By Hassaan Khanani

KnS School of Business Studies – CAF 05 (Mock)

27 August 2018
September 2018: Mock Exam 3 hours – 100 Marks
Additional reading time – 15 minutes

Financial Accounting and Reporting – I

d
hi
Solution No 1

a
Talha Shahid Limited

Sh
Statement of Financial Position
As on 30 June 2018

Assets Rupees

a
Non-Current Asses

lh
Property plant and Equipment (1,681,000 - 110,000) 1,571,000
Less: Accumulated depreciation (324,000 - 1,100) (322,900)

Ta
1,248,100
Current Assets
Trade receivables (349,200 - 40,000 - 10,000 - 20,000) 279,200
i&
Less: Provision for doubtful debts (13,960)
265,240
Stock in trade (W-1) 312,000
an

Prepaid rent (W-2) 30,660

Cash and Bank 42,600
an

1,898,600

Equity and Liabilities

Kh

Equity
Share Capital (880,000 + 11,825 x 10) (W-6) 998,750
Share Premium (78,000 + 11,825 x 6) 149,250
an

Retained earnings (W-7) 358,020

Revaluation surplus (51,900 - 4720) (W-8) 47,180
Total equity 1,553,200
sa

Current liabilities
Bank Loan 120,000
as

Dividend payable 12,000

Interest payable (5,400 - 3,600) 1,800
H

Trade payable (216,600 - 40,000) 176,600

Tax payable 35,000
1,898,600

CAF 7 by Sir Hassaan Khanani at KnS .

No Sunday Classes , Fixed Time table Page 1 of 12

Sir Hassaan Khanani & Sir Talha Shahid

By Hassaan Khanani

KnS School of Business Studies – CAF 05 (Mock)

Talha Shahid Limited
Statement of Comprehensive income
For the year ended on 30 June 2018
Rupees
Sales (1,726,140 - 20,000) 1,706,140

d
Less: Cost of sales
Opening stock 168,000

hi
Purchases 1,229,700

a
Goods available for sales 1,397,700
Closing stock (W-1) (312,000)

Sh
Cost of sales (1,085,700)
Gross profit 620,440
Less: Operating expenses

a
Rent expense (W-2) 25,340

lh
Bad debts expense (W-3) 6,500
Salaries expense 46,900 CAF 7 , CAF 8 & CAF 9

Ta
Insurance expense 63,000 at KnS , fixed Time table
Miscellaneous expense 16,000 and No sunday Classes
Administrative expenses (W-4) 76,550
i&
Loss on disposal (W-5) 64,450 Sir Hassaan Khanani
(298,740) teaches full CAF 7 alone
Add: Other income (65,000 - 45,000) 20,000 and he is the only one to
an

Profit before interest and tax 341,700 teach 100% CAF 7 in

Less: Financial charges (120,000 x 6% x 9 /12) (5,400) Karachi as CAF 7
an

includes different topic

Profit before tax 336,300
Less: Taxation (35,000)
linking and its best if
single teacher teaches
Kh

Profit for the year 301,300

whole course.
Working Note:
1 – Closing stock
an

Rupees
Stock count at 20 June 2018 356,000
sa

Add: Purchases (21 June 2018 - 30 June 2018) 68,000

Less: Sales (21 June 2018 - 30 June 2018) [140,000 - 20,000] / 125% (96,000)
328,000
as

NRV Adjustment (36,000 - 20,000) (16,000)

312,000
H

2 – Rent expenses
56,000 = x + 1.1x + 1.1(1.1x) + 1.1 {1.1(1.1x)}
x = Rs. 12,066 i.e., rent of first six month
Now increase 10% in every six month.

Page 2 of 12

Sir Hassaan Khanani & Sir Talha Shahid

By Hassaan Khanani

KnS School of Business Studies – CAF 05 (Mock)

Rent expense : 12,066 + 110%(12,066) = Rs. 25, 340 (round off)
Prepaid rent : 56,000 – 25,340 = Rs. 30,660

3 – Provision for doubtful debt closing balance

= 349,200 – 20,000 – 40,000 – 10,000
= 279,200 x 5%

d
= Rs. 13,960

hi
Allowance for doubtful debts
Trade receivable (Written off) 10,000 b/d 17,460

a
c/d 13,960 Bad debts (Balancing figure) 6,500

Sh
23,960 23,960

4 – Administrative expenses

a
Rupees

lh
As per trial balance 77,100
Less: Depreciation (110,000 x 2% x 6/12) 550

Ta
76,550

5 – Loss on disposal
i&
Rupees
Revalued amount 110,000
an

Less Accumulated depreciation (110,000 x 2% x 3/12) (550)

Carrying amount 109,450
Sale proceeds 45,000
an

Loss on disposal 64,450

Kh

6 – Share Capital
Rupees
Share
Share Capital
premium
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At beginning balance 880,000 78000

Add: Right issue (190,000 / 16) @ Rs. 10; @ 6 118,750 71250
At end balance 998,750 149,250
sa

7 – Retained earning
as

Rupees
Retained earnings at beginning 96,000
Add: Profit for the year 301,300
H

Less: Dividend (44,000)

Add: Transfer from revaluation surplus (W-8) 4,720
Retained earnings at end 358,020

Page 3 of 12

Sir Hassaan Khanani & Sir Talha Shahid

By Hassaan Khanani

KnS School of Business Studies – CAF 05 (Mock)

8 – Revaluation Surplus transfer to retained earnings
Rupees
Cost at 1 January 2015 112,000
Less: Accumulated depreciation
Depreciation - 30 June 2015 (112,000 x 2% x 6/12) 1,120

d
Depreciation - 30 June 2016 (112,000 x 2%) 2,240

hi
Depreciation - 30 June 2017 (112,000 x 2%) 2,240
Depreciation - 31 December 2017 (112,000 x 2% x 6/12) 1,120

a
6,720

Sh
Carrying amount 105,280
Revalued amount 110,000
Revaluation surplus 4,720

a
Solution No 2

lh
Ta
Revaluation
Stock 4,000 Land and Building 7,500
Furniture 200
Provision for doubtful debts 2,300
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Capital A (6/8) 750
Capital B (2/8) 250
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1,000
7,500 7,500
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Capital Account
A B C A B C
Kh

Goodwill reverse 30,000 10,000 10,000 b/d 60,000 32,000 -

General reserve 6,000 2,000 -
Cash (balancing
14,250 16,750 - Revaluation 750 250 -
figure)
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Goodwill 37,500 12,500 -

C’ Capital
c/d 60,000 20,000 20,000 30,000
introduced)
sa

104,250 46,750 30,000 104,250 46,750 30,000

as
H

Statement of Financial PositionAs on 1 July 2018

Page 4 of 12

Sir Hassaan Khanani & Sir Talha Shahid

By Hassaan Khanani

KnS School of Business Studies – CAF 05 (Mock)

Assets Rupees Capital and Liabilities Rupees
Land and building 57,500 A Capital 60,000
Furniture 1,800 B Capital 20,000
Debtors 33,000 C Capital 20,000

d
Less: Provision for doubtful debts (3,300) 100,000
29,700 Creditors 70,000

hi
Other receivables 6,000

a
Stock in trade 36,000
Cash (45,000 + 25,000 - 14,250 - 16,750) 39,000

Sh
170,000 170,000
Working note:
C Capital = 15,000 + 5,000 + 10,000 = Rs. 30,000

a
Closing balance of capital = (15,000 + 5,000) / 20% = Rs.100,000
Closing balance of partner A = Rs. 100,000 x 60% = Rs. 60,000

lh
Closing balance of partner B = Rs. 100,000 x 20% = Rs. 20,000
Solution No 3

Ta
Amir
Income Statement For the year ended on 31 March 2017
Rupees
i&
Sales (132,500 + 156,500) + 4550 293,550
Less: Cost of sales
an

Opening stock (5,000 + 3,000) 8,000

Purchase (105,850 + 110,050) + 4550 220,450
Closing stock (4,600 + 3,500) (8,100)
an

Cost of sales 220,350

Gross profit 73,200
Kh

Less: operating expenses

Cash defalcation 24,150
Inventory lost 450
Repair 4,000
an

Rent (6,000 + 400 - 500) 5,900

Rate & Insurance (10,000 + 2,500 - 2,750) 9,750
sa

Electricity 4,000
Salary 15,000
Trade expenses 1,250
as

Audit fee 2,000

Depreciation (30,000 x 10%) + (800 x 10% x 3/12) 3,020
H

69,520
Net profit 3,680
Amir

Page 5 of 12

Sir Hassaan Khanani & Sir Talha Shahid

By Hassaan Khanani

KnS School of Business Studies – CAF 05 (Mock)

Statement of financial Position
As on 31 March 2017
Furniture & Fixture (30,000 + 800 - 3020) 27,780
Goodwill 9,500
Stock - Cosmetic 4,600

d
Stock - Confessionary 3,500

hi
Prepaid Rate & Insurance 2,750
Debtor - Cosmetic 1,400

a
Debtor - Confessionary 1,650

Sh
Advance to suppler - Cosmetic 300
Cash at bank 13,500
Cash in hand 250
65,230

a
lh
Capital 70,000
Profit 3,680

Ta
Drawing (15,000)
58,680
Creditor - Cosmetic 2,200
i&
Creditor - Confessionary 1,000
Creditor - Furniture 800
Rent payable 400
an

Audit fee payable 2,000

Advance from customer 150
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65,230

Working note:
Kh

Creditor - Cosmetic
Bank (100,000 + 6,000) 106,000 b/d 2,500
Purchases (Credit) 105,400
an

c/d 2,200 c/d 300

108,200 108,200
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Creditor - Confessionary
Bank 110,000 b/d 2,000
as

Purchases (Credit) 109,000

c/d (1800 - 800) 1,000
111,000 111,000
H

Debtor - Cosmetic

Page 6 of 12

Sir Hassaan Khanani & Sir Talha Shahid

By Hassaan Khanani

KnS School of Business Studies – CAF 05 (Mock)

b/d - Cash (Balancing figure) 131,250
Sales 132,500
c/d 150 c/d 1,400
132,650 132,650

d
Debtor - Confessionary

hi
b/d 500 Cash (balancing figure) 155,350
Sales 156,500 c/d 1,650

a
157,000 157,000

Sh
Cosmetic Rupees
Sales 132,500
Less: Cost of sales

a
Opening stock 5,000

lh
purchases (105400 + 5000) - 4,550 105,850
Closing stock (4,850)

Ta
Cost of sales (@ 80%) 106,000
Gross profit (@ 20%) 26,500
i&
Confessionary Rupees
Sales 156,500
an

Less: Cost of sales

Opening stock 3,000
purchases (109,000 + 1500) - 450 110,050
an

Closing stock (3,500)

Cost of sales (70%) 109,550
Kh

Gross profit (@30%) 46,950

Cash
an

b/d 1,000 Bank 245,000

Customer (131,250 + 155,350) 286,600 Salaries 15,000
Owner take inventory 4,550 Confessionary purchases 1,500
sa

Trade expenses 1,250

Cosmetic purchase 5,000
Defalcation - Theft (balancing figure) 24,150
as

c/d 250
292,150 292,150
H

Bank

Page 7 of 12

Sir Hassaan Khanani & Sir Talha Shahid

By Hassaan Khanani

KnS School of Business Studies – CAF 05 (Mock)

b/d 23,500 Purchases of cosmetic (100,000 + 6,000) 106,000
Cash 245,000 Purchases of confessionary 110,000
Repairs 4,000
Rent 6,000
Rate & Insurance 10,000

d
Electricity 4,000

hi
Amir (Drawing) 15,000
c/d (Balancing figure) 13,500

a
268,500 268,500

Sh
Solution No 4
(a)
Units (x) Labour FOH y X2 xy

a
60,000 200,000 120,000 320,000 3,600,000,000 19,200,000,000

lh
80,000 260,000 150,000 410,000 6,400,000,000 32,800,000,000
140,000 730,000 10,000,000,000 52,000,000,000

Ta
y = a + bx
i&
an

b (variable) = 2 (52,000,000,000) – (140,000) (730,000) = Rs. 4.5 per unit

an

2 (10,000,000,000) – (140,000)2

a (fixed) = 730,000 – 4.5 (140,000) Rs. 50,000

Kh

y = (110,000 + 50,000) + (6 + 4.5) x

y = 160,000 + 10.5 x
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(b) Cost of production of 90,000 units

y = 160,000 + 10.5 (90,000)
y = Rs. 1,105,000.
sa
as
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Page 8 of 12

Sir Hassaan Khanani & Sir Talha Shahid

By Hassaan Khanani

KnS School of Business Studies – CAF 05 (Mock)

Solution No 5

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Kh
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Page 9 of 12

Sir Hassaan Khanani & Sir Talha Shahid

By Hassaan Khanani

KnS School of Business Studies – CAF 05 (Mock)

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Dep 2018 & Surplus

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Ta
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Depreciation 2019 & Incremental Depreciation 2019

Depreciation for 2019 after

an

revaluation(135*20%) 27
Depreciation Original if asset never revalued 22.87
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(114.345*20%)
Incremental Dep 4.131
(27-22.87)
Kh

CA under revaluation Model on 31 dec 2019 108

Dep till 2020 & Incremental dep

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as
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Page 10 of 12

Sir Hassaan Khanani & Sir Talha Shahid

By Hassaan Khanani

KnS School of Business Studies – CAF 05 (Mock)

Solution No 6

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Solution No 7
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Part (a)
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Page 11 of 12

Sir Hassaan Khanani & Sir Talha Shahid

By Hassaan Khanani

KnS School of Business Studies – CAF 05 (Mock)

Part (b)

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CAF 7 , 8 & 9 at KnS in sha Allah See you all , we assure maximum practice along

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with 100% course coverage and summary of every topic.
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Page 12 of 12

Sir Hassaan Khanani & Sir Talha Shahid