PUNJAB PUBLIC SERVICE COMMISSION
COMBINED COMPETITIVE EXAMINATION
FOR RECRUITMENT TO THE POSTS OF
PROVINCIAL MANAGEMENT SERVICE, ETC -2023
CASE NO. 1C2024
TIME ALLOWED: THREE HOURS SUBJECT: COMMERCE (PAPER-1) 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.
Attempt Five Questions in All. Selecting minimum Two Questions from each Part. Calculator is allowed (Not programmable).
PART-A
Q No.1 An adjusted trial balance for State Insurance Agency at December 31 appears as follows:
State Insurance Agency
Adjusted Trial Balance
December 31, 2022
| | Rs | Rs |
|—|—|—|
| Cash | 10,200 | |
| Account Receivable | 20,000 | |
| Office Equipment | 15,000 | |
| Acc. Depreciation: Office Equipment | | 3,000 |
| Accounts Payable | | 6,000 |
| Capital | | 19,700 |
| Drawing | 18,000 | |
| Sales Commissions earned | | 185,000 |
| Advertising expense | 36,500 | |
| Rent expense | 32,000 | |
| Salaries expense | 64,500 | |
| Utilities expense | 16,000 | |
| Depreciation expense: Office Equipment | 1,500 | |
| | Rs.213,700 | Rs.213,700 |
Prepare journal entries to close the accounts. Use four entries: (1) to close the revenue account, (2) to close the expense accounts, (3) to close the Income Summary account, and (4) to close the owner’s drawing account. (20 Marks)
Q No.2 From the following Trial Balance of Mr. Haji Traders, prepare Trading, Profit & Loss Account for the year ended 31st March, 2021 and a Balance Sheet as at that date.
| | Debit (Rs.) | Credit (Rs.) |
|—|—|—|
| Opening Stock | 24,000 | |
| Drawings | 11,200 | |
| Furniture | 4,800 | |
| Cash in Hand | 36,000 | |
| Purchases | 96,000 | |
| Returns | | 8,000 |
| Establishment charges | 20,000 | |
| Taxes and Insurance | 4,000 | |
| Bad Debts | 4,000 | |
| Sundry Debtors | 40,000 | |
| Investments | 32,000 | |
| Discount received | | 1,200 |
| Commission | | 4,000 |
| Returns | 16,000 | |
| Bad Debts Provision | | 8,000 |
| Sales | | 120,000 |
| Bank Loan @ 15% | | 16,000 |
| Creditors | | 34,800 |
| Capital | | 80,000 |
| | 280,000 | 280,000 |
The following adjustments are made:
(1) Depreciate Furniture @ 10% p.a.
(2) Interest accrued on Investment Rs.1,680.
(3) Commission amounting to Rs.800 relating to the next year.
(4) Bad Debts Reserve is to be maintained at Rs.8,000
(5) Salaries Rs.800 and Taxes Rs.3,200 are payable.
(6) Insurance prepaid is Rs.400.
(7) Closing Stock Rs.36,000. (20 Marks)
Q No.3 Draw a difference between accrual and cash basis accounting. Explain the reasons that financial decision making is difficult without cash flow statement.
Q No.4 A Contractor undertook a contract for under mentioned expenditure on account of Contract ‘A’ to 31st December, 2022:
| | Rs. |
|—|—|
| Materials | 120,000 |
| Plant | 20,000 |
| Wages | 164,000 |
| Establishment Expenses | 6,000 |
The contract began in January, 2022; the contract price being Rs.600,000. Cash received on account to date Rs.240,000 being 80% of the work certified; and the remainder is to be paid as to 10% on completion and the balance six months after completion. Materials on hand and work completed but not certified was Rs.10,000.
Prepare a contract account showing the profit to date after depreciating Plant by Rs.100. How much profit would the company be justified in crediting to the Profit and Loss Account? Show also how the work-in-progress would appear in the Balance Sheet. (20 Marks)
PART-B
Q No.5 Discuss different cost elements broadly categorized in tracing cost. (20 Marks)
Q No.6 The following job order cost detail pertains to the three jobs that were in process at Dany Machine Company during January:
| | Job 36 | Job 37 | Job 38 |
|—|—|—|—|
| Cost charged in prior period | $36,000 | $18,000 | — |
| Costs added in January: | | | |
| Direct materials | 44,000 | 34,000 | 32,000 |
| Direct labor | 40,000 | 48,000 | 42,000 |
| Factory overhead (60% of direct labor) | 24,000 | 28,800 | 25,200 |
Required:
Prepare the appropriate journal entry (Including subsidiary ledger detail for job orders) to record each of the following transactions:
(1) Direct materials were issued from the materials storeroom to work in process.
(2) The payroll was distributed to work in process.
(3) Factory overhead was applied to production for the period.
(4) Jobs 36 and 37 were completed and transferred to the finished goods storeroom.
(4×5=20 Marks)
Q No.7 In standard cost system, the computation of variance is the first step. What steps should follow?
Q No.8 Why is cost-volume-profit analysis by products valuable to management? (20 Marks)
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