XI – ACCOUNTINGa4accounting.weebly.com/uploads/7/1/2/8/7128209/xi-2014_-_p.pdf · hand Rs.50,000 and cash at bank Rs.90,000. Following transactions were completed by them during

The workings under the heading of “Additional Working” are not required according to the requirement of the examiner. These are only for understanding the solutions. For more help, visit www.a4accounting.weebly.com

2014

Compiled and Solved by:

Sameer Hussain

XI – ACCOUNTING

PRIVATE

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

www.facebook.com/a4accounting.net [email protected]

X I – A c c o u n t i n g – 2 0 1 4 ( P r i v a t e )

Page 2

ACCOUNTING – 2014

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) Contra entry is recorded in: (a) Cash book. (b) Petty cash book. (c) Sales journal. (d) Purchase journal.

(2) The following does not affect the owner’s equity:

(a) Profit. (b) Additional investment. (c) Drawings. (d) Purchase of fixed assets.

(3) This is recorded in purchase journal:

(a) Purchase of fixed assets. (b) Purchase of merchandise for cash. (c) Purchase of merchandise on account. (d) None of these.

(4) A chronological record of all events in a business is:

(a) Ledger. (b) Trial balance. (c) List of sales and purchase. (d) General journal.

(5) If determines the arithmetic accuracy of double entry:

(a) General journal. (b) Ledger. (c) Trial balance. (d) Adjustment.

(6) The process of transferring debits and credits from the journal to the ledger accounts is called:

(a) Footing. (b) Balancing. (c) Trial balance. (d) Posting.




Page 3

(7) Beginning inventory + Purchases – Ending inventory =: (a) Gross profit. (b) Net profit. (c) Goods available for sale. (d) Cost of goods sold.

(8) The claims of creditors against the assets of a business are known as:

(a) Accounts receivable. (b) Owner’s equity. (c) Assets. (d) Liabilities.

(9) In case of loss, revenue is always:

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

(10) This is special journal as well as a part of ledger:

(a) General journal. (b) Sales journal. (c) Cash book. (d) Trial balance.

(11) Drawings account is closed to:

(a) Income summary account. (b) Cash account. (c) Merchandise account. (d) Capital account.

(12) A pre-payment is initially recorded as:

(a) Expense or liability. (b) Asset or income. (c) Asset or liability. (d) Asset or expense.

(13) Allowance for bad debts account is:

(a) Contra asset. (b) Liability. (c) Asset. (d) None of these.




Page 4

(14) In trial balance, salaries expense are Rs.90,000. On December 31, adjustment data shows accrued salaries of Rs.15,000. The amount of total salaries expense will be: (a) Rs.75,000. (b) Rs.90,000. (c) Rs.15,000. (d) Rs.105,000.

(15) In balance sheet, ending merchandise inventory is shown as:

(a) A liability. (b) An income. (c) An asset. (d) Capital.

(16) A schedule that explains difference between the balance shown in bank statement and the

balance shown in the depositor’s accounting records is: (a) Trial balance. (b) Schedule of accounts receivable. (c) Schedule of accounts payable. (d) Bank reconciliation.

(17) An entry with more than one debit or more than one credit is called:

(a) Compound entry. (b) Double entry. (c) Contra entry. (d) None of these.

(18) Depreciation is:

(a) Non-cash expense. (b) Cash expense. (c) Prepaid expense. (d) Accrued expense.

(19) The excess of assets over capital is/are:

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

(20) The total liabilities of a business are Rs.60,000 which are 1/3 of the total assets, then total

assets will be: (a) Rs.20,000. (b) Rs.180,000. (c) Rs.120,000. (d) Rs.60,000.




Page 5

ACCOUNTING – 2014

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 TERMS AND EQUATION (a) State the fundamental accounting equation. (b) Give rules of debit and credit in terms of increases and decreases in the value of three elements

of the equation. (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 & 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

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).




Page 6

Q.No.3 GENERAL JOURNAL Mr. Akbar started his business on January 1, 2014 by investing cash Rs.90,000 and equipment worth Rs.50,000. During the month, the following transactions were completed: January: 5. Purchased merchandise on credit Rs.50,000 from Asim Traders and paid Rs.2,000 for

transportation on it. 7. Sold merchandise on credit Rs.16,000 and for cash Rs.15,000 to Mr. Khalid. 15. Received a cheque of Rs.15,000 from Mr. Khalid in full settlement of his account. 20. Paid by cheque Rs.49,500 to Asim Traders in full settlement of their account. 25. Deposited the cheque in the bank, received on January 15. 30. Mr. Akbar purchased a mobile phone for his personal use from the business cash Rs.5,000. 31. Paid rent in advance by a cheque of Rs.10,000 for office building. REQUIRED Prepare General Journal entries. SOLUTION 3

MR. AKBAR GENERAL JOURANL

FOR THE MONTH OF JANUARY 2014

Date Particulars P/R Debit Credit

Jan. 1 Cash 90,000 Equipment 50,000 Akbar Capital 140,000 (To record the investment by owner in the business)

Jan. 5 Purchases 50,000 Transportation – in 2,000 Accounts payable (Asim Traders) 50,000 Cash 2,000 (To record the goods purchased on account and paid

transportation)

Jan. 7 Accounts receivable (Mr. Khalid) 16,000 Cash 15,000 Sales 31,000 (To record the goods sold for cash and on account)

Jan. 15 Cash 15,000 Sales discount 1,000 Accounts receivable (Mr. Khalid) 16,000 (To record the cheque received from customer)

Jan. 20 Accounts payable (Asim Traders) 50,000 Purchase discount 500 Bank 49,500 (To record the payment to supplier by cheque)

Jan. 25 Bank 15,000 Cash 15,000 (To record the cheque deposited into bank)




Page 7


Jan. 30 Drawings 5,000 Cash 5,000 (To record the cash withdrew by owner for personal

use)

Jan. 31 Prepaid office rent 10,000 Bank 10,000 (To record the rent paid in advance)

Q.No.4 TRIAL BALANCE The following are balances taken from the ledger of Qadri Brothers on March 31, 2014: Cash Rs.?; Accounts receivable Rs.10,000; Merchandise inventory Rs.6,500; Sales Rs.45,000; Prepaid rent Rs.4,000; Purchase discount Rs.1,500; Service income Rs.4,000; Office equipment Rs.10,000; Accounts payable Rs.4,000; Purchases Rs.20,000; Supplies expense Rs.1,500; Salaries expense Rs.14,000; Miscellaneous expense Rs.1,500; Sales return and allowance Rs.2,000; Capital Rs.30,000. REQUIRED Prepare a Trial Balance with proper heading, arranging the accounts in sequence. SOLUTION 4 Computation of Cash Balance: Credits: Sales 45,000 Purchase discount 1,500 Service income 4,000 Accounts payable 4,000 Capital 30,000

Total credits 84,500 Less: Debits: Accounts receivable 10,000 Merchandise inventory 6,500 Prepaid rent 4,000 Office equipment 10,000 Purchases 20,000 Supplies expense 1,500 Salaries expense 14,000 Miscellaneous expense 1,500 Sales return and allowance 2,000

Total debits (69,500)

Cash balance 15,000




Page 8

QADRI BROTHERS TRIAL BALANCE

FOR THE MONTH ENDED MARCH 31, 2014

NO. PARTICULARS P/R DEBIT CREDIT

1 Cash 15,000 2 Accounts receivable 10,000 3 Merchandise inventory 6,500 4 Prepaid rent 4,000 5 Office equipment 10,000 6 Accounts payable 4,000 7 Capital 30,000 8 Sales 45,000 9 Sales return and allowance 2,000

10 Service income 4,000 11 Purchases 20,000 12 Purchases discount 1,500 13 Supplies expense 1,500 14 Salaries expense 14,000 15 Miscellaneous expense 1,500

Total 84,500 84,500

Q.No.5 CASH BOOK M/S. Jawaid & Co. uses three column cash book in their business. On March 1, 2014, they had cash in hand Rs.50,000 and cash at bank Rs.90,000. Following transactions were completed by them during March: March 05: Sold merchandise for cash Rs.36,000. March 10: Received a cheque from Younus for Rs.24,500 in full settlement of Rs.25,000. The

cheque was deposited into the bank on the same day. March 15: Paid cash to Muneer Rs.22,700 iin full settlement of his account of Rs.23,000. March 17: The cheque of Younus was dishonoured by the bank. March 26: Withdrew from bank Rs.2,000 to pay residential flat’s rent and Rs.6,000 for office rent. REQUIRED Prepare a three column cash book. Balance it on March 31 and bringing down the balances as on April 1, 2014. SOLUTION 5




Page 9

M/S. JAWAID & CO. THREE COLUMN CASH BOOK

FOR THE MONTH OF MARCH 2014 B

ank

24

,50

0

2,0

00

6,0

00

32

,50

0

82

,00

0

11

4,5

00

Cas

h

22

,70

0

22

,70

0

63

,30

0

86

,00

0

Pu

rch

.

Dis

c. 30

0

30

0

30

0

P/R

Par

ticu

lars

Acc

ou

nts

p

ayab

le

Acc

ou

nts

rece

ivab

le

Dra

win

gs

Ren

t ex

pen

se

Ba

lan

ce c

/d

Dat

e

Mar

. 15

Mar

. 17

Mar

. 26

Mar

. 26

Ma

r. 3

1

Ban

k

90

,00

0

24

,50

0

11

4,5

00

82

,00

0

Cas

h

50

,00

0

36

,00

0

86

,00

0

63

,30

0

Sale

s

Dis

c.

500

(500

)

---

P/R

Par

ticu

lars

Sale

s

Acc

ou

nts

re

ceiv

able

Acc

ou

nts

re

ceiv

able

Ba

lan

ce b

/d

Dat

e

Mar

. 1

Mar

. 5

Mar

. 10

Mar

. 17

Ap

r. 1




Page 10

Q.No.6 BANK RECONCILIATION STATEMENT Comparison of cash book and bank statement of Mr. Tariq Jamil, a sole trader, reveals the following for the month of April 2014:

1) Balance per cash book (Debit balance) Rs.17,000 and as per bank statement (Debit balance) Rs.23,000.

2) Direct deposit by a customer Rs.5,000. 3) A cheque of Rs.18,000 issued in settlement of an account was recorded in the cash book as

Rs.13,000. 4) Uncleared cheques Rs.37,000. 5) Unpresented cheques Rs.7,000. 6) Bank made direct payment for an outstanding bill of business Rs.10,000.

REQUIRED (a) Prepare bank reconciliation statement as on April 30, 2014. (b) Record necessary entries in General Journal of the books of Mr. Tariq Jamil at April 30, 2014.

SOLUTION 6 (a)

MR. TARIQ JAMIL BANK RECONCILIATION STATEMENT

FOR THE MONTH OF APRIL 2014

Particulars Cash Book Pass Book

Unadjusted balance on 30 April 2014 17,000 (23,000) Add: Direct deposit – Accounts receivable (2) 5,000 Less: Accounts payable – Error (3) (5,000) Add: Uncleared cheques (4) 37,000 Less: Unpresented cheques (5) (7,000) Less: Bills payable (6) (10,000)

Adjusted balance 7,000 7,000

SOLUTION 6 (b)

MR. TARIQ JAMIL GENERAL JOURNAL

FOR THE MONTH OF APRIL 2014


1 Mark – up charges 600 Accounts receivable 3,500 Equipment 1,500 Notes payable 3,000 Bank 8,600 (To record the decrease in bank account)

2 Bank 10,800 Dividend income 2,200 Cash 8,600 (To record the increase in bank account)

Q.No.7 SPECIAL JOURNALS Following information for the month of February 2014 is contracted from the books of Shahzaman Co. February 02: Purchase goods from Momin Rs.12,000 on credit.




Page 11

February 05: Purchase merchandise from Muslim for Rs.30,000 paying a cheque of Rs.12,000 and agreeing to pay the balance after ten days.

February 10: Purchase office supplies on account from Jazib Rs.2,000. February 15: Purchase merchandise from Qazi for Rs.17,000 with term 2/10, n/30. February 20: Purchase merchandise from Imran for Rs.40,000 receiving quantity discount of Rs.2,000. REQUIRED Prepare a purchase journal from above given information. Total it and write an entry on February 28 to indicate debit and credit. SOLUTION 7

SHAHZAMAN CO. PURCHASE JOURNAL

FOR THE MONTH OF FEBRUARY 2014

Date Invoice No. Name of Suppliers P/R Amount

February 2 Momin 12,000 February 5 Muslim 18,000 February 15 Qazi 17,000 February 20 Imran 38,000

February 28 Purchases Dr. 85,000 Accounts payable Cr.

SECTION “C” (DETAILED – ANSWER QUESTIONS) (30) Instruction: Attempt the following question which is compulsory: Q.No.8 FINANCIAL STATEMENT The following balances have been taken from the ledger of Raza & Co. on December 31, 2013:

Debit Balance Credit Balance

Cash Rs.60,000 Accounts payable Rs.38,000

Accounts receivable Rs.40,000 Notes payable Rs.32,000

Merchandise inventory Rs.80,000 Unearned rent Rs.32,000

Prepaid insurance Rs.26,000 Sales Rs.220,000

Office equipment Rs.50,000 Accumulated depreciation Rs.22,000

Purchase Rs.190,000 Raza’s Capital Rs.157,000

Salaries expense Rs.30,000

Sales return Rs.25,000

Rs.501,000 Rs.501,000

Data for Adjustment on December 31, 2013: (i) Merchandise inventory Rs.80,000. (ii) Insurance expired Rs.4,000. (iii) Bad debts estimated Rs.600. (iv) Outstanding salaries Rs.4,000. (v) Depreciation on office equipment for the year Rs.3,000. (vi) Rent earned Rs.8,000.

REQUIRED Prepare any two of the following:

(a) Income statement for the year ended December 31, 2013. (b) Balance sheet as on December 31, 2013. (c) Closing entries on December 31, 2013.




Page 12

SOLUTION 8 (a) RAZA & CO.

INCOME STATEMENT FOR THE PERIOD ENDED 31 DECEMBER 2013

Sales 220,000 Less: Sales returns (25,000)

Net sales 195,000 Less: Cost of Goods Sold: Merchandise inventory beginning 80,000 Add: Purchases 190,000

Merchandise available for sale 270,000 Less: Merchandise inventory ending (80,000)

Cost of goods sold (190,000)

Gross profit 5,000 Less: Operating Expenses: Salaries expense (30,000 + 4,000) 34,000 Insurance expense 4,000 Bad debts expense 600 Depreciation expense 3,000

Total operating expenses (41,600)

Loss from operation (36,600) Add: Other Income: Rent income 8,000

Net loss (28,600)

SOLUTION 8 (b)

RAZA & CO. BALANCE SHEET

AS ON 31 DECEMBER 2013

ASSETS EQUITIES

Current Assets: Liabilities: Cash 60,000 Accounts payable 38,000 Accounts receivable 40,000 Notes payable 32,000 Less: All for bad debts (600) 39,400 Unearned rent 24,000

Merchandise inventory 80,000 Salaries payable 4,000

Prepaid insurance 22,000 Total liabilities 98,000

Total current assets 201,400 Owner’s Equity: Fixed Assets: Capital 157,000 Office equipment 50,000 Less: Net loss (28,600)

Less: All for depreciation (25,000) Total owner’s equity 128,400

Total fixed assets 25,000

Total assets 226,400 Total equities 226,400




Page 13

Additional Working: RAZA & CO.

ADJUSTING ENTRIES FOR THE PERIOD 31 DECEMBER 2013


1 Merchandise inventory 80,000 Expense and revenue summary 80,000 (To close the ending inventory)

2 Insurance expense 4,000 Prepaid insurance 4,000 (To adjust the prepaid insurance)

3 Bad dents expense 600 Allowance for bad debts 600 (To adjust the bad debts expense)

4 Salaries expenses 4,000 Salaries payable 4,000 (To adjust the unpaid salaries)

5 Depreciation expense 3,000 Allowance for depreciation – Office equipment 3,000 (To adjust the depreciation expense)

6 Unearned rent 8,000 Rent income 8,000 (To adjust the unearned rent)

SOLUTION 8 (c)

RAZA & CO. CLOSING ENTRIES

FOR THE PERIOD ENDED 31 DECEMBER 2013


1 Expense and revenue summary 336,600 Sales return 25,000 Merchandise inventory beginning 80,000 Purchases 190,000 Salaries expenses 34,000 Insurance expenses 4,000 Bad debts expense 600 Depreciation expense 3,000 (To close the various expense accounts)

2 Sales 220,000 Merchandise inventory ending 80,000 Rent income 8,000 Expense and revenue summary 308,000 (To close the revenue account)

3 Raza’s Capital 28,600 Expense and revenue summary 28,600 (To close the expense and revenue summary account)

Documents

XI – ACCOUNTINGa4accounting.weebly.com/uploads/7/1/2/8/7128209/xi-2014_-_p.pdf · hand Rs.50,000 and cash at bank Rs.90,000. Following transactions were completed by them during