Advanced Accounting Final - Paksights

Advanced Financial Accounting Sohail Afzal Key Book Solution

www.paksights.com www.fb.com/bcomstudymaterial of 206

Chapters List

Joint Stock Company (Page 2 – 7)

Issue of Bonus Shares and Right Shares (Page 8 – 21)

Debentures Bonds and TFCs (Page 22 – 43)

Final Accounts (Page 44 – 79)

Analysis of Accounting Ratios (Page 80 – 111)

Consignment Account (Page 112 – 143)

Contract Account (Page 144 – 159)

Hire Purchase and Hire Installment (Page 160 – 205)



Chapter - 1

JOINT STOCK COMPANIES

INTRODUCTION

Solutions Q.1 (a) JOURNAL Date Details L/F Debit

(Rs.)

Credit

(Rs.)

2010

July. 15

July. 31

Bank Account Dr.

Ordinary Share Application Account

(Money received alongwith application for 200,000

shares @ Rs. 10 each)

20,00,000

20,00,000

20,00,000

20,00,000

Ordinary Share Application Account Dr.

Ordinary Share Capital Account

(Applicants allotted the shares)

(b) JOURNAL Date Details L/F Debit

(Rs.)

Credit

(Rs.)

2010

July. 15

July. 31

Bank Account Dr.


(Money received alongwith application)

23,00,000

23,00,000

23,00,000

23,00,000



(200,000 shares allotted to applicants)



“ Ordinary Share Application Account Dr.

Bank Account

(Refund of money on 30,000 shares)

300,000

300,000

SOHAIL LTD. Balance Sheet as at……….

Share Capital & Liabilities Rs. Assets Rs. Authorized Capital: 400,000 ordinary shares of Rs. 10 each Issued & Subscribed & Paid up: Capital 200,000 ordinary shares of @ Rs. 10 each

40,00,000

Capital Assets: Bank Balance

20,00,000

20,00,000 20,00,000 20,00,000

Q.2 JOURNAL Date Details L/F Debit

(Rs.) Credit (Rs.)

2010 June. 1

June. 15

June. 30

June. 30

Bank Account Dr. Ordinary Share Capital Account (10,000 shares taken by directors)

100,000

350,000

350,000

50,000

100,000

350,000

350,000

50,000

Bank Account Dr. Ordinary Share Application Account (Money received alongwith applications for 35,000 shares) Ordinary Share Application Account Dr. Ordinary Share Capital Account (35,000 shares allotted to applicants) Bank Account Dr. Ordinary Share Capital Account (5000 shares taken up by underwriters as per assignment)

DECENT LTD. Balance Sheet as at 30th June 2010

Share Capital & Liabilities Rs. Assets Rs. Authorized Capital:

50,000 ordinary shares of Rs. 10 each

Issued & Subscribed & Paid up:

Capital 50,000 shares of @ Rs. 10

500,000

Capital Assets:

Bank Balance

500,000



each 500,000

500,000 500,000


(Rs.) Credit (Rs.)

2010 Nov. 1

Nov. 15

Nov. 15 - -

Preliminary Expenses Account Dr. Ordinary Share Capital Account (1000 shares taken by promoter)

50,000

100,000

300,000

200,000

100,000

50,000

100,000

300,000

200,000

100,000

Bank Account Dr. Ordinary Share Application Account (5000 shares taken by directors) Bank Account Dr. Ordinary Share Application Account (Money for 6000 shares received) Ordinary Share Application Account Dr. Ordinary Share Capital Account (4000 shares allotted to applicants) Ordinary Share Application Account Dr. Bank Account (2000 applicant money refunded)

A LTD. Balance Sheet as at……….

Share Capital & Liabilities Rs. Assets Rs. Authorized Capital: 10,000 ordinary shares of Rs. 50 each Issued, subscribed & paid up capital: 1000 Shares by promoter 2000 Shares by directors 4000 Shares by public

500,000

Deferred Cost: Preliminary Expenses Capital Assets: Bank Balance

50,000

300,000

50,000

100,000 200,000 350,000 350,000


(Rs.) Credit (Rs.)

2010 Jan. 15

Bank Account Dr. Ordinary Share Application Account (Money received for 35,000 shares @ Rs. 11 each)

385,000

385,000



Jan. 30

Jan. 30

Ordinary Share Application Account Dr. Ordinary Share Capital Account Premium on Issue of Shares Account (200,000 shares allotted at a premium of 10%)

220,000

165,000

200,000

20,000

165,000 Ordinary Share Application Account Dr. Bank Account (Money refund for 15,000 shares)

Balance Sheet as at 30th Jan 2010 Share Capital & Liabilities Rs. Assets Rs.

Authorized Capital: 100,000 shares of Rs. 10 each Issued & Subscribed & Paid up: 20,000 shares of @ Rs. 10 each Reserves: Share premium

10,00,000

Capital Assets: Bank Balance

220,000

200,000

20,000

220,000 220,000


(Rs.) Credit (Rs.)

Bank Account Dr. Ordinary Share Application Account (Money received with applications for 15,000 shares @ Rs. 9 each)

135,000

135,000 15,000

135,000

150,000

Ordinary Share Application Account Dr. Discount on Issue of Shares Account Dr. Ordinary Share Capital Account (15,000 shares to public of 10% discount)

ASIF BASHIR LTD. Balance Sheet as at 30th Jan 2010

Share Capital & Liabilities Rs. Assets Rs. Authorized Capital:

100,000 shares of Rs. 10 each

Issued Capital:

20,000 shares of Rs. 10 each

10,00,000

Deferred Cost:

Discount on Issue of Shares

Capital Assets:

Bank Balance

15,000

135,000

200,000



Subscribed & Paid up Capital:

15000 share of Rs. 10 each

150,000

150,000 150,000


(Rs.)

Credit

(Rs.)

2010

Jan. 1

Jan. 1

Jan. 10

Jan. 20

“

Machinery Account Dr.

Asghar Account

(Being purchase of machinery)

50,00,000

50,00,000

2,50,00,000

50,00,000

2,50,00,000

50,00,000

50,00,000

2,50,00,000

50,00,000

2,50,00,000

Asghar Account Dr.


(5,000 shares issued to vender @ Rs. 1000 each)

Bank Account Dr.


(Application money received for 25,000 shares)

Bank Account Dr.


(5000 shares taken by underwriters)



(25,000 shares allotted to public)

Balance Sheet as at 30th Jan 2010 Share Capital & Liabilities Rs. Assets Rs.

Authorized Capital: Fixed Assets:



50,000 shares @ of Rs. 1000 each

Issued Capital:

35,000 shares @ of Rs. 10 each

Subscribed & Paid up Capital:

35,000 share @ of Rs. 10 each

5,00,00,000 Machinery

Capital Assets:

Bank Balance

50,00,000

3,00,00,000

3,50,00,000

3,50,00,000

3,50,00,000 3,50,00,000

Q.7

(a) At Per JOURNAL Date Details L/F Debit

(Rs.) Credit (Rs.)

Land & Buildings Account Dr. Machinery Account Dr. Furniture Account Dr. Debtors Account Dr. Sunday Creditors Account M/s Noor & Sons Account (Assets a liabilities acquired for a purchase consideration of Rs. 100,000)

50,000 40,000 14,000

5,000

99,000

10,000 99,000

99,000 M/s Noor & Sons Account Dr. Ordinary Share Capital Account (9,900 shares allotted at Rs. 10 (per value) in full settlement of purchase consideration)

(a) At Per JOURNAL Date Details L/F Debit

(Rs.) Credit (Rs.)

First Entry is Same.

M/s Noor & Sons Account Dr.

Discount on Issue of Share Account Dr.


(11,000 shares allotted at 10% discount)

99,000

11,000

110,000



Chapter - 2

ISSUANCE OF BONUS SHARES

& RIGHT SHARES

Solutions

Q.1 Existing capital = C = Rs. 40,00,000

Free Reserves = FR = Rs. 50,00,000

Quantum of Bonus = Q

Increased capital = C+Q

Residual Reserves = FR -Q

Q =

= ( , , ) , ,

= , ,

Q = Rs. 32,00,000

CHECK:



Residual reserves should be atleast 25 % of increased capital:

Residual Reserves = FR – Q

= 50,00,000 – 32,00,000 = Rs. 18,00,000

Increased Capital = C+ Q

= 40,00,000+32,00,000 = Rs. 72,00,000

Residual Reserves = 72,00,000 x 25 %

= Rs. 18,00,000

Free Reserves = FR = Rs. 32,00,000

Existing Capital = C = , ,

x 100 = Rs. 20,00,000

Maximum amount of bonus = Q

Q =

= ( , , ) , ,

= , , , ,

Q = , ,

= Rs. 21,60,000

CHECK:

Residual reserves should be at least 25 % of increased capital:

Residual Reserves = FR – Q

= 32,00,000 – 21,60,000 = Rs. 10,40,000

Increased Capital = C+ Q

= 20,00,000+ 21,60,000 = Rs. 41,60,000

Residual Reserves = 41,60,000 x 25 % = Rs. 10,40,000

Q.3 JOURNAL ENTRIES Date Details L/F Debit

(Rs.) Credit (Rs.)



Reserve Fund A/c Dr. Bonus to Shareholders A/c (Being the Bonus declared)

18,00,000

18,00,000

18,00,000

18,00,000 Bonus to Shareholders A/c Dr. Share Capital A/c (Being the issuance of bonus shares at par)

WORKING NOTES:

(w-1) Amount of Bonus:

30,00,000 x 60% = Rs. 18,00,000


(Rs.) Credit (Rs.)

Reserve Fund A/c Dr. Bonus to Shareholders A/c (Being the Bonus declared)

300,000

300,000

300,000

300,000 Bonus to Shareholders A/c Dr. Share Capital A/c (Being the issuance of bonus shares at par)

WORKING NOTES:

(w-1) No. of Bonus Shares:

= Existing share x

= 6000 x ½ = 3000 shares

(w-2) Amount of Bonus = 3000 share x Rs. 100 = Rs. 300,000


(Rs.) Credit (Rs.)

Profit & Loss A/c Dr. General Reserve A/c Dr. Bonus to shareholders A/c (Being the Bonus declared)

250,000 150,000

400,000



Bonus to Shareholders A/c Dr. Share Capital A/c (Being the issuance of bonus shares at par)

400,000 400,000

WORKING NOTES:


= 40% of paid up capital

= 40% of 10,00,000 = Rs. 400,000

Bonus out of Profit & Loss A/c = Rs. 250,000

Bonus out of General Reserve A/c = Rs. 150,000


(Rs.) Credit (Rs.)

Share Premium A/c Dr. General Reserve A/c Dr. Profit & Loss A/c Dr. Bonus to shareholders A/c (Being the Bonus declared)

100,000 200,000 200,000

500,000

500,000

500,000 Bonus to Shareholders A/c Dr. Share Capital A/c (Being the issuance of bonus shares at par)

WORKING NOTES:


= Issued, subscribed & paid up share x

= 100,000 x

= 50,000 shares


50,000 shares x Rs. 10 = Rs. 500,000

Bonus out of Share Premium A/c = Rs. 100,000





AMENDED BALANCE SHEET AS AT 31-12-2010

Liabilities Rs. Authorized Capital: 400,000 shares of Rs. 10 each Issued & Subscribed & Paid up capital: 150,000 shares of Rs. 10 each Reserves: Share premium (200,000 – 100,000) General reserve (600,000 – 200,000) Profit & Loss A/c (350,000 – 200,000)

400,000

15,00,000

1,00,000 4,00,000 150,000

21,50,000


(Rs.) Credit (Rs.)

Machinery A/c Dr. Vendor A/c (Being the purchase of machinery)

200,000

200,000

250,000 230,000

480,000

200,000

25,000 140,000

35,000

480,000

480,000

Vendor A/c Dr. Bank A/c Share Capital A/c Share Premium A/c (Being the issuance of shares to vendors) Profit & Loss A/c Dr. General Reserve A/c Dr. Bonus to shareholders A/c (Being the Bonus declared) Bonus to Shareholders A/c Dr. Share Capital A/c (Being the issuance of bonus shares)

WORKING NOTES:

(w-1) No. of Shares issued to Vendor:

=

,= 1400 shares

Share Capital = 1400 x 100 = Rs. 140,000

Share Premium = 1400 x 25 = Rs. 35,000




= Existing share x

= 12,000 x 2/5 = 4800 shares

(w-3) Amount of Bonus = 4800 share x Rs. 100 = Rs. 480,000



= Rs. 480,000

(w-4) Total No. of Shares:

Existing shares = 12,000

Shares issued to vender = 1,400

Bonus shares = 4,800

18,200

BALANCE SHEET

AS AT 31-12-2010 Liabilities Rs. Assets Rs.

Authorized Capital: Issued, subscribed & paid up capital: 18,200 shares of Rs. 100 each General reserve (800,000 – 230,000) Profit & Loss A/c Share premium Creditors Provision for Tax

30,00,000 Fixed Assets: Land & Building Plant & Machinery 800,000 + Purchased 200,000 Capital Assets: Furniture Stock Debtors Bank (130,000 – 25,000)

900,000

10,00,000 190,000

250,000 220,000 105,000

18,20,000

570,000 -

35,000 175,000

65,000

26,65,000 26,65,000


(Rs.) Credit (Rs.)



Long Term Debts A/c Dr.

Share Capital A/c

Share Premium A/c

(Being the long term debts issuing ordinary shares at

premium)

170,000

70,000 30,000

100,000

136,000

34,000

100,000

100,000

Profit & Loss A/c Dr.

General Reserve A/c Dr.

Bonus to shareholders A/c

(Being the Bonus declared)

Bonus to Shareholders A/c Dr.

Share Capital A/c

(Being the issuance of bonus shares)

WORKING NOTES:

(w-1) No. of shares issued against long term debts:

= ,

. = 13,600 shares

Share Capital = 13,600 x Rs. 100 = Rs. 136,000

Share Premium = 13,600 x Rs. 25 = Rs. 34,000

Rs. 170,000


40% of 250,000 = Rs. 100,000



= Rs. 100,000

BALANCE SHEET AS AT 31-12-2010

Liabilities Rs. Assets Rs.



Share Capital: 48,600 shares of Rs. 10 each Reverse: Reverse Fund (110,000 – 30,000) Profit & Loss A/c Share premium

486,000

80,000

36,000

Sundry Assets 600,000

600,000 600,000

Q.9 Market value of 2 shares @ Rs. 250 each = Rs. 500

Add: Issue price of 1 right share @ Rs. 140 each = Rs. 140

Total price of 3 shares = Rs. 640

Average Price =

=

. = Rs. 213.33

Value of Right = Market price - Average price

= Rs. 250-Rs. 213.33

= Rs. 36.67

CHECK:

Value of right =

x (Market price-Offered price)

= x (250 - 140)

= x 110 = Rs. 36.67

Q.10 Market value of 8 shares @ Rs. 50 each = Rs. 400

Add: Issue price of 3 right shares @ Rs. 20 each = 60

Total price of 11 shares = 460

Average Price =

= = Rs. 41.82


= Rs. 50- Rs. 41.82 = Rs. 8.18

CHECK:



Value of right =


= x (50 - 20)

= Rs. 8.18

Q.11 Market value of 10 shares @ Rs. 225 each = Rs. 2,250

Add: Issue price of 4 right shares @ Rs. 120 each = 480

Total price of 14 shares =2,730

Average Price =

= = Rs. 195


= Rs. 225 - Rs. 195 = Rs. 30

CHECK:

Value of right =


= x (225 - 120)

= Rs. 30


(Rs.) Credit (Rs.)

Sundry Shareholders A/c (8000 x 175) Dr. Share Capital A/c (8000 x 100) Share Premium A/c (8000 x 75) (Being the issuance of right shares to shareholders at premium)

14,00,000

960,000

440,000

800,000 600,000

960,000

400,000

Bank A/c Dr. Sundry Shareholders A/c (Being amount received from shareholders) Bonus to Dividend A/c (8000 x 55) Dr. Sundry Shareholders A/c (Being the shareholders account transferred to bonus share dividend a/c)

LEDGER ACCOUNTS:



Dr. SUNDRY SHAREHOLDERSACCOUNT Cr. Date References Rs. Date References Rs.

Share Capital A/c Share Premium A/c

800,000 600,000

Bank A/c Bonus Share Dividend A/c

960,000

440,000

14,00,000 14,00,000

Dr. SHARE CAPITAL ACCOUNT Cr. Date References Rs. Date References Rs.

Balance c/d 16,00,000 Balance b/d Sundry Shareholders A/c

800,000 800,000

16,00,000 16,00,000

Dr. SHARE PREMIUM ACCOUNT Cr. Date References Rs. Date References Rs.

Balance c/d 600,000 Sundry Shareholders A/c 600,000

600,000 600,000

Dr. BANK ACCOUNT Cr. Date References Rs. Date References Rs.

Sundry Shareholders A/c 960,000 Balance c/d 960,000

960,000 960,000

Dr. BONUS SHARE DIVIDEND ACCOUNT Cr. Date References Rs. Date References Rs.



Sundry Shareholders A/c 600,000 Balance c/d 600,000

600,000 600,000


(Rs.) Credit (Rs.)

Sundry Shareholders A/c (300,000 x 13) Dr. Share Capital A/c Share Premium A/c (Being the issuance of right shares)

39,00,000

39,00,000

39,00,000

39,00,000

Bank A/c (300,000 x 13) Dr. Sundry Shareholders A/c (Being amount received from shareholders)

LEDGER ACCOUNTS: Dr. SUNDRY SHAREHOLDERS ACCOUNT Cr. Date References Rs. Date References Rs.

Share Capital A/c Share Premium A/c

30,00,000 900,000

Bank A/c

39,00,000

39,00,000 39,00,000

Dr. SHARE CAPITAL ACCOUNT Cr. Date References Rs. Date References Rs.

Balance c/d 60,00,000 Balance b/d Sundry Shareholders A/c

30,00,000 30,00,000

60,00,000 60,00,000

Dr. SHARE PREMIUM ACCOUNT Cr. Date References Rs. Date References Rs.

Balance c/d 900,000 Sundry Shareholders A/c 900,000

900,000 900,000




Sundry Shareholders A/c 39,00,000 Balance c/d 39,00,000

39,00,000 39,00,000


(Rs.) Credit (Rs.)

Profit & Loss A/c Dr. Reserve Fund A/ c Dr. Bonus to shareholders A/c (Being the bonus declared)

200,000 175,000

375,000

900,000

900,000

375,000

375,000

750,000 150,000

900,000

Bank to Shareholders A/c Dr. Sundry Capital A/c (Being the issuance of bonus shares) Sundry Shareholders A/c (7500 x 120) Dr. Share Capital A/c (7500 x 100) Share Premium A/c (7500 x 20) (Being the issuance of right shares)

Bank A/c (7500 x 120) Dr. Sundry Shareholders A/c (Being amount received from shareholders)

WORKING NOTES:

(w-1) No. of Bonus Share:

Existing share x

12,500 x 15/50 = 3750 shares


3750 share x Rs. 100 = Rs. 480,000


Bonus out of Reserve Fund A/c = Rs. 175,000

= Rs. 375,000

(w-3) No. of Right Shares:



Existing share x

= 12,500 x 30/50 = 7500 shares



+ Bonus shares = 3,750

+ Right shares = 7,500

23,750

MODERN APPLIANCE LTD.

BALANCE SHEET


Authorized Capital: 300,000 shares of Rs. 100 each Issued, subscribed & paid up capital: 23,750 shares of Rs. 100 each Reserve Fund (825,000 – 175,000) Profit & Loss A/c (330,000 – 200,000) Share premium

30,00,000

Sundry Assets (Bal. fig.) Cash in Bank

24,05,000 900,000

23,75,000

650,000 130,000 150,000

33,05,000 33,05,000


(Rs.) Credit (Rs.)

Profit & Loss A/c Dr. Reserve Fund A/ c Dr. Bonus to shareholders A/c (Being the bonus declared)

200,000 200,000

400,000

200,000

400,000

Bank to Shareholders A/c Dr. Sundry Capital A/c (Being the allotment of bonus shares)



Sundry Shareholders A/c Dr. Share Capital A/c Share Premium A/c (Being the allotment of right shares)

500,000

500,000

500,000

500,000 Bank A/c Dr. Sundry Shareholders A/c (Being amount received from shareholders)

WORKING NOTES:

(w-1) No. of Bonus Share:

Existing share x

20,000 x 1/5 = 4000 shares


4000 share x Rs. 100 = Rs. 400,000


Bonus out of Reserve Fund A/c = Rs. 200,000

= Rs. 400,000

(w-3) No. of Right Shares:

Existing share x

= 20,000 x 1/4 = 5000 shares



+ Bonus shares = 4,000

+ Right shares = 5,000

29,000



ABC CO. LTD.

BALANCE SHEET


Authorized Capital: 30,000 shares of Rs. 100 each Issued, subscribed & paid up capital: 29,000 shares of Rs. 100 each Reserve Fund (12,00,000 – 200,000) Profit & Loss A/c (700,000 – 200,000)

30,00,000

Sundry Assets (Bal. fig.) Bank

39,00,000 500,000

29,00,000 10,00,000

500,000

44,00,000 44,00,000

Chapter 3

DEBENTURES BONDS AND TFCs

Solutions Q.1 JOURNAL Date Details L/F Debit

(Rs.) Credit (Rs.)

2010 Jan. 1

”

(a) Issued at par: Bank A/c Dr. 12% Debentures A/c (Being the issuance of 12% debentures at par)

500,000

550,000

500,000

500,000 50,000

(b) Issued at 10% premium: Bank A/c Dr. 12% Debentures A/c Premium on Issuance of Debentures A/c



”

(Being the issuance of 12% debentures at 10% premium)

450,000 50,000

500,000 (c) Issued at 10% discount:

Bank A/c Dr. Discount on Issue of Debentures A/c Dr. 12% Debentures A/c (Being the issuance of 12% debentures at 10% discount)

Q.2 BOOKS OF HAIDER LTD. JOURNAL Date Details L/F Debit

(Rs.)

Credit

(Rs.)

(a)

(b)

Business Purchase A/c Dr.

Rashid’s A/c

(Being the purchase agreement signed)

460,000

500,000

460,000

480,000

500,000

20,000

460,000

40,000

460,000

460,000

480,000

480,000

40,000

Sundry Assets A/c Dr.

Sundry Liabilities A/c

Business Purchase A/c

(Being the Assets and Liabilities taken over)

Rashid’s A/c Dr.

10% Debentures A/c

(Being amount paid to Rashid by issuing debentures at

par)


Rashid’s A/c



Goodwill A/c Dr.



(Being the Assets and Liabilities taken over)



(c)

Rashid’s A/c Dr.

10% Debentures A/c

(Being the debentures issued to vendor at par)

480,000

430,000

500,000

430,000

480,000

430,000

430,000

40,000

30,000

430,000


Rashid’s A/c





Capital Reserve A/c

(Being purchase of net assets of Rs. 460,000 at Rs.

430,000)

Rashid’s A/c Dr.

10% Debentures A/c

(Being the debentures issued to vendor)

WORKING NOTES: (b) (c)

Sundry Assets 500,000 500,000

Less: Sundry Liabilities 40,000 40,000

Net Assets 460,000 460,000

Purchase price 480,000 ` 480,000

(Goodwill)/Capital Reserve 20,000 20,000

Q.3 BOOKS OF X COMPANY LTD. JOURNAL Date Details L/F Debit

(Rs.) Credit (Rs.)

Business Purchase A/c Dr. Naeem Bros A/c (Being the purchase agreement signed)

770,000

770,000



(a)

(b)

(c)

Sundry Assets A/c Dr. Goodwill A/c Business Purchase A/c Sundry Liabilities A/c (Being purchase of net assets of Rs. 730,000 at Rs. 770,000)

760,000 40,000

770,000

770,000 85,550

770,000

770,000

30,000

770,000

8,55,500 50

700,000 70,000

Naeem Bros A/c Dr. Debentures A/c (Being 7700 debentures issued at par to vendor) Naeem Bros A/c Dr. Discount on Issue of Debentures A/c (8555 x 10) Dr. Debentures A/c (8555 x 100) Cash A/c (Being 8,555 debentures issued to vendor at 10% discount) Naeem Bros A/c Dr. Debentures A/c (7000 x 100) Premium on issue of Debentures A/c (7000 x 10) (Being 7000 debentures issued to vendor at 10% premium)

WORKING NOTES:

(w-1) No. of Debentures Issued to Vendor:

=

(a) = ,

= 7700 debentures

(b) = ,

= 8555.556 or 8555 debentures

(c) = ,

= 7000 debentures

Q.4 FIRST METHOD:

No entry will be passed for issue of debentures as collateral security. Only the entry for bank loan will be passed i.e.

Date Details L/F Debit (Rs.)

Credit (Rs.)

1-7-10 Bank A/c Dr. Bank Loan A/c (Being the loan taken from bank)

175,000 175,000



BALANCE SHEET Liabilities Rs. Assets Rs.

12 % Debentures A/c (In addition, debentures of Rs 200,000 given to bank as Collateral security) Bank Loan (secured against debentures of Rs. 200,000 given as collateral security)

600,000

175,000

Bank

175,000

SECOND METHOD: Date Details L/F Debit

(Rs.) Credit (Rs.)

1-7-10 Bank A/c Dr. Bank Loan A/c (Being the loan obtained from bank)

175,000

200,000

175,000

200,000 Debentures Suspense A/c Dr. Debentures A/c (Issuance of Rs 200,000 debentures as collateral security for a loan of Rs. 175,000)


6 % Debentures A/c (Including, debentures of Rs 200,000 given to bank as collateral security) Bank Loan (Secured against debentures of Rs. 200,000)

800,000

175,000

Bank Debentures Suspense A/c

175,000 200,000


(Rs.) Credit (Rs.)

(1)

(2)

(3)

Bank A/c Dr. 10% Debentures A/c (Being the issued at par but redeemable at par)

500,000

465,000 35,000

540,000

500,000

500,000

500,000 40,000

Bank A/c Dr. Discount on Issue of Debentures A/c Dr. 10% Debentures A/c (Being the debentures issued at 7% discount but redeemable at par) Bank A/c Dr. 10% Debentures A/c Premium on Issuance of Debentures A/c (Being the debentures issued at 8% premium but



(4)

(5)

redeemable at par) 500,000

20,000

475,000 45,000

500,000 20,000

500,000 20,000

Bank A/c Dr. Loss on Issue of Debentures A/c Dr. 10% Debentures A/c Premium on Redemption of Debentures A/c (Being the debentures issued at par but redeemable at 4% par) Bank A/c Dr. Loss on Issue of Debentures A/c (25,000 + 20,000) Dr. 10% Debentures A/c Premium on Redemption of Debentures A/c (Being the debentures at 5% discount but redeemable at 4% premium)


(1) 10 % Debentures (2) 10 % Debentures (3) 10 % Debentures Debentures Premium (4) 10 % Debentures Premium on redemption of debenture (5) 10 % Debentures Premium on redemption of debenture

500,000 Bank Bank Discount on issue of debentures Bank Bank Loss on issue of debentures Bank Loss on issue of debentures

500,000 500,000 500,000 500,000

465,000

35,000 500,000 500,000 500,000

40,000 540,000

540,000 540,000 500,000

20,000

500,000 20,000

520,000 520,000 500,000

20,000

475,000 45,000

520,000 520,000


(Rs.) Credit (Rs.)

(a)

Bank A/c Dr. 9% Debentures A/c (Being the issued at par & redeemable at par)

90,000

90,000



(b)

(c)

(d)

(e)

Bank A/c Dr. Discount on Issue of Debentures A/c Dr. 9% Debentures A/c (Being the debentures issued at discount & redeemable at par)

81,000 9,000

94,500

90,000 9,000

85,500 4,500 4,500

90,000

90,000 4,500

90,000 9,000

90,000 4,500

Bank A/c Dr. 9% Debentures A/c Premium on Issuance of Debentures A/c (Being the debentures issued at premium & redeemable at par) Bank A/c Dr. Loss on Issue of Debentures A/c Dr. 9% Debentures A/c Premium on Redemption of Debentures A/c (Being the debentures issued at par & redeemable at par) Bank A/c Dr. Discount on Issue of Debentures A/c Dr. Loss on Issue of Debentures A/c Dr. 9% Debentures A/c Premium on Redemption of Debentures A/c (Being the debentures issued at discount & redeemable at premium)


(Rs.) Credit (Rs.)

1-1-10

Bank A/c Dr.

12% Debentures A/c

Premium on Issuance of Debentures A/c

(Being the issuance of 12% debentures at 5% premium)

787,500

750,000

37,500



30-6-10

31-12-10

”

Debentures Interest A/c Dr.

Bank A/c

(Being the interest for first half year paid)

(750,000 x x )

45,000

45,000

90,000

45,000

45,000

90,000


Bank A/c

(Being the interest for second half year paid)

Profit & Loss A/c Dr.

Debentures Interest A/c

(Being the debentures interest transferred to profit &

loss A/c)


(Rs.) Credit (Rs.)

31-12-09

Debentures Interest A/c Dr. Bank A/c (Being the payment of interest on debentures)

(500,000 x )

60,000

60,000



” ” ”

31-12-10 ” ” ”

(i) Redemption out of Profit: Profit & Loss Appropriation A/c Dr. Debentures Interest A/c (Being the amount of profit set aside for redemption of debentures)

100,000

100,000

100,000

48,000

100,000

100,000

100,000

100,000

97,000 3,000

97,000 3,000

48,000

100,000

100,000

100,000

12% Debentures A/c Dr. Bank A/c Capital Reserve A/c (Being the debentures redeemed) (ii) Redemption out of capital: 12% Debentures A/c Dr. Bank A/c Capital Reserve A/c (Being the debentures redeemed) Debentures Interest A/c Dr. Bank A/c (Being the payment of interest on debentures)

(400,000 x )

(i) Redemption out of Profit: Profit & Loss Appropriation A/c Dr. Debentures Interest A/c (Being the amount of profit set aside for redemption of debentures) 12% Debentures A/c Dr. Bank A/c (Being the debentures redeemed) (ii) Redemption out of capital: 12% Debentures A/c Dr. Bank A/c (Being the debentures redeemed)


(Rs.) Credit (Rs.)



1-1-07 ”

31-12-07 ”

31-12-08 ”

31-12-09 ” ”

31-12-10 ” ”

Bank A/c Dr. Discount on Debentures A/c Dr. 9% Debentures A/c (Being the issuance of 15,000 debentures at 5% discount)

14,25,000 75,000

4,500

135,000

154,500

135,000

150,000

135,000

75,000

150,000

128,250

75,000

143,250

15,00,000

4,500

135,000

4,500 135,000

15,000

135,000

135,000 15,000

135,000

75,000

135,000 15,000

128,250

73,650 4,350

Debentures Issue Expenses A/c Dr. Bank A/c (Being the payment of debentures issue expenses) Debenture Interest A/c Dr. Bank A/c (Being the payment of debentures interest) Profit & Loss A/c Dr. Debentures Issue Expenses A/c Interest on Debentures A/c Discount on Debentures A/c (Being the debentures issue expenses, discount and interest on debentures transferred to profit & loss A/c) Interest on Debenture A/c Dr. Bank A/c (Being the payment of debentures interest) Profit & Loss A/c Dr. Debentures Issue Expenses A/c Discount on Debentures A/c (Being the interest & discount on debentures transferred to profit & loss account) Interest on Debenture A/c Dr. Bank A/c (Being the payment of debentures interest) 9 % Debentures A/c Dr. Bank A/c (Being the cancellation of debentures) Profit & Loss A/c Dr. Debentures Issue Expenses A/c Discount on Debentures A/c (Being the interest & discount on debentures transferred to profit & loss account) Interest on Debenture A/c Dr. Bank A/c (Being the payment of debentures interest) 15,00,000 – 75,000 = 14,25,000 x 9% 9 % Debentures A/c Dr. Bank A/c (73,500 + 150) Profit on Redemption of Debentures A/c (Being the debentures purchased for redemption) Profit & Loss A/c Dr.



”

Interest on debentures A/c Discount on Debentures A/c (Being the interest & discount on debentures transferred to profit & loss account)

1,350

128,250 15,000

1,350 Profit on Redemption of Debentures A/c Dr. Discount on Debentures A/c (Being the discount on debentures written off against capital profit)


9 % Debentures A/c

13,50,000

Discount on Debentures A/c 13,650


(Rs.) Credit (Rs.)

1-1-10

31-12-10 ” ”

Bank A/c Dr. 12% Debentures A/c Debentures Premium A/c (Being the issuance of 12% debentures at 5% Premium)

630,000

72,000

30,000 1,500

72,000

600,000

30,000

72,000

25,200 6,300

72,000

Interest on Debenture A/c Dr. Bank A/c (Being the interest payable of debentures) 12 % Debentures A/c Dr. Debentures Premium A/c Share Capital A/c (252 x 100) Share Premium A/c (252 x 25) (Being 300 debentures converted into 252 ordinary shares at Rs. 25 per share premium) Profit & Loss A/c Dr. Interest on Debentures A/c (Being the interest on debentures transferred to profit & loss account)



M LTD. BALANCE SHEET AS ON 31-12-2010

Liabilities Rs. Assets Rs. Share Capital: 252 share of Rs. 100 each Reserves: Share Premium Debenture Premium (30,000 – 1,500) Debentures: 12% Debenture Current Liabilities: Interest on debentures outstanding

25,200

6,00

28,500

570,000

72,000

Deferred Cost: Profit & Loss A/c Current Asset: Cash at Bank

72,000

630,000

702,000 702,000

WORKING NOTES:

No. of shares issued =

= ( ) ( )

.

= = 252 shares

Share Capital = 252 x 100 = Rs. 25,200

Share Premium = 252 x 25 = Rs. 6,300

Rs. 31,500

Note: It has been presumed that debenture holder’s option for conversion will be entitled

to the benefit of premium already paid by them on issue of debentures.


(Rs.) Credit (Rs.)

2010 Mar. 31

10 % Debentures Account Dr. Interest on Debentures Account Dr. Bank Account Profit on redemption of Debentures Account

40,000 1,000

40,800 200



June. 30

Aug. 31

Dec. 31 ” ”

(Being purchase of Rs. 40,000 debentures @ 102 cum-interest)

13,000

60,000 1,000

10,000

25,000

2,600

13,000

58,600 2,400

10,000

25,000

2,600

Interest on Debenture Account Dr. Bank Account (Being the payment of interest on debentures of Rs. 260,000 @ 10% for half year) 10 % Debentures Account Dr. Interest on Debentures Account Dr. Bank Account Profit on redemption of Debentures Account (Being purchase of Rs. 60,000 debentures @ 96 ex-interest for cancellation) Interest on Debenture Account Dr. Bank Account (Being the payment of interest on debentures of Rs. 200,000 @ 10% for half year) Profit & Loss Account Dr. Interest on Debentures A/c (Being the interest on debentures transferred to profit & loss account) Profit on Redemption of Debentures Account Dr. Capital Reserve Account (Being the profit on redemption of debentures account transferred to capital reserve account)


(Rs.) Credit (Rs.)

1-7-09

Bank A/c Dr. 12% Debentures A/c (Being the issuance of 10,000, 12% debentures at par)

10,00,000

10,00,000



1-12-09 ” ”

30-6-10

31-12-10 ” ” ”

Debentures Interest A/c Dr. Bank A/c (Being the interest for half year paid)

(10,00,000 x x )

60,000

100,000

60,000

60,000

60,000

98,000

120,000

12,000

60,000

100,000

60,000

54,000 6,000

54,000 6,000

98,000

120,000

12,000

Own Debentures A/c Dr. Bank A/c (Being purchase of 1000 own debentures at par) Profit & Loss A/c Dr. Debentures Interest A/c (Being the transfer of debentures interest to profit & loss A/c) Debentures Interest A/c (w-1) Dr. Bank A/c Interest on Own debenture A/c (Being the interest on debentures for half year paid) Debentures Interest A/c Dr. Bank A/c Interest on own debenture A/c (Being the interest on debentures for half year paid) Own Debentures A/c Dr. Bank A/c (Being purchase of 1000 own debentures at Rs. 98 each) Profit & Loss A/c Dr. Debentures Interest A/c (Being the transfer of debentures interest to profit & loss A/c) Interest on Own Debenture A/c Dr. Profit & Loss A/c (Being the interest on debentures transferred to profit & loss account)

(w-1) Debentures Interest on 30-06-09 & 31-12-10:

= 900,000 x x = 54000 (Payment)

= 100,000 x x = 6000 (Revenue)

60,000 (Expense)

Q.13 JOURNAL Date Details L/F Debit Credit



(Rs.) (Rs.)

30-04-10

30-6-10

01-09-10

31-12-10 ” ” ”

Own Debentures A/c Dr. Interest on Debentures A/c Dr. Bank A/c (Being purchase of Rs. 25,000 own debentures at 97 ex-interest)

24,250 1,000

14,000

24,000 500

14,500

25,000

30,000

3000

25,250

13,500 500

24,500

12,000 2,500

24,250 750

30,000

3000

Interest on Debentures A/c Dr. Bank A/c Interest on Own Debentures A/c (Being the payment of interest on debentures and interest saved on own debentures) Own Debentures A/c Dr. Interest on Debentures A/c Dr. Bank A/c (Being purchase of Rs. 25,000 own debentures at Rs. 98 cum-interest) Interest on Debentures A/c (w-2) Dr. Bank A/c Interest on Own Debentures A/c (Being the payment of interest on debentures and interest saved on own debentures) 12% Debentures A/c Dr. Own Debentures A/c Capital Reserve A/c (Being the own debentures cancellation) Profit & Loss A/c Dr. Interest on Debentures A/c (Being the transfer of debentures interest to P & L A/c) Interest on Debentures A/c Dr. Profit & Loss A/c (Being interest own debentures transferred to P & L A/c)

(w-1) Debentures Interest on 30-06-09: On Rs. 25,000 @ 12% for 2 months = Rs. 500 (Revenue)

On Rs. 225,000 @ 12% for 6 months = 13,500 (Payment)

= 14,000 (Expense)

(w-2) Debentures Interest on 31-12-2010: On Rs. 25,000 @ 12% for 6 months = Rs. 1,500 (Payment)

On Rs. 25,000 @ 12% for 4 months = 1,000 (Revenue)

On Rs. 200,000 @ 12% for 6 months = 12,000 (Payment)



=14,500 (Expense)


(Rs.) Credit (Rs.)

31-03-10

30-06-10

01-11-10

31-12-10 ” ” ” ”

Own Debentures A/c Dr. Interest on Debentures A/c Dr. Bank A/c (Being purchase of 300 own debentures at 97 ex-interest)

29,100 900

17,100

14,100 600

17,400

30,000

900

36,000

3,000

30,000

16,200 900

14,700

15,300 2,100

29,100 900

900

36,000

3,000

Interest on Debentures A/c Dr. Bank A/c Interest on Own Debentures A/c (Being the payment of interest on debentures and interest saved on own debentures) Own Debentures A/c Dr. Interest on Debentures A/c Dr. Bank A/c (Being purchase of 150 own debentures at Rs. 98 cum-interest) Interest on Debentures A/c (w-2) Dr. Bank A/c Interest on Own Debentures A/c (Being the payment of interest on debentures and interest saved on own debentures) 12% Debentures A/c Dr. Own Debentures A/c Profit on Redemption of Debentures A/c (Being the own debentures cancellation) Profit on Redemption of Debentures A/c Dr. Capital Reserve A/c (Being the profit on redemption of debentures transferred to capital reserve account) Profit & Loss A/c Dr. Interest on Debentures A/c (Being the transfer of debentures interest to profit & loss A/c) Interest on Debentures A/c Dr. Profit & Loss A/c (Interest on debentures transferred to profit & loss A/c)

BALANCE SHEET AS ON 31ST DECEMBER, 2010

Liabilities Rs. Assets Rs. Reserves: Capital Reserve

900

Own Debentures (Free value Rs. 15,000)

14,100



12% Debenture 270,000


(Rs.) Credit (Rs.)

01-05-10

30-06-10

31-12-10 ” ”

(a)

(b)

Own Debentures A/c Dr. Interest on Debentures A/c Dr. Bank A/c (Being purchase of 500 own debentures at Rs. 97 ex-interest)

48,500 2,000

22,000

24,000

48,000

4,000

50,000

52,500

50,500

21,000 1,000

21,000 3,000

48,000

4,000

48,500

48,500 4,000

Interest on Debentures A/c Dr. Bank A/c Interest on Own Debentures A/c (Being the payment of interest on debentures and interest saved on own debentures) Interest on Debentures A/c Dr. Bank A/c Interest on Own Debentures A/c (Being the payment of interest on debentures and interest saved on own debentures) Profit & Loss A/c Dr. Interest on Debentures A/c (Being interest debentures transferred to profit & loss account) Interest on Own Debentures A/c Dr. Profit & Loss A/c (Being interest on own debentures transferred to profit & loss account) 12% Debentures A/c Dr. Own Debentures A/c Capital Reserve A/c (Being the cancellation of own debentures) Bank A/c (500 x 105) Own Debentures A/c Profit & Loss A/c (Being the own debentures sold at Rs. 105)

Q.16 Annual Installment = 400,000 x [.

( . ) - 1]

= 400,000 x 0.2320118



= Rs. 92,805 Approx

Dr. 6% DEBENTURES ACCOUNT Cr. Date References Rs. Date References Rs.

21-12-07

31-12-08

31-12-09

31-12-10

Balance c/d Balance c/d Balance c/d Bank A/c

400,000

1-1-07

01-01-08

01-01-09

01-01-10

Bank A/c Balance b/d Balance b/d Balance b/d

400,000

400,000 400,000 400,000

400,000

400,000 400,000 400,000

400,000

400,000 400,000 400,000

400,000

400,000 400,000

Dr. DEBENTURES SINKING FUND ACCOUNT Cr. Date References Rs. Date References Rs.

31-12-07

31-12-08

31-12-09

31-12-10

Balance c/d Balance c/d Balance c/d General Reserve

92,805

31-12-07

01-01-08 31-12-08

01-01-09 31-12-09

01-01-10 31-12-10

Profit & Loss Appropriation A/c Balance b/d Bank A/c (Interest) P& L Appropriation A/c Balance b/d Bank A/c (Interest) P& L Appropriation A/c Balance b/d Bank A/c (Interest) P& L Appropriation A/c

92,805

92,805 92,805 190,250

92,805

4,640 92,805

190,250 190,250 292,568 190,250

9,513 92,805

292,568 292,568 400,000

292,568 14,625 92,804

400,000 400,000

Dr. DEBENTURES SINKING FUND INVESTMENT ACCOUNT Cr.



Date References Rs. Date References Rs.

31-12-07

01-01-08

31-12-08

01-01-09

31-12-09

01-01-10

Bank A/c

Balance b/d

Bank A/c

Balance b/d

Bank A/c

Balance b/d

92,805

31-12-07

31-12-08

31-12-09

31-12-10

Balance c/d

Balance c/d

Balance c/d

Bank A/c

92,805

92,805 92,805

92,805

97,445

190,250

190,250 190,250

190,250

102,318

292,568

292,568 292,568

292,568

292,568

292,568 292,568

Q.17


01-01-10 Bank A/c

300,000

01-01-10 Balance b/d

300,000

300,000 300,000

Dr. DEBENTURES SINKING FUND ACCOUNT Cr. Date References Rs. Date References Rs.

01-01-10 6% Govt. Securities General Reverse

1,200 220,800


222,000

222,000 222,000



Dr. 6% GOVT. SECURITIESACCOUNT Cr. Date References Rs. Date References Rs.


222,000

01-01-10 Bank A/c Debenture Sinking Fund

220,800 1,200

222,000 222,000


01-01-10 Balance b/d 6% Govt. Securities

123,000 220,800

01-01-10 12% Debenture A/c Balance c/d

300,000 43,800

343,800 343,000


(Rs.) Credit (Rs.)

31-02-10 ” ” ”


Bank A/c Dr.

Interest on Own Debentures A/c

(Being interest on investment transferred to sinking fund)

14,000

66,000

71,000

646,800

3,200

900,000

80,000

71,000

650,000

99,000

Profit & Loss Appropriate A/c Dr.

Debentures Sinking Fund A/c

(Being amount set aside for annual installment)

Bank A/c Dr.

Debentures Sinking Fund A/c Dr.

10% Stock A/c

(Being the installment sold at 98%)

14% Debentures A/c Dr.

Own Debentures A/c

Bank A/c



”

Debenture Sinking Fund A/c

(Being the debentures redeemed)

897,800

800,000

1,000

897,800

Debentures Sinking Fund

General Reverse A/c

(Balance of sinking fund transferred to General Reserve)


31-12-10 Bank A/c

Own Debentures A/c

Sinking Fund A/c

800,000

99,000

1,000


900,000

900,000 900,000

Dr. OWN DEBENTURESACCOUNT Cr.



99,000 31-12-10 14% Debenture A/c

99,000

99,000 99,000

Dr. 10% STOCKACCOUNT Cr.



650,000 31-12-10 Bank A/c

Debenture Sinking Fund

646,800

3,200

650,000 650,000

Dr. DEBENTURES SINKING FUND ACCOUNT Cr.




31-12-10 10% Stock A/c

General Reverse A/c

3,200

297,800

01-01-10

31-12-10

”

”

”

Balance b/d

Bank

Debenture Interest

Profit & Loss App. A/c

14% Debentures

749,000

66,000

14,000

71,000

1,000

901,000 901,000

Q.19

Dr. 6% DEBENTURESACCOUNT Cr. Date References Rs. Date References Rs.

31-12-10 Bank A/c

750,000


750,000

750,000 750,000

Dr. DEBENTURE REDEMPTION INSURANCE POLICY ACCOUNT Cr.


01-01-10

”

31-12-10

Balance b/d

Bank A/c

Debenture Red Fund

690,000

30,000

30,000

31-12-10 Bank A/c

750,000

750,000 750,000

Dr. DEBENTURES REDEMPTION FUND ACCOUNT Cr. Date References Rs. Date References Rs.



31-12-10 General Reverse A/c

750,000 01-01-10 31-12-10

”

Balance b/d Profit & Loss App. A/c Insurance Policy A/c

690,000 30,000 30,000

750,000 750,000

Chapter - 4



Company Final Accounts

Solutions Q.1 JOURNAL

Date Particulars Debit (RS.)

Credit (RS.)

Profit and Loss Appropriation Account Dr. Reserve Fund Account

(Being amount appropriated for reserve)

6,000 10,000 10,800

6,000 10,000 10,800

Profit and Loss Appropriation Account Dr. Profit for Taxation Account (Being amount appropriated for taxation) Profit and Loss Appropriation Account Dr. Proposed Dividend Account (Being Amount appropriated for final dividend)

Net Profit for the Year

Gross Profit – Operating Expense

65000 – 21,000

Rs. 44,000

Dr PROFIT AND LOSS APPROPRIATION A/C CR

References Rs. References Rs. Reserve Fund Provision for Taxation Proposed Dividend Balance Transferred to B/S

6,000 10,000 10,800 26,200

Net profit for the year Balance of previous year

44,000 9,000

53,000 53,000

Q.2 JOURNAL



Date Particulars Debit (RS.)

Credit (RS.)

i) ii)

Interim Dividend Account Bank Account

(Being the payment of dividend)

187,500 187,500 187,500 187,500

187500 187500 187,500

187,500

If Dividend Bank (Separate) Opened Dividend Bank Account

Bank Account Interim Dividend Account

Dividend Bank Account (Being the payment of dividend) Profit and Loss Appropriation Account Interim Dividend Account (Being Amount is appropriated)

Q.3

Dr PROFIT AND LOSS APPROPRIATION A/C CR

References Rs. References Rs. Profit for Taxation General Reserve Debenture redemption fund Interim dividend paid Amount for proposed dividend Balance Transferred to B/S

13,000 20,000 6,900 4,100 24,000 107,500

Net profit for the year Balance of Profit & Loss A/C Excess previous year provision not required further

140,000 34,000 1,500



Q No.4

Hamza Industries LTD Trading and Profit & Loss Account For the year Ended 31st Dec, 2010

Dr. Cr. Particulars Amount

(Rs.) Particulars Amount

(Rs.) Opening Stock Purchases Rs.210,000 Less: Return 10,000 Manufacturing Wages Gross profit transferred to P&L A/c Salaries Insurance Legal Charges Debenture Interest 1/3rd Preliminary Expenses written off Bad Debts Printing and Stationary Auditor’s Remuneration Depreciation

Plant Furniture

Net Profit Transferred to P&L Appropriation A/c

60,000

200,000 75,000

165,000

Sales Rs. 415,000 Less Returns 15,000 Closing Stock Gross profit Transferred from Trading A/c

400,000 100,000

500,000 500,000 34,000 8,000 1,000

12,000

3,000 2,000 5,000

12,500

29,500 2,350

55,650

165,000

165,000 165,000



Dr PROFIT AND LOSS APPROPRIATION A/C Cr Particulars Rs. Particulars Rs. Transfer to General Reserve Provision for Tax Proposed Final Dividend 400,000 @ 5% Balance Transferred to B/S

8,000 20,000 20,000 37,650 85,650

Balance of Previous year Net Profit for the year 2002

30,000 55,650 85,650

Hamza Industries LTD. CO BALANCE SHEET

AS ON 31st DEC, 2010

Liabilities Amount (Rs.)

Particulars Amount (Rs.)

Authorized Capital: Issued, subscribed and paid up capital (40,000 ordinary shares of Rs.10 each) Reserves: Balance of Profit & Loss Appropriation General Reserves Debenture & Long Term Loan: 6% Debenture Current Liabilities: Sundry Creditor Provision for Tax Proposed Final Dividend

10,00,000

400,000

37,650

8,000

200,000

2,550,000 20,000 20,000

Fixed Assets: Plant & Machinery 295,000 Less: Depreciation 29,500 Furniture 47,000 Less: Depreciation 2,350 Freehold Property Goodwill Deferred Cost: Preliminary Expenses Current Assets: Sundry Debtors Bills Receivable Closing Stock Cash at Bank Cash in Hand

265,500 500,000

44,650

180,000 60,000 6,000 205,000 57,500 100,000 15,000 7,000

940,650 940,650

Q No.5

MOON & CO LTD



Trading and Profit & Loss Account For the year Ended 31st Dec, 2010

Dr. Cr. Particulars Amount


(Rs.) Opening Stock Purchases Wages 140,000 Add: Outstanding 10,400 Gross profit transferred to P&L A/c Discount Allowed Insurance Less: Prepaid Salaries Add: Outstanding Rent: Add: Outstanding General Expense Printing & Stationary Advertisement Postage, Telephone Etc Depreciation:

Plant & Machinery 24,150 Furniture 3,400

Provision for bad debts (W-1) Net Profit (Transferred to P & L App A/C)

100,000 600,000

150,400 200,800

Sales Rs. 850,000 +Unrecorded Credit Sales 1,200 Closing Stock Gross profit b/d Discount Received

851,200 200,000

1,051,200 1,051,200 8,400

6,720

39,400

13,200 17,900 4,800 7,600

21,000

27,550 8,560

51,970

200,800 6,300

165,000 207,100

Dr PROFIT AND LOSS APPROPRIATION A/C Cr Particulars Rs. Particulars Rs.



Proposed Dividend Balance c/d (transferred to B/S)

25,000 39,410

Balance b/d Current Year Net Profit

12,440 51,970

64,410 64,410 Moon & CO LTD.

BALANCE SHEET AS ON 31-12-2010

Share Capital & Liabilities Amount

(Rs.) Assets Amount

(Rs.) Share Capital: Authorized Capital 100,000 shares @ Rs. 10 each Issued, Subscribed & Paid up capital 50,000 Shares @ Rs. 10 Each Reserves: General Reserves Profit & Loss Appropriation A/C Current Liabilities: Creditors Loan from managing director Outstanding wages Outstanding Salaries Outstanding rent Proposed dividend

10,00,000

500,000

50,000 39,410

70,400 31,400 10,400 2,400 1,200

25,000

Fixed Assets: Plant & Machinery 161,000 Less: Depreciation 24,150 Furniture 34,000 Less: Depreciation 3,400 Current Assets: Closing Stock Debtors 77,400 Add : Unrecorded Credit Sales 1,200

78,600

Less: New Bad debts 600 Less: New Provision for bad debts 1,560 Prepaid Insurance Cash at hand

136,850

30,600

200,000

76,440 6,720

279,600 730,210 730,210

Working Notes:



(W-1) Provision for Bad Debts:

Old Bad debts Add: New Bad Debts Add: New Provision For Bad Debts (77,400+1,200-600=78,000 ×2/100) Less: Old Provision for bad debts Provision for bad debts

6,400 600 1,560 ______ 8,560 - ______ 8,560

Q No.6

SINDBAD COMPANY Profit & Loss Account

For the year ended 31st Dec, 2010 Dr. Cr.



Management Expenses Rent and Taxes Director Fee Insurance Repair to Motor Car Repair to Machinery Salaries Bad Debts General Charges Net Profit for the year

170,000 30,000 46,000 17,500 16,000 14,000 83,000 13,000 15,100

742,400

Gross Profit 11,07,000 +Credit Sales Unrecorded 20,000 Misc Receipts

11,27,000 20,000

11,47,000 11,47,000

Dr PROFIT AND LOSS APPROPRIATION A/C Cr Particulars Rs. Particulars Rs. Transfer to General Reserve Provision for Taxation Proposed Final Dividend Balance Transferred to B/S

60,000 150,000 100,000 534,200

Balance from previous year Current Year Net Profit

101,800 742,400

844,200 844,200

SINDBAD LTD. BALANCE SHEET



AS ON 31-12-2010

Share Capital & Liabilities Amount (Rs.)

Assets Amount (Rs.)

Share Capital: Authorized Capital Issued, subscribed & paid capital Reserves: General Reserves 200,000 Transfer to Reserve 60,000 Profit & Loss Appropriation A/C Long Term Loan: Bank Loan Secured Current Liabilities: Unclaimed Dividend Outstanding Expenses B/P Provision for Taxation Proposed dividend Sundry creditors

10,00,000 10,00,000

260,000 534,200

900,000

45,000 40,000 40,000

150,000 100,000 281,000

Fixed Assets: Furniture & Fixture 117,000 Less: Depreciation 15,000 Land & Building 950,000 Less: Depreciation 300,000 Plant & Machinery 700,000 Less: Depreciation 230,000 Motor Car 10,45,000 Less: Depreciation 680,000 Goodwill Deferred Cost: Preliminarily Expenses Current Assets: Prepaid Expenses B/R Sundry Debtors 580,000 +Unrecorded Credit Sales 20,000 Cash at Bank Cash in Hand Closing Stock

102,000

650,000

470,000

365,000

100,000

30,000

20,000 60,000

600,000

136,700 16,500

800,000 33,50,200 33,50,200

Q No.7



MUMTAZ LTD Profit & Loss Account

For the year ended 30th June, 2010 Dr. Cr. Particulars Amount


(Rs.) Postage & Telegram Telephone charges Interest in Debenture 600 + Outstanding 600 Rent, Rates Advertisement Director’s Remuneration Discount Insurance 450 Less: Prepaid (450/12×3) 150 Repairs Reserve for investment Depreciation:

Plant & Machinery Land & Building Furniture

Net Profit Transferred to P & L App.

800 120

1200 400

1400 900 80

300 150 500

3,200 900 300

8650

Gross Profit Interest Received

18,500 400

18,900 18,900

Dr PROFIT AND LOSS APPROPRIATION A/C Cr Particulars Rs. Particulars Rs. Dividend Equalisation Fund Debenture Redemption Fund Proposed Dividend Balance c/d (Transferred to B/S)

1,000 1,000 2,800 6,600

Profit of Previous Year Profit of Current Year

2,750 8,650

11,400 11,400



MUMTAZ LTD. BALANCE SHEET

AS ON JUNE 30, 2010


(Rs.)

Assets Amount (Rs.)

Share Capital: Authorized Capital Issued, subscribed & paid capital Reserves: Balance of Profit Share Premium Dividend Equalization Reserve 2,000 + Transfer 1000 Debenture Redemption Reserve 1,000 + Transfer 1000 Debentures: 6% Debentures Current Liabilities: Sundry Creditors Interest on debentures payable Bank Overdraft Provision for Taxation Proposed dividend

-

35,000

6,600 1,000

3,000

2,000

20,000

4,000 600 350

6,500 2,800

Fixed Assets: Plant & Machinery 50,000 Less: Accumulated Depreciation 21,200 Land & Building 30,000 Less: Accumulated Depreciation 12,900 Furniture & Fixture 3,000 Less: Accumulated Depreciation 1,500 Current Assets: Closing Stock Investment 8,000 Less: Reserve 500 Sundry Debtors Advance Income Tax Prepaid Insurance Cash in Hand

28,800

17,100

1,500

12,000

7,500

11,000 1,000 150

2,800 81,850 81,850

Q No.8



KALAM MANUFACTURING COMPANY Profit & Loss Account

For the year ended Dec.31, 2010 Dr. Cr. Particulars Amount


(Rs.) Stock (1-1-10) Purchases Wages and Salaries 39,000 Less: Wages for installation of machinery 2,000 Fuel and Power Custom Duty and Clearing Charges Gross Profit c/d Insurance Director Fee Repair Debenture Interest 9,000 Add: Outstanding 9,000 Written off Preliminary Exp Carriage Outward New Provision 2,925 Add: Bad Debts 1,500 Less: Old Provision 1,800 Depreciation:

Plant (See Note 1) Furniture

Net Profit for the year

75,000 165,000

37,000

2,250 5,250

185,500

Sales Closing Stock Gross Profit b/d Discount Received Dividend on Investment

360,000 110,000

470,000

6,150 6,000 3,600

18,000

6,000 880

2,625

25,850 1,500

118,295

470,000

185,500 2,400 1,000

188,900 188,900 Note 1



New Value of Plant & Machinery Value in Trial Balance 256,500 +Value of Wages for Installation 2,000 258,500 Depreciation 258,500 @ 10% =25,850 Dr PROFIT AND LOSS APPROPRIATION A/C Cr Particulars Rs. Particulars Rs. Interim Dividend Transfer to General Reserve Provision for Taxation Final Proposed dividend @ 10% Balance (Cr.) Transfer to Balance Sheet

13,500 18,000 37,500 22,500

53,045

Balance From Previous Year Net Profit For Current Year

26,250 118,295

144,545 144,545 KALAM MANUFACTURING CO.

BALANCE SHEET AS ON DEC. 31, 2010


(Rs.) Assets Amount

Rs.



Share Capital: Authorized Capital (45,000 Ordinary shares of Rs. 10 each) Issued, subscribed & paid capital (22,500 shares of Rs. 10 each) Reserves: P&L Appropriation A/C Balance General Reserve 15,000 Add: Transfer 18,000 Debenture Redemption Reserve Share Premium Debentures& Long Term Loans: 6% Debentures Current Liabilities: Sundry Creditors Interest on debentures payable Proposed dividend Provision for Taxation

450,000

225,000

53,045

33,000

6,750 7,500

300,000

9,750 9,000

22,500 37,500

Fixed Assets: Plant & Machinery 50,000 Less: Accumulated Depreciation 21,200 Land & Building 30,000 Less: Accumulated Depreciation 12,900 Furniture & Fixture 3,000 Less: Accumulated Depreciation 1,500 Current Assets: Closing Stock Investment 8,000 Less: Reserve 500 Sundry Debtors Advance Income Tax Prepaid Insurance Cash in Hand

28,800

17,100

1,500

12,000

7,500

11,000 1,000 150

2,800

704,045 704,045



Q No.9

RINGO RING COMPANY Profit & Loss Account

For the year ended March 31, 2010 Dr. Cr. Particulars Amount


(Rs.) Rent and Taxes Salaries 47,000 Add: Outstanding 3,000 Office Expenses Audit Fee Audit Expenses Compensation to Employees Discount Preliminary Expenses Written off Interest on Debenture

(40,000 × × )

Depreciation:

Plant Furniture

Net profit for the year

24,000

50,000 27,500 4,500 500

6,500 3,500

2,000 700

8,100 1,00

65,950

Gross Profit Discount Received

192,450 2,000

194,450 194,450

Dr PROFIT AND LOSS APPROPRIATION A/C Cr Particulars Rs. Particulars Rs. Interim Dividend Transfer too General Reserve Provision for Taxation Proposed Dividend (5×3,000) Balance Transferred to B/S

12,000 8,000

15,000 15,000 31,950


16,000 65,950

81,950 81,950



RINGO RING COMPANY.

BALANCE SHEET AS ON March 31, 2010


(Rs.) Assets Amount

(Rs.) Share Capital: Authorized Capital Issued, subscribed & paid capital (3,000 share of Rs.100 each) Reserves: General Reserves 5,000 Add: Transfer 8,000 Profit & Loss Appropriation A/C Debentures & Long Term Loan: 7% Debentures (1-1-2001) Current Liabilities: Sundry Creditors Liability for Expenses Provision for Taxation Proposed Dividend Outstanding Salaries Interest on Debenture

500,000

300,000

13,000

31,950

40,000

33,000 9,550

15,000 15,000 3,000 700

Fixed Assets: Plant 81,000 Less: Depreciation 8,100 Furniture 12,000 Less: Depreciation 1,200 Preliminary Expenses Current Assets: Closing Stock Advance Tax Unexpired Payment Cash in Hand Sundry Debtors

72,900

10,800

20,000

153,000 27,000 8,000 7,500

180,000

461,200 461,200



Q No. 10

STAR LIMITED COMPANY Profit & Loss Account

For the year ended Dec 31, 2010 Dr. Cr. Particulars Amount


(Rs.) Salaries and Wages Carriage Outward Interest on Debentures 4,500 Add: Outstanding 4,500 Depreciation of Furniture Depreciation on Property Provision for Bad debts Net Profit Transferred to P&L App.

68,100 11,600

9,000 7,000

20,000 4,738

59,562

Balance from Trading 176,550 + Unrecorded Cr. Sales 3,450

180,000

180,000 180,000 Dr PROFIT AND LOSS APPROPRIATION A/C Cr Particulars Rs. Particulars Rs. Interim Dividend Transfer too General Reserve Provision for Taxation Proposed Dividend (5×3,000) Balance Transferred to B/S

24,000 10,000 30,000 17,500 52,312


74,250 59,562

133,812 133,812



STAR COMPANY. BALANCE SHEET

AS ON DEC 31, 2010


Assets Amount (Rs.)

Share Capital: Authorized Capital (60,000 Ordinary Shares) Issued, subscribed & paid capital (35,000 shares of Rs.10 each) Reserves: General Reserves 18,000 Add: Transfer 10,000 Share Premium account Profit & Loss Appropriation A/C Debentures & Long Term Loan: 9% Debentures Current Liabilities: Interest on Debentures Payable Sundry creditors Bills Payable Taxation Reserve Proposed Dividend

600,000 350,000

28,000

40,000

52,312

100,000

4,500 50,400 1,000

30,000 17,500

Fixed Assets: Furniture 100,000 Less: Depreciation 37,000 (30,000+7,000) Freehold Property 300,000 Less: Depreciation 120,000 Deferred Cost Technical Know how Current Assets: Sundry Debtors 115,000 + Unrecorded Cr. Sales 3,450 118,450 -Provision for bad debts 4,738 Bills Receivable Closing Stock Cash in Hand

63,000 180,000

18,000

113,712

12,000

283,000 15,000

684,712 684,712



Q No.11

LUQMAN AUTO PARTS COMPANY Trading and Profit & Loss Account

For the year ended Dec.31, 2010 Dr. Cr. Particulars Amount


(Rs.) Stock Jan 1, 2002 Purchases 359,105 Less: Returns 4,925 Sundry Manufacturing Exp 19,620 Add: Outstanding Wages 1,380 Carriage Clearing Charges Gross Profit c/d Director’s Remuneration Office Salaries & Exp 34,500 + Outstanding 1,500 Auditor Fee Interest on Bank Loan 1,125 +Still Payable 1,125 Deprecation: Plant & Machinery Furniture Net Profit Transferred to P & L App

93,210 354,180

21,000

2,450 12,500

159,310

Sales 584,750 Less: Returns 6,340 Closing Stock Gross Profit b/d

578,410

64,240

642,650

13,230

36,000

11,620

2,250

11,130 750

84,330

642,650

159,310

159,310 159,310 Dr PROFIT AND LOSS APPROPRIATION A/C Cr Particulars Rs. Particulars Rs. Provision for Taxation @ 30 % General Reserve Proposed dividend @ 15% Balance Transferred to B/S

25,299 10,000 30,000 38,351


19,320 84,330

103,650 103,650



Luqman Auto Parts CO.

BALANCE SHEET AS ON DEC. 31, 2010


(Rs.) Assets Amount

(Rs.) Share Capital: Authorized Capital (50,000 Ordinary shares of Rs. 10 each) Issued, subscribed & paid capital (20,000 shares of Rs. 10 each) Reserves: P&L Appropriation A/C Balance General Reserve Loans: 9% Bank Loan Current Liabilities: Outstanding Wages Outstanding Officer Salaries Interest on Loan Payable Sundry Creditors Provision for Taxation Proposed Dividend

500,000

200,000

38,351 10,000

25,000

1,380 1,500 1,125

31,110 25,299 30,000

Fixed Assets: Plant & Machinery 74,200 Less: Depreciation 11,130 Furniture & Fixture 7,500 Less: Depreciation 750 Freehold Premises Deferred Cost: Preliminary Expenses Current Assets: Investment Sundry Debtors Closing Stock Advance Income Tax Cash at Bank Cash in Hand

63,070

6,750

98,000

9,000

4,000 52,700 64,240 35,000 9,765 1,240

363,765 363,765



Q No. 12

EHSAN Manufacturing Limited Profit & Loss Account



(Rs.) Commission Establishment Charges Rates & Taxes Audit Fee Discount Allowed Interest on Loan Reserve for Investment (100,000-96,000) Depreciation:

- Building - Furniture - Motor Vehicle

Net Profit Transferred to B/S

2,000 101,000 16,000 12,000 3,000 24000

4,000

7,500 5,000

17,500 239,200

Gross Profit Interest on Investment 4,500 +Accrued 1,500 Discount Received

422,700

6,000 2,500

431,200 431,200

Dr PROFIT AND LOSS APPROPRIATION A/C Cr Particulars Rs. Particulars Rs. Interim Dividend Provision for Tax not yet Provided For Year 2009 Provision For Tax Further Required Proposed Dividend Balance Transferred to P&L App.

30,000

11,000 59,800 60,000 93,400

Net Profit for the year Previous year profit

239,200 15,000

254,200 254,200



EHSAN MANUFACTURING LIMITED

BALANCE SHEET AS ON DEC 31, 2010


Assets Amount (Rs.)

Share Capital: Issued, subscribed & paid capital Reserves: General Reserves Share Premium Balance of Profit Long Term Loans: Long Term Loan Current Liabilities: Provision for tax Proposed Dividend Sundry Creditors

600,000

50,000 12,500 93,400

240,000

59,800 60,000 15,800

Fixed Assets: Building Land Furniture Motor Vehicle Current Assets: Investment 100,000 - Investment Reserve 4,000 Advance Payment of Tax Stocks Sundry Debtors Cash at Bank Accrued Interest on investment

350,000 100,000 10,000

175,000

96,000

40,000 196,500 35,000

127,500 1,500

11,31,500 11,31,500



Q No. 13

AKRAM ARIF LTD. Profit & Loss Account



(Rs.) Director Fee Interest on debentures 15,000 +Interest Payable 15,000 Salaries Insurance 17,000

Less: Prepaid( ×3) 4,250

Depreciation:

Land & Building Plant & Machinery Motor Truck Furniture

Net Profit Transferred to P&L App.

15,500

30,000

100,000

12,750

90,000 80,000 20,000 5,000

736,250

Balance From Trading (Working) Interest on Investment

10,49,500

40,000

10,89,500 10,89,500

Dr PROFIT AND LOSS APPROPRIATION A/C Cr Particulars Rs. Particulars Rs. Interim Dividend Dividend Equalisation Reserve Provision for Taxation Final Dividend Balance c/d (transferred to B/S)

90,000 80,000

200,000 225,000 441,250

Balance of Profit Net Profit for the Year

300,000 736,250

10,36,250 10,36,250



AKRAM ARIF LTD BALANCE SHEET

AS ON DEC 31, 2010 Share Capital & Liabilities Amount

(Rs.) Assets Amount

(Rs.) Authorized Capital: Issued, subscribed & paid capital (15,000 shares of Rs.100 each) Reserves: Share Premium Account General Reserve ,Dividend Equalization Reserve 110,000 Add: Transfer 80,000 Balance of Profit (Cr.) Debenture & Long Term Loans: 6% Debenture Current Liabilities: Sundry Creditors Interest on Debentures Payable Provision for Tax Proposed Dividend

15,00,000

15,00,000

40,000 135,000

190,000

441,250

500,000 11,50,000

15,000 200,000 225,000

Fixed Assets: Motor Truck 149,500 Less: Accumulated Depreciation 85,000 (65,000+20,000) Land and Building 900,000 Less: Accumulated Depreciation 400,000 Plant & Machinery 800,000 Less: Accumulated Depreciation 275,000 Furniture 800,000 Less: Accumulated Depreciation 25,000 Investment: Investment at cost Current Assets: Sundry Debtors Advance Tax Tax Deducted at Source Unexpired Insurance Closing Stock Cash in Hand & at Bank

64,500

500,000

525,000

75,000

800,000 12,50,000 150,000 10,500 4,250

850,000 167,000

43,96,250 43,96,250

WORKING:

Balance From Trading A/C 879,500

Add: Depreciation on Land and Building & on Plant & Machinery (90,000+80,000) 170,000 Corrected Balance 10,49,500



Q No.14

MAKANIG COMPANY Trading and Profit & Loss Account

For the year ended June.30, 2010 Dr. Cr. Particulars Amount


(Rs.) Cost of Goods Sold Gross Profit c/d Repair and Maintenance Advertisement Sundry Expenses Insurance Provision for doubtful debts further required (25,000 – 20,000) Interest on Debentures Rs.20,250 + Outstanding 20,250 Establishment (174,000-18,000) Deprecation: Machinery Building Furniture Reserve for Investment Managerial Commission 18,000 Add: Outstanding 6,000 Net Profit Transferred to P & L App

30,00,000 950,000

Sales Gross Profit b/d Income from Investment

39,50,000

39,50,000

15,000 90,000 31,000 29,750 5,000

40,500

156,000

120,000 35,000 16,000 15,000

24,000

392,750

39,50,000 950,000 20,000

970,000 970,000 Dr PROFIT AND LOSS APPROPRIATION A/C Cr Particulars Rs. Particulars Rs. Provision for Taxation Proposed dividend (5 × 35,000) Balance Transferred to B/S

100,000 175,000 157,750


40,000 392,750

432,750 432,750



MAKANGI COMPANY LTD. BALANCE SHEET

AS ON June. 30, 2010


Assets Amount (Rs.)

Share Capital: Authorized Capital Issued, subscribed & paid capital (35,000 ordinary shares of Rs. 100 each) Reserves: Share Premium Balance of Profit (cr.) Debentures &Long Term Loans: 6% Debentures Current Liabilities: Bank Overdraft Sundry Creditors Provision for Tax Proposed Dividend Outstanding interest on debentures Outstanding Managerial Commission

-

35,00,000

175,000 157,750

675,000

100,000 250,000 100,000 175,000 20,250

6,000

Fixed Assets: Freehold Land Building 750,000 Less: Accumulated Depreciation 85,000 Machinery 15,00,000 Less: Accumulated Depreciation 420,000 Furniture 200,000 Less: Accumulated Depreciation 56,000 Current Assets: Investment 300,000 Less: Reserve for investment 15,000 Advances Sundry Debtors 500,000 Less: Provision 25,000 Closing Stock Cash in Hand

20,00,000

665,000

10,80,000

144,000 285,000 60,000

475,000 400,000 50,000

51,59,000 51,59,000



Q.No. 15

SARA SUNDAS COMPAY

TRADING AND PROFIT AND LOSS A/C

Dr FOR THE YEAR ENDED DEC 31, 2010 Cr

Dr. PROFIT AND LOSS APPROPRIATION A/C CR.

Particulars R.s Particulars Rs. Interim Dividend Provision for Tax Proposed dividend Balance C/d (transferred to BS)

45,000 30,000 45,000 42,716

Balance b/d Current car profit SARA

16,848 145,868

162,716 162,716

Particulars Rs Particulars Rs Opening Stock Purchases Manufacturing Expenses Gross Profit c/d Establishment Expense General Charges Director Fee Depreciation Manager's Commission Repair & renewals Staff provident fund Net profit transferred to P&L App. A/c

172,058 500,903 202,800 258,466

36,814 31,078 18,000 20,000

6,500 10,000

1,500 145,868

Sales 983,947 + Credit Sale not recorded 1,600 Closing Stock Gross Profit b/d Interest on Investment 8,544 + Accrued 2,750

985,547 148,680

258,466

11,294

269,760 269,760

11,34,227 11,34,227



SARA SUNDUS COMPANY BALANCE SHEET

AS ON DEC.31, 2010

Liabilities Rs. Assets Rs. Share Capital: Issued, subscribed & paid up Capital 60,000 shares of Rs. 10 each Reserves: General Reserve Profit & Loss Appropriation A/c Current Liabilities: Trade Creditors Unclaimed Dividend Commission to Managing Agent Staff Provident Fund 37,500 + Further 1,500 Provision for tax Proposed dividend

600,000

250,000 42,716

36,858

6,526 6,500

39,000 30,000 45,000

Fixed Asset: Building 175,000 ,000 Furniture 15,000 Machinery 200,000 Motor vehicles 95.000 485,000 Less depreciation reserve 91,000 Long Term Investment: Investment Current Asset: Accrued interest on investment Stock Book debts 148,380 +Sales not recorded1,600 Cash

394,000

288,950

2,750 148.680

149,980

72,240 10,56,600 10,56,600



Q.16 ALPHA LTD.COMPANY

TRADING AND PROFIT AND LOSS ACCOUNT

Dr. FOR THE YEAR ENDED DEC. 31, 2010 CR.

Particulars Rs. Particulars Rs. Opening stock Purchases Rs. 240800 Less: Returns 1800 Wages Fuel and power Gross profit c/d Salaries Insurance Audit fee Repair & Renewal Advertisement Depreciation Provision for doubtful debts New provision Rs. 5,750 (141,250 - 22,000 - 4,250 ) x 5% Add: Bad debts 4.250 10,000 Less: Old provision 4,300 Manager's commission (106,600 x 15 /100) Net profit transferred to P & L App. A/c

200,000

239,000 49,300 29,400

315,300

Sales 790,000 Less: Sale or return 22,000 Closing stock 55,000 Add: Goods on sale or return 10,000 Gross profit b/d Misc. Receipts

768,000

65,000

833,000 833,000 82,000 12,000 16,000

7,000 26,000 85,000

5,700 15,990

90,610

315,300 25,000

340,300 340,300

PROFIT AND LOSS APPROPRIATION A/C

Particulars R.s Particulars Rs. Provision for tax (for last year) Provision for tax required Proposed dividend Balance c/d (transferred to B/S)

8,000 35,000 72,000 62,710

Balance from last year Net profit during the year

87,100 90,610

177,710 177,710



BALANCE SHEET

AS ON 31ST DEC. 2010

Liabilities Rs. Assets Rs. Share Capital: Authorized Capital 120,000 shares of Rs. 10 each Paid up capital: 80,000 shares of Rs. 10 each Reserves: General Reserve Dividend equalization Reserve Profit & Loss Appropriation A/c Current Liabilities: Sunday Creditors Outstanding expenses Tax payable Unclaimed Dividend Managing Commission Outstanding Provision for tax Proposed dividend

12,00,000

800,000

100,000

45,000 62,710

105,000

26,800 13,000 10,000

3,990

35,000 72,000

Fixed Asset: Land &Building Machinery Motor vehicles Furniture Current Asset: Closing Stock Sunday debtors 141,250 Less: Goods on sales Or return 22,000 119,250 Less: Bad debts 4,250 115,000 Less: provision 5,570 Prepaid Expenses Cash at bank Cash in hand

5,00,000 228,500 220,000 105,000

65,000

109,250 8,000

24,000 13,750

12,73,500 12,73,500



Q.17 PAKISTAN LIMITED

TRADING AND PROFIT AND LOSS ACCOUNT

Dr. FOR THE YEAR ENDED 30TH JUNE, 2011 Cr.

Particulars R.s Particulars Rs. Opening stock Purchases 210,000 Less Purchase return 10,000 200,000 Less Goods sent on consignment 60,000 Manufacturing wages Gross profit c/d

60,000

140,000

75,000

225,000

Sales 415,000 Less: Sales or return 15,000 Closing stock

400,000

100,000

500,000 500,000 Depreciation on: Plant & machinery 29,500 Patent 6,000 Furniture 2,350 Auditor's Remuneration Insurance Salaries Printing and stationary Legal charges Debentures interest Preliminary expenses (written off) (21,000 x 1/3) Provision for bad debts (w-3) Net profit transferred to P & L Appropriation A/c

37,850 12,500

8,000 34,000

5,000 1,000

12,000 7,000

13,625

139,025

Gross profit b/d Profit on consignment (w-1)

225,000 45,000

270,000 270,000



PAKISTAN LIMITED

PROFIT AND LOSS APPROPRIATION ACCOUNT

Dr. FOR THE YEAR ENDED 30TH JUNE, 2011 Cr.

Particulars R.s Particulars Rs. Interim dividend Final dividend (21,000-8,000) General reserve Provision for income tax Balance transferred to B/S

8,000 13,000

8,000 20,000

120,025

Balance b/d Current year net Profit

30,000 139,025

169,025 169,025 PAKISTAN LIMITED

BALANCE SHEET

AS ON 30TH DECCEMBER, 2011

Liabilities &Captial Rs. Assets Rs. Authorised Capital: 100,000 shares of Rs. 10 each Paid up Capital: 42,000 shares of Rs. 10 each Reserves: General Reserve Profit & loss A/c Current Liabilities: 6% debentures Current Liabilities: Sunday creditors Final dividend Provision

10,00,000

Fixed Assests: Plant & machinery 295,000 Less: Depreciation 29,500 Patents 60,000 Less: Depreciation 6,000 Furniture 47,000 Less: Depreciation 2,350 Freehold property Deferred Costs: Preliminary Exp. (21,000-7,000) Current Assets: Cash in hand (7,000+ 40,000) Cash at Bank Sundry debtors 205,000 + Dishonoured bills 27.500 232500 -Provision for bad debts. 11.625 (232,500 5/100) Bills receivable 57,500 Less: Bills receivable dishonoured27,500 Closing stock 100,000 Consignment stock 15,000 JS traders (Consigner) (w-2)

265,500

54,000

44,650 180,000

14,000

47,000 15,000

220,875

30,000

115,000 50.000

420,000

8,000 120,025

200,000

255,000

13,000 20,000

10,36,025 10,36,025



(w-1)

Dr. CONSIGNMENT ACCOUNT Cr.

R.s Rs. Goods sent on Consignment A/c JS traders – Commission (100,000 x 10/100) Profit on consignment

60,000 10,000

45,000

JS Traders – Sales Stock on Consignment (60,000 x ¼)

100,000 15,000

115,000 115,000

(w-2)

Dr. JS TRADERS ACCOUNT (CONSIGNEE) Cr.

Particulars R.s Particulars Rs. Consignment A/c 100,000 Cash A/c

Consignment A/c Balance c/d

40,000 10,000 50,000

100,000 100,000

(w-3) Provision for Bad Debts:

Old bad debts + New bad debts + New provision for bad debts- Old provision for bad debts

= 2000+0 + (232,500x5%) – 0

= 2000 + 11,625

= 13,625



Q.18 ISLAM AND SALEEM LTD.

PROFIT AND LOSS ACCOUNT

Dr. FOR THE YEAR ENDED ON 31st MARCH 2010 Cr.

Particulars R.s Particulars Rs. Salaries Director fee Management Expenses Interest on debenture Amortization of Franchise Depreciation: Furniture ( 15.000 @ 10 % ) On Building (600,000 @ 10%) On Truck Net profit transferred to P & L App. A/c

150,000 15,200

172,000 7,800 5,000

1,500

60,000 38,750

296,750

Gross profit corrected Commission received

735,000 12,500

747,500 747,500

Dr. PROFIT AND LOSS APPROPRIATION A/C Cr.

Particulars R.s Particulars Rs. Provision for Taxation Proposed Dividend General Reserve Balance c/d (transferred to B/S)

100,000 100,000

50,000 63,250

Balanced of Previous Years Current year Net Profit

16,500 296,750

313,250 313,250

ISLAM AND SALEEM LTD. CO.

BALANCE SHEET

AS ON 31ST MARCH 2010




Share Capital: Authorized Capital Issued, subscribed & paid up capital Reserves: General Reserve Balance of Profit & Loss Appropriation A/c Debentures: 6% Mortgage Debenture Current Liabilities: Provision for taxation 150,000 + Further provided 100,000 Proposed dividend Sunday Creditors

500,000

50,000

63,250

130,000

250,000 100,000

45,000

Fixed Asset: Building 600,000 Less Accumulated Depreciation 210,000 Furniture 15,000 Less Acc. Depreciation 9,000 Truck 450,000 Less Accumulated Depreciation 188,750 Franchise 50,000 Less Amortization 5,000 Deferred Cost: Discount on Issue of Debenture Current Asset: Debtors Closing Stock Cash at bank

390,000

6,000

261,250

45,000

6,000

180,000 230,000

20,000 11,38,250 11,38,250

(W-1) Calculation of Correct Gross Profit:

Gross profit before calculation Rs.750,000

Less Closing stock overcast charged to Trading Account

(245,000-230,000) 15,000

(Lower of Cost OR Market Value Rule IAS2)

735,000

(W-2) Depreciation ON Truck:

Depreciation ON 3 Trucks 300,000 x 10 % 30,000

Depreciation ON New Truck 50,000 x10 % x 7/12 8,750

Total Depreciation ON Trucks 38,750



Q.19 SUNSHINE COMPANY

TRADING AND PROFIT AN LOSS ACCOUNT

Dr. FOR THE YEAR ENDED DEC. 31, 2009 Cr.

Particulars R.s Particulars Rs. Open Stock Purchases Carriage Gross profit transferred to profit and Loss A/c Salaries Packing charges Rent Director's remuneration Interest on debentures3,000 + Outstanding 3,000 Interest on Bank Overdraft Postage Depreciation on equipment Net profit for the year (transferred to P & L App. A/c

100,000 825,000

3,800

351,200

Sale10,50,000 - Sales of equipment10.000 Closing Stock Gross profit transferred from trading A/c Interest received Gain on sale of equipment (with zero book value)

10,40,000 240,000

12,80,000 12,80,000 82,000

1,350 17,000 22,000

6,000 7,500 1,380

18,000

207,970

351,200

2,500

10,000

363,700 363,700

Dr. PROFIT AND LOSS APPROPRIATION A/C Cr.

Particulars R.s Particulars Rs. Interim dividend Transfer to dividend equalization reserve Provision for Taxation Transfer to general reserve Proposed dividend (60, 000 x 2.5) Balance Transferred to B/S

36,000

25,000 50,000 30,000

125,000 109,970

Balance from last year Net profit for year Provision for Taxation no longer required (71,000-58,000)

155,000 207,970

13,000

375,970 375,970



SUNSHINE COMPANY

BALANCE SHEET

AS ON DEC. 31, 2009

Liabilities Rs. Assets Rs. Share Capital: Authorized Capital Issued, subscribed & paid up capital Reserves: General Reserve Dividend Equalization Reserve Balance of Profit (Cr.) Debentures: 5% Debenture Current Liabilities: Bills Payable Sunday Creditors Interest on debentures payable Bank Overdraft Provision for taxation Proposed final dividend

500,000

500,000

30,000 25,000

109,970

120,000

75,000 90,000

3,000 100,000

50,000 125,000

Fixed Asset: Equipment 180,000 Less Depreciation 18,000 Freehold Property Investment: Investment in 5% Govt. Bonds Current Asset: Sunday Debtors Bill Received Closing Stock Advance Tax Cash in hand

162,000 530,000

50,000

115,000

78,970 240,000

32,000 20,000

12,27,970 12,27,970



Chapter - 5

Analysis of Accounting Ratios

Solutions

Q.1 (i) Current Ratio =

= ,

,= 1 : 1

(w-1) Current Assests = Stock + Debtors + Bank+ Prepaid insurance

= 120,000+90,000+ 22,800 + 7,200 = Rs. 240,000

(w-2) Current Liabilities = Creditors + Provision for tax +Bank Overdraft

= 150,000 + 10,000+80,000 = Rs. 240,000

(ii) Liquidity Ratio =

= ,

,= 0.47 : 1

(w-3) Liquid Assets = Current Assets - Stock - Prepaid Exp.

= 240,000-120,000-7,200 = Rs. 112,800

(iii) Stock Turnover Ratio =

.

= ,

,= 4.17times

(w-4) Cost of Goods Sold:

Suppose cost = 100

Gross profit = 20

Sales = 120

Sales : Cost of sales



120 : 100

600,000 : x

x = ,

= 500,000

(iv) Debtors Turnover Ratio =

.

= ,

,= 6.67 times

Q.2(a) Current Ratio =

= ,

,= 2 : 1

(w-1)Current Assets =Stock + Debtors + Advances +Prepaid Expenses + Cash

= 220,000+ 110,000+ 10,000 +8,000 +52.000 = Rs. 400,000

(w-2)Current Liabilities = Bank overdraft +Creditor + Outstanding Expenses

= 100,000 + 80.000+20,000 = Rs.200,000

(b) Quick Ratio =

= ,

,= 0.86 : 1

(w-3) Quick Assets = Current Assets - Stoke - Prepuid Expenses

= 400,000 - 200,000 - 8.000 = Rs. 172,000

(c)Debt-Equity Ratio =

= ,

,= 1 : 1

(w-4)Long Term Debts = Mortgage Loan + Debentures

= 440,000+ 160,000 = Rs. 600,000

(w 5) Equity = Share Capital + Reserves and surplus

= 500,000 + 100,000 = Rs. 600,000

OR



= ,

,= 1.33 : 1

(d) Proprietary Ratio =

= ,

, ,= 0.43 : 1

(e) Fixed Assets Ratio =

= , ,

, ,= 0.83 : 1

(w-6)Long Term Funds = Shareholder Funds+Long Term Debts

= 600,000+600,000 = Rs. 12,00,000

Q.3 Current Ratio =

= ,

,= 1 : 1

(w-1)Current Assets = Stock + Investment + Cash

= 60,000 + 20,000 + 60,000 = Rs. 140,000

(w-2)Current Liabilities = Creditors+ Provision for Tax + Overdraft

= 80,000+ 40,000 +20,000 =Rs. 140,000

(ii) Liquidity Ratio =

= ,

,= 0.57 : 1

(w-3) Liquid Assets = Investment+ Cash

= 20,000 +60,000 = 80,000

(i) Proprietary Ratio =

= ,

,= 0.55 : 1

(w-4) Shareholder's Fund = Share Capital + Capital Reserve + Profit & Loss A/c



= 200,000+40,000 +60,000 = 300,000

(iv) Debt - Equity =

= ,

,= 0.33 : 1

OR

= , ,

,= 0.33 : 1

(v) Return on Equity Ratio =

x100

= ,

,x 100 = 20%

Q.4 Debtors Turnover Ratio =

.

For 2009 = 800,000 + 100,000 = 8 times

For 2010 = 700,000 + 100,000 = 7 times

(w-1) Net Credit Sales: 2009 2010

Gross sales 950,000 800,000

Less: Cash sales 100,000 75,000

Less: Sales returns 50,000 25,000

800,000 700,000

(w-2) Average Total Debtors = / /

For 2009 =( , , ) ( , )

= 100,000

For 2010 =( , , ) ( , , )

= 100,000

Debtors collection period =.

x Days of year

For 2009 =,

,x 365 = 45.62 or 46 days



For 2010 =,

,x 365 = 52.14 or 52 days

Q.5 Creditors Turnover Ratio =

.

=,

,= 5 times

(w-1) Net Credit Purchases: Rs.

Total Purchases 425,000

Less: Cash Purchases 113,000

Less: Return Outwards 12,000

300,000

(w-2) Average Total Creditors = Creditors + Bills payable

= 53,200+ 6,800 = 60,000

Note: As opening creditors and bills payable are not given so closingcreditor and bills payable are considered as average accounts payable.

Average Payment Period =.

x Days of year

=,

,x 365 = 73 times

Q.6(i) Stock Turnover Ratio =

.

=,

,= 6.96 times

(w-1) Cost of sales = Sales -Gross profit

= 400,000-20 % of 400,000

= 400,000-80,000 = 320,000

(ii) Debtors Turnover Ratio =

.

=,

,= 9.09 times



(i) Working Capital Turnover Ratio =

=,

,= 14.55 times

(w-2) Net Working Capital = Current Assets- Current Liabilities

= 96,000-74,000 = 22,000

(w-3) Current Assets = Stock + Debtors - Provision for bad debts+ Cash

= 46,000 +44,000 - 4,000+ 10,000 = 96,000

(iv) Fixed Assets Turnover Ratio =

=,

,= 1.54 times

Q.7 (a) Gross Profit Ratio =

x 100

=,

,x100 = 30.82 %

(b)Operating Profit Ratio =

x 100

=,

,x 100 = 16.6 %

(w-1) Operating Profit = Gross Profit -Operating Expenses

= 260,000-120,000 = Rs. 140,000

Operating Expenses = Office Expenses + Selling Expenses + Distribution Expenses + Provision for doubtful debts + Depreciation

= 50,000 +30,000 + 20,000 + 4,000 + 16,000 = 120,000

(c) Operating Ratio =

x 100

=( , , ) ,

,x 100 = 83.4 %

OR

Operating Ratio = 100 – Operating Profit Ratio

= 100 – 16.6 = 83.4 %



(b) Net Profit Ratio =

x 100

=,

,x 100 = 21.34 %

(e) Stocks Turnover Ratio =

. x 100

=,

,x 100 = 8.68 times

Average Stock = ½ [55,000 + 79,500] = 67,250

Q.8

(a) Current Ratio =

= , ( )

,= 1.8 : 1

(b) Earnings per Share =

.

= ,

,= Rs. 3 per share

(c) Debt-Equity Ratio =

= ,

,= 0.308 : 1

(d) Interest Coverage Ratio =

= ,

,= 5.167 times

(e) Price/Earnings Ratio =

= = 8.33 times

WORKING NOTES:

(w-1) Current Assets: Rs. (w-2) Net Profit after Tax: Rs.

Cash 21,000 Net Profit before tax 50,000

Marketable securities 17,000 Less: Provision for



Accounts Receivable 47,000 income tax

Inventory 50,000 (50,000 x 40/100) 20,000

135,000 Net profit after tax 30,000

(w-3) Equity: Rs. (w-4) Total Debts: Rs.

Paid up Capital 100,000 Current Liabilities 75,000

Profit & Loss A/c (Cr.) 30,000 Long Term Liabilities 80,000

General Reserve 50,000 155,000

180,000

(w-5) Long Term Funds: Rs. (w-6) Earnings before Interest and Tax: Rs.

Equity 180,000 Net profit before tax 50,000

Long Term Liabilities 80,000 Add: Interest expenses 12,000

Total Long Term Funds 260,000 62,000

Q.9

(i) Net Profit Ratio =

x 100

=,

, ,x 100

= 10.43 %

(ii) Current Ratio =

= , , ,

, ,

= 1.83 : 1

(iii) Fixed Assets Turnover Ratio =

=, ,

, ,

= 4 times



(iv) Debt-Equity Ratio =

= ,

, , ,

= 0.2 : 1

(v) Stocks Turnover Ratio =

. x 100

=, ,

,x 100

= 8.23 times

(vi) Debtors Turnover Ratio =

.

=, ,

, ,

= 4.43 times

Q.10 (i) Gross Profit Ratio =

x 100

For X Ltd. =,

, ,x 100 = 23.81 %

For Y Ltd. =,

, ,x 100 = 23.6 %

(w-1) Gross Profit = Sales - Cost of Sales

X Ltd. = 25,20,000-19.20,000 = 600,000

Y Ltd. = 21,40,000- 16,35,000 = 505,000

(ii) Working Capital Ratio=

X Ltd. = , ,

,=

, ,

,= 2.1 : 1



Y Ltd. = , ,

,=

,

, ,= 1.49 : 1


.

X Ltd. =, ,

, ,= 4.8 times

Y Ltd. =, ,

, ,= 5.2 times

(iv) Liquid Ratio =

X Ltd. = ,

,=1.27 : 1

Y Ltd. = ,

,=0.96 : 1

Q.11 (a) Gross Profit Ratio =

x 100

=, , ,

, ,x 100

=,

, ,x 100 = 49.5 %

(b) Net Profit Ratio =

x 100

=,

, ,x 100 = 24 %

(w-1) Net Profit: Rs.

Sales 10,00,000

Less: Cost of Sales 5 05,000

Gross Profit 495,000

Less: Operating Expenses 100,000

Operating Profit 395,000

Add: Interest on Investment 25,000

420,000



Less: Interest on Debentures 20,000

Net Profit before Tax 400,000

Less : Provision for Tax @ 40 % 160,000

Net Profit after Tax 240,000

(c) Return on Capital Employed Ratio:

&

x 100

=,

,x 100 = 29.9 %

(w-2) Net Capital Employed:

= Current Assets – Current Liabilities + Fixed Assets

= 250,000 – 160,000+ 900,000 = 990,000

(d) Return on Shareholder's Fund Ratio:

x 100

=,

, , ,x 100

=,

, ,x 100 = 23.08 %

Q.12 (a) (i) The Working Capital = Current Assets - Current Liabilities

2009 = 142,500-60,000 = Rs.82,500

2010 = 172,500- 100,000 = Rs. 7,500

(w-l) Current Assets: 2009 2010

Cash 16,000 30,000

Marketable securities 20,000 10,000

Trade Receivables (Net) 45,000 55,000

Liquid Assets 81,000 95,000

Inventories 60,000 75,000



Prepaid Expenses 1,500 2,500

142,000 172,500

(ii) The Capital Ratio =

For 2009 = ,

,= 2.375 : 1

For 2010 = ,

,= 1.725 : 1

(iii) Acid Test Ratio =

For 2009 = ,

,= 1.35 : 1

For 2010 = ,

,= 0.95 : 1

(iv) Ratio of Current Assets to Total Assets =

For 2009 = ,

,= 0.56 : 1

For 2010 = ,

,= 0.6 : 1

(v) Ratio of Cash to Current Liabilities =

For 2009 = ,

,= 0.27 : 1

For 2010 = ,

,= 0.3 : 1

(b)(i) Working capital has decreased by Rs. 10,000 as a result of an increase in current liabilities. This change by itself cannot be regarded as unfavorable.

(ii) The current ratio has decreased significantly. This may have unfavorable implications, and the changes as well as the reasons for the change deserves the attention of management.

(iii) Because of the material increase in current liabilities, there has been a decrease in acid test ratio that would appear to be unfavorable. This, too, deserves careful analysis by management; such a trend cannot be permitted to continue.

(iv) The ratio of current assets to total assets has improved slightly but this change simply indicates that a higher portion of total assets is in current form. There is little that can implied from this change.



(v) The ratio of cash to current liabilities has improves slightly during the year the However, this change, in itself, may hold little significance in view of the more significant changes in (i), (ii) and (iii).

Q.13 (a) Inventory Turnover Rate =

= ,

,= 6.25 times

(w-1) Cost of Sales:

Suppose cost = 100

+Profit = 20

Sales = 120

Sales : Cost of sales

120 : 100

300,000 : x

x = ,

= Rs. 250,000

(b) Average Age of Inventory =

=

.= 48 days

Q.14 (a) Finished Goods Turnover Ratio =

For 2009 =,

, =14 times

For 2010 = ,

, , = 10.44 times

(b) Goods in Process Turnover Ratio =

For 2009 =,

, = 5 times

For 2010 = ,

, , = 6.25 times

(a) Raw Material Turnover Ratio =



For 2009 =,

, = 4.8 times

For 2010 = ,

, , = 4 times

Q.15 (i) Working Capital Ratio =

= , ,

, ,= 2.43 : 1

(w-1) Current Assets: Rs.

Investments 400,000

Inventories 60,00,000

Receivables 37,00,000

Cash and Bank 1,00,000

102,00,000

(w-2) Current Liabilities: Rs.

Trade Creditors 33,50,000

Provisions 650,000

Other Current Liabilities 200,000

42,00,000

(ii) Debt-Equity Ratio =

= , ,

, ,= 2.08 : 1

(w-3) Long Term Debts = Secured term loans + Unsecured term loans

= 120,00,000 + 15,00,000 = 1,35,00,000

(w-5) Equity = Share Capital + Reserves & Surplus

= 560,000 + 15,00,000 =65,00,000


.



=, ,

, ,= 1.64 times


. /

=, ,

, ,= 4.32 times

(v) Return on Capital Employed Ratio:

&

x 100

=, ,

, ,x 100 = 20.46 %

(w-5) Net Profit before Interest &Tax:

Sales-Cost of Sales- Administrative Expenses- Selling Expenses - Depreciation = 16,000-9,830-1,200 – 260-700 = 4010

(w-6) Capital Employed = Current Assets + Fixed Assets-Current Liabilities

= 10,200+14,000 - 4,200-400 = 19,600

Q.16 (i) Capital Ratio =

= ,

,= 3.33 : 1


Cash in hand 20,000

Cash at bank 30,000

Debtors 60,000

Liquid Assets 110,000

Stock 90,000

200,000



(iii) Acid Test Ratio =

= ,

,= 1.83 : 1


.

=,

( , , ) /= 8 times

(iv) Creditors Turnover Ratio =

.

=,

( , , )/= 4 times

(w-2) Net Credit Purchases:

Creditors on 31-12-2010 Rs, 60,000

+ Cash Paid 105,000

165,000

- Creditors on 1-1-2010 15,000 150,000

(v) Stock Turnover Ratio =

.

=,

( , , )/= 5 times

(w-3) Cost of Sales = Sales - Gross Profit = 500,000-100,000 = 400,000



Q.17 INCOME STATEMENT

Details (Rs.) (Rs.) (Rs.) Sales: Less: Cost of goods sold: Opening stock +Purchases + Carriage Cost of goods available for sale: - Closing stock Gross Profit: Less: Operating Expenses: Office expenses Sales expenses Operating profit Add: Profit on sales of share Less: Financial Expenses Loss on sale of fixed assets Net profit before interest & tax: Less: Interest on debentures Net profit before tax: Less: Provision for tax Net profit after tax:

109,050 2,850

18,100

111,900

170,000

102,000 130,000

28,000

30,000 6,000

68,00

36,000

2,000 600

32,000 1,800

33,800

2,600

31,200 1,200

30,000 9,000

21,000



FINANCIAL STATEMENT

(Rs.) (Rs.) Current Assets:

Cash Bills Receivable Debtors Liquid Assets: + Stock

Total Current Assets Less: Current Liabilities:

Creditors Bank overdraft Provision for tax

Working capital Add: Fixed Assets:

Building Plant & Machinery

Capital Employed: Less: Long term debts Shareholder's Fund

2,000 5,000

20,000

27,000 28,000

15,000 6,000 9,000

55,000

30,000

50,000 20,000

25,000

75,000 100,000

20,000 80,000

(i) Current Ratio:

=

= ,

,= 1.83 : 1

(ii) Quick Ratio:

=

= ,

,= 0.9 : 1

(iii) Stock Turnover Ratio:

=

.

=,

,= 4.43 times

(iv) Debtors Turnover Ratio:



=

.

=,

,= 6.8 times

(w-2) Average Debtors:

= Debtors + Bill receivable

= 20,000 + 5,000

= Rs. 25,000

(v) Return on Shareholder's Fund Ratio:

=

x 100

=,

,x 100 = 26.25 %

(vi) Return on Capital Employed Ratio:

= &

x 100

=,

,x 100 = 31.2 %

Q.18 (i) Current Ratio =

= ,

,=3.2 : 1

(w-1) Current Assets = Stock + Debtors + Cash + Prepaid insurance

= 150,000+ 200,000 + 40,000 + 10,000 = Rs. 400,000

(w-2) Current Liabilities = Creditors + Outstanding Expenses + Provision for tax

= 60,000 + 15,000+ 20,000 = Rs. 125,000

(ii) Liquid Ratio =

= ,

,= 1.92 : 1

(w-3) Liquid Assets = Debtors + Cash



= 200,000 + 40,000= Rs. 240,000

(iii) Debt-Equity Ratio =

= ,

,=0.71 : 1

(w-4) Equity = Share Capital + General Reserve + Profit & Loss A/c – Preliminary Exp.

= 500,000 + 50,000 + 50,000 – 35,000 = 565,000

(iv) Capital Gearing Ratio =

= ,

,= 1.41 times

(v) Proprietary Ratio =

= ,

, ,= 0.52 : 1

Q.19

(i) Debt-Equity Ratio =

= ,

,

=0.5 : 1

OR

Debt-Equity Ratio =

= , ( )

,

=1 : 1

OR

Debt-Equity Ratio =



= ,

, ( )

=0.333 : 1

(2) Fixed Assets Ratio =

= ,

, ( )

=0.8 : 1

(v) Proprietary Ratio =

= ,

, , ( )

= 0.5 : 1

(4) Current Ratio =

= ,

,

= 1.6 : 1

(5) Liquid Ratio =

= ,

,

= 1.2 : 1

WORKING NOTES:

(w-) Total Debts: Rs. (w-6) Long Term Funds: Rs.

Long Term Liabilities 250,000 Equity 500,000

Current Liabilities 250,000 Long Term Liabilities 25,000

Total Debts 500,000 Long Term Funds 750,000



BALANCE SHEET

Liabilities Rs. Assets Rs. Share Capital Long term liabilities Current Liabilities Total Share Capital and liabilities

500,000 250,000 250,000

Fixed Asset Liquid Assets Closing Stock Total Assets

600,000 300,000 100,000

10,00,000 10,00,000


Liquid assets 300,000

Closing stock 100,000

Total current assets 400,000

Q.20 Gross Profit = 60,000

Sales = ,

x 100 = 200,000

(w-1) Cost of Sales = 200,000 - 60,000 = 140,000

Stock Turnover = 7

=

7 Average Stock = 1 x 140,000

Average Stock = ,

= 20,000

(w-2) Opening Stock = Average Stock – ½ x 5000

= 20,000 – ½ x 5,000

= 20,000 - 2,500 = 17,500

(w-2) Closing Stock = Average Stock + ½ x 5000

= 20,000 + ½ x 5,000

= 20,000 + 2,500

= 22,500

(a) Net Purchases: Rs.

Cost of Sales 140,000

+ Closing Stock 22,500



162,500

- Opening Stock 17,500

1,45,000

(b) Creditors Turnover Ratio =

=,

( , , )/= 4.26 times

(iii) Average Age of Creditors = .

=,

,= 86 Days Approx.

Q.21 (a) Calculation of Sales:

Gross Profit Ratio = 20

So Sales : Gross Profit

100 : 20

x : 500,000

x = ,

= Rs. 25,00,000

(b) Calculation of Sunday Debtors:

Debtor’s Velocity = 3 months

= 3

12 Debtors = 3 x 25,00,000

Total Debtor = , ,

= 625,000

Sunday Debtor = Total Debtor – Bills Receivable

= 625,000 – 60,000 = Rs. 565,000

(b) Calculation of Stock:

Stock Velocity = 6 months

= 6

12 Avg. Stock = 6 x 20,00,000



Total Stock = , ,

= 10,00,000

Opening Stock = Avg. Stock - ½ of 20,000

= 10,00,000 – 10,000 = Rs. 990,000

Closing Stock = Avg. Stock + ½ of 20,000

= 990,000 + 20,000 = Rs.10,10,000

(b) Calculation of Sunday Creditors:

Creditor’s Velocity = 2 months

= 2

12 Creditors = 2 x 20,00,000

Total Creditors = , ,

= 625,000

Sunday Creditors = Total Creditor – Bills Receivable

= 336,667 – 36,667

= Rs. 300,000

Credit Purchases:

Cost of Sales = 20, 00,000

+ Closing Stock = 10, 10,000

30, 10,000

- Opening Stock = 9,90,000

Purchases = 20, 20,000

Q.22 Working Capital = Current Assets - Current Liabilities

162,000 = 2.8-1 = 1.8

So Current Assets =,

. 𝑥 2.8 = Rs. 252, 000

Current Liabilities = ,

. 𝑥 1 = Rs. 90, 000

Liquid Assets:

Acid Test Ratio = 1.5



=

.

Liquid Assets = 1.5 x 90,000 = Rs. 135, 000

Q.23 WORKING NOTES:

(w-1) Current Assets & Current Liabilities:

Current Ratio =

= 2.5 : 1

Working Capital = Current Assets- Current Liabilities

= 2.5 – 1 = 1.5

As Working Capital = Rs. 120,000

So Current Ratio = ,

. x 2.5 = Rs. 200,000


. x 1 = Rs. 80,000

(w-2) Liquid Assets &Stock:

Liquid Ratio =

=

.

Liquid Assets = 1.5 x 80,000 = Rs. 120, 000

Stock = Current Assets – Liquid Assets

= 200,000 – 120,000 = 80,000

(w-3) Fixed Assets & Proprietor's Fund:

Proprietary Ratio =

=

.

Proprietor's Fund:

Fixed Assets (Net) = Fixed Assets - Long-term Liabilities

Working Capital = Current Assets - Current Liabilities

Proprietor's Fund = Total Assets - Total Liabilities Proprietor's Fund = Fixed Assets (Net)+ Working Capital

1 = 0.75 +0.25

As Working Capital is Rs. 120,000



So Proprietor’s Fund = ,

. x 1 = Rs. 360,000

Fixed Assets = ,

. x 0.75 = Rs. 80,000

BALANCE SHEET

AS ON 31-12-2010

Liabilities Rs. Assets Rs. Share Capital & Reserves: Capital 400,000 Reserve & Surplus 80,000 Current Liabilities: Bank Overdraft 20,000 Other Current Liabilities 60,000

480,000

80,000

Fixed Asset Closing Assets: Stock 80,000 Liquid Assets 120,000

360,000

200,000

560,000 560,000

Q.24 WORKING NOTES:

Working Capital = Current Assets - Current Liabilities

1.5 = 2.5 – 1

As Working Capital is Rs. 300,000

So Current Assets = ,

. x2.5 = Rs. 500,000


. x1 = Rs. 200,000

(w-2) Stock:

Current Assets - Liquid Assets = Stock

2.5-1.5 = 1

As Current Assets are Rs. 500,000

So Stock = ,

. x1 = 200,000




Stock Turnover = 6

So Cost of Sales = 6 x 200,000 = Rs. 12, 00,000

(w-4) Sales:

Gross profit ratio is 20 %

So Sales = 100

Gross Profit =20

Cost of Sales = 80

Cost of Sales : Sales

80 : 100

12,00,000 : x

x = , ,

= Rs. 15,00,000

(w-5) Sundry Debtors:

Debt Collection Period = 2 months

.

= 2

12 Debtors = 2 x 15,00,000

Debtor = , ,

= 250,000

(w-5) Fixed Assets:

Fixed Asset Turnover = 2 months

= 2

2 Fixed Asset = 12,00,000

Fixed Asset = 600,000

(w-7) Net Worth:

=

.

0.8 Net Worth = 600,000

Net Worth = ,

.= 750.000



(w-8) Reserve and Surplus to Capital:

Reserves & Surplus to capital = .

Net Worth = Capital +Reserve & Surplus

1.5 = 1 +0.5

So Capital = ,

. x 1 = 500,000

Reserves & Surplus = ,

. x 0.5 = 250,000

BALANCE SHEET

Liabilities Rs. Assets Rs. Share Capital Reserve & Surplus Long term Loans Current Liabilities

500,000 250,000 150,000 200,000

Fixed Asset Closing Assets: Stock200,000 Debtor 250,000 Cash 50,000

600,000

500,000 11,00,000 11,00,000

Q.25 WORKING NOTES:

(w-1) Total Current Assets:

=

5 Total Current Assets = 7 x 500,000

Total Current Assets = ,

= Rs. 700,000

(w-2) Capital:

=

5 Capital = 4 x 500,000

Capital = ,

= Rs. 400,000

(w-3) Total Liabilities:

= ½



Total Liabilities = 2 x 400,000= Rs. 800,000

(w-4) Net Profit:

=

5 Net Profit = 1 x 400,000

Net Profit = ,

= Rs. 80,000

(w-5) Sales:

Net Profit ratio is 20 %

Net Profit : Sales

20 : 100

80,000 : x

x = ,

= Rs. 400,000

(w-6) Gross Profit:

400,000 x 25% = Rs. 100,000

(w-7) Opening Stock:

Stock Turnover =

= 10

Cost of Sales = Sales - Gross Profit

= 400,000-100,000 = Rs. 300,000

Average Stock = ,

= Rs. 30,000

Average Stock =

30,000 = ,

30,000 x 2 = Opening stock + 50,000

Opening stock = 60,000 – 50,000 = Rs. 30,000

TRADING AND PROFIT and LOSS ACCOUNT



Dr. FOR THE YEAR ENDED DEC. 31, 2010 Cr.

Details R.s Details Rs. Opening Stock Purchases (Balancing Figure) Gross profit c/d Expenses (Bal. Fig.) Net profit

10,000

340,000 100,000

Sale (w-5) Closing Stock Gross profit b/d

400,000 50,000

450,000 450,000 20,000 80,000

100,000

100,000 100,000

BALANCE SHEET

AS ON 31ST DECEMBER, 2010

Liabilities Rs. Assets Rs. Capital Opening 320,000 + Net profit 80,000 Liabilities (w-3)

400,000 800,000

Fixed Asset Closing Assets: Stock 50,000 Other Current Assets 650,000

500,000

700,000 12,00,000 12,00,000

Q.26 WORKING NOTES:

(w-1) Total Debts:

= 0.6

Total Debts = 0.6 x 200,000= 120,000

(w-2) Short-term Debts:

= 0.4

Short-term Debts = 0.4 x 120,000= 48,000

(w-3) Long-term Debts = Total Debts – Short-term Debts

= 120,000 – 48,000

= 72,000



(w-4) Fixed Assets:

= 0.6

Fixed Assets = 200,000 x 0.6 = 120,000

(w-5) Total Assets = Owner's Equity + Total Debts

= 200,000 + 120,000 = 320,000


= 2

Cost of Sales = 2 x 320,000 = 640,000

(w-7) Inventory:

Cost of Sales / 8 = 640,000/8 = 80,000

(w-8) Current Assets = Total Assets - Fixed Assets

= 320,000 – 120,000 = 200,000

(w-9) Cash = Current Assets – Inventory

= 200,000 – 80,000 = 120,000

BALANCE SHEET

Liabilities Rs. Assets Rs. Short-term Debts Long-term Debts Total Debts Owner’s Equity Total Capital & Liabilities

48,000 72,000

120,000 20,000

Cash Inventory Total Current Assets Fixed Assets Total Assets

120,000 80,000

200,000 120,000

12,00,000 12,00,000

Q.27 Assuming the current ratio and the liquid ratio to be more than 1, the various changes mentioned in the Q will affect these two ratios as stated below:

(i) The ratios will improve since the payment of the amount will reduce both the numerator and the denominator by the same amount. Suppose current assets Rs. 90,000 and current liabilities Rs. 40,000. The ratio will be 2.25. If Rs. 10,000 is paid to a supplier, the current assets and liabilities respectively will be Rs. 80,000 and Rs. 30,000, giving a ratio of 2.67.



(ii) Collection of an amount due from a customer will not affect the ratios since the total of current assets or liquid assets does not change.

(iii)Sale of goods for cash at the normal profit will lead to an increase in cash of greater than the reduction in the stock of goods. Hence, both the current ratio and the liquidity ratio will improve.

(iv) The repayment of fixed deposits will mean using cash for meeting a non-current liability. This will mean lowering of current ratio as well as liquidity ratio.

(v) Payment of half-early Installment, will be for acquiring a fixed asset. This will lower the current ratio as well as the liquidity ratio.

(vi) Sale of long-term investment will increase cash or debtors and hence current assets. It will improve current ratio as well as liquidity ratio.

Q.28 a) Purchase of Machinery worth Rs. 500,000 on cash will result in decrease of cash to

that extent. Cash being a component of current assets will decline. Revised amount of current assets Rs. 1500,000 and current liabilities remain the same. Hence the current ratio will be 1.5:1, thus it will deteriorate.

b) Purchase of machinery of Rs. 500,000 on short-term credit will result in increase in creditors to that extent. Revised amount of current liabilities Rs. 15,00,000. Hence, the current ratio will be 1.33: 1. Showing deterioration.

c) Purchase of machinery worth Rs. 500,000 by obtaining medium term loan from bank (at 20 % margin) will result in decrease of cash by Rs.100,000. Thus revised amount of current assets shall be Rs. 19,00,000. Medium term loan raised shall not affect current liabilities immediately hence should be static at Rs. 10,00,000. Now current ratio will be 1.9:1 showing deterioration.

d) Payment of dividend Rs. 200,000 of which 50 % deducted as tax at source will result in decrease in bank balance by Rs. 100,000 and increase in Rs. 100,000 current liability (because tax deducted at source should have been paid in near future). Current assets thus amount to Rs. 19,00,000 and current liabilities to Rs. 11,00,000. Hence current ratio will be 1.73:1. Showing deterioration over original position.



Chapter – 8

CONSIGNMENT ACCOUNTS

Solutions Q.1 RAUF & CO’S JOURNAL Date Details L/F Debit

(Rs.) Credit (Rs.)

Consignment to Farooq Account Dr.

Goods sent on Consignment Account

(Goods sent on consignment)

24,000

2,000

10,000

34,000

1,500

5,100

1,400

24,000

2,000

10,000

34,000

1,500

5,100

1,400


Cash Account

(Carriage and insurance paid)

Cash Account Dr.

Farooq Account

(Advance received in cash)

Farooq Account Dr.

Consignment to Farooq Account

(Goods sold by consignee)


Farooq Account

(Transportation and warehousing charges paid by

consignee)


Farooq Account

(15 % commission charged by consignee)


General P & L Account

(Profit on consignment transferred to General P & L A/c)



Goods Sent on consignment Account Dr.

Trading Account

(Goods sent on consignment transferred trading account)

24,000

17,400

24,000

17,400

Bank Account Dr. Farooq Account (Balance amount received from Farooq)

Dr. CONSIGNMENT TO FAROOQ ACCOUNT Cr. References Rs. References Rs.

Goods sent on consignment account

Cash Account (Expenses)

Farooq Account (Expenses)

Farooq Account (Commission)

Profit transferred to G. P & L account

24,000

2,000

1,500

5,100

1,400

Farooq Account (Sales proceeds)

34,000

34,000 34,000

Dr. FAROOQ ACCOUNT (CONSIGNEE) Cr. References Rs. References Rs.

Consignment to Farooq A/C (Sales) 34,000 Cash Account (Advance)

Consignment To Farooq Account

Consignment To Farooq Account

Bank Account

10,000

1,500

5,100

17,400

34,000 34,000

Dr. GOODS SENT ON CONSIGNEMENT ACCOUNT Cr. References Rs. References Rs.

Trading Account 24,000 Consignment To Farooq Account 24,000



24,000 24,000

FAROOQ’S JOURNAL Date Details L/F Debit

(Rs.) Credit (Rs.)

Rauf & Co. Account Dr. Cash Account (Cash sent as advance)

10,000

34,000

1,500

5,100

17,400

10,000

34,000

1,500

5,100

17,400

Cash Account Dr. Rauf & Co Account (Goods sold and cash received as consignor’s be behalf) Rauf & Co. Account Dr. Cash Account (Expenses paid on consignor’s behalf) Rauf & Co. Account Dr. Commission Account (15% commission on sales charged from consignor) Rauf & Co. Account Dr. Bank Account (Balance amount remitted to consignor)

Dr. RAUF & CO’S ACCOUNT Cr. References Rs. References Rs.

Cash Account (Advance) Cash Account (Expenses) Commission Account Bank Account

10,000 1,500 5,100

17,400

Cash Account (Sales)

34,000

34,000 34,000

Q.2 KARIM & CO’S JOURNAL Date Details L

/F

Debit (Rs.)

Credit (Rs.)

Consignment to Lahore Account Dr. Goods Sent on Consignment Account (Good sent on consignment)

10,500

350

7,000

10,500

350

7,000

Consignment to Lahore Account Dr. Cash Account (Freight, Insurance and Loading charges paid) BTTIs Receivable Account Dr. Salman & Sons Account



(Acceptance received at two months) 130

504

14,400

2,916

10,500

6,766

130

504

14,400

2,916

10,500

6,766

Consignment to Lahore Account Dr. Salman & Sons Account (Unloading charges, storage and insurance paid by consignee) Consignment to Lahore Account Dr. Salman & Sons Account (Commission charged by consignee, 2 % + 1.5 % = 3.5 % on 14,400) Salman & Sons Account Dr. Consignment to Lahore Account (Gross sales proceed for 60 cases) 30 x 225 = 6750 25 x 250 = 6250 14400 05 x 280 = 1400 Consignment to Lahore Account Dr. General P & L Account (Profit transferred to G. P & L Account) Goods Sent on Consignment Account Dr. Trading Account (Goods sent on consignment transferred to Trading Account) Bank Account Dr. Salman & Sons Account (Balance received from consignee)

CONSIGNMENT TO LAHORE ACCOUNT References Rs. References Rs.

Goods sent on Consignment Account Cash Account (Expenses) Salman & Sons Account (Expenses) Salman & Sons Account (Commission) Profit transferred to G. P & L Account

10,000 350 130

504

2,916

Salman & Sons Account (Sales)

14,400

14,400 14,400

Dr. SALMAN & SONS ACCOUNT Cr. References Rs. References Rs.

Consignment to Lahore Account 14,400 Bill Receivable Account (Advance) Consignment to Lahore Account Consignment to Lahore Account Bank Account

7,000 130 504

6,766



14,400 14,400

Dr. GOODS SENT ON CONSIGNMENT ACCOUNT Cr. References Rs. References Rs.

Trading Account 10,500 Consignment to Lahore Account

10,500

10,500 10,500

SALMAN & SON’S JOURNAL Date Details L/F Debit

(Rs.) Credit (Rs.)

Karim & Co. Account Dr.

Bill Payable Account

(Acceptance given at two months as advance)

7,000

130

504

14,400

6,766

7,000

130

504

14,400

6,766


Cash Account

(Expenses paid on behalf of consignor)


Commission Account

(3 % commission charged to consignor)

Cash Account Dr.

Karim & Co. Account

(Goods sold and cash received on consignor's behalf)


Bank Account

(Balance remitted to consignor)

Dr. KARIM & CO. ACCOUNT Cr. References Rs. References Rs.



Bill Payable Account (Advance) Cash Account (Expenses) Commission Account Bank Account

7,000 130 504

6,766

Cash Account (Sales)

14,400

14,400 14,400

Q.3 CONSIGNMENT TO ZEESHAN ACCOUNT Date References Rs. Date References Rs.

2010 July. 1

Dec.31

Goods sent on Consignment Account Cash Account (Expenses) Zeeshan Account (Expenses) Zeeshan Account (Commission)Profit transferred to G. P & L Account

300,000 1,200 1,200

60,000

138,000

2010 Dec. 31

Zeeshan Account (Sales) Stock on Consignment Account

400,000

100,400

500,400 500,400

VALUATION OF STOCK

Rs. Cost of unsold cases = 100 x 1000 = 10,000

Add: Proportionate share of Direct Expenses : = x 100 = 400

10,400

Dr. ZEESHAN ACCOUNT Cr. Date References Rs. Date References Rs.

2010 Dec.31

Consignment to Zeeshan Account (Sales)

400,000

2010 Dec. 31

Consignment Account Cash Account (Expenses) Consignment to Zeeshan Account (Commission) Bank Account Balance c/d

1,200

60,000 90,000

248,800

400,000 400,000



Dr. GOODS SENT ON CONSIGNMENT ACCOUNT Cr. Date References Rs. Date References Rs.

2010 Dec. 31

Trading Account

300,000

2010 July. 1

Consignment to Zeeshan Account

300,000

300,000 300,000

Q.4 GLOBAL CO’S JOURNAL Date Details L/

F Debit (Rs.)

Credit (Rs.)

Consignment to Rawalpindi Account Dr. Goods Sent on Consignment Account (1000 cases of medicine sent on consignment)

100,000

3,000

150,000

18,750

1,200

25,750

100,000

52,800

100,000

100,000

3,000

150,000

18,750

1,200

25,750

100,000

52,800

100,000

Consignment to Rawalpindi Account Dr. Cash Account (Expenses paid on consignment) Zahid & Bros. Account Dr. Consignment to Rawalpindi Account (Sales proceeds of 750 cases) Consignment to Rawalpindi Account Dr. Zahid & Bros. Account (12.5 % commission charged by consignee) Consignment to Rawalpindi Account Dr. Zahid & Bros. Account (Expenses incurred by consignee) Stock on Consignment Account Dr. Consignment to Rawalpindi Account (Value of 250 cases with consignee) Bank Account Dr. Zahid & Bros. Account (Bank draft received from consignee) Consignment to Rawalpindi Account Dr. General P & L Account (Profit on consignment transferred to General P &LA/C) Goods Sent on Consignment Account Dr. Trading Account (Transfer of goods sent on consignment to trading Account)

Valuation of Stock:

Rs.



Cost of unsold cases 250 x 100 = 25,000

Add: Proportionate share of Direct Expenses : ,

, x 250= 750

25,750

Dr. CONSIGNMENT TO RAWALPINDI ACCOUNT Cr. References Rs. References Rs.

Goods sent on Consignment Account Cash Account (Expenses) Zahid & Bros. Account (Commission) Zahid & Bros. Account(Expenses) Profit transferred to G. P & L Account

100,000 3,000

18,750 1,200

52,800

Zahid & Bros. Account (Sales) Stock on Consignment Account

150,000 25,750

175,750 175,750

Dr. CONSIGNMENT TO RAWALPINDI ACCOUNT Cr. Date References Rs. Date References Rs.

2010 Mar.1

Sep.30

Goods sent on Consignment Account: Cash Account (Expenses) Freight: 35,000 Insurance: 6,500 Afzal & Sons (Commission) Afzal & Sons (Expenses) Profit transferred to General P & L Account

650,000

41,500 89,000 12,100

169,700

2010 Sep.30

Afzal & Sons (Sales) Stock on Consignment

824,000 138,300

962,300 962,300

VALUATION OF STOCK

Rs. Cost of 1/5 unsold cases 650,000 x 1/5 = 130,000




, x 130,000 = 8,300

138,300

650,000 𝑥 = 520,000 𝑥

Amount of bill

650,000 x = 975,000 x = 780,000

10 % Commission = 780,000 x = 78,000

Surplus price realized = 824,000 - 780,000 = 44,000

25% Commission on surplus = 44,000 x = 11,000

89,000

Dr. AFZAL & SONS ACCOUNT Cr. Date References Rs. Date References Rs.

2010 Sep.30

Consignment to Multan A/c Balance c/d

824,000

57,100

2010 Mar.1

Bill Receivable A/c Consignment to Multan A/c Consignment to Multan A/c

780,000

89,000 12,100

881,100 881,100

Note: The account of Afzal & Sons (consignee) is showing credit balance of Rs. 57,100 and This amount will be accordingly adjusted against the unsold goods with them:

Dr. KARIM BUX ACCOUNT Cr. Date References Rs. Date References Rs.

2010 Mar.1

Bill Receivable A/c Commission Account Cash Account (Expense)

780,000

89,000 12,100

2010 Sep.30

Cash Account (Sales) Balance c/d

824,000

57,100

881,100 881,100

IN THE LEADER OF AFZAL & SONS

Q.5 CALCULATION OF COMMISSION Rates of Commission: (i) 10 % on normal selling price. (ii) 25 % of any surplus price above normal Selling Price = 824,000 Normal selling price = 780,000



Q.6

Dr. CONSIGNMENT TO RAWALPINDI ACCOUNT Cr. Date References Rs. Date References Rs.

Goods sent on Consignment Account: Cash Account (Freight) Mr. R Account (Expenses) Mr. R Account (Commission) Stock Reverse Account Profit transferred to General P & L Account

75,000

5,000 6,000 4,200 3,750

11,050

Mr. R Account (Sales) Stock on Consignment Account Goods sent on Consignment Account (Reverse)

70,000

20,000

15,000

105,000 105,000

VALUATION OF STOCK

Rs. Value of unsold stock at invoice price: 18,700

Add: Proportionate share of Direct Expenses = ,

= 1,250

20,000

VALUATION OF STOCK

Rs. Cost of unsold cases 60,000 x ¼ = 15,000


, x 15,000 = 1,250

20,000

Dr. MR. R ACCOUNT Cr. Date References Rs. Date References Rs.

Consignment to Multan A/c

70,000

Bill Receivable A/c Consignment to Multan A/c Consignment to Multan A/c Bank A/c

30,000 6,000 4,200

29,800

70,000 70,000

Q.7 IN THE LEADER OF MR. C



Dr. CONSIGNMENT TO SARGODHA ACCOUNT Cr. Date References Rs. Date References Rs.

2010 Jan.1

Mar.31

Goods sent on Consignment Account: Cash Account (Expenses) Mr. D Account (Expenses) Mr. D Account (Commission) Stock Reverse Account Profit transferred to General P & L Account

28,000 2,000 1,200 1,350 1,000

1,950

2010 Mar.31

Mr. D Account (Sales) Stock on Consignment Account Goods sent on Consignment Account

24,000

7,500

4,000

35,500 35,500

Dr. MR. R ACCOUNT Cr. Date References Rs. Date References Rs.

2010 Mar.31

Consignment to Sargodha A/c

24,000

2010 Mar.31

Consignment Account Consignment Account Bank Account

1,200 1,350

21,450

24,000 24,000

Dr. GOODS SENT ON CONSIGNMENT ACCOUNT Cr. Date References Rs. Date References Rs.

2010 Mar.31

Consignment Account Trading Account

4,000

24,000

2010 Mar.31

Consignment Account

28,000

28,000 28,000

VALUATION OF STOCK Rs.

Value of ¼ of stock at invoice price: 28,000 x ¼ = 7,000 Add: Proportionate Direct Expenses: 2,000 x ¼ = 500 7,500

CALCULATION OF COMMISSION

5% of goods sold at invoice price: 28,000 x = 21,000 x = 1,050

10% of surplus price realized: 24,000 – 21,000 = 3,000 x = 300

1,350



CALCULATION OF STOCK RESERVE Cost Invoice Value of good sent 24,000 28,000 Less: Goods sold 18,000 21,000 6,000 7,000 Add: Proportionate direct expenses: 2,000 x ¼ = 500 500 6,500 7,500 Stock Reserve = Invoice price of stock- Cost price of stock = 7,500 - 6,500 = 1,000

Q.8

Dr. CONSIGNMENT ACCOUNT Cr. References Rs. References Rs.

Goods sent on Consignment A/c:

Cash A/c (Expenses)

Babar’s Account

Expenses Rs. 8,400

Commission 9,600

Stock Reverse Account

Profit on Consignment:

Transferred to general P & L Account

144,000

7,500

18,000

8,000

17,000

Babar’s A/c (Sales)

Stock on Consignment A/c

Goods sent on Consignment A/c

120,000

50,500

24,000

194,500 194,500

Dr. CONSIGNMENT ACCOUNT Cr. References Rs. References Rs.



Consignment A/c:

120,000

Consignment A/c:

Expenses Rs. 8,400

Commission 9,600

Bill Receivable A/c

Cash Account

18,000

40,000

62,00

120,000 120,000

WORKING NOTES:

(w-l) Commission:

Sale price of goods sold = Rs. 120,000

Less: Invoice price of goods sold = 144,000 x 2/3 = Rs. 96,000

Surplus Price = Rs. 24,000

Commission on Rs. 96,000 @ 5 % = Rs. 4.800

Commission on Rs. 24,000 @ 20 % = Rs. 4.800

Rs. 9,600

Value of Stock:

Invoice price of goods unsold = 144,000 x 1/3 = Rs 48,000

Add: Consignor's Expenses = 7,500x 1/3 = 2,500

= Rs. 50,500

Q.9 Dr. CONSIGNMENT ACCOUNT Cr.

References Rs. References Rs. Goods sent on Consignment Account Cash Account (Expenses) Aslam Account (Expenses) Aslam Account (Commission) Aslam Account (Defective Goods) Aslam Account (Bad Debts) Stock Reverse Account (20 x 150) Profit transferred to general P & L A/c

80,000 2,000 3,750 6,300

250 3,500 3,000 3,200

Aslam Account (Sales) Stock on Consignment Account Goods sent on Consignment Account

70,000 17,000 15,000



102,000 102,000

Dr. MR. ASLAM ACCOUNT Cr. References Rs. References Rs.

Consignment to Hong Kong A/c

70,000

Bill Receivable A/c Consignment to Hong Kong A/c Consignment to Hong Kong A/c Consignment to Hong Kong A/c Consignment to Hong Kong A/c Balance c/d

40,000 3,750 6,300

250 3,500

16,200 70,000 70,000

Dr. GOODS SENT ON CONSIGNMENT ACCOUNT Cr. References Rs. References Rs.

Consignment to Hong Kong A/c Trading A/c

15,000 65,000

Consignment to Hong Kong A/c

80,000

80,000 80,000

VALUATION OF STOCK AT INVOICE PRICE Rs.

Value price of 20 machines: 20 x 800 = 16,000

Add: Proportionate Direct Expenses: x 20 = 1,000

17,000

Q.10 RAZAQ & CO’S JOURNAL Date Details L/F Debit

(Rs.) Credit (Rs.)

2010 Jan.1

”

Mar.1 ”

Consignment to Mardan Account Dr. Goods Sent on Consignment Account (Goods sent on consignment at invoice price)

50,000

500

45,000

2,000

3,150

50,000

500

45,000

2,000

3,150

Consignment to Mardan Account Dr. Cash Account (Packing, carriage & insurance paid) Mushtaq& Co. Account Dr. Consignment to Mardan Account (Good sold by consignee) Consignment to Mardan Account Dr. Mushtaq & Co. Account (Expenses paid by consignee) Consignment to Mardan Account Dr. Mushtag & Co. Account



(7 % commission due to consignee)

30,000

12,625

8,333

2,083

41,667

8,225

30,000

12,625

8,333

2,083

41,667

8,225

Cash Account Dr. Mushtaq & Co. Account (Cash received from consignee) Stock on consignment Account Dr. Consignment to Mardan Account (Stock with the consignee) Good sent on consignment Accoun tDr. Consignment to Mardan Account Goods Sent on Consignment Account Dr. Stock Reserve Account (Load in closing stock adjusted) Goods Sent on Consignment Account Dr. Trading Account (Goods sent transferred to trading account) Consignment to Mardan Account Dr. General P & LA/c (Profit transferred to general P & L account)

Dr. CONSIGNMENT TO MARDAN ACCOUNT Cr. References Rs. References Rs.


Cash A/c (Expenses)

Mushtaq & Co. A/c (Expenses)

Mushtaq & Co. A/c (Commission)

Stock Reverse A/c

Profit transferred to general P & L A/c

50,000

500

2,000

3,150

2,083

8,225

Mushtaq & Co. A/c (Sales)

Stock on Consignment A/c


45,000

12,625

8,333

65,958 65,958



Dr. MUSHTAQ & CO. ACCOUNT Cr. References Rs. References Rs.

Consignment to Mardan Account

45,000



Cash Account

Balance c/d

2,000

3,150

30,000

9,850

45,000 45,000


Value of 25 cycles: 25 x 500 = 12,500

Add: Proportionate Direct Expenses: x 25 = 125

12,625

CALCULATION OF STOCK REVERSE For 100 cycles load included is: 8,333

For 25 cycles: 8,333 x = 2,083

Q.11 IN THE LEDGER OF ZAHEER & SONS

Dr. CONSIGNMENT TO KOHAT ACCOUNT Cr. References Rs. References Rs.

Goods sent on Consignment Account Cash Account (Expenses) Hammad (Expenses) Hammad Account (Expenses) Hammad Account (Commission) Stock Reverse Account Profit transferred to general P & L A/c

180,000 2,000 1,200

700 6,750 9,000

17,150

Hammad Account (Sales) Stock on Consignment Account Goods sent on Consignment Account

135,000 45,800 36,000

216,800 216,800



Dr. HAMMAD ACCOUNT Cr. References Rs. References Rs.

Consignment to Kohat Account

135,000

Consignment to Kohat Account Consignment to Kohat Account Consignment to Kohat Account Bank Account

1,200 700

6,750 126,350

135,000 135,000


Value of 25% of unsold goods: 180,000 x = 45,000

Add: Proportionate Direct Expenses: ,

, x 45,000 = 800

45,800

CALCULATION OF STOCK REVERSE For goods of Rs. 180,000 load is = 36,000

For goods of Rs. 45,000 = ,

, x 45,000 = 9,000

Q.12 IN THE LEDGER OF MOON TEXTILES MILLS LTD.

Dr. CONSIGNMENT TO AZAM TRADERS ACCOUNT Cr. References Rs. References Rs.

Goods sent on Consignment Account Azam Traders Account (Commission) Stock Reverse Account Profit transferred to general P & L A/c

225,000 25,250 22,500 74,750

Azam Traders Account (Sales) Stock on Consignment Account Goods sent on Consignment Account

205,000 67,500 75,000

347,500 347,500



Dr. AZAM TRADERS ACCOUNT Cr. References Rs. References Rs.

Consignment Account Balance c/d (Advance) (67,500 x 80%)

205,000

54,000

Bill Receivable A/c (225,000 x 80%) Consignment A/c (Commission) Bank A/c

180,000

25,250 53,750

259,000 259,000

CALCULATION OF COMMISSION

Goods sent on consignment at cost price = 150,000 Unsold goods at cost price = 45,000 45,000

Unsold goods are 30 % of goods sent = ,

, x 100

which means 70 % of the goods sent are sold:

Cost of sold goods = 150,000 x = 105,000

Now the invoice price of 70 % goods sold = ,

, x 105,000 = 157,500

Now 10 % commission on 157,500 = 15,750 Surplus price realized 205,000-157,500 = 47,500 20 % commission on surplus price

= 47500 x =9,500

Total Commission =25,250

Q.13 IN THE LEDGER OF MOHSIN COAL CO.

Dr. CONSIGNMENT TO LAHORE ACCOUNT Cr. References Rs. References Rs.

Goods sent on Consignment Account Cash Account (Expenses) Razman Ltd. Account (Expenses) Razman Ltd. Account (Brokerage 2%) Razman Ltd. Account (Commission 3%) Profit transferred to general P & L A/c

400,000 100,000

5,000 8,000

12,000 122,474.74

Razman Ltd. Account (Sales) Stock on Consignment Account

400,000 247,474.74

647,474.75 647,474.75



VALUATION OF STOCK IN CASE OF NORMAL LOSS

FORMULA:

= Adjusted per unit cost

= , ,

, =

,

,= 50.505050

Unsold quantity of Coal = 4,900 tons

Value of unsold Coal = 4,900 x 50.505050

= 247,474.74

Q.14 SALEEM CHEMICALS JOURNAL Date Details L/F Debit

(Rs.) Credit (Rs.)

2010 Jan.1

” ”

Consignment to Faisalabad Account Dr. Goods Sent on Consignment Account (Goods sent on consignment)

13,00,000

9,000

1,000

13,00,000

9,000

1,000

Consignment to Faisalabad Account Dr. Cash Account (Carriage &Octrori paid) Consignment to Faisalabad Account Dr. Furqan Account (Unloading charges paid by consignee)

Feb, 28 Furqan Account Dr 12,80,000 Consignment to Faisalabad Account 12,80,000 (Goods sold by consignee) Consignment to Faisalabad Account Dr 5,500 Furqan Account 5,500 (Expenses paid by consignee) Consignment to Faisal Account Dr 64,000 Furqan Account 64,000 (Commission due to consignee) Stock on Consignment Account Dr 240,612.24 Consignment to Faisalabad Account 240,612.24 (Stock with the consignee) Consignment to Faisal Account Dr 141,112.24 General P & L Account 141,112.24 (Profit transferred to G.P & L account)



Dr. CONSIGNMENT TO FAISLABAD ACCOUNT Cr.

Rs. Rs.

Goods sent on Consignment Account 13,00,000 Furqan Account (Sales) 12,80,000 Cash Account (Expenses) 9,000 Stock on Consignment Account 240,612.24 Furqan Account (Expenses) 1,000 Furqan Account (Expenses) 5,500 Furqan Account (Commission) 64,000 Profit transferred to general P&L A/c 141,112.24

15,20,612.24 15,20,612.24

VALUATION OF STOCK IN CASE OF NORMAL LOSS

= Original cost of Goods + Direct Expenses

= Adjusted per liter cost Total quantity - Quantity lost

= 13,00,000 + 10,000

= 13,10,000

= Rs. 13.36734694 10,000 - 2,000 98,000

Closing Stock = 18,000 liters x Rs. 13.36734694 = Rs. 240,612.24

Q.15 IN THE LEDGER OF BILAL Dr. CONSIGNMENT TO MARDAN ACCOUNT Cr.

Reference Rs. Reference Rs.

Goods sent on Consignment 5,000 Abdullah Account (Sales) 5,400 Cash Account (Expenses) 450 Cash Account (Railway) 300 Abdullah Account (Expenses) 350 Profit & Loss Account 245 Abdullah Account (Commission) 270 (Abnormal Loss)

Goods sent on Consignment Account Dr 13,00,000 Trading Account 13,00,000 (Goods sent transferred to trading account)



Loss on consignment transferred to General P &L Account 125

6,070 6,070 Dr. ABDULLAH ACCOUNT Cr.


Consignment to Mardan Account 5,400 Consignment to Mardan Account (Expenses) 350 Consignment to Mardan Account (Comm.) 270 Bank Account 4,780

5,400 5,400

CALCULATION OF ABNORMAL LOSS

Rs. Value of 10 damaged cases: 50 x 10 = 500 Add: Proportionate Direct Expenses: 450

x 10 = 45 100 545 Less: Amount received from Railway: 300 Net loss transferred to P&L Account…… 245 Q.16 IN THE LEDGER OF SOHRAB & CO. Dr. CONSIGNMENT TO COLOMBO ACCOUNT Cr.

Reference Rs. Reference Rs. Good sent on Consignment Account 500,000 A & Co. Account (Sales) 600,000 Cash Account (Expenses) 12,000 Profit & Loss Account A & Co. Account (Expenses) 15,000 (Abnormal Loss) 51,200 A & Co. Account (Expenses) 3,000 Stock on Consignment Account 25,867 A & Co. Account (Commission) 30,000 A & Co. Account (Bad Debts) 5x750 3,750 Profit transferred to P&L A/c 140,317 704,067 704,067

VALUATION OF ABNORMAL LOSS

Rs. Cost of 100 damaged bicycle: 500 x 100 = 50,000 Add: Proportionate Direct Expenses: 12,000 x 100 = 1,200



1,000 Abnormal Loss: ……. 51,200

VALUATION OF STOCK

Rs. Cost of 100 unsold cycles: 100 x 500 = 50,000 Add: Proportionate Direct Expenses by Consignor: 12,000

x 100 = 1,200 1,000 Add: Proportionate Direct Expenses by Consignor: 15,000

x 100 = 1,667 900 52,867

Dr. A & CO. ACCOUNT Cr. Reference Rs. Reference Rs.

Consignment Account (Sales) 600,000 Bank Account (Advance) 300,000

Consignment Account (Expenses) 15,000

Consignment Account (Expenses) 3,000

Consignment Account (Commission) 30,000

Consignment Account (Bad Debts) 3,750

Bank Account 248,250

600,000 600,000

Dr. PROFIT &LOSS ACCOUNT Cr. Reference Rs. Reference Rs.

Consignment Account Consignment Account 140,317

(Abnormal Loss) 51,200

Profit on consignment transferred

to general P & L A/c 89,117

140,317 140,317

Q.17 BOOKS OF KHUBAIB & CO.



Dr. CONSIGNMENT TO LAHORE ACCOUNT Cr.

Date Reference Amount Rs.


Goods sent on consignment A/c 30,000 A & Co. A/c – Sales 26,250

Cash A/c Cash A/c – Claim 2,500

Freight 800 P&L A/c – Loss (W-1) 1,469

Cartage 252 Stock on consignment A/c (W-2) 3,969

Other charges 700 1,752

A & Co. A/c:

Commission 900

Storage expenses 200

Other selling expenses 400 1,500

General P&L A/c – Profit 936

34,188 34,188

Dr. A & CO. ACCOUNT Cr Date Reference Amount

Rs. Date Reference Amount

Rs. Consignment A/c – Sales 26,250 Consignment A/c

Commission 900

Storage expenses 200

Other selling expenses 400 1,500

Bill receivable A/c (Bal.fig) 24,750

26,250 26,250

Dr. GOODS SENT ON CONSIGNMENT ACCOUNT Cr Date Reference Amount

Rs. Date Reference Amount

Rs. Trading A/c (Bal. fig.) 30,000 Consignment A/c 30,000

30,000 30,000



WORKING NOTES:

(W-1) Calculation of Abnormal Loss: Rs.

Value of 1/8 goods lost by fire 3,750 (Rs. 30,000 x 1/8) Add: Proportionate of direct expenses Consignor’s expenses 219 (Rs. 1,752 x 1/8) Total Abnormal loss 3,969 Less: Cash received – Claim 2,500 Profit & Loss account – Loss 1,469 WORKING NOTES:

(W-2) Calculation of Stock on Consignment: Rs.

Value of 1/8 unsold stock(Rs. 30,000 x 1/8) 3,750 Add: Proportionate of direct expenses

Consignor’s expenses (Rs. 1,752 x 1/8) 219

Value of stock on consignment 3,969

Q. 18 BOOKS OF A LTD: Dr. CONSIGNMENT OF KARACHI ACCOUNT Cr.



Goods sent on consignment A/c 3,00,00,000 Z Ltd A/c – Sales 1,75,00,000 Cash A/c: Cash A/c – Insurance Co. 50,00,000 Freight Charges 75,5000 P&L A/c – Loss (W-1) 25,43,750 Insurance cost 50,000 Stock on consignment A/c

(W-2) 75,43,750

Other charges 50,000 175,000 Z Ltd A/c: Sales commission 875,000 (1,75,00,000 x 5/100) Storage expenses 200,000 Marketing expenses 350,000 14,25,000 General P&L A/c - Profit 987,500 3,25,87,500 3,25,87,500



Dr. Z.LTD. ACCOUNT Cr.

Date References Amount Rs.


Consignment A/c – Sales

1,75,00,000 Consignment A/c: Sales commission storage expenses Marketing Expenses Bill receivable A/c (Bal.fig)

875,000 200,000 350,000

14,25,000 1,60,75,000

1,75,00,000 1,75,00,000

Dr. Z.LTD. ACCOUNT Cr.



Consignment A/c 75,43,750

Cash A/c – Insurance Co. Profit & loss A/c - Loss

50,00,000 25,43,750

75,43,750 75,43,750 WORKING NOTES:

(W-1) Calculation of Abnormal Loss: Invoice price of ¼ of goods lost by fire (Rs. 3,00,00,000 x ¼) Add: Proportionate of direct expenses Consignor’s expenses (Rs.175,000 x ¼) Total abnormal loss Less: Cash received from the insurance company Profit & loss account (Loss) (W-2) Calculation of Stock on Consignment: Invoice price of ¼ of goods unsold (Rs. 3,00,00,000 x ¼) Add: Proportionate of direct expenses Consignor’s expenses (Rs.175,000 x ¼) Stock on consignment

Rs. 75,00,000

43,750

75,43,750 50,00,000 25,43,750

Rs. 75,00,000

43,750

75,43,750



Q.19 BOOKS OF A:

Dr. CONSIGNMENT ACCOUNT Cr.

References Amount Rs.

References Amount Rs.

Good Consignment A/c Cash Account: Freight Insurance Carriage B’s Account: Carriage Godown Rent Commission Repair Charges Profit & Loss Account

Rs.5,000 2,500

500

500,000

8,000

56,150 292,905

B’s A/c (Sales) Abnormal Loss: Insurance Claim Profit & Loss A/c Stock on Consignment Account

Rs.22,500 7,980

750,000

30,480 76,575

Rs.2,350

6,000 45,000

2,800

857,055 857,055

Dr. B’S ACCOUNT Cr.

References Rs. References Rs. Consignment A/c (Sales) 750,000 Consignment Account:

Carriage Godown Rent Commission Repair Charges Balance c/d

Rs.2,350

6,000 45,000

2,800

56,150 693,850

750,000 750,000

Dr. GOODS SENT ON CONSIGNMENT ACCOUNT Cr.

References Rs. References Rs. Trading Account 500,000 Consignment Account 500,000

500,000 500,000



WORKING NOTES:

(w-1) Value of Abnormal Loss:

Cost price of Radios damaged = 30 Radios x Rs. 1,000 = Rs. 30,000

Add: Consignor’s Expenses = Rs. 8,000 x = Rs. 480

Gross Loss = 30,480 Less: Insurance Claim = 22,500 Net Loss Transferred to P & L A/c = Rs. 7,980

(w-2) Value of stock:

Cost price of stock = 75 Radios x Rs. 1,000 = Rs. 75,00

Add: Consignor’s Expenses = Rs. 8,000 x = Rs. 1,200

Add: Consignor’s Expenses = Rs. 2,350 x = Rs. 375

Rs. 76,575 Q.20 CONSIGNOR’S JOURNAL Date Details L/F Debit

Rs.

Credit

Rs.

Consignment to Lahore Account

Goods Sent on Consignment Account

(Goods sent on consignment)

Dr.

640,000

640,000

M/s Riaz & Co. Account


(Sales made by the consignee)

Dr. 750,000

750,000



(Expenses paid by the consignee)

Dr. 40,000

40,000



(Commission due to consignee)

Dr. 23,250

23,250



Cash Account

M/s Riaz & Account

(Cash received from consignee)

Dr. 600,000

600,000

Stock on Consignment Account


(Stock with consignee)

Dr. 106,250

106,250


Profit & Loss Account


(Sale of damaged goods and amount recovered from railway

taken into account and balance transferred to P & L A/c)

Dr. 18,000

3,250

21,250


General P & L Account

(Profit transferred to general P & L Account)

Dr. 124,250

124,250

Goods Sent on Consignment Account

Trading Account

(Good sent transferred to trading account)

Dr. 640,000

640,000

References Rs. References Rs.

Balance b/d

Goods Sent on Consignment Account:

M/s Riaz & Co. Account (Expenses)

M/s Riaz & Co. Account (Commission)

Profit transferred to general P & L A/c

50,000

640,000

40,000

23,250

124,250

M/s Riaz & Co. Account (Sales)

Stock on Consignment Account


(10,000 + 8,000):

P & L Account

(Abnormal Loss)

750,000

106,250

18,000

3,250

877,500 877,500



VALUATION OF STOCK Opening Stock: 20,000 kgs Add: Goods Sent: 160,000 kgs 180,000 kgs Less: Goods sold (normal) 150,000 kgs Goods sold (damaged) 50,000 kgs 155,000 kgs

25,000 kgs Cost of 25,000 kgs = 25,000 x 4 = Rs. 100,000 Add: Proportionate Expenses = 40,000

160,000× 25,000

= Rs. 6250

Value of stock closing: 106,250

CALCULATION OF ABNORMAL LOSS Cost of damaged goods: 5,000 x 4 = 20,000

Add: Proportionate direct expenses: 40,000

160,000× 5,000 = 1,250

21,250 Less: Received from Railway: 8,000 From sale of damaged goods: 10,000 18,000 Abnormal Loss: 3,250

Q.21 LEDGER ACCOUNT IN THE BOOKS OF DILAWAR Dr. CONSIGNMENT ACCOUNT Cr.


Goods Sent on Consignment

Account

Cash Account:

Carriage

Freight

Insurance

Sarwar’s Account:

Ground Rent

Salesman’s Salaries

Commission

Profit transferred to general P & L

A/c

Rs. 50

250

40,000

500

2,913

1,860

Loss by Accident:

Cash

Profit & Loss

Sarwar’s A/c (Sales)

Stock on Consignment

2,500

1,550 4,050

33,250

7,973 200

Rs.500

750

1,663



45,273 45,273

Dr. SARWARSs ACCOUNT Cr.


Consignment A/c 33,250 Consignment A/c

Expenses 1,250

Commission 1,663 2,913

Balance c/d 30,337

33,250 33,250

Dr. GOODS SENT ON CONSIGNMENT A/C Cr.


Trading A/c 40,000 Consignment A/c 40,000

40,000 40,000

WORKING NOTES: Value of Ghee lost & Stock Cost of Ghee sent Rs. 40,000 Add: Consignor’s Expenses 500 40,500 Less: Cost of Ghee lost by accident:

40,000 x 500

5,000

4,050

Cost of 4,500 kg Ghee 36,450

Value of Stock =

36,450

4,500 − 20 × (5,000 − 500 − 3,500 − 20)

=

36,450

4,480 × (980) = Rs. 7,973 Approx



Q.22 IN THE LEDGER OF M/S NAEEM ACCOUNT Dr. CONSIGNMENT TO HASEEB ACCOUNT Cr.

References Rs. References Rs. Goods Sent to Consignment Account 15,00,000 Haseeb Account (Sales) 105,000 Cash Account (Expenses) 10,000 Insurance company 9,000 Haseeb Account (Expenses) 3,400 Profit & Loss Account (Loss) 3,100 Haseeb Account (Commission) 5,250 Stock on Consignment Account 13,89,200 Stock Reserve Account 276,500 Goods Sent on Consignment

Account 300,000

Profit transferred to general P & L A/c 11,650

18,06,300 18,06,300

CALCULATION OF ABNORMAL LOSS

Rs.

Cost of one car destroyed: 12,000

Add: Proportionate Direct Expenses: 10,000

100 × 1

100

Abnormal Loss….. 12,100

Less: Claim accepted by Insurance Co. 9,000

Net Loss Transferred to P&L Account…… 3,100

CALCULATION OF STOCK At Cost At Invoice Value of 92 unsold cars: 11,04,000 13,80,000 Add: Proportionate Direct Expenses: 10,000

100 × 92;

9,200 9,200

11,13,200 11,13,200

Stock Reserve = Invoice Price - Cost Price = 13,89,200 – 11,13,200 = 276,000



Q.23 IN THE LEDGER OF SOHAIL Dr. CONSIGNMENT TO LAHORE ACCOUNT Cr.

References Rs. References Rs. Goods sent on Consignment Account: 30,000 Arif Account (Sales) Cash Account (Expenses) 2,000 100 x 160 = 16,000 Arif Account (Expenses) 2,600 40 x 175 = 7,000 23,000 Arif Account (Commission) 1,380 Stock on Consignment Account 6,600

Stocl Reserve Account 2,000 Profit & Loss Account 796 Profit transferred to G.P &L A/c 3,920 Damaged stock to be sold 80 x 20 = 1,600 Less Commission 6% = (96) 1,504 Goods Sent on Consignment

Account 10,000

41,900 41,900

CALCULATION OF LOSS

Rs.

Sales price of 20 units: 80 x 20 = 1,600

Less: Commission (1,600 x 6%) 96

1,504

Cost of 20 units: 20 x 100 = 2,000

Add: Share of Direct Expenses: 3,000

200 × 20

= 300

2,300

So Total cost incurred on 20 units: 2,300

Less: Estimated Sale Price 1,504

Loss transferred to P & L Account 796

Invoice price of 40 units: 40 x 150 = 6,000

Add: Share of Direct Expenses 3,000

200 × 40

= 600

6,600

Note: Assume that damaged goods have not been sold as yet.



Chapter - 9

Contract Accounts

Solutions

Q.1

Dr. CONTRACT ACCOUNT Cr.

Reference Rs. Reference Rs. Material Wages Plant Business Charges Profit Carried down Profit & Loss A/c (15,000 + 2.3x80 %) Work in progress A/c (Reserve for contingencies) 0.2

120,000 164,400

20,000 8,600

15,000

Work in Progress A/c: Value of Work Certified 240,000 x 100/80 Material on hand Plant (20,000-2,000) Profit brought down

300,000 10,000 18,000

338,000 328,000

8,000

7,000

15,000

15,000 15,000



Q.2


Reference Rs. Reference Rs. Materials: From Store From Purchased Labor on Site Depreciation on Plant Overhead Charges Direct Expenses Wages Accrued Direct Expenses Accrued Profit c/d Profit & Loss A/c (33,750 x 2/3 x 220,000/275,000) Balance (Profit) c/f

20,300

105,000 101,250

3,025 9,275 5,750 1,950

400 33,750

Work-in-Progress: Work Certified 275,000 Work Uncertified 4,125 Material on Site Profit b/d

279,125 1,575

280,700 280,700

18,000 15,750

33,750

33,750 33,750


Reference Rs. Reference Rs. Balance (Profit) c/f 220,000 Cash Account 220,000

220,000 220,000

BALANCE SHEET

AS ON 31ST DECEMBER, 2010


Profit & Loss A/C Outstanding Wages Outstanding direct Exp.

18,000 1,950 400

Work in Progress: Value of Work Certified 275,000 Add: Cost of uncertified work 4,125 279,125 Less: Profit c/f 15,750 263,375 Less: Cash received from Contractor 220,000 Material on hand

43,375 1,575



Q.3



Material Purchased Material from Stores Depreciation on Plant Wages Direct Expenses Establishment Charges Profit c/d Profit & Loss A/c (7,500 x 2/3 x 80/100) Balance (Profit) c/f

58,063 9,785 1,130

73,634 2,026 8,720 7,500

Work in Progress: Certified (120,800x100/80)151,000 Material on Site Profit b/d

151,000

9,858

160,858 160,858

4,000 3,500

7,500

33,750 7,500

Q.4



Machinery Installed Materials Labor Direct Expenses Overhead Charges Wages Accrued Profit c/d Profit x Loss A/c: (84,675 x 2/3 540,000/585,000) Balance (Profit) c/f as Reserve

45,000 256,047 223,125

9,501 12,378

8,070 84,675

Material Returned Work in Progress: Work Certified 585,000 Uncertified Work 13,500 Materials on Hand Machinery Profit b/d

1,647

598,500 5,649

33,000

638,796 638,796

52,108 32,567

84,675

84,675 84,675



Q.5



Materials by Supplier Materials from Store Wages 41,260 Add: Wages Accrued 2,826 Hire of Plant Expenses Charged Overheads Charged Profit c/d Profit & Loss A/c ( 32,000 x 2/3x 90 % ) Work in Progress (Reserve)

58,966 10,180

44,086 21,030

3,065 8,330

32,000

Material on Site Work in Progress: Work Certified 150,000 Work Uncertified 12,613 Loss of Material: Cash 884 Profit & Loss A/c 2,500 Profit b/d

11,660

162,613

3,384

177,657 177,657

19,200 12,800

32,000

32,000 32,000

Dr. WORK IN PROGESS ACCOUNT Cr.


Contract Account: Work Certified 150,000 Uncertified 12,613

162,613

Contract Account: (Reserve for Contingencies) Balanced c/d

12,800

149,813 162,613 162,613



Wages Accrued Profit & Loss A/C 19,500 - Loss of Material 2,500

2,826

16,700

Material on Site Work in Progress: Work Certified 150,000 + uncertified work: 12,613 162,613 Less: Cash received from Contractor 135,000 Cash

11,660

27,613

884



Q.6



Material Purchased Material from Stores Direct Expenses Rs. 61,490 Add: Outstanding 490 Wages Rs. 184,930 Add: Outstanding 3,660 Administration Expenses Depreciation on Plant (121,800/5 x 10/12) Profit c/d Profit & Loss A/c (67,500 x 2/3 x 90/100) Balance (Profit) c/f

280,700 94,110

61,980

188,590

21,460

20,300 67,500

Material on Site Work in Progress: Work Certified (641,700x100/90) Profit b/d

21,640

713,000

734,640 734,640

40,500 27,000

67,500

67,500 67,500

Dr. WORK IN PROGESS ACCOUNT Cr.


Contract Account: Work Certified

713,000

Contract Account: (Reserve for Contingencies) Balanced c/d

27,000

686,000 713,000 713,000





Profit & Loss A/C Outstanding Expenses Wages Rs. 3,660 Direct Expenses 400

40,500

4,150

Material on Site Work in Progress: Value of Work Certified 150,000 Less: Profit c/f 27,000 686,000 Less: Cash received from Contractor 641,700 Machinery 121,800 Less: Depreciation 20,300

21,640

44,300

101,500

Q.7



Material Labour Rs. 74,375 Add: Wages Accrued 2,400 Plant Direct Expenses Rs. 3,167 Add: Accrued 240 Establishment Charges Profit c/d Profit & Loss A/c: (28,275 x 2/3 x 180,000/195,000) Balance (Profit) c/f

85,349

76,775 15,000

3,407 4,126

28,275

Material Returned Material in Hand Work in Progress: Work Certified 195,000 Work Uncertified 4,500 Plant Profit b/d

549 1,883

199,500 11,000

212,932 212,932

17,400 10,875

28,275

28,275 28,275

Dr. CONTRACTEE’S ACCOUNT Cr.


Balanced c/d 180,000

Cash A/c 180,000

180,000 180,000




Profit & Loss A/C Outstanding Expenses Wages Rs. 2,400 Direct Expenses 240

17,400

2,640

Work in Progress: Work Certified 195,000 Work Uncertified 4,500 199,500 Less: Cash received for Contingencies 10,875 188,625 Less: Cash received from contractee 180,000 Material in Hand Material in Hand Plant

8,625

1,883

549 11,000

Q.8 COMPUTATION OF ESTIMATED PROFIT: Total expenditure upto 31-03-2010 Rs. 194,000 Add: Estimated Additional Expenditure 40,000 234,000 Add: Provision for Contingencies:

,

.x 2.5 6,000

Estimated Total Expenditure 240,000

Contract Price 280,000

Estimated Total Profit 40,000 Profit to be taken to profit &loss account on 31-03-2010 may be computed as:

= Estimated Total Profit x

x

= 40,000 x,

,x

,

,

= Rs. 28,571



Q.9



Material Wages Plant Other Expenses Profit c/d Profit & Loss A/c (27,000 x 2/3 x 80/100) Work in Progress A/c (Reserve for Contingencies)

51,000 81,000 15,000

5,000 27,000

Profit & Loss A/c: Plant Lost Rs. 3,000 Material Lost 2,500 Plant Returned to Store 2,000 Less: Depreciation: 300 Plant at Site 10,000 Less: Depreciation 1500 Material at Site Work in Progress A/c: +Work Certified 160,000 +Work Uncertified 1000 Profit c/d

5,500

1,700

8,500

2,300

161,000 179,000 179,000

14,400

12,600

27,000

27,000 27,000

Dr. CONTRACTEE’S ACCOUNT Cr.


Balanced c/d 128,000 Cash A/c 128,000

128,000 128,000



BALANCE SHEET AS ON 31ST MARCH 2010


Profit & Loss A/C 14,400 Less: Loss of Plant & Material 5,500 Outstanding Expenses Wages Rs. 2,400 Direct Expenses 240

8,900

Work in Progress: Work Certified 160,000 Work Uncertified 1,000 161,000 Less: Reserve 12,600 148,400 Less: Cash received 128,000 Plant less depreciation Material at site

20,400 10,200

2,300

Q.10



Material Labour Foremen Depreciation of Machine

Supervision:

1200 𝑥 9

12 𝑥

1

2

Other Expenses Profit c/d Profit & Loss c/d (3,017 x 2/3 x 4/5) Work in Progress A/c (Reserve)

2,150 5,011

631 56

450

1,261 3,017

Material at Site Work in Progress: +Certified 10,000 +Uncertified (w-1) 2,328 Profit b/d

248

12,328

12,576 12,576

1,609 1,408

3,017

3,017 3,017

(w-1) Cost of Work Completed: Rs.

Material 2,150

Labour 5,011



Foremen 631

Supervision 450

Depreciation 56

Other Expenses 1,261

9,559

Less: Material at site 248

9,311

Cost of 2/3 contract = Rs. 9311

Cost of full contract = 9311 x 3/2 = Rs. 13966.5

Cost of work certified = 13966.5 x ,

, = 6983.25

Cost of Work Uncertified:

Cost of 2/3 contract = 9311.00

Less: Cost of work certified = 6983.25

2327.75 or 2328

Q.11


Reference House (A)

House (B)

Reference House (A)

House (B)

Work in progress(including estimated profit) Material Wages Electric services & fittings Road making charges Plant Establishment charges (10:7) Profit c/d

14,800 23,000 20,000

1,400 8,000

12,000 7,200

-

16,600 14,000

300 6,000 5,040 2,700

Material retuned to store Material in hand Plant returned to store (12,000-10% for 10months) Plant in hand (6,000-10 % for 8 months) Contractee’s A/c Work in Progress:

Certified (22,400x100/66 )

Uncertified Profit& Loss A/c (Loss)

400

11,000

60,000

15,000

540

5,600

36,000 2,500

86,400 44,640 86,400 44,640



Profit & Loss A/c (2,700 x 2/3 x 2/3) Work in Progress A/c (Reserve)

1,200 1,500

Profit b/d

2,700

2,700 2,700

Date References Rs. Date References Rs. 2008 2009 2010

Material Wages Direct Expenses Indirect Expenses Plant Balance b/d: Work in Progress: Certified Plant at Site Material Wages Direct Expenses Indirect Expenses Profit & Loss A/c: (15,75,000 x 23 x 90 %) Balance c/d Balance b/d Work in Progress Certified Uncertified Plant at Site Material Wages Direct Expenses Profit & Loss A/c

900,000 950,000

35,000 15,000

100,000

2008 2009 2010

Work in Progress: Certified 17,50,000 Plant at site Profit & Loss A/c (Loss) Work in Progress: Certified 56,50,000 Uncertified 1,00,000 Plant at site Work in Progress b/d (Reserve for contingencies) Contractee's A/c Plant returned to store

17,50,000

80,000

170,000 20,00,000 20,00,000

17,50,000 80,000

11,00,000 11,50,000

125,000 20,000

945,000 630,000

57,50,000 50,000

58,00,000 58,00,000

56,50,000 100,000

50,000 630,000 850,000

45,000 825,000

630,000 75,00,000

20,000

81,50,000 81,50,000



Q.13



Material Direct Labour Rs. 830,000 Add: Provision 6,000 Expenses Machinery Profit c/d Profit & Loss A/c (147,000 x 2/3 x 80%) Work in Progress A/c(Reserve)

600,000

836,000

40,000 160,000

147,000

Work in Progress A/c: Work Certified 16,00,000 (12,80,000 x 100/80) Work Uncertified 16,000 Material in hand Machinery Returned to Store (32,000 – 4,000) Material at Site (128,000 – 16,000) Profit c/d

16,16,000

27,000 28,000

112,000 17,83,000 17,83,000

78,400 68,600

147,000

147,000 147,000

NASIR CONTRACTORS CO. LTD. BALANCE SHEET

AS ON 31ST MARCH 2010 Liabilities Rs. Assets Rs.

Share Capital Profit & Loss A/C 25,000 Add: Profit on Contract 78,400 103,400 Less: Depreciation 6,500 Provision for Direct Labour Creditors

351,800

96,000 6,000

81,200

Land & Buildings Machinery Rs. (52,000 + 160,000) 212,000 Less: Depreciation (63,000 + 20,000 + 6,500) 89,500 Work in Progress: Work Certified 16,00,000 Work Uncertified 16,000 16,16,000 Less: Reserve 68,600 15,47,400 Less: Cash received 12,80,000 Material at hand Bank

74,000

122,500

267,400 27,000 45,000

535,900 535,900



Q.14


Reference 1 2 3 Reference 1 2 3

Material Wages General Charges Plant Wages Accrued Profit c/d Profit & Loss A/c (18,000 x 2/3 x 15/20) Balance (Profit) c/f

72,000 110,00

4,000 20,000

4,000

18,000

58,000 112,400

2,800 16,000

4,000

20,000 14,000

1,000 12,000

1,800

Material in hand Work Certified Work Uncertified Plant 1 (20,000 – 2,000) 2 (16,000 – 800) 3 (12,000 – 300) Profit & Loss A/c Profit b/d

4,000 200,000

6,000

18,000

4,000 160,000

8,000

15,200

6,000

2,000 33,000

2,100

11,700

228,000 193,200 48,800 228,000 193,200 48,800

9,000 9,000

18,000

18,000 18,000

BALANCE SHEET AS ON 31STDECEMBER 2010


Profit & Loss A/C 9,000 Less: Loss on Contract #2 6,000 Wages Accrued Contract #1 4,000 Contract #2 4,000 Contract #3 1,800

3,000

9,800

Plant 48,000 Less: Depreciation 3,100 Work in Progress: Contract #1 47,000 Contract #2 48,000 Contract #3 8,100 Material at hand Contract #1 4,000 Contract #2 4,000 Contract #3 2,000

44,900

103,100

10,000



(w-1) WORK IN PROGRESS:

Details Contract #1 Contract #2 Contract #3

Work Certified Uncertified Work Less Reserve Less Cash Received

200,000 6,000

160,000 8,000

33,000 2,100

206,000 9,000

168,000 35,100

197,000 150,000

168,000 120,000

35,100 27,000

47,000 48,000 8,100

Q.15



Material Wages paid Rs. 100,000 Add: Accrues 10,000 Plant Expenses Profit c/d Profit & Loss A/c Work in Progress A/c (Reserve)

150,000

110,000

80,000 40,000

109,000

Plant Returned to Store (20,000 – 4,000) Plant at Site (60,000 – 12,000) Material at Site Work in Progress A/c: Work Certified 400,000 Work Uncertified 15,000 Profit c/d

16,000

48,000 10,000

415,000

489,000 489,000 42,500 66,500

109,000

109,000 109,000



ESTIMATED CONTRACT ACCOUNT (2009-2010)


Material (150,000 + 260,000) Wages (110,000 + 110,000) Plant Expenses(40,000 + 71,000) Profit made to date

410,000 220,000

80,000 111,000 127,500

Plant returned to store: On 31-12-2009 16,000 30-09-2010 32,500 Contractee’s A/c

48,500 900,000

948,500 948,500

(w-1) PROFIT TO BE TAKEN TO PROFIT & LOSS A/C IN 2001:

x 100 x

= 127,500 x 300,000

900,000 = Rs.42,500

NOTE:

(1) Accrued wages for 2009 will be paid in 2010. Thus for 2010 the wages are only Rs. 110,000.

(2) It has been presumed that plant costing Rs. 10,000 would be exhausted on the contract site during the course of second year and it would be a normal loss.

Q.16



Material Rs. 124,000 Less: Unsuitable 8,000 Wages Plant Sunday Expenses Head Office Charges Profit c/d Profit & Loss A/c (86,000 x 260,000/520,000) Work in Progress A/c (Reserve)

116,000

95,000 30,000

5,000 9,000

65,000

Work in Progress A/c: Work Certified (195,000 x 4/3) 2,60,000 Work Uncertified 30,000 Material at Site Plant at Site Profit c/d

290,000 10,000 20,000

320,000 320,000

43,000 22,000

65,000

65,000 65,000



ESTIMATED CONTRACT ACCOUNT (2009-2010)


Material (116,000 + 74,400) Wages (95,000 + 64,000) Plant (30,000 + 25,000) Sunday Expenses (5,000 + 9,000) Head Office Charges For 9 months upto 31-12-00 9,000 For 6 months upto 31-06-01 6,000 15,000 +10% on 6,000 600 Provision on Contingencies Estimated Profit

190,400 159,000

55,000 14,000

15,600 15,000 86,000

Contractee’s A/c Plant returned to store

520,000 15,000

535,000 535,000



Chapter - 10

Hire Purchase and Installment Purchase

Solutions

HIRE PURCHASE AND

INSTALLMENT PURCHASE

Q.1 BREAK UP TABLE

Description Cash Price Installment Total Interest Cash Price

Less Down payment paid Outstanding Balance Less 1st Installment pad at the end of 1 year Outstanding Balance Less 2nd Installment paid at the end of 2 year Outstanding Balance

Rs. Rs. Rs. Rs. 117,750

300,00

4,088

2,792

30,000

25,912

27,208

30,000

30,000

30,000

81,750 25,912 55,838 27,208 28,630

BOOKS OF THE PURCHASE

JOURNAL

Date Particulars L/F Debit (Rs.)

Credit (Rs.)

1st year “ “

Machinery A/c Dr. Hire Vender A/c (Being purchase of machine on H/P)

1,11,750

30,000

4,088

1,11,750

30,000

4,088

Hire Vendor A/c Dr. Bank A/c (Being amount paid as down payment) Interest A/c Dr. Hire Vendor (Being interest due on O/S balance)



“ “ “

2nd Year “ “ “

Hire Vendor A/c Dr. Bank A/c (Being amount of 1st Installment paid)

30,000

11,175

15,263

2,792

30,000

10,058

12,850

30,000

11,175

4,088 11,175

2,792

30,000

10,058

2,792 10,058

Depreciation A/c Dr. Machinery A/c (Being depreciation charged @ 10 % on diminishing balance method) Profit & Loss A/c Dr. Interest A/c Depreciation A/c (Being the transfer of interest and depreciation to Profit & Loss A/c) Interest A/c Dr. Hire Vendor A/c (Being interest due on O/S balance) Hire Vendor A/c Dr. Bank A/c (Being amount of 2nd Installment paid)

Depreciation A/c Dr. Machinery A/c ( Being depreciation charged @ 10 % on diminishing balance method) Profit & Loss A/c Dr. Interest A/c Depreciation A/c (Being the transfer of interest and depreciation to Profit & Loss A/c)

Q.2 BREAK UP TABLE

Description Cash Price

Installment Total Interest Cash Price

Cash price Less Down payment paid Outstanding Balance Less 1st Installment paid at the end of 1st year Outstanding Balance Less 2nd Installment paid at the end of 2ndyear Outstanding Balance Less 3rd Installment paid at the end of 3rdyear

Rs. Rs. Rs. Rs. 15,980

4,000

599

329

92

4,000

5,401

4,671

1,908

4,000

6,000

5,000

2,000

11,980 5,401 6,579 4,671 1,908 1,908

1,020 15,980 17,000



(i) MR. SALMAN’S JOURNAL


Credit (Rs.)

1st year “ “ “ “ “

2nd Year “ “ “

Machine AccountDr. Ahmed Motors Account (Being purchase of machine on hire purchase system)

15,980

4,000

599

6,000

1,598

2,197

329

5,000

1,438

1,767

15,980

4,000

599

6,000

1,598

599 1,598

329

5,000

1,438

329 1,438

Ahmed MotorsAccount Dr. Bank Account (Being amount paid on signing the H.P contract) Interest AccountDr. Ahmed Motors Account (Being interest due on outstanding balance) Ahmed Motors Account Dr. Bank Account (Being amount of 1st Installment paid along interest) DepreciationAccount Dr. Machine A/c (Being depreciation charged @ 10 % on machine) Profit & Loss Account Dr. InterestAccount Depreciation Account (Being the transfer of interest and depreciation to Profit & Loss Account) Interest AccountDr. Ahmed Motors Account (Being interest due on O/S balance) Ahmed Motors Account Dr. Bank Account (Being amount of 2nd Installment along with interest)

Depreciation Account Dr. Machine A/c (Being depreciation charged @ 10 % machine) Profit & Loss Account Dr. Interest Account Depreciation Account (Being the transfer of interest and depreciation to Profit & Loss account)

3rd Year

Interest Account Dr. Ahmed Motors Account (Being interest due on O/S balance)

92

92



“ “ “

Ahmed Motors Account Dr. Bank Account (Being amount of 3rd Installment along with interest)

2,000

1,294

1,386

2,000

1,294

92 1,294

Depreciation Account Dr. Machine A/c (Being depreciation charged @ 1,070 on machine) Profit & Loss Account Dr. Interest Account Depreciation Account (Being the transfer of interest and depreciation to Profit & Loss account)

(ii) MR. SALMAN

BALANCE SHEET

AT THE END OF 2ND YEAR

Assets side Rs. Machine on cost Rs. 15,980 Less: Depreciation at the end of 2nd year (1,598 + 1,438) 3,036 12,944 Less: Payable to Hire Vendor 1,908

11,036

Q.3 BREAK UP TABLE

Dr. MACHINE ACCOUNT



On 1-1-2009 Less 1st Installment paid on 31-6-2009 Outstanding Balance Less 2nd Installment paid on 31-12-2009 Outstanding Balance Less 3rd Installment paid on 30-6-2010 Outstanding Balance Less 4th Installment paid on 31-12-2010

Rs. Rs. Rs. Rs. 185,875

44,424

5,576

4,244

2,871

1,434

44,424

45,756

47,129

48,566

50,000

50,000

50,000

50,000

141,451 45,756 95,695 47,129 48,566 48,566

14,125 185,875 200,000



LEDGER ACCOUNTS IN THE BOOKS OF THE COLLIERY COMPANY Dr. HIRE VENDOR ACCOUNT Cr. Date Particulars Rs. Date Particulars Rs. 2009

Jan. 30 Dec. 31 Dec. 31

2010

June. 30 Dec. 31

2009 Jan. 1

2010 Jan. 1

Bank Account Bank Account Balance c/d Bank Account Bank Account Hire Vendor Account Balance b/d

50,000 50,000 95,695

2009 Jan. 1

June. 30 Dec. 31

2010 Jan. 1

June. 30 Dec. 31

2009

Dec. 31 Dec. 31

2009

Dec. 31 Dec. 31

Wagon Account Wagon Account Interest Account Balance b/d Interest Account Interest Account Depreciation Account Balance c/d Depreciation Account Balance c/d

185,875

5,576 4,244

195,695 195,695

50,000 50,000

95,695

2,871 1,434

100,000 100,000

185,875

18,588 167,287

185,875 158,875

167,287

16,729 150,558

167,287 167,287

Dr. WAGON ACCOUNT Cr. Date Particulars Rs. Date Particulars Rs. 2009 Jan. 1

2010 Jan. 1

Hire Vendor Account Balance b/d

185,875

2009 Dec. 31 Dec. 31

2010

Dec. 31 Dec. 31

Depreciation Account Balance c/d Depreciation Account Balance c/d

18,588

167,287 185,875 158,875

167,287

16,729

150,558 167,287 167,287

Dr. INTEREST ACCOUNT Cr. Date Particulars Rs. Date Particulars Rs. 2009

June. 30 Dec.31

2010

June. 30 Dec.31

Hire Vendor Account Hire Vendor Account Hire Vendor Account Hire Vendor Account

5,576 4,244

2009 Dec. 31

2010 Dec. 31

Profit & Loss Account Profit & Loss Account

9,820

9,820 9,820

2,871 1,432

4,305

4,305 4,305



Dr. WAGON ACCOUNT Cr. Date Particulars Rs. Date Particulars Rs. 2009

Dec.31

2010 Dec.31

Wagon Account Wagon Account

18,588

2009 Dec. 31

2010

Dec. 31

Profit & Loss Account Profit & Loss Account

18,588

18,588 18,588

16,729

16,729 16,729 16,729

Q.4 BREAK UP TABLE



On 1-1-2008 Paid on 1-1-2008 Outstanding Balance Less paid on 31-12-2008 Outstanding Balance Less paid on 31-12-2009 Outstanding Balance Less on 31-12-2010 Outstanding Balance

Rs. Rs. Rs. Rs. 81,900 18,000

3,195

2,455

1,677

18,000

14,805

15,545

16,323

18,000

18,000

18,000

18,000

63,900 14,805 49,095 15,545 33,550 16,323 17,227

BOOK OF H LTD. Dr. HIRE VENDOR ACCOUNT Cr. Date References Rs. Date References Rs.

1-1-08 31-12-08

“

31-12-09 “

31-12-10 “

Bank A/c Bank A/c Balance c/d Bank A/c Balance c/d Bank A/c Balance c/d

18,000 18,000 49,095

1-1-08 31-12-08

1-1-09 31-12-09

1-1-10

31-12-10

Wagon A/c Interest A/c Balance b/d Interest A/c Balance b/d Interest A/c

81,900 3,195

85,095 85,095 18,000 33,550

49,095 2,455

51,550 51,550 18,000 17,227

33,550 1,677

35,227 35,227



Dr. WAGON ACCOUNT Cr. Date References Rs. Date References Rs.

1-1-08

1-1-09

1-1-10

Hire Vendor Account Balance b/d Balance b/d

81,900 31-12-08 “

31-12-09 “

31-12-10 “

Depreciation Account Balance c/d Depreciation Account Balance c/d Depreciation Account Balance c/d

8,190 73,710

81,900 81,900 73,710 8,190

65,520 73,710 73,710 65,520 8,190

57,330 65,520 65,520

Q.5 BREAK UP TABLE



On 1-1-2008 Less down payment paid Outstanding Balance Less 1st Installment paid on 31-12-2008 Outstanding Balance Less 2nd Installment paid on 31-12-2009 Outstanding Balance Less 3rd Installment paid on 31-12-2010

Rs. Rs. Rs. Rs. 128,940

20,000

5,447

3,719

1,894

20,000

34,553

36,281

38,106

20,000

40,000

40,000

40,000

108,940 34,553 74,387 36,281 38,106 38,106

11,060 128,940 140,000

RAIS & CO. JOURNAL


Credit (Rs.)

2008 Jan. 1

“

Dec. 31

Machine Account Dr. Amir & Co. Account (Being purchase of machine on hire purchase system)

128,940

20,000

5,447

128,940

20,000

5,447

Amir & Co. Account Dr. Bank Account (Being amount paid as down payment) Interest Account Dr. Amir & Co. Account



“ “ “

2009 Dec. 31

“ “ “

(Being interest due on outstanding balance) 40,000

25,788

31,235

3,719

40,000

20,630

24,349

40,000

25,788

5,447 25,788

3,719

40,000

20,630

3,719 20,630

Amir & Co. Account Dr. Bank Account (Being amount of 1st Installment paid) Depreciation Account Dr. Machine A/c (Being depreciation charged @ 20 % on written down method) Profit & Loss Account Dr. Interest Account Depreciation Account (Being the transfer of interest and depreciation to Profit & Loss Account) Interest Account Dr. Amir & Co. Account (Being interest due on O/S balance) Amir & Co. Account Dr. Bank Account (Being amount of 2nd Installment paid)

Depreciation Account Dr. Machine Account (Being depreciation charged @ 20 % on written down method) Profit & Loss Account Dr. Interest Account Depreciation Account (Being the transfer of interest and depreciation to Profit & Loss account)

2010 Dec. 31

“ “ “

Interest Account Dr. Amir & Co. Account (Being interest due on O/S balance)

1,894

40,000

16,504

18,398

1,894

40,000

16,504

1,894 16,504

Amir & Co. Account Dr. Bank Account (Being amount of 3rd Installment paid)

Depreciation Account Dr. Machine Account (Being depreciation charged on written down method) Profit & Loss Account Dr. Interest Account Depreciation Account



(Being the transfer of interest and depreciation to Profit & Loss account)

JOURNAL

AMIR & CO. Date Particulars L/F Debit

(Rs.) Credit (Rs.)

2008 Jan. 1

“

Dec. 31 “ “

2009 Dec. 31

“ “

2010 Dec. 31

Rais & Co. Account Dr. Hire Purchase Sales Account (Being machine on hire purchase basis)

128,940

20,000

5,447

40,000

5,447

3,719

40,000

3,719

1,894

128,940

20,000

5,447

40,000

5,447

3,719

40,000

3,719

1,894

Bank Account Dr. Rais & Co. (Being amount received as down payment) Rais & Co. Account Dr. Interest Account (Being interest due on 1st Installment) Bank Account Dr. Rais & Co. Account (Being amount of 1st Installment received) Interest Account Dr. Profit & Loss Account (Being the transfer of interest to Profit & Loss Account) Rais & Co. Account Dr. Interest Account (Being interest due on 2nd Installment) Bank Account Dr. Rais & Co. Account (Being amount of 2nd Installment received) Interest Account Dr. Profit & Loss Account (Being the transfer of interest to Profit & Loss Account)

Rais & Co. Account Dr. Interest Account (Being interest due on 3rd Installment)



“ “

Bank Account Dr. Rais & Co. Account (Being amount of 3rd Installment received)

40,000

1,894

40,000

1,894 Interest Account Dr. Profit & Loss Account (Being the transfer of interest to Profit & Loss Account)

Q.6 BREAK UP TABLE



On 1-1-2008 Less down payment paid Outstanding Balance Less 1st Installment paid on 31-12-2008 Outstanding Balance Less 2nd Installment paid on 31-12-2009 Outstanding Balance Less 3rd Installment paid on 31-12-2010

Rs. Rs. Rs. Rs. 40,000 16,000

2,880

1,920

960

16,000

8,000

8,000

8,000

16,000

10,880

9,920

8,960

24,000 8,000

16,000 8,000 8,000 8,000

5,760 40,000 45,760

BOOK OF H LTD. Dr. HIRE VENDOR ACCOUNT Cr. Date Particulars Rs. Date Particulars Rs. 2008 Jan. 1

Dec.31 Dec.31

2009

Dec.31 Dec.31

2010

Dec.31

Bank Account Bank Account Balance c/d Bank Account Balance c/d Bank Account

16,000 10,880 16,000

2008 Jan. 1

Dec.31

2009 Jan. 1

Dec.31

2010 Jan. 1

Machine Account Interest Account Balance b/d Interest Account Balance b/d

40,000

2,880

42,880 42,880

9,920 8,000

16,000

1,920 17,920 17,920

8,960

8,000



Dec.31

Interest Account

960

8,960 8,960 Dr. MACHINE ACCOUNT Cr. Date Particulars Rs. Date Particulars Rs. 2008 Jan. 1

2009 Jan. 1

2010 Jan. 1

Hire Vendor Account Balance c/d Balance c/d

40,000

2008 Dec.31 Dec.31

2009

Dec.31 Dec.31

2010

Dec.31 Dec.31


4,000

36,000 40,000 40,000

36,000

3,600

32,400 36,000 36,000

32,400

3,240

29,160 32,400 32,400

Dr. INTEREST ACCOUNT Cr. Date Particulars Rs. Date Particulars Rs. 2008

Dec.31 2009

Dec.31 2010

Dec.31

Hire Vendor Account Hire Vendor Account Hire Vendor Account

2,880

2008 Dec.31 2009

Dec.31 2010

Dec.31

Profit & Loss Account Profit & Loss Account Profit & Loss Account

2,880

1,920

1,920

960

960

Dr. DEPRECIATION ACCOUNT Cr. Date Particulars Rs. Date Particulars Rs. 2008

Dec.31 2009

Dec.31 2010

Dec.31

Machine Account Machine Account Machine Account

4,000

2008 Dec.31 2009

Dec.31 2010

Dec.31

Profit & Loss Account Profit & Loss Account Profit & Loss Account

4,000

3,600

3,600

3,240

3,240

(b) BALANCE SHEET AS ON 31-12-2009



Assets side Rs.

Machine on Cost Rs. 40,000 Less: Depreciation upto 31-12-2009 (4,000 + 3,600) 7,600 32,400 Less: Payable to Hire Vendor 8,000

24,400

Q.7 CALCULATION OF CASH PRICE

(i) Under Back Calculation Method:

No. of Installment

Amount due at the time of Installments

Rs.

Interest Rs.

Cash Price Rs.

3rd

2nd

1st

6,300 6,000 + 7,440 = 13,440 12,800 + 8,200 = 21,000

6,300 x

= 300

13,440x

= 640

21,000x

= 1,000

6,300 – 300 = 6,000 13,440 – 640 = 12,800 21,000 – 1000 = 20,000

Total Cash Price = 20,000 + Down Payment

= 20,000 + 10,000

= 30,000



BOOKS OF HMT LTD. Dr. SAJID PRINTERS LTD. Cr. Date References Rs. Date References Rs.

1-7-09 31-12-09

1-1-10 30-06-10 31-12-10

Hire purchase sales A/c Interest A/c Balance b/d Interest A/c Interest A/c

30,000 1000

1-7-09 31-12-09

“

30-06-10 31-12-10

Bank A/c Bank A/c Balance c/d Bank A/c Bank A/c

10,000 8,200

12,800 31,000 31,000 12,800

640 300

7,440 6,300

13,740 13,740

Q.8 CALCULATION OF CASH PRICE OF MACHINE BREAK UP TABLE

No. of Installment

Amount due at the time of Installments

Rs.

Interest Rs.

Cash Price Rs.

3rd

2nd

1st

27,783 26,460 + 27,783 51,660 + 27,783

27,783 x

= 1,323

54,243 x

= 2,583

79,443 x

= 3,783

27,783– 1,323 = 26,460 54,243 – 2,583= 51,660 79,443 – 3,783 = 75,660

Total Cash Price = 75,660 + Down Payment

= 75,660 + 14,340 = 90,000

BOOKS OF MODEL INDUSTRIES LTD. Dr. MACHINE ACCOUNT Cr. Date Particulars Rs. Date Particulars Rs.



2008 Jan. 1

2009 Jan. 1

2010 Jan. 1

Ideal Machineries Ltd. A/c Balance b/d Balance b/d

90,000

2008 Dec.31 Dec.31

2009

Dec.31 Dec.31

2010

Dec.31 Dec.31


9,000

81,000 90,000 90,000

81,000

8,100

72,900 81,000 81,000

72,900

7,290

65,610 72,900 75,900

Dr. IDEAL MACHINERIES LTD.ACCOUNT Cr. Date Particulars Rs. Date Particulars Rs. 2008 Jan. 1

Dec.31 Dec.31

2009

Dec.31 Dec.31

2010

Dec.31

Bank Account Bank Account Balance c/d Bank Account Balance c/d Bank Account

14,340 27,783 51,660

2008 Jan. 1

Dec.31

2009 Jan. 1

Dec.31

2010 Jan. 1

Dec.31

Machine Account Interest Account Balance b/d Interest Account Balance b/d Interest Account

90,000

3,783

93,783 93,783

27,783 26,460

51,660

2,583 54,243 54,243

27,783

26,460

1,323 27,783 27,783

Q.9 Cash price after down payment = v = Rs: 59,685

Annual Installment = a = ?

Interest rate of annual Installment = i = 10%

No. of Installments = n = 3

v = ( 1 −

( ))

59,685 =

.( 1 −

( . ))



59,685 x 0.1 = a ( 1 −

.)

5,968.5 = a (1-0.7513148)

5,968.5 = 2486852 a

a = .

.= 24,000

Hire purchase price = 24,000 x 3 = Rs. 72,000

BREAK UP TABLE



On 1-1-2008 Unpaid on31-12-2008 Outstanding Balance Less: Paid on 31-12-2009 Outstanding Balance Less Paid on 31-12-2010

Rs. Rs. Rs. Rs. 59,685 18,032

5,968

4,165

2,182

18,038

19,835

21,818

24,000

24,000

24,000

41,653 19,835 21,818 21,818

12,315 59,685 72,000

BOOK OF P LTD. Dr. Y LTD. ACCOUNT Cr. Date References Rs. Date References Rs.

31-12-08 “

31-12-09 “

31-12-10 “

Bank A/c Balance c/d Bank A/c Balance c/d Bank A/c

24,000 41,653

1-1-08 31-12-08

1-1-09

31-12-09

1-1-10 31-12-10

Machinery A/c Interest A/c Balance b/d Interest A/c Balance b/d Interest A/c

59,685 5,968

65,653 65,653 24,000 21,818

41,653 4,165

45,818 45,818 24,000 21,818

2,182 24,000 24,000



Dr. MACHINERY ACCOUNT Cr. Date References Rs. Date References Rs.

1-1-08

1-1-09

1-1-10

Y Ltd. Account Balance b/d Balance b/d

59,685

31-12-08 “

31-12-09 “

31-12-10 “

Depreciation A/c Balance c/d Depreciation A/c Balance c/d Depreciation A/c Balance c/d

11,937 47,748

59,685 59,685 47,748 11,937

35,811 47,748 47,478 35,811 11,937

23,874 35,811 35,811

Q.10 BREAK UP TABLE

Year Amount Payable Ratio Interest Cash Price

1st 2nd 3rd

60,000 40,000 20,000

3 2 1

5500 x 3/6 = 2,750 5500 x 2/6 = 1,833 5500 x 1/6 = 917

20,000 – 2,750 = 17,250 20,000 – 1,833 = 18,167 20,000 – 917 = 19,083

6 5,500 54,500

Amount of interest = HPP – Cash Price

= [(20,000 x 3) + 20,000] – 74,500

= 5,500

BOOKS OF X LTD. Dr. CRESENT LTD.ACCOUNT Cr. Date References Rs. Date References Rs.

1st year

2nd year

3rd year

Bank A/c Bank A/c Balance c/d Bank A/c Balance c/d Bank A/c

20,000 20,000 37,250

1st year

2nd year

3rd year

Machine A/c Interest A/c Balance b/d Interest A/c Balance b/d Interest A/c

74,500 2,750

77,250 77,250 20,000 19,083

37,250 1,833

39,083 39,083 20,000

19,083

917 20,000 20,000




1st year

2nd year

3rd year

Crescent Ltd. A/c Balance b/d Balance b/d

74,500

1st year

2nd year

3rd year


7,450 67,050

74,500 74,500 67,050

7,450

59,600 67,050 67,050 59,600

7,450

52,150 59,600 59,600

Q.11 BREAK UP TABLE

Description Cash Price Installments Total Interest Cash Price

Less: Down payment paid Outstanding Balance Less 1st Installment paid at the end of 1st year Outstanding Balance

Rs. Rs. Rs. Rs. 450,000 112,500

33,750

22,500

112,500

112,500

112,500

146,250

337,500 112,500 225,000

BOOK OF Z LTD. Dr. Y LTD. ACCOUNT Cr. Date References Rs. Date References Rs.

1st year

2nd year

Bank Account Bank Account Balance c/d Car Account

112,500 146,250 225,000

1st year

2nd year

Car Account Interest Account Balance b/d Interest Account

450,000 33,750

483,750 483,750 247,500

225,000

22,500 247,500 247,500



Dr. CAR ACCOUNT Cr. Date References Rs. Date References Rs.

1st year

2nd year

Y Ltd. Account Balance b/d

450,000

1st year

2nd year

Depreciation Account Balance c/d Depreciation Account Y Ltd. P & L A/c (Loss)

45,000 405,000

450,000 405,000 405,000

40,500 247,500 117,000

405,000 405,000

BOOK OF Y LTD. Dr. Z LTD. ACCOUNT Cr. Date References Rs. Date References Rs.

1st year

2nd year

H.P. Sales Account Interest Account Balance b/d Interest Account

450,000 33,750

1st year

2nd year

Bank Account Bank Account Balance c/d Goods repossessed A/c

112,500 146,250 225,000

483,750 483,750 225,000

22,500 247,500

247,500 247,500

Q.12 BREAK UP TABLE



Cash price Less Down payment paid Outstanding Balance Less 1st Installment paid at the end of 1st year Outstanding Balance Less 2nd Installment paid at the end of 2ndyear Outstanding Balance Less 3rd Installment paid at the end of 3rdyear

Rs. Rs. Rs. Rs. 300,000 100,000

20,000

15,000

10,000

100,000

50,000

50,000

50,000

100,000

70,000

65,000

60,000

200,000 50,000

150,000 50,000

100,000 50,000



Outstanding Balance 50,000 5,000

BOOKS OF X Dr. HIRE VENDOR ACCOUNT Cr. Date References Rs. Date References Rs.

1st year

2nd year

3rd year

4th year

Bank Account Bank Account Balance c/d Bank Account Balance c/d Bank Account Balance c/d Machinery Account

100,000 70,000

150,000

1st year

2nd year

3rd year

4th year

Machinery Account Interest Account Balance b/d Interest Account Balance b/d Interest Balance b/d Interest A/c

300,000 20,000

320,000 320,000 65,000

100,000 150,000

15,000 165,000 165,000

60,000 50,000

100,000 10,000

110,000 50,000 55,000 50,000

5,000 55,000 55,000


1st year

2nd year

3rd year

4th year

Hire Vendor Account Balance c/d Balance c/d Balance c/d

300,000

1st year

2nd year

3rd year

4th year

Depreciation Account Balance c/d Depreciation Account Balance c/d Depreciation Account Balance c/d Depreciation Account Hire Vendor Account Profit & Loss A/c (Loss)

60,000 240,000

300,000 300,000 240,000

48,000

192,000 240,000 240,000 192,000

38,400

153,600 192,000 192,000 153,600 30,720

55,000 67,880

153,600 153,600

BOOKS OF HIRE VENDOR Dr. X ACCOUNT Cr. Date References Rs. Date References Rs.

1st year H.P. Sales Account 300,000 1st year Bank Account 100,000



2nd year

3rd year

4th year

Interest Account Balance b/d Interest Account Balance b/d Interest Account Balance b/d Interest Account

20,000

2nd year

3rd year

4th year

Bank Account Balance c/d Bank Account Balance c/d Bank Account Balance c/d Goods repossessed A/c

70,000 150,000

320,000 320,000 150,000

15,000 65,000

100,000 165,000 165,000 100,000

10,000 60,000 50,000

110,000 110,000 50,000

5,000 55,000

55,000 55,000 Dr. GOODS REPOSSESSED ACCOUNT Cr. Date References Rs. Date References Rs.

X Account Cash Account Profit & Loss A/c (Loss)

55,000 10,000 35,000

Bank Account(Sale of repossessed Machinery)

100,000

100,000 100,000

Q.13

Dr. BREAK UP TABLE Cr. Description Cash Price Installments Total

Interest Cash Price On 1-1-2005 Less: Down payment paid Outstanding Balance Less: 1st Installment paid on 31-12-2005 Outstanding Balance Less: 2nd Installment paid on 31-12-2005 Outstanding Balance

Rs. Rs. Rs. Rs. 480,000 120,000

36,000

24,000

12,000

120,000

120,000

120,000

120,000

156,000

144,000

360,000 120,000 240,000 120,000 120,000

BOOKS OF FRENCH TRANSPORT AGENCY Dr. RAINBOW AUTO COMPANYACCOUNT Cr. Date Particulars Rs. Date Particulars Rs.



2005 Jan. 1

Dec.31 Dec.31

2006

Dec.31 Dec.31

2007

Dec.31 Dec.31

Bank Account Bank Account Balance c/d Bank Account Balance c/d Car Account Balance c/d

120,000 156,000 240,000

2005 Jan. 1

Dec.31

2006 Jan. 1

Dec.31

2007 Jan. 1

Dec.31

Car Account Interest Account Balance b/d Interest Account Balance b/d Interest Account

480,000

36,000

516,000 516,000

144,000 120,000

240,000

24,000 264,000 264,000

60,000 72,000

120,000

12,000 132,000 132,000

WORKING: Depreciation

Value of ‘1’ car on the date of repossession Cost price of ‘1’ car on 1-1-2005 Less: Depreciation upto 31-12-2005 Less: Depreciation upto 31-12-2005 Less: Depreciation upto 31-12-2005 Value of ‘1’ car on the date of repossession

@20% Hire Purchases

@20% Hire Vendor

Rs. 240,000 48,000

Rs. 240,000 60,000

192,000 38,400

180,000 60,000

153,600 30,720

120,000 60,000

122,880 60,000

The difference between Rs. 122,880 and Rs. 60,000 is the loss for hire purchaser which is

Rs. 62.880 (122,880 – 60,000).

Dr. CARS ACCOUNT Cr. Date Particulars Rs. Date Particulars Rs. 2005 Jan. 1

Rainbow Auto

2005 Dec.31

Depreciation Account

96,000



2006 Jan. 1

2007 Jan. 1

Company Account Balance b/d Balance c/d

480,000 Dec.31

2006 Dec.31 Dec.31

2007

Dec.31 Dec.31

Dec.31

Dec.31

Balance c/d Depreciation Account Balance c/d Depreciation Account Rainbow Auto Company Account Profit & Loss Account (Loss) Balance c/d

384,000

480,000 480,000

384,000

76,800 307,200

384,000 384,000

307,200

61,440

60,000

62,880

122,880 307,200 307,200

BOOKS OF RAINBOW AUTO COMPANY Dr. FRENCH TRANSPORT AGENCY ACCOUNT Cr. Date References Rs. Date References Rs.

2005 Jan. 1

Dec.31

2006 Jan. 1

Dec.31

2007 Dec.31

H.P. Sales Account Interest Account Balance b/d Interest Account Balance b/d Interest Account

480,000

36,000

2005 Jan. 1

Dec.31 Dec.31

2006

Dec.31 Dec.31

2007

Dec.31 Dec.31

Bank Account Bank Account Balance c/d Bank Account Balance c/d Goods repossessed A/c Balance c/d

120,000 156,000 240,000

516,000 516,000

240,000 24,000

144,000 120,000

264,000 264,000

120,000 12,000

60,000 72,000

132,000 132,000



Q.14 BREAK UP TABLE Description Cash Price Installments Total

Interest Cash Price Less: Down payment paid Outstanding Balance Less: 1st Installment paid at the end of 1st year Outstanding Balance Less: 2nd Installment paid at the end of 2nd year Outstanding Balance

Rs. Rs. Rs. Rs. 120,000

30,000

13,500

11,925

10,114

30,000

10,500

12,075

30,000

24,000

24,000

90,000 10,500 79,500 12,075 67,425

BOOKS OF FAST TECH.

Dr. HIRE VENDORACCOUNT Cr. Date Particulars Rs. Date Particulars Rs.

1st year

2nd year

3rd year

Bank Account Bank Account Balance c/d Bank Account Balance c/d Computer Account Balance c/d

30,000 24,000 79,500

1st year

2nd year

3rd year

Computer Account Interest Account Balance b/d Interest Account Balance b/d Interest Account

120,000 13,500

133,500 133,500 24,000 67,425

79,500 11,925

91,425 91,425 20,580 56,959

67,425 10,114

77,539 77,539

WORKING: Depreciation

Value of ‘2’ computers on the date of repossession Cost price of ‘2’ computers Less: Depreciation for 1st year Less: Depreciation for 2nd year Less: Depreciation for3rd year Value of ‘2’ computers on possession

@20% Hire Purchases

@20% Hire Vendor

Rs. 60,000 12,000

Rs. 60,000 18,000

48,000 12,000

42,000 12,000

36,000 12,000

29,400 8,820

24,000 20,580 The difference between Rs. 20,580 and Rs. 24,000 is the loss for hire purchaser which is

Rs. 3,420 (24,000 – 20,580).



Dr. COMPUTERS ACCOUNT Cr. Date References Rs. Date References Rs.

1st year

2nd year

3rd year

Hire Vendor Account Balance b/d Balance b/d

120,000

1st year

2nd year

3rd year

Depreciation Account Balance c/d Depreciation Account Balance c/d Depreciation Account Hire Vendor Account Profit & Loss A/c (Loss) Balance c/d

24,000 96,000

120,000 120,000 96,000

24,000 72,000

96,000 96,000 72,000 24,000

20,580 3,420

24,000 72,000 72,000

BOOKS OF HIRE VENDOR Dr. FAST TECH. ACCOUNT Cr. Date References Rs. Date References Rs.

1st year

2nd year

3rd year

H.P Sales Account Interest account Balance b/d Interest account Balance b/d Interest account

120,000 13,500

1st year

2nd year

3rd year

Bank Account Bank Account Balance c/d Bank Account Balance c/d Good Repossessed A/c Balance c/d

30,000 24,000 79,500

133,500 133,500 79,500 11,925

24,000 67,425

91,425 91,425 67,425 10,114

20,580 56,959

77,539 77,539

GOODS REPOSSESSED ACCOUNT Date References Rs. Date References Rs.

Hire Vendor Account Bank Account Profit & Loss A/c (Profit)

20,580 1,328 8,092

Bank Account(Sale of repossessed computers)

30,000



30,000 30,000

BOOKS OF A LIMITED COMPANY Dr. HIRE PURCAHSE TRADINGACCOUNT Cr.

Date Particulars Rs. Date Particulars Rs. 2010 Jan.1

Dec.31

Balance b/d: Goods out on H.P. (at H.P. price) Goods sold on H.P. A/c (at H.P. price) Loss on goods repossessed A/c (4,000-500) Stock Reserve A/c Loading on closing H.P. stock) 30,000 x 50/150 Profit & Loss A/c

15,000

81,000

3,500

10,000 18,500

2010 Dec.31

Cash received Goods repossessed A/c Stock reserve A/c (Loading on opening HP stock) 15,000 x 50/150 Goods sold on H.P. A/c (Loading on goods sold) 81,000 x 50/150 Balance c/d Goods with H.P Customer (at H.P price) Hire purchase Debtors A/c

56,000

4,000 5,000

27,000

30,000

6,000 128,000 128,000

Dr. MEMARENDUM HIRE PURCHASE STOCK A/C Cr. Date Particulars Rs. Date Particulars Rs.

Balance c/d (at H.P. price) Goods sold on hire Purchases (at H.P. price)

15,000

81,000

Hire purchases debtors A/c (Bal. Fig.) Balance c/d (at H.P. price)

66,000

30,000 96,000 30,000

MEMARENDUM HIRE PURCHASE STOCK A/C Date Particulars Rs. Date Particulars Rs.

Balance c/d (at H.P. price Hire Purchases Stock A/c

66,000

Cash Received A/c Goods repossessed A/c Balance c/d (at H.P. price)

56,000 4,000 6,000

66,000 66,000

Q.16 BOOKS OF A TRADER Dr. HIRE PURCAHSE TRADINGACCOUNT Cr. Date Particulars Rs. Date Particulars Rs.



1-1-10

31-12-10

Balance b/d: Stock with customers at Selling price Installment due* Goods sold on selling price. Stock Reserve A/c Loading on closing H.P. stock) 12,000 x 60/160 Profit & Loss A/c

5,400 500

21,780

4,500 5,693

31-12-10 Cash received Stock reserve A/c (Loading on opening HP stock) 5,400 x 60/160 Goods sold on H.P. A/c (Loading on goods sold) 21,780 x 60/160 Balance c/d Stock with customers at Selling price Installment due but not Yet received

14,430

2,025

8,168

12,000

1,250 37,873 37873


Balance b/d (at H.P. price) (Balancing Figure) Hire purchases stock

500

15,180

Cash received Balance c/d (at H.P. price)

14,430

1,250 15,680 15,680



5,400

21,780

Hire purchases debtors A/c (Balancing Figure) Balance c/d (at H.P. price)

15,180

12,000 27,180 27,180



Q.17 BOOKS OF X Dr. HIRE PURCAHSE TRADINGACCOUNT Cr. Date Particulars Rs. Date Particulars Rs.

1-1-10

31-12-10

Balance b/d: Goods sold on hire purchases Installment due and unpaid Goods sold on hire purchase system at hire purchase price. Loading on goods reposes A/c (4,000-800) Stock Reserve (Loading on Installment not due and unpaid) 72,000 x 60/160 Profit & Loss A/c

32,000

160,000 3,200

27,000

41,800

31-12-10 Cash received Goods repossessed A/c (Installment due and unpaid) Stock reserve A/c Goods sold on H.P. A/c (Loading on goods sold) 160,000 x 60/160 Balance c/d Installment not due but unpaid Installment due and unpaid

112,000 4,000

12,000 60,000

72,000

4,000

264,000 264,000


Balance b/d (at H.P. price) (Balancing Figure) Hire purchases stock A/c

120,000

Cash received A/c Goods repossessed A/c Balance c/d (at H.P. price)

112,000 4,000 4,000

120,000 120,000



32,000

160,000

Hire purchases debtors A/c A/c (Balancing Figure) Balance c/d (at H.P. price)

120,000

72,000 192,000 192,000



Q.18 BOOKS OF A. RAHIM Dr. HIRE PURCAHSE TRADINGACCOUNT Cr. Date Particulars Rs. Date Particulars Rs.

1-1-10

31-12-10

Balance b/d: Hire purchases stock (at H.P. price) Installment due Goods sold on hire purchase (at H.P. price) Loss on goods repossessed A/c (500 - 50) Stock Reserve A/c (Loading on closing hire purchases stock) (10,000 x 1/2) Profit & Loss A/c

8,000 15,000

42,000

450

5,000

19,550

31-12-10 Cash received Goods repossessed A/c Stock reserve A/c (loading on opening hire purchase stock) (8,000 x ½) Goods sold on H.P. A/c (Loading on goods sold) (42,000 x ½) Balance c/d Hire purchases stock (at H.P. price) Installment due

50,000 500

4,000

21,000

10,000

4,500 90,000 90,000


Balance b/d (at H.P. price) (Balancing Figure) Goods sold on hire purchase (at H.P. price)

8,000

42,000

Hire purchases debtors A/c Balance c/d (at H.P. price)

40,000 10,000

50,000 50,000


Balance b/d (at H.P. price) H.P. stock

15,000 40,000

Cash received A/c Good Repossessed A/c Balance c/d (at H.P. price) (Balancing Figure)

50,000 500

4,500

55,000 55,000



Q.19 BOOKS REFRIGERATOR Dr. HIRE PURCAHSE TRADINGACCOUNT Cr. Date Particulars Rs. Date Particulars Rs.

1-1-10

31-12-10

Balance b/d: Installment due and unpaid Stock out with customers on hire purchase price Goods sold on hire purchase (at H.P. price) Stock Reserve A/c (Loading on closing stock) (18400 x 33.333/133.333) Profit & Loss A/c

1,200

16,000

35,200

4,600

8,200

31-12-10 Cash received Stock reserve A/c (Loading on opening stock out with customers) 16,000 x 33.333/133.333 Goods sold on H.P. (Loading on goods sold) 35,200 x 33.333/133.333 Balance c/d Stock out with customers on Hire purchases price Installment due and unpaid

32,000 4,000

8,800

18,400

2,000 65,200 65,200


Balance b/d (at H.P. price) Goods sold on hire purchases (Bal. Figure)

16,000

35,200

Hire purchases debtors A/c Balance c/d (at H.P. price)

32,800 18,400

51,200 51,200


Balance b/d (at H.P. price) Hire purchases stock A/c (Balancing Figure)

1,200

32,800

Cash received A/c Balance c/d (at H.P. price)

32,000 2,000

34,000 34,000



Q.20 IN THE BOOKS OF MR. KHUBAB Dr. HIRE PURCAHSE TRADINGACCOUNT Cr. Date Particulars Rs. Date Particulars Rs.

Purchase H.P Profit

810 238

Cash received: Ratio (50 + 125) Cycle (75 + 125) Encyclopedia (100+150) Goods repossessed A/c (Cost of encyclopedia) Stock in hands of customers at cost equivalent

175 200 250 233

190

1,048 1048

Dr. GOODS REPOSSESSED ACCOUNT Cr. Date References Rs. Date References Rs.

Hire purchases trading A/c (Cost of Encyclopedia)

233 Balance c/d 233

233 233

GENERAL TRADING ACCOUNT Particulars Rs. Particulars Rs.

Purchases 14,500 Less: Cost of Goods sold on Hire Purchase 810 Gross profit

13,690 3,310

Sales Closing Stock

12,000 5,000

17,000 17,000



WORKING:

Calculation of the value of stock at cost Equivalent:

Cost Equivalent =

x Cost Price

Cost

Rs.

H.P. Sale Price Rs.

Initial Payment

Rs.

Installment Paid Rs.

Installment Outstanding

Rs.

Cost Equivalent

Rs. Radio Cycle Encyclopedia

200 210 400

350 350 600

50 75

100

125 125 150

175 150 350

100 90

233 225 400

Q.21 IN THE BOOKS OF SALMAN Dr. HIRE PURCAHSE STOCKACCOUNT Cr. Date Particulars Rs. Date Particulars Rs.

1-1-10 Balance b/d Goods sold on hire purchase A/c

12,000

90,600

27-12-10

31-12-10

Hire purchase debtors A/c Goods repossessed A/c (Installments not yet due) Balance c/d

92,700 600

9,300

102,600 102,600

Dr. HIRE PURCAHSE DEBTORSACCOUNT Cr. Date Particulars Rs. Date Particulars Rs.

1-1-10 Balance b/d Hire purchase stock A/c

300 92,700

31-12-10 Cash A/c Goods repossessed A/c (Installments not yet not paid) Balance c/d

92,400 100

500

93,000 93,000



Dr. HIRE PURCAHSE ADJUSTMENTACCOUNT Cr. Date Particulars Rs. Date Particulars Rs.

31-12-10 31-12-10

Stock reserve A/c (w-3) Profit & Loss A/c

3,100 31,200

1-1-10 31-12-10

31-12-10

Stock reserve A/c (w-1) Good sold on hire purchase A/c (w-2) Goods repossessed A/c (Profit)

4,000

30,200

100 34,300 34,300

Dr. GOODS REPOSSESSEDACCOUNT Cr. Date Particulars Rs. Date Particulars Rs.

27-12-10 27-12-10 31-12-10

Hire purchase stock A/c Hire purchase debtors A/c Hire purchase Adjustment A/c

600 100 100

31-12-10 Balance c/d (w-4) 800

800 800

WORKING:

(w-1) If cost is Rs. 100, profit is Rs. 50 and hire purchase price is Rs. 100 + Rs. 50 = Rs. 150.

Profit on hire purchases = =

Therefore, loading on opening stock = x Rs. 12,000 = Rs. 4,000

(w-1) Loading on goods sold on hire purchase = x Rs. 90,600 = Rs. 3,000

(w-3) Loading on closing balance on hire purchase stock = x Rs. 9,300 = Rs. 3,100

(w-4) it is assumed that the goods repossessed have been valued at cost i.e.

= x Rs. 1,200 = Rs. 800

Q.22 IN THE BOOKS OF Y LTD. Dr. HIRE PURCAHSE STOCKACCOUNT Cr. Date Particulars Rs. Date Particulars Rs.



1-1-10 31-12-10

Balance c/d (at H.P. price) Goods sold on hire purchase A/c

120,000

264,000

31-12-10 Hire purchase debtors A/c Balance c/d(at H.P. price)

246,000 138,000

384,000 384,000 Dr. STOCK AT SHOPACCOUNT Cr. Date Particulars Rs. Date Particulars Rs.

1-1-10

Balance b/d Purchase A/c

15,000 204,000

31-12-10 Hire purchase stock A/c

( x Rs. 264,000)

Balance c/d

198,000

21,000 219,000 219,000

Dr. HIRE PURCAHSE DEBTORSACCOUNT Cr. Date Particulars Rs. Date Particulars Rs.

1-1-10 31-12-10

Balance b/d Hire purchase stock A/c

9,000 246,000

31-12-10 Cash A/c Balance c/d

240,000 15,000

255,000 225,000

Dr. STOCK RESERVEACCOUNT Cr. Date Particulars Rs. Date Particulars Rs.

1-1-10 31-12-10

Hire purchase adjust A/c Balance c/d

30,000 34,500

31-12-10 31-12-10

Balance b/d Hire purchase adjustment A/c

30,000

34,500 64,500 64,500

Dr. HIRE PURCAHSE ADJUSTMENTACCOUNT Cr. Date Particulars Rs. Date Particulars Rs.

31-12-10 31-12-10

Stock reserve A/c (w-3) Profit & Loss A/c

34,500 61,500

1-1-10 31-12-10

Stock reserve A/c (w-1) Good sold on hire purchase A/c (w-2)

30,000

66,000 96,000 96,000

WORKING:

(w-1) Goods are sold of a profit of 33.333 % on cost. It means, if the cost is Rs. 100, then profit is Rs. 33.333 and hire purchases price =Rs. 100 + Rs. 33.333 = Rs. 133.333.

Therefore, loading on hire purchases price = .

.=

Loading on opening balance of hire purchase debtors= x Rs. 120,000= Rs. 30,000



(w-1) Loading on goods sold on hire purchase = x Rs. 264,000 = Rs. 66,000

(w-3) Loading on closing balance on hire purchase stock = x Rs. 138,000 = Rs. 34,500

Q.23 BREAK UP TABLE Dr. MACHINE ACCOUNT Cr.

Description Cash Price Installments Total Interest Cash Price

Less: Down payment paid Outstanding Balance Less: 1st Installment paid at the end of 1st year Outstanding Balance Less: 2nd Installment paid at the end of 2nd year Outstanding Balance Less: 3rd Installment paid at the end of 3rd year

Rs. Rs. Rs. Rs. 22,350

6,000

818

558

274

6,000

5,182

5,442

5,726

6,000

6,000

6,000

6,000

16,350 5,182

11,168 5,442 5,726 5,726

1,650 22,350 24,000

BOOKS OF Z. LTD. JOURNAL


Credit (Rs.)

1st year “ “

Wagon Account Dr. Interest Suspense Account Dr. Hire Vendor Account (Being wagon purchase on hire purchase system)

22,350 1,650

6,000

24,000

6,000

Hire Vendor Account Dr. Cash Account (Being down payment paid)



“ “

2nd Year “ “

3rd year “ “

Interest Account Dr. Interest Suspense Account (Being interest due)

818

6,000

2,235

558

6,000

2,012

274

6,000

1,810

818

6,000

2,235

558

6,000

2,012

274

6,000

1,810

Wagon Account Dr. Cash Account (Being 1st Installment paid) Depreciation Account Dr. Wagon Account (Being depreciation charged in 1st year) Interest Account Dr. Interest Suspense Account (Being interest due) Hire Vendor Account Dr. Cash Account (Being 2nd Installment paid) Depreciation Account Dr. Wagon Account (Being depreciation charged in 2nd year)

Interest Account Dr. Interest Suspense Account (Being the interest due) Hire Vendor Account Dr. Cash Account (Being 3rd Installment paid)

Depreciation Account Dr. Wagon Account (Being depreciation charged in 3rd year)

Dr. WAGON ACCOUNT Cr. Date Particulars Rs. Date Particulars Rs.

1st year

2nd year

3rd year

Hire Vendor A/c Balance c/d Balance b/d

22,350 1st year

2nd year

3rd year


2,235 20,115

22,350 22,350 20,115 2,012

18,103 20,115 20,115 18,103 1,810

16,293 18,103 18,107

Dr. HIRE VENDOR ACCOUNT Cr. Date Particulars Rs. Date Particulars Rs.



1st year

2nd year

3rd year

Cash A/c Cash A/c Balance c/d Cash A/c Balance c/d Cash A/c

6,000 6,000

12,000

1st year

2nd year

3rd year

Wagon A/c Interest Suspense A/c Balance b/d Balance b/d

22,350 1,650

24,000 24,000 6,000 6,000

12,000

12,000 12,000 6,000 6,000 6,000 6,000

Dr. INTEREST SUSPENSE ACCOUNT Cr. Date Particulars Rs. Date Particulars Rs.

1st year

2nd year

3rd year

Hire Vendor A/c Balance b/d Balance b/d

1,650

1st year

2nd year

3rd year

Interest A/c Balance c/d Interest A/c Balance c/d Interest A/c

818 832

1,650 1,650 832 558

274 832 832 274 274

274 274

BOOKS OF HIRE VENDOR JOURNAL


Credit (Rs.)

1st year “ “ “

2nd Year

Z Ltd. Account Dr. Sale Account Interest Suspense Account (Being the sale of wagon on Installment system)

24,000

6,000

818

6,000

558

22,350

1,650

6,000

818

6,000

558

Cash Account Dr. Z Ltd. Account (Being down payment received) Interest Suspense A/c Dr. Interest Account (Being interest due) Cash Account Dr. Z Ltd. Account (Being 1st Installment paid) Interest Suspense A/c Dr. Interest Account (Being interest due)



“

3rd year “

Cash Account Dr. Z Ltd. Account (Being 2nd Installment paid)

6,000

274

6,000

6,000

274

6,000

Interest Suspense A/c Dr. Interest Account (Being interest due) Cash Account Dr. Z Ltd. Account (Being 3rd Installment paid)

Dr. Z LTD. ACCOUNT Cr. Date Particulars Rs. Date Particulars Rs.

1st year

2nd year

3rd year

Sales Account Suspense Account Balance b/d Balance b/d

22,350 1,650

1st year

2nd year

3rd year

Cash Account Cash Account Balance c/d Cash Account Balance c/d Cash Account

6,000 6,000

12,000 24,000 24,000 12,000

6,000 6,000

12,000 12,000 6,000 6,000

6,000 6,000

Dr. INTEREST SUSPENSE ACCOUNT Cr. Date Particulars Rs. Date Particulars Rs.

1st year

2nd year

3rd year

Interest A/c Balance c/d Interest A/c Balance c/d Interest A/c

818 832

1st year

2nd year

3rd year

Z Ltd. Balance b/d Balance b/d

1,650

1,650 1,650 558 274

832

832 832 274 274

274 274


Interest Cash Price On 1-1-2007 Less: 1st Installment paid on 31-12-2007

Rs. Rs. Rs. Rs. 177,300

41,135

8,865

41,135

50,000



Outstanding Balance Less: 2nd Installment paid on 31-12-2008 Outstanding Balance Less: 3rd Installment paid on 31-12-2009 Outstanding Balance Less: 4th Installment paid on 31-12-2010

136,165 43,192

6,808

4,649

2,378

43,192

45,351

47,622

50,000

50,000

50,000

92,973 45,351 47,622 47,622

22,700 177,300 200,000

BOOKS OF A. KARIM Dr. WAGON ACCOUNT Cr. Date Particulars Rs. Date Particulars Rs. 2007 Jan. 1

2008 Jan. 1

2009 Jan. 1

2010 Jan. 1

Hire Vendor A/c Balance b/d Balance b/d Balance b/d

177,300

2007 Dec. 31

2008 Dec. 31

2009 Dec. 31

2010 Dec. 31

Depreciation A/c Balance c/d Depreciation A/c Balance c/d Depreciation A/c Balance c/d Depreciation A/c Balance c/d

17,730

159,570 177,300 177,300

159,570

15,957

143,613 159,570 159,570

143,613

14,361

129,252 143,613 143,613

129,252

12,925

116,327 129,252 129,252

Dr. VENDOR’S ACCOUNT Cr. Date Particulars Rs. Date Particulars Rs. 2007 Jan. 1

Dec. 31

2008 Jan. 1

Dec. 31

2009 Jan. 1

Dec. 31

Cash A/c Balance c/d Cash A/c Balance c/d Cash A/c Balance c/d

50,000

150,000

2007 Jan. 1

Dec. 31

2008 Jan. 1

2009 Jan. 1

Motor Car A/c Interest Suspense A/c Balance b/d Balance b/d

177,300

22,700 200,000 200,000

50,000

100,000

150,000

150,000 150,000

50,000 50,000

100,000

100,000 100,000



2010

Dec. 31

Cash A/c

50,000

2010 Jan. 1

Balance b/d

50,000

50,000 50,000

Dr. INTEREST SUSPENSE ACCOUNT Cr. Date Particulars Rs. Date Particulars Rs. 2007 Jan. 1

2008 Jan. 1

2009 Jan. 1

2010 Jan. 1

Hire Vendor A/c Balance c/d Balance c/d Balance c/d

22,700

2007 Dec. 31 Dec. 31

2008

Dec. 31

2009 Dec. 31

2010 Dec. 31

Interest A/c Balance c/d Interest A/c Balance c/d Interest A/c Balance c/d Interest A/c Balance c/d

8,865

13,835 22,700 22,700

13,835

6,808 7,027

13,835 13,835

7,027

4,649 2,378

7,027 7,027

2,378

2,378

2,378 2,378


Interest Cash Price On 1-1-2006 Less: 1st Installment paid on 31-12-2006 Outstanding Balance Less: 2nd Installment paid on 31-12-2007 Outstanding Balance Less: 3rd Installment paid on 31-12-2008 Outstanding Balance Less: 4th Installment paid on 31-12-2009

Rs. Rs. Rs. Rs. 4,100

713

287

237

184

126

713

763

816

874

1,000

1,000

1,000

1,000

3,387 763

2,624 816

1,808 874



Outstanding Balance Less: 5th Installment paid on 31-12-2010

934 934

66

934

1,000

900 4,100 5,000

BOOKS OF Z. LTD. JOURNAL


Credit (Rs.)

2006 Jan. 1

Dec. 31 “

2007 Dec. 31

“

2008 Dec. 31

“

2009 Dec.31

“

2010 Dec. 31

“

Computer A/c Dr. Interest Suspense A/c Dr. Hire Vendor A/c (Being computer purchase on Installment system)

4,100 900

287

1,000

237

1,000

184

1,000

126

1,000

66

1,000

5,000

287

1,000

237

1,000

184

1,000

126

1,000

66

1,000

Interest A/c Dr. Interest Suspense A/c (Being interest due) Hire Vendor A/c Dr. Cash A/c (Being 1st Installment paid) Interest A/c Dr. Interest Suspense A/c (Being interest due) Hire Vendor A/c Dr. Cash A/c (Being 2nd Installment paid) Interest A/c Dr. Interest Suspense A/c (Being interest due) Hire Vendor A/c Dr. Cash A/c (Being 3rd Installment paid) Interest A/c Dr. Interest Suspense A/c (Being interest due

Hire Vendor A/c Dr. Cash A/c (Being 4th Installment paid) Interest A/c Dr. Interest Suspense A/c (Being interest due

Hire Vendor A/c Dr. Cash A/c



(Being 5th Installment paid)

LEDGER ACCOUNTS IN THE BOOKS OF ALI Dr. HIRE VENDOR’S ACCOUNT Cr. Date Particulars Rs. Date Particulars Rs. 2006

Dec. 31 Dec. 31

2007 Dec. 31 Dec. 31

2008 Dec. 31 Dec. 31

2009 Dec. 31 Dec. 31

2010 Dec. 31

Cash A/c Balance c/d Cash A/c Balance c/d Cash A/c Balance c/d Cash A/c Balance c/d Cash A/c

1,000 4,000

2006 Jan. 1

2007 Jan. 1

2008 Jan. 1

2009 Jan. 1

2010 Jan. 1

Computer A/c Interest Suspense A/c Balance b/d Balance b/d Balance b/d Balance b/d

4,100

900

5,000 5,000

1,000 3,000

4,000

4,000 4,000

1,000 2,000

3,000

3,000 3,000

1,000 1,000

2,000

2,000 2,000

1,000

1,000

1,000 1,000



Dr. INTEREST SUSPENSE ACCOUNT Cr. Date Particulars Rs. Date Particulars Rs. 2006 Jan. 1

2007 Jan. 1

2008 Jan. 1

2009 Jan. 1

2010 Jan. 1

Hire Vendor A/c Balance b/d Balance b/d Balance b/d Balance b/d

900

2006 Dec. 31 Dec. 31

2007

Dec. 31 Dec. 31

2008

Dec. 31

2009 Dec. 31

2010 Dec. 31

Interest A/c Balance c/d Interest A/c Balance c/d Interest A/c Balance c/d Interest A/c Balance c/d Interest A/c

287 613

900 900

613

237 376

613 613

376

184 192

376 376

192

126

66 192 192

66

66

66 66

BOOKS OF HIRE VENDOR JOURNAL


Credit (Rs.)

2006 Jan. 1

Dec. 31

Dec. 31

2007 Dec. 31

Dec. 31

Ali Account Dr. Sale Account Interest Suspense Account (Being the sale of computer on Installment system)

5,000

287

1,000

237

1,000

4,100

900

287

1,000

237

1,000

Interest Suspense A/c Dr. Interest A/c (Being the interest due) Cash Account Dr. Ali Account (Being 1st Installment paid) Interest Suspense A/c Dr. Interest A/c (Being the interest due) Cash Account Dr. Ali A/c (Being 2nd Installment paid)



2008 Dec. 31

Dec. 31

2009 Dec. 31

Dec. 31

2010 Dec. 31

Dec. 31

Interest Suspense A/c Dr. Interest A/c (Being the interest due)

184

1,000

126

1,000

66

1,000

184

1,000

126

1,000

66

1,000

Cash Account Dr. Ali A/c (Being 3rd Installment paid) Interest Suspense A/c Dr. Interest A/c (Being the interest due) Cash Account Dr. Ali A/c (Being 4th Installment paid) Interest Suspense A/c Dr. Interest A/c (Being the interest due) Cash Account Dr. Ali A/c (Being 5th Installment paid)

Dr. ALI ACCOUNT Cr. Date Particulars Rs. Date Particulars Rs. 2006 Jan. 1 Jan. 1

2007 Jan. 1

2008 Jan. 1

2009 Jan. 1

2010 Jan. 1

Sales A/c Interest Suspense Account Balance b/d Balance b/d Balance b/d Balance b/d

4,100

900

2006 Dec. 31 Dec. 31

2007

Dec. 31 Dec. 31

2008

Dec. 31 Dec. 31

2009

Dec. 31 Dec. 31

2010

Dec. 31

Cash A/c Balance c/d Cash A/c Balance c/d Cash A/c Balance c/d Cash A/c Balance c/d Cash A/c

1,000 4,000

5,000 5,000

4,000

1,000 3,000

4,000 4,000

3,000

1,000 2,000

3,000 3,000

2,000

1,000 1,000

2,000 2,000

1,000

1,000 1,000 1,000



Dr. INTEREST SUSPENSE ACCOUNT Cr. Date Particulars Rs. Date Particulars Rs. 2006

Dec. 31 Dec. 31

2007

Dec. 31 Dec. 31

2008

Dec. 31 Dec. 31

2009

Dec. 31 Dec. 31

2010

Dec. 31

Interest A/c Balance c/d Interest A/c Balance c/d Interest A/c Balance c/d Interest A/c Balance c/d Interest A/c

287 613

2006 Jan. 1

2007 Jan. 1

2008 Jan. 1

2009 Jan. 1

2010 Jan. 1

Ali Cash A/c Balance b/d Balance b/d Balance b/d Balance b/d

900

900 900

237 376

613

613 613

184 192

376

376 376

126

66

192

192 192

66

66 66 66


Interest Cash Price On 1-1-2008 Less: Down payment Paid Outstanding Balance Less: 1st Installment paid on 31-12-2008 Outstanding Balance Less: 2nd Installment paid on 31-12-2008 Outstanding Balance Less: 3rd Installment paid on 31-12-2010

Rs. Rs. Rs. Rs. 7,450 2,000

-

273

186

91

2,000

1,727

1,814

1,909

2,000

2,000

2,000

2,000

5,450 1,727 3,723 1,814 1,909 1,909

0 550 7,450 8,000



BOOKS OF MR. TARIQ Dr. MACHINERY ACCOUNT Cr. Date Particulars Rs. Date Particulars Rs.

2008 Jan. 1

2009 Jan. 1

2010 Jan. 1

Hire Vendor A/c Balance b/d Balance b/d

7,450

2008

Dec. 31

2009 Dec. 31

2010 Dec. 31


745

6,705 7,450 7,450

6,705

671

6,705 6,705 6,705

6,034

603

5,431 6,034 143,613

HIRE VENDOR BOOKS

Dr. TARIQ ACCOUNT Cr. Date Particulars Rs. Date Particulars Rs. 2008 Jan. 1 Jan. 1

2009 Jan. 1

2010 Jan. 1

Sales A/c Interest Suspense Account Balance b/d Balance b/d

7,450

550

2008 Jan. 1

Dec. 31 Dec. 31

2009

Dec. 31 Dec. 31

2010

Dec. 31

Cash A/c Cash A/c Balance c/d Cash A/c Balance c/d Cash A/c

2,000 2,000 4,000

8,000 8,000

4,000

2,000 2,000

4,000 4,000

2,000

2,000 2,000 2,000

Dr. INTEREST SUSPENSE ACCOUNT Cr. Date Particulars Rs. Date Particulars Rs. 2008

Dec. 31 Dec. 31

2009

Dec. 31 Dec. 31

Interest A/c Balance c/d Interest A/c Balance c/d

273 277

2008 Jan. 1

2009 Jan. 1

Tariq A/c Balance b/d

550

550 550

186 91

277



2010

Dec. 31

Interest A/c

277 2010 Jan. 1

Balance b/d

277

91

91 91 91

Advanced Accounting Final - Paksights

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