Scribd
Upload
40 views6 pages

Main Quiz 5 - Makeup

This document contains instructions for a makeup quiz for a course at LUMS. It provides 7 multiple choice questions about a partnership and company called CrawFord. The questions require calculations of partnership income/loss allocation, accounting entries, financial ratios, cash flow, and a common size balance sheet. Readers are advised to show their work clearly and assume any missing information as needed to solve the questions.

Uploaded by

Eisha Shahid
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
40 views6 pages

Main Quiz 5 - Makeup

This document contains instructions for a makeup quiz for a course at LUMS. It provides 7 multiple choice questions about a partnership and company called CrawFord. The questions require calculations of partnership income/loss allocation, accounting entries, financial ratios, cash flow, and a common size balance sheet. Readers are advised to show their work clearly and assume any missing information as needed to solve the questions.

Uploaded by

Eisha Shahid
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 6

LUMS – SDSB – POFA – Fall 2023 – Makeup QUIZ Name: _________________________ ID: _________

You should read the questions VERY carefully. All questions to be attempted. Write in ink. Present
neatly. Produce solutions in the space provided. You can use empty space as your rough work but
mention the same as such. In case you think some information is missing or wrong, state your
assumptions (you will get credit only if the information is really wrong or missing and is required to
solve the questions). Instructor or TA will not be responding to questions in class. Present neat and
clean.
______________________________________________________________________

Following data pertains to all the questions in this quiz

The Income and Loss sharing ratio of the three partners is 5:3:2.

1) Loss for May was USD 54,000. Workout capitals of the three partners before distribution of
income of May. Also make an accounting entry that would have been made on 31 st May for
distribution of income / loss among the three partners [10]

Loss sharing:
Jamison  54000 x 5 / 10 = 27000  +33000 = 60000 Capital before May Loss Distribution 2
Moyer  54000 x 3 / 10 = 16200  + 21000 = 37200 Capital before May Loss Distribution 2
Roper  54000 x 2 / 10 = 10800  + 3000 = 13800 Capital before May Loss Distribution 2

Accounting Entry 4

Jamison Capital Dr. 27000


Moyer Capital Dr. 16200
Roper Capital Dr. 10800
Income Summery Cr. 54000
LUMS – SDSB – POFA – Fall 2023 – Makeup QUIZ Name: _________________________ ID: _________

2) Income for June is USD 36,000. Make an accounting entry for the distribution of income of
June among the three partners [5]

Accounting Entry 5

Income Summery Dr. 36000


Jamison Capital Cr. 18000
Moyer Capital Cr. 10800
Roper Capital Cr. 7200

3) On 30th June 2020, after distribution of income of June, as above, parner Moyer withdraws
from business and he is paid cash of USD 22000 on withdrawal. Make an accounting entry
to record his withdrawal showing necessary calculations [10]

Bonus Calculation 5
Moyer’s updated capital = 21000 + 10800 = 31800
Moyer is paid = 22000
Bonus to Old partners 9800
Distribution of Bonus:
Jamison = 9800 * 5 / 7 = 7000
Roper = 9800 * 2 / 7 = 2800

Accounting Entry 5

Moyer’s Capital Dr. 31800


Jamison’s Capital Cr. 7000
Roper’s Capital Cr. 2800
Cash Cr. 22000
LUMS – SDSB – POFA – Fall 2023 – Makeup QUIZ Name: _________________________ ID: _________

For following questions, disregard data of Question1, 2 and 3. But consider only the balance sheet
provided. Each question is independent of others

4) Workout any solvency ratio for CrawFord on 31st May [5[

Debt to Assets Ratio = Total Liabilities / Total Assets


= 13500 + 27000 + 4000 / 101500 = 0.4384 = 43.84%

Times Interest Earned = EBIT / Interest Expense


= Cannot be worked out as interest expense not available

Debt Equity Ratio = Total Liabilities / Total Equity


= 13500 + 27000 + 4000 / 33000 + 21000 + 3000 = 78.07%

5) If Rerun on Equity of CrawFord for May was 20%, and the net profit margin was 25%,
workout net sales for May. For this question, take closing balances as average for any ratio
that requires average numbers. [5]

ROE = Net Profit / Partners’ Equity  0.2 = X / 57000  X = 11400 3

NP Margin = Net Profit / Net Sales  0.25 = 11400 / Y  Y = 45600 2

6) Assuming notes payables are a long term liability, loss for May was USD54000 and all the
contra asset allowances relate to non cash expenses recorded in May, workout the cash
flow from operating activities. Further Assume Business started in May means April
balances were Zero

Net Loss -54000


+Dep 5500
+Bad Debts 1000
-Inc in Inventory -34500
-Inc in Receivables -25000
+ Inc in Payables +27000
+ Inc in Salaries P/A + 4000

CFFOA = -76000
LUMS – SDSB – POFA – Fall 2023 – Makeup QUIZ Name: _________________________ ID: _________

7) Make a common size balance sheet for CrawFord for May [5]

20.7 32.5
( 5.4) 20.7
34.0 2.9
24.6 13.3
( 1.0) 26.6
27.1 3.9
100 100

--------------------------------------------------------------------------------------------------------------------
LUMS – SDSB – POFA – Fall 2023 – Makeup QUIZ Name: _________________________ ID: _________
LUMS – SDSB – POFA – Fall 2023 – Makeup QUIZ Name: _________________________ ID: _________

You might also like