Accountancy & Auditing 2025

ABC Traders is a sole proprietorship owned by Mr. Ali. Below are the financial details of the business as of December 31, 2024: i. Cash in hand: PKR 50,000 ii. Accounts Receivable: PKR 80,000 iii. Inventory: PKR 120,000 iv. Office Equipment (at cost): PKR 200,000. v. Accumulated Depreciation on Office Equipment: PKR 40,000 vi. Accounts Payable: PKR 60,000 vii. Loan Payable to Bank: PKR 100,000 viii. Owner's Capital (as of January 1, 2024): PKR 300,000 ix. Owner's Drawings during the year: PKR 30,000 x. Net Income earned during the year: PKR 90,000 Required: a) Categorize the above details under different heads of accounting equation. b) Prepare the balance sheet of ABC Traders as of December 31, 2024 using the information above.

Continued with the data provided in Question No 1, Additional Adjustments in the accounts of ABC Traders as of December 31, 2024 are as follow: a) Accrued Salaries of PKR 10,000 are unpaid and unrecorded. b) Office Equipment Depreciation: Straight-line method over 5 years with no residual value. c) Unearned Revenue of PKR 15,000 was incorrectly recorded as sales revenue. d) Supplies Expense of PKR 5,000 needs to be recorded for supplies used during the year. e) Accrued Interest on the bank loan of PKR 4,000 remains unpaid and unrecorded. Required: a) Prepare the necessary adjusting journal entries for the above adjustments. b) Prepare an Income Statement for the year ended December 31, 2024. c) Update the Balance Sheet to reflect these adjustments.

XYZ Corporation, a merchandising company, is preparing its financial records for the year ended December 31, 2024. Below are the extracted balances from the general ledger: Balances of the Items Amount in PKR Cash: 70,000 Accounts Receivable: 200,000 Inventory (Beginning): 150,000 Purchases: 500,000 Purchase Returns and Allowances: 30,000 Sales Revenue: 900,000 Sales Returns and Allowances: 20,000 Office Supplies: 10,000 Prepaid Insurance: 24,000 Office Equipment: 300,000 Accumulated Depreciation - Office 80,000 Equipment: Accounts Payable: 90,000 Salaries Payable: 12,000 Bank Loan Payable (Non-Current): 150,000 Salaries Expense: 100,000 Utilities Expense: 45,000 Rent Expense: 60,000 Depreciation Expense: 30,000 Owner's Capital (January 1, 2024): 400,000 Owner's Drawings: 50,000 Additional Information for Adjustments i. Inventory at the end of the year is PKR 120,000. ii. Office supplies used during the year are PKR 6,000. iii. Insurance expired during the year amounts to PKR 8,000. iv. Accrued salaries at year-end are PKR 15,000. v. Depreciation on office equipment is recorded using the straight-line method over 10 years (no residual value). Required: a) Prepare an unadjusted Trial Balance as of December 31, 2024. b) Incorporate the adjustments and prepare the adjusted Trial Balance.

Ali, Bilal, and Sara formed a partnership business on January 1, 2024, under the name ABS Traders. The partners agreed to share profits and losses in the ratio 3:2:1 respectively. The following balances were provided at the end of the first year, December 31, 2024: Particulars Amount (PKR) Cash 80,000 Accounts Receivable 150,000 Inventory 200,000 Furniture & Fixtures 100,000 Accounts Payable 90,000 Loan Payable 110,000 Ali's Capital (Jan 1, 2024) 200,000 Bilal's Capital (Jan 1, 2024) 150,000 Sara's Capital (Jan 1, 2024) 100,000 Ali's Drawings 30,000 Bilal's Drawings 20,000 Sara's Drawings 10,000 Net Income for the Year 120,000 Required: i. Using the data provided, prepare an unadjusted trial balance as of December 31, 2024. ii. Distribute the Net Income of PKR 120,000 among the partners (Ali, Bilal, and Sara) based on their agreed profit-sharing ratio of 3:2:1. iii. Calculate the adjusted capital balances for each partner after considering their profit ratio. iv. Prepare the Capital Accounts for Ali, Bilal, and Sara in a T-account format or in a statement form.

ABC Manufacturing produces custom furniture. Below are the details for the month of November 2024: Accounting Activities/Items Amounts in PKR Beginning Balances: Raw Materials Inventory (Nov 1, 2024): 120,000 Work-in-Process (WIP) Inventory (Nov 1, 2024): 80,000 Finished Goods Inventory (Nov 1, 2024): 150,000 Transactions During November: Raw materials purchased during November 350,000 (paid in cash): Direct materials issued to production: 280,000 Indirect materials issued: 50,000 Total direct labor incurred: (80% paid in cash; 200,000 20% accrued). Total indirect labor incurred (paid in cash): 60,000 Total factory overhead incurred including: 250,000 ○ Depreciation on machinery: PKR 70,000 Ο Utilities: PKR 50,000 Ο Other factory expenses: PKR 130,000 Manufacturing overhead applied to production at 120% of direct labor cost. Ending Balances Raw Materials Inventory (Nov 30, 2024): 140,000 Work-in-Process (WIP) Inventory (Nov 30, 2024): 100,000 Finished Goods Inventory (Nov 30, 2024): 180,000 Sales Total finished goods transferred to Cost of Goods Sold: 650,000 Total sales for November (80% received in cash, 20% on account). 800,000 Required: a) Prepare the Raw Materials Inventory T-account, including purchases, usage, and ending balance. b) Calculate the total manufacturing costs added to production during November. c) Prepare the Work-in-Process Inventory T-account, including beginning balance, costs added, and ending balance.

XYZ Furniture Ltd. manufactures wooden chairs. The following standard costs were established for producing one chair: Cost Standard Rate Component Standard Quantity per Chair Direct PKR 500 per unit 2 units Materials Direct Labor PKR 300 per hour 4 hours Factory PKR 100 per Applied at a rate of Overhead direct labor hour 50% of direct labor cost During November 2024, the company produced 1,000 chairs, and the following actual data was recorded: i. Materials: a. 2,100 units of direct materials were purchased and used. b. Total cost of materials: PKR 1,120,000. ii. Labor: a. 3,800 hours of direct labor were worked. b. Total labor cost: PKR 1,160,000. iii. Factory Overhead: a. Actual overhead incurred: PKR 200,000. b. Overhead applied at the standard rate based on actual direct labor hours. Required: Calculate and interpret the results of: i. the Material Price Variance and the Material Quantity Variance. ii. the Labor Rate Variance and the Labor Efficiency Variance. iii. the Overhead Spending Variance and the Overhead Efficiency Variance.

ABC Café operates a specialty coffee shop that sells handcrafted beverages and desserts. The café incurs a Total Fixed Costs: PKR 1,000,000 including monthly rent of PKR 500,000, salaries of PKR 300,000, Utilities and Miscellaneous Expenses of PKR 200,000. The owner wants to determine its break-even point to plan for future growth. The following data is provided: Product Line Information 1. Coffee Drinks (Regular) 2. Desserts (Premium) i. Selling Price: PKR 400 per cup ii. Variable Cost: PKR 180 per cup iii. Current Sales Mix: 70% i. Selling Price: PKR 600 per item ii. Variable Cost: PKR 280 per item iii. Current Sales Mix: 30% Required: i. Calculate the contribution margin for both coffee drinks and desserts. ii. Compute the weighted average contribution margin (WACM) based on the sales mix. iii. Determine the break-even sales in units for the café.