Course:
Bussiness of Accounting (1340)
Q. 1The Accountant of Multan Club summarizes the following information of cash received and paid by the club from the date of commencement 1st January to 31st December, 2020:
|
Subscription received |
230,500 |
Electricity Charges |
9,600 |
|
Receipts from sales of
refreshment |
169,660 |
Repaid to Mr. Imran onDec,
2013 |
300,000 |
|
Loan from Mr. Imran |
300,000 |
Rent expenses |
1,600 |
|
Loan from Bank |
260,000 |
Telephone Expenses |
640 |
|
Land and Building |
500,000 |
Printing & Stationery |
3,200 |
|
Purchase of refreshment |
73,700 |
Bank Interest |
5,920 |
|
Purchase of Furniture |
36,000 |
General expenses |
4,340 |
|
Wages Paid |
10,000 |
|
|
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Adjustments:
a. There was a bill for Rs.
5,120 owing for refreshment at 31' December, 2013
b. The stock of refreshment on
hand on 31" December, 2013, was valued Rs. 3,800
c. The rent paid up to 31st
December, 2013 included Rs. 160 paid in advance.
d. Interest accrued but not
paid to Mr. Imran amounted Rs. 13,000
e. Subscription in arrear
amounted to Rs. 9,500.
Required:
The income and expenditure
account for the year ended on 31' December, 2020.
To prepare the Income and
Expenditure Account for the Multan Club for the year ended on December 31,
2020, we need to categorize the items into revenue (income and expenses) and
capital (assets and liabilities). The income and expenditure account summarizes
the revenue and expenses to determine the surplus or deficit for the period.
**Income and Expenditure
Account for the year ended on 31st December 2020:**
| **Particulars** | **Amount (Rs.)** |
|-----------------------------------|------------------|
| **Income**
| Subscription Received | 230,500
| Receipts from Sales of Refreshment|
169,660
| Loan from Bank| 260,000
| **Total Income** |
660,160
| **Expenditure**
| Electricity Charges|
9,600
| Repaid to Mr. Imran (Loan) |
300,000
| Rent Expenses| 1,600
| Telephone Expenses| 640
| Printing & Stationery|
3,200
| Bank Interest| 5,920
| General Expenses| 4,340
| Purchase of Refreshment|
73,700
| Purchase of Furniture | 36,000 |
| Wages Paid | 10,000 |
| | |
| **Total Expenditure** | 445,000 |
| | |
| **Surplus (Income over Expenditure)**|
215,160 |
**Adjustments:**
a. **Bill for Refreshment at
31st December, 2013:**
- Deduct Rs. 5,120 from the receipts from
the sales of refreshment.
b. **Stock of Refreshment on
hand at 31st December, 2013:**
- Add Rs. 3,800 to the purchase of
refreshment.
c. **Rent Paid in Advance:**
- Deduct Rs. 160 from the rent expenses.
d. **Interest Accrued but not
Paid to Mr. Imran:**
- Add Rs. 13,000 to Bank Interest.
e. **Subscription in Arrear:**
- Deduct Rs. 9,500 from the subscription
received.
**Adjusted Income and
Expenditure Account:**
| **Particulars** | **Amount (Rs.)** |
|-----------------------------------|------------------|
| **Income** | |
| Subscription Received | 221,000 |
| Receipts from Sales of
Refreshment| 164,540 |
| Loan from Bank | 260,000 |
| | |
| **Total Income** | 645,540 |
| | |
| **Expenditure** | |
| Electricity Charges | 9,600 |
| Repaid to Mr. Imran
(Loan) | 300,000 |
| Rent Expenses | 1,440 |
| Telephone Expenses | 640 |
| Printing &
Stationery | 3,200 |
| Bank Interest | 18,920 |
| General Expenses | 4,340 |
| Purchase of Refreshment | 77,500 |
| Purchase of Furniture | 36,000 |
| Wages Paid | 10,000 |
| | |
| **Total Expenditure** | 461,640 |
| | |
| **Surplus (Income over Expenditure)**|
183,900 |
The adjusted income and
expenditure account reflects the corrected values after considering the
adjustments. The surplus of Rs. 183,900 indicates that the club's revenue
exceeded its expenses for the year ended on December 31, 2020.
Q.
2 Khan & Sons established a
business on July 01, 2020 with capital of Rs. 300,000. He introduced Rs.
125,000 as additional investment and withdraws Rs. 50,000 during the year. On
30th June, 2014 he has assets of
Rs. 400,000 and liabilities Rs. 40,000. Calculate the profit or loss of Khan
& Sons for the year ended on 30thJune, 2020 using single entry system.
In a single-entry system,
calculating profit or loss involves determining the change in the owner's
equity over a specific period. The formula for calculating profit or loss in a
single-entry system is:
\[ \text{Profit (or Loss)} =
\text{Ending Owner's Equity} - \text{Beginning Owner's Equity} +
\text{Drawings} - \text{Additional Investments} \]
Where:
- **Ending Owner's Equity:**
The owner's equity at the end of the period.
- **Beginning Owner's
Equity:** The owner's equity at the beginning of the period.
- **Drawings:** Any
withdrawals or drawings made by the owner during the period.
- **Additional Investments:**
Any additional investments made by the owner during the period.
It's important to note that in
a single-entry system, you may not have all the detailed transaction records
that a double-entry system provides. As a result, the calculation may be less
precise compared to a double-entry system, which records both debit and credit
entries for each transaction.
Q.
3On 15thApril, 2018 Mr. Muhammad of Karachi sent a consignment of 1,000
calculators to Mr. Ali Islamabad for sale in a college Book fiesta at a cost of
Rs. 100 each on commission basis @ 10% of gross sales proceeds. She paid Rs.
5000 as carrying cost. Mr. Ali sold 500 calculators for Rs. 150 each and 300
calculators for Rs. 200. She incurred Rs. 1,000 as freight charges and Rs.
2,000 miscellaneous expenses. 50 calculators were theft from the whole house of
consignee. On 31st May 2018 Consignee sent the account sales along with as bank
for the amount due to consigner. Required: Prepare the Consignment account and
consignee account ibn the books of consigner.
1.
**Consignment Account:**
\[\begin{align*}
\text{Consignment Account} \\
\text{Date} & \quad
\text{Particulars} & \quad \text{Amount (Rs.)} \\
15-Apr & \quad
\text{Consignment sent to Mr. Ali} & \quad \text{(1000 calculators * Rs.
100)} \\
& \quad \text{+ Carrying
cost} & \quad \text{+ 5000} \\
& \quad \text{(To Goods
Sent on Consignment)} & \quad \text{(To Carrying Cost)} \\
& \quad \text{Total} &
\quad \text{(Debit side)} \\
\end{align*}
2.
**Consignee Account:**
\begin{align*}
\text{Consignee Account} \\
\text{Date} & \quad \text{Particulars}
& \quad \text{Amount (Rs.)} \\
& \quad \text{Received
calculators on consignment} & \quad \text{(1000 calculators * Rs. 100)} \\
& \quad \text{Carrying
cost paid by consignee} & \quad \text{(To Consignment Account)} \\
15-Apr & \quad \text{(To
Consignment Account)} & \quad \text{(To Bank)} \\
& \quad \text{Total} &
\quad \text{(Debit side)} \\
\end{align*}
\]
3.
**Sales by Consignee:**
\begin{align*}
\text{Sales by Consignee
Account} \\
\text{Date} & \quad
\text{Particulars} & \quad \text{Amount (Rs.)} \\
& \quad \text{Sales of 500
calculators at Rs. 150 each} & \quad \text{(500 * Rs. 150)} \\
& \quad \text{Sales of 300
calculators at Rs. 200 each} & \quad \text{(300 * Rs. 200)} \\
& \quad \text{(To
Consignee Account)} & \quad \text{Total} \\
\end{align*}
4.
**Expenses Incurred by Consignee:**
\begin{align*}
\text{Expenses by Consignee
Account} \\
\text{Date} & \quad
\text{Particulars} & \quad \text{Amount (Rs.)} \\
& \quad \text{Freight
charges} & \quad \text{(To Consignee Account)} \\
& \quad
\text{Miscellaneous expenses} & \quad \text{(To Consignee Account)} \\
& \quad \text{Total} \\
\end{align*}
5.
**Loss Due to Theft:**
\begin{align*}
\text{Loss Due to Theft
Account} \\
\text{Date} & \quad
\text{Particulars} & \quad \text{Amount (Rs.)} \\
& \quad \text{Loss due to
theft of 50 calculators} & \quad \text{(50 * Rs. 100)} \\
& \quad \text{(To
Consignment Account)} & \quad \text{Total} \\
\end{align*}
6.
**Summary of Consignee's Account:**
- Calculate the total sales,
subtract the expenses and loss due to theft, and find the balance due to the
consigner.
- This balance should match
the amount sent by the consignee to the consigner.
Note: The
actual format might vary based on the accounting practices and requirements.
This is a simplified representation.
Q.
4 Mr. Ahmad industries purchased a
computer on January 1, 2015. Acquisition cost of the asset is Rs. 100,000,
useful life of the asset in 5 years, residual value (or salvage value) at the
end of useful life is Rs. 10,000. What is the amount of depreciation expense
for the year ended December 31, 2019 using sum of years’ digit’s methods?
The sum of years' digits (SYD)
method is a depreciation calculation method that takes into account the total
useful life of an asset. The formula for depreciation using the sum of years'
digits method is:
\[ \text{Depreciation Expense}
= \left( \frac{\text{Remaining Useful Life}}{\text{Sum of Years' Digits}}
\right) \times \text{Depreciable Cost} \]
Where:
- Depreciable Cost =
Acquisition Cost - Residual Value
- Sum of Years' Digits = n(n +
1) / 2, where n is the useful life of the asset.
Let's
calculate the depreciation for the year ended December 31, 2019:
1.
**Depreciable Cost:**
\[ \text{Depreciable Cost} =
\text{Acquisition Cost} - \text{Residual Value} \]
\[ \text{Depreciable Cost} = Rs. 100,000 -
Rs. 10,000 = Rs. 90,000 \]
2.
**Sum of Years' Digits (n):**
\[ n = \text{Useful Life} = 5 \]
\[ \text{Sum of Years' Digits}
= \frac{n(n + 1)}{2} \]\[ \text{Sum of Years' Digits} = \frac{5(5 + 1)}{2} =
\frac{5 \times 6}{2} = \frac{30}{2} = 15 \]
3.
**Remaining Useful Life (at the end of 2019):**
\[ \text{Remaining Useful
Life} = \text{Total Useful Life} - \text{Years Already Depreciated} \] \[
\text{Remaining Useful Life} = 5 - 4 = 1 \]
4.
**Depreciation Expense:**
\[ \text{Depreciation Expense}
= \left( \frac{\text{Remaining Useful Life}}{\text{Sum of Years' Digits}}
\right) \times \text{Depreciable Cost} \]
\[ \text{Depreciation Expense}
= \left( \frac{1}{15} \right) \times Rs. 90,000 \]
\[ \text{Depreciation Expense} = Rs. 6,000 \]
So, the amount of depreciation
expense for the year ended December 31, 2019, using the sum of years' digits
method is Rs. 6,000.
Q. 5 Tufail, Jamal and Kamal were running a business under the name
Globe General Store. They shared profit and loss as 3:2:1 respectively. They
close their books on 31st December each year. Jamal retired from the business.
On the date of his retirement the Balance sheet of the firm was under:
|
Capitals &Liabilities |
Amount |
Assets |
Amount |
|
Sundry Creditors |
10200 |
Cash in hand |
10000 |
|
Loan of Jamal |
3600 |
Sundry debtors 10000 |
|
|
|
|
Less Allowance 500 |
9500 |
|
Tufail-Capital 22700 |
|
Stock |
16000 |
|
Jamal-Capital 16000 |
|
Office equipment’s 12000 |
|
|
Kamal-Capital 7000 |
45700 |
Less deprecation 2000 |
10000 |
|
|
|
Plant & machinery 17000 |
|
|
|
|
Less deprecation 3000 |
14000 |
|
|
59500 |
|
59500 |
Following adjustment are to be
made before ascertaining the amount due to Jamal:
Goodwill is to be valued at
Rs. 18000/- which is to be remained in the books.
Allowance for un-collectible
is to be increased to Rs. 1000/-
iii. Stock valued at Rs.
15000/-
iv. Office equipment and plant
machinery is to be depreciated at 10% of the net value.
v. Amount due to Jamal is to
be transferred to his loan account, at the rate of 15% interest, but loan in
the balance sheet is to be paid immediately.
Required:
Pass
necessary journal entries, prepare the balance sheet of the new firm.
Let's go through the necessary
journal entries and the preparation of the balance sheet step by step:
1.
**Goodwill Valuation:**
\[ \text{Goodwill} = \text{New Goodwill
Value} - \text{Old Goodwill Value} \]
\[ \text{Goodwill} = Rs. 18,000 - Rs. 0 \]
(assuming there was no previous goodwill)
\[ \text{Journal Entry:} \]
\[ \text{Debit: Goodwill} \]
\[ \text{Credit: Tufail's Capital (3:2:1)}
\]
2.
**Increase in Allowance for Uncollectible:**
\[ \text{Journal Entry:} \]
\[ \text{Debit: Allowance for Uncollectible}
\]
\[ \text{Credit: Sundry Debtors} \]
3.
**Stock Valuation:**
\[ \text{Stock Adjustment} = \text{Old Stock
Value} - \text{New Stock Value} \]
\[ \text{Stock Adjustment} = Rs. 16,000 -
Rs. 15,000 \]
\[ \text{Journal Entry:} \]
\[ \text{Debit: Stock} \]
\[ \text{Credit: Tufail's Capital (3:2:1)}
\]
4.
**Depreciation on Office Equipment and Plant Machinery:**
Calculate depreciation on both
Office Equipment and Plant Machinery at 10% of the net value.
\[ \text{Depreciation Expense} = \text{Net
Value} \times \text{Depreciation Rate} \]
\[ \text{Journal Entry for Office
Equipment:} \]
\[ \text{Debit: Depreciation Expense} \]
\[ \text{Credit: Office Equipment} \]
\[ \text{Journal Entry for Plant Machinery:}
\]
\[ \text{Debit: Depreciation Expense} \]
\[ \text{Credit: Plant Machinery} \]
5.
**Transfer Amount Due to Jamal to Loan Account:**
Calculate the interest on the
loan and transfer the amount due to Jamal to his Loan Account.
\[ \text{Interest} = \text{Loan Amount}
\times \text{Interest Rate} \]
\[ \text{Journal Entry:} \]
\[ \text{Debit: Jamal's Loan} \]
\[ \text{Credit: Cash (for the principal)}
\]
\[ \text{Credit: Interest Expense (for the
interest)} \]
Now, let's prepare the balance
sheet after these adjustments:
\begin{align*}
\text{Balance Sheet of Globe General
Store} \\
\text{As of 31st December} \\
\end{align*}
\begin{align*}
\text{Assets} & \quad
\text{Amount} & \quad \text{Liabilities and Capital} & \quad
\text{Amount} \\
\text{Cash in Hand} &
\quad Rs. 10,000 & \text{Sundry Creditors} & \quad Rs. 10,200 \\
\text{Sundry Debtors} &
\quad Rs. 9,500 & \text{Tufail's Capital} & \quad Rs. 23,400 \\
\text{Stock} & \quad Rs.
15,000 & \text{Jamal's Loan} & \quad Rs. 18,000 \\
\text{Office Equipment} &
\quad Rs. 10,800 & \text{Kamal's Capital} & \quad Rs. 7,000 \\
\text{Plant Machinery} &
\quad Rs. 12,600 & & \\
\text{Goodwill} & \quad
Rs. 18,000 & & \\
\text{Total Assets} &
\quad Rs. 75,900 & \text{Total Liabilities and Capital} & \quad Rs.
75,900 \\
\end{align*}
Please note that the values of
Office Equipment, Plant Machinery, Stock, and Goodwill have been adjusted based
on the journal entries mentioned earlier. The new capital values have also been
adjusted accordingly.
Ye sample assignment h. Ye bilkul
copy paste h jo dusre student k pass b available h. Agr ap ne university
assignment send krni h to UNIQUE assignment
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0313-6483019
0334-6483019
0343-6244948
University c related har news c
update rehne k lye hamra channel subscribe kren: