2~23 (Feb-March) ~

Name of the Pap~r · ·.

Financi~l· Ac~ou~ting
Name of the Course : B.Com. (Hons.) Regular
Semester : I
Duration: 3 Hours .
Attemp t all e
u· .· . Maximum Marks: 90
. st
q zons. All questions are compulsory qnd carry equal marks ..
Q. 1. (a) State with rea ( · · ·
· _sons attemp t any six) wliet~e r the followi ng stateme nts are
true or false.
(i) Accoun tin f . (1.5 )( 6)
g per orms only one function, i.e. mainten ance of systematic accounting ·
record s. · •·

(~~9) AExpense incurre d to keep the machine in w~rking conditio n is capit~l exp·e~d~ture. .
m d·tu · · ·
n ex pen 1 re intende d to benefit the current penod 1s revenue expend iture.· ·
.
.·(iv) Accrua l means ~ecognitio~ ~f revenue as it is earned and of costs as they are paid.
(v) As per the consist ency principle, accounting policy once adopted for similar items
should ~ f~llowe d consistently from year 'to year and should never be changed .
under any crrcumstance. . . ·· · · · . ·
(~9 All_ the e~terpr ises _are require d to apply Ind AS. . · · · .
. (~~i) Gomg concern , consistency & accrual are the fuhdam entalac countin g assumptions, .. . ·:
(vm) An outstan ding expense account.is a nomjna l account.
•(b) Write short notes on any two of the followi ng: (4.5 X 2)
. (1) Prior Period Items .
(ii) Money measurement.concept
(iitl "Event Occurring after Balance Reporting Period" as per Ind.AS 10. ....
·
Ans. (a) (z) False, Accoun ting perform s not only_one function but it is the-process that
consist s recordi ng, classifying,·summa rising and interpre ting of the transactions
of the enterpr ise which are of financial n~ture.
(ii) False, It is a Revenue expenditure because it does not increase the benefits but
only keeps the ~chin e in workin g condition. . .. · ·
(iii) True, It is incurre d to maintai n the existing earning capacity of the business . .
(iv) False, Accrua l means recognition of revenue as it is earned and of costs as_they
are incurre d. . ·
(v) False, Consist ency. princip le doe· s -not -say· that account ing policies cannot be
change d at all. They can~ change d in ce_rtain -circumstances._. But this change
must · be disclose d . along with an .explanation of change and its effects on the
. .result. • . '· · · · .
. (vi) False, The MCA notified _the Compani~s R~les, 2015 . which specify that Ind ·
AS are applica ble to certam cl~s _of comparues and set ~ut-the dates of their
applica bility. · · . . . · ·· . ·· · . .
(vii) True, Accord ing to AS-1 ~su~d by ICAI, <?omg C~ncern , Consist ency and Accrual
· . are the fundamental accounting ass~pt ions. . · .
(viii) False, Outstan ding Expense ~ccoun t is a Representative Personal Accoun t whid~
. i•
. represents a·certain person 9r a group of persons.
· • . . [Page T-48 .·
(b)(,) Prior Period Items. See Q. 4, Chapte r 8.
(it) Money Measurement Concept. See Q. 1 _(Point~ ), Chapte r 4. . [P~g~ T-26
(iii). "Event Occurring after Balance Rq,ortm g Penod'~ as per Ind AS 10. " ,
See Q. 10, Chapter 7. . · • · · . [Page T-46
~ 2.(R) On t• January 2015, a new plant was purchas ed by Mr. A £or f2,00,00 0 and a
,_ no,aoo was ,pent on its installa tion. On 1st June 2016, a new plant was

~ , the' flnt plan!,;,.. iUlHs,o oo only wu··--· . :

destrored by fire
_ _ . ..Jcrlp. It was not msured . . . · . . , · ; .,
7~ a second-hand plant was purchas ed for ~1,50,000_ and a further !l
on its repain ~d fS,000 on_its erection . It came into use on f i
. 69 :,
 70 ■ Shiv Das DELHI UNIVERSITY SERIES
th
· 15 Nove~ber, -_2017. Derrecfatlon has been proyided at the rate of lO% _
original cost annually on 31st December, It was the practice to charge th p.a. on the
depredation on all the acquisitions made during the year and to ignore d e fun Yea,,
the item sold during the year. The accounts are closed annually on 8t e:;redatton 8
31
°"
December 2017, it was decided to change the method of depredation and t ecernbfr. 1
on diminishing balance method In respect of the existing it O foll°"' the11
rate of 15"~ p.a.
because of the change in the statute lo best reflect the consumption pattern
Show Plant A/c, Accumulated Depredation A/c and the Plant Disposal
:~:f!: Plant
9set.
3 years. · ~c for
(b) X L~d. gives you the 'following details of the inventory for the year 2021-22, . 12
out the value of closing inventory by (a) Group method; (b) Item by item rnethod•F•n:
Article Group
.
N<1. of rmifs Cost per Realisable value per unit
Re11lisation
unit~) ~) expenses
1. A 200 100 120
. 25/3%
2, B 400 200 200 10%
3. A 600 . 150 160 2513%
4. B 800 250 300 · 10%
Sol. (a) Let Pl' P2 and P3 are first, second and third purchased plant respectively. -
Dr. . · Plant Account • · · Cr,
Date Particulars Date Particulars
1.1.15 Bank Ale (P1) 2,10,000 31.12J5 Balance c/d
~
2,10,(XX) .
(?2,00,000 + t10,000) ·
)
2,10,000 . 2,10.000
1.1.16 Balance b/d 2,10,000 31.12.16 Balance c/d 3,40,lm
1.6.16 ~nkNe (P2) 1,30,000
3,40,000 3,40,lm
"1.1.17 Balance bid 3,40,000 29.10.11 · Plant Disposal Ne (P1) 2,10,000
:
7.10.17 Bank Ale (P:J .. · 1,70,000 31.12.17 Balance c/d 3,00,lm
f{1,50,000 + 15,000 + 5,000)
5,10,000 5,10,000
Dr. . Accumulated Depreciation Account. Cr.
Particulars Date Particulars (t)
Date ~)
31.12.15 ~ce c/d 21,000 · 31.12.15 Depreciation Ne (P1)
10 . 21.000
(~2,10,000 X lOQ )
. 21,000
31.12.16 Balance rJd 55,000 1.1.16 Balance bid .
•
31.12.16 Depreciation Ne:
p . t21,000 34,()(»
p:
(t 1,30,000 >< 10/100).

55,000
UIIIIUIIII NC(P,) . 42,000 . 1.1.17 Balance b/d
56,050 . 31 ,12.17 Depreciation Ale (WOV)* ·
98,050

,aoso
 J'jnancial Accou ntin~ 2021 (Feb-M arch) ■ 71
pr.
Plant DJaposaJ A«ou nt Cr.
Date Particulars
20.10.17 Plant Ale (P )
Date Pdrlicular~
-1 2,10,000 20.10.17 Ac.cumulatP,(f Oep. Ale 42,000
f(211<m ♦ 21,V.fJ)
Bank Ale (Sctap) . 5 ,0(JJ
P & LAie {Jost) (b/fJ 113000
2,10,000 2 10.UIJ
(b) (a) Group Method
Group Article Cost (l') Net Realisa_ble Value (NR V) (l') lowerofC.ost
(RV - Realisation F.xvense~) M!IR .V
Group A · 1 20,000 24,000 - (25/300 X 24,000) 'n,(ll)
3 · 90,000 96,000 -:-- (25/300 X 96,000) 88.()('JJ
-
Total • 1,10,000 1,10,()(J() 1,fO,OCO
Group B - 2 80,000 80,0QO - (10/100 X 80,000) 12,()(YJ
-- 4 2,00,000 2!40,00Q - (10/100 X 2,40,()0()) 2,16,000 2,88,(Y.,O
Total 2,80,000 3,.90.000
-
:.b) Oosi ng Inve ntory f (1,10,000 + 2,80,000) • f3,90,000 .
( =:-- --.- ~--- -
--~~ -r-~ ;;--= Ite: .:m Tby ~It~ em~ M~ et;h o~d Lower of cost
Artic le CoS t NRV(l')
(RV - Realisation E .) OT NRV
(l')
20,000 l ~ 22,000 ...\ 20,000
1
2 so,00o 12,000 - n.ooo
. 90,000 88,000 88,000
3 2.00,000
-2,00,000 2, 16,000
4- 3,B0,000

.-. Cosi ng Inven tory =t3,80,000 .

Or, (a) Expl ain in _brief the follo wing :
(i) Mean ing of Prope rty, Plant and Equip ment
· (ii) Impa irme nt Loss as per AS-26 (iit) Featu res of AS-2
of petro l is taken "·hen the
(b) HP is a leadi ng disbi buto r of petro l A detai l inven tory
h follo wing inform.itio n
book s are close d at the end of ~ch mont h. At the end of mont
· · - · 6
is avail able: -_ . . t-t7~ .ocx, -
• Sales
n~.OCO
•Gene ral overh eads cost
_Inventory at the begin ning
1,00,0 00 litNS @ n 5 rer litre
·_ Two lalJl litres ~ f 14.25
Jurieases:
· Purch 1
One lalr-h litres @ U5.15
June 30 ,.
by the FIFO meth od: -
· · Closing·'biventory-i.30 Jak'1 litres.- Com pute the lolloofwing
cost of good s sold for June
. (i) .-Valu e of inven tory on June 30 (i'1 Amo unt
(U•l Profit/Loff for the mont h of Jur_ie . . (Page T-55
Am. (a) (i) See Q. t(a), Chap ter 10. ·
whach the carry mg aml1u nt of an asset
-~ An impjlll1llftlt Joss is the amou nt by an asset' s net
nt is highe r of
,oe;e ecll Us recov erabl e amou nt, Reco verable amou
. • ·
. .H ~ value ,and its value in use. ~tu~ e cash flows expec ted to arise
.i,,, _, is the prese nt value of estim ated
CQrltU'IUO'llS use of an ~ t and from its d1Sposal at the and
of its usefu l
(Page T-40
 72 ■ ~hiv Das DELHI uNI\TERSITY SERIES fl 4 2S
(FIFO Met hod ) . • (1,00,000 0x US.ZS)· +. (30,0
00 ><
. . · . 2,50 . · )
y . . • f19,4
(b) (1) Val ue of Inventoe
(it). Calculation ~f Cost of Goo ds Sold:
Particulars
Opening Stock: (1,00,000 ,c '15) .11 28,50,000
14 25
Add: Purchases: June 1 (2,00,000 ' · ) 15,15,000
June 30 (1,00,000 II f15.15)
Less: Closing Stock (from point (i))
. . Cost of Goods Sofd ·
(iii) Calculation of Pr~fit/loss for the mon th
of June:
Particulars
47.25,000
Sales 39.22
Less: Cost of Goods Sold 8,02,500 .
1,25,
'Less: General Overhead Cost 8,n
Profit

Q. 3. (a) Ota ndig arh. Cricket Clu b prov st

ides you with ·the follo win g information
March, 2022 : . .' . · 6
related to its•r esta uran t for the year end ed 31 t
Particulars t Particulars
ck of restaurant on 31.3.22. 11,250
Ope nin g~ of restaurant on 1.4.21 . 9,_750 ,Clo;irig sto_
5,12,lQI
·Restaurant takings . 9,Qi,000_ Restaurant'purchases · .· · _.
. ~ ':' ' ·.. . 44.B .
. \Yages(mcfudingf1,25,000for.Jest)' - to3,750 -Fuel ,,-4 .
r , .
t
... • .,

ctn glaa Cutlery on 1.4.2021 :..,.__ ·: .• :· 6,~50 · Depreciat

• •
ion t<? be charged on China
.• . _. . ,. . '¼ t. :. . . -: glass Cutlery @ 20% p.a ·
.. Prep are Restaurant Trad ing Afc and sho
w the extract of Inco me and Expenditure Ale
end ed 2021 -22. .: ·_ · .
· and extract of Balance She et for the.year st
_-(b) An NPo supp lies the follo win g info
rma tion for. the year end ed 31 Marc hr 2022.
sum ed and pres ent the item s in the ,6nandal
·. ~ t h e amo unt of ~ports Material con base d .on the following6
slatements of the NPO _for the year end ed 31st Mar ch, 2022 . .
infcmaation; . . . .

Particulars As ·a t i.4.21 ~) As at 1.4.22 <U

5,750 14.750
·. Ciedilorsb'~materials 38,000
/ . . 18,750 . .
. ·ad ofs po rts ~
hase s of sports ~aterials
.'.flae payment to a-editors amounted to t71,000 and cash purc. . .
.· . .. . .
aiom ded to '20,0 00.
the Secr etar y of the Crazy Jay qu~:
:(cJ,~ ~~ ~o~ !i_~ ~ ~~ ~b ~ed f!!>m ?89,000
ipts anci · Paym :ents Acc ount ·
Subs cript ions rece ived in 2022-23 as per Rece · t5,000
·
. Advance Subscriptions received in 2021-22 ni.500
~~ outstanding at the end of 2022-2'3
·
(indudingf1500for_2021-22) · .
-24 t3,000
.Advance Subs cript ions rece ived for 2023 · t600
~p tio ns written off duri ng 2022-23 tB,400
Su b& ai~ receivabte·on i.4.2022
' . d
eo ed
~ -· showing .the Subscriptions inco me for .the year
. . . . ·. ACCount
NllelMnt.ftems ill the Inco me and Exp endi ture 6
· w app ear in
- ~ S ~ as at the e~d of the year. .

.. '.
 ~ol. (a) . Financial
Acco . ·
Restaurant T . unttn g 201:3 (Feb,;March) ■ 73
.Dr. ·fi radin ·
or the year ended 3l5'g Account , ·
Particulars .t .
Opening stock · March, 2022 Cr.
Purchases 9,750 Resta nt Par.ticulars
· Wages_
· Fuel
5•12,000
. 1,25,000 Clos·
ura takmg's
ing stoek
'
9,04,000
11,250
· Depreciation on Cultery (ts, 44,250
250 x '20/ ·
Surplus transferred to Income & · 100) • 1,250
Expenditure Ale .
2 23000
Dr. 9,15,250
Extract of Income&&~E:~;iidi.;;,~r===-=----
Exvenditure '-- ---6 ~9,~15~,250~
· ~ xpen iture Account
Cr.
' Wages · Income
Liabilities Extract
. .
of B I
78 ,750 Surplus
a an;e Sheet as at 31st March, 2022
2,23,000 '
Assets
China Glass Cutlery 6,250
Less: Depreciation (1,250) 5,000
(b) Dr. ' Closing Stock
Creditors for Sports Matetrial Account 11,250
Particulars . Cr.
Cash_ Ale (Paid) t Particulars
Balance c/d
71,000
14,750
Balance b/d
Stock of Sports Material (Bal. F,g.J
' ,
.,.
5,750 '
85,750 • ' ~ · 85,750
st0ck of Sports Material Account
Cr. .
Particulars ·. f Particulars
Balance b/d . 18,750 Income & Expenditure Ne (Bal. Fig.)
; Creditors for. Sports Material 80,150
80,000 Balance c/d . 38,000
Cash Ale (Purchases) ·_ .. 20,000
. 1,18,750 1,18,750
An extract of Income & Expenditure Account
Expenditure ··' · t Income
rts material consumed · 80,750
An extract of Balance Sheet as at 31st !vfarch, 2023
. Liabilities t
Creditors for Spo ~ Materials Assets •
14,750 · Stock of Spbrts Material 38,000
.. ·. Subscriptions Account
·(c) pr. for the year ended 31st March 2023 Cr.
Particulars t Particulars
Jlalance b/d · 8,400 Balance bid (Advance at the Beginning) 5.000
Outstanding at the Beginning) . _ BankA/c 89,000:
-=orne & Expenditure Ne (Bal. Fig.) 95,700 Income & Expenditure Ne (Written off} 600
.,_IMl!I rJd (Advance at tt,e end) . 3,000 Bala~ce r)d: (Outstanding at the end)
2021-22 1,500,
1-- ---~ ~ 2022-23 . _ 1.,..1,0.;...;..;..4
00 -___;1:.:2~500~
; . . . . . 1,07,100
~ t of Su~ ript ion to be show n in Income ,~nd 1,07,100
~xl~?~di tu~ A/ c = ,95 ,~
· _of f?ubscription Outstanding to be show n 1n L1ab
1htlt>s slde .of.Balance Shee t
. . . ·. ·· . : · . .
Subicription rec~ived in Ad,v~nce to be e,how n m. Balance Sheet ,. = ,12,5 00
~3,ooo 1
 74 ■ Shiv Das DELHI UNIVERSITY SERI~
st
. Or, The ;rial Balance of Mr. Gopal Das at 31 March, 2018 is giv~n below:
Particulars . Dr. ~)
Purchases 8,, 12,525
Sales · 12,62,00o
Provision fc>r Doubtful Debts · 26,00o
Sundry Debtors · 2,51,000
Sundry Creditors 1,52,630
. Bills Payable 20,250
Opening Stock 1,33,625
Wages · 1,15,685
Salaries 27,875
Furniture 36,250
Postage 21,130 .
· Power and fuel 6,750
General Expenses · 29,155
Bad debts . 2,625
Loan to Ram@ 10% p.a. (on 1st Dec. 17) ·. 15,000
Cash in.hand and at bank . ·50,000
~neral expenses outstanding . 3.500
Drawings . . · 22,260
Capital 50,000
Outstanding wages 10,000
lnputCGST . . -5,000
lnputSGST .. 5,000
lnputlGST . 8,000
.Output CGST 4,000
OutputSGST 4,000
OutputlGST 9,500 .
Total . . 15,41,880 .. 15,41,880
Prepare Tradi.p.g and Profit and Loss .Account for the year ended 315 March, 2018
and the Balance Sheet as at that date after taking into consideration the following
iaformation: . . . 18
(i) .Stock on.31 .March, 2018 was f62,750.
st

(ii) Depreciation on ftµnj.ture is to. be charged ·@ 10.%. . .

(iii} Sundry debtors include an item of . f2,500 from· a . customer who ·has become
insolvent. . . . . ·. . · .
(iv) The remaining debtors ai;e not co~id~red to be doubtful in re.c overy. . · . ·
(t1) .Goods .costing f7,500 plu~ IG5T @12 % were destroyed by fire and insurance
·· company admitted a claim .for fS,000. · · · . · · . ·
(wl Received goods from Rahµ! & Comp_any of ~6,000 plus IGST @ 12% on 2'11'
· ~ 2018 but the invoice of purchase' w,;1s not. recorded in the Purchases boOk,
SoL Tra~ and Profit & Loss Account of Mr. Gopal Das · ·
Dr. · for the year ended 31.03.18 · ·· Cr.
Particulars f Particulars · t
8'>d< _1,33,625 Sales 12,62,000 .
• 8,12,525 ~losing stock· 62,750
, 6,000
. (7,500) 8,11,025
1,15,685
. 6,750 '
257,le5
13,24 750
 Financial Ac.cou~ting 2023 (Feb-Ma rth) ■ 75
Salaries
Depreciation on fumiture
27,875 Gross Profit bid
3,625 Provition for doubtful Debts (old) . 2,57,665
26,000
(t36.250" 10/100) Accrued interest on loan
postage 21,130 , 500
(f15,000" 10/100 x 4/12)
General Expenses 29,155
Bad debts f (2,625 + 2500) 5,125
Insurance claim (loss) 400
((7,500 • 112/100- ?8,000)
Net Profit transferred to Capital Account 1.96.855
/
2.84165 . . 2.84.165 ·
Balance Sheet
As at 31.03,18
Liabilities Assets f
Capital 50,000 Sundry Debtors
Add: Net Profit 1,96,855 Less: Bad debts ---1:= ~ 2,48,fiOO
Lsss: Drawings (22,260) 2,24,595 Closing stock · / 62,7W
. Sundry Creditors 1,52,630 Fumiture
Add: Rahul (Creditor) Less: Depreciation 32,625
(f6,000" 112/100)° 6,720 1,59,350 Loan to Ram . 1s;ooo
BlsPayabfe 20,250 Add: Accrued Interest (4 months 500 15,500
Outstanding General Expenses 3,500 Insurance Claim 8,000
Outstanding Wages 10,000 Cash in hand and at Bank 50,000
/
lnputSGST ~ 1

4,17,695 4.17,695

.
Working Notes:
.,
1
•
. ,. '{ \\
. CGST(n SGST (f) IGST {?)
4,000 4,000 9,500
Outpu~
5,000 5,000 7,8'2JJ"2
Input
1,000 i ,000 1,680
.
(1,000) (680) n ,680l
Set off:
320 (er.)

*2 Input IGST •Amt. given + Input received on goods purchased - Input received on goods destroyed
. • tB,000 + t6,000 x 12/100 - f7,500 x 12/100 -
- ts,ooo + t120 .
- "900 ... t1,s20_ ·
~ . .
(ie.,
Cross utilisation of Credit of -CGST and SGSf is not possible. It means, CGST Credit
the payment of SGSf and SGST credit cannot
input tax paid on CGSI} cannot be utilised for
be utilised for the payment of CGST. - ·
Q. 4. X IJd. has two branche s at Lucknow and Itawa. Goods are invoiced to branche s
COfl phu
50%. Goods are transferred by/to another branch at its cost. Follow ing
the year
ronnatlon Is availab le about the traD:5adions of the Lucknow branch for
3191 March; 2022: . .
Particulars
. 4,80,600
asbco_st _. 14,09,400
th
· at f27,~ to braneh_on 25 March, 2022 but not received by the
10,800
• <
91,800
21,060
 76 ■ Shiv D~s DELl-ll
. . . . SERIFS
UNIVERSITY. ~

Goods returned by credit customers to branch

Goods returned by credit customers directly to H. 0.
Agreed allowance to customers off the selling price {already considered while invoicing)
Nonnal loss due to wastage and deterioration of stock at cost to H.0. .
Loss-in-transit .
(at invoice price)· ,11,880 against which a sum of ,1;320 was received from the insurance
company in full settlement of the claim) . ·
Cash sales ?57,600 and Credit sales ,13,12,920
Branch expenses (including Insurance charges) {90,000
Bad debts ?1 800 and discount allowed to customers (900
The branch manager is entitled to a commission of 5% of profit of the hr~h
·charging such commission. · • . .' after
Required: · Prepare Branch Stock A/ c, Branch Adjustment A/ c and 8
Profit & Loss A/ c assuming that the closing stock at ~e branch at its cost as per phr~h
1
verification amounted to "3,60,000. . ys~8
Sol. Dr. . Ludcnow Branch Stock Account C
-:-----::;---:-:---; :------i---;---r---- ~-;-:--;---- --r----~i1.
Particulars · " Particulars
Balance b/d 4,80,600 Goods to Branch Ale
Goods Sent fo Branch Ale 14,09,400 (transfer to ltawa) .
Goods Sent to Branch Ale ·10,800 Goods sent to Branch Ale
(transfer from ltawa) (Returns to H.O.)
· Bra11ch Debtors Ale (Sales Return) 10,260 Branch Adjustment Ale
(Allowance) .
: .. Branch Adjustment Ne *1 · 2,700
. (Invoice price of No'rmal loss) (1800x150%)
Branch Adjustment Ale *2 · 3,960
(load bn'loss) (11 ,880 ~ 1/3) ..
Branch P/LNc (Cost of lost) 7,920 11,880
Cash Sales 57,600
Credit sales · .. 13,12,920
24,300

=~
Branch Short/:lge (Balancing Figure) . -
Balance c/d: In transit · 27,000
3,lt7,00J
In Hand . · --'---'--~.,.....,...,..~
3,60,000
19,11 ,060 19,11,IMiO
Cr.
Debtors
Dr.. · Lucknow Branch Adjustment Account
~
~
Particulars " · Particulars
Goods Sent to Branch Ne . 30,600 Goods Sent to Branch.Ne 4,69,800

~,
(load an transfer-?91,SOOx 1/3) · .(load on goods transferred)
Goods Sent to Branch Ne 7,740 ("14,09,400 X 1/3)
3,600
Goods ~
(ReunslDH.O.)... t(21,060 +·2160),c1/3 Goods Sent to Branch Ale ·
Branch SmekA/c (Allowance) 1,800 (load on transfer) (t10,800 x 1/3)

~
~ Stod(Afc (normal loss) · 2,700 Stock Rese'rve Ne ("4,80,600 x 1/3) 1,60,200
9nn:b Sb:l(Afc('11,88Q X 1/3) .3,960
1ml on Abnormal toss) . Bact~
a
i,;,-_.:.._-dl..,tlc:kNc ('24,300 x 1/3)
1'8.,..), .
8,100 ~ i
~ Plj
, - .,n,97,000 • 1/3) 1,29,000
,_,.,
P.pl & Loll Ale
4,49,700
633 600
 Financial Accounting 2023 {Feb-March) ■ 77

- _D_r._ _A~~~;--=L:.:u::ckn::::o~w:-;B~r~a~n~ch~P~rofi~t~a!!n~d~Lo~s~s~A~c~c~o~u~n~t.:..•- - - ~_:-=•~C~r::_.

~ Branch Stock Ale
, IBranch~>CkPAakriti~
·cu11z]a~rsif:~AA\-+-~"~~-=--.,.....,....,_EE2:lif*!L---,----l-~f~=-
f(11,3SO _ J,9S0) Particular5
(Abnonnal loss) ' 7,920 BranchAdjustmentA/c 4,49,700
'. , .Branch Stock Ale t(24,300-8,100) 16,200 Ba~;:(,:~:~nce claim) 7;J2.0
(Cost of Shortage) · ,.,
Expenses
90,000.
Bad debts · 1,800
Discount Allowed 900
Manager's Commission (t3,40,200 x s, ) 16,200
General P'& LAle - 105
3 24 000
4.,57,020 4 020
Note: .
•1 N~~ Loss. Such loss is bound t~ occur due t~ inhereni nature ~ goods, such as lo5s of _
_ weight du~ to le~ge, evaporation etc. Normal loss is treated as direct charge which affects
Gross profit margin only. Hence, normal loss will not be split-irtto loading and cost of goods
bt .· . · ·
•2 Abnormal Loss; Branch ·stocl.< destroy~d. by fire, floods,· theft or loss in transit is called
- abnormal loss. Accounting treatment for abnormal loss is: · · _
Invoice_value of abnqrmal loss will be q:edited Branch Stock Account, the particu1ar Joss
account being debited with the same amount. The. load on such ioss will be debited to
Branch Adjustment Account and credited to Abnormal Loss Account. 'The Cost_of Loss will
be transferred to the nranch Profit & Loss A/ C. ... : ·, . . . -
Accounting Entry will be: · ·
(1) Abnormal Loss A/ c · Dr. xxx
To Branch Stock A/ c XXX

(i1) Branch Adjustment A/ c Dr. (Loading)

Branch Profit & Loss A/ c . Dr. (Cost price of loss)
To Abnormal Loss A c-· otal
· ·_Or, Patna branch is supplied goods from the H,O. at 200/o profit on invoice price.
· All expenses (except petty expens~s) !11'e -paid by H.o:.directly. ~uch petty expenses -
~ ·paid by the branches~that are allowed to m~tain petty cash balance of ~,000 on
imprest system. From the following 'balances, prepare -Patna Branch A/c: -
· Balances· as on 31st Mardi, 2021: · • ·
'. Petty cash at branch U .000
' Stock at branch at cost price fl.58.400
~ Debtors at branch • t 1,21,800
i Creditors at branch t35,000
Furniture at branch , 1.os,000
Pre id rent for 3 months ,s,400
st
Tt'ansactions for the year ended 31 March, 2022:
Goods send to branch at invoice price ,16,24,000
Cash sales at branch , 13.30.000 .
Credit sales at branch t9,10,000 ,
f16,800 .·
Allowances to debtors
Cash received from·customers t7.70,000
Bad debts written off · t4,200 ·
Gpods returned by branch to H.O~at invoice ~ri~ t14,000 ·
Cash pucchases by the branch (on H.0. penrns~1on) ,2.10,000
· to Creditors · t1,40,000 '

0~1) \•-
t33,600 :·
t35,000 ·
t25,200 :·
78 ■ Shiv Das DELHI UNIVERSITY SERI.ES
Payments made by the branch:
~P~e~ttyr.::ex~pe~n~s~es~~:-;;i:.=-::---.:-;:.;:;;;;;;--- - - -- - - - - - -- - -J.._,1a,
Balance as on 318 March, 2022
~ct~~ t
Creditors
Provide depredation on furniture at 20% per annum.
So.1 D r. Patna Branch Account
pi, rticulars t Particulars
Balance bid: Petty Cash 7,000 Balance b/d: Creditors ·

Stock (IP) (n .ss;4oo x ;~) 4,48,000 Stock _

Reserve .(t3,58,400 x /~) 89,600
Debtors 1,21,800 Goods Sent to Branch Ale (loading) 3.24.800
Furniture 1,05,000 Cash remitances*4 · 17,50,000
Prepaid Rent · , 8,400 6,90,200 Goods sent to Branch.Ale , 14,000
Goods Sent to Branch Ale (1P) 16,24,000 (Return to H.O.)
Goods Sent to Branch Ale .
2,800 Balance dd: Sto_ck ( t5,60,000 x ~~ii) 7,00,000
~d ~n return) ( ,14,000 ~ : ) ' ·
1
Bank A/c: · Rent • . · 33,600. Petty Cash 7,rt11'2
Salaries 35,000 Debtors *1 2,40,800
Insurance ~ 25,200 8
Petty Expenses 16,800*2 ·Furniture ( f1,05,~~o-t1,05,ooo x 1~) 84,000
Creditors 1,40,000 Advance Salary 7,000
- General P & LAle (Balancin~ Figure) 6,50,300 Prepaid Insurance (t25,000_x 1~) 6,300
Balance c/d: Creditors t 49000 Prepaid Rent "_ · 8400
·, 32,66,900 . 32,66,900
Working Notes: '\ Dr. .Balance Debtors Account
Particulars t Particulars f
. Balance b/d· 1,21,800 Allowance 16,800
Credit Sales · 9,10,000 Bank A/ c (Collection from Debt.) 7,70,
Bad debts
t--~,------1 Balance c/d (Balancing Fig.)
10 31800
· . *2 Dr. Petty Cash Account
Particulars f Particulars
· Balance b/d 7,000 Petty Expenses A/ c
... Bank A/c (Balanci.ng Figure) _ 16 800 Balat;tce cjd
'- - . 23800 23
·. ~the Petty Cas Account is being maintained on Imprest System; it is assumed that the
amou.nt.._o!,~~ spent by the ':'ranch.~ust ~ave been reimbursed by H.0, and as such~
i. ~ WUIIICI:! of P~ Cash will remam as m the beginning i.e., t7,000 , · . · Cr
t fJ!• ··· · Branch Creditors Account · '
Particulars f Particulars
cf
ayrnent) 1,40,000 Balance b/d
r/l , ·- 49,000 Stock A/ c (Balancing Fig.)
t----,,.-=,-.,...._--1 {Credit Purchase)
.189 000 ·
Branch Cash Account
t Particulars
13,30,000 Purchase A/c
7,70,000 Creditors A/c
Branch A/c
(Cash remittances to H .O.)
r-,-:::21:-:00::-::--::-00=0,-(
 \.I
u 1. • .Financial Accou nting 2023 (Fe~M arch) ■ 79
Q. 5 . ...,.,s. AM Enterprise had . .
d two _departm ents, Cloth and Read ymad e Cloth es. The .
Read ymad e Cloth s were
depar tmen t at its.usual 8 i:t
e by the firm itself out of the doth suppl ied by the doth
figures, prepare Depa rtmen tal
Trad ing and Profit & L e Amg price. From the follow ing ·
oss ccount for the year ended 31st March 22:
· Particulars Cloth Department Readymade Clothes
(f) Department (f)
st
Opening Stock on 1 April, 2021 31,50,000 5,32,000
Purchases 2,10,00,000 1,68,000
Sales 2,31,00,000 47,25,000
. Transfer to_Readymacte Clothes Depatment 31,50,000
Manufacturing Expenses -- 6,30,000
SeDing Expenses 2,10,000 73,500
8,40,000 5,60,000
Rent & W~housing
- . ·. 21,00,000 6,72,000 _
Stockon3~. Marth,2022
ble for neces sary
. In. add1~ on to the above, the following inform ation is made availa
consi derati on:
dered ~ consi sting of
· The stock in the Read ymad e cioth es Depa rtmen t ~ay be consi
75% cloth and 25% other expenses. Th~ doth Depa rtmen t earne
d a gross profit at the rate
nt to f!0,85 ,000. 18
of 15% in 20~1-22. Gene ral Expenses of the busin ess as a whole amou
Sol. · Depa rtmen tal Trading and Profit & ·_Loss Accou nt
. for the year ended 31.03.22 ~
Ready- Total i
Cloth Ready- Total Particulars Goth
(t) Dept. made- (t)
Dept. - made
Particulars (t) Gothe s
(t) Clothes . Dept. (t)
.
·, Dept. (t)
31,50,000 ; 5;32,000 36,82,000 Sales 2,31,00,000 47,25,000 2.78.25,ooo·
Opening stock
~

2,1·0,00,000 1,68,000 2, 11,68,000 Transfer to Ready- .

Purchases . 31,50,000 - 31,50,000
. mace Cloth!3s Dept.
Transfer from Cloth 21,00·,ooo 6,72,000 - 21,n,000
- 31,50,0QO 31,50,000 Closing Stock
Department
Manufacturing exp. - 6,30,000 . · 6,30,000
.
42,00,000 9,17,000 51,17,000
Gross Profit -
53,97,000 3,37,47,000
. - 2,83,50,000 53,97,000 3,37,47,000
2,83,50,000
73,500 ·2,83,500 Gross Profit 42,00,000 9,17,000 51.17,000
Selling Expenses · 2,10,000 .
8,40,000 · 5,60,000 14,00,000
Rent & Warehousing .
31,50,000 2,83,500 34,33,500
Net Profit 42,00,000 · 9,17,000 5t.17,000
00 ·
42,00,000 9,17,000 51,17,0
General Profit and Loss Accou nt •
for the year ending 31.03.22
·Particulars ·
80,640 Net Profit: ('31,50,000 + ,2,.83,500) 34,33,500
Reserve (Closing Stock)*1
10,85,000 Stock Reserve (Opening Stock)*1 59,850
expenses
23,27,710 .•
34,93,350 34,93,350
 · . . · . · . · . ~ I T Y SERIES
80 ■ shiv Das I~a.1° · rve
. , . . • • eatculation of Stock Rese
WorkinS Notes: 1

Total ·
. · · Break up;
· 75'K,Ooth 3,99,~
25% Other expenses l,33~
stock reserve:
· stocic
@ 15% on o~ing ., 59,85()
.. @ 16% on dosing stock :z

• Calculation of Gross Profit •,.t,

2
Opening (given)
· G~Profi t '42,00,000 • 16%
Oosing Total Sales =-, .2,62,50,000 •• . . O.J,
· ,,_ p Ltd. availed a lease from N &t L Ltd. The condition s of the leaae .___~
~ws~ . -·-
as un;')Leas e period is 3 years in the beginnin ~ of the year 2019, for equiPDtent ·c 12
· .. no,00,000 and has an expected useful life of ~ years. · . _ ...
(ii) the fair market value is also U0,00,000. . . · .
(iii) The property reverts ~ack to the ~esso! on temunah on of the lease.
(iii) the unguaranteed residual value 1s estimate d at U,00,000 at the end of the
2021 . . . . . ,_
. ·(t1) au,e;
equal annual payment s are made at the end of each year. · ·
Consider implicit rate of return = 10 % . · · . _ _ _
1be present value of n due al the end of third year at 10% rate of mterest is to,.7513.
. · 111t present value of annuity of.~1 at the· end of third year at 100/o IRR is n.4868.
. , Stale whether the lease constitutes finance lease and also calculate unearned finani:e
income. . . . .
(I,) Distinguish between' Operatin g lease and Finance lease.
6
Sol (•) . Computation·of Annual Lease Payment to the Less.or:
. Cost of Equipme~t · . n0,00,(D)
., Un~te ed Residual Value (URV) n,OO,lm
· '•~Va lue of (URV) = (U,00,000 x 0.7513) . . . · rn,m
·:._Present V!ilue of lease payment s (U0,00,000 - ~75,130) '9,24,870·
• . · · Annual Lease Paymen( (~ o1i..~ay ment t~~:) . •. f3,7J,911JI
tt!H!Batl V~\l~ of•~ payment ~9,24,870 equals to 92.48 %_ of FV (U0,00;000) This ~ws
.(i) ~ V~ue of Ml.P (Minkum Lease PayfRent) substantially c~vers the initial_
Jlair 'lalue of the asset. · , .· · · . · . ·; .
ii) l.eue ' . .
• term i.e., 3 years covers the major part of life of the asset i.e:5 years. · ·
it la • finance lease. , _ , -· ·
. of Unearned Finance lnco~e (UFI):
(t) l
-Wllaallllieli!dayment (t3,71,912 x. 3) 11,15,736
..:.,. ~idual Value
in lease
. . 12, ' •

9,24,870
75,130
Income (UPI)
11. (Page r-65