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2002

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 0 2 ( P r i v a t e )

ACCOUNTING – 2002

PRIVATE Time: Three Hours Max. Marks: 100 Note: Attempt any Four questions. All questions carry equal marks. Indent Journal Entries and give explanation below each. Show computations, where necessary. Use of calculator is allowed. Q.No.1 ACCOUNTING EQUATION – ANALYSIS a. For each of the following determine the underlined missing item:-

(i) The liabilities of a business entity having assets of Rs.400,000 and owner’s equity of Rs.180,000. (ii) The assets of business entity having liabilities of Rs.100,000 and owner’s equity of Rs.200,000. (iii) The owner’s equity of business having assets of Rs.1600,000 and liabilities of Rs.80,000. (iv) The revenues of business entity having expenses of Rs.120,000 and net income of Rs.30,000. (v) The expenses of a business entity having revenues of Rs.180,000 and net loss of Rs.16,000.

b. Transactions given below relate to the business of New Way Company. For each of the transaction, you are required to indicate the effects on the elements of accounting equation using (+) for increase (-) for decrease, and (0) for no change. Use the headings and follow the example given below:- FOR EXAMPLE Transaction no. Assets Liabilities Owner’s equity

1 + 0 + (i) Started business with cash investment. (ii) Purchased building for cash. (iii) Purchased merchandise on credit. (iv) Sold merchandise at a cost on credit for the same amount. (v) Paid to accounts payable. (vi) Withdrew cash from the business for personal use of the owner. (vii) Paid cash for utility bills.

SOLUTION 1 (a) (i) Assets = Liabilities + Owner’s equity

Liabilities = Assets – Owner’s equity Liabilities = 400,000 – 180,000 Liabilities = 220,000

(ii) Assets = Liabilities + Owner’s equity

Assets = 100,000 + 200,000 Assets = 300,000

(iii) Owner’s equity = Assets – Liabilities Owner’s equity = 160,000 – 80,000 Owner’s equity = 80,000

(iv) Revenue = Expenses + Profit Revenue = 120,000 + 30,000 Revenue = 150,000

(v) Expenses = Revenue + Loss Expenses = 180,000 + 16,000 Expenses = 196,000



SOLUTION 1 (b) Transaction No. Assets Liabilities Owner’s Equity

(i) + 0 +

(ii) 0 0 0

(iii) 0 + -

(iv) + 0 +

(v) - - 0

(vi) - 0 -

(vii) - 0 -

Q.No.2 CASH BOOK GIVEN Mr. Aslam, a sole trader, uses a Three Column Cash Book for his business. On June 1, 2001 he had cash on hand Rs.2,500 and cash in bank Rs.3,500. During the month, he completed the following transactions:- June 06: Received a cheque from Karim & Co. for Rs.240/- and allowed them discount Rs.10/-. June 11: Deposited Karim & Co.’s cheque in the bank Rs.240/-. June 15: Issued a cheque for Rs.250/- to Sharif & Co. in full settlement of their account of

Rs.300/-. June 21: Deposited cash into bank Rs.1,000/-. June 27: Withdrew from bank for personal use Rs.300/-. June 30: Withdrew cash from bank for office use Rs.500/-. REQUIRED

a) Enter the opening balance and record the above transactions in a three-column Cash Book. b) Balance the Cash Book on June 30, 2001 bringing down the Cash and Bank balance on July 1,

2001. c) Set up T-accounts for Sales Discount and Purchase Discount accounts in the ledger and post the

discount amounts of the Cash Book to these accounts, giving posting reference. SOLUTION 2

GENERAL LEDGER Sales Discount

30.June.2001 CB Rs.10

Purchase Discount

30.June.2001 CB Rs.50



MR. ASLAM THREE COLUMN CASH BOOK

FOR THE MONTH OF JUNE 2002

Ban

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25

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30

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50

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3,6

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4,7

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Par

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A/P

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arif

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Q.No.3 GENERAL JOURNAL GIVEN During the first month of operation, Mr. Jamil’s business completed the following transactions.

a) On March 1, 2001, Mr. Jamil invested cash Rs.25,000/- in the business. b) On March 2, 2001, he bought Rs.6,000/- supplies for the shop. c) On March 3, 2001, he paid Rs.5,000/- rent for the month of the March for the shop. d) On March 5, 2001, he purchased the equipments for Rs.12,000/-. e) Up to March 16, 2001, receipt from services rendered to various clients Rs.8,250/-. f) On March 30, 2001, payment of salaries to the office assistant Rs.3,600/-. g) On March 31, 2001, receipt from services rendered during two weeks’ period ended March 31,

amounted to Rs.9,300/-. h) On March 31, 2001, Mr. Jamil withdrew Rs.8,000/- cash and supplies worth Rs.500/- for his

personal use. REQUIRED Record the above transactions in the General Journal Standard form. SOLUTION 3

MR. JAMIL GENERAL JOURNAL

FOR THE MONTH OF MARCH 2001

Date Particulars P/R Debit Credit

1.Mar Cash 25,000 Capital 25,000 (To record the investment by owner in the business)

2.Mar Supplies 6,000 Cash 6,000 (To record the purchase of supplies for cash)

3.Mar Prepaid rent 5,000 Cash 5,000 (To record the rent paid for the month of March)

5.Mar Equipments 12,000 Cash 12,000 (To record the purchase of equipment for cash)

16.Mar Cash 8,250 Service income 8,250 (To record the service income received)

30.Mar Salaries expense 3,600 Cash 3,00 (To record the cash paid to office assistant)

31.Mar Cash 9,300 Service income 9,300 (To record the cash received against service)

31.Mar Drawings 8,500 Cash 8,000 Supplies 500 (To record the cash and supplies withdrew by owner for

personal use)



Q.No.4 LEDGER POSTING AND TRIAL BALANCE GIVEN Take the transactions as given in question No.3 above. REQUIRED

(i) Set up Ledger accounts in T-Form and make posting there in. (ii) Foot and Balance the account in pencil. (iii) Prepare Trial Balance on March 31.

SOLUTION 4 (i and ii)

GENERAL LEDGER

Cash

1.Mar Capital 25,000 2.Mar Supplies 6,000 16.Mar Service income 8,250 3.Mar Prepaid rent 5,000 31.Mar Service income 9,300 5.Mar Equipments 12,000 30.Mar Salaries expense 3,600 31.Mar Drawings 8,000

34,600 31.Mar c/d balance 7,950

42,550 42,550

1.Apr b/d balance 7,950

Supplies

2.Mar Cash 6,000 31.Mar Drawings 500 31.Mar c/d balance 5,500

6,000 6,000


Prepaid Rent

3.Mar Cash 5,000 31.Mar c/d balance 5,000

5,000 5,000


Equipment


12,000 12,000


Capital


25,000 25,000




Drawings

31.Mar Cash/Supplies 8,500 31.Mar c/d balance 8,500

8,500 8,500


Service Income

16.Mar Cash 8,250 31.Mar Cash 9,300 31.Mar c/d balance 17,550

17,550 17,550


Salaries Expense


3,600 3,600


SOLUTION 4 (iii) MR. JAMIL

TRIAL BALANCE FOR THE MONTH OF MARCH 2001

NO. PARTICULARS P/R DEBIT CREDIT

1 Cash 7,950 2 Supplies 5,500 3 Prepaid rent 5,000 4 Equipments 12,000 5 Capital 25,000 6 Drawings 8,500 7 Service income 17,550 8 Salaries expense 3,600

Total 42,550 42,550

Q.No.5 CONTROLLING ACCOUNTS AND SUBSIDIARY LEDGER GIVEN The following transactions were completed by Al-Mustafa and Co. during January, 2001:- January 5: Purchased merchandise on account from Mr. Fahim for Rs.25,000/-. January 12: Purchased merchandise on credit from Mr. Deedar for Rs.40,000/-. January 23: Purchased merchandise on credit from Mr. Wasim for Rs.30,000/-. REQUIRED

(i) Enter the above transactions in the Purchase Journal and complete it in all respects. (ii) Set up the accounts in ‘T’ Form in the General Ledger and post the entry therein. (iii) Set up accounts in subsidiary Ledger in self-balancing form and make postings therein.



SOLUTION 5 (i) AL-MUSTAFA AND CO. PURCHASE JOURNAL

FOR THE MONTH OF JANUARY 2001

Date Invoice No. Name of Suppliers P/R Amount

5.January.2001 Mr. Fahim 25,000 12.January.2001 Mr. Deedar 40,000 23.January.2001 Mr. Wasim 30,000

31.January.2001 Purchases DR. 95,000 Accounts payable CR.

SOLUTION 5 (ii)

GENERAL LEDGER Purchases

31.January.2001 Rs.95,000

Accounts Payable

31.January.2001 Rs.95,000

SOLUTION 5 (ii)

AL-MUSTAFA AND CO. SUBSIDIARY LEDGER

FOR THE MONTH OF JANUARY 2001 Mr. Fahim

Date Invoice No. Description P/R Debit Credit Balance

5.January.2001 PJ 25,000 25,000

Mr. Deedar


12.January.2001 PJ 40,000 40,000

Mr. Wasim


23.January.2001 PJ 30,000 30,000

Q.No.6 BILL TRANSACTIONS GIVEN On April 1, 2001, Mr. Jamal sold merchandise to Mr. Zaheer for Rs.45,000/- on account and drew a bill payable after three months. Mr. Zaheer accepted and returned the bill on the same date to Mr. Jamal. On maturity, the bill was dishonoured. REQUIRED Give the necessary entries in the General Journal of:

(i) Mr. Jamal and (ii) Mr. Zaheer.



SOLUTION 6 (i) MR. JAMAL

GENERAL JOURNAL


1.Apr Accounts receivable (Zaheer) 45,000 Sales 45,000 (To record the goods sold on account to Zaheer)

1.Apr Bill receivable 45,000 Accounts receivable (Zaheer) 45,000 (To record the acceptance received)

1.July Accounts receivable (Zaheer) 45,000 Bill receivable 45,000 (To record the bill dishonoured on maturity date)

SOLUTION 6 (ii)

MR. ZAHEER GENERAL JOURNAL


1.Apr Purchases 45,000 Accounts payable (Jamal) 45,000 (To record the goods purchased from Jamal on account)

1.Apr Accounts payable (Jamal) 45,000 Bill payable 45,000 (To record the acceptance given)

1.July Bill payable 45,000 Accounts payable (Jamal) 45,000 (To record the dishonoured of bill of exchange)

Q.No.7 FINANCIAL STATEMENTS GIVEN The following balanecs were extracted from the Ledger of Mr. Shakir on December 31, 2001, before the closing of books:- Cash Rs.8,500/-; Supplies Rs.1,000/-; Accounts receivable Rs.9,000/-; Allowance for bad debts Rs.1,500/-; Merchandsie inventory (January 1, 2001) Rs.7,000/-; Prepaid insurance Rs.600/-; Furniture Rs.5,000/-; Notes payable Rs.4,500/-; Shakir’s Capital Rs.16,600/-; Shakir-Drawings Rs.2,000/-; Sales Rs.50,000/-; Sales discount Rs.500/-; Purchases Rs.30,000/-; Salaries expense Rs.8,000/-; Rent expense Rs.6,000/-; Commission earned Rs.5,000/-. Supplementary data for adjustments on December 31, 2001:

(i) Unpaid salaries Rs.3,000/-. (ii) Prepaid rent Rs.1,000/-. (iii) Unused sales supplies Rs.400/-. (iv) Insurance was prepaid to the extent of Rs.200/-. (v) Commission earned Rs.4,000/-. (vi) Merchandise inventory was valued on December 31, 2001 at Rs.6,000/-.

REQUIRED Prepare:

a) Income Statement for the year ended December 31, 2001, and b) Balance Sheet as on December 31, 2001.

OR



PERIOD ADJUSTMENTS AND CLOSING PROCESS GIVEN Take the supplementary data for adjustments as given in question numbered 7 in this paper. REQUIRED

a) Prepare Adjusting Entries in General Journal, giving explanation, and b) Closing Process:

GIVEN Pick out Expense and Revenue data from the balances given in question numbered 7 in this paper, and also take into account the supplementary data for adjustments given therein.

REQUIRED (i) Prepare Closing Entries in General Journal. (ii) Set up Expense and Revenue Summary and make postings to it from the General Journal in (i)

above. (iii) Close the Expense and Revenue Summary.

SOLUTION 7 (a)

MR. SHAKIR INCOME STATEMENT

FOR THE PERIOD ENDED 31 DECEMBER 2001 Sales 50,000 Less: Sales discount (500)

Net sales 49,500 Less: Cost of Goods Sold: Merchandise inventory (beg) 7,000 Add: Purchases 30,000

Merchandise available for sale 37,000 Less: Merchandise inventory (end) (6,000)

Cost of goods sold (31,000)

Gross profit 18,500 Less: Operating Expenses: Salaries expense (8,000 + 3,000) 11,000 Rent expense (6,000 – 1,000) 5,000 Supplies expense 600 Insurance expense 400

Total operating expenses (17,000)

Profit from operation 1,500 Add: Other Income: Commission income (5,000 + 1,000) 4,000

Net profit 5,500



SOLUTION 7 (b) MR. SHAKIR

BALANCE SHEET AS ON 31 DECEMBER 2001

ASSETS EQUITIES Current Assets: Current Liabilities: Cash 8,500 Notes payable 4,500 Accounts receivable 9,000 Salaries payable 3,000 Les: All for bad debts (1,500) 7,500 Unearned commission 1,000

Merchandise inventory 6,000 Total liabilities 8,500 Supplies 400 Prepaid insurance 200 Owner’s Equity: Prepaid rent 1,000 Capital 16,600

Total current assets 23,600 Add: Net profit 5,500

Fixed Assets: 22,100 Furniture 5,000 Less: Drawings (2,000)

Total fixed assets 5,000 Total owner’s equity 20,100

Total assets 28,600 Total equities 28,600

OR SOLUTION 7 (a)

MR. SHAKIR ADJUSTING ENTRIES

FOR THE PERIOD ENDED 31 DECEMBER 2001


1 Salaries expense 3,000 Salaries payable 3,000 (To record the unpaid salaries expense)

2 Prepaid rent 1,000 Rent expense 1,000 (To adjust the prepaid rent)

3 Supplies expense 600 Supplies 600 (To adjust the unused supplies)

4 Insurance expense 400 Prepaid insurance 400 (To adjust the prepaid insurance)

5 Commission earned 1,000 Unearned commission 1,000 (To adjust the unearned commission)

6 Merchandise inventory 6,000 Expense and revenue summary 6,000 (To close the merchandise inventory)



SOLUTION 7 (b) MR. SHAKIR

CLOSING ENTRIES FOR THE PERIOD ENDED 31 DECEMBER 2001


1 Expense and revenue summary 54,500 Merchandise inventory 7,000 Purchases 30,000 Insurance expense 400 Supplies expense 600 Rent expense 5,000 Salaries expense 11,000 Sales discount 500 (To close the various expenses accounts)

2 Sales revenue 50,000 Merchandise inventory 6,000 Commission income 4,000 Expense and revenue summary 60,000 (To close the various income accounts)

3 Expense and revenue summary 5,500 Capital 5,500 (To transfer the profit to the capital account)

General Ledger

Expense and Revenue Summary

1 54,500 2 60,000 3 5,500

60,000 60,000

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