Commerce, Paper I

From the following Trial Balance of Mr. Haji Traders, prepare Trading, Profit & Loss Account for the year ended 31st March, 2021 and a Balance Sheet as at that date. Debit (Rs.) Credit (Rs.) Opening Stock 24,000 Drawings 11,200 Furniture 4,800 Cash in Hand 36,000 Purchases 96,000 Returns 8,000 Establishment charges 20,000 Taxes and Insurance 4,000 Bad Debts 4,000 Sundry Debtors 40,000 Investments 32,000 Discount received 1,200 Commission 4,000 Returns 16,000 Bad Debts Provision 8,000 Sales 120,000 Bank Loan @ 15% 16,000 Creditors 34,800 Capital 80,000 280,000 280,000 The following adjustments are made: Depreciate Furniture @ 10% p.a. Interest accrued on investment Rs.1,680. Commission amounting to Rs.800 relating to the next year. Bad Debts Reserve is to be maintained at Rs.8,000 Salaries Rs.800 and Taxes Rs.3,200 are payable. Insurance prepaid is Rs.400. Closing Stock Rs.36,000.

Draw a difference between accrual and cash basis accounting. Explain the reasons that financial decision making is difficult without cash flow statement.

The Contract Ledger of a company indicates the under mentioned expenditure on account of Contract 'A' to 31st December, 2022: Rs. Materials 120,000 Plant 20,000 Wages 164,000 Establishment Expenses 6,000 The contract began in January, 2022; the contract price being Rs.600,000. Cash received on account to date Rs.240,000 is 80% of the work certified; and the remainder is to be paid as to 10% on completion and the balance six months after completion. Materials on hand and work completed but not certified was Rs.10,000. Prepare a contract account showing the profit to date after depreciating Plant by Rs.100. How much profit would the company be justified in crediting to the Profit and Loss Account? Show also how the work-in-progress would appear in the Balance Sheet.

Discuss different cost elements broadly categorized in tracing cost.

The following job order cost detail pertains to the three jobs that were in process at Dany Machine Company during January: Cost charged in prior period ...... Job 36 Job 37 Job 38 $36,000$18,000 - Costs added in January: Direct Materials 44,000 34,000 32,000 Direct labor 40,000 48,000 42,000 Factory overhead (60% of direct labor) 24,000 28,800 25,200 Required: Prepare the appropriate journal entry (Including subsidiary ledger detail for job orders) to record each of the following transactions: Direct materials were issued from the materials storeroom to work in process. The payroll was distributed to work in process. Factory overhead was applied to production for the period. Jobs 36 and 37 were completed and transferred to the finished goods storeroom.

In standard cost system, the computation of variance is the first step. What steps should follow?

Why is cost-volume-profit analysis by products valuable to management?