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2013

Compiled and Solved by:

Sameer Hussain

XI – ACCOUNTING

PRIVATE

Compiled & Solved by: Sameer Hussain www.a4accounting.weebly.com

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X I – A c c o u n t i n g – 2 0 1 3 ( P r i v a t e )

ACCOUNTING – 2013

PRIVATE Time: 20 Minutes Max. Marks: 20

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

(1) N.S.F. stand for: (a) National Studies Federation. (b) New Study Federation. (c) Net Sufficient Fund. (d) Non – Sufficient Fund.

(2) Such entry is called contra entry that is entered in cash book on:

(a) Receipts side. (b) Payment side. (c) Both sides. (d) None of these.

(3) These accounts normally have credit balance except:

(a) Accounts payable. (b) Bank loan. (c) Sales. (d) Sales return and allowance.

(4) This is the part of accounts receivable that is estimated to be uncollectible:

(a) Bad debts. (b) Depreciation. (c) Unsold inventory. (d) Credit sales.

(5) Assets are equal to:

(a) Cash + Capital. (b) Capital – Liabilities. (c) Capital + Liabilities. (d) Cash – Capital.

(6) The total liabilities of a business are Rs.50,000 which is 2/3 of the total assets. Then the total

assets will be: (a) Rs.95,000. (b) Rs.85,000. (c) Rs.75,000. (d) Rs.65,000.


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(7) Bank overdraft means the business: (a) Is wasting money. (b) Has bought too many goods. (c) Is having more receipts than payments. (d) Had paid more out of its bank account than it has put in.

(8) Interest earned but not yet received is called:

(a) Accrued income. (b) Unearned income. (c) Other income. (d) None of these.

(9) In the balance sheet, ending inventory is shown as:

(a) Liabilities. (b) Assets. (c) Income. (d) Capital.

(10) Net profit is always:

(a) Equal to gross profit. (b) More than gross profit. (c) Less than gross profit. (d) None of these.

(11) Opening entries are prepared for:

(a) Income, Expenses, Drawings. (b) Income, Assets, Expenses. (c) Drawings, Liabilities, Expenses. (d) Assets, Capital, Liabilities.

(12) The best describes accumulated depreciation:

(a) Expense account. (b) Assets account. (c) Contra asset account. (d) Liabilities account.

(13) Cost of goods sold is:

(a) Asset. (b) Income. (c) Expense. (d) Liability.

(14) The error in cash account will affect:

(a) Income statement. (b) Sales journal. (c) Purchase journal. (d) Balance sheet.


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(15) Accrued income is shown in: (a) Income statement. (b) Balance sheet. (c) Cash book. (d) Both income statement and balance sheet.

(16) The discount given on prompt payment is called:

(a) Trade discount. (b) Quantity discount. (c) Cash discount. (d) None of these.

(17) This is a long term liability:

(a) Salaries payable. (b) Rent payable. (c) Bank loan. (d) Accounts payable.

(18) Narration is written in:

(a) In between the entries. (b) Above the entry. (c) Below the entry. (d) Anywhere.

(19) Cash book is:

(a) Ledger. (b) Subsidiary ledger. (c) Statement. (d) Financial statement.

(20) Dishonoured cheques of customers are recorded in:

(a) Petty cash book. (b) Sales journal. (c) Cash book. (d) Purchase journal.


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ACCOUNTING – 2013

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

SECTION “B” (SHORT – ANSWER QUESTIONS) (50) Note: Attempt any Four questions. All questions carry equal marks. The use of calculator is allowed. Q.No.2 ACCOUNTING EQUATIONS

a) State the fundamental accounting equation. b) Give the rules of Debit and Credit in terms of increase and decrease in financial elements. c) List in sequence the steps involved in a complete accounting cycle.

SOLUTION 2 (a) Accounting equation: Assets = Liabilities + Owner’s Equity SOLUTION 2 (b) Rules of Debit and Credit:

Head of Accounts Increases Decreases

Assets Recorded as Debit Recorded as Credit

Liabilities Recorded as Credit Recorded as Debit

Owner’s Equity Recorded as Credit Recorded as Debit

Revenue & Income Recorded as Credit Recorded as Debit

Expenses Recorded as Debit Recorded as Credit

SOLUTION 2 (c) Steps of Accounting Cycle:

Journal Entries: The transaction is recorded in journal as a debit and credit.

Post to Ledger: The journal entries are transferred to the appropriate T-accounts in the general ledger.

Trial Balance: A trial balance is calculated to verify that the sum of debits is equal to the sum of credits.

Adjusting Entries: Adjusting entries are made for accrued and differed items. The entries are journalized and posted to the T-accounts in the general ledger.

Adjusted Trial Balance: A new trial balance is calculated after making the adjusting entries.

Financial Statement: Income statement, balance sheet and cash flow statements are prepared.

Closing Entries: Transfer the balances of temporary accounts to owner’s equity account.

After-Closing Trial Balance: A final trial balance is calculated after the closing entries made.

Reversing Entries: Reverse the necessary adjusting entries (optional).


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Q.No.3 GENERAL LEDGER GIVEN The trial balance of “Habib Co,” showed the following balances as on December 1, 2012:

Cash Rs. 10,000 Accounts receivable Rs. 5,000 Merchandise inventory Rs. 3,000 Accounts payable Rs. 8,000 Habib’s Capital Rs. 10,000

The transactions for the month of December 2012 were as follows: Dec. 05, 2012: Purchase merchandise on account from Rana & Co. for Rs.7,000. Dec. 08: Returned merchandise to Rana & Co. Rs.1,100. Dec. 12: Sold merchandise to Mumtaz & Co. on account for Rs.22,000. Dec. 15: Sold merchandise for cash Rs.15,000. Dec. 17: Merchandise was returned by Mumtaz & Co. Rs.1,200. Dec. 18: Purchased office equipment on account for Rs.5,000. Dec. 20: Opened a bank account with Rs.10,000. Dec. 24: Withdrew merchandise Rs.2,000 and cash Rs.3,000 for personal use. Dec. 31: Paid cash for salary expense Rs.2,000. REQUIRED Enter the opening balances and post the above transactions in General Ledgers. SOLUTION 3

HABIB CO. GENERAL LEDGER

Cash

Dec. 1 Balance 10,000 Dec. 20 Bank 10,000 Dec. 15 Sales 15,000 Dec. 24 Drawings 3,000 Dec. 31 Salaries expense 2,000

15,000 Dec. 31 c/d balance 10,000

25,000 25,000

Jan. 1 b/d balance 10,000

Accounts Receivable

Dec. 1 Balance 5,000 Dec. 17 Sales return & allowance 1,200 Dec. 12 Sales 22,000 Dec. 31 c/d balance 25,800

27,000 27,000


Merchandise Inventory

Dec. 1 Balance 3,000 Dec. 31 c/d balance 3,000

3,000 3,000



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Accounts Payable

Dec. 8 Purchase returns & allowance 1,100 Dec. 1 Balance 8,000 Dec. 31 c/d balance 18,900 Dec. 5 Purchases 7,000 Dec. 18 Office equipment 5,000

20,000 20,000


Habib’s Capital

Dec. 31 c/d balance 10,000 Dec. 1 Balance 10,000

10,000 10,000


Purchases

Dec. 5 Accounts payable 7,000 Dec. 24 Drawings 2,000 Dec. 31 c/d balance 5,000

7,000 7,000


Purchases Return & Allowances

Dec. 31 c/d balance 1,100 Dec. 8 Accounts payable 1,100

1,100 1,100


Sales

Dec. 31 c/d balance 37,000 Dec. 12 Accounts receivable 22,000 Dec. 15 Cash 15,000

37,000 37,000


Sales Return & Allowance

Dec. 17 Accounts receivable 1,200 Dec. 31 c/d balance 1,200

1,200 1,200


Office Equipment

Dec. 18 Accounts payable 5,000 Dec. 31 c/d balance 5,000

5,000 5,000


Bank

Dec. 20 Cash 10,000 Dec. 31 c/d balance 10,000

10,000 10,000



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Salaries Expenses

Dec. 31 Cash 2,000 Dec. 31 c/d balance 2,000

2,000 2,000


Drawings

Dec. 24 Cash/purchases 5,000 Dec. 31 c/d balance 5,000

5,000 5,000

Jan. 1 b/d balance 5,000 Additional Working:

HABIB CO. GENERAL JOURNAL

Date Particulars P/R Debit Credit

Dec. 05 Purchases 7,000 Accounts payable (Rana & Co.) 7,000 (To record the goods purchased on account)

Dec. 08 Accounts payable (Rana & Co.) 1,100 Purchase returns and allowance 1,100 (To record the goods returned to supplier)

Dec. 12 Accounts receivable (Mumtaz & Co.) 22,000 Sales 22,000 (To record the goods sold on account)

Dec. 15 Cash 15,000 Sales 15,000 (To record the goods sold for cash)

Dec. 17 Sales return and allowance 1,200 Accounts receivable (Mumtaz & Co.) 1,200 (To record the goods returned by customer)

Dec. 18 Office equipment 5,000 Accounts payable 5,000 (To record the purchase of office equipment on credit)

Dec. 20 Bank 10,000 Cash 10,000 (To record the cash deposited into bank)

Dec. 24 Drawings 5,000 Purchases 2,000 Cash 3,000 (To record the cash and goods withdrew for personal

use by owner)

Dec. 31 Salaries expense 2,000 Cash 2,000 (To record the salaries paid to employees)


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HABIB CO. TRIAL BALANCE

FOR THE MONTH ENDED 31 DECEMBER 2012

NO. PARTICULARS P/R DEBIT CREDIT

1 Cash 10,000 2 Bank 10,000 3 Accounts receivable 25,800 4 Merchandise inventory 3,000 5 Office equipment 5,000 6 Accounts payable 18,900 7 Habib’s Capital 10,000 8 Habib’s Drawings 5,000 9 Purchases 5,000

10 Purchases return and allowances 1,100 11 Sales 37,000 12 Sales return and allowances 1,200 13 Salaries expenses 2,000

Total 67,000 67,000

Q.No.4 CASH BOOK GIVEN Mr. Shehzad uses three – column cash book. On April 1, 2012, he had cash in hand Rs.40,000 and balance at bank Rs.50,000 (Bank overdraft). During the month he completed the following transactions: April 01: Cash sales Rs.60,000. April 03: Received a cheque for Rs.15,000 from a customer Raja, deposited into bank in full

settlement of his account of Rs.16,000. April 05: Mr. Ahsan settled his account of Rs.18,000 after a discount of Rs.1,000 through cheque. April 09: Deposited Mr. Ahsan’s cheque into bank. April 18: Paid salaries by cheque Rs.11,000. April 25: Drew cash for personal use Rs.1,000. April 30: Drew from bank for office use Rs.4,000. REQUIRED Record the above transactions in three column cash book. SOLUTION 4


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MR. SHEHZAD THREE COLUMN CASH BOOK

FOR THE MONTH OF APRIL 2012

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Q.No.5 BANK RECONCILIATION STATEMENT GIVEN Comparison of cash book and bank statement of Khalid Traders revealed the following information: Balance as per cash book Rs. 12,000 Balance as per bank statement Rs. 37,000

(i) Cheque deposited but not shown in bank statement Rs. 15,000 (ii) Cheque issued but not presented at the bank Rs. 32,000 (iii) Direct deposit by a customer in bank Rs. 8,000 (iv) Dishonoured cheque Rs. 1,500 (v) Bank service charges Rs. 500 (vi) Profit given by bank Rs. 2,000

REQUIRED a) Prepare Bank Reconciliation Statement as on Dec. 31, 2012. b) Prepare necessary adjusting entries.

SOLUTION 5 (a)

KHALID TRADERS BANK RECONCILIATION STATEMENT

FOR THE MONTH ENDED 31 DECEMBER 2012

Particulars Cash Book Pass Book

Balance on 31 December 2012 12,000 37,000 Add: Deposited but not shown (i) 15,000 Less: Unpresented cheque (ii) (32,000) Add: Direct deposit by customer (iii) 8,000 Less: Dishonoured cheque (iv) (1,500) Less: Bank service charges (v) (500) Add: Profit by bank (vi) 2,000

Reconcile Balance 20,000 20,000

SOLUTION 5 (b)

KHALID TRADERS GENERAL JOURNAL

FOR THE MONTH OF DECEMBER 2012


1 Bank 10,000 Accounts receivable 8,000 Profit 2,000

(To record the increase in bank account)

2 Accounts receivable 1,500 Bank service charges 500 Bank 2,000 (To record the decrease in the bank account)


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Q.No.6 SPECIAL JOURNAL GIVEN Following information for the month of January 2013, is extracted from the books of Gulistan Co.: Jan. 01: Sold merchandise on credit to Rehman Sons Rs.5,000. Jan. 02: Sold goods on credit to Mehran Stores Rs.6,000. Jan. 03: Rehman Sons returned merchandise worth Rs.450. Jan. 10: Sold merchandise to Hadi & Co. worth Rs.2,000. Jan. 17: 10% allowance given to Mehran Stores on defective goods of Rs.2,000 sold to him on

January 02, 2013. Jan. 27: Sold merchandise on account to Rehman Sons Rs.3,000. Jan. 29: Sold merchandise to Hadi & Co. Rs.2,500 for cash. REQUIRED

a) Record the above transactions in appropriate journal. b) Prepare accounts receivable subsidiary ledgers for each customer in self balancing form.

SOLUTION 6 (a)

GULISTAN CO. SALES JOURNAL

FOR THE MONTH OF JANUARY 2013

Date Invoice No. Name of Customers P/R Amount

January 01, 2013 Rehman Sons 5,000 January 02, 2013 Mehran Stores 6,000 January 10, 2013 Hadi & Co. 2,000 January 27, 2013 Rehman Sons 3,000

January 31, 2013 Accounts receivable Dr. 16,000 Sales Cr.

GULISTAN CO.

SALES RETURNS AND ALLOWANCE JOURNAL FOR THE MONTH OF JANUARY 2013

Date Invoice No. Name of Customers P/R Amount

January 03, 2013 Rehman Sons 450

January 31, 2013 Sales return & allowance Dr. 450 Accounts receivable Cr.

GULISTAN CO.

GENERAL JOURNAL FOR THE MONTH OF JANUARY 2013


Jan. 17 Sales discount 200 Accounts receivable (Mehran Stores) 200 (To record the sales discount allowed to customer)

Jan. 29 Cash 2,500 Sales 2,500 (To record the goods sold for cash)


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SOLUTION 6 (b) GULISTAN CO,

ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER FOR THE MONTH OF JANUARY 2013

Rehman Sons

Date Invoice No. Description P/R Debit Credit Balance

Jan.01.2013 Sales 5,000 5,000

Jan.03.2013 Sales return 450 4,550

Jan.27.2013 Sales 3,000 7,550

Mehran Stores


Jan.02.2013 Sales 6,000 6,000

Jan.17.2013 Sales discount 200 5,800

Hadi & Co.


Jan.10.2013 Sales 2,000 2,000

Q.No.7 CORRECTION OF ERROR GIVEN Following errors were found before closing the books of Karim Brothers:

a) Purchase of stationary for Rs.1,200 has been recorded as purchase. b) Construction as addition of office building for Rs.30,000 was wrongly debited to repair expense

account. c) Defective goods returned by a customer for Rs.2,000 were charged to sales account. d) Depreciation expense on machinery was overcharged by Rs.1,000 through allowance for

depreciation account. e) Cash Rs.900 received from a customer Naseem, was recorded as received from Nasreen. f) Rs.600 was paid for repair of proprietor’s home T.V. set and debited to general expense

account. REQUIRED Prepare correcting entries in General Journal. SOLUTION 7

KARIM BROTHERS CORRECTING ENTRIES


1 Office supplies 1,200 Purchases 1,200 (To correct the purchase of office supplies)

2 0ffice building 30,000 Repairs expense 30,000 (To correct the construction of building)

3 Sales return and allowance 2,000 Sales 2,000 (To correct the goods returned by customer)


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4 Allowance for depreciation 1,000 Depreciation expense 1,000 (To correct the depreciation expense)

5 Accounts receivable (Nasreen) 900 Accounts receivable (Naseem) 900 (To correct the cash collected from customer)

6 Drawings 600 General expense 600 (To correct the withdrew for personal use)

SECTION “C” (DETAILED – ANSWER QUESTIONS) (30) Instruction: Attempt the following question which is compulsory: Q.No.8 FINANCIAL STATEMENT AND CLOSING PROCESS GIVEN The following is the pre – closing trial balance of Syed Sons for the year ended Dec. 31, 2012: Debit Balance: Cash Rs.15,000; Accounts receivable Rs.10,000; Merchandise inventory (beginning) Rs.6,500; Prepaid shop rent Rs.4,000; Sales equipment Rs.10,000; Purchases Rs.20,000; Office supplies expense Rs.2,000; Salaries expense Rs.14,000; Miscellaneous expense Rs.1,500; Sales return and allowance Rs.2,000. (Total Rs.85,000). Credit Balance: Sales revenue Rs.45,000; Purchase discount Rs.1,500; Commission income Rs.4,000; Accounts payable Rs.4,000; Allowance for bad debts Rs.500; Syed’s capital Rs.30,000. (Total Rs.85,000). Data for Adjustment on December 31, 2012:

(i) Prepaid shop rent was Rs.1,000. (ii) Office supplies unused Rs.500. (iii) Allowance for bad debts was increased by Rs.300. (iv) Outstanding salaries Rs.3,000. (v) Depreciation on sales equipment was estimated at Rs.1,500. (vi) Commission unearned Rs.1,000. (vii) Merchandise inventory was valued on December 31, 2012 Rs.3,000.

REQUIRED a) Prepare income statement for the year ended December 31, 2012. b) Prepare balance sheet as of December 31, 2012 in classified form. c) Prepare closing entries in General Journal. OR

Prepare post – closing trial balance as on December 31, 2012.


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SOLUTION 8 (a) SYED SONS

INCOME STATEMENT FOR THE PERIOD ENDED 31 DECEMBER 2012

Sales revenue 45,000 Less: Sales return and allowance (2,000)

Net sales 43,000 Less: Cost of Goods Sold: Merchandise inventory (beginning) 6,500 Add: Net Purchases: Purchases 20,000 Less: Purchase discount (1,500)

Net purchases 18,500

Merchandise available for sale 25,000 Less: Merchandise inventory (ending) (3,000)

Cost of goods sold (22,000)

Gross profit 21,000 Less: Operating Expenses: Office supplies expenses (2,000 – 500) 1,500 Salaries expense (14,000 + 3,000) 17,000 Miscellaneous expense 1,500 Shop rent expense 3,000 Bad debts expense 300 Depreciation expense 1,500

Total operating expenses (24,800)

Loss from operation (3,800) Add: Other Income: Commission income 3,000

Net loss 800

SOLUTION 8 (b)

SYED SONS BALANCE SHEET

AS ON 31 DECEMBER 2012

ASSETS EQUITIES

Current Assets: Liabilities: Cash 15,000 Accounts payable 4,000 Accounts receivable 10,000 Salaries payable 3,000 Less: All for bad debts (800) 9,200 Unearned commission 1,000

Merchandise inventory 3,000 Total liabilities 8,000 Prepaid shop rent 1,000 Office supplies 500 Owner’s Equity:

Total current assets 28,700 Capital 30,000 Less: Net loss (800)

Fixed Assets: Total owner’s equity 29,200 Sales equipment 10,000 Less: All for depreciation (1,500)

Total fixed assets 8,500

Total assets 37,200 Total equities 37,200


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SOLUTION 8 (c) SYED SONS

CLOSING ENTRIES FOR THE PERIOD ENDED 31 DECEMBER 2012


1 Expense and revenue summary 53,300 Sales return and allowance 2,000 Merchandise inventory 6,500 Purchases 20,000 Office supplies expenses 1,500 Salaries expenses 17,000 Miscellaneous expense 1,500 Shop rent expense 3,000 Bad debts expense 300 Depreciation expenses 1,500 (To close the various expense accounts)

2 Sales revenue 45,000 Purchase discount 1,500 Merchandise inventory 3,000 Commission income 3,000 Expense and revenue summary 52,500 (To close the revenue account)

3 Syed’s Capital 800 Expense and revenue summary 800 (To close the expense and revenue summary account)

OR

SYED SONS

POST – CLOSING TRIAL BALANCE FOR THE PERIOD ENDED 31 DECEMBER 2012

NO. PARTICULARS P/R DEBIT CREDIT

1 Cash 15,000 2 Accounts receivable 10,000 3 Allowance for bad debts 800 4 Merchandise inventory 3,000 5 Prepaid shop rent 1,000 6 Office supplies 500 7 Sales equipment 10,000 8 Allowance for depreciation – Sales equipment 1,500 9 Accounts payable 4,000

10 Salaries payable 3,000 11 Unearned commission 1,000 12 Syed’s Capital 29,200

Total 39,500 39,500

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