ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
(Department of Business Administration)
WARNING
1. PLAGIARISM OR HIRING OF GHOST WRITER(S) FOR SOLVING
THE ASSIGNMENT(S) WILL DEBAR THE STUDENT FROM THE
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
THE “AIOU PLAGIARISM POLICY”.
Course: Financial Accounting (5004) Semester: Spring, 2025
Level: MSc Administrative Sciences
Total Marks: 100 Pass Marks: 50
ASSIGNMENT No. 1
Q. 1 The credit manager of Athlete Sporting Goods has gathered the following
information about the company’s accounts receivable and credit losses during the
current year:
Net credit sales for the year Rs. 3,000,000
Account receivable at year-end 360,000
Uncollectible accounts receivable
Written off during the year Rs. 43,650
Estimated potion of year-end receivables
Expected to prove Uncollectible (per ageing schedule) 18,000 61,650
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Instructions
Prepare one journal entry summarizing the recognition of uncollectible accounts
expense for the entire year under each of the following independent assumptions:
a) Uncollectible accounts expense is estimated at an amount equal to 1.5% of
net credit sales.
b) Uncollectible accounts expense is recognized by adjusting the balance in the
Allowance for Doubtful Accounts to the amount indicated in the year-end
aging schedule. The balance in the allowance account at the beginning of the
current year was 15,000 (Consider the effect of the write-offs during the year
upon the balance in the Allowance for Doubtful Accounts). (20)
Q. 2 The trial balance of Horton Company on June 30, 2011, is as follows:
Horton Company
Trial Balance
June 30, 2011
Cash 3,700
Account receivable 2.900
Unexpected insurance 490
Supplies 1,460
Equipment 18,600
Accumulated depreciation( equipment) 2,480
Notes payable 10,000
Earned revenue 1,200
Capital 14,190
Drawing 1,500
Revenue from services 5,130
Rent expense 2,450
Salaries 1,900
33,000 33,000
a) Insurance expired for the month is calculated as Rs.70
b) Supplies used during the accounting period are Rs. 560
c) Depreciation expense on equipment Rs. 310
d) Interest accrued on note payable Rs. 80
e) Revenue earned during the period Rs. 800
f) Salaries payable to employees is Rs. 500
Required:
a. Prepare adjusting entries (10)
b. Prepare Income Statement and Balance Sheet (10)
Q. 3 Universal Scopes sells state-of-the-art telescopes to individuals and organizations
interested in studying the solar system. On Dec. 31 last year, the company’s
inventory amounted to Rs. 120,000. During the first week of January this year, the
company made only one purchase and one sale. The transactions were as follows:
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Jan. 2: sold one telescope costing Rs 37,200 to Central University for cash Rs. 62,000.
Jan. 5: purchased merchandise on account from ABC Rs 80,000, terms 2/10 n/30.
a) Prepare journal entries to record these transactions assuming that Universal
Explorer Scopes uses a perpetual inventory system.
b) Compute the balance of the inventory account on Jan. 7. (20)
Q. 4 (a) On October 25, 2011, Atlantic Iron Works acquired new machinery for
Rs. 50,000. The machinery has an estimated useful life of 5 years, with a
residual value of Rs. 20,000. For income tax purposes; this machinery
qualifies as three years of property.
Compute the annual depreciation expenses for each year using the straight-
line method and Book value after each of three years. (12)
(b) Make a comparison between the Straight line method and the Reducing
Balance Method. (8)
Q. 5 Compute the correct amount to replace each letter in the following table: (20)
Titles 1 2 3 4
Balance a Per Bank Statement A 8200 175 1200
Deposit in Transit 600 B 50 125
Outstanding Cheques 1500 1000 C D
Balance Per Cash Books 2600 9400 225 1250
Total Marks: 100 Pass Marks: 50
ASSIGNMENT No. 2
This assignment is a research-oriented activity. You are required to obtain information
relating to any business or commercial organization and prepare a paper of about 10 to 15
pages on the topic allotted to you.
You are also required to select one of the following topics according to the last digit of
your roll number. For example, if your roll number is D-3427185 then you will select
topic No.5 (the last digit):-
List of Topics
0- Financial Statement Analysis and its benefits for the organization
1- Application of credit terms and Receivables Management
2- Effects of AIS
3- Application of Depreciation Methods
4- Use of Perpetual Inventory System
5- Accounting treatment at various stages (From formation to Dissolution) of
Partnership
6- Effects of IPO on the existing shareholders.
7- Effects of changes in shareholders’ equity.
8- Mechanism of Petty Cash, and marketable securities.
9- Bond — a preferred source of financing than equity.
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