Indus International Institute of

Management & Sciences

Financial Accounting
program)

MBA 1 Sem (weekend

Time: 2hr
Final Term Exams

Subjective
Qno1 Integrated Waste Management purchased new equipment on Jan 4, 2011, at a cost of $240,000.
The equipment had an estimated useful life of 8 years with an estimated residual value of $ 24000.
9 marks
Instructions
Compute the annual depreciation expanse throughout the 8 year life of this equipment under three
depreciation methods listed below. Company policy is to round depreciation for fractional periods to nearest
month. As the equipment was acquired in early January, one full years depreciation will be taken each year.

Straight line method

Sum-of-the-years-digits method
Double declining balance method.

Qno2 Enter the following transactions into Material Ledger Card of a bakery under LIFO, FIFO, and
Average Method:- 9 marks
June 1 Opening balance of flour 25 kg costing $ 100
2 Purchased 50 kg of flour for $ 210
3 Consumed 60 kg flour
7 Purchased 80 kg flour for $ 360
8 10 kg flour returned to supplier purchased on june 7
10 45 kg of flour consumed in bakery
13 Purchased 70 kg flour for $ 336
18 Consumed 65 kg of flour
Prepare: Material Ledger Card
Qno3 the following Trail Balance was extracted from Global Manufacturing on 31 Dec 2014
Opening stock $ 4516
Purchases

$10,944

Advertisement $4,240

Commission $ 1,520

Insurance $ 725

Reserve for Bad debts $ 300

Discount on sale$ 260

Manufacturing wages $1,350

Capital $11,380

Plant and machinery $15,360

Total

Total $ 43,990

Sundry debtors 1,500

Cash in hand$ 3,415

$ 43,990

Mortgage Loan $1,000

Sundry Creditors $4,300

Salaries

$300

Rent $1,380

Sales $25,360
Discount on purchase $130

Adjustments
1.
2.
3.
4.
5.

Rent paid in advance $ 380

Accrued commission $120
Outstanding salaries $ 300
Depreciation of plant @10 per year
Ending stock was valued $ 5,000

Prepare Income Statement and Balance Sheet for 2014. 12 marks

Qno4 Beach Property Management was started on Nov 1 by Rosa Garcia to provide management
services for the owners of apartment and buildings. The organizational period extended throughout
Nov and included the transaction listed below. 10 marks
Nov 1 Garcia opened a bank account in the name of business with deposit $ 25,000 cash.
Nov4 Purchased Land and Office Building for price $ 1,40,000 of which $ 75,000 for land and $65,000 for
building and $20,000 cash down payment made and remaining note payable issued for balance of the
purchase price
Nov 7 Purchased office equipment on credit from Harvard Office Equipment $5,850
Nov 9 A typewriter (cost $490) which was part of Nov 7 purchase of office equipment proved defective and was
returned for credit to Harvard Office Equipment.
Nov 17 Sold one-third land acquired on Nov 4 to Ace Parking Lots at a price $ 25,000. There is no profit and
loss in this sale and Beach received $5,000 as cash down payment and note receivable in the amount of $
20,000 due in four monthly installments of $5,000 each, starts on Nov 30.
Nov 28 Paid $ 1,600 in partial settlement of the liability to Harvard Office Equipment.
Nov 30 Received cash $ 5,000 as partial collection of the note receivable from Ace Parking Lots.
Prepare Journal entries for the month of November 2014
Qno 5 Show the effect of the following transaction on accounting equation during the month of March,
Mr. David, Lawyer. 10 marks
1. Invested $ 50,000 to open his law practice.
2. Bought supplies for cash $3,00
3. Bought equipment on credit $ 2,500
4. Received $2,000 as fee earned during month
5. Paid office rent for march $ 1,000
6. Paid salaries to part time helper $ 2000
7. Paid account payable $ 1,000
8. Supplies used $ 200
9. Withdrew $ 500 for personal use
10. Paid utility bills for $ 1,000
Prepare Accounting equation for the month of March.