INSTALMENT SALES

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					INSTALMENT SALES
   B.COM. PART II




              Prepared By: Muhammad Hassam
                                              PART “A”
Q#1:
       The following is the Balance Sheet of Nishat Traders on December 31, 1989

                                          NISHAT TRADERS
                                          BALANCE SHEET
                                          As on Dec. 31, 1989.

                    Assets                                                Equities
Cash                                Rs. 25,000             Accounts Payable            Rs. 6,000
Merchandise Inventory               Rs. 15,000             Bank Loan                   Rs. 65,000
Furniture                           Rs. 12,000             Nishat Capital              Rs. 101,000
Building                            Rs. 60,000
Equipment                           Rs. 15,000
Land                                Rs. 45,000

                                       172,000                                             172,000

        Nishat Traders sell all merchandise on the instalment sales basis. The following figures have been
collected from the books of Nishat Traders for the year 1990.
    1) Installment sales                                                         Rs. 200,000
    2) Collections on instalment                                                 Rs. 90,000
    3) Merchandise purchased on account                                          Rs. 145,000
    4) Cash paid on account                                                      Rs. 80,000
    5) Selling & General expenses paid                                           Rs. 8,000
    6) A customer was defaulted and merchandise was repossessed, valued Rs. 6,000 and instalment
        account cancelled Rs. 10,000
    7) Merchandise inventory end (New)                                           Rs. 20,000

REQUIRED:
      Give the entries that would be made to record the transactions and to adjust and close accounts for
1990.
                                                                                            (I/S = 18,000)
Q#2:
      The following transactions were made in Reyaz trades during the year 1991.
   1) Instalment sales                                                          Rs. 300,000
   2) Collections of 1990 Instalment Receivables                                Rs. 50,000
   3) Collections of 1991 Instalment Receivables                                Rs. 120,000
   4) Merchandise purchased on account                                          Rs. 180,000
   5) Cash paid to accounts payable                                             Rs. 140,000
   6) Selling & Administrative expenses paid                                    Rs. 10,000
   7) Merchandise sold in 1990 and repossessed in 1991, valued Rs. 5,000 Instalment cancelled Rs. 6,000
   8) Merchandise sold during the year and repossessed, valued Rs. 9,000, Instalment cancelled Rs. 15,000
   9) Gross profit percentage in 1990 was 35% and in 1991 it was 28%.

REQUIRED:
    Prepare journal entries including adjusting and closing entries for the year.
                                                                                            (I/S =40,400)




                                                     2                   Prepared By: Muhammad Hassam
Q#3:
       The following transactions were made in Fayyaz & Sons during the 1992.
   1) Instalment sales                                                         Rs. 400,000
   2) Collections of 1990 Instalment Receivable                                Rs. 44,000
   3) Collections of 1991 Instalment Receivable                                Rs. 90,000
   4) Collections of 1992 Instalment Receivable                                Rs. 220,000
   5) Merchandise purchased on account                                         Rs. 230,00
   6) Cash paid to accounts payable                                            Rs. 250,000
   7) Selling & Administrative expenses paid                                   Rs. 15,000
   8) Merchandise sold in 1991 and repossessed in 1992, valued Rs. 7,000 Instalment cancelled Rs. 10,000
   9) Merchandise sold during the year and repossessed, valued Rs. 11,000, Instalment cancelled Rs.
       20,000
   10) Gross profit percentage in 1990 = 15%, 1991 = 20%, 1992 = 25%.

REQUIRED:
       Prepare journal entries to record all transactions and adjusting & closing entries relating to the
instalment sales during the year ended December 31, 1992.
                                                                                           (I/S = 59,600)

Q#4:
       The following is the Balance Sheet of Aftab & Company on December 31, 1984

                                        AFTAB & COMPANY
                                         BALANCE SHEET
                                         As on Dec. 31, 1984.

                    Assets                                             Equities
Cash                                Rs. 40,000           Accounts Payable             Rs. 10,000
Merchandise Inventory               Rs. 20,000           Bank Loan                    Rs. 20,000
Equipment                           Rs. 10,000           Aftab Capital                Rs. 152,000
Building                            Rs. 70,000
Furniture & Fixture                 Rs. 12,000
Land                                Rs. 30,000

                                      182,000                                            182,000

        Aftab Sons sells all merchandise on the instalment sales basis. The following figures have been
collected from the books of Aftab Traders for the year 1985.
    1) Installment sales                                                       Rs. 120,000
    2) Collections on instalment                                               Rs. 60,000
    3) Merchandise purchased on account                                        Rs. 91,000
    4) Cash paid on account                                                    Rs. 80,000
    5) Selling & General expenses paid                                         Rs. 6,000
    6) A customer was defaulted and merchandise was repossessed, valued Rs. 3,000 and instalment
        account cancelled Rs. 5,000
    7) Merchandise inventory end (New)                                         Rs. 30,000

REQUIRED:
      Give the entries that would be made to record the transactions and to adjust and close accounts for
1985.
                                                                                           (I/S = 12,800)




                                                   3                   Prepared By: Muhammad Hassam
Q#5:
  The following transactions were made in Fayyaz & Sons during the 1992.
  1) Instalment sales                                                         Rs. 250,000
  2) Collections of 1985 Instalment Receivable                                Rs. 25,000
  3) Collections of 1986 Instalment Receivable                                Rs. 120,000
  4) Merchandise purchased on account                                         Rs. 150,00
  5) Cash paid to accounts payable                                            Rs. 130,000
  6) Selling & Administrative expenses paid                                   Rs. 9,000
  7) Merchandise sold in 1985 and repossessed in 1986, valued Rs. 7,000 Instalment cancelled Rs. 10,000
  8) Merchandise sold during the year and repossessed, valued Rs. 10,000, Instalment cancelled Rs.
     15,000
  9) Gross profit percentage in 1985 = 20%, 1986 = 25%.

REQUIRED:
       Prepare journal entries to record all transactions and adjusting & closing entries relating to the
instalment sales during the year ended December 31, 1986.
                                                                                           (I/S = 23,750)

Q#6:
  The following transactions were made in Fayyaz & Sons during the 1992.

   1)  Instalment sales                                                         Rs. 340,000
   2)  Collections of 1985 Instalment Receivable                                Rs. 20,000
   3)  Collections of 1986 Instalment Receivable                                Rs. 80,000
   4)  Collections of 1987 Instalment Receivable                                Rs. 190,000
   5)  Merchandise purchased on account                                         Rs. 175,000
   6)  Cash paid to accounts payable                                            Rs. 200,000
   7)  Selling & Administrative expenses paid                                   Rs. 150,000
   8)  Merchandise sold in 1986 and repossessed in 1987, valued Rs. 7,000 Instalment cancelled Rs. 12,000
   9)  Merchandise sold during the year and repossessed, valued Rs. 10,000, Instalment cancelled Rs.
       10,000
   10) Gross profit percentage in 1985 = 30%, 1986 = 35%, 1987 = 36%.

REQUIRED:
       Prepare journal entries to record all transactions and adjusting & closing entries relating to the
instalment sales during the year ended December 31, 1987.
                                                                                         (I/S = - 48,800)

Q#7:
       Ideal Office Equipment supplier sells office Equipment on instalment basis the following inform the
year 1985 has been collected from the accounting record.

   1)   Inventory of equipment (Jan. 1, 1985)                                   Rs. 65,000
   2)   Purchases of Equipment during the year                                  Rs. 177,000
   3)   Sales of Equipment during the year on instalment basis                  Rs. 300,000
   4)   Collections from customers                                              Rs. 100,000
   5)   Inventory of Equipment (Dec. 31, 1985)                                  Rs. 62,000

REQUIRED:
    Give entries including adjusting and enclosing under instalment method.
                                                                                              (I/S = 40,000)




                                                     4                  Prepared By: Muhammad Hassam
Q#8:
       The following figures have been collected from the books of KASHIF Company, which sell its
products on instalment basis 1989.

   1)    Instalment sales                                                       Rs. 25,000
   2)    Cost of instalment sales                                               Rs. 17,500
   3)    Cash collections during the year                                       Rs. 15,000
   4)    Expenses Paid                                                          Rs. 3,000
   5)    Repossessed goods sold on instalment basis; instalment accounts cancelled Rs. 5,000; repossessed
         goods valued Rs. 4,000.

REQUIRED:
    Give the entries that would be made to record the transactions and to close accounts.
                                                                                                 (I/S = 2,000)

Q#9:
         Tahir Sales Company, reports profit on the instalment basis. Sales during 1984 are summarized
below:

   1)    Instalment sales                                                        Rs. 125,000
   2)    Cost of instalment sales                                                Rs. 60,000
   3)    Cash collections during the year                                        Rs. 100,000
   4)    Expenses Paid                                                           Rs. 8,000
   5)    Repossessed goods sold on instalment basis;
         instalment accounts cancelled                                           Rs. 10,000
         repossessed goods valued                                                Rs. 7,250

REQUIRED:
    Give the entries that would be made to record the transactions and to close accounts.
                                                                                                 (I/S = 3,250)

Q#10:
        The following figures have been collected from the books of Habib Trading Company, which sells
its product on instalment basis:

   1)    Instalment sales                                                         Rs. 340,000
   2)    Cash collected on Instalment sales                                       Rs. 180,000
   3)    Purchased Merchandise for cash                                           Rs. 230,000
   4)    General and selling expenses paid                                        Rs. 17,000
   5)    Merchandise Inventory at start                                           Rs. 50,000
   6)    Merchandise Inventory at end (New)                                       Rs. 42,000
   7)    Instalment accounts cancelled Rs. 8,000 repossessed goods valued Rs. 6,000

REQUIRED:
    Give entries including adjusting and closing under instalment method.
                                                                                                (I/S = 37,400)




                                                       5                 Prepared By: Muhammad Hassam
Q#11:
       Khalid Company deals in Radio and Television sets. The summary of the transactions for the year
end in December 31, 1986 is as follows:

   1) Instalment sales                                                         Rs. 300,000
   2) Collections in respect of 1986 instalment sales                          Rs. 40,000
   3) Collections of 1986 sales                                                Rs. 180,000
   4) Purchase on account                                                      Rs. 200,000
   5) Payments to accounts payable                                             Rs. 140,000
   6) Selling expense paid                                                     Rs. 14,000
   7) General expense paid                                                     Rs. 8,000
   8) Repossessed Merchandise fair market value                                Rs. 3,000
   9) Instalment Receivable, 1985 written off by repossession                  Rs. 4,500
   10) Inventory, December 31, 1986 (New and repossessed)                      Rs. 23,000
   11) Inventory January 1, 1986                                               Rs. 30,000

REQUIRED:
    Journal entries, including adjusting and closing entries for the year ended on December 31, 1986.
                                                                                           (I/S = 39,400)

Q#12:
        Saad & Company sells Merchandise on the instalment basis.

                                                                  1980           1981            1982
Sales                                                           180,000        240,000         200,000
Cost of instalment sales                                        108,000        139,200         112,000
Operating Expenses                                               50,000         55,000          54,000
Collections from sale of 1980                                    75,000         60,000          40,000
Collections from sale of 1981                                                  100,000          80,000
Collections from sale of 1982                                                                   85,000

REQUIRED:
    Give all entries in General journal for the year ended 1980, 1981, 1982.
                                                                                             (I/S = 11,000)

Q#13:
       The following figures have been collected from the books of Taha Traders sells its products on
instalment basis:

   1)   Instalment Sales                                                       Rs. 200,000
   2)   Purchased Merchandise on account                                       Rs. 160,000
   3)   Paid to creditors                                                      Rs. 120,000
   4)   Cash collected from customers                                          Rs. 120,000
   5)   Expenses paid                                                          Rs. 12,000
   6)   Merchandise Inventory at start                                         Rs. 20,000
   7)   Merchandise Inventory at end                                           Rs. 30,000

REQUIRED:
    Give entries including adjusting and closing entries under instalment method.
                                                                                             (I/S = 18,000)




                                                   6                   Prepared By: Muhammad Hassam
Q#14:
       The safe Ride Company Book showed on January 1, 1988. Cash Rs. 450,000; Merchandise
Inventory Rs. 50,000 and share capital Rs. 500,000. The transactions for the year ended on 31st December,
1989 are summarized as follows:
                                                                    1988                         1989

   1)   Instalment sales                                          10,00,000                    15,00,000
   2)   Collections on 1988 Instalment Receivable                  6,00,000                     3,00,000
   3)   Collections of 1989 Instalment Receivable                                               9,00,000
   4)   Purchase of Merchandise on account                         7,30,000                    10,35,000
   5)   Payments to accounts payable                               5,00,000                     3,50,000
   6)   Selling & Administrative expense paid                      1,50,000                     3,50,000
   7)   Repossessed Merchandise at fair market value                                              30,000
   8)   Instalment receivable 1988, written of by repossession                                  1,00,000
   9)   Inventory, December 31 (New and repossessed)               2,00,000                     2,65,000

REQUIRED:
     Journal entries including adjusting and closing entries for the year ended on 31st December, 1988 and
  st
31 December, 1989.
                                                                                            (I/S = 102,000)
                                                                                             (I/S = 48,000)

Q#15:
        The following informations were collected from the books of Aslam Traders.

PARTICULARS                                                        1988                          1989

   1) Instalment sales                                            120,000                      2,40,000
   2) Collections on 1988 Instalment Receivable                    70,000                        25,000
   3) Collections of 1989 Instalment Receivable                                                1,50,000
   4) Purchase of Merchandise on account                          1,00,000                     1,64,000
   5) Payments to accounts payable                                  90,000                     1,50,000
   6) Selling expense paid                                           6,000                        8,000
   7) General expense paid                                           3,000                        4,000
   8) Merchandise Inventory at end (New)                            16,000                       20,000
   9) Value of Merchandise repossessed (1988)                        3,000                        7,500
   10) Instalment A/Receivable written off (1988)                    5,000                       10,000
   11) Value of Merchandise repossessed (1989)                                                   10,000
   12) Instalment A/Receivable of 1989 written off                                               15,000

REQUIRED:
    Give the entries in General Journal including adjusting and closing entries for 1988 and 1989.
                                                                                            (I/S = 11,500)
                                                                                          (I/S = 45,862.5)




                                                     7                    Prepared By: Muhammad Hassam
Q#16:
        The Yasin Appliance Co. reports gross profit on the instalment basis the following data are available:

                                                       1985                  1986                  1987

Instalment sales                                     240,000               250,000                300,000
Cost of instalment sales                             180,000               181,250                216,000

Collections:

1985 instalment contracts                             45,000                 75,000                72,500
1986 instalment contracts                                                    47,500                80,000
1987 instalment contracts                                                                          62,500

Defaults:

Unpaid balance of 1985 instalment contracts                                 12,500                 15,000
Value assigned and repossessed goods                                         6,500                  6,000
Unpaid balance of 1986 instalment contracts                                                        16,000
Value assigned and repossessed Goods                                                                9,000

REQUIRED:
        Give all of the entries for 1985, 1986 and 1987 that are required in recording instalment sales,
collections, defaults and repossession and the recognition of Gross profit.
                                                                                          (I/S = 11,250)
                                                                                        (I/S = 28,937.5)
                                                                                          (I/S = 49,775)

Q#17:
        Raheel House uses the instalment basis of recognizing Gross profit for sales made on the instalment
Plan.

1980: Sold for Rs. 1500 a television set having a cost of Rs. 900 and received account payment of Rs. 300.

1981: Received twelve monthly instalment of Rs. 75/= each.

1982: The customer defaulted on monthly instalment payment, the set was repossessed, and the remaining
      four instalments were cancelled. The set was estimated to be worth Rs. 270.

REQUIRED:
    Prepare all journal entries for 1980, 1981 and 1982.
                                                                                                  (I/S = 120)
                                                                                                  (I/S = 360)
                                                                                                   (I/S = 90)




                                                      8                    Prepared By: Muhammad Hassam
Q#18:
       Rohail Broadcasting Company sold radio sets on instalment basis for a contract price of Rs. 60,000
which cost Rs. 30,000.

Other Details are:

   1)   Down payment received at 10% of the contract price.
   2)   Total amount collected from customers (excluding down payment Rs. 36,000).
   3)   Two customers default on sales amounting to Rs. 600 each after making only the down payments.
   4)   One set was recovered from the customer and value assigned to it Rs. 300, and the other set was
        considered at lost.

REQUIRED:
         Entries in the General Journal to record the above transactions including adjusting and closing
entries.
                                                                                           (I/S = 20,760)

Q#19:
       A Television dealer sold sets on the instalment basis for a contract price of Rs. 75,000 which cost Rs.
37,500.

Other Details are given as under:

   1)   Down payment was made 5% of the contract price.
   2)   Total each collected after the down payment was Rs. 45,000).
   3)   Two customers default after making only the down payments on a total sales of Rs. 1,500.
   4)   One radio set was repossessed having a value of Rs. 375, and other radio set was considered
        irrecoverable.

REQUIRED:
         Entries in the General Journal to record the above transactions, including adjusting and closing
entries.
                                                                                         (I/S = 24,037.50)




                                                      9                    Prepared By: Muhammad Hassam
                                                 PART “B”
Q#1:
       Pak furniture Company began business on July 1, 1968. On June 30, 1969, its Balance Sheet
included the following account balances, among others.
                      Instalment Accounts Receivable                        Rs. 62,400
                      Deferred Gross profit on instalment sales             Rs. 26,208
       During the year ended June 30, 1970 the company made sales on the instalment basis totaling Rs.
188,500. The cost of Merchandise sold on the instalment basis was Rs. 113,100. The following amounts
were collected on Instalment Contract during the year ended June 30, 1970.

                 YEAR OF SALES                                               AMOUNT COLLECTED
               Year ended June 30, 1969                                          Rs. 50,200
               Year ended June 30, 1970                                          Rs. 96,400

       Instalment Contracts adjusting in the year ended June 30, 1969 with balance totaling Rs. 6,600 were
determined to be uncollectible and the Merchandise was repossessed. All the date of repossession these
Merchandise had an estimated value at Rs. 3,250.

REQUIRED:
       Prepare journal entries to record all transactions and adjusting entries relating to the instalment sales
during the year ended June 30, 1970.
                                                                                                  (I/S = 59,066)

Q#2:
       Ather Trader began business on January 1, 1980. On January 1, 1981, its Balance Sheet included the
following accounts.
                      Instalment Accounts Receivable                            Rs. 50,800
                      Unrealized Gross profit – 1980                            Rs. 20,320
       During the year ended December 31, 1981 the company made sales on the instalment basis totaling
Rs. 460,000. The cost of Merchandise sold on the instalment basis was Rs. 299,000. The following amounts
were collected on Instalment Contract during the year ended December 31, 1981.

DEFAULTS:

Unpaid balance of 1980 instalment contracts                                  Rs. 7,000
Value assigned to repossessed goods                                          Rs. 4,500
Unpaid balance of 1981 instalment contracts                                  Rs. 5,000
Value assigned to repossessed goods                                          Rs. 3,300

REQUIRED:
       Prepare journal entries to record all transactions and adjusting entries relating to the instalment sales
during the year ended December 31, 1981.
                                                                                                 (I/S = 117,850)
Q#3:
       The following data relates to instalment Account Receivable of various year:

                              Instalment A/R of 1975 collected in 1978       Rs. 60,000
                              Instalment A/R of 1976 collected in 1978       Rs. 80,000
                              Instalment A/R of 1977 collected in 1978       Rs. 120,000
                              Instalment A/R of 1978 collected in 1978       Rs. 160,000




                                                      10                    Prepared By: Muhammad Hassam
                            The ratio of cost to instalment sales is as under:
                            Instalment Accounts Receivable 1975 – 80%
                            Instalment Accounts Receivable 1976 – 75%
                            Instalment Accounts Receivable 1977 – 60%
                            Instalment Accounts Receivable 1978 – 60%

REQUIRED:
      Give all the general entries to record the instalment sales related transactions for the year 1978
assuming the unrealized gross profit for the year 1978 before adjustment amounted to Rs. 200,000.
                                                                                            (I/S = 144,000)

Q#4:
       The following data collected from the book of Indus Trading Company on December 31, 1983.

                             Cash collections during the year of 1983

                      Instalment Accounts Receivable of 1980             Rs. 50,000
                      Instalment Accounts Receivable of 1981             Rs. 70,000
                      Instalment Accounts Receivable of 1982             Rs. 100,000
                      Instalment Accounts Receivable of 1983             Rs. 180,000

                             The ratio of cost to Instalment Sales is as under:

                             Cost of instalment sales 1980        75%
                             Cost of instalment sales 1981        65%
                             Cost of instalment sales 1982        60%

                             Other Informations:

                             Merchandise Inventory (1-1-1983)                     Rs. 60,000
                             Merchandise Inventory (31-12-1983)                   Rs. 35,000
                             Purchase Merchandise on account                      Rs. 200,000
                             Selling & Administrative expenses paid               Rs. 29,000

REQUIRED:
      Give all the general entries to record the instalment sales related transactions for the year 1983
assuming the unrealized gross profit for the year 1983 before adjustment amounted to Rs. 150,000.
                                                                                            (I/S = 120,000)




                                                    11                   Prepared By: Muhammad Hassam
Q#5:
        The Umair Sales Company accounts for instalment sales on the instalment basis. On January 1, 1984,
the customer accounts included the following balances.

                     Instalment Accounts Receivable 1982                        Rs.   40,000
                     Instalment Accounts Receivable 1983                        Rs.   90,000
                     Deferred Gross profit 1982                                 Rs.   16,000
                     Deferred Gross profit 1983                                 Rs.   36,000

        December 31, 1984, the account balances, before adjustment for realized gross profit on instalment
sales are:

                     Instalment Accounts Receivable 1982                        Rs. 10,000
                     Instalment Accounts Receivable 1983                        Rs. 50,000
                     Instalment Accounts Receivable 1984                        Rs. 128,000
                     Deferred Gross profit 1982                                 Rs. 16,000
                     Deferred Gross profit 1983                                 Rs. 36,000
                     Instalment Sales 1984                                      Rs. 240,000
                     Cost of instalment sales 1984                              Rs. 144,000

REQUIRED:
    (a)   Statement showing collections in 1984 on Instalment accounts of each year.
    (b)   Give all general journal entries including closing and adjusting entries for 1984.
                                                                                            (I/S = 72,800)

Q#6:
       The Uzair Trading Company accounts for instalment sales on the instalment basis. On January 1,
1983, the customer accounts included the following balances.

                     Instalment Accounts Receivable 1981                        Rs. 60,000
                     Instalment Accounts Receivable 1982                        Rs. 100,000
                     Deferred Gross profit 1981                                 Rs. 18,000
                     Deferred Gross profit 1982                                 Rs. 32,000

        December 31, 1983, the account balances, before adjustment for realized gross profit on instalment
sales are:

                     Instalment Accounts Receivable 1981                        Rs. 15,000
                     Instalment Accounts Receivable 1982                        Rs. 30,000
                     Instalment Accounts Receivable 1983                        Rs. 120,000
                     Unrealized Gross profit 1981                               Rs. 18,000
                     Unrealized Gross profit 1982                               Rs. 32,000
                     Instalment Sales 1983                                      Rs. 300,000
                     Cost of instalment sales 1983                              Rs. 195,000
                     Selling & General Expense                                  Rs. 21,000

REQUIRED:
    (a)   Statement showing collections in 1983 on Instalment accounts of each year.
    (b)   Give all general journal entries including closing and adjusting entries for 1983.
                                                                                            (I/S = 77,900)




                                                   12                   Prepared By: Muhammad Hassam
Q#7:
        Nasir & Company accounts for instalment sales by reporting income in the proportion of the
collections the selling price. On December 31, 1982 his books show account balances as follows:

YEAR          INSTALMENT A/R                PERCENTAGE OF                 NREALIZED GROSS PROFIT
              DECEMBER 31, 1982              ABOVE COST                      DECEMBER 31, 1982

1980                  Rs. 1,000                     30%                                   7,000
1981                  Rs. 11,571                    45%                                  10,000
1982                  Rs. 35,000                    40%                                  20,000

REQUIRED:
    Give the entry to adjust the unrealized Gross profit accounts at end of 1982.

Q#8:

YEAR          PERCENTAGE OF              INSTALMENT A/R            COLLECTED          INSTALMENT A/R
              GROSS PROFIT               ON JAN. 1, 1973           DURING 1973          ON DEC. 31,
1973

1971                  42%                   Rs. 60,000             Rs. 60,000                    Nil
1972                  36%                   Rs. 120,000            Rs. 48,000                Rs. 72,000
1973                  40%                                          Rs. 120,000               Rs. 300,000

REQUIRED:
       Prepare all journal entries for 1973 from the data above, including those required for the recognition
of Gross Profit at the end of the year.
                                                                                               (I/S = 52,080)

Q#9:
        Noor Zada & Company accounts for instalment sales by reporting income in the proportion of the
collections to the selling price. On December 31, 1972, his books show accounts balances as follows:

       INSTALMENT RECEIVABLE                                       UNREALIZED GROSS PROFIT

       1970           Rs. 15,000                                   1970           Rs. 12,250
       1971           Rs. 60,000                                   1971           Rs. 39,000
       1972           Rs. 135,000                                  1972           Rs. 157,000

       The Gross Profit rates were 1970: 35%, 1971: 30%, 1972: 40%

REQUIRED:

       (a)    How much collected in 1972 from Accounts Receivable of each year.
       (b)    What adjusting entries are required of December 31, 1972.
                                                                                             (I/S = 131,000)




                                                     13                   Prepared By: Muhammad Hassam
Q#10:
        Muhammad Farroque & Company accounts for instalment sales by reporting income in the
proportion of the collections to the selling price. On December 31, 1967, his books show accounts balances
as follows:

        INSTALMENT RECEIVABLE                                    UNREALIZED GROSS PROFIT
        1965          Rs. 10,000                                 1965     Rs. 8,050
        1966          Rs. 40,000                                 1966     Rs. 27,000
        1967          Rs. 90,000                                 1967     Rs. 105,000
        The Gross Profit rates were 1965: 35%, 1966: 30%, 1967: 40%

REQUIRED:
    (a)   How much collected in 1967 from Accounts Receivable of each year.
    (b)   What adjusting entries are required of December 31, 1967.
                                                                                              (I/S = 88,550)

Q#11:
       On July 31, 1967 Shabbir sold property that had cost him Rs. 60,000 for Rs. 75,000. He received Rs.
10,000 as down payment; the balance is payable in monthly instalment, with the first payment due at the end
of August 31. Monthly payments are sum consisting of Rs. 400 to apply against the principal plus interest on
the unpaid balance at 6% per annum. Shabbir decided to report profit on the instalment basis.

REQUIRED:
      What entries would be made for the sale, for the receipts of instalment with interest at the end of
each month for the recognized of profit for 1967.
                                                                                            (I/S = 5,755)

Q#12:
       On July 1, 1969, the Shariq Autos sold 10 Suzuki cars on instalment basis at Rs. 13,500 each, cost
being Rs. 11,475 each.
       The terms of sale were:
    1) Rs. 3,500 should be paid at the time of signing the agreement.
    2) The balance should be paid in 20 quarterly instalment of Rs. 500 each. The first instalment is payable
       on September 30, 1969.
       The interest at 8% should be paid on the balance and be paid along with the instalment amount.

REQUIRED:
    Give all entries, including adjusting and closing entries for the year ended December 31, 1969.
                                                                                           (I/S = 10,650)

Q#13:
       On April 1, 1981 Qamar Autos sold one car to Ansar Ahmed for Rs. 15,000 which cost Rs. 12,000.
The agreement provides:
   1) Down payment Rs. 3,000.
   2) The balance to be paid in 6 equal instalments; carrying interest at 6% on unpaid balance.
   3) Instalment are payable quarterly and the first instalment is payable on June 30.
       Mr. Ansar Ahmed has paid three instalments in 1981 together with interest.

REQUIRED:
      Give all entries, including adjusting and closing entries for the year ended December 31, 1981.
                                                                                               (I/S = 2,250)
Q#14:
      On January 1, 1970, the Indus Autos sold four rikshaws of 6,000 each, payment was made Rs. 6,000
as down payment and the balance in 3 annual instalment of Rs. 6,000.

                                                     14                   Prepared By: Muhammad Hassam
     The rate of interest was charged on the unpaid balance at 5%. The instalment is payable on
December 31 each years.
     The cost of the rikshaws was Rs. 20,000.

REQUIRED:
    Entries in the General Journal of Indus Autos for the year 1970, 1971 and 1972.
                                                                                               (I/S = 2900)
                                                                                               (I/S = 1600)
                                                                                               (I/S = 1300)

Q#15:
       Nasir Traders sold on March 31, 1980, ten T.V. sets for Rs. 48,000 costing Rs. 30,000 receiving a
down payment of Rs. 48.00 and the same is in equal monthly instalments. Interest is also allowed on the
unpaid balance at ½ of 1% a month.
       The customers pay the instalments regularly upto May, 1980.
       The customers of two T.V. sets defaults after making payment of May 1980 instalment. The sets are
repossessed having a market price of Rs. 5300.

REQUIRED:
        Give the necessary journal entries in proper form on the books of Nasir Traders to record the above
transactions on March 31, April 30, and May 31, 1980, under instalment method. Give the adjusting and
closing journal entries also.
                                                                                               (I/S = 6,908)




                                                    15                   Prepared By: Muhammad Hassam

				
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