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PMS 2023 Commerce Paper 1
An adjusted trial balance for State Insurance Agency at December 31 appears as follows:
State Insurance Agency
Adjusted Trial Balance
December 31, 2022
| Rs. | Rs. | |||
| Cash | 10,200 | |||
| Account Receivable | 20,000 | |||
| Office Equipment | 15,000 | |||
| Acc. Depreciation: Office Equipment | 3,000 | |||
| Accounts Payable | 6,000 | |||
| Capital | 19,700 | |||
| Drawing | 18,000 | |||
| Sales Commissions earned | 185,000 | |||
| Advertising expense | 36,500 | |||
| Rent expense | 32,000 | |||
| Salaries expense | 64,500 | |||
| Utilities expense | 16,000 | |||
| Depreciation expense: Office Equipment | 1,500 | |||
| 213,700 | 213,700 |
Prepare journal entries to close the accounts. Use four entries: (1) to close the revenue account, (2) to close the expense accounts, (3) to close the Income Summary account, and (4) to close the owner's drawing account.
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:
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:
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?
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