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2011

Compiled and Solved by:

S.Hussain

XI – ACCOUNTING

PRIVATE

http://www.a4accounting.net/

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

X I – A c c o u n t i n g – 2 0 1 1 ( P r i v a t e )

ACCOUNTING – 2011

PRIVATE Time: 20 Minutes Max. Marks: 20

SECTION “A” (MULTIPLE CHOICE QUESTIONS) Note: (i) This section contains of 20 part questions and all are to be answered. Each question carries equal marks. (ii) Do not copy down the part question in your answer book. Write only the answer in full against the proper number of the question and its part. (iv) The code of your question paper must be mentioned in bold letters in the beginning. Q.No.1 Choose the correct answer for each from the given options:

(1) The owner’s equity in the business arises from these two sources: (a) Net income and cash. (b) Net profit and drawings. (c) Net profit and additional investment. (d) All of these.

(2) This account has a credit balance:

(a) Bank overdraft. (b) Sales discount. (c) Office supplies. (d) Unexpired insurance.

(3) The act of totaling of money columns of an account is called:

(a) Posting. (b) Ruling. (c) Footing. (d) Balancing.

(4) The term “Accounting Period” means the span of time covered by:

(a) Income statement. (b) Balance sheet. (c) Cash flow statement. (d) All of these.

(5) Gross profit is:

(a) Excess of sales revenue over cost of goods sold. (b) Cost of goods sold plus opening stock. (c) Sales less ending stock. (d) Net profit less expenses.

(6) Accounts are un-dated at the end of accounting period by:

(a) Correcting entry. (b) General entry. (c) Opening entry. (d) Adjusting entry.



(7) Bad debts expenses are: (a) Selling expenses. (b) Administrative expenses. (c) Operating expenses. (d) Preliminary expenses.

(8) Depreciation expense includes:

(a) Non – cash expense. (b) Cash expense. (c) Prepaid expense. (d) All of these.

(9) Supplies on hand on Jan. 1, Rs.140, supplies purchased during the period Rs.530, supplies

consumed Rs.480, supplies at the end were: (a) Rs.910. (b) Rs.760. (c) Rs.670. (d) Rs.190.

(10) Accounting cycle is a sequence of accounting procedures followed during:

(a) Accounting period. (b) Two years. (c) Accounting equation. (d) One hour.

(11) When gross profit is zero, it implies that:

(a) G.P. < COGS. (b) COGS > G.P. (c) Net sales = Gross profit. (d) Net sales = Cost of goods sold.

(12) When depositor’s book shows a credit bank balance it means:

(a) Amount overdrawn. (b) Amount deposited. (c) Outstanding cheques. (d) Uncleared cheque.

(13) A bank does not pay against cheques if they are:

(a) Over six months old. (b) Over months old. (c) Over three months old. (d) Over two months old.

(14) The following bank account is subject to Zakat deduction:

(a) Current account. (b) Saving account. (c) T – Account. (d) Control account.



(15) Cash book serves the purpose of: (a) Journal. (b) Ledger. (c) Trial balance. (d) Financial statement.

(16) An accounting book used for small expenses recording is called:

(a) Cash book. (b) Journal. (c) Ledger. (d) Petty cash book.

(17) A cheque is received for Rs.4,000 and recorded in the bank column receipt side of cash book,

the balance of cash will show: (a) No effect. (b) Balance. (c) Overstatement. (d) Understatement.

(18) Purchase account is:

(a) An asset. (b) A liability. (c) An expense. (d) Revenue.

(19) If sales return is debited to purchase account erroneously by Rs.2,000, the net income will

show: (a) Increase by Rs.2,000. (b) Decrease by Rs.2,000. (c) No effect. (d) Decrease by Rs.1,000.

(20) N.S.F. stands for:

(a) New Studies Federation. (b) National Studies Federation. (c) Net Sufficient Funds. (d) Non – Sufficient Fund.



ACCOUNTING – 2011

PRIVATE Time: 2 Hours 40 Minutes Max. Marks: 80

SECTION “B” (SHORT – ANSWER QUESTIONS) (50) Note: Attempt any Four questions. All questions carry equal marks. The use of calculator is allowed. Q.No.2 GENERAL JOURNAL GIVEN Following are the first six transactions of Miqdad Traders, posted in respective ledger account:

Cash (Rs.) Capital – Miqdad (Rs.)

Jan. 1, 2011 50,000 Jan. 20, 2011 1,000 Jan. 1, 2011 50,000 Jan. 25, 2011 3,000

Purchases Accounts Payable – Ahmed

Jan. 4. 2011 5,000 Jan. 4, 2011 5,000 Jan. 25, 2011 1,000

Accounts Receivable – Mansoor Sales

Jan. 15, 2011 4,000 Jan. 15, 2011 4,000

Prepaid Rent Office Supplies

Jan. 20, 2011 1,000 Jan. 25, 2011 4,000

REQUIRED Record the effects shown in above ledgers (postings) in standard form of General Journal.

SOLUTION 2

MIQDAD TRADERS GENERAL JOURNAL

FOR THE MONTH OF JANUARY 2011

Date Particulars P/R Debit Credit

Jan. 1 Cash 50,000 Capital 50,000 (To record the cash invested by owner in the business)

Jan. 4 Purchases 5,000 Accounts payable (Ahmed) 5,000 (To record the goods purchased on account)

Jan. 15 Accounts receivable (Mansoor) 4,000 Sales 4,000 (To record the goods sold on credit)

Jan. 20 Prepaid rent 1,000 Cash 1,000 (To record the rent paid in advance)

Jan. 25 Office supplies 4,000 Cash 3,000 Accounts payable (Ahmed) 1,000 (To record the purchase of office supplies)



Q.No.3 LEDGER & TRIAL BALANCE GIVEN The following is the trial balance of Shah Latif & Co. on March 31, 2011:

Cash Rs.20,000 Accounts payable Rs.30,000 Accounts receivable Rs.50,000 Salaries payable Rs.15,000 Merchandise inventory Rs.60,000 Bank loan Rs.25,000 Equipment Rs.40,000 Capital Rs.100,000

Rs.170,000 Rs.170,000

The following transactions were performed during first fortnight of April: April 05: Paid outstanding salaries. April 06: Collected 1/2 of accounts receivable. April 07: Sold merchandise for cash Rs.20,000 and on account Rs.30,000. April 10: Paid 1/3 of the accounts payable. April 14: Made additional investment depositing cash into the bank Rs.25,000. REQUIRED

Prepare the ledgers with opening balances on April 01, and post the above transactions directly there-in. Foot and balance the accounts.

SOLUTION 3

SHAH LATIF & CO. GENERAL LEDGER

Cash

1.Apr.11 Balance 20,000 6.Apr.11 Salaries payable 15,000 6.Apr.11 Accounts receivable 25,000 10.Apr.11 Accounts payable 10,000 7.Apr.11 Sales 20,000 30.Apr.11 c/d balance 40,000

65,000 65,000

1.May.11 b/d balance 40,000

Bank

14.Apr.11 Capital 25,000 30.Apr.11 c/d balance 25,000

25,000 25,000

1.May.11 b/d balance 25,000 Accounts Receivable

1.Apr.11 Balance 50,000 6.Apr.11 Cash 25,000 7.Apr.11 Sales 30,000 30.Apr.11 c/d balance 55,000

80,000 80,000


Merchandise Inventory

1.Apr.11 Balance 60,000 30.Apr.11 c/d balance 60,000

60,000 60,000




Equipment


40,000 40,000


Accounts Payable

10.Apr.11 Cash 10,000 1.Apr.11 Balance 30,000 30.Apr.11 c/d balance 20,000

30,000 30,000


Salaries Payable

5.Apr.11 Cash 15,000 1.Apr.11 Balance 15,000

15,000 15,000

Bank Loan


25,000 25,000


Capital

1.Apr.11 Balance 100,000 30.Apr.11 c/d balance 125,000 14.Apr.11 Bank 25,000

125,000 125,000


Sales

7.Apr.11 Cash/Acc. receivable 50,000 30.Apr.11 c/d balance 50,000

50,000 50,000

1.May.11 b/d balance 50,000 Additional Working:

SHAH LATIF & CO. GENERAL JOURNAL

FOR THE MONTH OF APRIL 2011


Apr. 05 Salaries payable 15,000 Cash 15,000 (To record the payment of outstanding salaries)

Apr. 06 Cash 25,000 Accounts receivable 25,000 (To record the cash collected from customer)




Apr. 07 Cash 20,000 Accounts receivable 30,000 Sales 50,000 (To record the goods sold for cash and on credit)

Apr. 10 Accounts payable 10,000 Cash 10,000 (To record the payment made to suppliers)

Apr. 14 Bank 25,000 Capital 25,000 (To record the additional investment made by owner)

Q.No.4 CASH BOOK GIVEN Mr. Sultan started business by the name of Baaho Enterprises on April 1, 2011 with cash investment of Rs.50,000. During the month the following transactions were completed: April 05: Opened an account with the bank depositing cash Rs.10,000. April 10: Purchased merchandise for cash Rs.5,000 and on account Rs.20,000 from Asif. April 14: Sold merchandise for cash Rs.9,000 and on credit Rs.16,000 to Adeel. April 20: Issued a cheque to Asif for Rs.9,800 as part payment. April 23: Mr. Adeel issued a cheque of Rs.9,800 in favour of Baaho Enterprises as part payment. April 27: Deposited the above cheque of Adeel into the bank. REQUIRED

(a) Record the above transactions in three column cash book page No. 51. (b) Balance the cash book on April 30. Bring down the balance on May 1, 2011.

SOLUTION 4 (a & b)



BAAHO ENTERPRISES THREE COLUMN CASH BOOK

FOR THE MONTH OF APRIL 2011 (PAGE # 51)

Ban

k

9,8

00

9,8

00

10

,00

0

19

,80

0

Cas

h

10

,00

0

5,0

00

9,8

00

24

,80

0

44

,00

0

68

,80

0

P.D

isc

P/R

(c)

(c)

Par

ticu

lars

Ban

k (D

epo

site

d)

Pu

rch

ases

Acc

ou

nts

P

ayab

le

(Asi

f)

Ban

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epo

site

d)

C/D

Bal

ance

Dat

e

Ap

r. 0

5

Ap

r. 1

0

Ap

r. 2

0

Ap

r. 2

7

Ap

r. 3

0

Ban

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10

,00

0

9,8

00

19

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0

10

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0

Cas

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50

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0

9,0

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9,8

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68

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44

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S.D

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P/R

(c)

(c)

Par

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Cap

ital

Cas

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(Dep

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)

Sale

s

Acc

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re

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able

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(Dep

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ance

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Ap

r. 0

1

Ap

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5

Ap

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4

Ap

r. 2

3

Ap

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7

May

. 1



Q.No.5 SPECIAL JOURNAL GIVEN Following information for the month of April 2011 is extracted from the books of Sakina Mariam Co. dealing in various types of new equipments such as typewriters, computers, calculating machines etc. April 05: Sold one computer system on account to Apex Stores for Rs.24,000. April 09: Sold old furniture (used in own office) to Bashir on credit for Rs.14,000. April 14: Sold a typewriter to Shahzad Associates for Rs.13,000 on account. April 21: Sold a printer to Ramzan & Co. for cash Rs.7,000. April 23: Sold ten calculators @ Rs.1,200 each to Husnain Industries on account. REQUIRED

(a) Prepare a sales journal from above information (Pg No. 51). Total it and pass the entry on April 30, 2011.

(b) Set up accounts receivable account bearing No. 5001 and sales account No. 1005 in standard form. (Control account).

SOLUTION 5 (a)

SAKINA MARIAM CO. SALES JOURNAL

FOR THE MONTH OF APRIL 2011 (PAGE # 51)

Date Invoice No. Name of Suppliers P/R Amount

April 05 Apex Stores 24,000 April 14 Shahzad Associates 13,000 April 23 Husnain Industries 12,000

April 30 Accounts receivable Dr. 5001 49,000 Sales Cr. 1005

SOLUTION 5 (b)

GENERAL LEDGER

Accounts Receivable (5001)

Date Particulars P/R Amount Date Particulars P/R Amount

Apr. 30 Sales SJ-51 49,000 Apr. 30 c/d bal 49,000

49,000 49,000

May. 1 b/d bal 49,000

Sales (1005)

Date Particulars P/R Amount Date Particulars P/R Amount

Apr. 30 c/d bal 49,000 Apr. 30 A/R SJ-51 49,000

49,000 49,000

May 1 b/d bal 49,000



Q.No.6 BANK RECONCILIATION STATEMENT GIVEN Comparison of cash book and bank statement of Naeem & Co. for the month of March 2011 revealed the following:

(i) Balance as per cash book Rs.2,050. (ii) Bank overdraft Rs.3,500 as per bank statement. (iii) A deposit of Rs.5,400 was made on March 31, too late to appear in bank statement. (iv) Cheques outstanding totaled Rs.800. (v) Cheque drawn for Rs.420 was erroneously charged by the bank as Rs.520. (vi) Bank service charges of Rs.30 were not recorded by the company. (vii) A cheque for purchase of office supplies was drawn for Rs.230 but was recorded by the

company as Rs.320. (viii) A cheque of Rs.110 for travelling expenses was not recorded by the company. (ix) A cheque of Asif & Co. for Rs.800 marked N.S.F. and returned by the bank.

REQUIRED Prepare Bank Reconciliation Statement as on March 31, 2011. SOLUTION 6

NAEEM & CO. BANK RECONCILIATION STATEMENT

FOR THE MONTH ENDED 31 MARCH 2011

Particulars Cash Book Pass Book

Balance on 31 March 2011 2,050 (3,500) Add: Late deposit cheque (iii) 5,400

1,900 Less: Outstanding cheques (iv) (800)

1,100 Add: Error by bank (v) 100

1,200 Less: Bank service charges (vi) (30)

2,020 Add: Office supplies (Error) (vii) 90

2,110 Less: Travelling expense (viii) (110,)

2,000 Less: Dishonoured cheque (ix) (800)

Reconcile Balance 1,200 1,200

Q.No.7 CORRECTION OF ERRORS GIVEN Following errors were found before closing of books of Daniyal Brothers. You are required to make improper form of General Journal to rectify the errors.

(a) A cheque of Rs.5,000 was received from Irfan Sons and deposited in the bank but in the cash book receipt was recorded as Rs.500.

(b) The invoice of Rs.8,000 was paid to Akram after discount period but payment was recorded with discount of 2%.

(c) Bad debts expense was overstated by Rs.2,000. (d) Accrued interest on overdraft of Rs.4,000 was overlooked. (e) Accrued commission revenue was understated by Rs.5,000.



SOLUTION 7 DANIYAL BROTHERS

CORRECTING ENTRIES


1 Bank 4,500 Accounts receivable (Irfan Sons) 4,500 (To correct the cheque deposited into bank)

2 Purchase discount 160 Cash 160 (To correct the payment after discount period)

3 Allowance for bad debts 2,000 Bad debts expense 2,000 (To correct the overstatement of bad debts)

4 Interest expense 4,000 Interest payable 4,000 (To correct the omission of accrued interest expense)

5 Commission receivable 5,000 Commission income 5,000 (To correct the understatement of accrued commission)

SECTION “C” (DETAILED – ANSWER QUESTIONS) (30)

Note: Attempt the following questions: Q.No.8 FINANCIAL STATEMENTS GIVEN The balances taken from the pre-closing trial balance of Usra & Co. as of December 31, 2010 are as follows: Debit Balances: Cash Rs.40,000, Accounts receivable Rs.35,000, Merchandise inventory (opening) Rs.30,000, Unexpired insurance Rs.20,000, Purchases Rs.130,000, Transportation – in Rs.5,000, Sales discount Rs.5,000, Sales equipment Rs.40,000, Drawings Rs.12,000, Rent expense Rs.25,000. Credit Balances: Accounts payable Rs.25,000, Sales revenue Rs.105,000, Commission income Rs.7,000, Purchase return Rs.5,000, Long-term loan Rs.80,000, Capital Rs.120,000. Data for Adjustments on December 31, 2010:

(i) Merchandise inventory at December 31, 2010 Rs.60,000. (ii) Unpaid rent Rs.2,000. (iii) Insurance expired Rs.12,000. (iv) Depreciation on sales equipment estimated at Rs.4,000.

REQUIRED (a) Prepare income statement for the year ended December 31, 2010. (b) Prepare balance sheet as of December 31, 2010 in classified form. (c) Prepare closing entries in General Journal. OR Adjusted Trial Balance.



SOLUTION 8 (a) USRA & CO.

INCOME STATEMENT FOR THE PERIOD ENDED 31 DECEMBER 2010

Sales revenue 105,000 Less: Sales discount (5,000)

Net sales 100,000 Less: Cost of Goods Sold: Merchandise inventory (beg) 30,000 Add: Net Purchases: Purchases 130,000 Add: Transportation – in 5,000

Delivered purchases 135,000 Less: Purchase return and allowances (5,000)

Net purchases 130,000

Merchandise available for sale 160,000 Less: Merchandise inventory (end) (60,000)

Cost of goods sold (100,000)

Gross profit --- Less: Operating Expenses: Rent expense (25,000 + 2,000) 27,000 Insurance expense 12,000 Depreciation expense 4,000

Total operating expenses (43,000)

Loss from operation (43,000) Add: Other Income: Commission income 7,000

Net loss (36,000)

SOLUTION 8 (b) USRA & CO.

BALANCE SHEET AS ON 31 DECEMBER 2010

ASSETS EQUITIES

Current Assets: Liabilities: Cash 40,000 Current Liabilities: Accounts receivable 35,000 Accounts payable 25,000 Merchandise inventory 60,000 Rent payable 2,000

Unexpired insurance 8,000 Total current liabilities 27,000

Total current assets 143,000 Long – Term Liabilities: Fixed Assets: Long term loan 80,000

Sales equipment 40,000 Total liabilities 107,000 Less: All for depreciation (4,000)

Total fixed assets 36,000 Owner’s Equity: Capital 120,000 Less: Net loss (36,000) Less: Drawings (12,000)

Total owner’s equity 72,000

Total assets 179,000 Total equities 179,000



SOLUTION 8 (c) USRA & CO.

CLOSING ENTRIES FOR THE PERIOD ENDED 31 DECEMBER 2010


1 Expense and revenue summary 213,000 Merchandise inventory 30,000 Purchases 130,000 Transportation – in 5,000 Sales discount 5,000 Rent expense 27,000 Insurance expense 12,000 Depreciation expense 4,000 (To close the various expenses accounts)

2 Sales revenue 105,000 Purchase return and allowances 5,000 Merchandise inventory 60,000 Commission income 7,000 Expense and revenue summary 177,000 (To close the various income accounts)

3 Capital 36,000 Expense and revenue summary 36,000 (To transfer the net loss to the capital account)

4 Capital 12,000 Drawings 12,000 (To close the drawings account)

OR



USRA & CO. ADJUSTED TRIAL BALANCE

FOR THE PERIOD ENDED 31 DECEMBER 2010

NO. PARTICULARS P/R DEBIT CREDIT

1 Cash 40,000 2 Accounts receivable 35,000 3 Merchandise inventory 30,000 4 Unexpired insurance 8,000 5 Purchases 130,000 6 Transportation – in 5,000 7 Sales discount 5,000 8 Sales equipment 40,000 9 Drawings 12,000

10 Rent expenses 27,000 11 Accounts payable 25,000 12 Sales revenue 105,000 13 Commission income 7,000 14 Purchase return 5,000 15 Long – term loan 80,000 16 Capital 120,000 17 Rent payable 2,000 18 Insurance expense 12,000 19 Depreciation expense 4,000 20 Allowance for depreciation – S. Equipment 4,000

Total 348,000 348,000

Additional Working:

USRA & CO. ADJUSTING ENTRIES

FOR THE PERIOD ENDED 31 DECEMBER 2010


1 Merchandise inventory 60,000 Expense and revenue summary 60,000 (To adjust the merchandise inventory)

2 Rent expense 2,000 Rent payable 2,000 (To adjust the unpaid rent)

3 Insurance expense 12,000 Unexpired insurance 12,000 (To adjust the insurance expense)

4 Depreciation expense 4,000 Allowance for depreciation – Sales equipment 4,000 (To adjust the depreciation expense)

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