XII Accounting

NOTE: Attempt any FIVE questions. All questions carry equal marks. (20)

1. ACCOUNTING FOR NON-PROFIT CONCERN

The following is the summary of Reciepts and Payments of Moona Ramzan Welfare Society the year ended 31st Dec 2007.

RECEIPTS
Cash Opening Balance | 40,850
Donations | 1,70,000
Membership fee | 80,000
Other Incomes | 9,150 (3,00,000)

PAYMENTS
Purchase of Computer | 20,000
Staff Salary | 72,000
Office Expenses | 10,000
Office Rent | 48,000
Medicines, book for poor (free supply) | 69,450
Sewing Machines for Widow (free supply) | 40,000
Balance (ending) | 40,550 (3,00,000)

Other Information
i. On 1st January 2007 the Society had the following Assets: Furniture Rs. 60,000 & Equipments Rs. 65,000.
ii. Outstanding Membership fee Rs. 5,000
iii. Non-current Assets to be depreciated at 10%

REQUIRED
i. Prepare Income and Expenditure Account for the year.
ii. Prepare Balance Sheet as on December 31, 2007

2. SINGLE ENTRY SYSTEM

On 1st May 2007 Mr. Hammad started his business with cash investment of Rs. 5,00,000. He maintains his accounting records under Single Entry System. His position on 30th April 2008 was as under:
Cash Rs. 1,500, Plant Assets Rs, 2,48,500, Accounts Payable 20,000, Merchandise Rs. 1,50,000, Bank Loan Rs. 50,000, Accounts Receivable Rs, 1,70,000.

Additional Information
i. Hammad withdrew Rs. 7,000 per month for his private use.
ii. Additional investment by Hammad Rs. 30,000
iii. Plant Assets are to be depreciated at 8% per annum.
iv. Prepaid rent Rs. 6,000 and Unpaid salaries Rs. 5,000
v. 5% of Accounts Receivable is estimated as bad debts.
vi. Rs. 3,650 of interest is due on bank loan.

REQUIRED
a. What is Hammad’s Capital at the end?
b. Prepare the Statement of Profit and Loss for the year.
c. Prepare Statement of Affairs on 30th April 2008.

3(A). PARTNERSHIP FORMATION

On 1st May 2008 Saad, Khalida and Maheen agreed to form a partnership business with a total capital of Rs. 12,00,000 to be contributed by them in the ratio of 3:2:1 respectively.

REQUIRED
I. Find the investment of each partner and record in General Journal.
ii. Prepare the initial Balance Sheet.

3(B). DIVISION OF PROFIT AND LOSS

Tariq and Bilal are equal partners in a firm. For the year ended 30th April, 2008 the firm’s Net Income amounted to Rs. 1,40,000. As per their agreement Tariq was to receive the salary of Rs. 5,000 per month and Bilal Rs. 50,000 per annum.

REQUIRED
i. Prepare Income Distribution Summary.
ii. Journal Entry showing the distribution of Net Income between partners using the current accounts.

4. PARTNERSHIP ADMISSION

Khalid and Saima are partners in a firm sharing profits and losses in the ratio of their capitals. The firm’s financial position of 31st March 2008 was as under.
Cash Rs. 14,800, Other Assets Rs. 4,85,200, Khalid’s Capital Rs. 2,70,000, Saima’s Capital Rs. 1,35,000 Accounts Payable Rs. 95,000.
On 1st April 2008 they agreed to admit Raveen as a partner for 1/5 interest in the capital and profit.

REQURED
A. Pass General Journal Entries to record the admission of Raveen under each of the following cases separately:
i. If Raveen invests Rs. 1,35,000 and is credited with the entire amount of her investment.
ii. If Raveen invests Rs. 67,500 (Total Capital of the firm increases by her investment).
iii. If Raveen purchase 1/3 interest of Khalid for cash Rs. 75,000.
B. Prepare initial balance sheet as on 1st April under case (ii).

5. PARTNERSHIP DISSOLUTION

Nizam, Nadeem and Akram are partners sharing profits and losses in the ratio of their capitals. On 15th May 2008 the firm’s position stood as under.
Cash Rs. 10,000, Other Assets Rs. 2,40,000, Accounts Payable Rs. 50,000, Nizam’s Capital Rs. 1,00,000, Nadeem’s Capital Rs. 50,000 and Akram’s Capital Rs. 50,000
On this date they decided to dissolve the partnership.

REQUIRED
Pass entries in General Journal relating to dissolution and final settlement among the partners under each of the following cases separately:
A. If Other Assets were realized cash Rs. 2,60,000 and Accounts Payable were paid in full.
B. Other Assets were sold for Rs. 2,20,000 cash and Accounts Payable were paid in full.

6. ISSUE OF SHARES & DEBENTURES

Aamna Ltd was registered with the Authorised Capital of Rs. 80,00,000 divided into the shares of Rs. 10 each. The Company made the following transactions:
i. Offered 5,00,000 shares to public at par. The Bank informed that Rs. 45,00,000 were received. The Directors made the final allotment.
ii. Issued 10,000 shares for the purchase of equipments at Rs.13 each
iii. Issued 2,50,000 shares for the purchase of machinery costing Rs. 22,50,000.
iv. Paid Rs. 1,20,000 for preliminary expenses.
v. Issued 2000 8% Debenture of Rs. 100 each at Rs.95 for cash.
vi. Issued 1000 10% Debentures at Rs. 100 each at Rs. 105 for cash.

7. COMPANY-RETAINED EARNING

The Income Statement of Sana Mariam Ltd. For the year ended 31st March 2008 showed the Net Income of Rs. 5,00,000. The Board of Directors decided.
i. To declare Rs. 1,00,000 Cash dividend and Rs. 1,50,000 stock dividend. (No. of issued shares 15,000 of Rs. 10 each against the stock dividend).
ii. To appropriate Reserve for Contingencies Rs. 1,00,000 and for Plant Extension Rs. 3,00,000.

REQUIRED
a. Pass Journal Entry for the transfer of Net Income to Retained Earnings having credit balance of Rs. 4,00,000.
b. Journalise the Directors decision No. 1 and 2 above.
c. Prepare the statements of Retained Earnings on 31-03-2008.

8. DEPRECIATION

On 1st May 2006 Sadia Ltd Bought a certain machinery for Rs. 8,00,000 subject to 10% Trade Discount and thereafter Cash Discount of 5%. Its useful life was estimated to be 10 years and the salvage value Rs. 24,000

REQUIRED
a. Compute Depreciation expense for the year 2006 and 2007 under Straight Line Method if the Company’s Accounting year ends on 31st December.
b. Pass Adjusting and Closing Entries for the year 2006.
c. Prepare initial Balance Sheet as on 31st December 2007.
d. Compute the amount of Depreciation Expense for the said two years under Diminishing Balance Method if the rate applied is 20%.