[QUOTE]Calculation of new provision:

old provision- Bad debts= Excess old provision (1320 -613= 707)
Excess old provision + Provision increase by = new provision (707+1000[COLOR="DarkGreen"][B]+[/B][/COLOR]1707)[/QUOTE]

Sorry 707+1000= 1707*

Kinza The value of stock withdrawn is to be
Credited to the "Trading a/c"
It is generally shown as a deduction from purchases on the debit side of the "Trading a/"
Deducted from Capital on the liabilities side of the balance sheet (as additional drawings)

Discount allowed and discount received will come in profit&loss or trading account

Q5 2002

Trading account dr
Opening supplies 3000
Rent 6000
Wages 1150

Credit side
Sales 14,400
Closing supplies 1300

Gp= 5,550

Profit and loss debit side
Depreciation 1200
Advertising 100

Credit
Gp 5550

Np= 4250


Bs

Assets
Equipment 8400
Prepaid 300
Supplies 1300
Service fee 400
Receivable 1500
Cash 200

Total assets 12,100

Capital 10000
Drawings (3600)
Net profit 4250

Total capital 10650

Payable 800
Rent 500
Wages 150

Total capital & liability = 12,100

Since it is a service industry hence wages are part of direct expense

[COLOR="Blue"][B][SIZE="5"][COLOR="RoyalBlue"]Ratios solutions to the Past papers Questions (corrections are welcome, if any)[/COLOR][/SIZE][/B][/COLOR]

[COLOR="Purple"][B]Q.3, 2013[/B][/COLOR]
Theory

[COLOR="Purple"][B]Q.8, 2012[/B][/COLOR]

[B](a) [/B] [LIST=1][*]Sales:.............................................Rs. 450000[*] Current Assets: ..................................200,000[*] Stock:.................................................60000[*] COGS:.................................................360000[*] Average Collection Period:.......................60 days[*] G.P:....................................................90000[/LIST]
[B](b)[/B] [LIST=1][*]Working Capital:....................................Rs. 500,000[*] Current Ratio:.......................................3:1[*] Quick Ratio:.........................................2.4:1[*] Inventory Turnover:..............................4 times[*] A/R Turnover:......................................72 days[*] G.P Margin:.........................................70%[*] N.P Margin:.........................................37%[*] Operating Expenses Rate:......................32%[/LIST]
[B][COLOR="Purple"]Q.8, 2011[/COLOR][/B]

[B](a)[/B] [LIST=1][*]Inventory Turnover:..............................5 times[*] A/R Turnover:......................................9 times[*] Total operating expenses:......................657000[*] G.P percentage:...................................35%[*] Return on average [*] Stock holder equity:..............................20%[*] Return on average assets:......................8.9%[/LIST]
[B](b)[/B] Yes, it would be prudent decision to have long term loans. Since return on Equity is 20%; and interest payable on long term loan would be 12%, so the company can make an additional profit of 8%.

[B][COLOR="Purple"]Q.4, 2010[/COLOR][/B]
[LIST=1][*]Current Ratio:..............................................06:1[*]Quick Ratio:................................................0.25:1[*]Debt to Equity Ratio:....................................1.7:1[*]Fixed Assets Ratio:.......................................1.5:1[*]Proprietary Ratio:.........................................0.3:1[/LIST][B][COLOR="Purple"]Q.3, 2009[/COLOR][/B]
[LIST=1][*]G.P:..........................................................4, 50,000[*]COGS:.......................................................13, 50,000[*]Average Inventory:...................................... 225000[*]Debtor:......................................................200000[*]Debtors Turnover:........................................9 times[*]Current Liabilities:........................................ 300000[*]Total Assets:..............................................1500000[*]Total Debts:...............................................900000[/LIST]
[B]Required Balance Sheet:[/B]

[B]Assets[/B]

Cash.........................................................30000
M/s...........................................................25000
A/R...........................................................200000
Inventory...................................................225000
Net fixed Assets..........................................1020000

[B]Total Assets...........................................1500000[/B]

[B]Liabilities + O/E[/B]

A/P...........................................................120000
Notes Payable............................................160000
Accruals....................................................20000
Long Term Debts.........................................600,000
S.H Equity.................................................600,000
[B]
Total........................................................1500000 [/B]


[B][COLOR="Purple"]Q.4, 2008[/COLOR][/B]

[B]I solved these ratios only for company X…[/B]
[LIST=1][*]Current Ratio:............................................1.9:1[*]Quick Ratio:..............................................1.23:1[*]Net Profit Margin........................................3.8%[*]Stock Turn over:........................................9.6 times[*]Debt to Equity Ratio....................................0.64:1[/LIST]

[B][COLOR="Purple"]Q. 2, 2007[/COLOR][/B]
Pending

[B][COLOR="Purple"]Q.4, 2006[/COLOR][/B]
[LIST=1][*]Current Ratio (2004)....................................2:1[*]Current Ratio (2005)....................................2:1
[*]Quick Ratio (2004)......................................0.5:1[*]Quick Ratio (2005)......................................1:1
[*]Working Capital (2004).................................300000[*]Working Capital (2005).................................250,000[/LIST]
Later compare the same ratios with reference to standard ratio. Standard Ratio are as follows:

Current Ratio..............................................2:1
Quick Ratio................................................1:1
Working Capital: Depends on the size and nature of a company.

[B][COLOR="Purple"]Q. 4, 2003[/COLOR][/B]

[B]Pertinent Ratios are:

Only solved for 2001[/B]
[LIST=1][*]Current Ratio:............................................2.1:1[*]Operating Profit Margin:...............................5 %[*]Return on Total resources:...........................7.49%[*]N.P Margin:...............................................2.07%[*]Return on investment:................................7.49%[*]Return on Capital Employed:........................24.15%[*]Return on Equity Capital:............................12.48 %[/LIST]
[B][COLOR="Purple"]Q. 3, 2002[/COLOR][/B]
[LIST=1][*]Working Capital:........................................Rs. 5, 75,500[*]Current Ratio:...........................................3.9:1[*]Acid Test Ratio:........................................ 2:1[*]Debtors Turnover:......................................4 times[*]Average collection Period:............................90 days[*]Inventory Turnover:....................................1.9 times[*]Ratio of S.H Equity to[*]Total Liabilities:..........................................2.4:1[/LIST][B][COLOR="Purple"]Q.3, 2001
[/COLOR][/B]


(1)Ratio of Net Sales to
Average total Assets (1999).........................0.6:1

Ratio of Net Sales to
Average total Assets (2000).........................0.7:1


(2)Ratio of Net Sales to
Average Plant & Assets (1999)......................1.7:1

Ratio of Net Sales to
Average Plant & Assets (2000)......................1.8:1


(3)The Rate earned on Net Sales (1999):............2.5%

The Rate earned on Net Sales (2000):............4.5%


(4)Gross Profit Ratio (1999):.............................34%

Gross Profit Ratio (2000):.............................37%

(5)Rate Earned on avg.
Total Assets (1999):...................................2.5%

Rate Earned on avg.
Total Assets (2000):...................................5%

(6)Rate earned on avg. shares
Holder Equity (1999):..................................3.4%

Rate earned on avg. shares
Holder Equity (2000):..................................6.8%

(7)The number of times bond
Interest requirements were
Earned (before income taxes) (1999).............3.67 times

The number of times bond
Interest requirements were
Earned (before income taxes) (2000).............7.67 times


(8)Number of Times Preferred
Dividend earned (1999)...............................2.08 times

Number of Times Preferred
Dividend earned (2000)...............................4.5 times

[SIZE="4"][COLOR="RoyalBlue"][B]Cash Budget Solution to the Past Papers
[/B][/COLOR][/SIZE]

[B][COLOR="Purple"]Q.4, 2007[/COLOR][/B]

[B]Total Receipts..............................................Rs. 9, 20,000
Total Payments.................................................891000[/B]

Opening balance................................................80000
Add Total Receipts.............................................[U]920000[/U]
[B]Total...............................................................10, 00,000[/B]
Less T. Payments...............................................[U]8, 91000[/U]
[B]Excess of Cash.............................................[U]Rs.109000[/U][/B]

[B][COLOR="Purple"]Q.5, 2008[/COLOR][/B]

[B]Total Receipts..............................................Rs. 34,400
Total Payments.................................................39850[/B]

Opening balance................................................5000
Add Total Receipts.............................................[U]34400[/U]
[B]Total...............................................................39400[/B]
Less T. Payments...............................................[U]39850[/U]
[B]Deficit.........................................................Rs.(450)[/B]
Bank borrowing..................................................[U]5450[/U]
[B]Desired ending Month Balance.........................[U]Rs. 5000[/U][/B]


[B][COLOR="Purple"]Q.4, 2009[/COLOR][/B]

[B]Total Receipts...............................................Rs. 257200
Total Payments..................................................281500[/B]

Opening balance.................................................30000
Add Total Receipts..............................................[U]257200[/U]
[B]Total................................................................287000[/B]
Less T. Payments................................................[U]272500[/U]
[B]Excess of Cash..............................................[U]Rs. 14700[/U][/B]

[QUOTE=mhz99;664451]Kinza The value of stock withdrawn is to be
Credited to the "Trading a/c"
It is generally shown as a deduction from purchases on the debit side of the "Trading a/"
Deducted from Capital on the liabilities side of the balance sheet (as additional drawings)[/QUOTE]
Sorry for late reply, I was busy with my state bank test.

Although the adjusting entry for Stock or goods taken by owner is "drawing a/c debit and trading a/c credit" yet we deduct the stock from purchases, this is the rule I read in both M.Arif's and Ghani's book.
[QUOTE=mhz99;664456]Discount allowed and discount received will come in profit&loss or trading account[/QUOTE]

This question confuses me too and I read thoroughly the theory of M. Arif's book for this. In M.Arif's book only the terms " Discount on Purchases" and "discount on Sales" are treated as trading a/c items i.e. deducted from purchases and sales respectively and all other terms like discount allowed, discount received or discount are treated as profit and loss a/c items so i treated discount allowed and discount received as profit and loss item.

[trade discount should be deducted from purchase and the same case in sale=KinzaShoaib;664871]Sorry for late reply, I was busy with my state bank test.

Although the adjusting entry for Stock or goods taken by owner is "drawing a/c debit and trading a/c credit" yet we deduct the stock from purchases, this is the rule I read in both M.Arif's and Ghani's book.


This question confuses me too and I read thoroughly the theory of M. Arif's book for this. In M.Arif's book only the terms " Discount on Purchases" and "discount on Sales" are treated as trading a/c items i.e. deducted from purchases and sales respectively and all other terms like discount allowed, discount received or discount are treated as profit and loss a/c items so i treated discount allowed and discount received as profit and loss item.[/QUOTE]

ACCOUNTANCY & AUDITING, PAPER-I

SECTION-A
Q.2. The following information is available: (20)
[B]Trial Balance as at December 31, 2012. [/B]

[B]Particulars Debit Rs. Credit Rs. [/B]
Capital 6400000
Drawings 1813800
Goodwill 3618200
Land & Buildings 2400000
Plant & Machinery 1600000
Loose Tools 120000
Bills Receivable 145800
Bills Payable 1352000
Creditors 3068840
Purchase Returns 106000
Sales 8720000
Stock, 1st Jan 2011 1677800
Purchases 2050800
Wages 858000
Carriage Outward 22160
Carriage inward 55000
Coal & gases 234160
Salaries 1414560
Rent, Rates & Taxes 113000
Discount 60520
Cash at Bank 1016840
Cash in Hand 18600
Sundry Debtors 1800000
Repairs & maintenance 74600
Printing & Stationery 20600
Bad Debts 48520
Advertisements 140840
Sales Returns 85000
Furniture 48000
General Expenses 210040
[B] 19646840 19646840 [/B]
The following adjustments are to be made:
1. Closing Stock as on December 31, 2011 was Rs 1400000.
2. Depreciation is to be provided on the following assets:
― Plant & Machinery 10 %
― Loose Tools 10 %
― Furniture 10 %
― Land & Buildings 2.5 %
3. Provide for the following payables:
― Wages – Rs. 60000
― Advertisements – Rs. 20000
― Salaries – Rs.120000
― Repairs & Maintenance – Rs. 15000
4. Provide 5 % on the debtors against bad debts and 2 % against discounts.
[B]Required:- Prepare Trading, Profit & Loss Account and Balance Sheet as at December 31, 2011 from the above data.[/B]