FEDERAL PUBLIC SERVICE COMMISSION
COMPETITIVE EXAMINATION – 2020
FOR RECRUITMENT TO POST IN BS – 17
UNDER THE FEDERAL GOVERNMENT
ACCOUNTANCY AND AUDITING, PAPER I
TIME ALLOWED: THREE HOURS
PART – I (MCQs): MAXIMUM 30 MINUTES
PART – I (MCQs): MAXIMUM MARKS = 20
PART – II MAXIMUM MARKS = 80
NOTE:
(i) Part – II is to be attempted on the separate Answer Book.
(ii) Attempt ONLY FOUR questions from PART – II. ALL questions carry EQUAL marks.
(iii) All the parts (if any) of each Question must be attempted at one place instead of at different places.
(iv) Candidate must write Q. No. in the Answer Book in Accordance with Q. No. in the Q. Paper.
(v) 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 attempted question will not be considered.
PART-II
SECTION I
Q. No. 2. On September 1, 2011, the account balances of R and Equipment Repair, Inc. were as follows. (20)
| No. | Debits | No. | Credits | ||
| 101 | Cash | Rs. 4,880 | 154 | Accumulated Depreciation | Rs. 1,500 |
| 112 | Accounts Receivable | 3,520 | 201 | Accounts Payable | 3,400 |
| 126 | Supplies | 2,000 | 209 | Unearned Service Revenue | 1,400 |
| 153 | Store Equipment | 15,000 | 212 | Salaries Payable | 500 |
| 311 | Common Stock | 15,000 | |||
| 320 | Retained Earnings | 3,600 | |||
| Rs. 25,400 | Rs. 25,400 | ||||
During September the following summary transactions were completed
Sept 08 Paid Rs. 1,400 for salaries due employees, of which Rs 000 is for September.
10 Received Rs.1.200 cash from customers on account.
12 Received Rs 3,400 cash for services performed in September.
15 Purchased store equipment on account Rs. 3,000.
17 Purchased supplies on account Rs.1.200.
20 Paid creditors Rs. 4,500 on account.
22 Paid September rent Rs 500.
25 Paid salaries Rs.1,250.
27 Performed services on account and billed customers for services provided Rs.1.500.
24 Received Rs. 650 from customers for future service.
Adjustment data consist of:
Supplies on hand Rs.1,200. Accrued salaries payable Rs. 400. Depreciation is Rs.100 per month. Unearned service revenue of Rs. 1,450 is earned.
Required
(a) Journalize the September transactions. Prepare a trial balance at September 30.
(b) Journalize and post adjusting entries. Prepare an adjusted trial balance.
(c) Prepare an income statement and a retained earnings statement for September and a balance sheet at September 30.
Q. 3. (A) Industry A has three companies whose income statements and balance sheets summarized below. (10)
(10)
| Company X | Company Y | Company Z | |
| Sales | Rs. 500,000 | (d) | (g) |
| Net Income | Rs. 25,000 | Rs. 30,000 | (h) |
| Total assets | Rs. 100,000 | (e ) | Rs. 250,000 |
| Total asset turnover | (a) | (f) | 0.4 |
| Profit margin | (b) | 0.4% | 5% |
| Return on total assets (ROA) | (c ) | 2% | (i) |
First supply the missing data in the table above. Then comment on the relative performance of each company.
(B) The Rivers Company reports the following data relative to accounts receivable: (10)
| 20X8 | 20X9 | |
| Average accounts receivable | Rs. 400,000 | Rs. 416,000 |
| Net credit sales | Rs. 2,600,000 | Rs. 3,100,000 |
Thc terms of sale are net 30 days.
(a) Compute the accounts receivable turn over and the collection period, and
(b) Evaluate the results.
Q. 4. (A) The Wessel Karim Corporation is considering installing a new conveyor for materials handling in a ware house. The conveyor will have an initial cost of Rs. 85,000 and an installation cost of Rs. 6.000. Expected benefits of the conveyor are: (a) Annual labor cost will be reduced by Rs. 17,000, and (b) breakage and other damages from handling will be reduced by Rs. 600 per month. Some of the firm’s costs are expected to increase as follows: (a) Electricity cost will rise by Rs.200 per month, and (b) annual repair and maintenance of the conveyor will amount to Rs. 999. Assume the firm uses the MACRS rules for depreciation in the 5-year property class. No salvage value will be recognized for tax purposes. Thc conveyor has an expected useful life of 8 years and a projected salvage value of Rs 4.500. The tax rate is 35 percent
(a) Estimate future cash inflows for the proposed project
(b) Determine the projects NPV at 10 percent. Should the firm buy the conveyor? (10)
(B) Majid, Inc accountants have developed the following data from the company’s accounting records for the year ended April 30, 2017. (10) (20)
a) Purchase of plant assets. Rs. 59,400.
b) Cash receipt from issuance of notes payable, Rs. 46,100.
c) Payments of notes payable, Rs. 44,000.
d) Cash receipt from sale of plant assets, Rs.24,500
e) Cash receipt of dividends, Rs. 4,800
f) Payment, to suppliers, Rs.374,300
g) Interest expense and payments, Rs.12,000.
h) Payments of salaries, Rs. 88,000.
i) Income tax expense and payments, Rs 37,000.
j) Depreciation expense, Rs. 59,900
k) Collections from customers, Rs.605,500
l) Payment of cash dividends, Rs.49,400,
m) Cash receipt from issuance of common stock, Rs.64,900.
n) Cash balance April 30, 2016. Rs. 400,000; April 30, 2017. Rs.121,700.
Required:
Prepare Majid’s statement of cash flows for the year ended April 30, 2017. Use the direct method for cash flows from operating activities.
SECTION II
Q. 5. (A) Modern Geezer Company has two departments. Factory overhead costs are applied based on direct labour cost in Department A and machine hours in Department B. The following information is available: (10)
| Budgeted Items | Dept. A | Dept. B |
| Direct labour cost | Rs. 180,000 | Rs. 165,000 |
| Machine hours | 51,000 | 40,000 |
| Factory overhead cost | Rs. 225,000 | Rs, 180,000 |
Actual data for Job #10 are as follows:
| Actual Items | Dept. A | Dept. B |
| Direct materials requisitioned | Rs. 10,000 | Rs. 16,000 |
| Direct labour cost | Rs. 11,000 | Rs. 14,000 |
| Machine hours | 5,000 | 3,000 |
Required:
(A) Compute the budgeted factory overhead rate for Department A.
(B) Compute the budgeted factory overhead rate for Deportment B.
(C) What is the total overhead cost for Job #10?
(D) If job #10 consists of 50 units of product, what is the unit cost of this job?
(B) Chief Manufacturing is a small textile manufacturer using machine-hours as the single indirect-cost rate to allocate manufacturing overhead costs to the various jobs contracted during the year. The following estimates are provided for the coming year for the company and for the Somerset High School Science Olympiad Jacket job. (10) (20)
| Company | Somerset High School | |
| Direct materials | Rs. 25,000 | Rs. 600 |
| Direct manufacturing cost | Rs. 5,000 | Rs. 200 |
| Manufacturing overhead costs | Rs. 20,000 | |
| Machine hours | 40,000 mh | 800 mh |
Required:
(a) For Chief Manufacturing, determine the annual mananctunng overhead cost-allocation rate.
(b) Determine the amount of manufacturing overhead costs allocated to the Somerset High School job.
(c) Determine the estimated total manufacturing costs for the Somerset High School job.
Q. 6. (A) Sodius Chemical Inc. placed 220,000 liters of direct materials into the mixing process. At the end of the month. 5,000 liters were still in process, 30% converted as to labor and factory overhead. All direct materials are placed in mixing at the beginning of the process and conversion costs occur evenly during the process. Sodius uses weighted-average costing. (10)
Required:
(a) Determine the equivalent units in process for direct materials and conversion costs, assuming there was no beginning inventory.
(b) Determine the equivalent units in process for direct materials and conversion costs. assuming that 12,000 liters of chemicals were 40% complete prior to the addition of the 220,000 liters.
(B) Asghar Manufacturing Company sells its products for Rs. 33 each. The current production level is 50,000 units, although only 40,000 units an anticipated to be sold.
Unit manufacturing costs are:
Direct materials — Rs. 6.00
Direct manufacturing labor — Rs. 9.00
Variable manufacturing costs — Rs. 4.50
Total fixed manufacturing cost — Rs. 180,000
Marketing expenses Rs.3.00 per unit, plus Rs. 100,000 per year
Required:
(a) Prepare an income statement using absorption costing.
(b) Prepare an income statement using variable costing
Q. 7. (A) Big Mind Corporation was recently formed to produce a semiconductor chip that forms an essential part of the personal computer manufactured by a major corporation. The direct materials are added at the start of the production process while conversion costs are added uniformly throughout the production process. June is Big Mind’s first month of operations, and therefore, there was no beginning inventory. Direct materials cost for the month totaled Rs.950,000, while conversion costs equaled Rs. 4,625,000. Accounting records indicate that 475,000 chips were started in June and 425,000 chips were completed.
Ending inventory was 50% complete as to conversion costs.
Required:
(a) What is the total manufacturing cost per chip for June?
(b) Allocate the total costs between the completed chips and the chips in coding Inventory.
The following information was gathered for Smart-view Company for the year ended December 31, 2018: (10) (20)
| Budgeted | Actual | |
| Direct labor hours | 75,000 dlh | 80,000 dlh |
| Factory overhead | Rs. 600,000 | Rs. 625,000 |
Assume that direct labour-hours are the cost -allocation base.
Required:
(a) Compute the budgeted factory overhead rate.
(b) Compute the factory overhead applied.
(c) Compute the amount of over/under applied overhead.
Q. 8. (A) Umar Company produces baseball bats and cricket paddles. It has two departments that process all products. During July, the beginning work in process in the cutting department was half completed as to conversion, and complete as to direct materials. The beginning inventory included Rs. 40,000 for materials and Rs. 60,000 for conversion costs. Ending work-in-process inventory in the cutting department was 40% complete. Direct materials are added at the beginning of the process.
Beginning work in process in the finishing department was 80% complete as to conversion. Direct materials for finishing the units are added near the end of the process. Beginning inventories included Rs. 24,000 for transferred-in costs and Rs. 28,000 for conversion costs. Ending inventory was 30% complete. Additional information about the two departments follows: (10)
| Cutting | Finishing | |
| Beginning work-in-process units | 20,000 | 24,000 |
| Units started this period | 60,000 | |
| Units transferred this period | 64,000 | 68,000 |
| Ending work-in-process units | 20,000 | |
| Material costs added | Rs. 48,000 | Rs. 34,000 |
| Conversion costs | 28,000 | 68,500 |
| Transferred out cost | 128,000 |
Required:
Prepare a production cost worksheet, using FIFO for the finishing department.
(B) During February the Luqman Manufacturing Company’s costing system reported several variances that the production manager was surprised to see. Most of the company’s monthly variances are under Rs.225, even though they may be either favorable or unfavorable. The following information is for the manufacturing of garden gates. its only product: (10)
1. Direct materials price variance, Rs.900 unfavorable.
2. Direct materials efficiency variance, Rs.1.900 favorable.
3. Direct manufacturing labor price variance, Rs.4,100 favorable.
4. Direct manufacturing labor efficiency variance, Rs.700 unfavorable.
Required:
(a) Provide the manager with some ideas as to what may have caused the price variances.
(b) What may have caused the efficiency variances?
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