B.COM I Principle of Accounting 2003 (Regular)
B.COM I Accounting
Attempt any FIVE questions carrying equal marks.
Q.1 (A). ACCOUNTING PRINCIPLES
Name the accounting principles indicated by each of the following statements.
1. Every business unit has a separate existence from its owner.
2. To use the same accounting principle without changing it and practice year after year.
3. The assumption that an entity will continue indefinitely.
4. Recording the assets at their acquisition cost.
Q.1 (B). ACCOUNTING EQUATION
Which of the following is not a correct form of the accounting equation
1. Assets = Liabilities + Owner’s Equity
2. Assets = Equities
3. Assets + Owner’s Equity = Liabilities
Q.1 (C). ACCOUNTING TERMINOLOGY
Briefly explain and illustrate any SIX of the following.
1. Accounting the language of business.
2. Accelerated depreciation methods.
3. Limited Company.
4. Operating Cycle.
5. Extra Ordinary Repairs.
6. Cash Short and Over.
7. Credit Balance at a Customer Account.
Q.2. WORK SHEET
Following is the Trial Balance taken from the books of Maha & Co. on 31st Dec. 2002.
2. Office Supplies
3. Prepaid Rent
4. Equipment (at cost)
5. Salaries Expense
6. Insurance Expense
7. Allowance for Dep. Equipment
8. Maha Capital
9. Commission Income
DEBIT ………….. CREDIT
7. …………………. 10,000
8. …………………. 50,000
9. …………………. 76,000
1,36,000 | 1,36,000
Data For Adjustments
1. Commission Receivable | Rs. 5,000
2. Unearned Commission | Rs. 3,000
3. Prepaid Rent Expired | Rs. 18,000
4. Unpaid Insurance Expense | Rs. 4,000
5. Office Supplies Consumed | Rs. 8,000
6. Provide Depreciation on Office Equipment at 15% of cost.
7. Prepaid Salaries | Rs. 5,000
Prepare a Ten-Column Work Sheet
Q.3. ADJUSTING AND REVERSING ENTRIES
Take the data relating to adjustments in Questions No. 2.
Pass necessary ADJUSTING and REVERSING Entries.
Q.4. BANK RECONCILIATION STATEMENT
The Cash Book of Liaq & Co. showed a Debit Balance of Rs. 20,452 while the Bank Statement for the month of November 2003 showed the Balance of Rs. 16,365/=. Following items were discovered causing the difference.
1. Bank Charges not entered in Cash Book Rs. 52
2. Late Deposits not recorded by Bank Rs. 3,135
3. Cheques issued but not presented Rs. 2,500
4. Promissory Note Collected by Bank Rs. 4,600
5. Cheque deposited but not shown on Bank Statement Rs. 3,000
6. Zakat deducted Rs. 1,000 & interest credited Rs. 300 by Bank.
7. Cheques dishonoured and returned by Bank Rs. 4,300
Prepare Bank Reconciliation Statement and Adjusting Entries in the Journal.
(A). On March 21, 2003 Mobeen & Zulfi agreed to form a partnership Mobeen invested Equipment at agreed value of Rs. 80,000 the original cost of which was Rs. 1,00,000 and accumulated depreciation was Rs. 20,000.
Zulfi invested merchandise costing Rs. 40,000 at an agreed value of Rs. 50,000 along with his supplier, credit value Rs. 10,000 and sufficient cash to make his Capital equal to Mobeen.
1. Prepare Journal Entries to record the partner’s investment.
2. Prepare initial balance sheet of the partnership firm.
(B). P,Q and R are the equal partners with Rs. 1,00,000 each made investment in the firm. R decided to retire. He is paid Rs. 1,10,000 (Goodwill of the firm to be recorded)
Prepare Journal Entries and computation for recording the retirement of R.
Q.6. ACCOUNTS RECEIVABLE
The following data are taken from the AFAQI Traders
………………………………………. Dec 31, 2001 | Dec 31, 2002
Accounts Receivable ……………… 70,000 ……………1,56,700
Allowance for Bad Debts (CR) …… 300
Allowance for Bad Debts (CR) ……………………………….5,000
(balance before adjustment)
During the year the following transactions were performed
1. Sales on account Rs. 2,40,000
2. Accounts Receivable written off as uncollectible Rs. 3,300
3. Previously written off accounts receivable Rs. 8,000
4. Cash Collected from customers Rs. 1,50,000
1. Prepare Journal Entries to record the above transactions.
2. Give an adjusting entry, assuming Afaqi Traders estimate the uncollectibles at 3% of Credit Sales.
3. Give an adjusting entry assuming Afaqi Traders estimate the Bad Debts at 10% of accounts receivable at end.
4. Prepare Partial balance sheets showing accounts receivable and related allowance for Bad Debts on December 31, 2002 under both the approaches. Show Computation.
Q.7. INVENTORY VALUATION
January 01, Balance | 09 units @ Rs. 500 each
April 12, Purchased | 10 units @ Rs. 550 each
August 17, Sold | 08 units
October 21, Purchased | 10 units @ Rs. 600 each.
December 28, Sold | 09 units
(A). Using FIFO Periodic
1. Compute the Cost of ending inventory at Dec 31, 2002.
2. Compute the Cost of goods Sold for the year ended Dec 31, 2002.
3. Prepare Journal entries to record purchases and the year and Adjusting entry using Cost of goods sold.
(B) Using FIFO Perpetual
1. Prepare the inventory card in good form
2. Give an entry to adjust Inventory at December 31, 2002.
Q.8. ACCOUNTING FOR COMPANIES
The Shares issue transactions of Safeer Co. Ltd for the year ended on 30th September 2003.
1. The Company issued for Cash 4,00,000 shares of Rs. 10 each at Rs. 13 each.
2. The Promoters were allotted 10,000 shares of Rs. 10 each for services.
3. The Company bought Equipment costing Rs. 1,00,000 Rs. 10 shares were issued in exchange. The market value per share was Rs. 12.50.
4. For Land purchased worth Rs. 7,50,000, 80,000 shares off Rs. 10 each were issued.
5. Declared Dividend 25% on the shares issued above.
6. Paid the dividend through Bank.
1. JOURNALISE the above transactions.
2. Prepare initial Balance sheet of the Company.
On April 02, 1999 the Global Company acquired an equipment. It has estimated useful life of 3 years with salvage value Rs. 5,000 the following expenditure were incurred on it. (The accounting year ends on December 31)
1. Billed Price Rs. 2,75,000.
2. Freight Charges Rs. 2,000 and Transit Insurance Rs. 3,000.
3. Installation Expenses Rs. 25,000
4. Three years Fire Insurance Rs. 15,000.
1. Compute the Cost of Equipment
2. Company used Straight Line Method. Compute the depreciation expenses and Accumulated Depreciation for the whole life of the asset.
3. Assume that the equipment was traded in with another equipment, costing Rs. 4,00,000 on December 31 2001. The trade in allowance was Rs. 50,000 and balance to be paid in cash.
NOTE: Gain or Loss is not to be recognized. Give the entries and computation.
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