Commerce, Paper I

From the following Trial Balance of a Trader, prepare trading and Profit & Loss account for the year ending 31st March, 2019 and a Balance Sheet at that date: Debit Balances Rs. Credit Balances Rs. Opening Stock 36,000 Discount Received 1,800 Furniture 24,000 Unearned Commission 6,000 Bills Receivables 36,000 Purchases Returns 24,000 Cash in hand 18,000 Allowance for Bad Debts 12,000 Purchases 144,000 Sales 180,000 Sales Returns 12,000 Bank Loan at 15% 24,000 Establishment charges 30,000 Accounts Payables 22,200 Taxes and Insurance 6,000 Bills Payables 30,000 Bad debts 6,000 Capital 120,000 Accounts Receivables 60,000 Investment 48,000 Total 420,000 Total 420,000 Further information are as follows:

The Balance sheets of the Ruler Company at the end of Year 1 and 2 follow: Assets Year 1 Year 2 Liabs. & Equity Year 1 Year 2 Cash Rs. 20,000 Rs. 15,000 Acc. Payable Rs. 40,000 Rs. 50,000 Acc. Receivables 45,000 50,000 Accrued Exp. 12,500 10,000 Inventory 40,000 65,000 Notes Payable 30,000 30,000 Prepaid Expenses 10,000 5,000 Common Stock 150,000 185,000 Building & Equip. 70,000 85,000 Retained Earnings (10,000) 7,500 Acc. Depreciation (7,500) (17,500) Land 45,000 80,000 Total 222,500 282,000 Total 222,500 282,000 Land was acquired for Rs 35,000 in exchange for capital stock, Rs35,000, during the year; equipment of Rs 15,000 was acquired for cash. Cash dividends of Rs 10,000 were charged to retained earnings during the year; the transfer of net income to retained earnings was the only other in this account. Required: Prepare a cash flow statement at end of Year 2.

The contract ledger of a company showed the following expenditure on account of a contract at 31st December, 2019. (20 Marks) Particulars Amount Materials Rs. 60,000 Plant 10,000 Wages 82,200 Establishment charges 4,300 The contract was commenced on 1st January, 2019 and the contract price was Rs. 300,000. Cash received on account to date was Rs. 120,000 representing 80% of the work certified being retained 20% until completion. The value of materials on hand was Rs. 2,000 and cost of work finished but not certified at 31st December, 2019 was Rs. 3,000. Required: Prepare an account in respect of the contract, showing the profit to date, assuming depreciation on plant at 10% per annum and state the proportion of profit the company would be adjusted in taking to the credit of Profit and Loss account.

The Elite Company has a budgeted normal capacity of 10,000 labor hours, with a standard production of 8,000 units at this capacity. Standard costs are: Materials: 2 Kilograms @ Rs.0.50 Labor: Rs. 9 per hour Factory Overhead at normal Capacity: Fixed expenses: Rs. 5,000 Variable expenses: Rs. 1.50 per labor hour During May, actual factory overhead totaled Rs. 17,550 and 9,000 labor hours cost Rs. 76,500. During the month, 7,000 units were produced using 14,400 kg of materials at a cost of Rs.0.51 per kg. Required: Two variances for materials, two variances for labor, and variances for factory overhead, using the two, three, and four-variance methods.

During April Assembling Department received 45,000 units from cutting department at a unit cost of Rs. 5. Cost added in Assembly Department were: materials Rs. 116,025, labor Rs. 127,125 and factory overhead Rs. 84,750. There was no beginning work in progress inventory. Of the 45,000 units received, 37,500 units were transferred out and 6,750 units were in process at the end of month (all materials and 2/3 converted). 750 lost units were, at the time of loss, 1/2 complete as to material and conversion costs. The entire loss is considered abnormal and is to be charged to factory overhead. Required: Prepare the cost of production report.

The records of the Modern Manufacturing Company show the following information for six months ended June 30, 2019. (20 Marks) Particulars Amount Materials purchased Rs. 2,500,000 Direct Labor 2,125,000 Factory Overhead 1,575,000 Selling Expenses 421,000 General and Administrative Expenses 376,000 Sales (2,400 units) 6,860,000 Inventory on January 1, 2019: Materials 280,000 Finished Goods (100 units) 200,000 No unfinished work on hand at the beginning or at the end of the period. Inventory on June 30, 2019: Materials 40,000 Finished Goods (500 units) — Required: i. Number of Units Manufactured ii. Value of ending Finished Goods Inventory iii. Cost of Goods Sold Statement iv. Income Statement v. Per unit Gross Profit and Net Profit