Prepare Income Statement with following data

PirMehr Ali Shah

Arid Agriculture University, Rawalpindi

Office of the controller of Examinations

Mid Exam / FALL 2020 (Paper Duration 24 hours)

To be filled by Teacher

Course No.: MGT-423                                                                          Course Title: Cost Accounting

Total Marks: 18                                                                                     Date of Exam: 03.12.2020

Degree: BS Coomerce            Semester: 3rd                                                        Section: …

Q.No. 1 2 3 4 5 6 7 8 9   10 Marks

Obtained/

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Total Marks in Words:
Name of the teacher: M. Aleem Akhtar
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Registration No.: ………………………………………….……… Name:……………………………………………………..

 

 

Answer the following questions.

Q.No.1      Marks (3)

Prepare Income Statement with following data.

  • Net Income for the year Rs. 1.2 Million
  • Rate of Income 0.1 time of the sales
  • Gross profit 0.4 time of sales
  • Marketing Expense 10% of sales
  • 7% bonds payable represent 37.5% of total liabilities Rs. 2 Million.

 

Answer:                                                                                                                                                                              

                                                                                                                                                                                               

                                                                                                                                                                                               

                                                                                                                                                                                               

 

 

 

 

 

 

 

Q.No.2            Marks (5)

 

Following is trial balance of Israr Industrial Company Limited as on January 31, 2108.

  Debit (Rs.) Credit (Rs.)  
Notes Receivable 27,405 Notes Payable 17,300
Accounts Receivable 32,200 Account Payable 5600
Cash 39,500 Taxes Payable 12,000
Finish goods 14,800 Rent Payable 2500
WIP 16,300 Sales 423,610
Raw Material 35,600 Capital 100,000
Prepaid Insurance 2700 Retained earnings 25,800
Equipment 126,000 Accumulated depreciation 40,400
Material Purchased 123,000    
Direct Labor 82,000    
FOH 80,705    
Selling Cost 36,800    
Admin. Cost 10200    

 

Following further information are also available: FOH applied at rate of 80% of direct labor cost. Inventories as on December 31, 2018: Material… Rs. 16200, WIP. Rs 40,500 and Finish goods. Rs21,300. Debit balance of FOH costs account Rs.15105 Represents under applied FOH. This variance is distributed over entire production of the period.

Required: (a) Statement of cost of goods manufactured and sold for the year ended December 31, 2018 showing cost of goods sold at normal and actual.

(b) Income statement for the year ended December 31, 2018 and balance sheet as on date.

 

 

Answer:                                                                                                                                                                              

                                                                                                                                                                                               

                                                                                                                                                                                               

                                                                                                                                                                                               

 

 

 

 

 

 

 

 

 

Q.No.3.        Marks (6)

Topper Inc. had following inventories on March 1:  Finish goods Rs. 15000, WIP Rs. 19070 and Materials Rs. 14000.

The work in process control three jobs: Job No. 62 Materials Rs. 2800, Labor Rs. 2100 and Applied FOH Rs. 1680. Job No. 63 Materials Rs. 3400, Labor Rs. 2700 and Applied FOH Rs.2160. Job No. 64 Materials Rs. 1800, Labor Rs. 1350 and Applied FOH Rs.1080.

The following information pertains to March operations:

  • Material purchased and received Rs22000
  • Material requisitioned for production Rs. 21000. Of this amount Rs. 2400 was for indirect material; the difference was distributed Rs. 5300 to job 62, Rs. 7400 to job 63 and Rs.5900 to job 64.
  • Material returned to storeroom from factory Rs.600 of which Rs 200 was indirect material and balance job 63.
  • Material returned to vendors Rs 800.
  • Payroll after deduction 7.5% for FICA tax and 11.5% for employee’s income tax was Rs. 30,780. The payroll amount due the employees was paid during March.
  • Of the payroll direct labor represented 55%, Indirect labor 20%, Sales salaries 15% and admin. Salaries 10%. The direct labor cost was distributed: Rs. 6420 to job 62, Rs. 8160 to job 63 and Rs. 6320 to job 64.
  • An additional 13.7% was entered for employer payroll taxes, representing the employer’s 7.5% FICA tax, 5.4% state unemployment insurance tax, and 0.8% federal unemployment insurance tax. Employer payroll taxes related to direct labor are charged to factory overhead control account.
  • FOH other than any previously mentioned, amounted Rs. 5500 included in this figure were Rs, 2000 for depreciation of factory building and equipment Rs.250 for expired insurance on the factory. The remaining overhead, RS. 3250 was unpaid at the end of march.
  • FOH applied to production: 80% of the direct labor cost to be charged to three job based on labor cost for march.
  • Jobs 62 and 63 were completed and transferred to the finish goods warehouse.
  • Both jobs 62 and 63 were shipped and billed at gross profit of 40% of the cost of goods sold.
  • Cash collections from accounts receivable during March were Rs 69,450.

 

Required: (1) Prepare job order cost sheets to past beginning inventories data  (2) Journalize the March transactions with current posting to general ledger inventory accounts and to job cost sheets.  (3) Prepare schedule of inventories on March 31.

 

 

Answer:                                                                                                                                                                              

                                                                                                                                                                                               

                                                                                                                                                                                               

                                                                                                                                                                                               

Q.No.4           Marks (4)

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Answer:                                                                                                                                                                              

                                                                                                                                                                                               

                                                                                                                                                                                               

                                                                                                                                                                               

                                                                                                                                                                                               

                                                                                                                                                                                               

                                                                                                                                                                               

 

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