KINNAIRD COLLEGE FOR WOMEN

Final Term Examinations – Fall 2020

Major: BAF

Course Code: BAF 306 Maximum Marks: 30

Course Title: Corporate Financial Reporting - I Semester: V
Course Instructor: Anam Tariq Time Allowed: 2.5 Hours
Course Credit Hours: 03

Read the paper & instructions carefully and attempt all questions accordingly.

SUBJECTIVE TYPE PAPER

Question 1: (15)

Ventura Company, Inc., provides lawn mowing services to both commercial and residential
customers. The company performs adjusting entries on a monthly basis, whereas closing entries
are prepared annually at December 31. An adjusted trial balance dated December 31, 20XX,
follows:

Ventura Company Inc.

Adjusted Trial Balance
December 31, 20XX
DEBITS ($) CREDITS
($)
CASH 58,525
ACCOUNTS RECEIVABLES 4,800
UNEXPIRED INSURANCE 8,000
PREPAID RENT 3,000
SUPPLIES 1,075
TRUCKS 150,000
ACCUMULATED DEPRECIATION (TRUCKS) 120,000
MOWING EQUIPMENT 20,000
ACCUMULATED DEPRECIATION (MOWING 12,000
EQUIPMENT)
ACCOUNTS PAYABLE 1,500
NOTES PAYABLE 50,000
SALARIES PAYABLE 900
INTEREST PAYABLE 150
INCOME TAXES PAYABLE 1,050
UNEARNED MOWING REVENUE 900

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 CAPITAL STOCK 20,000
RETAINED EARNINGS 30,000
DIVIDENDS 5,000
MOWING REVENUE EARNED 170,000
INSURANCE EXPENSE 2,400
OFFICE RENT EXPENSE 36,000
SUPPLIES EXPENSE 5,200
SALARY EXPENSE 60,000
DEPRECIATION EXPENSE: TRUCKS 30,000
DEPRECIATION EXPENSE: MOWING EQUIPMENT 4,000
REPAIR AND MAINTENANCE EXPENSE 3,000
FUEL EXPENSE 1,500
MISC. EXPENSE 5,000
INTEREST EXPENSE 3,000
INCOME TAXES EXPENSE 6,000
406,500 406,500

Instructions:

1. Prepare an income statement and statement of retained earnings for the year ended
December 31, 20XX. Also prepare the company’s balance sheet dated December 31,
20XX.
2. Prepare necessary year end closing entries.
Prepare an after closing trail balance.

Question 2: (10)

Compute CGS & Inventory under three cost flow assumptions. Whereby, assume company uses
perpetual inventory system. Company sold 55 units on 14.4.2019

Date Units purchased Unit Cost

Jan 10 42 100

Jan 29 15 120

March 29 135
15
April 20 24 140

June 22 25 155

Nov 5 25 160

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Question 3: (5)

Assume that 50,000 shares of $2 par value stock have been authorized and that 10,000 of these
authorized shares are sold at a price of $2 each.

In a case, when 10,000 shares were issued at a price of $10 per share. What journal entries will
be passed in a company’s books of accounts?

Also prepare a stockholders equity section of a balance sheet if retained earnings are $150,000.

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