Question 1) Describe the different stages of developing an effective Accounting Information System.
Question 2)(a) A tractor which cost Rs.30,000 had estimated useful life of 5 years and estimated salvage value of Rs.10,000. Straight line depreciation was used. Give the journal entry required by each of the following alternative assumptions:
i. The tractor was sold for cash of Rs.19,500 after 2 years’ use.
ii. The tractor was traded in after 3 years on another tractor with a fair market value of Rs.37,000. Trade in allowance was Rs.21,000. (Record any implied gain or loss)
iii. The tractor was scrapped after 7 years’ use. As scrap dealers was unwilling to pay anything for the tractor, it was given to scrap dealer for his services in removing it.
(b) Compare depreciation with depletion.
Question 3) Research Consultants has three partners — A, B and C during the present year, their capital balances were:
A, Rs.180,000; B, Rs.140,000; and C, Rs.80,000.
Partnership agreement provides that partners will receive salary as follows:
A, Rs.10,000; B, Rs.50,000; and C, Rs.28,000
Partners will also be allowed 12% interest annually on their capital balances. Residual profit or loss is to be divided:
A, one half; B, one third, and C, one sixth.
Create separate schedule showing how income will be divided among three partners in each of the following cases. The figure given in each case is the annual partnership net income or loss to be allocated among the partners.
a. Income of Rs.526,000
b. Income of Rs.67,000
c. Loss of Rs.32,000
Question 4)(a) Make comparative study of preferred stock and common stock.
(b) What is the function of underwriter in Initial Public Offering (IPO)?
Question 5) Limited company was registered with authorized capital of Rs.500,000 divided into 10,000 ordinary shares of Rs.50 each. On 1st November 1994 Company offered 7000 shares in following manner:
1000 shares to promoters against preliminary expenses
2000 shares to directors for cash
4000 shares to general public.
On 15th November 1994, company received applications for 6000 shares. Shares were not allotted to applicants of 2000 shares and their application money was refunded.
Record the above information in company’s books and demonstrate the figures in balance sheet.