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  • Question 1
    Answer each of the following questions briefly:                                                                              [10 × 2 = 20 Marks]
     
    (i) Distinguish between authorized, issued, subscribed, called up and paid up capital by the means of a hypothetical example in the form of a problem.
     
    (ii) What is the complete accounting treatment of interest on loan to the partner during the preparation of a profit and loss appropriation account of a partnership firm assuming that such interest has been paid in cash to the partner by the firm?
     
    (iii) Why are abnormal losses ignored when calculating the profit of the joint venture?
     
    (iv) Give two examples of selling overhead and two examples of distribution overhead in the context of a cost sheet.
     
    (v) What are imputed costs? How will you deal with it during the preparation of a cost sheet?
     
    (vi) What is the basis of accounting that is followed when preparing a cash flow statement?
     
    (vii) State two differences between Debtors’ turnover ratio and Creditors’ turnover ratio.
     
    (viii) What is the self-balancing entry for credit sales and credit purchases?
     
    (ix) When should goodwill be recorded in the books of a firm as per AS – 10? Are there any exceptions? If so, under what circumstances?
     
    (x) Under what heading will ‘Premium on Redemption of Debentures’ be recorded in a Horizontal balance sheet?
    VIEW SOLUTION
  • Question 2
    Calculate net cash flows from operating activities:                                                                                  [10 Marks]
     
    Particulars 31.3.09 Rs. 31.3.10 Rs.
    Profit and Loss Account
    30,000
    35,000
    General Reserve
    10,000
    15,000
    Provision for depreciation on plant
    30,000
    35,000
    Outstanding expenses
    5,000
    3,000
    Goodwill
    20,000
    10,000
    Sundry debtors
    40,000
    35,000

    An item of plant costing Rs. 20,000 having book value of Rs. 14,000 was sold for Rs. 18,000 during 2009 – 2010. VIEW SOLUTION
  • Question 3
    (a) Current liabilities of a company are Rs. 3,00,000. Its current ratio is 3 : 1 and quick ratio is 1 : 1. Calculate the value of stock in trade.                          [14 Marks]

    (b) Calculate stock turnover ratio from the following information:
          Opening stock Rs. 58,000; purchases Rs. 4,84,000; Gross profit rate 25% on sales.
          Sales – Rs. 6,40,000.

    (c) From the following information, calculate operating Ratio:
          Net sales Rs. 5,00,000; cost of goods sold Rs. 3,00,000 and operating expenses
          Rs. 1,00,000.

    (d) X Ltd. has a current ratio of 4 : 1 and its liquid ratio is 3 : 1. If its inventory is Rs. 36,000, find out the value of total current assets, total quick assets and total current liabilities.

    (e) From the following Balance Sheet of Spencer Ltd. as on 31.3.2010, calculate debt – equity ratio.
     
    Liabilities Amount
    (
    Rs)
    Assets Amount
    (
    Rs)
    Equity share capital
    10,00,000
    Building
    5,00,000
    10% Preference share capital
    4,00,000
    Plant
    8,00,000
    Securities premium
    1,20,000
    Machinery
    4,00,000
    General Reserve
    1,00,000
    Furniture
    2,00,000
    12% Debentures
    4,00,000
    Stock
    1,00,000
    Creditors
    1,00,000
    Debtors
    50,000
    Bills Payable
    1,00,000
    Bills Receivable
    30,000
    Outstanding expenses
    50,000
    Bank
    1,00,000
    Provision for tax
    30,000
    Cash
    1,00,000
        Discount on issue of shares
    20,000

     

    23,00,000
     
    23,00,000

     

         
    VIEW SOLUTION
  • Question 4
    A, B and C are partners sharing profits and losses in the ratio of 3 : 2 : 1. On 31.3.10, B decides to retire and their capital accounts on that date are A – Rs. 60,000; B – Rs. 45,000 and C – Rs. 50,000. Their current accounts on that date are A – Rs. 5,000 (Cr.); B – Rs. 2,300 (Dr.) and C – Rs. 3,000 (Cr.). [14 Marks]

    The partnership deed provided that, in case of retirement, the retiring partner should be entitled to a share of the goodwill of the firm to be calculated on the average of the profits of last three years’ ending on 31.3.2010 which comes to Rs. 12,000. The retiring partner will be entitled to interest also at 6% on the unpaid balance and would be paid by an annual instalments of Rs 10,000. At the time of retiement, B was paid off an amount leaving unpaid balance of Rs 30,000 only. Show B’s loan account until the whole payment due to him is made.
    (Modified) VIEW SOLUTION
  • Question 5

    Jacob ad Company Ltd. issues one thousand, 14% debentures of Rs. 100 each at par on 1.1.01. Under the terms of issue:
                                                                                                                                                                    [14 Marks]
    (a) Debenture interest is annually payable on 31st December every year and
    (b) 15th of the debentures are annually redeemable by drawings; the first redemption occurring on 31.12.03.
    Pass necessary journal entries for the year 2001 and 2002.

    VIEW SOLUTION
  • Question 6
    Arther and Barry entered into a joint venture on 1.10.2009 for sale of goods paying Rs. 60,000 and Rs. 40,000 respectively in a joint bank account and  sharing profits and losses in the ratio of 3 : 5. It was agreed that the joint bank account is to be used for purchases and sales and each venturer is to meet his joint venture expenses out of private funds. Each venturer is to charge a commission @ 5% on sales made by him. The transactions for the period ended 31.3.2010 were as follows:  [14 Marks]

    Arther purchased goods costing Rs. 40,000 and incurred carriage amounting to Rs. 6,000. He sold 90% of these goods at 30% over this cost price and selling expenses amounted to Rs. 2,500. Barry purchased goods costing Rs. 50,000 and incurred carriage amounting to Rs. 6,500. He sold 80% of these goods at 25% over the cost price and selling expenses amounted to Rs. 3,000.

    15th5thof the remaining goods purchased by Arther was destroyed by fire on 28.2.2010 and the insurance company paid a claim of Rs. 2,000.

    Write up Joint Venture account, Joint Bank account and Ventures’ account. VIEW SOLUTION
  • Question 7
    From the following information prepare a Cost Sheet of Jackson and Company Ltd. showing the total cost for the month of January 2010:                                            [14 Marks]
     
      Amount
    (Rs)
    Opening stock of raw materials
    60,600
    Opening stock of finished goods
    35,900
    Closing stock of raw materials
    75,000
    Closing stock of finished goods
    30,900
    Opening stock of work-in-progress
    1,25,600
    Closing stock of work-in-progress
    1,42,200
    Purchase of raw materials
    2,85,700
    Sale of finished goods
    13,50,000
    Direct wages
    3,50,000
    Factory expenses
    2,00,000
    Office and administration expenses
    1,05,000
    Selling and distribution expenses
    75,000
    Abnormal loss of materials
    10,000
    Cost of idle time in the factory
    1,000
    Cost of rectification of defective work
    5,000
    VIEW SOLUTION
  • Question 8
    The following information has been extracted from the books of Mathew and Company Ltd. for the three months ended 31.12.2008:                                                    [14 Marks]
     
    01.10.08 Stock 1500 units @ Rs. 2 per unit
    12.10.08 Goods received note 2000 units @ Rs. 2.25 per unit
    18.10.08 Requisition 1100 units
    10.11.08 Requisition 800 units
    16.11.08 Requisition 1000 units
    18.11.08 Goods received note 2400 units @ Rs. 2.50 per unit
    20.12.08 Requisition 900 units

    At the physical stock taking on 31.12.08, 2000 units were in stock. You are required to prepare a stores ledger based on LIFO method of pricing. Also prepare a Trading account using this method on the basis of the following sales figures:

    18.10.08 1100 units @ Rs. 3.50 per unit
    10.11.08 800 units @ Rs. 4 per unit
    16.11.08 1000 units @ Rs. 2.75 per unit
    20.12.08 900 units @ Rs. 4.50 per unit
    VIEW SOLUTION
  • Question 9
    Prepare the General Ledger Adjustment Accounts as will appear in the Debtors and Creditors ledgers from the information given below: [14 Marks]
           
    Balance on 1.4.2009 (Dr.) Rs. (Cr.) Rs.
    Debtors Ledger 47,200 240
    Creditors Ledger 280 26,300

    Transactions for the year ended 31.3.2010
     
      Amount
    (Rs)
    Total Sales
    1,20,100
    Cash Sales
    8,100
    Bills accepted by customers
    20,100
    Bills receivable dishonoured
    1,500
    Total purchase
    89,500
    Credit purchases
    67,000
    Creditors paid in full settlement of Rs. 40,000
    39,500
    Received from debtors in full settlement of Rs. 59,000
    58,200
    Returns inwards
    2,600
    Returns outwards
    1,800
    Bills accepted for creditors
    5,500
    Bills payable matured
    8,000
    Bills receivable discounted
    5,000
    Bills receivable endorsed to creditors
    4,000
    Endorsed Bills dishonoured
    1,000
    Bad debts written off (after deducting bad debts recovered Rs. 300)
    2,200
    Provision for doubtful debts
    550
    Set offs
    1,100
    Mutual indebtedness
    1,900
     
     
       
    Balance on 31.3.2010:

    Debtors Ledger (Cr.) Rs. 380.

    Creditors Ledger (Dr.) Rs. 420. VIEW SOLUTION
  • Question 10
    From the list of following assets and liabilities, prepare the Balance Sheet of Burn and Company Limited in vertical form as per Schedule VI, Part I of the Companies Act, 1956: [14 Marks]
     
     
    Amount
    (Rs)
    Assets
     
    Cash at Bank
    79,800
    Cash In hand
    1,500
    Investment
    95,000
    Preliminary expenses
    9,000
    Loans and advances
    95,000
    Goodwill
    50,000
    Building
    6,00,000
    Plant and machinery
    6,60,000
     
      Less: depreciation
    66,000
    5,94,000
    Stock
    10,000
    Debtors
    1,74,000
     
      Less: provision for doubtful debts
    8,700
    1,65,300
    Furniture
    14,400
    Liabilities
     
    Creditors
    1,00,000
    General Reserve
    50,000
    Interest on debentures accured and due
    28,000
    Authorised share capital: 1,20,000 shares of Rs. 10 each
    12,00,000
    Called up and paid up capital: 80,000 shares of Rs. 10 each
    8,00,000
     
      Less: calls in arrear
    15,000
    7,85,000
    Profit and loss account
    75,000
    6% debentures
    6,00,000
    Bills payable
    76,000
     
     
    VIEW SOLUTION
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