Grade XII
Code: Acc.104
Time: 3 Hours
Full Marks: 75
The candidates are required to give their answers in their own words as far as practicable.
The figures in the margin indicate full marks.
Attempt All Questions [11 × 1 mark = 11 marks]
Q1: Write any two features of public company.
Answer:
Major two features of public company:
1. Company is an artificial person
2. It has separate legal entity.
Q2: What do you mean by authorized capital?
Answer:
The maximum authorized capital is mentioned in “Memorandum of Association.”
Authorized capital is divided by number of shares to find out value of one share.
Q3: Write the meaning of financial statement.
Answer:
The summary of detailed information about financial position and performances of a business firm is known as the financial statement.
The financial statements are prepared at the end of accounting period.
Q4: What is process costing?
Answer:
Process costing is applied where production is carried on through different stages of processes before a finished product.
It this method, cost of product is ascertained at the stage of every process.
Q5: Write the meaning of allocation of overhead.
Answer:
Allocation of overheads is the process of identification the overhead of a particular cost center, job or department.
In other words, whole or undivided expenses are written to a particular cost center, job or department.
Q6: List out any two duties of store-keeper.
Answer:
The major two duties of store-keeper:
To prepare purchase requisition note when materials reaches to re-order level.
To received purchased materials from receiving department.
Q7: What is time rate wage system?
Answer:
Under time rate wage system, wages are paid to workers on a time basis.
Time may be an hourly, daily, weekly or monthly basis.
Q8: State-any two limitations of computer system in accounting.
Answer:
Major two limitations of computer system in accounting:
(1) Heavy cost of installation, software and training.
(2) System failure and breaches of security.
Q9: Prepare adjustment entry of prepaid insurance expired Rs 2,000
SOLUTION:
Date |
Particulars |
|
LF |
Amount Dr |
Amount Cr |
|
Prepaid insurance expired account |
Dr |
|
2,000 |
|
|
To Prepaid insurance account |
|
|
|
2,000 |
|
(Being: prepaid insurance expired) |
|
|
|
|
Q10: From the following information, calculate net cash flow from operating activities under indirect method:
Net income Rs 40,000
Increase in current assets Rs 5,000
Non-operating expenses Rs 10,000
SOLUTION:
Cash Flow Statement
Under indirect method
Particulars |
Amount Dr |
Amount Cr |
Cash from operating activities: |
|
|
Net income |
|
40,000 |
Add: Non-operating expenses |
|
10,000 |
Less: Increase in current assets |
|
(5,000) |
net cash flow from operating activities |
|
45,000 |
Q11: If annual requirements is 1,00,000 units and economic order quantity is 20,000 units then find out number of order.
SOLUTION:
Given and working note:
Annual requirements (A) = 100,000 units
EOQ = 20,000 units
Now,
EOQ in order = A ÷ EOQ
= 100,000 ÷ 20,000 units
= 5 times
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Attempt All Questions [8 × 5 marks = 40 marks]
Q12: ABC Company Ltd issued 6,000 shares of Rs 100 each at 5% premium. The money was payable as follows:
On application Rs 30
On allotment Rs 50
On first and final call Rs 25
Applications were received for 10,000 shares. Shares were allotted on pro rata basis. Excess application money were utilized towards the money due on allotment. All calls were duly made and received
Required: Journal entries for share application; share allotment; share first and final call [1.5 + 2 + 1.5 = 5]
SOLUTION:
Shares Issued |
Issued Price |
Installation |
|
Arrears and Advance |
|
Share Applied |
Shares Allotted |
|
6,000 |
100 + 5P |
Application |
30 |
|
|
|
10,000 |
6,000 |
|
|
Allotment |
50 (45C + 5P) |
|
|
|
|
|
|
|
First and final call |
25 |
|
|
|
|
|
|
|
|
|
|
|
|
10,000 |
6,000 |
Excess money
= Difference in pro-rata shares × Always application money
= (10,000 – 6,000 shares) × Rs 30
= 4,000 × Rs 30
= Rs 120,000
Journal Entries
In the book of ABC Company Ltd
Date |
Particulars |
|
LF |
Amount Dr |
Amount Cr |
Received |
Amount received on application |
|
|
|
|
|
Bank account |
Dr |
|
300,000 |
|
|
To Equity share application account |
|
|
|
300,000 |
|
(Being- amount received on 10,000 shares @ Rs 30) |
|
|
|
|
|
|
|
|
|
|
Transfer |
Amount transfer of application |
|
|
|
|
|
Equity share application account |
Dr |
|
300,000 |
|
|
To Equity share capital account |
|
|
|
180,000 |
|
To Equity share allotment account (excess) |
|
|
|
120,000 |
|
(Being- amount transfer of application to capital account and |
|
|
|
|
|
Excess money adjusted |
|
|
|
|
|
|
|
|
|
|
Due |
Amount due/receivable on allotment |
|
|
|
|
|
Equity share allotment account |
Dr |
|
330,000 |
|
|
To Share premium (security premium) |
|
|
|
30,000 |
|
To Equity share capital account |
|
|
|
300,000 |
|
(Being- amount due/receivable on allotment) |
|
|
|
|
|
|
|
|
|
|
Received |
Amount received on allotment |
|
|
|
|
|
Bank account |
Dr |
|
210,000 |
|
|
To Equity share allotment account |
|
|
|
210,000 |
|
(Being- amount received on 6,000 shares @ Rs 45, and excess amount adjusted Rs 330,000 – Rs 120,000) |
|
|
|
|
|
|
|
|
|
|
Due |
Amount due/receivable on first and call |
|
|
|
|
|
Equity share first and call account |
Dr |
|
150,000 |
|
|
To Equity share capital account |
|
|
|
150,000 |
|
(Being- amount due/ receivable on first and call) |
|
|
|
|
|
|
|
|
|
|
Received |
Amount received on first and final call |
|
|
|
|
|
Bank account |
Dr |
|
150,000 |
|
|
To Equity share first and final call account |
|
|
|
150,000 |
|
(Being- amount received on 6,000 shares @ Rs 25) |
|
|
|
|
|
|
|
|
|
|
#####
Or
A shareholder holding 250 shares of Rs 100 each issued at 5% discount fails to pay final call money Rs 35. His shares were forfeited; the company reissued those forfeited shares @ Rs 110 as fully paid.
Required: Journal entries for final call; share forfeiture; share re-issue; transfer [1.5 + 1.5 + 1 + 1 = 5]
SOLUTION:
Note: final call is NOT possible
Given and working note:
Shares Issued |
Issued Price |
Installation |
|
Arrears and Advance |
|
Share Applied |
Shares Allotted |
|
100–5D |
App + Allot |
60 [65C–5D] |
|
|
|
|
|
|
First and final call |
35 |
–250 |
|
|
|
|
|
|
|
|
|
|
|
Journal Entries
In the book of ABC Corporation Ltd
Date |
Particulars |
|
LF |
Amount Dr |
Amount Cr |
|
Final call |
|
|
|
|
|
Bank account |
Dr |
|
? |
|
|
Calls in arrear account [250 × Rs 35] |
Dr |
|
8,750 |
|
|
To Equity share first and final call account |
|
|
|
? |
|
(Being- amount received on ? shares @ Rs 35 and arrear adjusted) |
|
|
|
|
|
|
|
|
|
|
|
Shares forfeiture |
|
|
|
|
|
Equity shares capital A/c [250 shares × Rs 100] |
Dr |
|
25,000 |
|
|
To Calls in arrears (on first and final call) [250 × Rs 35] |
|
|
|
8,750 |
|
To Share discount account [250 × Rs 5] |
|
|
|
1,250 |
|
To Share forfeiture account (paid or b/f) |
|
|
|
15,000 |
|
(Being- 250 shares of Rs 100 each forfeited for non-payment) |
|
|
|
|
|
|
|
|
|
|
|
Reissued |
|
|
|
|
|
Bank account [250 shares × Rs 110] |
Dr |
|
27,500 |
|
|
Share forfeiture account |
Dr |
|
Nil |
|
|
To Equity shares capital A/c [250 × Rs 100] |
|
|
|
25,000 |
|
To shares premium account [250 shares × Rs 10] |
|
|
|
2,500 |
|
(Being- 250 shares of Rs 100 each, reissued @ Rs 110) |
|
|
|
|
|
|
|
|
|
|
|
Transfer |
|
|
|
|
|
Share forfeiture account |
Dr |
|
15,000 |
|
|
To Capital reserve account |
|
|
|
15,000 |
|
(Being- share forfeiture amount transferred to capital reserve) |
|
|
|
|
|
|
|
|
|
|
Given and working note:
Share forfeiture Cr |
= capital profit |
15,000 |
|
|
Share forfeiture Dr |
= capital loss |
Nil |
|
|
Share forfeiture Cr |
= capital reserve |
15,000 |
|
|
Q13 (A): Ayansh Company Ltd took over the following assets of Aarab Company Ltd:
Machinery Rs 2,00,000
Furniture Rs 50,000
Stock Rs 1,00,000
The company paid the purchase consideration by issuing 5,000 shares of Rs 100 each at 10% discount.
Required: journal entries for purchase of assets and issue of share [1+1 = 2]
SOLUTION:
Purchase consideration
= 5,000 shares × (Rs 100 – 10D)
= Rs 450,000
Journal Entries
In the book of Ayansh Company Ltd
Date |
Particulars |
|
LF |
Amount Dr |
Amount Cr |
|
Assets and liabilities taken |
|
|
|
|
|
Machinery account |
Dr |
|
200,000 |
|
|
Furniture account |
Dr |
|
50,000 |
|
|
Stock account |
Dr |
|
100,000 |
|
|
Goodwill account (b/f) |
Dr |
|
100,000 |
|
|
To Sundry liabilities |
|
|
|
Nil |
|
To Aarab Company Ltd account |
|
|
|
450,000 |
|
(Being- assets and liabilities taken over, balance as goodwill) |
|
|
|
|
|
|
|
|
|
|
|
Purchase consideration paid |
|
|
|
|
|
Aarab Company Ltd account |
Dr |
|
450,000 |
|
|
Discount on shares account |
Dr |
|
50,000 |
|
|
To Share capital account |
|
|
|
500,000 |
|
(Being: payment made by issuing 5,000 shares of Rs 100 at Rs 90) |
|
|
|
|
|
|
|
|
|
|
(B): A Company Ltd issued 200; 8% debentures of Rs 1,000 each at par and redeemable at 10% premium after 10 years.
Required: Journal entries for issue and redemption of debentures [1+2 = 3]
SOLUTION:
Journal Entries
In the book of A Company Ltd
Date |
Particulars |
|
LF |
Amount Dr |
Amount Cr |
|
Issued at par, redeemable at 10% premium |
|
|
|
|
Year 1 |
Bank account Loss on issue of debenture |
Dr Dr |
|
200,000 20,000 |
|
|
To 8% Debentures account To Premium on redemption of debenture |
|
|
|
200,000 20,000 |
|
(Being- 200; 8% debentures of Rs 1,000 each issued at par |
|
|
|
|
|
, redeemable at 10% premium) |
|
|
|
|
|
|
|
|
|
|
|
Debenture transfer to debenture holders at 10% premium |
|
|
|
|
Year 10 |
8% Debenture account |
Dr |
|
200,000 |
|
|
Premium on redemption of debenture account |
Dr |
|
20,000 |
|
|
To Debentures holder account |
|
|
|
220,000 |
|
(Being- debenture transferred to debenture holders with premium) |
|
|
|
|
|
|
|
|
|
|
|
Redeemed of debentures |
|
|
|
|
Year 10 |
Debenture holders account |
Dr |
|
220,000 |
|
|
To Bank account |
|
|
|
220,000 |
|
(Being- payment made to debenture holders) |
|
|
|
|
|
|
|
|
|
|
Q 14: The following financial transaction of AB Company is provided:
Sales revenue |
500,000 |
Advertising |
15,000 |
Opening stock |
40,000 |
Rent received |
10,000 |
Purchase |
300,000 |
Commission paid |
4,000 |
Insurance |
15,000 |
Return outward |
12,000 |
Salary |
70,000 |
Carriage |
8,000 |
Interest on investment |
100,000 |
Return inward |
3,000 |
Interest on loan |
5,000 |
|
|
Additional information:
(a) Closing stock Rs 30,000
(b) Salary outstanding Rs 5,000
Required: Trading account; Profit & Loss account [2+3 = 5]
SOLUTION:
Trading, Profit & Loss Account
In the book of AB Company
Particulars |
|
Amount |
Particulars |
|
Amount |
To Opening stock |
|
40,000 |
By Sales |
500,000 |
|
To Purchase |
300,000 |
|
Less: Return inward |
(3,000) |
497,000 |
Less: Return outward |
(12,000) |
288,000 |
By Closing stock |
|
30,000 |
To Carriage |
|
8,000 |
|
|
|
To Gross profit |
|
191,000 |
|
|
|
|
|
527,000 |
|
|
527,000 |
To Salary |
70,000 |
|
By Gross profit |
|
191,000 |
Add: Outstanding |
+ 5,000 |
75,000 |
By Interest on investment |
|
100,000 |
To Insurance |
|
15,000 |
By Rent received |
|
10,000 |
To Interest on loan |
|
5,000 |
|
|
|
To Advertisement |
|
15,000 |
|
|
|
To Commission paid |
|
4,000 |
|
|
|
To Net profit |
|
187,000 |
|
|
|
|
|
301,000 |
|
|
301,000 |
Q15: An unadjusted trial balance of AD Company is given below:
Particulars |
Amount Dr |
Particulars |
Amount Cr |
Machinery |
145,000 |
Share capital |
100,000 |
Cash balance |
60,000 |
Creditors |
50,000 |
Salary |
35,000 |
Bank loan |
40,000 |
Prepaid rent |
15,000 |
Sales |
250,000 |
Purchase |
190,000 |
Discount |
5,000 |
|
445,000 |
|
445,000 |
Additional information:
a. Prepaid rent of Rs 3,000 was expired
b. Depreciate machinery by 10%
Required: Work sheet [5]
SOLUTION:
Journal Entries
Date |
Particulars |
|
LF |
Amount Dr |
Amount Cr |
|
Prepaid rent expired account |
Dr |
|
3,000 |
|
|
To Prepaid rent account |
|
|
|
3,000 |
|
(Being: prepaid rent expired) |
|
|
|
|
|
|
|
|
|
|
|
Depreciation account |
Dr |
|
14,500 |
|
|
To Machinery account |
|
|
|
14,500 |
|
(Being: depreciation charged on machinery 145,000 @ 10% |
|
|
|
|
|
|
|
|
|
|
Ten Column Worksheet
Particulars |
Part 1 |
Part 2 |
Part 3 |
Part 4 |
Part 5 |
|||||
Trial balance |
Adjustments |
Adjusted TB |
Income statement |
Balance sheet |
||||||
Dr |
Cr |
Dr |
Cr |
Dr |
Cr |
Dr |
Cr |
Assets |
Liabilities |
|
Machinery |
145,000 |
|
|
14,500 |
130,500 |
|
|
|
130,500 |
|
Cash balance |
60,000 |
|
|
|
60,000 |
|
|
|
60,000 |
|
Salary |
35,000 |
|
|
|
35,000 |
|
35,000 |
|
|
|
Prepaid rent |
15,000 |
|
|
3,000 |
12,000 |
|
|
|
12,000 |
|
Purchase |
190,000 |
|
|
|
190,000 |
|
190,000 |
|
|
|
Share capital |
|
100,000 |
|
|
|
100,000 |
|
|
|
100,000 |
Creditors |
|
50,000 |
|
|
|
50,000 |
|
|
|
50,000 |
Bank loan |
|
40,000 |
|
|
|
40,000 |
|
|
|
40,000 |
Sales |
|
250,000 |
|
|
|
250,000 |
|
250,000 |
|
|
Discount |
|
5,000 |
|
|
|
5,000 |
|
5,000 |
|
|
|
445,000 |
445,000 |
|
|
|
|
|
|
|
|
Prepaid ins. expired |
|
|
3,000 |
|
3,000 |
|
3,000 |
|
|
|
Depn on machinery |
|
|
14,500 |
|
14,500 |
|
14,500 |
|
|
|
Net profit |
|
|
|
|
|
|
12,500 |
|
|
12,500 |
Total |
|
|
17,500 |
17,500 |
445,000 |
445,000 |
255,000 |
255,000 |
202,500 |
202,500 |
Q16: Mention the objectives of cost accounting with its definition. [2+3 = 5]
Answer:
Definitions of cost accounting
According to Professor R. N. Carter, “Cost accounting is a system of recording an account about manufacturing of a certain commodity (goods) or a particular job.”
Objectives of cost accounting | Advantages of cost account | Functions of cost account
The major objectives of cost accounting are as follows:
Cost comparison
Cost accounting helps to compare total cost or unit cost at different level of production in different departments, jobs and process.
Price fixation
It helps to fixation the selling price.
It also helps for tender price.
Cost control
It helps to control the cost at different levels.
These costs may be about materials, labour and overhead.
Helpful in planning and decision making
It helps to management to plan and take decision.
Like manufacturing or buy, operate or shut down, select the profitable method, fixation the selling price etc
Check the accuracy
It helps to check or reconcile the differences between cost accounting and financial accounting.
Q17 (A): Differentiate between centralized purchase and decentralized purchase. [2]
Answer:
Centralized purchase means single purchase department.
Decentralized purchase means all the department and branches purchase materials independently.
Bases |
Centralized purchase |
Decentralized purchase |
Meaning |
Under centralized purchasing, all materials are purchased by central purchase department. |
Under decentralized purchasing, all materials are purchased by each departments or branches. |
Suitable |
It is suitable for small sized organization |
It is suitable for large sized organization |
(B): The following are the store transactions for the month of Jun:
Jun 1: Opening stock 200 units @ Rs 3
Jun 5: Purchase 400 units @ Rs 2.5
Jun 10: Purchase 300 units @ Rs 2
Total sales during the month of Jun 750 units
Calculate: FIFO cost of ending inventory and cost of goods sold using FIFO method under periodic inventory system [3]
SOLUTION:
Given and working note:
Opening stock plus purchase units = 200 + 400 + 300 = 900 units
Out of 900 units, 750 units were sold; remaining 900 – 750 = 150 units.
In FIFO, 150 units remain closing stock from last purchase viz Jun 10
FIFO under Periodic Inventory System
Date |
Particulars |
Cost of goods purchased |
Cost of goods sold |
Closing stock |
||||||
Jun 1 |
Opening stock |
200 × Rs 3 |
= |
600 |
200 × Rs 3 |
= |
600 |
0 |
= |
0 |
Jun 5 |
Purchase |
400 × Rs 2.5 |
= |
1,000 |
400 × Rs 2.5 |
= |
1,000 |
0 |
= |
0 |
Jun 10 |
Purchase |
300 × Rs 2 |
= |
600 |
150 × Rs 2 |
= |
300 |
150 × Rs 2 |
= |
300 |
|
|
900 units |
= |
Rs 2,200 |
750 units |
= |
Rs 1,900 |
150 units |
= |
Rs 300 |
Therefore,
Closing stock 150 units; Rs 300
Cost of goods sold 750 units; Rs 1,900
Q18 (A): The standard output per hour is 5 units. The wage rate per unit is Rs 30 and total working hour in a month is 150 hours.
Calculate: Total wages for the month under piece rate system. [2]
SOLUTION:
Given and working note:
Units produced in a month = 150 hours × 5 units per hour = 750 units
Now,
Total wage = Units produced × Wage rate per unit
= 750 units × Rs 30
= Rs 22,500
(B): The following information are provided:
Net profit shown by financial accounting Rs 45,000
Depreciation overcharged in cost accounting Rs 10,000
Undervalued of opening stock in financial accounting Rs 8,000
Interest on investment credited in financial accounting Rs 11,000
Required: Cost reconciliation statement [3]
SOLUTION:
Given and working note:
Given and working note:
Activities |
FA |
– |
CA |
= |
Add or less |
Depreciation |
10,000 |
– |
20,000 |
= |
-10,000 |
Opening stock |
8,000 |
– |
16,000 |
= |
-8,000 |
Interest on investment |
11,000 |
– |
Nil |
= |
10,000 but income |
Cost Reconciliation Statement
For the month of …
Particulars |
Amount |
Amount |
Net profit as per financial account |
|
45,000 |
Add: |
|
|
|
|
Nil |
Less: |
|
45,000 |
Depreciation overcharged in cost accounting Opening stock undervalued in financial accounting |
10,000 8,000 |
|
Interest on investment credited only in financial accounting |
10,000 |
(28,000) |
Net profit as per cost account |
|
17,000 |
Q19: What is computerized accounting system? Explain the elements of computerized accounting system. [2+3 = 5]
Answer:
What is computerized accounting system?
A computerized accounting system is an accounting information system that processes the financial transactions as per GAAP.
Generally Accepted Accounting Principles (GAAP) to produce reports as per user requirements.
There are two types of accounting systems; they are manual and computerized.
Every accounting system has two aspects.
First, it has to work under a set of well-defined concepts called accounting principles.
Another, that there is a user-defined framework for maintenance of records and generation of reports.
Elements of computerized accounting system | Components of computerized accounting system
Computerized accounting system (CAS) refers to the processing of accounting transaction through the use of hardware and software of the computer.
CAS takes accounting transactions as inputs that are processed through Accounting Software to generate the following reports:
Day books/journals
Ledger
Trial balance
Position statement (balance sheet)
Statement of profit and loss (profit and loss account)
Cash flow statement etc.
Financial statements are the end products of the accounting process.
They are prepared according to Generally Accepted Accounting Principles (GAAP).
The accounting cycle means the processes involved in identifying, measuring and communicating the information.
The basic phases of the cycle are as follows:
Business transactions are analysed.
The transactions are recorded in the journal.
Journal entries are posted to the ledger accounts.
A trial balance is prepared from balances of accounts.
Accounts are reviewed and the necessary adjustments made.
Adjustments are posted in the ledger to prepare adjusted trial balance.
Adjusted trial balance is used to prepare the balance sheet and profit and loss account.
Financial Statements are prepared from the finally adjusted ledger and balancing the accounts.
The above accounting cycle can be processed through the use of computers.
###########
Click on the link for YouTube videos: |
|
Accounting Equation |
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Basic Journal Entries in Nepali |
|
Basic Journal Entries |
|
Journal Entry and Ledger |
|
Ledger |
|
Subsidiary Book |
|
Cash Book |
|
Trial Balance & Adjusted Trial Balance |
|
Bank Reconciliation Statement (BRS) |
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Depreciation |
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Final Accounts: Class 11 |
|
Adjustment in Final Accounts |
|
Capital and Revenue |
|
Single Entry System |
|
Non-Trading Concern |
|
Government Accounting |
|
Goswara Voucher (Journal Voucher) |
###########
Attempt All Questions [3 × 8 marks = 24 marks]
Q20: The trial balance of Api Company Ltd is given on 31st March:
Particulars |
Amount |
Particulars |
Amount |
Opening stock |
15,000 |
Sales revenue |
465,000 |
Purchase |
285,000 |
Share capital |
150,000 |
Audit fee |
12,000 |
Accounts payable |
22,000 |
Printing and stationery |
18,000 |
Loan |
180,000 |
Salaries expenses |
60,000 |
Interest and dividend |
8,000 |
Goodwill |
10,000 |
Service revenue |
35,000 |
Promotion expenses |
9,000 |
|
|
Interest expenses |
12,000 |
|
|
Repair and maintenance |
8,000 |
|
|
Plant and equipment |
200,000 |
|
|
Bank balance |
42,000 |
|
|
Account receivable |
65,000 |
|
|
Investment |
100,000 |
|
|
Rent expenses |
20,000 |
|
|
Other selling expenses |
4,000 |
|
|
|
860,000 |
|
860,000 |
Additional information:
a. Closing stock Rs 20,000
b. Depreciate on plant and equipment 10%
c. Income tax @20%
d. Rent payable 1,000
Required: (a) Profit or loss statement based NFRS; (b) Statement of Financial Position based on NFRS [5+3 = 8]
SOLUTION:
Profit or Loss Statement under NFRS
Api Company Ltd
For the year ended 31st March
Particulars |
Notes |
Amount |
Amount |
|
Net sales revenue |
|
|
465,000 |
|
Less: |
Cost of goods sold |
1 |
|
(280,000) |
|
Gross profit |
|
|
185,000 |
Add: |
Other income |
4 |
|
43,000 |
Less: |
Operating expenses: |
|
|
|
|
Administrative expenses |
2 |
119,000 |
|
|
Selling and distribution |
3 |
13,000 |
|
|
Depreciation on PPE |
5 |
20,000 |
(152,000) |
|
Profit from operation |
|
|
76,000 |
Less: |
Financial expenses: |
|
|
|
|
Interest expenses |
|
|
(12,000) |
|
Profit before tax |
|
|
64,000 |
Less: |
Income tax expenses (64,000 @ 20%) |
|
|
(12,800) |
|
Profit from continuing operations |
|
|
51,200 |
Add: |
Profit from discontinued operation after tax |
|
|
Nil |
|
Net profit after tax |
|
|
51,200 |
Statement of Financial Position as per NFRS
Api Company Ltd
For the year ended 31st March
Particulars |
Notes |
Year 2021 |
|
ASSETS |
|
|
|
Non-Current Assets: |
|
|
|
|
Property, plant and equipment |
5 |
180,000 |
|
Investment |
|
100,000 |
|
Goodwill |
|
10,000 |
|
Total non-current assets (A) |
|
290,000 |
Current Assets: |
|
|
|
|
Cash and bank |
|
42,000 |
|
Account receivable |
|
65,000 |
|
Inventories (closing stock) |
|
20,000 |
|
Total current assets (B) |
|
127,000 |
|
TOTAL ASSETS (A+B) |
|
417,000 |
EQUITY |
|
|
|
|
Common stock (share capital) |
|
150,000 |
|
Additional paid in capital (share premium) |
|
Nil |
|
Retained earnings (net profit after tax) |
|
51,200 |
|
Total Equity |
|
201,200 |
LIABILITIES |
|
|
|
Non-Current Liabilities: |
|
|
|
|
Loan |
|
180,000 |
|
Other non-current liabilities |
|
Nil |
|
Total non-current liabilities (a) |
|
180,000 |
Current Liabilities: |
|
|
|
|
Rent payable |
|
1,000 |
|
Account payable |
|
22,000 |
|
Income tax payable |
|
12,800 |
|
Total current liabilities (b) |
|
35,800 |
|
Total Liabilities (a+b) |
|
215,800 |
|
TOTAL EQUITY AND LIABILITIES |
|
417,000 |
Or
The trial balance of Arya Company Ltd is given on 31st December:
Particulars |
Amount |
Particulars |
Amount |
Opening stock |
40,000 |
Share capital |
150,000 |
Salary |
32,000 |
Bank loan |
50,000 |
Purchase |
250,000 |
Sundry creditors |
40,000 |
Advertisement |
14,000 |
Sales |
390,000 |
Bank balance |
35,000 |
Purchase return |
5,000 |
Sundry debtors |
50,000 |
Interest received |
14,000 |
Investment |
50,000 |
Commission received |
2,000 |
Machinery |
120,000 |
|
|
Interest paid |
5,000 |
|
|
Administrative expenses |
35,000 |
|
|
Prepaid insurance |
20,000 |
|
|
|
651,000 |
|
651,000 |
Additional information:
a. Closing stock Rs 55,000
b. Depreciate machinery by 10%
c. Prepaid insurance expired Rs 3,000
d. Income tax @25%
Required: (i) Multi step income statement; (ii) Balance sheet [4+4 = 8]
SOLUTION:
Multi Step Income Statement
Arya Company Ltd
For the year ended 31st December
Particulars |
Notes |
Amount |
Amount |
|
Net sales revenue |
|
|
390,000 |
|
Less: |
Cost of goods sold |
1 |
|
(230,000) |
|
Gross profit |
|
|
160,000 |
Less: |
Administrative expenses: |
|
|
|
|
Salaries |
|
32,000 |
|
|
Administrative expenses |
|
35,000 |
|
|
Prepaid insurance expired |
|
3,000 |
|
|
Depreciation on machinery |
|
12,000 |
(82,000) |
|
Selling and distribution expenses: |
|
|
|
|
Advertisement |
|
14,000 |
(14,000) |
|
|
|
|
|
Less: |
Non-operating expenses: |
|
|
|
|
Interest paid |
|
|
(5,000) |
|
Operating profit |
|
|
59,000 |
Add: |
Non-operating incomes |
|
|
|
|
Interest received |
|
14,000 |
|
|
Commission received |
|
2,000 |
16,000 |
|
Profit before tax |
|
|
75,000 |
Less: |
Income tax expense (76,000 @ 25%) |
|
|
(18,750) |
|
Net profit after tax |
|
|
56,250 |
Given and working note:
1. Cost of goods sold: |
|
|
2. Prepaid insurance: |
|
Opening stock |
40,000 |
|
Prepaid insurance |
20,000 |
Add: Purchase |
250,000 |
|
Less: Expired |
(3,000) |
Less: Purchase return |
(5,000) |
|
|
17,000 |
Less: Closing stock |
(55,000) |
|
|
|
|
230,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
3. Machinery |
120,000 |
|
|
|
Less: Depreciation |
(12,000) |
|
|
|
|
108,000 |
|
|
|
|
|
|
|
|
Balance Sheet
Arya Company Ltd
For the year ended 31st December
Particulars |
Notes |
Amount |
Amount |
Sources of fund: |
|
|
|
Owners’ equity fund (insiders): |
|
|
|
Share capital |
|
150,000 |
|
General reserve |
|
Nil |
|
Retained earnings (net income after tax) |
|
56,250 |
206,250 |
Loan fund (outsiders): |
|
|
|
Bank loan |
|
|
50,000 |
Total liabilities |
|
|
256,250 |
Application of funds: |
|
|
|
Fixed or non-current assets: |
|
|
|
Machinery |
|
108,000 |
|
Investment |
|
50,000 |
|
Intangible assets |
|
Nil |
158,000 |
Add: Current assets: |
|
|
|
Bank balance |
|
35,000 |
|
Sundry debtors |
|
50,000 |
|
Prepaid insurance |
2 |
17,000 |
|
Closing stock |
|
55,000 |
157,000 |
Less: Current liabilities and provisions: |
|
|
|
Sundry creditors |
|
40,000 |
|
Income tax payable |
|
18,750 |
(58,750) |
Total assets |
|
|
256,250 |
Q21: The following comparative balance sheet of AD Company Ltd is given for two years:
Liabilities |
2077 (2021) |
2078 (2022) |
Assets |
2077 (2021) |
2078 (2022) |
Share capital |
250,000 |
300,000 |
Machinery |
180,000 |
300,000 |
Debenture |
50,000 |
80,000 |
Goodwill |
40,000 |
20,000 |
Creditors |
30,000 |
65,000 |
Debtors |
70,000 |
120,000 |
Outstanding expenses |
10,000 |
5,000 |
Stock |
30,000 |
50,000 |
Retained earnings |
40,000 |
60,000 |
Cash balance |
60,000 |
20,000 |
|
380,000 |
510,000 |
|
380,000 |
510,000 |
Additional information for the current year:
(i) Sales Rs 550,000
(ii) Cost of goods sold Rs 350,000
(iii) Operating expenses including depreciation Rs 30,000 is Rs 100,000
(iv) Interest expenses Rs 10,000
(v) Sales of machinery Rs 40,000 and purchase of machinery Rs 185,000
(vi) Dividend paid Rs 55,000
Required: Cash flow statement by using direct method [4+1+2+1 = 8]
SOLUTION:
Cash Flow Statement
AD Company Limited
Particulars |
Amount |
Amount |
Cash from operating activities: |
|
|
Cash collection from debtors: |
|
|
Sales revenue |
550,000 |
|
Less: Increase in account receivable debtors |
(50,000) |
500,000 |
Cash paid to suppliers: |
|
|
Cost of goods sold |
(350,000) |
|
Add: Increase in stock |
(20,000) |
|
Less: Decrease in creditors |
35,000 |
(335,000) |
Cash paid to operating expenses: |
|
|
Operating expenses (100,000 – 30,000 depreciation) |
(70,000) |
|
Add: Decrease in outstanding expenses |
(5,000) |
(75,000) |
Cash paid for interest and insurance: |
|
|
Interest and insurance |
|
(10,000) |
Cash paid to tax: |
|
|
Tax paid |
|
Nil |
Net cash from operating activities (A) |
|
80,000 |
Cash from investing activities: |
|
|
Sales of machinery |
|
40,000 |
Purchase of machinery |
|
(185,000) |
Net cash from investing activities (B) |
|
(145,000) |
Cash from financing activities: |
|
|
Issue of shares |
|
50,000 |
Issue of debentures |
|
30,000 |
Dividend paid |
|
(55,000) |
Net cash from investing activities (C) |
|
25,000 |
Change in cash and cash equivalent (A+B+C) |
|
(40,000) |
Add: beginning cash and cash equivalent |
|
60,000 |
Ending cash and cash equivalent |
|
20,000 |
Q22: The following cost information were extracted from the last month:
Direct materials: Rs 250,000
Direct wage: Rs 150,000
Factory overhead: Rs 45,000
Administrative overhead: Rs 44,500
Overheads are allocated as under:
Factory overhead on the basis of prime cost
Administrative overhead on the basis of factory cost
The following costs were estimated for submitting a tender:
Material cost Rs 100,000
Labour cost Rs 60,000
The factory is expected to earn 20% profit on tender price.
Required: (a) Cost sheet; (b) Tender sheet [3+5 = 8]
SOLUTION:
Cost Sheet
Particulars |
Amount |
Direct materials |
250,000 |
Direct wages |
150,000 |
Prime cost |
400,000 |
Add: Factory overhead |
45,000 |
Factory cost |
445,000 |
Add: Administrative overhead |
44,500 |
Cost of production |
489,500 |
Add: Selling and distribution expenses |
Nil |
Total cost |
489,500 |
Given and working note:
% of factory expenses on prime cost
= (Factory overhead ÷ Prime cost) x 100
= (45,000 ÷ 400,000) x 100
= 11.25%
% of administrative expenses on factory cost
= (Administrative overhead ÷ Factory cost) x 100
= (45,500 ÷ 445,000) x 100
= 10%
Quotation Statement (Tender Sheet)
Particulars |
Amount |
Raw materials |
100,000 |
Direct wage |
60,000 |
Prime cost |
160,000 |
Add: Factory expenses [11.25% of prime cost = 160,000 @ 11.25%] |
18,000 |
Factory cost |
178,000 |
Add: Administrative expenses [10% of factory cost = 178,000 @10%] |
17,800 |
Cost of production |
195,800 |
Add: Selling and distribution expenses |
Nil |
Total cost |
195,800 |
Profit (195,800 @ 20/80) |
48,950 |
Tender price |
244,750 |
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