CSS Accounting and Auditing Past Paper 2018

Instructions specific to this paper

• Attempt ONLY FOUR questions from PART-II by selecting TWO questions from
• Use of Calculator is allowed.
• 80% of the electricity bill, 75% of insurance expired and 70% of Rent of Premises associated
• Beginning Inventory (January 1, 2016) and Ending Inventory (December 31, 2016) in Rs.
• Factory overhead is applied @ Rs. 5 per machine hour. The total machine hours are 26400

Questions

1. Q. 220 marks

   Following is the summary of closing balances (unadjusted trial balance) of Muddasar Co. for the year ended on December 31, 2016. Accounts Amount (Rs.) Accounts Amount (Rs.) Cash 80000 Accounts Receivable 35200 Store Supplies 5000 Prepaid Rent 11240 Furniture 7600 Accumulated Depreciation on Furniture 1520 Insurance 8500 Plant & Machinery 45000 Accumulated Dep. on Capital 165000 Plant & Machinery 9000 Drawings 31000 Accounts Payable 8500 Salaries Expenses 9500 Sales Revenue 212980 Purchases 95000 Advertising Expenses 7000 Purchase Returns 6500 Wages 10 000 Opening Merchandise Inventory 45000 Sales Returns 3000 Miscellaneous Expenses 5000 Commercial Expenses 5460 Additional Information (adjustments) needs settlements at the end of period to show the true picture of the financial performance of Co. i. Closing Merchandise Inventory valued at Rs. 35 000 ii. Store supplies on hand at the end of year is Rs. 1500 iii. It is noticed that Prepaid Rent amounting Rs. 9240 was expired during the period iv. Prepaid Insurance is valued Rs. 1500 at the end of the period v. Outstanding salaries are Rs. 3000 vi. Depreciation is charged @ 10 % for Plant & Machinery and @ 7% for Furniture Required: Based upon above information, prepare Adjusting Entries, Adjusted Trail Balance and Income Statement & Balance Sheet.

2. Q. 410 marks

   (a) The XYZ Co. purchased a large machine 5 years ago at a total cost of Rs. 400,000. The accumulated depreciation on this machine is Rs. 290,000. The corporation sold the machine at Rs.10, 000 gain. Required: Calculate the amount would be reported as cash flow from this sale. (b) On April 1, 1993 Ayesha Industries purchased new equipment at a cost of Rs. 325000. (10) (20) Useful life of this equipment was estimated at 5 years, with a residual value of Rs. 25000. For tax purposes, however, this equipment is classified as “3- year property”. Required: Compute the annual depreciation expense for each year until this equipment becomes fully depreciated under each depreciation methods listed below (Because you will record depreciation for only a fraction of a year in 1993, depreciation will extend through in all methods except MACRS) and show supporting computations. i. Straight –line, with depreciation for fractional years rounded to the nearest whole month. ii. 20%-declining-balance method, with the half-year convention. Limit depreciation in 1998 to an amount which reduces the undepreciated cost to the estimated residual value. iii. Sum-of-the-years’-digits, with the half-year convention iv. MACRS accelerated rates for “3-year property”

3. Q. 610 marks

   (a) Delight Food Products produces Squash Cubes by continuous processing in three departments i.e. A, B and C. During November 2017 Department B received 8000 cubes from the Department A (preceding department) and transferred 5500 cubes to Department C (next department). During the month there was a normal loss of 400 cubes at the end of process. Moreover, 600 cubes, 75% completed, were lost due to negligence of a worker in the B department. There was no work in process beginning inventory, the ending inventory was estimated as 60% completed. Following product costs were charged to the department during the month of November: Cost from preceding department Rs. 16400 Direct Material 2000 Direct Labour 3625 Factory Overhead 5075 27100 It is noticed that all materials are added at the start of process in Department B. Required: Prepare the Cost of Production Report for the month of November, 2017(for Department B). (b) Ahmad Enterprises produces and sells the finest quality golf clubs in all of Clay County. (10) (20) The company expects the following revenues and costs in 2017 for its Elite Quality golf club sets: Revenues (400 sets sold @ Rs. 600 per set) Rs. 240,000 Variable costs Rs. 160,000 Fixed costs Rs. 50,000 Required: How many sets of clubs (unit) must be sold for Ahmad Enterprises to reach their breakeven point?

4. Q. 720 marks

   XYZ Enterprises applies factory overhead @ 60% of direct labour cost. During the year 2016 following actual costs were recorded: (Rs.) Direct Labour cost 580000 Factory Overhead cost 428000 At the end of the year following balances appear in the some of the Control Accounts: Cost of Goods Sold 1750000 Finished Goods 500000 Work in Progress 250000 Required: (i) Based upon above given information, determine under-applied or over-applied factory overhead. (ii) Pass general journal entry to close factory overhead applied account at the end of year. (iii) Pass general journal entries to dispose off under applied or over applied factory overhead in the following cases: (a) The variance is considered as a significant amount (b) The variance is considered as an insignificant amount (c) The variance is considered as cause by poor scheduling of production and excessive spending

5. Q. 810 marks

   (a) Ayesha & Co. Prepared following estimates for the year 2017: Fixed factory overhead (in Rs) 450 000 Variable factory overhead (in Rs) 600 000 Direct labour hours 200 000 However, actual results for the cost for the year 2017 were recorded as follows: Fixed Factory overhead (in Rs) 450 000 Variable Factory overhead (in Rs) 680 000 Direct labour hours 220 000 Required: based upon above given information, Calculate: (i) Total Factory overhead variance (ii) Capacity variance (iii) Budget variance (b) Calculate the total fixed cost of the shipping department of Areeba & Co. based upon the (10) (20) following information for the year 2016: Salaries Rs.800,000 75 percent of employees on guaranteed contracts Packaging Rs.400,000 depending on size of item(s) shipped Postage Rs.500,000 depending on weight of item(s) shipped Rent of warehouse space Rs.250,000 annual lease

Standard FPSC instructions

Printed on this and every CSS paper.

• Part-II is to be attempted on the separate Answer Book.
• All the parts (if any) of each question must be attempted at one place instead of at different places.
• Write Q. No. in the Answer Book in accordance with Q. No. in the question paper.
• No page/space be left blank between the answers. All the blank pages of the Answer Book must be crossed.
• Extra attempt of any question or any part of the attempted question will not be considered.