BBS First Year Financial Accounting and Analysis | MGT211 | Model Question 2020 | TU | Set A | Download in PDF

Long Answer Questions (attempt any two) (2X15=30)

17. Following are the transaction of a Computer Service Agency during the month of January.
Jan 2 Received cash Rs.300,000 to start business from the owners of the company.
Jan 8 Deposited into bank Rs.100,000
Jan 10 Signed a two year promissory note at the bank and received cash of Rs.50,000.
Interest 10% along with Rs.50,000 will be repaid at the end of two years.
Jan 11 Purchase of supplies for Rs.30,000 on account. The company has 45 days to pay for the supplies.
Jan 19 Billed a client Rs.100,000 for service rendered by expert in helping to install a new computer system. The client is to pay 25% of the bill upon its receipt and the remaining balance within 60 days.
Jan 21 Paid Rs.10,000 to the advertising company.
Jan 22 Received Rs.45,000 after deduction of 10% discount from the client billed on Jan 19
Jan 26 Received cash of Rs.30,000 for service provided in selecting software for its computer.
Jan 28 Purchased a computer system for Rs.50,000 in cash.
Jan 30 Paid Rs.50,000 salaries for January and Rs.30,000 rent for February.

Required:
a. Journal entries (5)
b. T accounts (ledger) for income, account receivable and account payable (3)
c. Triple column cash book (4)
d. Trial Balance (3)

18. The balance sheet of a company for two years are given below:

Liabilities	Year 1	Year 2	Assets	Year 1	Year 2
Equity Share capital	1,000,000	12,00,000	Fixed assets	1,000,000	1,200,000
Share premium	100,000	120,000	Inventory	200,000	350,000
10% Debentures	120,000	70,000	Accounts receivable	250,000	340,000
Provision for tax	20,000	40,000	Prepaid expenses	20,000	10,000
Provision for dividend	10,000	20,000	Cash	120,000	150,000
Accounts payable	60,000	150,000
Accumulated depreciation	250,000	280,000
Profit and loss a/c	30,000	170,000
	1,590,000	2,050,000		1,590,000	2,050,000

Income Statement for the Year 2
Sales revenue		Rs.
Less: Cost of goods sold		10,00,000
Gross Profit		600,000
Less: Operating expenses:		400,000
Administrative expenses	150,000
Depreciation	50,000
Provision for tax	40,000
Provision for dividend	20,000
Interest paid	12,000
Premium on redemption of debentures	5,000
Total operating expenses		277,000
Net income		123,000
Add: Gain on sale of fixed assets		17,000
Retained earning		140,000

Additional information
i. A plant costing Rs.50,000 with an accumulated depreciation of Rs.20,000 has been sold
for Rs.47,000.

ii. Dividend paid in year 2 Rs. 10,000.
Required: Cash flow statement by using direct method (6+3+3+3=15)

19. “Financial accounting is based on generally accepted accounting principles, which is enabled the preparation and presentation of financial statement uniformly,” discuss. (15)