Commerce, Paper I

PART-B 5 Explain the following terms with examples and imaginary data if required.

From the following details prepare cash flow statement for ABC Limited for the year ended 31st December, 2015 under IAS 7 layout: Profit and Loss Account for the year ended on 31st December, 2015 Particulars Amount Amount Gross Profit Rs. 44,700 Discount received Rs. 410 Gain on Sale of Asset Rs. 620 Rs. 1,030 Total Rs. 45,730 Less Expenses Vehicle / Expenses Rs. 1,940 Wages Rs. 17,200 General Expenses Rs. 830 Bad Debts Rs. 520 Provision for Bad Debts Rs. 200 Depreciation Rs. 1,800 Total Expenses Rs. 22,490 Net Profit Rs. 23,240 Balance Sheet as on Particulars 2014 2015 Fixed Assets At cost Rs. 15,400 Rs. 8,200 Accumulated Depreciation Rs. 5,300 Rs. 3,100 Net Fixed Assets Rs. 10,100 Rs. 5,100 Current Assets Inventories Rs. 18,600 Rs. 24,000 Debtors Rs. 8,800 Rs. 7,700 Less Provision Rs. 600 Rs. 800 Net Debtors Rs. 8,200 Rs. 6,900 Cash and Bank Balance Rs. 410 Rs. 720 Total Current Assets Rs. 27,210 Rs. 31,620 Total Assets Rs. 37,310 Rs. 36,720 Liabilities & Equity Particulars 2014 2015 Current Liabilities Creditors Rs. 5,900 Rs. 7,200 Long Term Liabilities Bank Loan Rs. 10,000 Rs. 7,500 Total Liabilities Rs. 15,900 Rs. 14,700 Net Worth Rs. 21,410 Rs. 22,020 Capital Opening Balance Rs. 17,210 Rs. 21,410 Add Net Profit Rs. 21,200 Rs. 23,240 Total Rs. 38,410 Rs. 44,650 Less Drawing Rs. 17,000 Rs. 22,630 Net Capital Rs. 21,410 Rs. 22,020

A company purchased a second-hand machine on 1 st Jan., 2001 for Rs.37,000 and immediately spent Rs.2,000 on its overhauling and Rs.1,000 on its erection. On 1 st July, 2002, it purchased another machine for Rs.10,000 and on 1 st July, 2003 it sold off the first machine purchased in 2001 for Rs.28,000. It purchased a machine for Rs.25,000 on 1 st July, 2003. On 1 st July, 2004 the second machine purchased for Rs.10,000 was sold for Rs.2000. Depreciation was provided on the machine at 10% on the original cost annually. In 2002, however, the company changed the method of depreciation and adopted the written down value method, rate of depreciation being 15% p.a. Required: Give the Machine Account for four years from 2001 to 2004 assuming accounting year ends on 31 st December every year.

Given below is Income Statement of XYZ Limited for the year ended. Particulars Rupees Sale — net 5,971,228,748 Cost of Sales 3,125,337,924 Gross Profit 2,845,890,824 Distribution, selling and promotional expenses 1,499,737,319 Administrative and general expenses 270,080,061 Research and development expenses 3,606,954 Other operating expenses 84,485,841 Total Operating Expenses 1,957,910,175 Other Income 29,277,764 Operating Profit 917,258,413 Finance Costs 4,959,755 Profit before taxation 912,298,658 Taxation 285,834,489 Profit for the Year 626,464,169 ASSETS Non-current assets Property, plant and equipment 934,825,946 Long term investment 5,073,017 Long term deposits 200,000,000 Long term advances 12,695,663 16,074,304 Total Non-current Assets 1,168,668,930 Current Assets Particulars Amount Stock in Trade 1,115,539,075 Trade Debts 250,692,198 Advances 57,879,171 Trade deposits and short term prepayments 24,329,555 Profit accrued 2,015,658 Other receivables 4,819,473 Loan to subsidiary 20,000,000 Tax refunds due from the Government 5,611,106 Short term investments 100,000,000 Cash and Bank Balance 612,566,431 Total Current Assets 2,193,452,667 Total Assets 3,362,121,597 Liabilities & Equity Particulars Amount Current Liabilities Bank Borrowing 800,000,000 Trade Creditors 500,000,000 Total Current Liabilities 1,300,000,000 Long Term Liabilities Deposits 500,000,000 Equity Paid up Credit 500,000,000 General Reserves 1,062,121,597 Total Equity 1,562,121,597 Total Liabilities & Equity 3,362,121,597 Additional Information i) Company declared dividend @30% during the year. ii) Market value of the share is Rs.600 while face value is Rs.10/- iii) Company has no long term borrowings. iv) Prepayments are 10% of the respective item. Required Compute following ratios: i) Gross Profit Margin ii) After Tax Profit Margin iii) Return on Equity iv) Dividend Yield v) Dividend Payout vi) Times Interest Earned vii) Current Ratio viii) Quick Ratio ix) Breakup value of shares x) Earnings Per share

Use LIFO on the following information to calculate the value of ending inventory. Date Particulars Units Rate Mar 1 Beginning Inventory 60 units @ $15.00 Mar 5 Purchase 140 units @$15.50 Mar 14 Sale 190 units @ $19.00 Mar 27 Purchase 70 units @$16.00 Mar 29 Sale 30 units @ $19.50

In June, the idle capacity variance of Cool Corporation was zero, and spending variance was Rs.6,000 unfavorable. In July, the idle capacity variance was Rs.8,000 unfavorable, but the spending variance was zero. In June, actual overhead expense was Rs.70,000 for an output of 8,000 tons. July's expense was Rs.56,000 and output was 6,000 tons. In August, output was 9,000 tons, and actual overhead expense was Rs.71,000. Required: (1) Factory overhead budgeted (estimated) for 9,000 tons. (2) Factory overhead applied in August. (3) Variances for August.

Naveed Manufacturing Co. presents the following information for the year ended 31st December, 1999. Required: 1) Prepare Cost of Goods Manufactured and Sold Statement Particulars Amount Particulars Amount Sales 252,000 Commission 2,500 Sales Returns and Allowances 2,000 Advertising 4,000 Purchases of Raw Material 96,200 Depreciation of Sales Office 2,200 Carriage In 300 Traveling Expenses 1,800 Direct Labour 40,000 Bad Debts 700 Purchases Return 1,200 Salaries 2,000 Indirect Material 4,300 Stationery Used 1,125 Indirect Labour 4,700 Rent of Office 1,500 Rent of Factory 3,500 Interest Received 1,110 Factory Taxes 1,150 Interest Paid 275 Insurance of Factory Building 1,500 Depreciation of Plant and Machinery 3,425 Heat, Light and Power 2,225 INVENTORIES Particulars Jan. 1 Dec. 31 Raw Material 9,000 12,000 Work in Process 16,100 13,900 Finished Goods 17,600 15,300 Required: Prepare Cost of Goods Manufactured and Sold Statement