ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD

(Department of Commerce)

ADVANCED ACCOUNTING (444)

CHECKLIST

SEMESTER: SPRING, 2021

This packet comprises the following material:

1. Course Outlines
2. Assignment No. 1 & 2
3. Assignment Forms (2 sets)

In this packet, if you find anything missing out of the above-mentioned material, please
contact at the address given below:

The Deputy Registrar

Mailing Section, Services Block # 28
Allama Iqbal Open University
H-8, Islamabad
Phone: 051-9057611-12

Muhammad Munir Ahmad

(Course Coordinator)

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 ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
(Department of Commerce)
***

WARNING
1.Plagiarism and or hiring of ghost writer(s) for solving the assignment(s) will
debar the student from award of degree/ certificate, if found at any stage.
2.Submitting assignment(s) borrowed or stolen from other(s) as one’s own, will be
penalized as defined in “AIOU Plagiarism Policy”.
3.You are required to solve all questions if you are unable to understand any
question of assignment, do seek help from your concerned tutor. But keep in
mind that tutors are not supposed to solve the assignment questions for you.

Assignment No. 1
Units (1-4)

Course: Advanced Accounting (444) Semester: Spring 2021

Level: B.Com/AD Marks: 100
Pass for B. Com: 40
Pass for A.D: 50
NOTE: ALL QUESTIONS ARE COMPULSORY.
Q.1 (20)
Green Ltd. Issued 4,000 6% Debentures of Rs. 100 each at Rs. 105. The debenture
holders had the option of converting within one year, debentures into Ordinary Shares of
Rs. 100 each at Rs. 125.
At the end of the 1 st year the interest on debentures was outstanding. Holders of 200
debentures decided to take advantage of the option. Give journal entries and show the
Balance Sheet of the company.

Q.2 (20)
th
On 15 March, 2021 Hammad & Co. of Rawalpindi consigned 1000 cases of milk
powder to Jawad & Co. of Jhelum, invoiced at Rs. 200,000 which was 25 above their cost
price. Hammad & Co. paid Rs. 12,000 as insurance. On 1 st June, Jawad & Co., paid
carriage inward Rs. 20,000, Unloading Charges 4,000 and sent to the consignors a bank
draft for Rs. 80,000 as advance. On 1 st August, 2021, they sold 800 cases for Rs. 210,000.
The consignee is entitled to a commission of 8 percent on the invoice price and 20
percent of any surplus price realized. Jawad & Co. enclosed a bill at 2 months for the
amount due.
Required: Show the Transactions and necessary accounts in the books of Consignor and
Consignee.

Q.3 (20)

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What is meant by Departmental Accounts? Describe the objectives and advantages of
preparing departmental accounts?

Q.4 (20)
From the following particulars, Prepare Branch Account showing the profit or loss of the
Branch.
Opening stock at branch Rs.300,000
Goods sent to branch 900,000
Sales (Cash) 1,200,000
Salaries 100,000
Other expenses 40,000
Closing stock could not be ascertained, but it is known that the branch usually sells at
cost plus 20 percent. The branch manager is entitled a commission of 5 per cent on profit
of the branch before charging such commission.

Q.5 (20)
Red and Green entered into a Joint Venture for purchase and sale of some household
items. They agreed to share profits and losses in the ratio of their respective contributors.
Red contributed Rs. 250,000 in cash and Green Rs. 325,000. The whole amount was
placed in a Joint Bank account. Goods were purchased by Red for Rs. 250,000 and
expenses paid by Green amounted to Rs. 50,000. They also purchased goods for Rs.
375,000 through the Joint Bank Account. The expenses on purchase and sale of the
articles amounted to Rs. 150,000 (including those met by Green). Goods costing Rs.
500,000 were sold for Rs. 1125,000 and the balance was lost by fire.
Required: Enter the above transactions in the books of both Red and Green and also in
the separate books of joint venture.

Assignment No. 2
Units (5-9)
Total Marks: 100
Pass for B. Com: 40
Pass for A.D: 50
Q.1 (20)
The accounts of Blue limited disclose a net profit of Rs. 1 Million for the year ended 31 st
December, 2020. The balance of profit brought forward from 2019 was Rs. 35,000. The
shareholders in the annual general meeting resolved that (a) a dividend of 20% on
200,000 Equity Shares of Rs. 100 each to be paid; (b) Rs. 250,000 be added to the
Reserve Fund; and (c) Rs. 20,000 be paid to the employees as bonus.
Required: Make journal entries to give the effect to the above resolution and show the
Profit and Loss Appropriation Account of the company. Ignore income tax.
Q.2 (20)
Naveed Ltd. Three machines on 1 st January, 2021, that has fair value of Rs. 10,000 each,
from Izhar Ltd. for five years. Interest rate implicit in the lease is 10%. Useful life of
equipment is 5 years. Annual rentals are payable at the beginning of each year. The lessee
depreciates the asset using the straight-line method.
Required:

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 i. Compute the annual rentals payable.
ii. Prepare amortization schedule.
iii. Prepare the journal entries for the first two years in the books of lessee.

Q.3 (20)
The following data is available from the financial statements of ACBM Corporation for
the period ended on December 31st, 2020:
Equity Share Capital 275,000 Capital Reserve 125,000
Profit & Loss A/c 50,000 6% Debentures 125,000
Sundry Creditors 60,000 Bills Payable 30,000
Provision for 45,000 Outstanding Creditors 40,000
Taxation
Total Assets 750,000 Sales 1,250,000
Required: You are required to compute the following Ratios of ACBM Corporation:
i. Return on Assets
ii. Assets Turnover Ratio
iii. Leverage Ratio
iv. Current Ratio
v. Proprietary Ratio

Q.4 (20)
Define the Share Capital. What do you understand by issuance of shares at par, at a
premium and at a discount? Illustrate your answer with suitable example.

Q.5 (20)
Explain and differentiate Amalgamation from Liquidation. Give any two examples in
Pakistani scenario.