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Shree Guru Kripas Institute of Management


ACCOUNTING GROUP I
Reg. No..
Total Number of Printed Pages:

Time Allowed:

3Hrs

Date: 28.03.2016
Maximum Marks:

100

Question 1 is compulsory (4 5 = 20 Marks). Answer any 5 from the remaining 6 (16 5 = 80 Marks)

1. (a)Heramba Ltd gives you the following information for the year ended 31st March 20X2:
Particulars
Sales for the year ` 48,00,000 (The Company sold goods for Cash only).
Cost of Goods Sold
Closing Inventory was higher than Opening Inventory by
Trade Creditors on 31.03.20X2 exceed the outstanding on 31.03.20X1 by
Tax paid during the year.
Amounts paid to Trade Creditors during the year
Administrative and Selling Expenses Paid
Cost of new Machinery acquired in December 20X1
Dividend paid during the year
Cash in hand and at Bank on 31.03.20X2
Cash in hand and at Bank on 01.04.20X1
Prepare Cash Flow Statement for the year ended 31.03.20X2.

48,00,000
75% of Sales
50,000
1,00,000
1,50,000
35,50,000
3,60,000
6,00,000
1,20,000
70,000
50,000
(5 Marks)

1. (b)Nidhi Ltd purchased Raw Materials at a basic price of ` 10,000 on which Excise Duty of ` 1,500
is paid. Cost of Inventory (of Raw Materials at this stage would be ` 11,500). The material is
thereafter processed. For this purpose, Conversion Costs (Labour and Direct Overheads, and other
Fixed Production Overheads) amounting to ` 1,800 are incurred. Excise Duty Liability on Finished
Goods amounting ` 1,700 is being paid by the Company. The Company is entitled for a CENVAT
credit of ` 1,500. Compute the value of Inventory.
(5 Marks)
1. (c)An item of Machinery was purchased on 1st April 2012 for ` 2,00,000. The WDV Depreciation
Rate applicable to the Machinery was 15%. The WDV of the Machinery on 31st March 2014 was `
1,44,500. On that date, the Enterprise decided to the change the method of depreciation from WDV
to SLM, and write off the Book Value ` 1,44,500, over the remaining useful life of the machinery,
i.e. 5 years. Out of the total useful life of 7 years, 2 years have already elapsed.
Comment on whether the above accounting treatment is correct. If not, give the correct accounting
treatment, with reasons
(5 Marks)
1
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Shree Guru
G
Kripas Institute of Managemennt

Accounts Group
G
I CA
C IPCC

1. (d) An amount
a
of ` 9,90,000 was incurred on a contraact work uptto 31st Marcch. Certificattes have
been receeived to date to the valuue of ` 12,000,000 againnst which ` 10,80,000 has
h been received in
cash. Thee cost of worrk done but not certifiedd amounted to
t ` 22,500. It is estimatted that by spending
s
an additiional amoun
nt of ` 60,000 (includding Provission for Coontingencies)) the work can be
`
completeed in all resp
pects in another two moonths. The agreed
a
Contrract Price off the work is
12,50,0000. Compute a conservatiive estimate of the profitt to be taken to the P&L A/c as per AS
A 7.
(5 Marks)
2. (a) The Receipts and
a
Paymennts Accounnt, Income and Expendditure Accoount and addditional
informattion of a Spo
orts Club forr the year ennded 31.03.20014 were as follows
(12 Marks)
Receiipts and Paym
ments Accouunt for the year
y ending on
o 31.03.20114
`
`
Receipts
Payyments
To Balance b/d
42,0000 By Seccretary Salarry
10,000
To Entrrance Fees 20122013
2
10,0000 By Prinnting & Stattionery
26,000
To Entrrance Fees 20132014
2
1,00,0000 By Addvertising
16,000
To Subbscription 20
0122013
6,0000 By Firee Insurance
12,000
To Subbscription 20
0132014
1,50,0000 By 12%
% Investmennts (Purchaseed on
2
2,00,000
01.10.22013)
To Subbscription 20
0142015
4,0000 By Furrniture
20,000
To Rennt Received
24,0000 By Ballance c/d
58,000
To Inteerest Receiveed
6,0000
Totaal
3,42,0000
T
Total
3
3,42,000
Incom
me and Expennditure Accoount for the year
y ending on 31.03.2014
`
`
Expend
diture
Inccome
To Secretary Salary
y
15,0000 By Enttrance Fees
1
1,05,000
To Prinnting and Staationery
22,0000 By Subbscription
1
1,56,000
To Advvertising
16,0000 By Rennt
28,000
To Auddit Fees
5,0000 By Inteerest on Inveestments
12,000
To Firee Insurance
10,0000
To Deppreciation on
n Sports
90,0000
Equipm
ment
To Deppreciation on
n Furniture
5,0000
To Surpplus
1,38,0000
Totaal
3,01,0000
T
Total
3
3,01,000
Additionnal Informattion: The Assets and Liabbilities as onn 31.03.20133 include
1. Cluub Grounds & Pavilion ` 4,40,000,
4. Subbscription inn Arrear ` 8,000,
2. Spoorts Equipmeent ` 2,50,0000,
5. Subbscription Received
R
in Advance
A
` 2,,000
andd
3. Furrniture & Fix
xtures ` 40,0000,
6. Creeditors for Printing
P
& Sttationery ` 5,000.
You are required to prepare the Balance Sheeet of the Cluub as on 31.03.2013.
2. (b) Outlinne the consid
derations forr selection off PrePackagged Accountting Softwarre.
2
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Shree Guru
G
Kripas Institute of Managemennt

Accounts Group
G
I CA
C IPCC

3. E, F and G were Partn


ners sharingg Profits and Losses in thhe ratio of 5::3:2 respectiively. On 31st March
2013, thee Balance Sh
heet of the Fiirm stood as follows
(16 Marks)
`
`
C
Capital
and Liabilities
L
Propertiees and Assetss
Capital Accounts:
NonCurrent Asssets: Buildingg
55,000
E
500,000
Fuurniture
25,000
F
400,000
Curreent Assets:
Stock
42,000
G
288,000 1,18,,000
Deebtors
20,000
Current Liabilities:C
Creditors
33,,500
Caash at Bank
11,200
O
Outstanding
Expenses
1,,700
Totaal
1,53,,200
T
Total
1
1,53,200
st
On 31 March
M
2013,, E decided to
t retire, andd F and G decided
d
to coontinue as eqqual Partnerrs. Other
terms weere as follows
(a) Buildding is appreeciated by 20%,
2
Furnituure be depreeciated by 10%
1
and a Provision
P
off 5% be
createed on Debtorrs.
(b) Gooddwill is valueed at two yeears purchase of profit for the latest accountinng year. Thee Firms
Profit for the yeaar ended 31sts March 20113 was ` 25,000. No Goodwill accouunt is to be raised
r
in
the boooks of acco
ount.
(c) Freshh Capital be introduced
i
b F and G too the extent of ` 10,000 and ` 35,000 respectiveely.
by
(d) Out of
o sum payaable to Retiiring Partnerr E, a sum of ` 45,0000 be paid im
mmediately and the
balannce be transfferred to his Loan Accouunt bearing interest at 122% per annuum. The loann is to be
paid off
o by 31st March
M
2014.
One monnth after Ess retirement, F and G aggreed to adm
mit Es son H as a Partnner with oneefourth
share in Profit/Losse
P
es. E agreed that the ballance in his Loan A/c be converted into Hs Caapital. E
also agreed to forego
o one months interest onn his loan.
It was alsso agreed thaat H will briing in his share of Gooddwill throughh book adjusstment, valueed at the
price on the date off Es retirem
ment. No Gooodwill Accoount is to be
b raised in the books. You
Y are
requestedd to pass necessary
n
Joournal Entriees to give effect to abbove transacctions, and prepare
Partners Capital Acccounts.
4. (a)Ananthhu formed a Private Lim
mited Compaany under thhe name of Ananthu
A
(P) Ltd,
L to take over his
existing business
b
as from
f
1st Aprril, but the Company
C
waas not incorpporated untill 1st July. Noo entries
relating to
t transfer off the businesss were enterred in the boooks, which were carriedd on withoutt a break
until 31st March of th
he next year.
You are required to prepare Traading and Prrofit and Looss Account for the yeaar ended 31stt March,
apportionning the periiods before and
a after inccorporation and
a a Balancce Sheet as on
o that date.. Ignore
Depreciaation and Taaxation. The following Trial
T
Balancce was extraacted from thhe books ass on 31st
March (eend of the year).
(12 Marks)
Particularss
Debit
Credit
st
Stock inn Trade as att 1 April (Opening Stock)
4,300
Purchases and Saless
18,900
27,800
Carriagee Outwards
330
Travelleers Commisssion
750
Office Salaries
S
and Expenses
2,100
3
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Shree Guru
G
Kripas Institute of Managemennt

Accounts Group
G
I CA
C IPCC

Particularss

Debit
1,200

Credit

Rent andd Rates


Ananthuus Capital Account
A
as at
a 1st April (O
Opening Balance)
23,000
Directorrs Fee
1,800
Fixed Assets
A
13,400
Current Liabilities
3,700
Current Assets (otheer than StockkinTrade))
11,200
Preliminnary Expenses
520
Total
54,500
54,500
You are also
a given th
he following informationn:
st
Stockk as at 31 March
M
(end of
o the year) iss ` 4,400.
Purchhase Consideeration was agreed at ` 30,000,
3
to be settled by issue of 3,0000 Equity Shares
S
of
e
` 10 each.
The Gross
G
Profitt Margin is constant andd the monthhly sales in April, Februuary and March are
doublle the month
hly sales for the remaininng months off the year.
Assum
me that Carrriage Outwarrds and Travvellers Com
mmission varry in direct proportion
p
too Sales.
4. (b) Calcuulate the Maximum Rem
muneration Payable
P
to thhe Managingg Director foor the year, based
b
on
Effectivee Capital of Natarajan
N
Lttd, a NonInnvestment Coompany, from
m the inform
mation givenn below:
(4 Marks)
Particulars
(` in 000s)
Profit foor the year (ccalculated ass per Sec.1988)
3,000
Paid up Capital
18,000
Reservees & Surplus
7,200
Securities Premium
1,200
Long Teerm Loans
6,000
Investm
ments
3,600
Preliminnary Expenses nor writteen off
3,000
Remuneeration paid to
t the Managing Directoor during thee year
600
5. The Balannce Sheet off Malini Ltd as on 31st March
M
is giveen below:
(16 Marks)
`
`
Liab
bilities
Assets
1,00,0000 Equity Shaares of ` 10 each
e
fully
10,00,0000 Freehold Property
5,50,000
paid up
4,000, 8%
8 Preferencce Shares off ` 100
4,00,0000 Plant andd Machinery
2,00,000
each fullly paid
6% Debentures(se
D
ecured by
4,00,000
Trade Invvestments (att cost)
2,00,000
Frreehold Prop
perty)
Addd: Arrear In
nterest
24,000
4,24,0000 Sundry Debtors
D
4,50,000
Sundry Creditors
1,01,0000 StockinTrade
3,00,000
Directorrs Loan
3,00,0000 Deferred Advertisement Exp
50,000
Profit andd Loss Accouunt
4,75,000
Total
T
22,25,0000
Total
22,25,000
4
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Shree Guru
G
Kripas Institute of Managemennt

Accounts Group
G
I CA
C IPCC

The Boarrd of Directo


ors of the Coompany deciided upon thhe following Scheme of Reconstruct
R
ion with
the conseent of respecctive Stakehoolders:
1. Preference Shares are to be written
w
downn to ` 80 eachh and Equityy Shares to ` 2 each.
2. Pref. Dividend in
n arrear for 3 years to be waived by 2/3
2 rd and forr balance 1/33rd, Equity Shares
S
of
otted.
` 2 eaach to be allo
3. Debentureholderss agreed to take
t
one Freeehold Propeerty at its Boook Value of
o ` 3,00,0000 in part
paym
ment of their holding. Ballance Debenntures to rem
main as liabiliity of the Coompany.
4. Arreaar Debenturee Interest to be
b paid in caash.
5. Remaaining Freeh
hold Propertyy to be valueed at ` 4,00,0000.
6. Invesstment sold out
o for ` 2,500,000.
7. 75% of
o Directors Loan
L
to be waived
w
and forr the balance,, Equity Sharres of ` 2 eachh to be allotteed.
8. 40% of Sundry Debtors,
D
80%
% of Stock and 100% of
o Deferred Advertisem
ment Expenses to be
writteen off.
9. Comppanys Contrractual Com
mmitments am
mounting to ` 6,00,000 have been seettled by payying 5%
Penallty of Contraact Value.
Show thee Journal En
ntries for giiving effect to the Interrnal Reconsstruction andd draw the Balance
Sheet of the
t Compan
ny after effeccting the scheeme.
6. (a) CCL wants to tak
ke up a Loss of Profit Policy.
P
Turnnover duringg the currentt year is exppected to
increase by 20%. Th
he Companyy will avail Overdraft Facilities
F
froom its Bankk at 15% intterest to
boost up the Sales. The
T average daily Overddraft Balancce will be around ` 3 Laakh. All otheer Fixed
Expensess will remain
n the same. The
T followinng details aree available from
fr
previouus year (4 Marks)
` 3,30,000 Total
` 24
Fixed Expenses:
Salaries
T
Variabble Expensess
4,00,000
` 30,000 Miscellaneo
` 70,000
Rent, Rates and Taxes
T
M
us Income
` 50,000 Net
` 4,20,000
Travelling Expennses
N Profit
4
Postaage, Telegram
m,
` 60,000
Telephoone
Direcctors Fees
` 10,000
Audiit Fees
` 20,000
Determinne the amoun
nt to be takenn for the Currrent Year.
6. (b)Marutii has made following
f
traansactions duuring the finnancial year 20132014:
2
(12 Marks)
Datee
Partiiculars
01.05.20013 Purchaases 24,000 12% Bondss of ` 100 eaach at ` 84 cum
c
interestt. Interest iss
th
st
payablle on 30 Seeptember annd 31 Marcch every yeaar.
15.06.20013 Purchaases 1,50,000 Equity Shaares of ` 10 each in Alphha Limited for
f ` 25 eachh
throug
gh a Broker, who chargedd Brokeragee at 2%.
10.07.20013 Purchaased 60,000 Equity Sharres of ` 10 eaach in Beetaa Limited forr ` 44 each thhrough
a Brok
ker, who chaarged Brokerrage at 2%.
14.10.20013 Alpha Limited maade a Bonus Issue
I
of twoo Shares for every
e
three Shares
S
held.
31.10.20013 Sold 80,000
8
Sharees in Alpha Limited
L
for ` 22 each.
01.01.20014 Receiv
ved 15% Inteerim Dividennd on Equityy Shares of Alpha
A
Limiteed.
15.01.20014 Beeta Limited madde a Rights Issue
I
of one Equity Sharre for every four Shares held at
` 5 perr Share. Marruti exercised
d his option for 40% of his
h entitlemeents and soldd the
balancce rights in thhe market att ` 2.25 per Share.
S
5
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Shree Guru
G
Kripas Institute of Managemennt

Accounts Group
G
I CA
C IPCC

Datee
Partiiculars
01.03.20014 Sold 15,000 12% Bonds
B
at ` exinterest.
e
15.03.20014 Receiv
ved 18% Inteerim Dividennd on Equityy Shares of Beeta
B
Limiteed.
Interesst on 12% Boonds was duuly received on due datess.
Prepare separate
s
Investment Acccount for 122% Bonds, Equity
E
Sharees of Alpha Limited andd Equity
Shares off Beeta Limiited in the boooks of Maruuti for the yeear ended onn 31st March 2014.
7. Answer any
a Four ou
ut of the folllowing:

(444=16)

(a) A Ltdd purchases a Plant on Hire


H Purchaase Basis forr ` 1,00,0000 and makess the paymennt in the
follow
wing manneer
Downn Payment `20,000.
1st Innstallment affter 1 year `40,000, 2ndd Installmennt after 2 yeears ` 20,0000, Last Insttallment
after 3 years.
The Cashh Price of th
he Plant is ` 86,000. Callculate (a)) Total Interest, and (b) Interest included in
each Insttallment.
(b) From
m the followin
ng informatiion for the month
m
of Marrch, furnisheed by Harini& Co, prepaare Total
Debtoors Account.
`
`
Particulaars
Particculars
Sales (inncluded Cash
h Sales of `
68,000 ChequesD
Dishonoured
2,000
7,000)
Collections from Deebtors (Cashh) 57,000 Return Inw
ward
700
Discounnt Allowed
2,000 Bad Debtss Written Offf now recoovered
500
Bad Debbts Written Off
O
1,500 Provision for Doubtfuul Debts
1,200
Chequess Received
10,000 Balance Outstanding
O
o
on
20,000
01.03.20122(Receivablles)
(c) Arjunn and Balraam are Partnners in a Fiirm and shaare Profits and
a Losses equally. Arrjun has
th
withddrawn the folllowing sum
ms during thee half year ennding 30 Juune
Datee
15th January
J
10th Februaary
5th April
20th May
18th June
`
5,000
4,000
8,,000
10,000
9,0000
Interest on
o Drawings is charged at
a 10% per annum.
a
Findd out the Aveerage Due Date and com
mpute the
th
Interest on
o Drawings to be chargeed on 30 Juune.
(d) Viruppaksh Ltd is engaged in manufacturiing and suppply of gear boxes
b
to IA Ltd
L but 10%
% thereof
is rettained and paid
p
after onne year, if thhere is satissfactory perfformance off the parts supplied.
s
Viruppaksh Ltd accounts
a
for only 90% of Invoice Values as sale
s
at the time
t
of suppply, and
balannce 10% is acccounted as sale in the year
y of receippt of paymennt. Commennt
(e) Mridaa Ltd has pu
urchased Plaant and Macchinery 3 yeears back forr ` 45 Lakhhs. A balance of ` 5
Lakhs is still payable to the Suppliers
S
forr the same. The
T Supplierr waived offf the balancee amount
nt Financial Year. The Company
C
treeated it as Inncome and credited
c
to P&L
P
A/c
durinng the curren
of currrent Financial Year. Is this
t correct??

6
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