Principles of Accounting, Solved Paper 2018 Supplementary, ICOM II, FBISE, MCQS, Short Questions, Extensive Questions

In this post, we are going to solve the paper of Principles of Accounting, Solved Paper 2018 Supplementary, ICOM II of FBISE. Practical problems of Chapter 6 Partnership Accounts Profits Distribution, for ICOM II, DCOM, DBA have already posted. This post will also be helpful for the students of BCOM, ADP Commerce and other disciplines related to business, finance and commerce. In other posts, all other chapters related to partnership will be discussed and also solved papers of Principles of Accounting for ICOM II for FBISE, BISE Lahore, BISE Rawalpindi will be presented to you. Solved Papers of Business Statistics are already posted on the website. Solved Paper Principles of Accounting 2018 Annual ICOM II FBISE has already posted.

Solved by Iftikhar Ali, M.Sc Economics, MCOM Finance Lecturer Statistics, Finance and Accounting

Principles of Accounting, Solved Paper 2018 Supplementary, ICOM II, FBISE, MCQS, Short Questions, Extensive Questions

MCQS

Q. 1 Circle the correct option i.e. A / B / C / D. Each part carries one mark.

1)	The people who form a company are called:
	A	Owners	B	Directors
	C	Promoters	D	Debenture holder
2)	In non-trading concerns, subscription received in advanceis considered as:
	A	Expense	B	Asset
	C	Liability	D	Income
3)	Opening capital is ascertained by preparing:
	A	Cash account	B	Opening statement of affairs
	C	Creditors account	D	Capital account
4)	Gradual decrease in value of a fixed asset due to its use in business is called:
	A	Calculation	B	Depreciation
	C	Fluctuation	D	Deterioration
5)	Income of a non-trading concern is generated from:
	A	Sales	B	Receipts
	C	Payments	D	Investors
6)	Which of the following is not prepared under single entry system?
	A	Cash book	B	Statement of affairs
	C	Trial balance	D	Personal accounts
7)	The assets which have physical form are called:
	A	Tangible assets	B	Intangible assets
	C	Fixed assets	D	Current assets
8)	Un-appropriated profits are shown as:
	A	Profit and loss account debit balance	B	Profit and loss account credit balance
	C	Accumulated losses	D	Gross profit
9)	Non-trading concerns prepare:
	A	Profit and loss account	B	Manufacturing account
	C	Income and expenditure account	D	Cost of Goods Sold account
10)	Patents, copyrights, goodwill are:
	A	Tangible assets	B	Intangible assets
	C	Current assets	D	Liquid assets
11)	Debenture holders are of company.
	A	Creditors	B	Owners
	C	Customers	D	Debtors
12)	Depreciation is considered as a/an for business.
	A	Expense	B	Income
	C	Asset	D	Liability
13)	Nature of consignee account is:
	A	Personal account	B	Nominal account
	C	Real account	D	Cash account
14)	For a business, interest on capital is a/an:
	A	Income	B	Asset
	C	Expense	D	Liability
15)	Amount which will be realized at the end of asset’s useful life, is called:
	A	Written down value	B	Market value
	C	Remaining value	D	Residual value
16)	Sinking fund investment is:
	A	Asset	B	Income
	C	Expense	D	Liability
17)	The process of allocating the cost of an intangible asset over its useful life, is called:
	A	Depreciation	B	Amortization
	C	Obsolescence	D	Deterioration
18)	Subscription outstanding is a/an:
	A	Income	B	Liability
	C	Expense	D	Asset
19)	Book value of an asset is equal to:
	A	Cost – Depreciation	B	Cost – Salvage value
	C	Market value – Depreciation	D	Net realizable value – Depreciation
20)	Which of the following is not a depreciable asset?
	A	Equipment	B	Machinery
	C	Land	D	Motorcar

Short Questions

SECTION – B (Marks 30)

Q. 2 Attempt any TEN parts. The answer to each part should not exceed 3 to 4 lines. (10×3=30)

(i) Differentiate between trading and non-trading concerns.

Answer: Under trading activity, basic motive of the firm is to earn profit and do trading activities whereas under non-trading activity, the basic motive is neither to do trading activity nor profit motivation.

(ii) Give any three characteristics of single entry system.

Answer:

Characteristics of Single Entry System

Cash Book: Cash book is prepared under single entry system in which both personal and business transactions are recorded
Personal Accounts: In single entry system, only personal accounts are maintained but not real or nominal accounts.
Statements of Affairs: Under single entry system, opening and closing statement of affairs are prepared to calculate the opening and closing capital of the firm.

(iii) Write down any three reasons of depreciation.

Answer:

Wear & Tear: Assets deteriorate due to continuous usage.
Time Laps: Some type of assets become useless after some time.
Obsolescence: Due to new technology, old technology discarded.

(iv) What do you understand by Accumulated Depreciation?

Answer:

Accumulated Depreciation

Accumulated depreciation is the total amount of depreciation that has been charged against an asset since the asset was first acquired.

(v) Define the term Amortization.

Answer:

Amortization

Amortization is cost of intangible asset over a period of time besides this it is used to repayment of loan over a period of time.

(vi) Define the term general reserve.

Answer: General reserve is an amount that is set aside from the profit to meet future contingencies and to do further activities such as offsetting future losses etc.

(vii) What is a capital reserve?

Answer: Any amount of capital profit set aside to meet the future expenses is called capital reserve. Capital profit is a profit that is generated other than normal trading activities.

(viii)Define the term provision.

Answer: Provision is a fund that put aside to cover future losses or expenses such as provision for bad debt.

(ix) What is the difference between consignment inward and consignment outward?

Answer:

Consignment Inward

When consignment is received by consignee from consignor to sell in market for commission is called consignment inward.

Consignment Outward

When consignment is sent to consignee by consignor to sell in the market is called consignment outward.

(x) Distinguish between consignor and consignee.

Answer:

Consignor or principal is a person who send goods on consignment to consignee or agent to sell on commission.

Consignee or agent is a person who sell goods of consignor or principal in the market on commission.

(xi) What is a holding company?

Answer: Parent company is considered as holding company that buy, controls and holds other companies. Parent or holding companies are normally considered as corporations.

(xii) What is a private limited company?

Answer: According to the Companies Act 1984, private limited company should has following features:

Members should be 2 to 50
Right of transfer of shares is restricted by article of association.
Prohibits the invitation to general public to invest in the debentures of the company.

SECTION – C (Marks 50)

(Part I)

Q.3 Following was the balance sheet of A, Band C sharing profits and losses in the proportions 1/2, 1/3 and 1/6 respectively:

Liabilities & Capital	Rs.	Assets	Rs.
Creditors	5000	Land and Building	48000
Capital:		Machinery	7000
A	57000	Stock	29000
B	32000	Debtors	25200
C	16000	Cash	800

	110,000		110,000

They agreed to take “D” into partnership and give him 1/16 share on the following terms:

That D should bring in Rs. 3000 as goodwill and Rs. 8000 as his capital.
The machinery be depreciated by 12%.
The stock be depreciated by 10%.
That a reserve be created for doubtful debts at 5%.
That the value of land and building having appreciated be brought up to Rs. 62,000.
That after making above adjustments, the capital accounts of the old partners be adjusted on the basis of the proportion of D’s capital.

Required: Prepare revaluation account, partners’ capital accounts and the opening balance sheet of the new firm.

Solution:

Date	Details	Dr. Rs.	Cr. Rs.
	Revaluation A/c	5000
	Machinery A/c		840
	Stock A/c		2900
	Reserve for doubtful debt A/c		1260
	(Assets depreciation and provision created W:2)

	Land & Building A/c	14,000
	Revaluation A/c		14,000
	(Value of Land & Building appreciated W:2)

	Revaluation A/c	9000
	A’s Capital A/c		4500
	B’s Capital A/c		3000
	C’s Capital A/c		1500
	(Net increase of revaluation transferred to partner’s capital accounts W:3)

	Cash A/c	11,000
	D’s Capital A/c		8000
	Goodwill A/c		3000
	(D introduced capital and goodwill in the business)

	Goodwill A/c	3000
	A’s Capital A/c		1500
	B’s Capital A/c		1000
	C’s Capital A/c		500
	(Goodwill transferred to old partners with sacrifice ratio W:4)

	A’s Capital A/c	3000
	Cash A/c		3000
	(3000 charged from A’s Capital after adjustment)

	Cash A/c	4000
	B’s Capital A/c		4000
	(4000 transferred to B’s Capital after adjustment of capitals)

	Cash A/c	2000
	C’s Capital A/c		2000
	(2000 transferred to C’s Capital after adjustment of capitals)

A’s Capital A/c
Date	Detail	Rs.	Date	Detail	Rs.
	Balance c/d Adjusted W:5	60,000		Balance b/d	57,000
	Cash A/c	3000		Revaluation A/c	4500
				Goodwill A/c	1500
		63,000			63,000

B’s Capital A/c
Date	Detail	Rs.	Date	Detail	Rs.
	Balance c/d Adjusted W:5	40,000		Balance b/d	32,000
				Revaluation A/c	3000
				Goodwill A/c	1000
				Cash A/c	4000
		40,000			40,000

C’s Capital A/c
Date	Detail	Rs.	Date	Detail	Rs.
	Balance c/d Adjusted W:5	20,000		Balance b/d	16,000
				Revaluation A/c	1500
				Goodwill A/c	500
				Cash A/c	2000
		20,000			20,000

D’s Capital A/c
Date	Detail	Rs.	Date	Detail	Rs.
	Balance c/d	8,000		Cash A/c	8,000


		8,000			8,000

Cash A/c
Date	Detail	Rs.	Date	Detail	Rs.
	Balance b/d	800		A’s Capital A/c	3,000
	D’s Capital A/c	8,000		Balance c/d	14,800
	Goodwill A/c	3,000
	B’s Capital A/c	4,000
	C’s Capital A/c	2,000
		17,800			17,800

Updated Balance Sheet
Liabilities & Capital	Rs.	Assets	Rs.
Creditors	5000	Land and Building (48,000 + 14,000)	62,000
Capital:		Machinery (7000 – 840)	6160
A	60,000	Stock (29,000 – 2900)	26,100
B	40,000	Debtors 25200
		Less Provision (1260)	23,940
C	20,000	Cash	14,800
D	8,000
	133,000		133,000

Working 1: Setting of Old Ratio

$\mathbf{A\ :\ B\ :\ C}\$

$\frac{\mathbf{1}}{\mathbf{2}}\mathbf{:}\frac{\mathbf{1}}{\mathbf{3}}\mathbf{:}\frac{\mathbf{1}}{\mathbf{6}}\$

$\frac{\mathbf{3}}{\mathbf{6}}\mathbf{:}\frac{\mathbf{2}}{\mathbf{6}}\mathbf{:}\frac{\mathbf{1}}{\mathbf{6}}\$

W 2: Revaluation Calculation

Machinery = 7,000 x 0.12 = 840

Stock = 29,000 x 0.10 = 2900

New Provision = 25200 x 0.05 = 1260

Land & Building = 62,000 – 48,000 = 14,000

Net Increase = 14000 – 5000 = 9000

W 3: Net Revaluation increase share of old partners

$\mathbf{A}^{\mathbf{'}}\mathbf{s\ Share = 9000\ \times}\frac{\mathbf{3}}{\mathbf{6}}\mathbf{= 4500}\$

$\mathbf{B}^{\mathbf{'}}\mathbf{s\ Share = 9000\ \times}\frac{\mathbf{2}}{\mathbf{6}}\mathbf{= 3000}\$

$\mathbf{C}^{\mathbf{'}}\mathbf{s\ Share = 9000\ \times}\frac{\mathbf{1}}{\mathbf{6}}\mathbf{= 1500}\$

W 4: Calculation of New, Sacrifice Ratio & Goodwill of A, B & C

$\mathbf{1 -}\frac{\mathbf{1}}{\mathbf{16}}\mathbf{=}\frac{\mathbf{15}}{\mathbf{16}}\$

$\mathbf{A}^{\mathbf{'}}\mathbf{s\ New\ Ratio =}\frac{\mathbf{15}}{\mathbf{16}}\mathbf{\ \times}\frac{\mathbf{3}}{\mathbf{6}}\mathbf{=}\frac{\mathbf{45}}{\mathbf{96}}\$

$\mathbf{B}^{\mathbf{'}}\mathbf{s\ New\ Ratio =}\frac{\mathbf{15}}{\mathbf{16}}\mathbf{\ \times}\frac{\mathbf{2}}{\mathbf{6}}\mathbf{=}\frac{\mathbf{30}}{\mathbf{96}}\$

$\mathbf{C}^{\mathbf{'}}\mathbf{s\ New\ Ratio =}\frac{\mathbf{15}}{\mathbf{16}}\mathbf{\ \times}\frac{\mathbf{1}}{\mathbf{6}}\mathbf{=}\frac{\mathbf{15}}{\mathbf{96}}\$

$\mathbf{D's\ Ratio =}\frac{\mathbf{1}}{\mathbf{16}}\$

$\mathbf{A\ :\ B\ :\ C\ :D}\$

$\frac{\mathbf{45}}{\mathbf{96}}\mathbf{:}\frac{\mathbf{30}}{\mathbf{96}}\mathbf{:}\frac{\mathbf{15}}{\mathbf{96}}\mathbf{:}\frac{\mathbf{1}}{\mathbf{16}}\$

$\frac{\mathbf{45}}{\mathbf{96}}\mathbf{:}\frac{\mathbf{30}}{\mathbf{96}}\mathbf{:}\frac{\mathbf{15}}{\mathbf{96}}\mathbf{:}\frac{\mathbf{6}}{\mathbf{96}}\$

$\mathbf{A}^{\mathbf{'}}\mathbf{s\ Sacrifice\ Ratio =}\frac{\mathbf{3}}{\mathbf{6}}\mathbf{-}\frac{\mathbf{45}}{\mathbf{96}}\mathbf{=}\frac{\mathbf{3}}{\mathbf{96}}\$

$\mathbf{B}^{\mathbf{'}}\mathbf{s\ Sacrifice\ Ratio =}\frac{\mathbf{2}}{\mathbf{6}}\mathbf{-}\frac{\mathbf{30}}{\mathbf{96}}\mathbf{=}\frac{\mathbf{2}}{\mathbf{96}}\$

$\mathbf{C}^{\mathbf{'}}\mathbf{s\ Sacrifice\ Ratio =}\frac{\mathbf{1}}{\mathbf{6}}\mathbf{-}\frac{\mathbf{15}}{\mathbf{96}}\mathbf{=}\frac{\mathbf{1}}{\mathbf{96}}\$

$\mathbf{A,\ B\ \&\ }\mathbf{C}^{\mathbf{'}}\mathbf{s\ Sacrifice\ Ratio = 3:2:1}\$

$\mathbf{A}^{\mathbf{'}}\mathbf{s\ Share\ of\ Goodwill = 3000 \times}\frac{\mathbf{3}}{\mathbf{6}}\mathbf{= 1500}\$

$\mathbf{B}^{\mathbf{'}}\mathbf{s\ Share\ of\ Goodwill = 3000 \times}\frac{\mathbf{2}}{\mathbf{6}}\mathbf{= 1000}\$

$\mathbf{C}^{\mathbf{'}}\mathbf{s\ Share\ of\ Goodwill = 3000 \times}\frac{\mathbf{1}}{\mathbf{6}}\mathbf{= 500}\$

W 5: Adjustment of Partner’s Capitals According to D’s Capital

$\mathbf{One\ portion\ of\ }\mathbf{D}^{\mathbf{'}}\mathbf{s\ Capital =}\frac{\mathbf{8000}}{\mathbf{6}}\mathbf{= 1333.33}\$

$\mathbf{A}^{\mathbf{'}}\mathbf{s\ Adjusted\ Capital = 1333.33\ \times 45 = 60,000}\$

$\mathbf{B}^{\mathbf{'}}\mathbf{s\ Adjusted\ Capital = 1333.33\ \times 30 = 40,000}\$

$\mathbf{C}^{\mathbf{'}}\mathbf{s\ Adjusted\ Capital = 1333.33\ \times 15 = 20,000}\$

Q.4 Amjad, Anwar and Arif were partners sharing profits and losses in the ratio 3:2:1. Their balance sheet on 31.12.2017 was as follows:

Liabilities	Rs.	Assets	Rs.
Creditors	15000	Cash at bank	3500
Bills payable	5000	Bills receivable	2000
Capital:		Investment	6500
Amjad	10000	Debtors	6000
Anwar	10000	Stock	5000
Arif	10000	Furniture	2000
		Buildings	25000
	50,000		50,000

Arif retired on the above date and the partners agreed that:

Goodwill should be calculated on the basis of two years profit of the average of the profits for the years 2014, 2015 and 2016 which were Rs. 16000, Rs.12000 and Rs. 14000 respectively.
Rs. 510 to be provided for doubtful debts.
Stock to be reduced by 10%.
There was appreciation in the value of building by 5%.

Required: Show necessary ledger accounts and the balance sheet of the continuing partners.

Solution:

Revaluation Account
Detail	Rs.	Detail	Rs.
Reserve for bad & doubtful debts	510	Buildings	1250
Stock	500
Balance transferred to:
Amjad’s Capital W:2	120
Anwar’s Capital W:2	80
Arif’s Capital W:2	40

	1250		1250

Amjad’s Capital Account
Detail	Rs.	Detail	Rs.
Balance c/d	24,120	Balance b/d	10,000
		Revaluation A/c	120
		Goodwill A/c W:1	14,000

	24,120		24,120

Anwar’s Capital Account
Detail	Rs.	Detail	Rs.
Balance c/d	19,413	Balance b/d	10,000
		Revaluation A/c	80
		Goodwill A/c W:1	9,333

	19,413		19,413

Arif’s Capital Account
Detail	Rs.	Detail	Rs.
Balance c/d	14,707	Balance b/d	10,000
		Revaluation A/c	40
		Goodwill A/c W:1	4,667

	14,707		14,707

Goodwill Account
Detail	Rs.	Detail	Rs.
Amjad’s Capital W:1	14,000	Balance c/d	28,000
Anwar’s Capital W:1	9,333
Arif’s Capital W:1	4,667

	28,000		28,000

Arif’s Loan Account
Detail	Rs.	Detail	Rs.
Balance c/d	14,707	Arif’s Capital A/c	14,707



	14,707		14,707

Updated Balance Sheet
Liabilities	Rs.	Assets	Rs.
Cash at bank	3500	Creditors	15000
Bills receivable	2000	Bills payable	5000
Investment	6500	Capital:
Debtors 6000		Amjad	24120
Less Provision (510)	5490	Anwar	19413
Stock (5000 – 500)	4500	Arif’s Loan	14,707
Furniture	2000
Buildings (25,000 + 1250)	26250
Goodwill W:1	28000
	78,240		78,240

W 1: Calculation of Goodwill

$\mathbf{Average\ of\ Profits = \ }\frac{\mathbf{16,000 + 12,000 + 14,000}}{\mathbf{3}}\mathbf{= 14000}\$

$\mathbf{Goodwill\ of\ the\ whole\ firm = 14,000\ \times 2 = 28,000}\$

$\mathbf{Amja}\mathbf{d}^{\mathbf{'}}\mathbf{s\ Goodwill = 28,000\ \times}\frac{\mathbf{3}}{\mathbf{6}}\mathbf{= 14,000}\$

$\mathbf{Anwa}\mathbf{r}^{\mathbf{'}}\mathbf{s\ Goodwill = 28,000\ \times}\frac{\mathbf{2}}{\mathbf{6}}\mathbf{= 9,333}\$

$\mathbf{Ari}\mathbf{f}^{\mathbf{'}}\mathbf{s\ Goodwill = 28,000\ \times}\frac{\mathbf{1}}{\mathbf{6}}\mathbf{= 4,667}\$

W 2: Calculation of Revaluation Balance to Partner’s Ratio

1250 – 510 – 500 = 240

$\mathbf{Amja}\mathbf{d}^{\mathbf{'}}\mathbf{s\ Share = 240\ \times}\frac{\mathbf{3}}{\mathbf{6}}\mathbf{= 120}\$

$\mathbf{Anwar's\ Share = 240\ \times}\frac{\mathbf{2}}{\mathbf{6}}\mathbf{= 80}\$

$\mathbf{Arif's\ Share = 240\ \times}\frac{\mathbf{1}}{\mathbf{6}}\mathbf{= 40}\$

(PART- II)

Q.5 Convert the following receipts and payments account of the Pakistan Health Society for the year ended on 30th June 2017…..

Q.5 Convert the following receipts and payments account of the Pakistan Health Society for the year ended on 30th June 2017 into an income and expenditure account and prepare a balance sheet:

Receipts	Rs.	Payments	Rs.
Bank Balance on 01-07-2016	2010	Salaries	656
Subscriptions	1115	Laundry Expenses	380
Fees	270	Rent and Taxes	200
Municipal grant	1000	Cost of car	2000
Donation for building fund	1560	Car Expenses	840
Rent	38	Drugs expense	670
		Bank balance on 30-06-2017	1247
	5,993		5,993

The society owns freehold land costing Rs. 8000 on which it is proposed to build a doctors hostel. A donation of Rs. 100, received to building fund, was wrongly included in the subscription account. A bill for medicines purchased during the year amounting to Rs. 128 was outstanding.

Solution:

Pakistan Health Society Income & Expenditure Account For the Year Ended 30^th June 2017
Expenditure	Rs.	Income	Rs.
Salaries	656	Subscription 1115
Laundry Expenses	380	Less wrongly included donation (100)	1015
Rent & Taxes	200	Fees	270
Car Expenses	840	Municipal Grant	1000
Drugs Expenses 670		Rent	38
Add outstanding 128	798
		Deficit	551

	2874		2323

Pakistan Health Society Balance Sheet For the Year Ended 30^th June 2017
Assets	Rs.	Liabilities	Rs.
Cash	1247	Donation for Building Fund (1560+100)	1660
Cost of Car	2000	Capital 10010
Freehold Land	8000	Less Deficit (551)	9459
		Outstanding Medicine bill	128

	11247		11247

Q.6 The following balances appear in A’s books which are kept on the single entry basis…..

Q.6 The following balances appear in A’s books which are kept on the single entry basis:

	31-12-2016 (Rs.)	31-12-2017 (Rs.)
Capital	50,000	48,000
Creditors	30,000	35,000
Furniture	5000	4500
Stock	50,000	46,500
Debtors	20,000	23,000
Bank Account	5000	9000

‘A’ has been regularly transferring Rs. 600 a month from his business bank account to his personal bank account by way of drawings. He took stock worth Rs. 1500 for his personal use. Depreciation of furniture has been provided @ 10% p.a.

Required:

Calculate profit for the year 2017.

Solution:

Mr. A Statement of Affairs Opening As on XXXX
Assets	Amount (Rs.)	Liabilities	Amount (Rs.)
Furniture	5000	Creditors	30,000
Stock	50,000	Capital (Balancing Figure)	50,000
Debtors	20,000	Note: Also given in the question
Bank Account	5000

	80,000		80,000

Mr. A Statement of Affairs Closing As on XXXX
Assets	Amount (Rs.)	Liabilities	Amount (Rs.)
Furniture 5000		Sundry Creditors	35,000
Less Depreciation (500)	4500	Capital (Balancing Figure)	48,000
Stock	46,500	Note: Also given in the question
Debtors	23,000
Bank Account	9000


	83,000		83,000

Mr. A Statement of Profit & Loss For Year ended XXXX
Capital Opening	50,000
Add Drawings (600 x 12)+1500	8700
Less Opening Capital Closing	(48,000)

Net Profit During the year	10,700

Q.7 Ahsan Motors Ltd consigned to their agent Wasim Motors in Lahore…..

Q.7 Ahsan Motors Ltd consigned to their agent Wasim Motors in Lahore. Two cars costing Rs. 20,000 for sale on the basis of 8 per cent commission plus 2 per cent del-credere commission. Wasim Motors paid selling expenses amounting to Rs. 1300. Ahsan Motors Ltd. paid for carriage, freight and insurance Rs. 1700. Consignee sold one car for Rs. 13000 and the second car was sold for Rs. 13,500. Show the ledger in the books of both the parties assuring that Wasim Motors settled the account with Ahsan Motors Ltd.

Solution:

Consignment to Lahore A/C
Date	Particulars	Amount	Date	Particulars	Amount
	Goods Sent on Consignment	20,000		Wasim’s A/C (Sales)	26,500
	Cash A/C (Consignor’s Expenses)	1700
	Wasim’s A/C (Consignee’s Expenses)	1300
	Wasim’s A/C (Consignee’s Commission) (26,500 x 0.10)	2650

	Profit Transferred to Profit & Loss A/C	850
		26,500			26,500

Wasim’s A/C
Date	Particulars	Amount	Date	Particulars	Amount
	Consignment to Lahore A/C	26,500		Consignment to Lahore A/C	1300
				Consignment to Lahore A/C	2650


				Balance c/d (Bank)	22,550

		26,500			26,500

Goods Sent on Consignment A/C
Date	Particulars	Amount	Date	Particulars	Amount
	Trading A/C	20,000		Consignment to Lahore Motors A/C	20,000

		20,000			20,000

Q.8 Asif Ltd. with an authorized capital of 100,000 shares of Rs. 10 each, passed…..

Q.8 Asif Ltd. with an authorized capital of 100,000 shares of Rs. 10 each, passed a resolution in a general meeting to issue 40,000 shares at a discount of 5%. 10,000 shares were issued to directors and 30,000 shares were offered to general public. Applications were received for 25,000 shares and subsequently shares were allotted.

Record the transactions in the books of the company and show the reflection in balance sheet.

Solution:

Journal
Date	Details	Dr. Rs.	Cr. Rs.
	Bank A/c	95,000
	Discount on Issuance of Shares A/c	5000
	Ordinary Share Capital A/c		100,000
	(10,000 shares issued to directors @5% discount)

	Bank A/c	237,500
	Ordinary Share Application A/c		237,500
	(Application received with money for 25,000 shares)

	Ordinary Share Application A/c	237,500
	Discount on Issuance of Shares A/c	12,500
	Ordinary Share Capital A/c		250,000
	(25,000 shares issued at 5% discount to shareholders)

Asif Ltd. Balance Sheet as at ……
Assets	Rs.	Liabilities	Rs.
Bank	332,500	Authorized Capital
Discount on issuance of shares	17,500	100,000 @ 10 each	10,00,000
(35,000 x 10) x 0.05=17,500		Issued, Subscribed & Paid up Capital
		35,000 @ 10 each	350,000

	350,000		350,000