AEP October 2007 — FRA ~ EXAMINATION (2 How INSTRUCTION: ‘This is closed book examination 2. Make your own assumptions, if required. State them on the fist page of your answer sheet 3. Enough time is provided and hence, you may proceed slowly and systematically to avoid any mistakes, 4. Please read the case completely before starting to answer the questions. You ‘may use aecounting equation or debitereditor any ether approach convenient toyou 5. Thave to evaluate 66 answer shoots. Hence, use lage fons ‘econ ‘e2ehwas set up on Mfaf@hiS192009 for providing software solutions to the potential clients, It started its operations by acquiring assets, liabilities, people and processes of Vanjara Software (VS), a loss-making software company in Baroda. The acquisition included the following assets and liabilities: = ss a ‘The promoters of e2e brought e capital and. . The balance amount was put in to the current account with ICICI Bank. With the above assets and liabilities, the coursjofie2e were opened on 1/4/2001, ‘The|$Blltermiloanytook over from VS was repayable in full on 31/3/2002, yy along with the During the year, @2eRcould © oe 's from the debtors of VS and had to write off the]? * lance amount. Yt paid the full amount to creditors of VS during the) 7% year, j> ee VS offered ther office premises to 926 on a monthly weneoPRE=TO0000 ‘payabletonyl5 oftevery month. One-year fire insurance policy was taken \ SniMM#OOT and a premivm of REOIOOD! wes paid by a cheque. An \ jon network was made on Hardware maintenance contract was signed for one year onaes lacs ‘of computers was paid in full as|~ maintenance charges. In order to meet monthly expenses tll billings and collections reached The business gradually picked up and the company recruited additional ‘manpower fo meet the growing diverse needs of ther clients. The bill increased from around Himatelaaiper mociaming:te tears months to 1 paid he sueceeding month. The other major items of expenses were Both fut together, the company was spending on an average’ Such & ff payments for a given month were due for the a ‘month. Otherpfixedvexpenses like travel, consumables, staff welfare, Xeroxing te. were sroundiaaementhyanaryrespenses and were paid in the same month in which they were incurred. \_\s ¢)yrev-ttw Bieta pr a Lest ean lace a During the year, ondersiWorth RSiS00 lacswereexecuted and billed but gaint the bill. It also received an advance of Rs. Epitome cen Sgapreo whom te services were rat | provided SBI loan together with the accrued interest was paid. The | \— interest and loan installment on ICICT Bank loan were paid on due dates. | - |v ‘The company did not expect any tax liability in the fest year. Required: 2 EE 3. Prepare the balance sheet as at 31/3/2002, the closing bank balance -on that day was Rs, 70.96 lacs2e.com Income statement PaRTCUTARS mE INCOME EXE Gate) 300.2 lem. Bats 1 rice et 12a) lnowerce ona] jorsoore 250) fon ean 72000192000 tome [ras roakneez0n “soe Jct roa teanone Ba [mer eos exp 2000002600000 | 54(@ [epelton ‘coputers: ‘so0000}() ‘hace “atoo] ‘ce eaip —_stocof> —= sen v2 | mare @ is s10201 is s1ya002 ETS = ras 7 fswsrecarma | «0. fa %o@| QU) fssrremitoan | 6° po fozsana} fexeonors He Joo otc wo a Frome s a 7 tee pyle Fetes conPurens 3 Jet = tephoe payale prewcues 20 lorrice cauweny] 3p basa locsrors % feeders Jeasrimeane — |_ soc fence 3 coo.