Advanced accounting keybook solution sohail afzal pdf PDF

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Adv anc ed Fin anc ial Acco un tin ha zal Key Bo ok Solu tion Advanc anced Financ ancial Accoun untin tingg So Soha hailil Af Afzal Book Solution

Chapters List  Joint Stock Company

(Page 2 – 7)

 Issue of Bonus Shares and Right Shares

(Page 8 – 21)

 Debentures Bonds and TFCs

(Page 22 – 43)

 Final Accounts

(Page 44 – 79)

 Analysis of Accounting Ratios

(Page 80 – 111)

 Consignment Account

(Page 112 – 143)

 Contract Account

(Page 144 – 159)

 Hire Purchase and Hire Installment

(Page 160 – 205)

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Page 1 of 206

Advanc anced Financ ancial Accoun untin tingg So Soha hailil Af Afzal Book Solution Adv anc ed Fin anc ial Acco un tin ha zal Key Bo ok Solu tion

Chapter - 1 JOINT STOCK COMPANIES INTRODUCTION

Solutions Q.1 (a) Date

2010 July. 15

JOURNAL Details

Bank Account

L/F

Dr.

Debit

Credit

(Rs.)

(Rs.)

20,00,000

Ordinary Share Application Account

20,00,000

(Money received alongwith application for 200,000 shares @ Rs. 10 each) July. 31

Ordinary Share Application Account

Dr.

20,00,000 20,00,000

Ordinary Share Capital Account (Applicants allotted the shares) (b) Date

2010 July. 15

JOURNAL Details

Bank Account

L/F

Dr.

Debit

Credit

(Rs.)

(Rs.)

23,00,000

Ordinary Share Application Account

23,00,000

(Money received alongwith application) Ordinary Share Application Account July. 31

Dr.

Ordinary Share Capital Account (200,000 shares allotted to applicants)

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23,00,000 23,00,000

Page 2 of 206

Advanc anced Financ ancial Accoun untin tingg So Soha hailil Af Afzal Book Solution Adv anc ed Fin anc ial Acco un tin ha zal Key Bo ok Solu tion “

Ordinary Share Application Account

Dr.

300,000

Bank Account

300,000

(Refund of money on 30,000 shares) SOHAIL LTD. Balance Sheet as at………. Rs. Assets Capital Assets: Bank Balance 40,00,000

Share Capital & Liabilities Authorized Capital: 400,000 ordinary shares of Rs. 10 each Issued & Subscribed & Paid up: Capital 200,000 ordinary shares of @ Rs. 10 each

Q.2 Date 2010 June. 1 June. 15

June. 30

June. 30

20,00,000

20,00,000 20,00,000

JOURNAL Details

20,00,000 L/F

Bank Account Dr. Ordinary Share Capital Account (10,000 shares taken by directors) Bank Account Dr. Ordinary Share Application Account (Money received alongwith applications for 35,000 shares) Ordinary Share Application Account Dr. Ordinary Share Capital Account (35,000 shares allotted to applicants) Bank Account Dr. Ordinary Share Capital Account (5000 shares taken up by underwriters as per assignment)

DECENT LTD. Balance Sheet as at 30th June 2010 Share Capital & Liabilities Rs. Assets Authorized Capital: Capital Assets: 50,000 ordinary shares of Rs. 10 each

Rs.

500,000 Bank Balance

Debit (Rs.) 100,000

Credit (Rs.) 100,000

350,000 350,000

350,000 350,000 50,000 50,000

Rs. 500,000

Issued & Subscribed & Paid up: Capital 50,000 shares of @ Rs. 10

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Page 3 of 206

Advanc anced Financ ancial Accoun untin tingg So Soha hailil Af Afzal Book Solution Adv anc ed Fin anc ial Acco un tin ha zal Key Bo ok Solu tion each

500,000 500,000

Q.3 Date 2010 Nov. 1 Nov. 15

Nov. 15

-

-

500,000

JOURNAL Details Preliminary Expenses Account Ordinary Share Capital Account (1000 shares taken by promoter) Bank Account Ordinary Share Application Account (5000 shares taken by directors) Bank Account Ordinary Share Application Account (Money for 6000 shares received) Ordinary Share Application Account Ordinary Share Capital Account (4000 shares allotted to applicants) Ordinary Share Application Account Bank Account (2000 applicant money refunded)

L/F Dr.

Debit (Rs.) 50,000

50,000 100,000

Dr.

100,000 300,000

Dr.

300,000 200,000

Dr.

200,000 100,000

Dr.

100,000

A LTD. Balance Sheet as at………. Share Capital & Liabilities Rs. Assets Deferred Cost: Authorized Capital: 500,000 Preliminary Expenses 10,000 ordinary shares of Rs. 50 each Capital Assets: Issued, subscribed & paid up capital: 1000 Shares by promoter 50,000 Bank Balance 2000 Shares by directors 100,000 200,000 4000 Shares by public 350,000 Q.4 Date 2010 Jan. 15

JOURNAL Details

L/F

Bank Account Dr. Ordinary Share Application Account (Money received for 35,000 shares @ Rs. 11 each)

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Credit (Rs.)

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Rs. 50,000 300,000

350,000

Debit (Rs.) 385,000

Credit (Rs.) 385,000

Page 4 of 206

Adv anc ed Fin anc ial Acco un tin ha zal Key Bo ok Solu tion Advanc anced Financ ancial Accoun untin tingg So Soha hailil Af Afzal Book Solution Jan. 30

Jan. 30

Ordinary Share Application Account Ordinary Share Capital Account Premium on Issue of Shares Account (200,000 shares allotted at a premium of 10%) Ordinary Share Application Account Bank Account (Money refund for 15,000 shares)

Dr.

220,000 200,000 20,000

Dr.

165,000 165,000

Balance Sheet as at 30th Jan 2010 Share Capital & Liabilities Rs. Assets Capital Assets: Authorized Capital: 10,00,000 Bank Balance 100,000 shares of Rs. 10 each Issued & Subscribed & Paid up: 20,000 shares of @ Rs. 10 each 200,000 Reserves: Share premium 20,000 220,000 Q.5 Date

JOURNAL Details

L/F

Bank Account Dr. Ordinary Share Application Account (Money received with applications for 15,000 shares @ Rs. 9 each) Ordinary Share Application Account Dr. Discount on Issue of Shares Account Dr. Ordinary Share Capital Account (15,000 shares to public of 10% discount)

Rs. 220,000

220,000

Debit (Rs.) 135,000

135,000

135,000 15,000

ASIF BASHIR LTD. Balance Sheet as at 30th Jan 2010 Share Capital & Liabilities Rs. Assets Deferred Cost: Authorized Capital: 100,000 shares of Rs. 10 each Issued Capital: 20,000 shares of Rs. 10 each

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Credit (Rs.)

10,00,000 Discount on Issue of Shares

150,000

Rs. 15,000

Capital Assets: 200,000 Bank Balance

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135,000

Page 5 of 206

Advanc anced Financ ancial Accoun untin tingg So Soha hailil Af Afzal Book Solution Adv anc ed Fin anc ial Acco un tin ha zal Key Bo ok Solu tion Subscribed & Paid up Capital: 15000 share of Rs. 10 each

150,000 150,000

Q.6 Date

150,000

JOURNAL Details

L/F

Debit

Credit

(Rs.)

(Rs.)

2010 Jan. 1

Machinery Account

Dr.

50,00,000 50,00,000

Asghar Account (Being purchase of machinery) Jan. 1

Asghar Account

Dr.

50,00,000 50,00,000

Ordinary Share Capital Account (5,000 shares issued to vender @ Rs. 1000 each) Jan. 10

Bank Account

Dr.

2,50,00,000 2,50,00,000

Ordinary Share Application Account (Application money received for 25,000 shares) Jan. 20

Bank Account

Dr.

50,00,000 50,00,000

Ordinary Share Capital Account (5000 shares taken by underwriters) Ordinary Share Application Account “

Dr.

Ordinary Share Capital Account

2,50,00,000 2,50,00,000

(25,000 shares allotted to public)

Balance Sheet as at 30th Jan 2010 Share Capital & Liabilities Rs. Assets Fixed Assets: Authorized Capital:

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Rs.

Page 6 of 206

Advanc anced Financ ancial Accoun untin tingg So Soha hailil Af Afzal Book Solution Adv anc ed Fin anc ial Acco un tin ha zal Key Bo ok Solu tion 50,000 shares @ of Rs. 1000 each

5,00,00,000 Machinery

Issued Capital:

50,00,000

Capital Assets:

35,000 shares @ of Rs. 10 each

3,00,00,000

3,50,00,000 Bank Balance

Subscribed & Paid up Capital: 35,000 share @ of Rs. 10 each

3,50,00,000 3,50,00,000

3,50,00,000

Q.7 (a) Date

At Per

JOURNAL Details

L/F

Land & Buildings Account Machinery Account Furniture Account Debtors Account Sunday Creditors Account M/s Noor & Sons Account (Assets a liabilities acquired for a purchase consideration of Rs. 100,000) M/s Noor & Sons Account Ordinary Share Capital Account (9,900 shares allotted at Rs. 10 (per value) in full settlement of purchase consideration) (a) Date

At Per

Dr. Dr. Dr. Dr.

Debit (Rs.) 50,000 40,000 14,000 5,000

Credit (Rs.)

10,000 99,000

Dr.

99,000 99,000

JOURNAL Details

L/F

Debit (Rs.)

Credit (Rs.)

First Entry is Same. M/s Noor & Sons Account

Dr.

99,000

Discount on Issue of Share Account

Dr.

11,000

Ordinary Share Capital Account

110,000

(11,000 shares allotted at 10% discount)

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Page 7 of 206

Advanc anced inancia ciall Acc Accou ountin ntingg Soh Sohail Afz fzal Keyy Bo Book Solut lution Adv anc ed FFinan inan cia ou ntin ail A fz al Ke ok So lut ion

Chapter - 2 ISSUANCE OF BONUS SHARES & RIGHT SHARES

Solutions Q.1

Existing capital

= C = Rs. 40,00,000

Free Reserves

= FR = Rs. 50,00,000

Quantum of Bonus

=Q

Increased capital

= C+Q

Residual Reserves

= FR -Q Q = = =

 

(,,),, ,, 



Q = Rs. 32,00,000 CHECK:

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Page 8 of 206

Advanc anced inancia ciall Acc Accou ountin ntingg Soh Sohail Afz fzal Keyy Bo Book Solut lution Adv anc ed FFinan inan cia ou ntin ail A fz al Ke ok So lut ion Residual reserves should be atleast 25 % of increased capital: Residual Reserves

= FR – Q = 50,00,000 – 32,00,000 = Rs. 18,00,000

Increased Capital

= C+ Q = 40,00,000+32,00,000 = Rs. 72,00,000

Residual Reserves

= 72,00,000 x 25 % = Rs. 18,00,000

Free Reserves

= FR = Rs. 32,00,000

Existing Capital

=C=

,, 

x 100 = Rs. 20,00,000

Maximum amount of bonus = Q Q

=



=

(,,),,

= Q

=





,,,,  ,, 

= Rs. 21,60,000

CHECK: Residual reserves should be at least 25 % of increased capital: Residual Reserves

= FR – Q = 32,00,000 – 21,60,000 = Rs. 10,40,000

Increased Capital

= C+ Q = 20,00,000+ 21,60,000 = Rs. 41,60,000

Residual Reserves

Q.3 Date

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= 41,60,000 x 25 % = Rs. 10,40,000

Details

JOURNAL ENTRIES L/F

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Debit (Rs.)

Credit (Rs.)

Page 9 of 206

Advanc anced inancia ciall Acc Accou ountin ntingg Soh Sohail Afz fzal Keyy Bo Book Solut lution Adv anc ed FFinan inan cia ou ntin ail A fz al Ke ok So lut ion Reserve Fund A/c Bonus to Shareholders A/c (Being the Bonus declared) Bonus to Shareholders A/c Share Capital A/c (Being the issuance of bonus shares at par)

Dr.

18,00,000 18,00,000

Dr.

18,00,000 18,00,000

WORKING NOTES: (w-1) Amount of Bonus: 30,00,000 x 60% = Rs. 18,00,000

Q.4 Date

JOURNAL ENTRIES Details Reserve Fund A/c Bonus to Shareholders A/c (Being the Bonus declared) Bonus to Shareholders A/c Share Capital A/c (Being the issuance of bonus shares at par)

L/F

Dr.

Debit (Rs.) 300,000

Credit (Rs.) 300,000

300,000

Dr.

300,000

WORKING NOTES: (w-1) No. of Bonus Shares:  

=

Existing share x

=

6000 x ½ = 3000 shares

 

(w-2) Amount of Bonus = 3000 share x Rs. 100 = Rs. 300,000 Q.5 Date

JOURNAL ENTRIES Details Profit & Loss A/c General Reserve A/c Bonus to shareholders A/c (Being the Bonus declared)

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L/F

Dr. Dr.

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Debit (Rs.) 250,000 150,000

Credit (Rs.)

400,000

Page 10 of 206

Advanc anced inancia ciall Acc Accou ountin ntingg Soh Sohail Afz fzal Keyy Bo Book Solut lution Adv anc ed FFinan inan cia ou ntin ail A fz al Ke ok So lut ion Bonus to Shareholders A/c Share Capital A/c (Being the issuance of bonus shares at par)

Dr.

400,000 400,000

WORKING NOTES: (w-1) Amount of Bonus: =

40% of paid up capital

=

40% of 10,00,000 = Rs. 400,000

Bonus out of Profit & Loss A/c

= Rs. 250,000

Bonus out of General Reserve A/c

= Rs. 150,000

Q.6 Date

JOURNAL ENTRIES Details Share Premium A/c General Reserve A/c Profit & Loss A/c Bonus to shareholders A/c (Being the Bonus declared) Bonus to Shareholders A/c Share Capital A/c (Being the issuance of bonus shares at par)

L/F

Dr. Dr. Dr.

Debit (Rs.) 100,000 200,000 200,000

Credit (Rs.)

500,000 Dr.

500,000 500,000

WORKING NOTES: (w-1) No. of Bonus Shares: =

Issued, subscribed & paid up share x

=

100,000 x

=

50,000 shares

 





(w-2) Amount of Bonus: 50,000 shares x Rs. 10

= Rs. 500,000

Bonus out of Share Premium A/c

= Rs. 100,000

Bonus out of General Reserve A/c

= Rs. 200,000

Bonus out of Profit & Loss A/c

= Rs. 200,000

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Page 11 of 206

Advanc anced inancia ciall Acc Accou ountin ntingg Soh Sohail Afz fzal Keyy Bo Book Solut lution Adv anc ed FFinan inan cia ou ntin ail A fz al Ke ok So lut ion AMENDED BALANCE SHEET AS AT 31-12-2010 Liabilities

Rs.

Authorized Capital: 400,000 shares of Rs. 10 each Issued & Subscribed & Paid up capital: 150,000 shares of Rs. 10 each Reserves: Share premium (200,000 – 100,000) General reserve (600,000 – 200,000) Profit & Loss A/c (350,000 – 200,000)

Q.7 Date

400,000 15,00,000 1,00,000 4,00,000 150,000 21,50,000

JOURNAL ENTRIES Details Machinery A/c Vendor A/c (Being the purchase of machinery) Vendor A/c Bank A/c Share Capital A/c Share Premium A/c (Being the issuance of shares to vendors) Profit & Loss A/c General Reserve A/c Bonus to shareholders A/c (Being the Bonus declared) Bonus to Shareholders A/c Share Capital A/c (Being the issuance of bonus shares)

L/F

Dr.

Debit (Rs.) 200,000

Credit (Rs.) 200,000

Dr.

200,000 25,000 140,000 35,000

Dr. Dr.

250,000 230,000

Dr.

480,000

480,000

480,000

WORKING NOTES: (w-1) No. of Shares issued to Vendor:  

=

Share Capital

= 1400 x 100 = Rs. 140,000

Share Premium

= 1400 x 25 = Rs. 35,000

 

,



= 1400 shares

(w-2) No. of Bonus Shares: www.paksights.com

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Page 12 of 206

Advanc anced inancia ciall Acc Accou ountin ntingg Soh Sohail Afz fzal Keyy Bo Book Solut lution Adv anc ed FFinan inan cia ou ntin ail A fz al Ke ok So lut ion  

=

Existing share x

=

12,000 x 2/5 = 4800 shares

 

(w-3) Amount of Bonus = 4800 share x Rs. 100 = Rs. 480,000 Bonus out of Profit & Loss A/c

= Rs. 250,000

Bonus out of General Reserve A/c

= Rs. 230,000 = Rs. 480,000

(w-4) Total No. of Shares: Existing shares

=

12,000

Shares issued to vender

=

1,400

Bonus shares

=

4,800 18,200

BALANCE SHEET Liabilities Authorized Capital: Issued, subscribed & paid up capital: 18,200 shares of Rs. 100 each General reserve (800,000 – 230,000) Profit & Loss A/c Share premium Creditors Provision for Tax

AS AT 31-12-2010 Rs. Assets 30,00,000 Fixed Assets: Land & Building 800,000 18,20,000 Plant & Machinery + Purchased 200,000 570,000 - Capital Assets: 35,000 Furniture 175,000 Stock 65,000 Debtors Bank (130,000 – 25,000)

26,65,000 Q.8 Date

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JOURNAL ENTRIES Details

Rs. 900,000 10,00,000 190,000 250,000 220,000 105,000

26,65,000

L/F

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Debit (Rs.)

Credit (Rs.)

Page 13 of 206

Advanc anced inancia ciall Acc Accou ountin ntingg Soh Sohail Afz fzal Keyy Bo Book Solut lution Adv anc ed FFinan inan cia ou ntin ail A fz al Ke ok So lut ion Long Term Debts A/c

170,000

Dr.

136,000 34,000

Share Capital A/c Share Premium A/c (Being the long term debts issuing ordinary shares at premium) Profit & Loss A/c

Dr.

General Reserve A/c

Dr.

70,000 30,000 100,000

Bonus to shareholders A/c (Being the Bonus declared) Bonus to Shareholders A/c

Dr.

100,000 100,000

Share Capital A/c (Being the issuance of bonus shares)

WORKING NOTES: (w-1) No. of shares issued against long term debts: =

, .

= 13,600 shares

Share Capital

= 13,600 x Rs. 100

= Rs. 136,000

Share Pr...