Accounting for Managers

Amity Centre for eLearning ASSIGNMENT PROGRAM: SEMESTER: Subject Name : Accounting for Managers Permanent Enrollment Number (PEN) : Roll Number (SEN) : Student Name : INSTRUCTIONS a) Students are required to submit all three assignment sets. ASSIGNMENT Assignment A Assignment B Assignment C b) c) d) e) DETAILS Five Subjective Questions Three Subjective Questions + Case Study 40 Objective Questions MARKS 10 10 10

Total weightage given to these assignments is 30%. OR 30 Marks All assignments are to be completed as typed in word/pdf. All questions are required to be attempted. All the three assignments are to be completed by due dates (specified from time to time) and need to be submitted for evaluation by Amity University.

( √ ) Tick mark in front of the assignments submitted Assignment ‘A’ Assignment ‘B’ Assignment ‘C’

a.000 Insurance 1. c) Paid life insurance premium $ 2.750 Office rent 5.a.4.200 Wages 99.000 1.000 Postage & Telegrams 110.900 1.860 2.000) at 15% p. for 2 months.000 half of which is in advance. for 1 month (furniture $ 12. for 6 months. b) Paid fire insurance of the above building in advance $ 1. for 6 months.a.260 Factory lighting 44.540 1. g) Provide interest on capital ($ 60.000.000) at 18% p.200 Bad debts 2.000) at 18% p. Walter: a) Paid rent of building $ 12.500 Loose tools 29. $ $ Mr. i) Provide interest on loan to Ram ($ 100.) Sundry Debtors Loan to Mr.a.2007 Cash at bank Bills payable 228.Accounting for Managers Assignment A Problem 1: Journalize the following transactions in the books of Mr. j) Charge interest on loan to Shyam ($ 35.200 44. d) Paid income-tax $ 3.000) at 18% p. f) Charge depreciation on furniture @ 10% p.440 . XYZ ‘ Drawings Plant & Machinery Freehold property Purchases Rtuens outwards Salaries Office Expenses Discount A/c (Dr. Balance on 1. k) Received commission $ 1. Krish @10% p.760 2.100 880 1. 2008 and a Balance Sheet as on that date after making the necessary adjustments.000 half of the building is used by the proprietor for residential use.260 Cash in hand 5.a.000 Provision for doubtful debts Interest on loan to Mr.100 Gas & fuel 13. you are required to prepare a Trading & Profit & Loss Account for the year ended 31st March.000.000).2007 13.a.000 Sundry creditors 66. Problem 2: From following figures extracted from the books of Mr.800 Stock 1. Krish 29. XYZ.500 sales 38. XYZ’s Capital Mr. e) Salary due to clerk $ 500.640 231.970 660 2. for 2 months. l) Brokerage due to us $ 500. h) Charge interest on drawing (10.100 2.

Plant & machine by 33.600 b) A new machine was installed during the year costing $15.000 Problem 4: Given below are the financial statements of Safal Enterprises. 2008 was valued at $ 72.33% b.000 47.760 as on 31. Trinity Foods as on 30 th June 2007 (after closing Nominal Accounts). f) Maintain a provision of 5% on sundry debtors for doubtful debts. In crores) 132. Problem 3: Following is the Trial Balance of M/s.100 paid for its erection has been debited to the wages account.000 50. Summarized P & L of Safal Enterprises For the year ended 31 March Particulars 2006 2007 ( Rs.) Cash Capital Bank Furniture Ram Rahim Trading & Profit & Loss 10.000 162. In the view of growth opportunities in the near future the firm has been maintaining a policy of 45% payout.00 Sales Other income .000 77.00 144.3. of shares outstanding for the firm is 2. c) Depreciate : a. Prepare a Balance Sheet on the basis of this trial balance.Accounting for Managers Adjustments: a) Stock on 31st March. Particulars Debit (Rs.2008 e) Of the sundry debtors Rs.000 162.660 are bad and should be written off.400 but it is not recorded in the books as on payment was made for it. using the tool of ratio analysis comment on the profitability and liquidity position of the firm for the year 2006-07. g) The manager is entitled to a commission of 10% of the net profits after charging such commission. Total no.00 12.00 15.000 100.000 15.000 25. Freehold property by 6% d) Loose tools were valued at $ 1.) Credit (in Rs. Wages $ 1.69crores. Furniture by 10% c.

04 12.36 5.00 93.50 1.50 8.96 29.00 51.18 3.25 22.02 33.71 51.00 4.00 .00 6.32 589.89 642. Gloria Ltd.56 13. Assets Cash and Bank balance Marketable securities Sundry debtors Prepaid expenses Stock Current Assets Fixed Assets (Net) 12.47 15.Accounting for Managers Cost of sales Gross margin Operating expenses Administration Selling & distribution Profit before interest & tax (PBIT) Interest Profit before tax (PBT) Provision for taxes Profit after tax (PAT) 102.71 60.96 20.60 21.20 1.12 139.14 247.00 21. 38.79 Balance Sheet of Safal Enterprises Particulars Assets Fixed assets Current assets Inventory Accounts receivable Cash Less: Current liabilities Net current assets Total Assets Liabilities &owners equity Share capital Reserves & Surplus Debt(long term) Total 31/03/06 31/03/07 (Rs in crores) 31.36 26.94 13.Gloria Ltd and Victoria Ltd as on 31st March 2007.25 14.26 4.98 14.00 23.64 15.26 9.07 27.96 37.96 27.57 60.44 4.75 11.36 29.24 110.01 25.18 7.55 20.00 Victoria Ltd.70 162.70 10.50 16.43 1.00 22.45 2.07 Problem 5: Given below are the balance sheets of the two firms.42 24.

00 889.00 512.56 Notes payable 6.32 Total 728.56 130.895 Can the financial positions of the two firms be compared assuming that the two firms fall in the same industry? .45 6.01 585.75 6.75 Sundry creditors 6.Accounting for Managers Total Assets 728.44 6.45 26.00 728.89 Liabilities and Owners Equity 6.89 889.01 Long term debt 130.45 345.323 26.00 345.00 Equity 585.00 512.32 889.

4.000 Problem 2: The product of a manufacturing concern passes through two processes A and B and then to finished stock. From the following information relating to process A for the month of August 2007. 125 per tonne Wages Rs. 14. manufactures and sells four types of products under the brand name Ambience.000 Output 415 tonnes Problem 3: Ahmedabad Company Ltd. The operating costs are: .000 20. Luxury.Accounting for Managers Assignment B Problem 1: Find out the cost of raw material purchased from the data given below: Particulars Prime cost Closing stock of raw material Direct labour cost Expenses on purchases’ Rs.000 per month. The sales mix in value comprises the following: Brand name Ambience Luxury Comfort Lavish Percentage 33 1/3 41 2/3 16 2/3 8 1/3 -----100 The total budgeted sales (100%) are $ 600.000 Manufacturing overheads Rs. Comfort and Lavish.000 100. 80 per tone. prepare process A account Materials 500 tonnes Cost of materials Rs. 200. It is ascertained that in process A normally 5% of the total input is scrap which realizes Rs.000 10.

respectively. The main competitors of the company in the two-wheelers and threewheelers segment are. Case study: Bajaj Auto Limited: The Unprecedented Growth Story Bajaj Auto Limited is the flagship company of the Bajaj Group. . LML ltd. Bajaj Auto has also diversified into the general as well as life insurance business through its subsidiaries Bajaj Allianz General Insurance Company Ltd. Kinetic Motor Co Ltd. 1. whereas Indian public holds about 26% and institutional investors have more than 27% stake in the company. 159. The company also produces threewheelers as goods carriers such as pick-up or delivery vans and passenger carriers such as auto-rickshaws.500 authorized service centres and 162 exclusive three-wheeler dealers spread across the country. Columbia. Mexico. The company manufactures two & three wheelers. Peru. Mr. Maharashtra Scooters Ltd. The products manufactured by Bajaj Auto are scooters. auto spares parts. Ltd. A) Calculate the breakeven point for the products on an overall basis. with the sales per month remaining at $. The promoters hold about 30% equity. 6.Accounting for Managers Ambience 60% of selling price Luxury Luxury 68% of selling price Comfort Comfort 80% of selling price Lavish Lavish 40% of selling price The fixed costs are $.000: Brand Name Ambience Luxury Comfort Lavish Percentage 25 40 30 05 --100 Assuming that this proposal is implemented.Hero Honda Motors Ltd. Bajaj Auto has a network of 498 dealers. etc. The company was incorporated in the year 1945 as M/s Bachraj Trading Corporation Private Ltd. motor cycles. steel and engineering products.00. b) It has been proposed to change the sales mix as follows. machine tools. Egypt. and TVS Motor Co. calculate the new breakeven point. Bangladesh. The Bajaj brand has presence in many countries such as Sri Lanka. Rahul Bajaj is the present Chairman of the company.000 per month.

Bajaj Auto has focused on his technology development.57 6239. Dividend too has grown to Rs 40 per share (400%) for the year ended 31 st March 2006 as against Rs 25 per share in 2005.44 7078.204 2004-05 123. The results of these strategies are reflected in its financial statements as follows (refer Table B and C): Table B Profit and Loss Account for Bajaj Auto Ltd for the year ended March 2003 March 2004 March 2005 March 2006 9284. implementing best-in-class production systems. Today it stands at almost 31%.07 4335.00 in the current year.907 75.92 6286. These capabilities enabled the company to create exciting new products.9% of the sales and operating income.92 5317.297 250.06 507.46 8131.05 297.60 to Rs 111. restructuring dealerships.10 9937.90 5017. rationalizing vendors.288 174. the company raised its market share in the motorcycle segment.285 crore in 2005-06.765 196.Accounting for Managers The company sold close to 23 lakh vehicles in 2005-06. the export of the company in all its product categories has also been unprecedented during the FY 200506 as is reflected in the figures given below: Table A Product-wise exports of Bajaj Auto Ltd Product Motorcycles Total two-wheelers Three-wheelers Total vehicles 2005-06 ( in numbers ) 165. which have set benchmarks in styling.710 Growth (in percentage) 33 34 14 27 Even more impressive has been the growth in company’s operating EBITDA.41 10. slashing costs while upgrading quality.10 32. Earnings per share have been risen from Rs 75. which is a record performance in its history.04 516. design.946 130. For the fifth successive year.52 50. Over the past few years.91 .84 602. Consequently the operating EBITDA margin grew by 220 basis points to 17. and distribution channels. The sales of motorcycles manufactured grew by 32% in 2005-06 compared to a market growth of below 19%. The company’s products are creating a customer pull at all price points and the company has now transformed from being a price warrior to a price leader. and product development in anticipation of market needs. Sales increased by almost 31% to an all-time high of Rs 9.35 7582.87 -11.945 65. and technology. which increased by 47% to touch Rs 1805 crore during 2005-06. scaling up its manufacturing facilities.87 Sales Other income Change in stocks Expenditure Profit & Loss 4987.16 (Rs in crore) 5721.

18 Capital WIP 9.44 534.41 & provisions companies Sundry Creditors 833.40 liabilities of tax Provisions 2281.24 Sundry debtors 176.60 1869.17 Less: cumulative 1660.64 1230.57 27.43 Surplus Free reserves 4233.93 159.70 274.37 1104.79 Net fixed Assets 1205.17 114.46 148.20 Group/associate 34.24 23.50 Table C Assets and Liabilities of Bajaj Auto Ltd as on 31 March 2006 Liabilities Mar 05 Mar 06 Assets Mar 05 Mar 06 Rs in crore Rs in crore Net Worth 4447.12 171.58 Advances/loans to 62.32 760.66 liabilities corporate bodies Current liabilities 4284.66 349.59 0.01 Total Assets 10100.78 Inventories 224.43 assets Share premium 87.19 capital depreciation Minority interest 89.97 302.19 3593.01 .42 809.37 274.21 4790.90 87.Accounting for Managers PBDIT Interest Depreciation PBT Tax provision PAT Dividends 981.64 1805.80 Receivables 3116.99 0.26 capital Bonus Equity 114.37 Advance payment 1823.66 1109.07 285.51 Cash & Bank 266.17 285.86 1404.48 balance Intangible/DRE 4.28 Paid up Equity 101.76 285.14 25.87 14680.43 0.28 1613.32 1036.74 2694.52 5099.34 191.04 3674.32 not written off Total Liabilities 10100.44 19.34 288.47 reserves Other free reserves 4146.82 Investments 5273.18 101.17 1469.81 1221.02 3092.91 1.28 5076.58 Deferred tax 9.05 5799.29 33.60 461.32 1834.88 476.94 184.44 Debtors exceeding 0.11 Specific reserves 23.20 1.16 5349.25 Other current 1169.20 6.37 1295.13 6 months Deferred tax 139.83 6865.43 Other receivables 1053.64 7773.79 Gross fixed assets 2870.40 Other companies 27.41 750.67 185.97 509.87 14680.54 Borrowings 1229.85 14.77 Reserves & 4256.

perspective? Does the firm appear to be the favorite destination in the automobile sector (two-wheelers and three-wheelers segment) for the lenders? 3. How efficient is the firm been in utilizing the resources at its disposal? How do you think the company can improve upon its efficiency? . Discuss 1. How attractive is the firm from the short-term and long-term lenders. the management not only sets higher standards it also continuously monitors its performance and benchmarks with the industry performance in general and their closest competitors’ results in particular. how can it be improved? 2.Accounting for Managers Notwithstanding its excellent financial performance in the years following its major strategic shift. To preclude the complacency from setting in. the management of the firm believes in the philosophy that the quest for perfection is eternal. Is the profitability performance of the firm satisfactory? If not.

14. If the business has any liability. Sales book is used to record all credit sales. Capital is increased by profit and decreased by losses. The system of recording transaction on the basis of their two old aspects is called double entry system. Withdrawal of money by the owner is an expense for the business. The profit & loss account is one of the financial statements. 3. The balance of an account is always known by the side which is shorter. 15. . the proprietor’s capital must be more than the total assets. Ledger is called the book of final entry. 4. Drawings reduce capital. Accounting records only those transactions and events which are financial character. 20. Accounting is a language of business. 16. 6. 19. Accounting is a service function. 10. 13. 18. 5. Cash book is used to record all receipts and payments of cash. Earnings of revenue means increase in Cash/Bank balance 9. 11. Goodwill is an intangible asset. The return of goods by a customer should be debited to Returns Inwards Account. 17. The journal is not a book of original entry. Salaries & Wages appearing in the trial balance are shown on the liabilities side of the balance sheet. 8. Purchases made from B for cash should be debited to B. 7. Goods bought for resale are referred to as Stocks 12.Accounting for Managers Assignment ‘C’ State whether the following are ‘true’ or ‘false’: 1. 2.

for issue of debentures at discount. 39. A firm earns no profit or incurs no loss at BEP. In marginal costing. 36. Margin of Safety implies ‘Break Even Point’. Fixed cost per unit remains constant. 33. Good units bear the abnormal loss arising in the process costing. Selling overheads form a part of cost of production. The amount of share premium received by the company is shown under the heading reserves & surplus in the company’s balance sheet.Accounting for Managers 21. The output of a process is transferred to next process. 29. There are no legal restrictions. Excess of pre-estimated loss over actual loss is known as abnormal loss. Share having preferential right as to dividend and repayment of capital are termed as equity share capital. Sales below BEP mean profit. stock is valued at fixed costs. 22. 26. Total fixed cost remains unaffected by the change in volume of output. Direct cost is that cost which can not be easily allocated to cost units. 30. 34. 27. Marginal costing is a method of ascertaining cost. 25. 32. 28. similar to shares. Manufacturing and administrative overheads are different. Debenture holders are not the member of the company. 38. 35. 37. 31. Shares which are not preference shares are called equity shares. 40. Variable cost per unit remains fixed. 24. . 23. In chemical industries unit costing is used.

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