- Question 1
Answer each of the following questions briefly: [10 × 2 = 20 Marks](i) Define Prime Cost.VIEW SOLUTION
(ii) Explain FIFO method of stock valuation.
(iii) What do you mean by the term non-recurring expenses in joint venture?
(iv) What is the purpose of opening a joint bank account for joint venture?
(v) State two advantages of self-balancing system.
(vi) Why is a profit and loss appropriation account necessary in a partnership firm?
(vii) Why is there a need for revaluation of assets and liabilities of a firm if there is a change in profit-sharing ratio of partners?
(viii) Explain ‘pro-rata allotment of shares’ by means of a suitable example.
(ix) State two differences between ‘current assets’ and ‘current liabilities’.
(x) Mention two uses of ratio analysis.
- Question 2
Winston was allotted 100 equity shares of Rs. 100 each by Diplod Ltd. originally issued at a discount of 6% per share. He failed to pay the final call at Rs. 35. These shares were forfeited and out of these, 50 shares were re-issued to Morgan at Rs. 90 each as fully paid up. Journalise the transactions in respect of forfeiture and re-issue of shares only. [10 Marks]
- Question 3
Trading and Profit and Loss Account of Myers Ltd. for the year ended 31st March 2007. [14 Marks]ParticularsAmountRsParticularsAmountRs
To opening stock15,250 By sales1,00,100 To purchases63,050 By closing stock19,600 To carriage400 To wages1,000 To Profit and Loss A/c40,0001,19,7001,19,700 To Administrative expenses20,200 By Trading A/c40,000 To salaries2,400 By non operating income1,200 To financial expenses1,400 To Non-operating expenses400 To Balance c/d16,80041,20041,200Balance Sheet of Myers Ltd.As at 31st March, 2007LiabilitiesAmountRsAssetsAmountRs Share capital70,000 Fixed assets60,100 Reserves1,200 Stock19,000 Profit and Loss A/c16,800 Debtors9,000 Creditors3,700 Bank3,60091,70091,700
From the above, calculate the follow ratios:VIEW SOLUTION
(i) Gross Profit ratio (%)
(ii) Net Profit ratio (%)
(iii) Stock turnover ratio
(iv) Proprietary ratio
(v) Current ratio
(vi) Quick ratio
(vii) Working capital turnover ratio.
- Question 4
The following are the Balance Sheets of Jardine Ltd. as on 31st December 2006 and 2007:- [14 Marks]Liabilities20062007Assets20062007
Share capital5,10,0005,50,000 Goodwill25,00020,000 Loan2,50,0001,50,000 Building2,10,0003,30,000 General reserve1,00,0001,00,000 Machinery3,00,0004,00,000 Profit and Loss A/c55,00095,000 Stock1,25,0001,05,000 Provision for taxation20,00055,000 Debtors1,50,0001,20,000 Creditors25,00020,000 Cash1,50,00012,000 Bills payable10,00015,000 Preliminary expenses15,00010,000 Provision for doubtful debts.5,00012,0009,75,0009,97,0009,75,0009,97,000
(i) During the year, a part of the machinery costing Rs. 2,500 was sold for Rs. 1,500.
(ii) Dividend of Rs. 50,000 was paid during the year.
(iii) Income tax of Rs. 25,000 was paid during the year.
(iv) Depreciation provided during the year on Building Rs. 5,000 and Machinery Rs. 25,000.
From the above, you are required to prepare a cash flow statement as per Accounting Standard – 3. VIEW SOLUTION
- Question 5
The following are is the trial balance of Martin Ltd. as on 31st March 2007:- [14 Marks]DebitsAmountRsCreditsAmountRs
Opening stock75,000 Purchase returns10,000 Purchases2,45,000 Sales3,40,000 Wages30,000 Discount3,000 Carriage950 Profit and Loss A/c15,000 Furniture17,000 Share capital1,00,000 Salaries7,500 Creditors17,500 Rent4,000 General reserve15,500 Trade expenses7,050 Bills payable7,000 Dividend paid9,000 Debtors27,500 Plant and Machinery29,000 Cash at Bank46,200 Patents4,800 Bills receivable5,0005,08,0005,08,000
(i) Stock as on 31.3.2007 – Rs. 88,000
(ii) Depreciate plant and machinery at 15% furniture at 10% and patents at 5%
(iii) The Board recommends payment of a dividend @ 15% p.a.
From the above information, you are required to prepare the Profit and Loss account for the year ended 31.3.2007 and a Balance Sheet as on that date. VIEW SOLUTION
- Question 6
Show by means of journal entries, how would you record the following issues in the books of Charles Ltd. Also show how would they appear in their respective Balance Sheets:- [14 Marks]
(i) A debenture issued at Rs. 95 repayable at Rs. 100.
(ii) A debenture issued at Rs. 95 repayable at Rs. 105.
[NOTE: Face value of each debenture is Rs. 100] VIEW SOLUTION
- Question 7
Robert and Smith were partners sharing profits and losses in the ratio of 3 : 2. [14 Marks]VIEW SOLUTION
On the date of dissolution, their capitals were:
Robert – Rs. 7,650 and Smith – Rs. 4,300
The Creditors amounted to Rs. 27,500. The balance of cash was Rs. 760. The assets realised Rs. 25,430. The expenses on dissolution were Rs. 1,540. All the partners are solvent. Close the books of the firm showing the realisation, capital and cash accounts.
- Question 8
Johnson Ltd. kept bought and sales ledger on self-balancing principles. From the following particulars, prepare the necessary adjustment accounts for the year 2007 in the two ledgers:- [14 Marks] Sundry Debtors (1.1.2007)12,400 Sundry Creditors (1.1.2007)5,000 Credit purchases20,600 Credit sales26,800 Cash received from debtors15,600 Returns inward600 Acceptances given8,000 Returns outward500 Debtors acceptances dishonoured1,000 Discount allowed200 Bad debts written off400
- Question 9
S, T and W having agreed to share profits and losses equally, entered into a joint venture to construct a building at a price of Rs. 10,00,000. A joint bank account was thus opened where S paid Rs. 4,00,000, T – Rs. 2,00,000 and W – Rs. 3,00,000. [14 Marks]
Expenses incurred on behalf of the joint venture were as follows:
Materials – Rs. 2,00,000; wages Rs. 1,50,000 and expenses Rs. 1,25,000.
Materials supplied by S from his stock amounted to Rs 1,25,000.
Finally, the venture was closed by T taking the closing stock at a valuation of Rs. 1,00,000.
From the above, you are required to prepare the joint venture account, co-ventures’ accounts and the joint bank account. VIEW SOLUTION
- Question 10
The following figures were extracted from the records of Alfred Engineering Company Ltd. for the year ended 31.3.2007. 14 Marks
Opening stock of raw materials40,000 Opening stock of work-in-progress12,000 Opening stock of finished goods30,000 Closing stock of raw materials50,000 Closing stock of work-in-progress30,000 Closing stock of finished goods80,000 Raw materials purchased4,00,000 Direct wages2,00,000 Factory insurance90,000 Carriage inwards4,000 Dock charges10,000 Cost of rectifying raw materials20,000 Hire of special tools for manufacturing1,00,000 Cost of factory supervision11,000 Wages paid to works gatemen20,000 Sale of finished products15,00,000
Selling and distribution overhead – 1% of sales. From the above, you are required to prepare a cost sheet for the year ended 31st March 2007.VIEW SOLUTION