PUNJAB PUBLIC SERVICE COMMISSION
COMBINED COMPETITIVE EXAMINATION FOR RECRUITMENT TO THE POSTS OF PROVINCIAL MANAGEMENT SERVICE-2019
COMBINED COMPETITIVE EXAMINATION FOR RECRUITMENT TO THE POSTS OF PROVINCIAL MANAGEMENT SERVICE-2019
SUBJECT: COMMERCE (PAPER-I)
TIME ALLOWED: THREE HOURS MAXIMUM MARKS: 100
TIME ALLOWED: THREE HOURS MAXIMUM MARKS: 100
NOTE: Attempt Five Questions in All, Selecting minimum Two Questions from each part. Calculator is allowed. (Not programmable)
PART – A
Q No. 1: Define the Accounting Cycle, How the accounting cycle provides a pathway to prepare Financial Statement. Elaborate the Steps involved in Accounting Cycle. (20 Marks)
Q No. 2: Selected year-end financial statements of ABC Corporation follow. (All sales were on credit; selected balance sheet amounts at December 31, 2012, were inventory, Rs48,900; total assets, Rs189,400; common stock, Rs90,000; and retained earnings, Rs22,748.)
ABC Income Statement For Year Ended December 31, 2013
Sales Rs448,600
Cost of goods sold Rs297,250
Gross profit Rs151,350
Operating expenses Rs98,600
Interest expense Rs4,100
Income before taxes Rs48,650
Income taxes Rs19,598
Net income Rs29,052
Sales Rs448,600
Cost of goods sold Rs297,250
Gross profit Rs151,350
Operating expenses Rs98,600
Interest expense Rs4,100
Income before taxes Rs48,650
Income taxes Rs19,598
Net income Rs29,052
ABC Balance Sheet December 31, 2013
Assets Liabilities and Equity
Cash Rs10,000
Short-term investments 8,400 Accounts payable Rs17,500
Accounts receivable net 29,200 Accrued wages payable 3,200
Notes receivable trade* 4,500 Income taxes payable 3,300
Merchandise inventory 32,150 Long-term note payable secured by mortgage on plant assets 63,400
Prepaid expenses 2,650 Common stock 90,000
Plant assets net 153,300 Retained earnings 62,800
Total assets Rs240,200 Total liabilities and equity Rs240,200
(*) These are short-term notes receivable arising from customer (trade) sales.
Assets Liabilities and Equity
Cash Rs10,000
Short-term investments 8,400 Accounts payable Rs17,500
Accounts receivable net 29,200 Accrued wages payable 3,200
Notes receivable trade* 4,500 Income taxes payable 3,300
Merchandise inventory 32,150 Long-term note payable secured by mortgage on plant assets 63,400
Prepaid expenses 2,650 Common stock 90,000
Plant assets net 153,300 Retained earnings 62,800
Total assets Rs240,200 Total liabilities and equity Rs240,200
(*) These are short-term notes receivable arising from customer (trade) sales.
Requirement Compute the following:
(1) current ratio (2) acid-test ratio (3) days’ sales uncollected
(4) inventory turnover (5) days’ sales in inventory (6) debt-to-equity ratio
(7) times interest earned (8) profit margin ratio (9) total asset turnover
(10) return on total assets (11) return on common stockholders’ equity. (20 Marks)
(1) current ratio (2) acid-test ratio (3) days’ sales uncollected
(4) inventory turnover (5) days’ sales in inventory (6) debt-to-equity ratio
(7) times interest earned (8) profit margin ratio (9) total asset turnover
(10) return on total assets (11) return on common stockholders’ equity. (20 Marks)
Q No. 3: Mr. Atif runs a small business. He is unable to reconcile the balance on the business bank statement with that shown in his bank column of the cash book. Copies of these two records are shown below. (20 Marks)
Cash Book (Bank Column)
| 20X8 | Rs. | 20X8 | Rs. | ||
|---|---|---|---|---|---|
| May 01 | Balance b/f | 5240 | May 05 | R. Rashid (cheque no. 56874) | 250 |
| May 07 | A. Zaman | 320 | May 06 | T. Ilyas (cheque no. 56875) | 420 |
| May 10 | W. Rana | 580 | May 21 | D. Hassan (cheque no. 56877) | 80 |
| May 21 | F. Kiani | 75 | May 27 | Z. Aslam (cheque no. 56878) | 510 |
| May 27 | F. Anwar | 360 | May 30 | G. Fraz (cheque no. 56879) | 130 |
| May 30 | A. Sarwar | 125 | May 31 | Balance c/d | 5310 |
| 6700 | 6700 | ||||
| June 1 | Balance b/d | 5310 |
Bank Statement (for May 20X8)
| Date 20X8 | Details | Debit Rs. | Credit Rs. | Balance Rs. |
|---|---|---|---|---|
| May 01 | Balance b/f | 5240 | ||
| May 02 | Dishonoured Cheque returned to drawer | 200 | 5040 | |
| May 07 | Deposit | 320 | 5360 | |
| May 09 | 56875 | 420 | 4940 | |
| May 10 | 56874 | 250 | 4690 | |
| May 13 | Deposit | 580 | 5270 | |
| May 21 | Direct Debit (Insurance) | 50 | 5220 | |
| May 25 | Credit Transfer (N. Salman) | 120 | 5340 | |
| May 27 | Deposit | 75 | 5415 | |
| May 29 | 56877 | 80 | 5335 | |
| May 30 | 56878 | 510 | 4825 | |
| May 31 | Bank Charges | 10 | 4815 |
Requirement:
- Following the steps of preparing bank reconciliation statement update and correct the bank column of the cashbook.
- Prepare a statement reconciling the balance on the bank statement with the cash book balance from (1).
Q No. 4: The following balances are taken from the books of Javed & Sons who runs a small business. (20 Marks)
| Dr (Rs.) | Cr (Rs.) | |
|---|---|---|
| Purchases and sales | 135,500 | 280,000 |
| Inventory at 1 January 2018 | 35,200 | |
| Returns | 1400 | |
| Carriage inward | 1500 | |
| Wages and salaries | 29,800 | |
| Repairs and maintenance | 7,500 | |
| Heating and lighting | 4,200 | |
| General expenses | 15,600 | |
| Cash in hand | 5,600 | |
| Petty cash | 400 | |
| Trade receivable and trade payables | 48,200 | 21,140 |
| 100,000 |
| Premises | ||
| Furniture and fixtures | 28,000 | |
| Provision for depreciation on furniture at 1 January 2018 | 5600 | |
| Motor vehicle at cost | 22,000 | |
| Provision for depreciation on motor vehicle at 1 January 2018 | 6160 | |
| Capital/Equity at 1 January 2018 | 150,000 | |
| Drawings | 28000 | |
| 462900 | 462900 |
Additional Information:
- Inventory at 31 December 2018 was valued at Rs. 40,700
- A bill of Rs. 1500 was owing for repairs and maintenance
- A debt of Rs. 1200 is to be written off as bad. A provision is to be made for doubtful debts of 5% on trade receivables at 31 December 2018.
- General expenses of Rs. 1400 have been paid for the year 2019
- Depreciation is to be provided @ 10% of cost on furniture and @ 20% on vehicles by using the reducing balance method.
Requirement:
Prepare profit and loss statement and balance sheet for the year ended 31 December 2018
PART-B
Q No. 5: Discuss the difference between Job order costing system and Process costing system on the basis of following characteristics:
- Application
- Accumulation of Cost
- Cost per unit
- Work in process a/c
- Cost of operating the system
(20 Marks)
Q No. 6: Zaman Corporation estimates factory overhead of Rs. 345,000 for next fiscal year. It is estimated that 60,000 units will be produced at a material cost of Rs. 575,000. Conversion will require 34,500 direct labor hours at a cost of Rs. 10 per hour, with 25,875 machine hours.
Requirement:
Calculate factory overhead rate on each of the following basis:
- Units of production
- Labor Cost
- Labor Hours
- Machine Hours
(20 Marks)
Q No. 7: WXY Pvt Ltd. is carrying on manufacturing business and producing different consumer products. Currently company is updating the costing procedure due to change in Government policies. Currently product “DP” is under costing process. Following is the relevant cost of Product YP for making 60,000 units:
Variable cost of production Rs. 175,000
Separable Cost Rs. 70,000
Fixed costs (apportioned) Rs. 120,000
Total Cost Rs. 365,000
Variable cost of production Rs. 175,000
Separable Cost Rs. 70,000
Fixed costs (apportioned) Rs. 120,000
Total Cost Rs. 365,000
Another manufacturer offers the company to sell the same part for Rs. 3.56 per unit.
Requirement:
With the help of above provided information, you are required to calculate the cost in both make and buy cases and also suggest that either WXY should make or buy the product-DP?
With the help of above provided information, you are required to calculate the cost in both make and buy cases and also suggest that either WXY should make or buy the product-DP?
(20 Marks)
Q No. 8: XYZ Limited is operating at 80% of its normal capacity. Currently, it is producing 20,000 units. Data regarding company’s sales and cost is as follows;
| Production fixed costs | Rs. 10,000 |
| Other fixed costs | Rs. 25,000 |
| Variable cost per unit: | |
| Direct material | Rs. 4 |
| Direct labor | Rs. 3 |
| Variable overhead | Rs. 1 |
| Rs. 8 | |
| Selling price per unit | Rs. 15 |
A customer offers to buy additional 10,000 units at Rs. 12 per unit. To complete the order direct labor cost will increase by 5% on additional production; however fixed cost will remain unchanged.
Requirement: Calculate Rs. Per unit variable cost for additional business and Profit/loss on normal and addition business.
(20 Marks)
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