Accounting Answers

Zeeshan Co. Ltd’s net income was Rs. 400,000 in 2004 and
Rs. 160,000 in 2005. What percentage increase in net income
must the Co. achieve in 2006 to offset the decline in profits in
2005?

A firm prepares its annual accounts on June 30th. The ledger account shows insurance A/c (debit) Rs.800 as on July, 2005. On December 31, 2005 the annual insurance premium of Rs.2,100 became due and was paid. What amount would be charged for insurance expense as on June 30, 2006?

Modern Traders completed books of accounts, prepared Trial Balance for 30th June 2006. It found “debits” exceeded “credits” by $ 27,880 and was credited to suspense account, after sometime following errors were detected:
Sales returns book was undercast by $1,000.
Purchase of furniture for $3,000 was passed through purchase day book.
$3,750 paid as wages to workers for making show-cases was charged to wages account.
Purchase of $ 6,710 was posted to the debit of creditors account as $ 6,170.
A cheque for $2,000 received from Saleem was dishonoured & was passed to the debit of allowances account.
Goods costing $ 1,000 had been returned by a customer and were taken into stock but no entry was made in the books.
A sale of $ 2,000 to Imran & co. was credited to their account.
Sale amounting to $10,000 was passed through purchased day book. The customer’s account had however been correctly debited.
Required:
(A) Journal Entries (without narration) to rectify the errors with reasons.
(B) suspense Account

Zeeshan Co. Ltd’s net income was Rs. 400,000 in 2004 and
Rs. 160,000 in 2005. What percentage increase in net income
must the Co. achieve in 2006 to offset the decline in profits in
2005?

Balance Sheet of AA & Co. showed the following information as at December 31, 2005.

Account Receivables 225,300
Allowance for Doubtful Accounts 6,759
Following transactions took place during the year ended December 31, 2006.
Credit sales 1,245,500
Cash Sales 230,600
Cash collected 1,386,200
Doubtful accounts written off 2,300
Company has a policy of providing for 3% of outstanding Receivables as Allowance for doubtful accounts.

Required:
(a) Prepare the following accounts for the year as they would appear in the books of AA & Co. (Journal entries are not required) :

i) Accounts Receivable Account.
ii) Allowance for Doubtful Accounts.

(b) Compute the amount of allowance for doubtful accounts required at the end of the year.

A trader starts a business with Rs. 10,000 cash and a van worth Rs.5,000. At the end of his first year he has Rs.2,000 in the bank, stock worth Rs.5,000, debtors valued at Rs.2,000 and the van which is now worth Rs. 4,000. If he has withdrawn Rs.2,000 from the business during the year for his personal use, what is the amount of profit/loss for the year?

The opening balance in the Provision for Doubtful Debts was Rs.705. During the year, the direct write-offs amounted to Rs.30 and at the year end the Debtors account showed a balance of Rs.15,000 (after writing-off Rs.30). The charge to profit and Loss account for bad debt expense for the year including the direct write-off amounted to Rs.200. Calculate the percentage provision that had been made for doubtful debts at the year end

A firm prepares its annual accounts on June 30th. The ledger account shows insurance A/c (debit) Rs.800 as on July, 2005. On December 31, 2005 the annual insurance premium of Rs.2,100 became due and was paid. What amount would be charged for insurance expense as on June 30, 2006?

Allison and Josh are partners in a business. Allison’s capital is $60,000, and Josh’s capital is $100,000. Profits for the year are $80,000. They agree to share profits and losses as follows:

Allison Josh
Salaries $20,000 $40,000
Interest on capital 10% 10%
Remaining profits and losses 3/5 2/5
Allison’s share of the profits before paying salaries and interest on capital is:

15) Articles of partnership
A. are required to form a partnership by federal law.
B. are a formal written agreement that states the partners’ relationship.
C. may be an oral agreement.
D. Both b and c

18) Allison and Josh are partners in a business. Allison’s capital is $60,000, and Josh’s capital is $100,000. Profits for the year are $80,000. They agree to share profits and losses as follows:

Allison Josh
Salaries $20,000 $40,000
Interest on capital 10% 10%
Remaining profits and losses 3/5 2/5
Allison’s share of the profits before paying salaries and interest on capital is:

A.
$48,000.


B.
$22,000.

C.
$28,000.

D. $28,400.

19) When two proprietors decide to combine their businesses and form a partnership, GAAP usually requires that noncash assets be taken over at their _______ on the date of the partnership.
A. residual value
B. book value
C. fair market value
D. historical cost