Q#01) Pre-closing Trial Balance of ABC Ltd. on Dec.

31, 2010 was as follows:

Debit Balance Credit Balance

Preliminary Expense Rs. 4,000
Furniture Rs. 35,000
Merchandise Inventory Rs. 7,000
Accounts Receivable Rs. 20,000
Cash Rs. 21,000
Purchases Rs. 80,000
Salaries expense Rs. 5,000
Rent expense Rs. 3,600
Depreciation Expense Rs. 3,000
Bad Debt Expense Rs. 1,400
Capital Rs. 50,000
Premium on shares Rs. 2,000
Retained Earnings Rs. 4,000
Mortgage Debenture Rs. 15,000
Accounts Payable Rs. 6,000
Allowance for Depreciation(Fur) Rs. 8,000
Allowance for Bad Debts Rs. 2,000
Sales Revenue Rs. 93,000

Merchandise Inventory on Dec. 31, 2010 was valued at Rs. 9,000. The authorised capital of the
company is Rs. 300,000 divided into 30,000 ordinary shares of Rs. 10 each.

Required

Prepare:
a) Income Statement for the year ended Dec. 31, 2010.
b) Balance Sheet as of Dec. 31, 2010 in Classified Form.

Q#02) Brotherhood Company Limited was registered with a Capital of Rs. 500,000 divided into
50,000 ordinary shares of Rs. 10 each. It completed the following transactions:

i) Issued to public 10,000 ordinary shares of Rs. 10 each, at a premium of Rs.2 per share. The
shares were fully subscribed and paid for.
ii) Purchased a plot of land worth Rs. 200,000 and in consideration, issued to the vendors 18,000
ordinary shares of Rs. 10 each. Each share has a market value of Rs. 12.
iii) Purchased a machine and in consideration, issued 20,000 ordinary shares of Rs. 10 each.

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Each share has a market value of Rs. 12.
iv) Issued 5,000 mortgage debenture of Rs. 20 each, redeemable after 10 years at Rs. 22 each.
v) Paid Rs. 5,000 for preliminary expense.

Required
i) Give entries in General Journal to record the above transaction.

Q#03) The following information relates to accounts and operations of Decent Company Limited
on Dec. 31, 2010:
Authorised capital; 500,000 Ordinary Shares of Rs. 10 each Rs. 5,000,000. Issued, subscribed
and paid up capital; 200,000 Ordinary shares of Rs. 10 each fully paid up Rs. 2,000,000,
Retained Earnings Rs. 300,000.
Credit balance in the Income Summary was Rs. 285,000 which is transfered to retained earnings
accounts.At the meeting of the Board of Directors, the following decisions were taken:
i) To make the following appropriations:
Rs. 60,000 for Plant Expansion
Rs. 50,000 for Contigencies
ii) To declare a 20% Cash Dividend.

Required
i) Entries in the General Journal to give effect to the above decision of the board of Directors and
their postings in relevant accounts.
ii) Partial Balance Sheet of the Company showing relevant items therein.

Q#04) The following transactions were completed by Ashraf Limited.

i) Purchase machinery with listed price of Rs. 150,000 and in consideration issued own 14,800
ordinary shares of Rs. 10 each.
ii) Purchased a plot of land and issued 15,000 ordinary shares of Rs. 10 each as purchase price.

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Each share has intrinsic value of Rs. 12.
iii) Purchased a runni8ng business by acquiring net assets of Rs. 60,000 and issued to the
vendours 6,200 ordinary shares of Rs. 10.
iv) Received Rs. 250,000 on the issue of 25,000 mortgage debentures of Rs. 10 each redeemable
after 10 years at Rs. 12 each.
v) Received cash Rs. 90,000 against the issue of 10,000 ordinary debentures of Rs. 10
each.Redeemable after five years at Rs. 12 each.

Required
Give entries in the General Journal to record the above transactions.

Q#05) The following is the adjusted Trial Balance of National Co. Ltd. as on Dec. 31, 2009:

Debit Balance ……………………………. ….Credit Balances

Cash……………………….Rs. 15,000………Allowance for Bad Debts Rs. 2,000
Accounts Receivable……...Rs. 80,000………Allowance for Depreciation Rs. 6,000
Merchandise Inventory……Rs. 70,000………Accounts Payable Rs. 5,000
Furniture…………………..Rs. 60,000………Ordinary Debenture Rs. 20,000
Preliminary expenses………Rs. 20,000……..Share Capital Rs. 100,000
Cost of goods sold…………Rs. 120,000……Retained Earning Rs. 53,000
Salaries expense……………Rs. 12,000……..General Reserve Rs. 10,000
Auditors fee expense……….Rs. 10,000…….Salaes Revenue Rs. 200,000
Rent Expense ………………Rs. 5,000
Depreciation expense ………Rs. 3,000
Bad debts expense ………….Rs. 1,000
Rs.396,000……………………………….Rs. 396,000
The authorized capital of the Company is Rs. 500,000 divided into0 50,000 ordinary shares of
Rs. 10 each.

Required
a) Income Statement for the year ended Dec. 31, 2009.
b) Balance Sheet as of Dec. 31, 2009.

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Q#05) The following transactions were completed by Al-Murtaza Company Limited:
i) Issued 50,000 ordinary shares of Rs. 10 each at Rs. 12.50 per share to the public payable in full
on application. The company received applications for 80,000 shares. The company allotted the
shares offered and refunded the amount received in excess.
ii) The Company issued to the public 50,000 ordinary shares of Rs. 10 each payable in full on
application. The entire issue was guaranteed by the underwriters. The company received
applications for 40,000 shares. As per agreement the underwriters subscribed the balance of the
issuance.
iii) The company purchased Machinery at a price of Rs. 450,000 and consideration issued to the
vendors its own 43,000 Ordinary Shares of Rs. 10 each.
iv) The Company issued 10,000 Debenture Bonds of Rs. 100 each redeemable at Rs. 105 per
debenture after five years. All the debentures were subscribed.
v) The Company issued 10,000 Debenture Bonds of Rs. 100 each at Rs. 95 per debenture. The
debentures are redeemable at par after five years. All the debentures were subscribed.

Required
Give entries in the General-Journal of the Company to record the above transactions.

Q#06) Afroz Ltd. issued Ordinary Shares (Rs. 10 par) during 2010, as noted below:
i) 10,000 shares of Rs. 14 each for cash.
ii) 4,000 shares of Rs. 9 each for cash.
iii) 5,000 shares for purchase of Machine (Market price of share being Rs. 13 each).
iv) 4,000 shares at par to the promoters, for services rendered.
v) 3,000 shares for purchase of Equipment having List Price of Rs. 32,000.
vi) 6,000 shares at par as Stock Dividend.

Required
Give entries in the General Journal of the company to record the above transactions (Show
computations, where necessary).

Q#07) On Jan. 1, 2008,Shah Company Ltd. was registered with an authorized capital of Rs.
1,200,000, divided into 6,000 10% preference shares of Rs. 100 each and 60,000 ordinary shares

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of Rs. 10 each.
On Jan. 15, 2008,the Company offered 4,000 10% preference shares and 50,000 ordinary shares,
Payable in full with application.
On Jan. 25,2008, The Company’s bankers reported that Rs. 500,000 on 5,000 10% preference
shares and Rs. 400,000 on 40,000 ordinary shares were received with applications. The
remaining ordinary shares which were not taken to by the public were taken by the underwriters
under the agreement.
On Jan. 31, 2008,the Directors of the Company finalized the allotment of 4,000 10% preference
shares and 40,000 ordinary shares to the public and 10,000 ordinary shares to the underwriters
and directed the banker to refund the excess of application money.
On Feb. 10, 2008, the Company allotted 4,000 ordinary shares of Rs. 10 each in consideration of
purchase price of Machinery. The shares were issued at market price of Rs. 12.50 each.

Required
Give dated entries in the General Journal of the Company for the above transactions.

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