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THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTSOF PAKISTAN

PART-I EXAMINATION - 1996\l\CCOUNTING - I'APER I

MAY, 1996

Q.1.Ca) In the accounts of MIs ABC Computer systems which deal in Computers. the computers

are shown are shown as current assets whereas the Companies or Firms which "buycomputers from them shown the same computer as fixed asset, Explain why is il 507 .

(b) What is the differences between liquid assets and current assets. Illustrate by example.(e) Mis Javed Traders' credit sales record shows the following data for the month 01

September, 1995.

Bill date(i) 4-9-1995(ii) 12-9-1995(iii) 24-9-1995

AmountRS.2.000Rs. 5.850

Rs . 10.975

Tenns2110 n/302110 ni302110 n/30

BuyersNadeem & SonsNasirn & CompanyIqbal & Co.

The bills were paid on 12·9·95.21-9-95 and 23-9-95 respectively.

Required:(i) Journal entries for payment in the books of purchaser.(ii) Journal entries of receipt of payment in the books of seller.

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(d) MIs Haysi Corporation put their surplus funds amounting to Rs. 2 5 Millions in ShortNotice Deposit wilh Sky High Bank LId. on 25-2-95 at a profit rale 0' 13% per annum.The deposil was encashed on 27·10-95. The bank deducts withholding Tax @ 10% atthe lime of 'Tlaking payments of profits. ,.'

• ••Required:(i) Calculate the amount of the profit paid by Mis Hayal Corporalion. •(ii) Journal entry for recording of prom by MIs Haysi Corporation.

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.Accounts receivable of Mis Shahid & Brolhers show a balance of Rs. 577.850. :rheamount when scrutinised revealed as under.

Receivable over 2 yearsReceivable over 1 year bulless than 2 years'Receivable over 6 months bulless (han 1 yearBalance is receivabla of less than 6 months.

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Rs. 15,500Rs.80.000

Rs. 165.000 .

The firm's policy is to write orr receivable over 2 years and to maintaJn a Bad DebtAllowance of 1% of the net sales of the year. The bad debt allowance account shows acredit balance of Rs. 20,500 and net sales for the year was Rs. 8.750.000. •

ReqUired:(Q Journal enlry to record bad debt write off(ii) Journal enlry for recording Bad debl Allowance(iii) T account for Bad debt allowance racordinq

balance. .

•the above transactions and show the

On August 17. 1995 MIs Venue Limited bought a new van having a market value of Rs.600,000. They paid Rs. 500,000 cash and balance was settled by trade in of their okf vanwhich was purchased in September 1992 for Rs. 450.000. The Company's policy forDepreciation was 10 charye deprecialion on motor vehicles al 20% on straighl linemethod having no residual value and 10 charge full year depreciaUon on assets under

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use for more than 8 months. No depreciation Is charged for usage of less than 6 monlhs.Calendar year Is Ihe aceounllng year for lhe company.

Required:(I) Joumalise disposal of the old van.(ii) Record purchase of new van.(iii) Calculale depredallon 'or the new van for the year 1996.

o.a, M/s Hamayun ltd. have 6 office executives on their regular payroll. Monthly data of their

>< emolumenls Is tabulated as under:

Salary (Amounl in Rs.)•

Name of Employee Desgo. Basic House . Conveyance GrossRenl Salary

I ~ Mr. BadruddoJa G.M. 9,000 4.050 900 13,950'£" 0 Mr. Joseph D'Souza Acctt. 8,000 3,600 800 12,400 •Mr. Nizamuddin Chief Cashier 6.000 3,600 600 9.300Mrs. Gul Khan P.A. to Dlr. 5.000 2.250 500 7,750Mr. Merajuddln PA to G.M. 5,000 2,250 500 7,750Mr. Fasihuuaman co-ore. • 5000 2,250 500 7,750,

The company has a recognised provident fund. Both the employees and employercontribute to provident 'und @ 10% of basic salary each month. As per law Income TaxIs to be deducted lrom salal)' of these employees@ 10% of basic salary per monlh.

The lollowing employees have taken loan lrom Ihe Company deductible lrom their salaryIn Instalments. Details are as under. .

Name of Employee

Mr. Joseph D'SouzaMr.; . Gul KhanMr. Fasihuuaman

LoanAmouni Monthly Loan Balance(Amount in Rs.) Deduclion as aI31·12·95

10,000 1,000 5,00015,000 1,500 9,000

5,000 500 500

Required:. (i) Prepare a payroll lorthe month 01 Janual)', 1996.(ii) Joumalise Ihe Payroll lor the month 01 January, 1996.

-Two friends Nazlr and Ramazan were running general stores' separately. In December,1994 Nazl(s landlonl gave him a notice to vacate the shop. Ramazan was planning toexpand his business so they agreed to merge Iheir businesses and take the assets and .liabilmes of individuals at value shown thereunder as at January I, 1995.

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, , CashAccounts ReceivableMerchandise Inventol)'Shop FumilureShop PremisesAllowance for Depredation:- Shop Premises•• Shop Fumilure

Accounts Payable

NazlrRs.

20,00035,000

100,00040,000

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15.00038,000

RamazanRs.

15,00045,00085,00060,000

150,000

60,00045,00065,000

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II was mutually agreed Ihat the Capilal 01 Nazir wquld be Rs. 150,000 and that 0'Ramazan Rs. 200,000. Any defidency in ·the capital would be paid in cash by therespeclive partners and paid 10 Ihe creditors. Profit sharing ratio for Ramazan and Nazir

155

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was agreed 70:30 and Ramazan was allowed Rs. 10,000 per year as shop rent. Theystarted partnership business from January 1, 1995 and reported operauonalnet profit ofRs. 170,000 before adjustments as per partnership agreement.

Required: •Q (i) Journal entries to record capital and assets in the partnership books of accounts.'

(ii) Prepare a balance sheet of partnership firm as at January 1. 1995. . ;(iii) Allocation of net profil adjustment to the partners.

/ ~ ,Q.5. SaJJad and Company sells household equipment's on hire-purcha se al cosl plus 500/.V marx-up.

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Stock issued on hire-purchase basis. 'Stock In hand al shop

Instalment due from customersCalledians during the year

Relevant dala for the year is appended below:January I, 1995

Rs.60,000

7.5004.500

•Required:

Prepare ledger accounts:(i) Hire Purchase Debtors(iI) Shop Siock(iii) H ire Purchase Stock

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December 31 . 1995.Rs. ,.

•69.000 .10,5007 ,500

120,000

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