XI ACCOUNTING REGULAR / PRIVATE

Transcription

1 The workings under the heading of Additional Working are not required according to the requirement of the examiner. These are only for understanding the solutions. For more help, visit XI ACCOUNTING REGULAR / PRIVATE Compiled and Solved by: S.Hussain

2 ACCOUNTING 1991 REGULAR / PRIVATE Time: 3 Hours Max. Marks: 100 Q.No.1 RULES OF DEBIT AND CREDIT ACCOUNTING CYCLES a) State the rules of debit and credit in terms of increases and decreases in the values of assets, liabilities, proprietorship, revenue and expense. b) List in sequence the steps involved in a complete accounting cycle. SOLUTION 1 (a) Rules of Debit & Credit: Head of Accounts Increases Decreases Assets Recorded as Debit Recorded as Credit Liabilities Recorded as Credit Recorded as Debit Owner s Equity Recorded as Credit Recorded as Debit Revenue & Income Recorded as Credit Recorded as Debit Expenses Recorded as Debit Recorded as Credit SOLUTION 1 (b) Steps of Accounting Cycle: Journal Entries: The transaction is recorded in journal as a debit and credit. Post to Ledger: The journal entries are transferred to the appropriate T-accounts in the general ledger. Trial Balance: A trial balance is calculated to verify that the sum of debits is equal to the sum of credits. Adjusting Entries: Adjusting entries are made for accrued and differed items. The entries are journalized and posted to the T-accounts in the general ledger. Adjusted Trial Balance: A new trial balance is calculated after making the adjusting entries. Financial Statement: Income statement, balance sheet and cash flow statements are prepared. Closing Entries: Transfer the balances of temporary accounts to owner s equity account. After-Closing Trial Balance: A final trial balance is calculated after the closing entries made. Reversing Entries: Reverse the necessary adjusting entries (optional). X I A c c o u n t i n g ( R e g u l a r / P r i v a t e ) Page 2

3 Q.No.2 CASH BOOK GIVEN Hashim a sole trader uses Three-Column Cash Book. On March 1, 1991 he had cash on hand Rs.25,000 and cash in bank Rs.52,000. During the month of March 1991, he completed the following transactions:- March 3: Purchased merchandise for Rs.5,300 and issued a cheque for the amount. March 6: Cash sales deposited into bank Rs.6,000. March 8: Purchased office supplies for cash Rs.200. March 10: Received a cheque for Rs.4,900 from Mubarak in full settlement of his account of Rs.5,000 and deposited the cheque into bank. March 15: Sold merchandise for cash Rs.2,500. March 18: Withdrew cash for personal use Rs.2,000. March 20: Issued cheque for Rs.2,450 to Ahmad in full settlement of his account of Rs.2,500. March 24: Withdrew from bank Rs.5,000 for office use. March 27: Merchandise purchased for cash Rs.3,000. March 30: Salary paid by cheque Rs.3,500. a) Enter the opening balances on March 1 and record the transactions in the Cash Book. b) Balance the Cash Book on March 31, 1991; close it and bring down cash and bank balances on April 1, c) Set up T-accounts for Sales Discount and Purchase Discount and post the totals of discount columns of the cash book. (Sales Discount account No. is 5001 and Purchase Discount account No. is 4003). SOLUTION 2 GENERAL LEDGER Sales Discount (5001) 31.March.1991 CB Rs.100 Purchase Discount (4003) 31.March.1991 CB Rs.50 X I A c c o u n t i n g ( R e g u l a r / P r i v a t e ) Page 3

4 Date 1.March 6.March 10.March 15.March 24.March 1.April Particulars Balances Sales A/R (Mubarak) Sales Bank (Withdrew) B/D Balance P/R (C) S.Disc Cash 25,000 2,500 5,000 32,500 27,300 Bank 52,000 6,000 4,900 62,900 46,650 Date 3.March 8.March 18.March 20.March 24.March 27.March 30.March 31.March Particulars Purchases Office supplies Drawings A/P (Ahmad) Cash (Withdrew) Purchases Salaries expense C/D Balance P/R (C) P.Disc Cash 200 2,000 3,000 5,200 27,300 32,500 Bank 5,300 2,450 5,000 3,500 16,250 46,650 62,900 HASHIM THREE COLUMN CASH BOOK FOR THE MONTH OF MARCH 1991 X I A c c o u n t i n g ( R e g u l a r / P r i v a t e ) Page 4

5 Q.No.3 SPECIAL JOURNAL GIVEN The following is an extract from the Sales Journal of Ahmad Brothers for the month of January 1991: - Date Invoice No. Name of Customer P/R Amount 3.January Salman 3,500 8.January Faizan 2, January Nadeem 1, January Arif 2, January Sheraz 2,000 a) Copy out the above Sales Journal total it and write the journal entry dated January 31, 1991 to post the total giving posting reference and check marks. b) Set up appropriate controlling accounts in the general ledger in the standard form and an account for each customer in the Accounts Receivable Subsidiary Ledger in self-balancing form. Make postings to the ledger accounts affected giving posting reference. (In the chart of account used by Ahmad Brothers Sales Account bears No and Accounts Receivable account bears No SOLUTION 3 (a) AHMAD BROTHERS SALES JOURNAL FOR THE MONTH OF JANUARY 1991 Date Invoice No. Name of Customer P/R Amount 3.January Salman 3,500 8.January Faizan 2, January Nadeem 1, January Arif 2, January Sheraz 2, January.1991 Accounts receivable Dr ,500 Sales Cr SOLUTION 3 (b) GENERAL LEDGER Accounts Receivable (1102) 31.Jan Sales 11,500 Sales (4001) 31.jan Accounts receivable 11,500 SUBSIDIARY LEDGER Salman Date Invoice No. Particulars P/R Debit Credit Balance 3.January SJ 3,500 3,500 X I A c c o u n t i n g ( R e g u l a r / P r i v a t e ) Page 5

6 Faizan Date Invoice No. Particulars P/R Debit Credit Balance 8.January SJ 2,000 2,000 Nadeem Date Invoice No. Particulars P/R Debit Credit Balance 10.January SJ 1,500 1,500 Arif Date Invoice No. Particulars P/R Debit Credit Balance 20.January SJ 2,500 2,500 Sheraz Date Invoice No. Particulars P/R Debit Credit Balance 25.January SJ 2,000 2,000 Q.No.4 BILLS TRANSACTIONS GIVEN On January 1, 1991 Basit sold merchandise on credit for Rs.5,000 to Jamshed. Basit drew a bill on Jamshed for this amount payable three months after. Jamshed accepted it and returned it to Basit. Basit endorsed the bill to his creditor Rehmat on the same day. The bill was met on April 1, Give entries in the General Journal in the books of Basit, Jamshed and Rehmat. SOLUTION 4 BASIT GENERAL JOURNAL 1.Jan Accounts receivable (Jamshed) 5,000 Sales 8,000 (To record the goods sold on account to Jamshed) 1.Jan Bill receivable 5,000 Accounts receivable (Jamshed) 5,000 (To record the acceptance received) 1.Jan Accounts payable (Rehmat) 5,000 Bill receivable 5,000 (To record the bill endorsed to Rehmat) JAMSHED GENERAL JOURNAL 1.Jan Purchases 5,000 Accounts payable (Basit) 5,000 (To record the goods purchased from Basit on account) 1.Jan Accounts payable (Basit) 5,000 Bill payable 5,000 (To record the acceptance given) 1.Apr Bill payable 5,000 Cash 5,000 (To record the payment of bill on maturity date) X I A c c o u n t i n g ( R e g u l a r / P r i v a t e ) Page 6

7 REHMAT GENERAL JOURNAL 1.Jan Bill receivable 5,000 Accounts receivable (Basit) 5,000 (To record the bill received by Basit) 1.Apr Cash 5,000 Bill receivable 5,000 (To record the cash received on maturity date) Q.No.5 GENERAL JOURNAL GENERAL LEDGER TRIAL BALANCE GIVEN On February 1, 1991 Aslam started a business with a cash investment of Rs.100,000. He completed the following transactions during the month. February: 3: Purchased merchandise on credit from Esajee Rs.25,000. 5: Purchased sales equipment on account from Babar & Co. Rs.20, : Sold merchandise for cash Rs.10,000 and on credit Rs.15, : Paid to Esajee Rs.15, : Collection from customers Rs.10, : Paid office salaries Rs.3,000. a) Record the above transactions in the General Journal. b) Post the entries from General Journal into the ledger using T-accounts. c) Balance the accounts and prepare pre-closing trial balance in proper form on February 28, 1991 with complete title and column headings. SOLUTION 5 (a) ASLAM GENERAL JOURNAL FOR THE MONTH OF FEBRUARY Feb Cash 100,000 Capital 100,000 (To record the investment by owner) 3.Feb Purchases 25,000 Accounts payable (Esajee) 25,000 (To record the goods purchased on account) 5.Feb Sales equipment 20,000 Accounts payable (Babar & Co.) 20,000 (To record the sales equipment purchased on account) 15.Feb Cash 10,000 Accounts receivable 15,000 Sales 25,000 (To record the goods sold for cash and on account) 20.Feb Accounts payable (Esajee) 15,000 Cash 15,000 (To record the cash paid to supplier) X I A c c o u n t i n g ( R e g u l a r / P r i v a t e ) Page 7

8 25.Feb Cash 10,000 Accounts receivable 10,000 (To record the cash collected from customers) 28.Feb Office salaries expense 3,000 Cash 3,000 (To record the salaries paid) SOLUTION 5 (b) ASLAM GENERAL LEDGER Cash 1.Feb Capital 100, Feb A/P (Esajee) 15, Feb Sales 10, Feb Salaries expense 3, Feb Accounts receivable 10,000 18, Feb c/d balance 102, , ,000 1.Mar b/d balance 102,000 Accounts Receivable 15.Feb Sales 15, Feb Cash 10, Feb c/d balance 5,000 15,000 15,000 1.Mar b/d balance 5,000 Sales Equipment 5.Feb Cash 20, Feb c/d balance 20,000 20,000 20,000 1.Mar b/d balance 20,000 Accounts Payable 20.Feb Cash 15,000 3.Feb Purchases 25,000 5.Feb Sale equipment 20, Feb c/d balance 30,000 45,000 45,000 1.Mar b/d balance 30,000 Capital 1.Feb Cash 100, Feb c/d balance 100, , ,000 1.Mar b/d balance 100,000 X I A c c o u n t i n g ( R e g u l a r / P r i v a t e ) Page 8

9 Purchases 3.Feb A/P (Esajee) 25, Feb c/d balance 25,000 25,000 25,000 1.mar b/d balance 25,000 Sales 15.Feb Cash/A/R 25, Feb c/d balance 25,000 25,000 25,000 1.Mar b/d balance 25,000 Salaries Expense 28.Feb Cash 3, Feb c/d balance 3,000 3,000 3,000 1.Mar b/d balance 3,000 SOLUTION 5 (c) ASLAM TRIAL BALANCE FOR THE MONTH OF 28 FEBRUARY 1991 NO. PARTICULARS P/R DEBIT CREDIT 1 Cash 102,000 2 Accounts receivable 5,000 3 Sales equipment 20,000 4 Accounts payable 30,000 5 Capital 100,000 6 Purchases 25,000 7 Sales 25,000 8 Shop rent expense 3,000 Total 155, ,000 Q.No.6 FINANCIAL STATEMENT GIVEN The following is the Pre-Closing Trial Balance of Kamran & Co. prepared on December 31, 1990: Debit Balances Credit Balances Cash 10,000 Sales 75,000 Merchandise inventory (1.1.90) 8,000 Purchase returns 500 Office equipment 30,000 Kamran Capital 60,000 Purchases 52,000 Allowance for depreciation - Salaries expense 5,500 Office equipment 2,500 Rent expense 5,000 Accounts payable 17,000 Office supplies 500 Insurance prepaid 1,200 Accounts receivable 20,000 Sales returns 500 Furniture 17,300 Kamran Drawings 5,000 Total 155, ,000 X I A c c o u n t i n g ( R e g u l a r / P r i v a t e ) Page 9

10 Data for adjustments on December 31, 1990 (i) Merchandise inventory was valued at Rs.10,000. (ii) Salaries Payable Rs.500. (iii) Accrued rent Rs.1,000. (iv) Office supplies unused Rs.200. (v) Insurance expired Rs.800. (vi) Depreciation on office equipment was estimated at Rs.2,500. a) Prepare Income Statement in classified report form for the year ended December 31, b) Prepare Balance Sheet in classified account form as of December 31, SOLUTION 6 (a) KAMRAN & CO. INCOME STATEMENT FOR THE PERIOD ENDED 31 DECEMBER 1990 Sales 75,000 Less: Sales returns (500) Net sales 74,500 Less: Cost of Goods Sold: Merchandise inventory (beg) 8,000 Add: Net Purchases: Purchases 52,000 Less: Purchase returns (500) Net purchases 51,500 Merchandise available for sale 59,500 Less: Merchandise inventory (end) (10,000) Cost of goods sold (49,500) Gross profit 25,000 Less: Operating Expenses: Salaries expense (5, ) 6,000 Rent expense (5, ,000) 6,000 Office supplies expense ( ) 300 Insurance expense (1, ) 800 Depreciation expense 2,500 Total operating expenses (15,600) Net profit 9,400 X I A c c o u n t i n g ( R e g u l a r / P r i v a t e ) Page 10

11 SOLUTION 6 (b) KAMRAN & CO. BALANCE SHEET AS ON 31 DECEMBER 1990 ASSETS EQUITIES Current Assets: Current Liabilities: Cash 10,000 Accounts payable 17,000 Accounts receivable 20,000 Salaries payable 500 Merchandise inventory 10,000 Rent payable 1,000 Office supplies 200 Total liabilities 18,500 Insurance prepaid 400 Total current assets 40,600 Owner s Equity: Fixed Assets: Capital 60,000 Office equipment 30,000 Add: Net profit 9,400 Less: All for depreciation (5,000) 69,400 25,000 Less: Drawings (5,000) Furniture 17,300 Total owner s equity 64,400 Total fixed assets 42,300 Total assets 82,900 Total equities 82,900 Q.No.7 ADJUSTING AND CLOSING PROCESS GIVEN Pick out revenue and expense account balances from the pre-closing trial balance and take data for adjustment from Question numbered 6 in this paper. a) Prepare Adjusting Entries in General Journal on 31 December b) Prepare General Journal entries to close all expense and revenue accounts and entries to close Expense and Revenue Summary and Drawings account. SOLUTION 7 (a) KAMRAN & CO. ADJUSTING ENTRIES 1 Merchandise inventory 10,000 Expense and revenue summary 10,000 (To close the merchandise inventory account) 2 Salaries expense 500 Salaries payable 500 (To adjust the accrued salaries) 3 Rent expense 1,000 Rent payable 1,000 (To adjust the unpaid rent) 4 Office supplies expense 300 Office supplies 300 (To adjust the office supplies expense) 5 Insurance expense 800 Insurance prepaid 800 (To adjust the prepaid insurance) X I A c c o u n t i n g ( R e g u l a r / P r i v a t e ) Page 11

12 6 Depreciation expense 2,500 Allowance for depreciation Office equipment 2,500 (To adjust the depreciation expense) SOLUTION 7 (b) KAMRAN & CO. CLOSING ENTRIES 1 Expense and revenue summary 76,100 Merchandise inventory 8,000 Purchases 52,000 Salaries expense 6,000 Insurance expense 800 Rent expense 6,000 Office supplies expense 300 Depreciation expense 2,500 Sales returns 500 (To close the various expenses accounts) 2 Sales revenue 75,000 Merchandise inventory 10,000 Purchase returns 500 Expense and revenue summary 85,500 (To close the various income accounts) 3 Expense and revenue summary 9,400 Capital 9,400 (To transfer the profit to the capital account) 4 Capital 5,000 Drawings 5,000 (To close the drawings account) Q.No.8 COST OF GOODS SOLD (a) GIVEN The following balances are taken from the books of Rehmat & Co. for the year ending December 31, 1990:- Merchandise inventory (1.1.90) Rs.15,000 Purchases 70,000 Purchase discount 1,400 Purchase returns 2,000 Transportation in 1,250 Merchandise inventory ( ) 10,000 Prepare Statement of Cost of Goods Sold. X I A c c o u n t i n g ( R e g u l a r / P r i v a t e ) Page 12

13 (b) GIVEN The following ERRORS were discovered before the closing of books:- (i) Purchase return of Rs.1,000 was credited to purchases account. (ii) Sale of office equipment for Rs.5,000 was credited to Sales account. (iii) Purchase of typewriter costing Rs.10,000 was debited to Purchase account. (iv) Rs.10,000 spent on the repairs of old furniture was debited to Furniture account. (v) Drawing of Rs.500 for personal use of the proprietor was debited to Office Expense account. Record entries in the General Journal to correct each of the above errors. SOLUTION 8 (a) REHMAT & CO. STATEMENT OF COST OF GOODS SOLD FOR THE PERIOD ENDED 31 DECEMBER 1990 Merchandise inventory (beginning) 15,000 Add: Net Purchases: Purchases 70,000 Add: Transportation in 1,250 Delivered purchases 71,250 Less: Purchase discount (1,400) Less: Purchase returns (2,000) Net purchases 67,850 Merchandise available for sale 82,850 Less: Merchandise inventory (ending) (10,000) Cost of goods sold 72,850 SOLUTION 8 (b) GENERAL JOURNAL 1 Purchase returns 1,000 Purchases 1,000 (To correct the purchase account) 2 Sales 5,000 Office equipment 5,000 (To correct the sales account) 3 Equipment 10,000 Purchase 10,000 (To correct the purchase account) 4 Repairs expense 1,000 Furniture 1,000 (To correct the furniture account) 5 Drawings 500 Office expense 500 (To correct the office expense account) X I A c c o u n t i n g ( R e g u l a r / P r i v a t e ) Page 13