85,800Freight Inward 9,000 Provision for Bad debts 6,000Accounts Receivable 141,000 Bills Payable 25,200Printing & Stationery 10,200 Capital 360,000Salaries 96,000Factory rent 24,000

Q.No.6 (b): From the following prepare an income and Expenditure Account for the year added 31st March, 2005 and balance Sheet for the same date:

1 April 2004 Rs. 31 March 2005 Rs.Balance Salaries 3,600Cash at Bank 455 Rent 600Cash in office 55 Printing & Stationery 1452005 Postage 25March 31 Bicycle ( purchase) 95Subscription Including Rs. 200 for 2005-06

3000 Prize Bonds 680Balance

Interest on investments (Cost of investments Rs. 30,000)

1,500 Cash in office 12

Bank interests 10 Cash in Bank 113Sale of Scooter 250

5,270 5,270

Subscriptions include Rs. 120 for 2003- 2004. Also rent includes Rs. 50 paid for March 2004. Subscriptions amounting to Rs. 150 have still to be collected for the year 2004-05). Rent for March 2005 has still to be paid and Rs. 25 are outstanding against a stationary bill. The book value of the scooter was Rs. 320.

Q.No.7: Suleman Keeps his books on single entry system. His statement of assets in liabilities as on 31st December 2007 is as follows

Assets Rs. Liabilities Rs.

Land & building 40,000 Sundry Creditors 130,000

Furniture & Fixture 6,000 Loan from money Lender 113,200

Plant & Machinery 110,000 Other liabilities 26,800

Stock 18,400

Debtors 151,000

Cash. 16,600

342,000 270,000

His drawings during the year amount to Rs.6000. Land the building are to be depreciated by 2%, Furniture and Fixture by 5% and Plant and Machinery by 10%. Sundry debtors are to be reduced by 2%. He has used Rs. 1600 worth of stock of his business for private purposes . During the year 2007 he sold some of his house hold furniture for Rs. 2000 and paid this into his business bank account. His capital at the beginning of the year was Rs. 60,000. Draw up his statement of profit and loss for the year ended 31st December 2007.

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Q.No.8: What are different types of errors? Explain in detail.