ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD

(Department of Commerce)

ADVANCED ACCOUNTING (444)

CHECK LIST

SEMESTER: SPRING, 2017

This packet comprises of the following material:-

1. Textbook (One)
2. Assignment No. 1 & 2
3. Assignment Forms (2 sets)

In this packet, if your find anything missing out of the above-mentioned material, please
contact at the address given below:

The Mailing Officer,

Mailing Section, Block No. 28
Allama Iqbal Open University
H-8, Islamabad
Ph: 051:9057611-12

Muhammad Munir Ahmad

(Course Coordinator)

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 ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
(Department of Commerce)

WARNING
1. PLAGIARISM OR HIRING OF GHOST WRITER(S) FOR SOLVING
THE ASSIGNMENT(S) WILL DEBAR THE STUDENT FROM AWARD
OF DEGREE/CERTIFICATE, IF FOUND AT ANY STAGE.
2. SUBMITTING ASSIGNMENTS BORROWED OR STOLEN FROM
OTHER(S) AS ONES OWN WILL BE PENALIZED AS DEFINED IN
AIOU PLAGIARISM POLICY.

Course: Advanced Accounting (444)

Level: BA/B.Com Semester: Spring, 2017
Total Marks: 100 Pass Marks: 40
ASSIGNMENT No. 1
(Units 14)
Note: All questions are compulsory

Q.1 Differentiate between shares and debentures and explain the various types of shares
and debentures, which are issued by a Joint Stock Company. (20)

Q.2 Ayala Corporation opens a branch at Multan on 1 st January, 2016. Goods are
invoiced to the branch at cost plus 25% which is the selling price. From the
following particulars relating to January 2016, ascertain the profit made at
Multan Branch. (20)

Goods sent to Multan Branch (Invoice Price) Rs. 309,375

Sales at Branch ----Cash 103,125
----Credit 134,750
Cash received from Debtors 105,875
Discount allowed to Customers 1,375
Cash sent to Branch for expenses 41,250
Goods returned by the Branch (Invoice Price) 10,500
Stock at 31st January 2016 at (Invoice Price) 57,750
Petty Cash at Branch on 31st January 625

Q.3 Tanvir and Zaheer entered into a joint venture to construct a building for a contract
price of Rs. 40,00,000. They agreed to share profits and losses in the Ratio of 70%
and 30% respectively. They opened a joint bank account with Allied Bank, each of
them contributing Rs. 120,000.
They incurred Rs. 14,500 miscellaneous expenses in obtaining tender form.
Materials worth Rs. 21,02,400 were bought for cash. They paid wages to masons
and other workers Rs. 25,400. Tanvir paid Rs. 19,800 to supervisors.

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 The contract was successfully completed. They had to spend Rs. 8,700 in getting
the building passed fit. The contract price was duly received. Zaheer took over the
stock of materials lying unused for Rs. 16,800.
Required: prepare the joint venture account, joint bank account and Tanvir and
Zaheers accounts showing the final distribution of cash between them. (20)

Q.4 On 1st June, 2016 M/S Umer Brothers, consigned goods to Ali of the value of Rs.
5,000 and invoiced the same at Performa invoice price at 20% above its cost. The
consigner had paid freight, insurance etc. Rs. 1,500 and had drawn a bill on the
consignee for Rs. 2,000 as an advance against the consignment. On 10 th June, 2016
he sold the bill for Rs. 1975. (20)
On 31st August 2016, an Account Sale was received from Ali, showing that he had
affected sale of Rs. 5,000 in respect of 4/5 of quantity of goods consigned to him.
The expenses of Ali were carriage in Rs. 500, salesman salaries Rs. 300 and
godown rent Rs. 200. His commission was 6% and 2.5% del-credere on sales. They
remitted the balance by cheque. You are required to prepare the journal entries
and necessary ledger accounts in the books of Consignor and Consignee.

Q.5 A company carries on business through four departments A, B, C and D. The trial
balance as at 31st December, 2016 was as follows: (20)

A B C D
Opening Stock 187,500 112,500 93,750 150,000
Purchases (Net) 1,875,000 1,125,000 375,000 975,000
Sales (Net) 1,800,000 787,500 356,250 862,500
Closing Stock 225,000 150,000 131,250 187,500

The opening and closing stocks have been valued at cost. The expenses, which are
to be charged to each department in proportion to the cost of goods sold in the
respective departments, are as follows:
Salaries 206,625
Rent and rates 54,375
Printing and Stationery 48,930
Depreciation 21,750

Required: Show the final result and percentage on sales in each department and
also the combined result with percentage to sales

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 ASSIGNMENT No. 2
(Units 59)
Total Marks: 100 Pass Marks: 40

Q.1 Explain the Hire Purchase system and give a set of specimen entries that usually
appear in the books of the Hire-Purchaser and the Vendor when the goods are sold
on Hire-purchase system. (20)

Q.2 What do you understand by the terms Amalgamation, Absorption and

Reconstruction? How shall you distinguish between these? (20)

Q.3 From the following ratios and further information given below, prepare a Trading
and Profit and loss Account and a Balance Sheet: (20)

Gross Profit Ratio 25% Net Profit Margin 20%

Stock Turnover Ratio 10 Net Profit/Capital 1/5
Capital to Total Liabilities 1/2 Fixed Assets/Capital 5/4
Fixed Assets/Total Current Assets 5/7 Fixed Assets Rs. 10,00,000
Closing Stock 1,00,000

Q.4 The Aflac Ltd. has a nominal capital of Rs. 6 Million divided into shares of Rs. 100
each. The balances as per ledger of the company as at December 31, 2016 were as
follows: (20)

Rs. Rs.
Premises 480,000 Stock (1.1.2016) 120,000
Plant & Machinery 576,000 Fixtures 11,520
Interim Dividend Paid 12,000 Sundry Debtors 139,200
Purchases 296,000 Goodwill 40,000
Preliminary Expenses 8,000 Cash in Hand 13,200
Freight 20,960 Cash at Bank 63,840
Directors Fees 9,184 Wages 135,680
Bad Debts 3,376 General Expenses 27,040
6% Debentures 480,000 Salaries 23,200
Profit & Loss Account (Cr) 23,200 Share Capital (fully called) 736,000
Sundry Creditors 80,000 Bills Payable 60,800
General Reserve 40,000 Sales 664,000
4% Government Securities 96,000 Provision of Bad Debts 5,600
Debenture interest 14,400

Prepare the Final Accounts and the Balance Sheet relating to 2016 from the
figures given above after taking into account the following:-
1. Depreciate Plant & Machinery by 20 per cent and Fixtures by 15%.
2. Write off 1/5 of Preliminary Expenses

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 3. Rs. 10,000 of wages were utilized in adding rooms to the premises, but
included in wages account.
4. Leave Bad Debts Provision at 5 per cent of the Sundry Debtors.
5. Provide a final dividend at 10 percent.
6. Transfer Rs. 15,000 to General Reserve; and
7. Make a provision for income tax to the extent of Rs. 20,000;
8. The stock on 31 December, 2016 was Rs. 156,000

Q.5 Jawad Brothers leases a Car on 1 st January, 2016 that has fair value of Rs. 1500,000
from Mian Corporation for four years. Interest rate implicit in the lease is 12%.
Useful life of equipment is 5 years. Annual rentals are payable at the beginning of
each year. The lessee depreciates the asset using the straight-line method. (20)

Required:
i. Compute the annual rentals payable.
ii. Prepare amortization schedule.
iii. Prepare the journal entries for the first two years in the books of lessee and
lessor.