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CSS 2025 Accountancy & Auditing Paper 1
ABC Traders is a sole proprietorship owned by Mr. Ali. Below are the financial details of the business as of December 31, 2024:
Required:
Categorize the above details under different heads of accounting equation.
Prepare the balance sheet of ABC Traders as of December 31, 2024 using the information above.
Continued with the data provided in Question No 1, Additional Adjustments in the accounts of ABC Traders as of December 31, 2024 are as follow:
Required:
Prepare the necessary adjusting journal entries for the above adjustments.
Prepare an Income Statement for the year ended December 31, 2024.
Update the Balance Sheet to reflect these adjustments.
XYZ Corporation, a merchandising company, is preparing its financial records for the year ended December 31, 2024. Below are the extracted balances from the general ledger:
| Balances of the Items | Amount in PKR |
|---|---|
| Cash: | 70,000 |
| Accounts Receivable: | 200,000 |
| Inventory (Beginning): | 150,000 |
| Purchases: | 500,000 |
| Purchase Returns and Allowances: | 30,000 |
| Sales Revenue: | 900,000 |
| Sales Returns and Allowances: | 20,000 |
| Office Supplies: | 10,000 |
| Prepaid Insurance: | 24,000 |
| Office Equipment: | 300,000 |
| Accumulated Depreciation - Office Equipment: | 80,000 |
| Accounts Payable: | 90,000 |
| Salaries Payable: | 12,000 |
| Bank Loan Payable (Non-Current): | 150,000 |
| Salaries Expense: | 100,000 |
| Utilities Expense: | 45,000 |
| Rent Expense: | 60,000 |
| Depreciation Expense: | 30,000 |
| Owner's Capital (January 1, 2024): | 400,000 |
| Owner's Drawings: | 50,000 |
Additional Information for Adjustments
Required:
Prepare an unadjusted Trial Balance as of December 31, 2024.
Incorporate the adjustments and prepare the adjusted Trial Balance.
Ali, Bilal, and Sara formed a partnership business on January 1, 2024, under the name ABS Traders. The partners agreed to share profits and losses in the ratio 3:2:1 respectively. The following balances were provided at the end of the first year, December 31, 2024:
| Particulars | Amount (PKR) |
|---|---|
| Cash | 80,000 |
| Accounts Receivable | 150,000 |
| Inventory | 200,000 |
| Furniture & Fixtures | 100,000 |
| Accounts Payable | 90,000 |
| Loan Payable | 110,000 |
| Ali's Capital (Jan 1, 2024) | 200,000 |
| Bilal's Capital (Jan 1, 2024) | 150,000 |
| Sara's Capital (Jan 1, 2024) | 100,000 |
| Ali's Drawings | 30,000 |
| Bilal's Drawings | 20,000 |
| Sara's Drawings | 10,000 |
| Net Income for the Year | 120,000 |
Using the data provided, prepare an unadjusted trial balance as of December 31, 2024.
Distribute the Net Income of PKR 120,000 among the partners (Ali, Bilal, and Sara) based on their agreed profit-sharing ratio of 3:2:1.
Calculate the adjusted capital balances for each partner after considering their profit ratio.
Prepare the Capital Accounts for Ali, Bilal, and Sara in a T-account format or in a statement form.
ABC Manufacturing produces custom furniture. Below are the details for the month of November 2024:
| Accounting Activities/Items | Amounts in PKR |
|---|---|
| Beginning Balances: | |
| Raw Materials Inventory (Nov 1, 2024): | 120,000 |
| Work-in-Process (WIP) Inventory (Nov 1, 2024): | 80,000 |
| Finished Goods Inventory (Nov 1, 2024): | 150,000 |
| Transactions During November: | |
| Raw materials purchased during November (paid in cash): | 350,000 |
| Direct materials issued to production: | 280,000 |
| Indirect materials issued: | 50,000 |
| Total direct labor incurred: (80% paid in cash; 20% accrued). | 200,000 |
| Total indirect labor incurred (paid in cash): | 60,000 |
| Total factory overhead incurred including: | 250,000 |
| ○ Depreciation on machinery: PKR 70,000 | |
| ○ Utilities: PKR 50,000 | |
| ○ Other factory expenses: PKR 130,000 | |
| Manufacturing overhead applied to production at 120% of direct labor cost. | |
| Ending Balances | |
| Raw Materials Inventory (Nov 30, 2024): | 140,000 |
| Work-in-Process (WIP) Inventory (Nov 30, 2024): | 100,000 |
| Finished Goods Inventory (Nov 30, 2024): | 180,000 |
| Sales | |
| Total finished goods transferred to Cost of Goods Sold: | 650,000 |
| Total sales for November (80% received in cash, 20% on account). | 800,000 |
Required:
Prepare the Raw Materials Inventory T-account, including purchases, usage, and ending balance.
Calculate the total manufacturing costs added to production during November.
Prepare the Work-in-Process Inventory T-account, including beginning balance, costs added, and ending balance.
XYZ Furniture Ltd. manufactures wooden chairs. The following standard costs were established for producing one chair:
| Cost Component | Standard Rate | Standard Quantity per Chair |
|---|---|---|
| Direct Materials | PKR 500 per unit | 2 units |
| Direct Labor | PKR 300 per hour | 4 hours |
| Factory Overhead | PKR 100 per direct labor hour | Applied at a rate of 50% of direct labor cost |
During November 2024, the company produced 1,000 chairs, and the following actual data was recorded:
Required:
Calculate and interpret the results of:
the Material Price Variance and the Material Quantity Variance.
the Labor Rate Variance and the Labor Efficiency Variance.
the Overhead Spending Variance and the Overhead Efficiency Variance.
ABC Café operates a specialty coffee shop that sells handcrafted beverages and desserts. The café incurs a Total Fixed Costs: PKR 1,000,000 including monthly rent of PKR 500,000, salaries of PKR 300,000, Utilities and Miscellaneous Expenses of PKR 200,000. The owner wants to determine its break-even point to plan for future growth. The following data is provided:
| Product Line Information | |
|---|---|
| 1. Coffee Drinks (Regular) | 2. Desserts (Premium) |
| i. Selling Price: PKR 400 per cup ii. Variable Cost: PKR 180 per cup iii. Current Sales Mix: 70% |
i. Selling Price: PKR 600 per item ii. Variable Cost: PKR 280 per item iii. Current Sales Mix: 30% |
Required:
Calculate the contribution margin for both coffee drinks and desserts.
Compute the weighted average contribution margin (WACM) based on the sales mix.
Determine the break-even sales in units for the café.
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