Commerce Punjab PMS Paper I 2014

PUNJAB PUBLIC SERVICE COMMISSION
COMBINED COMPETITIVE EXAMINATION FOR RECRUITMENT TO THE
POSTS OF PROVINCIAL MANAGEMENT SERVICE, ETC. – 2014

COMMERCE (OPTIONAL) PAPER-I

TIME ALLOWED: THREE HOURS      MAXIMUM MARKS: 100

Note: Answer FIVE questions in all but selecting minimum TWO from each part. Calculator is allowed. Attempt in English Language.

PART-A

Q.1. In analyzing the account of Don Norton, the adjusting data listed below are determined on December 31, the end of an annual fiscal period. (a) Give the adjusting entry for each item. (b) What reversing entries would be appropriate?

1. The prepaid insurance account shows a debit of $600, representing the cost of a 3-year fire insurance policy dated July 1.
2. On October 1, Rental Income was credited for $800, representing income from sub rental for a 4-month period beginning on that date.
3. Purchase of advertising materials for $ 700 during the year was recorded in the advertising expense account. On December 31 advertising materials of $ 150 are on hand.
4. On October 1, $ 750 was paid as rent for a 6-month period beginning on that date. The expense account, Rent, was debited.
5. Miscellaneous office Expense was debited for office supplies of $ 4000 purchased during the year. On December 31 office supplies of $ 75 are on hand.
6. Interest of $60 is accrued on notes payable.

Q.2. Sale for the Symmetric Products Co. were $150,000 for 2012. The beginning inventory was 30% of the cost of goods sold. The ending inventory was 40% of the beginning inventory. Selling expenses were 10% of sales and absorbed 30% of the gross profit on sales. Income before income taxes was 8% of sales. Income taxes were 50% of income before taxes. Prepare an income statement for 2012.

Q.3. The cost of machine purchased by Midwest Badge, Inc., on April 1, 2012 is $50,000. It is estimated that the machine will have a $ 5000 trade – in value at the end of its service life. Its life is estimated at 5 years; its working hour are estimated at 30, 000, its production is estimated at 600,000 units. During 2012 the machine was operated for 6,000 hours and produced 12,000 units.

Instruction: Compute the depreciation on the machine for 2012 by: (1) the straight line method, (2) the service – hours method, (3) the production output method, (4) the sum-of-the-years-digits method, and (5) the double declining –balance method.

Q.4. What groups may be interested in a Company’s financial statements?

PART-B

Q.5. The Roy Co. has sales $900,000, an M/S ratio of 40% and a P/V ratio of 30%.

1. What is the Company’s break even point?
2. What are the fixed expenses?
3. What is the income before income taxes?

Q.6. The following data related to the Iftikhar Corporation:

Cost incurred during the period:

Required: Cost of goods sold statement.

Q.7. What is a Job Order Cost Sheet?

Q.8. The Zaria Manufacturing Co. uses a process cost system. The costs of department 2 for the month of April were as follows:

The following information was obtained from the department:

The degree of completion of the work in process was:
50% of the units were 40% complete; 20% of the units were 30% complete and the balance of the units was 20% complete.

Required: A cost of production Report for April.