PUNJAB PUBLIC SERVICE COMMISSION
COMBINED COMPETITIVE EXAMINATION
FOR RECRUITMENT TO THE POSTS OF
PROVINCIAL MANAGEMENT SERVICE, ETC.-2025
CASE NO. 36C2025
COMBINED COMPETITIVE EXAMINATION
FOR RECRUITMENT TO THE POSTS OF
PROVINCIAL MANAGEMENT SERVICE, ETC.-2025
CASE NO. 36C2025
SUBJECT: COMMERCE (PAPER-I)
TIME ALLOWED: THREE HOURS MAXIMUM MARKS: 100
TIME ALLOWED: THREE HOURS MAXIMUM MARKS: 100
NOTE:
i. All the parts (if any) of each Question must be attempted at one place instead of at different places.
ii. Write Q. No. in the Answer Book in accordance with Q. No. in the Q. Paper.
iii. No Page/Space be left blank between the answers. All the blank pages of Answer Book must be crossed.
iv. Extra attempt of any question or any part of the question will not be considered.
i. All the parts (if any) of each Question must be attempted at one place instead of at different places.
ii. Write Q. No. in the Answer Book in accordance with Q. No. in the Q. Paper.
iii. No Page/Space be left blank between the answers. All the blank pages of Answer Book must be crossed.
iv. Extra attempt of any question or any part of the question will not be considered.
Attempt Five Questions in All, Selecting minimum Two Questions from each Part. Only Non Programmable calculator is allowed.
PART-A
Q No.1 Facts-by-FAX sells facsimile machines, copiers, and other types of office equipment. On May 10, the company purchased for the first time a new “plain-paper” fax manufacturing from Mitsui Corporation. Transactions relating to this product during May and June were as follows:
| May 10 | Purchased five P-500 facsimile machines on account from Mitsui Corporation, at a cost of Rs.540 each. Payment due in 30 days. |
| May 23 | Sold four P-500 facsimile machines on account to Foster & Cole, stockbrokers; sales price, Rs.900 per machine. Payment due in 30 days. |
| May 24 | Purchased an additional nine P-500 facsimile machines on account from Mitsui. Cost, Rs.540 per machine; payment due in 30 days. |
| June 9 | Paid Rs.2,700 cash to Mitsui Corporation for the facsimile machine purchased to May 10. |
| June 19 | Sold two P-500 facsimile machines to Tri-State Realty for cash. Sales price, Rs.950 per machine. |
| June 22 | Collected Rs.3,600 from Foster & Cole in full settlement of the credit sale on May 23. |
Required:
Prepare Journal entries to record these transactions in the accounting records of Facts-by-FAX. (The company uses a perpetual inventory system). (20 Marks)
Prepare Journal entries to record these transactions in the accounting records of Facts-by-FAX. (The company uses a perpetual inventory system). (20 Marks)
Q No.2 Village Theater closes its accounts each month. At July 31, the trial balance and other information given below were available for adjusting and closing the accounts.
Village Theater
Trial Balance
July 31, 2022
Village Theater
Trial Balance
July 31, 2022
| Cash | Rs.20,000 | |
| Prepaid film rental | 31,200 | |
| Land | 80,000 | |
| Building | 168,000 | |
| Acc. Depreciation: Building | Rs.10,500 | |
| Projection equipment | 36,000 | |
| Acc. Depreciation: Projection equipment | 3,000 | |
| Notes Payable | 190,000 | |
| Accounts Payable | 4,400 | |
| Unearned admission revenue (YMCA) | 1,000 | |
| Capital | 103,400 | |
| Drawing | 3,500 | |
| Admissions revenue | 36,900 | |
| Salaries expense | 8,700 | |
| Light and Power expense | 1,800 | |
| Total | Rs.349,200 | Rs.349,200 |
Other Data:
a. Film rental expense for July amounts to Rs.21,050. However, the film rental expense for several months had been paid in advance.
b. The building is being depreciated over a period of 20 years (240 months).
c. The projection equipment is being depreciated over 5 years (60 months).
d. At July 31, accrued interest payable on the note payable amounts to Rs.1,650. No entry has yet been made to record interest expense for the month of July.
e. Village Theater allows the local YMCA to bring children attending summer camp to the movies on any weekday afternoon for a fixed fee of Rs.500 per month. On May 28, the YMCA mad a Rs.1,500 advance payment covering the months of June, July, and August.
f. Village Theater receives a percentage of the revenue earned by Tastie Corporation, the concessionaire operating the snack bar. For snack bar sales in July, Tastie owes Village Theater Rs.2,250, payable on August 10. No entry has yet been made to record this revenue. (Credit Concessions Revenue.)
g. Salaries earned by employees but not recorded or paid as of July 31 amount to Rs.1,500. No entry yet been made to record this liability and expense.
a. Film rental expense for July amounts to Rs.21,050. However, the film rental expense for several months had been paid in advance.
b. The building is being depreciated over a period of 20 years (240 months).
c. The projection equipment is being depreciated over 5 years (60 months).
d. At July 31, accrued interest payable on the note payable amounts to Rs.1,650. No entry has yet been made to record interest expense for the month of July.
e. Village Theater allows the local YMCA to bring children attending summer camp to the movies on any weekday afternoon for a fixed fee of Rs.500 per month. On May 28, the YMCA mad a Rs.1,500 advance payment covering the months of June, July, and August.
f. Village Theater receives a percentage of the revenue earned by Tastie Corporation, the concessionaire operating the snack bar. For snack bar sales in July, Tastie owes Village Theater Rs.2,250, payable on August 10. No entry has yet been made to record this revenue. (Credit Concessions Revenue.)
g. Salaries earned by employees but not recorded or paid as of July 31 amount to Rs.1,500. No entry yet been made to record this liability and expense.
Required:
Record adjusting entries and prepare a 10-column work sheet utilizing the trial balance and adjusting data provided. (20 Marks)
Record adjusting entries and prepare a 10-column work sheet utilizing the trial balance and adjusting data provided. (20 Marks)
Q No.3 For each of the following separate cases, prepare adjusting entries required of financial statements for the year ended (date of) December 31, 2011. (Assume that prepaid expenses are initially recorded in asset accounts and that fees collected in advance of work are initially recorded as liabilities.) (20 Marks)
(A) One-third of the work related to $30,000 cash received in advance is performed this period.
(B) Wages of $9,000 are earned by workers but not paid as of December 31, 2011.
(C) Depreciation on the company’s equipment for 2011 is $19,127.
(D) The Office Supplies account had a $480 debit balance on December 31, 2010. During 2011, $5,349 of office supplies are purchased. A physical count of supplies at December 31, 2011, shows $587 of supplies available.
(E) The Prepaid Insurance account had a $5,000 balance on December 31, 2010. An analysis of insurance policies shows that $2,200 of unexpired insurance benefits remain at December 31, 2011.
(F) The company has earned (but not recorded) $750 of interest from investments in CDs for the year ended December 31, 2011. The interest revenue will be received on January 10, 2012.
(G) The company has a bank loan and has incurred (but not recorded) interest expense of $3,500 for the year ended December 31, 2011. The company must pay the interest on January 2, 2012.
(B) Wages of $9,000 are earned by workers but not paid as of December 31, 2011.
(C) Depreciation on the company’s equipment for 2011 is $19,127.
(D) The Office Supplies account had a $480 debit balance on December 31, 2010. During 2011, $5,349 of office supplies are purchased. A physical count of supplies at December 31, 2011, shows $587 of supplies available.
(E) The Prepaid Insurance account had a $5,000 balance on December 31, 2010. An analysis of insurance policies shows that $2,200 of unexpired insurance benefits remain at December 31, 2011.
(F) The company has earned (but not recorded) $750 of interest from investments in CDs for the year ended December 31, 2011. The interest revenue will be received on January 10, 2012.
(G) The company has a bank loan and has incurred (but not recorded) interest expense of $3,500 for the year ended December 31, 2011. The company must pay the interest on January 2, 2012.
Q No.4 The following is the trial balance of Arnold Corporation on December 31, 1997 after the year-end. (20 Marks)
| Debit | Credit | ||
|---|---|---|---|
| Cash | $13750 \vert{} Accumulated depreciation \vert{}$ 5380 | ||
| Accounts receivables | $10250 | Accounts payables | 3250 |
| Supplies | 1250 | Salaries & Wages payables | 1150 |
| Prepaid insurance | 700 | Unearned fee | 1250 |
| Office equipment | 42500 | Capital stock | 25000 |
| Dividend | 20000 | Retained earnings | 27050 |
| Salaries & wages expenses | 31250 | Fee earned | 92250 |
| Rent expenses | 24000 | ||
| Depreciation expenses | 2750 | ||
| Supplies expenses | 3475 | ||
| Insurances expenses | 2400 | ||
| Telephone expenses | 2700 | ||
| Utilities expenses | 2600 | ||
| Miscellaneous expenses | 405 | ||
| TOTAL | 158030 | TOTAL | 155330 |
Required: Pass the closing entries above given accounts and prepare income statement.
PART- B
Q No.5 The Sun Rise Corporation manufactures a special purpose machine which sells for Rs.1,200, of which Rs.800 represented the cost of goods sold, Rs.150 the total selling and administrative expenses. During the year 20A, 1,500 machines were sold. It is anticipated that in 20B the cost of material will increase by 10% and the cost of labor will increase by 20% whereas factory overheads will increase by 20%. The new selling price has been tentatively set at Rs.1,300. Selling and administrative expenses will increase by Rs.22 per unit. The cost of goods sold in 20A consisted of Material 40%, Labor 50% and Manufacturing Overheads 10%.
Required:
Required:
- Prepare a statement showing the cost of manufacturing one machine in 20B.
- Assuming that the new selling price set in 20B will reduce the sale potential by about 40% as compared with 20A, prepare income statement for 20B.
- Prepare another statement showing how many units should be sold in 20B to realize the same net profit as was realized in 20A. (20 Marks)
Q No.6 A company is producing the Product X for the home market. The normal Capacity is to produce 125,000 units. The estimates for the year 20A for the home market are as under:
| Estimated Production and costs | Full capacity Production & costs | |
|---|---|---|
| Sales in Units | 100,000 | 125,000 |
| Sales price Per Unit | Rs.4.00 | Rs.3.75 |
| Fixed Costs: | ||
| Manufacturing | 100,000 | 105,000 |
| Marketing and Selling | 10,000 | 11,000 |
| Variable Cost: | ||
| Manufacturing Rs.2 per unit | ||
| Marketing and Selling Rs.0.20 per Unit |
The Sales Manager finds that there is a market in the foreign country for 25,000 units at Rs.3.75 per unit. The cost of exporting the goods in the foreign country is Rs.0.50 per unit.
Required:
Should the company enter into the foreign market? What should be the minimum sales price at which the company can sell in the foreign country? Give reasons. (20 Marks)
Should the company enter into the foreign market? What should be the minimum sales price at which the company can sell in the foreign country? Give reasons. (20 Marks)
Q No.7 (a) What do you mean by the term “cost” and “expense”?
(b) Explain the principles of cost accounting used for allocating cost for product and services. (5+15=20 Marks)
(b) Explain the principles of cost accounting used for allocating cost for product and services. (5+15=20 Marks)
Q No.8 Lancaster Co. assembles and sells electric mixers. All parts are purchased, and the cost of the parts per mixer totals $40. Labor is paid on the basis of $32 per mixer assembled. Since the company handles only this one product, the unit cost base for applying factory overhead for the coming period, based on a production of 30,000 mixers, is as follows:
Indirect materials ………………. $220,000
Indirect labor ……………………. 240,000
Light and power…………………. 30,000
Depreciation………………………. 25,000
Miscellaneous…………………….. 55,000
Indirect labor ……………………. 240,000
Light and power…………………. 30,000
Depreciation………………………. 25,000
Miscellaneous…………………….. 55,000
During the period, 29,000 mixers were assembled and actual factory overhead was $559,600. These units were completed but not yet transferred to the finished goods storeroom.
Required:
(1) Prepare the journal entries to record the above information.
(2) Determine the amount of over- or under applied factory overhead. (10 + 10 = 20 Marks)
(1) Prepare the journal entries to record the above information.
(2) Determine the amount of over- or under applied factory overhead. (10 + 10 = 20 Marks)
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