Q1.

Following Data is taken from Afaq & Co on Dec 2015

QNO1 A
Afaq & Co.
Adjusting Entries
SNO Particulars Dr Cr
a Bad Debt Expense 1280
Allwoance for Bad Debt 1280
To adjust bad debt expense

b Depreciation Expense 6930

Allowance for Deptreciation Furniture 6930
To adjust depreciation expense on Furniture

c Depreciation Expense 6800

Allowance for Deptreciation - Equipment 6800
To adjust depreciation expense on Equipment

d Salaries Expense 2700

Salaries Payable 2700
To adjust outstanding salaries

e Interest Expense 400

Interest Payable 400
To adjust Interst Payable

f Stationery Expense 900

Stationery 900
To adjust Stationery Expense

g Traveling Expense 1000

Traveling Expense Payable 1000
To adjust Travelling Expense

h Advertising Expense 1000

Advertising Expense Payable 1000
To adjust Advertising Expense

i Insurance Expense 100

Pre Paid Insurance 100
To adjust Insurance Expense

j Unearned Service Revenue 2000

Service revenue 2000
To adjust service revenue
B
Adjusted Trial Balance
As on 31 Dec 2015
S No Title of Account Dr Cr
1 Cash 51,000
2 A/C Receivalbe 25,600
3 Stationery 600
4 Prepaid Insurance 200
5 Equipment 68,000
6 Furniture 69,300
7 Travelling Expense 6,000
8 A/C Payable 14,300
9 Allowance for Deptreciation - Equipment 11,800
10 Allowance for Deptreciation Furniture 25,530
11 Service Revenue 87,300
12 Salaries Expense 26,700
13 Advertising Expense 5,500
14 Drawings 17,000
15 Interest Expense 1,600
16 Capital 144,200
Unearned service revenue 2,000
17 Bad Debt Expense 1,280
18 Allowance for Bad Debt 1,280
19 Depreciation Expense - Furniture 6,930
20 Depreciation Expense - Equipment 6,800
21 Salaries Payable 2,700
22 Interest Payable 400
23 Stationery Expense 900
24 Traveling Expense Payable 1,000
25 Advertising Expense Payable 1,000
26 Insurance Expense 100
Balance 289,510 289,510
QNO2 A
Afaq & Co.
Income Statement
As on Dec 31, 2015

Service Revenue 83300

Add: Service Revenue 2000
Total Revenue 87,300

Less : Operating Expenses

Travelling Expense 6,000
Salaries Expense 26,700
Advertising Expense 5,500
Interest Expense 1,600
Bad Debt Expense 1,280
Depreciation Expense - Furniture 6,930
Depreciation Expense - Equipment 6,800
Stationery Expense 900
Insurance Expense 100
Expense & Revenue -
Total Operating Expense (55,810)
Net Profit 31,490

B
Afaq & Co.
Balance Sheet
As on Dec 31, 2015
Assets
Cash 51,000
A/C Receivalbe 25,600
Allowance for Bad Debt -1280 24,320
Unearned service revenue 2,000
Stationery 600
Prepaid Insurance 200
Equipment 68,000
Allowance for Deptreciation - Equipment -11800 56,200
Furniture 69,300
Allowance for Deptreciation Furniture -25530 43,770
Total Assets 178,090

Liabilities
A/C Payable 14,300
Salaries Payable 2,700
Interest Payable 400
Traveling Expense Payable 1,000
Advertising Expense Payable 1,000
Total Liabilities 19,400
Capital 144,200
Net Profit 31,490
Drawings (17,000)
Total Equity 158,690
Total Equities 178,090
Adjustments:
·         Depreciate machinery @ 5% p.a. by written down method.
·         Outstanding Salaries Rs. 2,000.
·         Insurance paid in advance Rs. 500.
·         Maintain @ 5% allowance for doubtful debts on sundry debtors.
·         Supplies at the end of year of worth Rs. 20,000.

QNO3 A
Mishal Company
Adjusting Entries
SNO Particulars Dr Cr
a Depreciation Expense 2,500
Allowance for Deptreciation - Machinery 2,500
To adjust depreciation expense on Machinery

b Salaries Expense 2,000

Salaries Payable 2,000
To adjust outstanding Salaries

c Prepaid Insurance 500

Insurance Expense 500
To adjust prepaid insurance

d Allowance on goods sold 4,000

Sundry Debitors 4,000
To adjust allowance on Debitors

d Supplies Expense 35,000

Supplies 35,000
To adjust supplies expense
B
Mishal Company
Adjusted Trial Balance
As on 31 Dec 2016
S No Title of Account Dr Cr
1 Drawings 14,000
2 Capital A/c 80,000
3 Supplies 20,000
4 Purchases 485,000
5 Sales 610,000
6 Sundry Debtors 76,000
7 Sundry Creditors 60,500
8 Sales Return 5,000
9 Carriage Inward 6,000
10 Salaries 30,000
11 Rent, Rates, Taxes 15,000
12 Insurance Expense 3,500
13 Machinery 50,000
14 Furniture 5,000
15 Cash In Hand 3,500
16 Depreciation Expense 2,500
17 Allowance for Dep - Machinery 2,500
18 Salaries Payble 2,000
19 Prepaid Insurance 500
20 Allowance on goods sold 4,000
21 Supplies Expense 35,000
Balance 755,000 755,000

QNO4 A
Mishal Company
Icome Statement
As on Dec 31, 2016

Sales 610000
Less: Sales Return -5000
Less: Allowance -4000 601,000

Less: Cost of Goods Sold

Opening Inventory -
Add Purchases 485,000
Add Carriage in 6,000
Less : Ending Inventory -
Cost of Goods Sold (491,000)
Gross Profit 110,000

Less : Operating Expenses

Salaries 30,000
Rent, Rates, Taxes 15,000
Insurance Expense 3,500
Depreciation Expense 2,500
Supplies Expense 35,000
-
Total Operating Expense (86,000)
Net Profit 24,000
B
Mishal Company
Balance Sheet
As on Dec 31, 2016
Assets
Supplies 20,000
Sundry Debtors 80000
Less: Allowance on goods sold -4000 76,000
Cash In Hand 3,500
prepaid Insurance
Machinery 50000
Allowance for Dep - Machinery -2500 47,500
Furniture 5,000

Total Assets 152,000

Liabilities
Sundry Creditors 60,500
Salaries Payble 2,000

Total Liabilities 62,500

Capital 80,000
Net Profit 24,000
Drawings (14,000)
Total Equity 90,000
Total Equities 152,500

Adjustments:
1. Salary Payable on December 31, 2016 is Rs. 1,500
2. Depreciation on Furniture charged to 10% by cost method
3. Inventory on hand on December is Rs. 60,000
4. 30,000 of Sales Account is unearned
QNO5 A
Wasim Mubarik Pvt Ltd
Adjusting Entries
As on 31 Dec 2016
SNO Particulars Dr Cr
a Salaries Expense 1,500
Salaries Payable 1,500
To adjust salaries payable

b Depreciation Expense 2,000

Allowance for Deptreciation -Furniture 2,000
To adjust depreciation expense on Furniture

c Sales 30,000
Un Earned Sales 30,000
To adjust un Earned Sales
d Closing Inventory 6,000
Profit & Loss Account 60,000
To adjust closing inventory

B
Wasim Mubarik Pvt Ltd
Adjusted Trial Balance
As on 31 Dec 2016
S No Title of Account Dr Cr
1 Purchase Return 13,000
2 Machinery 34,000
3 Salaries 18,700
4 Creditors 33,000
5 Cash in Hand 40,000
6 Carriage Inward 6,000
7 Closing Inventory 60,000
8 Profit & Loss Account 60,000
9 Rent Received 3,000
10 Discount Allowed 2,000
11 Purchases 100,000
12 Bills Payable 20,000
13 Debrots 15,000
14 Carriage Outward 5,000
15 Owner Equity 53,200
16 Building 18,000
17 Sales Return 3,000
18 Discount Received 14,000
19 Insurance Expense 6,000
20 Sales 100,000
21 Furniture 20,000
22 Salaries Payable 1,500
23 Depreciation Expense 2,000
24 Allowance for Deptreciation -Furniture 2,000
25 Un Earned Sales 30,000
Balance 329,700 329,700
QNO6 A
Wasim Mubarik Pvt Ltd
Income Statement
As on Dec 31, 2016

Sales 100,000
Less: Sales Return (3,000)
Discount Allowed (2,000)
Net Sales 95,000

Less: Cost of Goods Sold

Opening Inventory -
Add Purchases 100,000
Less: Purchase Return (13,000)
Less: Discount Received (14,000)
Add: Carriage Inward 6,000
Goods Available for Sale 79,000
Less : Ending Inventor (60,000)
Cost of Goods Sold (19,000)
Gross Profit 76,000

Less : Operating Expenses

Salaries 18,700
Carriage Outward 5,000
Insurance Expense 6,000
Depreciation Expense 2,000

Total Operating Expense (31,700)

Net Profit 44,300

B
Wasim Mubarik Pvt Ltd
Balance Sheet
As on Dec 31, 2016
Assets
Machinery 34,000
Inventory 60,000
Cash in Hand 40,000
Debrots 15,000
Building 18,000
Furniture 20000
Allowance for Deptreciation -Furniture -2000 18,000

Total Assets 185,000

Liabilities
Creditors 33,000
Bills Payable 20,000
Unearned rent 3,000
Salaries Payable 1,500
Un Earned Sales 30,000
Total Liabilities 87,500
Owner Equity 53,200
Net Profit 44,300
Total Equity 97,500
Total Equities 185,000
QNO7
Simren Shah Inc
Statement of Cash Flows
As on Dec 31, 2017

Cash flows from operating activities

Net income 40,000
Adjustments for:
Depreciation and amortization 11,400
Provision for losses on accounts receivable 0
Gain on sale of facility 5,000
16,400
Increase in trade receivables -4,200
Decrease in inventories 3,400
Decrease in trade payables -3,000
Increase Prepaids 1200
Cash generated from operations -2,600

Cash flows from investing activities

Purchase of property, plant, and equipment 0
Proceeds from sale of equipment. Investment -5,000
Net cash used in investing activities -5,000

Cash flows from financing activities

Proceeds from issue of common stock 4,800
Proceeds from issuance of long-term debt 10,200
Dividends paid -15,000
Net cash used in financing activities 0

Net increase in cash and cash equivalents 48,800

Cash and cash equivalents at beginning of period 24,200
Cash and cash equivalents at end of period 73,000

Q8. The following information was gathered from Waji-Ul-Hassan Corporation’s financial records at the end
of December 31st, 2017:

Net income 65,000

Depreciation expense 12,000
Beginning cash balance 22,000
Decrease in accounts receivable 12,000
Increase in inventory 8,000
Decrease in accounts payable 6,000
Decrease in accrued liabilities 2,000
Proceeds from bank loan 25,000
Payment of dividends to stockholders 16,000
Purchase of land 35,000

Cash balance at the end 69,000

Required: Using the indirect method, prepare a statement of cash flows

QNO8
Waji Ul Hassan Corporation
Statement of Cash Flows
As on Dec 31, 2017

Cash flows from operating activities

Net income 65,000
Adjustments for:
Depreciation and amortization 12,000
Provision for losses on accounts receivable 0
Gain on sale of facility 0
12,000
Decrease in accounts receivable 12,000
Increase in inventories -8,000
Decrease in trade payables -8,000
-4,000
Cash generated from operations 73,000

Cash flows from investing activities

Purchase of property, plant, and equipment -35,000
Proceeds from sale of equipment. Investment 0
Net cash used in investing activities -35,000

Cash flows from financing activities

Proceeds from issue of common stock 0
Proceeds from issuance of long-term debt 25,000
Dividends paid -16,000
Net cash used in financing activities 9,000

Net increase in cash and cash equivalents 47,000

Cash and cash equivalents at beginning of period 22,000
Cash and cash equivalents at end of period 69,000
QNO9 Following balances have been extracted from a balance sheet of Mr Fazal Din for 2017 & 2018:
2017 2018

Stock 220,000 200,000

Account Receivable 150,000 180,000
Account payable 136,000 156,000
prepaid rent 50,000 35,000
Accrued salaries 22,000 20,000
capital 350,000 376,000
Equipment 500,000 437,000
Drawings 65,000 33,000
Cash 100,000 312,000
long term liability - 40,000

Other Information
1 Profit for the year 100,000
2 Depreciation for the year 5,000
3 Equipment having a book value of 90,000 was sold for Rs 100,000
4 interest on long term loan is 17.5%

Mr Fazal Din
Statement of Cash Flows
As on Dec 31, 2018

Cash flows from operating activities

Net income 100,000
Adjustments for:
Depreciation and amortization 5,000
Provision for losses on accounts receivable 0
Gain on sale of facility 0
5,000
Decrease in accounts receivable -30,000
Decrease in inventories 20,000
Increase in trade payables 18,000
Decrease in Prepaids 15,000
23,000
Cash generated from operations 128,000

Cash flows from investing activities

Purchase of property, plant, and equipment 24,000
Proceeds from sale of equipment. Investment 10,000
Net cash used in investing activities 34,000

Cash flows from financing activities

Proceeds from issue of common stock 26,000
Proceeds from issuance of long-term debt 40,000
Dividends paid -16,000
Net cash used in financing activities 50,000

Net increase in cash and cash equivalents 212,000

Cash and cash equivalents at beginning of period 100,000
Cash and cash equivalents at end of period 312,000