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Hospitality Accounting-I 4th semester 2016 (BHM)

Pokhara University

 

Level: Bachelor                         Semester-Spring                       Year: 2016

Programme: BHM                                                                     Full Marks: 100

Course: Hospitality Accounting I                                               Pass Marks: 45

Time: 3hrs

Candidates are required to give their answers in their own words as far as practicable.

The figures in the margin indicate full marks.

 

Section “A”

Very Short Answer Questions

Attempt all the questions. 10*2

  1. Briefly explain about accounting.
  2. Define Going Concern Concept in accounting.
  3. If a company had total assets of 12,00,000 with current liabilities of Rs. 200,000 and long term liabilities of Rs. 600,000 then what will be the value of shareholder’s equity.
  4. What is trial balance? What are the objectives of preparing trial balance?
  5. Define capital expenditure with appropriate examples.
  6. What are the differences between reserve and provision?
  7. Prepare the statement of retained earnings for the Walt Disney Company:

Net Income for 2008                                          Rs. 1,850

Dividend declared and paid in 2008                      412

Retained earnings, September 30, 2007                9,543

Retained earnings, September 30, 2008               10,981

 

  1. A hotel has 200 rooms. 70% of the available rooms are occupied throughout the year, out of which 10% is complementary and the room revenue is Rs 25,00,000. Calculate complementary occupancy percentage.
  2. What do you mean by financial statement analysis?
  3. Find out the value of dividend paid the year if a company had opening and closing retained earnings Rs. 250,000 and Rs. 500,000 respectively with net profit after tax during the year is Rs. 320,000.

 

Section “B”

Descriptive Answer Questions

Attempt any six questions. 6*10

11. Define accounting. Explain in brief the principles of generally accepted accounting principle.

12. From the following transaction of ABC Company prepare cash book with appropriate column.

a) Cash balance Rs. 50,000 and bank balance Rs. 100,000.

b) Cash withdrawn from bank Rs. 20,000 for official use and Rs. 5000 for personal use.

c) Received Rs. 49,500 from account receivable in full settlement of Rs. 50,000.

d) Goods purchased for Rs. 200,000 out of which Rs. 30,000 paid in cash, Rs. 70,000 by cheque and balance on account.

e) Sold goods for Rs. 100,000 and 50% received in cash and sign a one month promissory note for reminder.

f) Cash deposited into bank Rs.40,000.

g) Payment made to account payable Rs. 99,000 in full settlement.

h) Salary paid Rs.20,000.

i) Goods sold on account Rs.50,000.

j) Commission received Rs.10,000.

 

13. Reliable Home Repair Company completed the following transactions in June 2016.

        June 1 The Company was organized and received Rs. 1,00,000 cash from the issuance of capital.

       June 8 The Company borrowed Rs. 10,000 from a bank as a loan

       June 15 Repairs service performed for a customer who agrees to pay within a month amounted to Rs. 5,400.

      June 22 The Company paid Rs. 4,065 on its loan from the bank, including Rs. 4,050 of principal and Rs. 15 of                interest.

       June 30 Miscellaneous expenses incurred in operating the business were Rs. 3,825 and were paid in cash.

Required:

  1. Prepare journal entries for each transaction.
  2. Post each transaction to the appropriate T accounts.
  3. Prepare a trial balance dated June 30,2016.
  4. The trial balance of World Trade House Ltd is as follows:

 

14.  World Trade House Ltd.

Trial Balance as on Dec 31, 2015

Account Titles Debit (Rs) Credit (Rs)
Cash and cash equivalents 5,000
Receivables 2,000
Inventories 3,000
Prepaid 1,500
Property, Plant & Equipment, at Cost 30,000
Accumulated depreciation,Property, Plants& Equipment 3,000
Brands, trademark and goodwill 20,000
Other assets 5,000
Notes payable 4,000
Account payable 5,000
Advances on sales (deferred revenues) 6,000
Other current liabilities 5,000
Long term debt 10,500
Other noncurrent liabilities 9,500
Preferred stock 5,000
Common stock Rs 100 par value 10,000
Retained earnings (Dec 31, 2002) 6,000
Additional paid in capital 1,000
Net sales 20,000
Cost of goods sold 15,000
Selling and administrative expense 1,500
Interest expenses 1,000
Gain on sales of machines 1,000
Income taxes 1,000
Cash dividends 4,000
Accrued payroll 3,000
Total 89,000 89,000

Required:

  1. World Trade House Ltd’s Income Statement for the year ended 31 Dec, 2015 using a multiple step format.
  2. World trade House ltd’s statement of Retained Earning at the end of 31 Dec, 2015.
  3. World Trade House Ltd’s Classified Balance Sheet as of Dec 31, 2015.

 

  1. Sharma and Company is in the process of its cash follows for the year ended 30 June, 2016. An income statement for the year and comprehensive balance sheet follows:

For the year ended June 30, 2016 (In Rs)

Sales revenue                                        4,00,000

Cost of goods sold                                 2,40,000

Gross Profit                                           1,60,000

General and Administrative expense        40,000

Depreciation expense                             80,000

Loss on sale of plat assets                     10,000

Total expenses and losses                   1,30,000

Income before interest and tax                30,000

Interest expense                                    15,000

Income before tax                                  15,000

Income tax expense                               5,000

Net Income                                          10,000

 

2016 2015 June 30
Cash 25,000 40,000
Account receivable 80,000 69,000
Inventory 75,000 50,000
Prepaid rent 2,000 18,000
Total Current assets 1,82,000 1,77,000
Land 60,000 1,50,000
Plant and equipment 5,75,000 5,00,000
Accumulated Depreciation 3,10,000 2,50,000
Total Long term Asset 3,25,000 4,00,000
Total assets 5,07,000 5,77,000
Account payable 1,45,000 1,40,000
Other accrued Liabilities 50,000 45,000
Income tax payable 5,000 15,000
Total Current Liabilities 2,00,000 2,00,000
Long term bank loan payable 75,000 1,50,000
Common Stock 1,00,000 1,00,000
Retained earnings 1,32,000 1,27,000
Total shareholder’s equity 2,32,000 2,27,000
Total liabilities and shareholder’s equity 5,07,000 5,77,000

Additional Information:

  • Dividend of Rs 5,000 were declared and paid during the year.
  • New plant assets were purchased for Rs 1,25,000 in cash during the year.
  • Land was sold for cash at its book value.
  • Plant assets were sold during the year for Rs 20,000 in cash. The original cost of the assets sold was Rs 50,000 and their book value was Rs 30,000.
  • A portion of bank loan also repaid.

Required: Prepare a cash flow statement using direct method in operating activity section.

 

  1. Following balance sheet is given to you.
Liabilities Amounts Assets Amounts
Equity Share capital 800,000 Land and Building 700,000
Reserve and Surplus 400,000 Plant and Machinery 650,000
General Reserve 200,000 Cash Balance 150,000
10% Bonds payable 500,000 Bank Balance 200,000
Account Payable 300,000 Inventory 400,000
Tax Payable 100,000 Account Receivable 200,000
Notes Payable 150,000 Pre-paid Insurance 150,000
2450,000 2450,000

Other Information:

  1. Fixed assets turnover ratio is 4 times
  2. Net profit before interest and tax 25% of total sales
  3. Tax rate is 25%.

Required:

  1. Current Ratio
  2. Quick Ratio
  3. Debt-Equity Ratio
  4. Amount of Sales
  5. Inventory Turnover Ratio
  6. Average Collection Period
  7. Net Profit after Tax
  8. Return on Assets
  9. Return on Shareholder’s Equity
  10. Return on Capital Employed

 

17. What is an animal report? Discuss its major components.

 

Section “C”

Case analysis 20

  1. You given the following trial balance and other information:
Particular Dr.amount (Rs) Particulars Cr. Amount (Rs)
Cost of sales: Sales Revenue:
F&B Department 150,000 Room 3,00,000
Laundry Service 20,000 F&B 5,00,00
Other Minor Operating Dept. 5,000 Laundry Service 1,00,000
Payroll and related expense: Other Minor Operating Dept. 50,000
Room 1,00,000 Common Stock 4,50,000
F&B Department 40,000 Retained Earning 40,000
Laundry service 15,000 General Reserve 20,000
Other Minor Operating Dept. 2,000 Share Premium 10,000
Administrative expense 20,000 Bonds payable 30,000
Marketing expense 15,000 Bank loan 40,000
Repair& maintenance 4,000 Account payable 10,000
Other expense: Notes payable 15,000
Room 50,000 Income tax payable 5,000
F&B Department 15,000 Salary & other expense payable 10,000
Laundry service 3,000
Other Minor operating dept. 1,000
Administrative expense 12,000
Marketing expense 10,000
Repair & Maintenance 3,000
Power expense 5,000
Fixed Charge
Rent expense 50,000
Insurance expense 25,000
Internet expense 35,000
Depreciation 55,000
Land & building 4,00,000
Plat & machinery 3,00,000
Equipment 1,00,000
Goodwill 50,000
Cash & Bank 20,000
Receivable 25,00
Inventory 35,000
Prepaid expenses 15,000
15,80,000 15,80,000

 

Other information:

a) Hotel has 150 rooms and 10% of rooms are generally under maintenance throughout the year.

b) Normally 80% rooms are occupied during the year and among them, paid rooms are 30,000 during the year.

c) No of cover sold during the year were 5,000 covers.

d) No of guests stay during the year were 45,000

Required:

i) Prepare income statement and balance sheet under USALI format.

ii) Calculate the following ratios:

  1. Average Daily Room rate
  2. Revenue per Available Room
  3. Average Food service Check
  4. Food Cost Percentage
  5. Average Occupancy per Room

 

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