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ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
(Department of Commerce)
ADVANCE ACCOUNTING (444)
CHECK LIST
SEMESTER: AUTUMN, 2010
This packet comprises following material:-
1. Text book (one)
2. Assignment No.1 and 2
3. Assignment form (One set)
4. Schedule for submitting the assignments and tutorial meetings.
If you find anything missing, in this packet, please contact at the address given bellow;
Director,
Admission & Mailing,
Allama Iqbal Open University,
H-8, Islamabad.
051-9057611-12
Syeda Faiza Urooj
Course Coordinator
ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
(Department of Commerce)
1. PLAGIARISM OR HIRING OF GHOST WRITER(S) FOR SOLVING THE ASSIGNMENT(S) WILL DEBAR THE STUDENT FROM AWARD OF DEGREE/CERTIFICATE, IF FOUND AT ANY STAGE.
2. SUBMITTING ASSIGNMENTS BORROWED OR STOLEN FROM OTHER(S) AS ONE’S OWN WILL BE PENALIZED AS DEFINED IN “AIOU PLAGIARISM POLICY”.
Course: Advanced Accounting (444) Semester: Autumn, 2010
Level: B.Com/ B.A Total Marks: 100
ASSIGHMENT NO.1
(Units 1 – 5)
Q.1. a) State the main difference between joint venture account and consignment account. (20)
b) On 1 July, Rahim and Saleem entered into a joint venture to buy and sell antiques and they agreed to share profit and loss equality.
(i) On 19 July, Rahim bought two antiques for $10,000. Rahim incurred expenses of $1,000. On 24 July, he sold the antiques for $30,000.
(ii) On 25 July, Saleem bought two antiques for $20,000 and on July 29 managed to sell them off for $60,000 and incurred expenses of $2,000.
(iii) The books are agreed to be closed at end of the month and financial settlement is supposed to be effected amongst Saleem and Rahim.
Required
(i) Prepare the Joint Vanture accounts as it would appear in the books of Raheem and Saleem.
(ii) Prepare the Memorandum Joint Venture Account for the aforesaid joint venture.
Q.2. Wasim of Rahim Yar Khan consigned goods costing Rs. 2,00,000 to his agent Mudassar of Fateh Jhang. The invoice was made pro-forma so as to show a profit of 25% on cost. Wasim paid freight and insurance Rs 4,000. Mudassar sold part of the consignment for Rs. 1,76,000 at a uniform price of 10% over invoice price and spent Rs. 6,000 as warehousing charges and Rs. 2,000 as selling expenses. Mudassar is entitled to a commission of 5% on sales and 20% of the net profit after charging commission on sales. Draw up consignment account in the books of consignor. (20)
Q.3. From the following details regarding West Branch of the Lahore Trading Co. prepare a branch account in respect of the year 2009: (20)
| Stock on 1-1-2009 | Rs. 12,000 | Returns to Head Office | Rs.4,800 |
| Stock on 31-12-2009 | 9,600 | Bad debts | 600 |
| Debtor on 1-1-2009 | 10,000 | Discount allowed | 310 |
| Debtors on 31-12-2009 | 11,500 | Returns from customers | 3,000 |
| Goods sent to branch during 2009 | 42,000 | Expenses paid by head office: | |
| Cash sales | 25,800 | Salaries and wages | 8,400 |
| Credit sales | 36,000 | Rent (from 1-1-2009- 31-12-2009) | 5,250 |
| Normal loss | 2,000 | Sundry expenses | 3,600 |
Q.4. Discuss the types of Companies and also explain the different classes of Share Capital? (20)
Q.5. Give Journal entries to record the following transactions (20)
* Issued on par 250,8% preference shares of Rs. 100 each.
* Issued 500 ordinary shares of Rs. 100 each at Rs.120 all amount received in cash.
* purchased building costing Rs. 165000 and issued 1000,8% preference shared of Rs.100 each for full consideration.
* Issued 5000 ordinary shares of Rs.10 each to promoters as remuneration for their services.
ASSIGHMENT NO.2
(Units 6 – 9)
Q.1. What are the courses available to companies for reorganization and also differentiate the absorption from amalgamation of a company. (20)
Q.2. P Ltd purchases a plant on hire purchases basis for Rs. 50,000 and makes the payment in the following order. Down payment Rs. 10,000: the first installment after one year Rs. 20,000; the second installment after two years Rs. 10,000; and the last installment after three years. The cash price of the plant is Rs.43,000.
Required:
(i) the total interest
(ii) the interest included in each installment. (20)
Q.3. From the following you are required to comment upon the long-term as well as short-term solvency of the company:
| Liabilities | Rs. | Assets | Rs. |
| Share Capital | 5,50,000 | Fixed Assets | 6,50,000 |
| Fixed Liabilities | 2,50,000 | Liquid Assets | 2,50,000 |
| Current Liabilities | 2,00,000 | Stock in Trade | 1,00,000 |
| TOTAL | 10,00,000 | TOTAL | 10,00,000 |
Hint: Calculate debt-equity ratio fixed assets ratio, proprietary ratio, current ratio and liquidity ration. (20)
Q.4. a) What are the major reasons of Mergers and Acquisitions?. (10)
b) On January 1, 2007, Burke Corporation signed a 5-year non canclable lease for a machine. The terms of the lease called for Burke to make annual payments of Rs. 8,668 at the beginning of each year, starting January 1, 2007. The machine has an estimated useful lijfe of 6 years and Rs. 5,000 un guaranteed residual falue. Burke uses the straight-line method of depreciation for all of its plant assets. Burke’s incremental borrowing rate is 10%, and the Lessor’s implicit rate is unknown.
Required: (i) Prepare all journal entries for Bruke for the year 2007. (10)
Q.5. Following is the trial balance of M/S Azaya Traders as on 30th June 2009. (20)
Trial Balance of M/s Azaya Traders as on 30th June 2009
| Particulars | Debit Amount (Rs.) | Credit Amount (Rs.) |
| Opening Stock | 86,000 | |
| Purchases | 11,36,000 | |
| Salaries | 1,53,000 | |
| Wages | 18,000 | |
| Carriage Outwards | 26,000 | |
| Trading Charges | 64,000 | |
| Carriage Outwards | 52,500 | |
| Rent Received | | 1,78,300 |
| Cash | 62,500 | |
| Capital | | 3,44,700 |
| Bank (Overdraft) | | 37,980 |
| Commission | 42,780 | |
| Creditors | | 2,68,000 |
| Sales | | 15,48,700 |
| Debtors | 2,56,000 | |
| Machinery | 4,80,000 | |
| Total | 23,77,680 | 23,77,680 |
Adjustments
The following additional information is available
(i) A Machine purchased on credit from M/s Ramsay Machine tools for Rs.2,00,000 is not yet recorded in the books.
(ii) Wages to the extent of Rs. 43,000 are incorrectly recorded as Salaries.
Required: From the above trial balance prepare the trading and P/L account and the balance sheet as at that date.