Thread: accounting past paper answers
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Old Saturday, October 19, 2013
KinzaShoaib KinzaShoaib is offline
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Ahmed Faisal
My two figures are different from you:
1. Taxes
2. Rent of Building

I first charge Rent to debit side of Profit and Loss Account but then I find that this is the same question as Q#14 given in M.A. Ghani's Book and in Key Book rent is recorded as revenue in credit side of P&L Account. Moreover, if we logically examine the statement i.e.
Quote:
Rent due for a portion of the Building let Rs. 150
then I think, It is justified to deal it as revenue. Building is also included in asset.

Secondly,
Quote:
The following balances appeared in the books of a merchant on 31st December, 2003.

Building……….……….…………….70,000
Motor trucks……….……….…….12,000
Furniture……….……….…….…...1,640
Sundry debtors……….………….15,600
Sundry creditors……….….…….18,852
Stock……….……….……….……….15,040
Cash in hand……….……..…..….988
Cash at bank……….…….……….14,534
Bills receivable……….………..….5,844
Bills payable……….……….……….6,930
Purchases……….……….…..…….85,522
Sales……….……….……….…...….1,21,850
Capital……….……….…………..….92,000
Carriage on purchase……..….1,291
Carriage on sales………..…..…800
Reserve for bad debts….…….1,320
Establishment……….…….…....2,135
Taxes & Insurance…….…..….783
Interest (Cr.) …….….…..…….340
Bad Debts……….….……….…….613
Audit fee……….……….……..….400
General charges……….…....…3,950
Travelling expenses ……….….325
Discount (Dr.) …….….…….….620
Investments……….……………..8,922
Sales returns………..……...….285

Required:
Prepare Trading and Profit and Loss account for the year ended 31st December 2003 and Balance Sheet as on that date. In doing so take the following matters into consideration.
Stock on 31st December, 2003 amounted to Rs. 15,500.
Depreciate Motor Trucks at 20 per cent and Furniture at 10 percent.
Increase Bad Debts Reserve by Rs. 1000
Salaries Rs. 500 and Taxes Rs. 150 are outstanding
Unexpired Insurance Rs. 50
Interest accrued on Investments Rs. 210
Rent due for a portion of the Building let Rs. 150
A bill receivable for Rs. 500 was discounted in December 2003 but was not due till January next.
I added outstanding taxes of Rs.150 and deducted unexpired Insurance of Rs.50 from Taxes and Insurance head amounted Rs. 783
( 783+150-50=883)

Now, correct me if I am wrong.
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