FRA MIDTERM QUESTION

PGEXP 2023

Total mark 70

Section A: 40 Marks (1 * 40)

1. Following is the unadjusted Trail balance of XYZ Co. as on 31.03.2023

Accounts Debit Credit

Furniture 25000
Accumulated depreciation, Furniture 2000
Merchandise inventory 18000
Marketable Securities 4000
Bills receivable 7000
Cash 4000
Prepaid Rent 3000
Bills Payable 4000
Share Capital 10000
Retained Earning 2500
Sales 112000
Sales Return and allowances 500
Sales discount 1500
Purchase 52000
Purchase return and allowances 800
Purchase discount 1200
Freight In 2500
Salary 8000
Promotion expenses 4000
Interest 1000
rent 2000
Total 132500 132500

Prepare the Income Statement and Balance Sheet after considering following adjustment (40)

a. Current year depreciation 1000

b. Outstanding salary, 2000
c. Closing inventory 21000
Section B: 30 marks (2 * 15)

Attend any two out of followings questions.

1. You are required to journalize (narration not required) and prepare the Trial Balance. (15)
(i). Issue of equity shares for Rs 5,00,000
(ii). Purchase of land for Rs 65,000 in exchange of share.
(iii). Purchase of building for Rs 35,000 with mortgage loan.
(iv). Purchase of equipment for Rs 15,000 cash.
(v). Purchase of inventory on cash for Rs 45,000
(vi). Rent paid in advance for next accounting period Rs 5,000
(vii). Cash sales revenue Rs 25,000
(viii). Credit sales revenue Rs 62,000
(ix). Salaries and wages paid Rs 7,300
(x). Advance collection from the customers Rs 18,000 for which goods and services would be
delivered in in next accounting period.
2. The following information is available from the records of ABC Co.
Data Details Units Unit cost
Apr 1 Inventory 150 12
Apr 25 Purchase 200 11
Jul 11 Purchase 100 8
Oct 22 Purchase 100 7
Feb 20 Purchase 250 6
March 31 Inventory 350

a. Determine the cost of the ending inventory using FIFO, LIFO and WAC methods. (10)
b. If the realizable value of the closing inventory is expected to be 4000 and expected selling
expenses is 1000, calculate the final value of closing stock in these three scenarios (FIFO, LIFO
and WAC) (5).
3. Explain Trial Balance, the steps to identify errors and different type errors that can not be
identified by the trial balance with examples. (15)